nep-com New Economics Papers
on Industrial Competition
Issue of 2005‒02‒27
four papers chosen by
Russell Pittman
US Department of Justice

  1. Intra-firm Coordination and Horizontal Merger By Michael Higl; Peter Welzel
  2. An Experimental Study of Leniency Programs By Yasuyo Hamaguchi; Toshiji Kawagoe
  3. Product market regulation in OECD countries: 1998 to 2003 By Paul Conway; Véronique Janod; Giuseppe Nicoletti
  4. Perfectly Competitive Innovation (Growth) By Michele Boldrin; David K Levine

  1. By: Michael Higl (University of Augsburg, Department of Economics); Peter Welzel (University of Augsburg, Department of Economics)
    Abstract: We look at an industry of Cournot oligopolists each of which consists of production facilities which enjoy some degree of freedom in deciding their output quantities and that way influence the total output of a firm. This structure can be motivated e.g. the existence of profit centers or by the specifics of a cooperative firm. The extent of coordination inside the firms is captured in a simple way, and market equilibrium is derived for potentially asymmetric firms using the concept of a replacement function. We use this model to address the question of profitability of horizontal mergers and of the welfare consequences of such mergers. Contrary to the standard literature, we find a wide range of potentially profitable mergers without having to refer to cost synergies. This result is driven by the effect of size in terms of the number of production facilities and by the strategic consequences of intra-firm decentralization. A number of seemingly conflicting results from the literature can be considered special cases of our model.
    Keywords: merger, oligopoly, organization, vertical coordination
    JEL: L22 L13
    Date: 2005–02
  2. By: Yasuyo Hamaguchi; Toshiji Kawagoe
    Abstract: Antitrust authorities of many countries have been trying to establish appropriate competition policies based on economic analysis. Recently an anti-cartel policy called a "leniency program" has been introduced in many countries as an effective policy to dissolve cartels. In this paper, we studied several kinds of leniency programs through laboratory experiments. We experimentally controlled for two factors: 1) cartel size: the number of cartel members in a group, small (two-person) or large (seven-person), 2) schedule of reduced fine: the number of firms that are given reduced fines. The experimental results showed that (1) an increase in the number of cartel members in a group increased the number of cartels dissolved, (2) changing the coverage of reduced fine had no significant effect both in two-player case and in seven-player case.
    Date: 2005–02
  3. By: Paul Conway; Véronique Janod; Giuseppe Nicoletti
    Abstract: This paper describes trends in product market regulation in OECD countries over the period 1998 to 2003. The analysis is based on summary indicators of product market regulation that measure the degree to which policies promote or inhibit competition. The results suggest that regulatory impediments to competition have declined in all OECD countries in recent years. Regulation has also become more homogenous across the OECD as countries with relatively restrictive policies have, in some areas, moved towards the regulatory environment of the more liberalized countries. Within some countries product market policies have become more consistent across different regulatory provisions, although relatively restrictive countries still tend to have a more heterogeneous approach to competition. In general, domestic barriers to competition tend to be higher in countries that have higher barriers to foreign trade and investment, and high levels of state control and barriers to competition tend to be associated with cumbersome administrative procedures and policies that reduce the adaptability of labour markets. Notwithstanding recent progress in product market reform, a 'hard core' of regulations that impede competition still persists in virtually all countries. <p> La réglementation des marchés de produits dans les pays de l'OCDE, 1998-2003 <p> Ce document décrit les évolutions de la réglementation encadrant les marchés de produits dans les pays de l'OCDE sur la période 1998-2003. L'analyse est basée sur des indicateurs synthétiques de la réglementation des marchés de produits qui mesurent l'intensité avec laquelle les politiques favorisent ou restreignent la concurrence. Les résultats suggèrent que les entraves à la concurrence résultant de la réglementation ont décliné dans tous pays de l'OCDE ces dernières années. La réglementation est aussi devenue plus homogène à travers l'OCDE, les pays disposant de politiques relativement restrictives, s'étant ralliés, dans certains domaines, à l'environnement réglementaire des pays plus libéraux. Dans certains pays, les politiques concernant les marchés de produits sont devenues plus cohérentes au regard des différents dispositifs réglementaires, même si les pays relativement restrictifs ont toujours tendance à disposer d'une approche plus disparate de la concurrence. De façon générale, les barrières à la concurrence résultant de politiques à vocation intérieure ont tendance à être plus importantes dans les pays disposant d'importants obstacles aux échanges internationaux et à l'investissement ; de même de hauts niveaux de contrôles étatiques et d'importants obstacles à la concurrence ont tendance à être associés avec d'encombrantes procédures administratives et des politiques qui réduisent la capacité d'adaptation du marché du travail. En dépit des récents progrès accomplis par les réformes des marchés de produits, un 'noyau dur' de règlements, entravant la concurrence, persiste toujours dans pratiquement tous les pays.
    Keywords: indicators; product market regulation
    JEL: K2 L5
    Date: 2005–02–14
  4. By: Michele Boldrin; David K Levine
    Date: 2005–02–22

This nep-com issue is ©2005 by Russell Pittman. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.