nep-com New Economics Papers
on Industrial Competition
Issue of 2005‒07‒18
eight papers chosen by
Russell Pittman
US Department of Justice

  2. Robust Monopoly Pricing: The Case of Regret By Dirk Bergemann; Karl Schlag
  3. Advertising on TV: Under- or Overprovision? By Kind, Hans Jarle; Nilssen, Tore; Sørgard, Lars
  4. Geographic Concentration and Industry Characteristics: An Empirical Investigation of East Asia By Soon-Chan Park,; Hongshik Lee,; Mikyung Yun
  5. Understanding Why Universal Service Obligations May Be Unnecessary: The Private Development of Local Internet Access Markets By Tom Downes; Shane Greenstein
  6. Import competition and the exit of firms in belgian manufacturing By Coucke, Kristien
  7. Endogenous Timing in a Mixed Triopoly with a Foreign Competitor By Yuanzhu Lu
  8. Market integration for agricultural output markets in Peru: the role of public infrastructure By Javier Escobal; Arturo Vásquez

  1. By: Eduardo Uribe
    Abstract: Este documento presenta un análisis de los efectos de las reformas introducidas por la Constitución de 1991 y por la Ley 142 de 1994 sobre el desempeño del sector de telecomunicaciones. Incluye una descripción de esas reformas y del actual marco institucional y regulatorio del sector. El documento analiza la evolución de las realidades institucionales y regulatorias del sector de telecomunicaciones y sus efectos sobre la financiación, las tarifas, la cobertura y la calidad del servicio. Finalmente, se presentan una serie de conclusiones y de retos futuros del sector.
    Keywords: Servicios Públicos
    JEL: L96
    Date: 2005–03–25
  2. By: Dirk Bergemann (Cowles Foundation, Yale University); Karl Schlag (European University Institute)
    Abstract: We consider a robust version of the classic problem of optimal monopoly pricing with incomplete information. The robust version of the problem is distinct in two aspects: (i) the seller minimizes regret rather than maximizes revenue, and (ii) the seller only knows that the true distribution of the valuations is in a neighborhood of a given model distribution. We characterize the robust pricing policy as the solution to a minimax problem for small and large neighborhoods. In contrast to the classic monopoly policy, which is a single deterministic price, the robust policy is always a random pricing policy, or equivalently, a multi-item menu policy. The responsiveness of the robust policy to an increase in risk is determined by the curvature of the static profit function.
    Keywords: Monopoly, Optimal Pricing, Regret, Robustness
    JEL: C79 D82
    Date: 2005–07
  3. By: Kind, Hans Jarle (Norwegian School of Economics and Business Administration); Nilssen, Tore (Dept. of Economics, University of Oslo); Sørgard, Lars (Norwegian Competition Authority)
    Abstract: We consider a model where TV channels transmit advertising, and viewers dislike such commercials. We find that the less differentiated the TV channels’ programs are, the lower is the amount of advertising in equilibrium. Relative to the social optimum, there is underprovision of advertising if TV channels are sufficiently close substitutes. In such a situation, a merger between TV channels may lead to more advertising and thus improve welfare. A publicly owned TV channel can partly correct market distortions, in some cases by having a larger amount of advertising than a private TV channel. It may actually have advertising even in cases where it is wasteful per se
    Keywords: Television industry; Advertising; Public policy; Mixed oligopoly
    JEL: L82 M37
    Date: 2005–05–22
  4. By: Soon-Chan Park, (Korea Institute of International Economic Policy); Hongshik Lee, (Korea Institute of International Economic Policy); Mikyung Yun (Korea Institute of International Economic Policy)
    Abstract: In this paper we assess the geographic concentration of 26 manufacturing industries over the 1986-1997 period, based on annual employment data for 8 East Asian countries. The average level of geographic concentration, in the relative term, has decreased continuously during the period in this regio. We show that intra-industry linkage and inter-industry linkage have a positive and significant influence on relative concentration. Furthermore, the industries with large demand bias, high scale intensity and low capital intensity are geographically concentrated. Finally, we find the evidence that regional integration in East Asia will lead to agglomeration of industries.
    Keywords: economic integration, location of industries, economic geography, industry characteristics
    JEL: F12 F13
    Date: 2004–12
  5. By: Tom Downes; Shane Greenstein
    Abstract: This study analyzes the geographic spread of commercial Internet Service Providers (ISPs), the leading suppliers of Internet access. The geographic spread of ISPs is a key consideration in U.S. policy for universal access. We examine the Fall of 1998, a time of minimal government subsidy, when inexpensive access was synonymous with a local telephone call to an ISP. Population size and location in a metropolitan statistical area were the single most important determinants of entry, but their effects on national, regional and local firms differed, especially on the margin. The thresholds for entry were remarkably low for local firms. Universal service in less densely-populated areas was largely a function of investment decisions by ISPs with local focus. There was little trace of the early imprint of government subsidies for Internet access at major U.S. universities.
    Keywords: Internet; Universal service; Geographic diffusion; Telecommunications
    JEL: D21 L29 L51 L86 L96
    Date: 2005
  6. By: Coucke, Kristien
    Abstract: In this paper we investigate the different effects of import competition on the exit behaviour of different types of firms. We find that import competition in Belgian manufacturing has a strong positive effect on the exit behaviour of firms that are not part of a multinational network. However, domestic firms with outsourcing activities (through a network of independent firms) experience a less important crowding out effect. Strong import competition especially increases the exit behaviour of larger domestic firms. But also multinational firms that do not specialise their production process through sourcing of less cost efficient activities abroad, have a higher probability to exit in industries characterised by strong import competition. The finding that import competition also increases the competitive pressure between multinational firms, reflects the increased importance of specialisation of production processes and vertical oriented FDI during the last decade. Note
    Keywords: exit, import, multinational presence
    Date: 2005–07–14
  7. By: Yuanzhu Lu (National University of Singapore)
    Abstract: Endogenous order of moves is analyzed in a mixed triopoly with one public firm, one domestic private firm and one foreign private firm. The public firm produces most inefficiently, the foreign private firm produces most efficiently, and the efficiency of the domestic private firm is in between. We consider the observable delay game of Hamilton and Slutsky (1990) in the context of a quantity setting mixed triopoly where firms first choose the timing of choosing their quantities before quantity choice and find subgame perfect Nash equilibria (SPNE). The main result is that the public firm chooses to produce in the last period while the domestic private firm chooses to produce in any period except the last one in such a mixed triopoly, provided that efficiency differential between domestic and foreign private firm is not big.
    Keywords: Mixed Oligopoly; Endogenous Timing; Foreign Competitor; Simultaneous; Sequential; Efficiency Differential
    JEL: C72 D43 H42 L13
    Date: 2005–07–12
  8. By: Javier Escobal (Grupo de Análisis para el Desarrollo GRADE); Arturo Vásquez (OSINERG)
    Abstract: This paper shows the impact that investment in infrastructure may have on the efficiency of agricultural products markets. Using daily price series for the most important agricultural crop in Peru (potato), in 10 cities from 1995 to 2001, we show that there is enough evidence to conclude that agricultural markets are spatially integrated. However we also show that there is short term disequilibria that affect the efficiency with which price information is transmitted across markets. A Threshold Cointegration Model is used to asses the speed of adjustment towards the equilibrium, the presence of transaction costs and the probabilities of successful and failed arbitrage between spatially distributed markets. As was expected, the paper shows that distance and geographic differences are important factors affecting spatial integration and efficiency between markets. However, other elements susceptible of government intervention, such as availability of information (access to local media and telecommunications facilities), road density or access to wholesale markets, are key factors for the reduction of transaction costs and the improvement of spatial integration between markets.
    Keywords: Infrastructure, Investment, Rural, Peru
    JEL: R12 D23 H54 Q11 Q13
    Date: 2005–07–13

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