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on Industrial Competition |
| By: | Lester M.K. Kwong (Department of Economics, Brock University) |
| Abstract: | This paper seeks to endogenize consumer switching costs by considering simple reward programs in the form of a price discount on future purchases for current consumers to a firm. In a two period model with a more cost efficient potential entrant, we show that for sufficiently low entry costs, the introduction of a reward program by an incumbent is never optimal. For intermediate values of the entry cost, there exists a bounded interval of rewards under which entry can be successfully deterred. Nevertheless, the desirability for the incumbent to preclude entry is solely contingent on the relative cost efficiency of the entrant. |
| Keywords: | Reward and Loyalty programs, Barrier to Entry, Entry deterrence, Switching Costs |
| JEL: | D4 L13 |
| Date: | 2004–08 |
| URL: | http://d.repec.org/n?u=RePEc:brk:wpaper:0501&r=com |
| By: | Norbäck, Pehr-Johan (The Research Institute of Industrial Economics); Persson, Lars (The Research Institute of Industrial Economics) |
| Abstract: | Investment liberalizing countries are often concerned that cross-border mergers & acquisitions, in contrast to greenfield investments, might have an adverse effect on domestic firms and consumers. However, given that domestic assets are sufficiently scarce, we identify a preemption effect and an asset complementarity effect, which imply that the acquisition price is substantially higher than the domestic seller's profits. Moreover, we show that for the acquisition to take place, the MNE must be sufficiently efficient when using the domestic assets, otherwise rivals will expand their business, thereby making the acquisition unprofitable. Consequently, restricting cross-border M&As may also hurt consumers. |
| Keywords: | Investment Liberalization; Mergers & Acquisitions; Development; Ownership |
| JEL: | F23 K21 L13 O12 |
| Date: | 2005–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0644&r=com |
| By: | Bode, Sven; Hübl, Lothar; Schaffner, Joey; Twelemann, Sven |
| Abstract: | The EU Directive 2003/87/EC for the introduction of a European emission trading system has left the task of allocating the emission allowances mainly to the member states. In Germany the details of the allocation method are laid down in the Allocation Act (ZuG 2007). One central element of the Allocation Act is the so called transfer-rule, which is intended to provide incentives for the replacement of emission intensive installations and thus to achieve environmental benefits. This paper takes a closer look at the transfer-rule's ecological impacts and competitive effects in the field of electricity generation. The analysis suggests that the investment incentives provided by the transfer-rule are limited and uncertain, while at the same time the overall amount of emissions from participants of the trading scheme will not be reduced. Instead the transfer-rule causes windfall profits for incumbent generators and leads to a significant distortion of competition. This cannot be justified by environmental benefits, as has been done by the German government and the European Commission. |
| Keywords: | Emission Trading, Competition, Electricity |
| JEL: | L49 L94 Q28 Q48 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-316&r=com |
| By: | Giulio Bottazzi; Angelo Secchi |
| Abstract: | Empirical analyses on aggregated datasets have revealed a common exponential behavior in the shape of the probability density of the corporate growth rates. We present clearcut evidence on this topic using disaggregated data. We explain the observed regularities proposing a model in which the firms’ ability of taking up new business opportunities increases with the number of opportunities already exploited. A theoretical result is presented for the limiting case in which the number of firms and opportunities go to infinity. Moreover, using simulations, we show that even in a small industry the agreement with asymptotic results is almost complete. |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2005/16&r=com |
| By: | Nadia Jacoby (MATISSE) |
| Abstract: | Evolutionary approaches of the firm devote a part of their analysis to firm behavior and to some processes acting inside the firm , however the internal workings of firms are, most of the time, not deeply analyzed. In this perspective, this paper attemps to investigate whether Ç we can drop internal selection in the evolutionary analysis of the firm È. In ordre to answer this question, we propose a micro-simulation model of internal selection where firms are engaged in production and R&D activities. They carry out two kinds of R&D and do not run any imitation process. Internal selection acts on R&D projects and we measure the impact of the selection mechanism on the firm's performances. The model generates persistent differences between firms according to their internal selection process. |
| Keywords: | Innovation, internal selection, market dynamics, R&D, technological performance |
| JEL: | C63 L11 L21 O32 |
| Date: | 2005–05 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:r05042&r=com |