nep-com New Economics Papers
on Industrial Competition
Issue of 2005‒02‒06
four papers chosen by
Russell Pittman
US Department of Justice

  1. Measuring Conduct and Cost Parameters in the Spanish Air Transport Market By Fageda, X.
  2. Optimal R&D Investment Strategies with Quantity Competition under the Threat of Superior Entry By Ruslan Lukach; Peter M. Kort; Joseph Plasmans
  3. Asimetrías en la Respuesta de los Precios de la Gasolina en el Mercado Chileno By Paula Soruco Michel
  4. On Stability in Competition: Tying and Horizontal Product Differentiation By Alain Egli

  1. By: Fageda, X. (Universitat de Barcelona)
    Abstract: This paper estimates a model airline competition for the Spanish air transport market. I test the explanatory power of alternative oligopoly models with capacity constraints. In addition, I analyse the degree of density economies. Results show that Spanish airlines conduct follows a price-leadership scheme so that it is less competitive than the Cournot solution. I also fin the evidence that thin routes can be cosidered as natural monopolies
    JEL: D43 L13 L93 C30
    Date: 2004
  2. By: Ruslan Lukach; Peter M. Kort; Joseph Plasmans
    Abstract: This paper studies R&D investment decisions of a firm facing the threat of new technology entry and subject to technical uncertainty. We distinguish four scenarios: inevitable entry, entry deterrence, entry blockade, and non-credible entry threat. The entry threat stimulates the incumbent to innovate in case entry prevention is possible, but discourages R&D if entry is inevitable. In the case of entry deterrence the incumbent successfully prevents entry by innovating. Greater technical uncertainty stimulates starting R&D and can result in implementation of more expensive research projects. The welfare analysis shows that the relation between welfare and entry cost and between welfare and uncertainty is non-monotonic.
    Keywords: investment under uncertainty, real options, R&D, competition
    JEL: C72 D21 O31
    Date: 2005
  3. By: Paula Soruco Michel
    Abstract: El principal objetivo del presente trabajo es determinar la presencia de asimetrías, tanto en el nivel como en la velocidad de ajuste, de los precios de la gasolina a los cambios en los costos de producción en el mercado chileno. Para lograr este objetivo, se considera y complementa la metodología utilizada por Duffy-Deno (1996), para medir estos dos tipos de asimetría en función de un modelo de rezagos distribuidos finitos particionado. El análisis se realiza para dos estructuras de series de datos, una serie promedio para el periodo comprendido entre enero de 2001 a diciembre de 2003 y otra serie desagregada a nivel de distribuidor minorista, para el periodo entre marzo de 2001 y noviembre de 2002. La serie desagregada permite estudiar no sólo la posible presencia de asimetrías en los cambios de precios, sino que facilita también la comparación del comportamiento entre los diferentes agentes participantes del mercado, lo que hace del mercado chileno un caso de estudio interesante. Los resultados encontrados, establecen que en general el mercado de la gasolina en Chile presenta un ajuste en proporción igual tanto para aumentos como para bajas en los precios aguas arriba, evidenciándose únicamente un cierto patrón de asimetría determinado por la diferencia en la velocidad de ajuste.
    Keywords: Asimetrías en Precios, Poder de Mercado, Gasolinas
    JEL: L11 L71 Q40
    Date: 2004–11
  4. By: Alain Egli
    Abstract: We combine Hotelling’s model of product differentiation with tie-in sales. Tie-in sales condition the sale of one good upon the purchase of another good. In equilibrium firms choose zero product differentiation. Due to the tying structure no firm can gain the whole market by a small price reduction. Then we address the following questions: Can a firm with monopoly power in one market leverage this power into another market where it faces competition. What is the effect from tying on the profits of the monopolist’s rival. In our model this effect is ambiguous
    Keywords: Horizontal product differentiation; tie-in sales; leverage theory of tying; foreclosure
    JEL: D43 L11 L12 L13
    Date: 2005–01

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