nep-com New Economics Papers
on Industrial Competition
Issue of 2006‒06‒24
fifteen papers chosen by
Russell Pittman
US Department of Justice

  1. What Do We Know About Competition and Quality in Health Care Markets? By Martin Gaynor
  2. Market Definition in Printed Media Industry: Theory and Practice By ARGENTESI, Elena; IVALDI, Marc
  3. Moore's Law, Competition and Intel's Productivity in the Mid-1990s By Ana Aizcorbe
  4. Ownership Concentration and Competition in Banking Markets By Alexandra Lai; Raphael Solomon
  5. Private Labels, National Brands and Food Prices By BONTEMPS, Christophe; OROZCO, Valérie; RÉQUILLART, Vincent
  6. Boosting Competition in Ireland By David Rae; Line Vogt; Michael Wise
  7. Do Institutions Matter? - An Analysis of the Russian Competition Policy in the Period of Transformation By Marina Grusevaja
  8. Russian Natural Gas Exports to Europe : Effects of Russian Gas Market Reforms and the Rising Market Power of Gazprom By Eirik Lund Sagen; Marina Tsygankova
  9. Who should take over operations in a supply chain? By SANTIAGO KRAISELBURD
  10. Government Outsourcing: Public Contracting with Private Monopoly By AURIOL, Emmanuelle; PICARD, Pierre
  11. Power sector reform, private investment and regional co-operation By David Newbery;
  12. Chile´s Market Share in the EU Market: The Role of Price Competition in a Panel Analysis Setting By Felicitas Nowak-Lehmann D.; Dierk Herzer; Sebastian Vollmer; Inmaculada Martínez-Zarzoso
  13. E-Commerce, Two-Sided Markets and Info-Mediation By GAUDEUL, Alexandre; JULLIEN, Bruno
  14. Consolidation and Value Creation in the Insurance Industry: the Role of Governance By Narjess Boubakri; Georges Dionne; Thouraya Triki
  15. Technology Sourcing Through Acquisitions – Do High Quality Patents Attract Acquires? By Jyrki Ali-Yrkkö

  1. By: Martin Gaynor
    Abstract: The goal of this paper is to identify key issues concerning the nature of competition in health care markets and its impacts on quality and social welfare and to identify pertinent findings from the theoretical and empirical literature on this topic. The theoretical literature in economics on competition and quality, the theoretical literature in health economics on this topic, and the empirical findings on competition and quality in health care markets are surveyed and their findings assessed. Theory is clear that competition increases quality and improves consumer welfare when prices are regulated (for prices above marginal cost), although the impacts on social welfare are ambiguous. When firms set both price and quality, both the positive and normative impacts of competition are ambiguous. The body of empirical work in this area is growing rapidly. At present it consists entirely of work on hospital markets. The bulk of the empirical evidence for Medicare patients shows that quality is higher in more competitive markets. The empirical results for privately insured patients are mixed across studies.
    JEL: I1 L1 L3
    Date: 2006–06
  2. By: ARGENTESI, Elena; IVALDI, Marc
    JEL: L40 L82 K21
    Date: 2005–09
  3. By: Ana Aizcorbe (Bureau of Economic Analysis)
    Date: 2005
  4. By: Alexandra Lai; Raphael Solomon
    Abstract: Many countries prohibit large shareholdings in their domestic banks. The authors examine whether such a restriction restrains competition in a duopolistic loan market. Blockholders may influence managers' output decisions by choosing capital structure, as in Brander and Lewis (1986). For the blockholder, debt has an additional benefit: it "disciplines" a manager by reducing the amount of free cash flow from which the manager can divert funds. A larger blockholder can exert more control. The authors show that an economy with blockholders often leads to a more competitive banking sector. Hence, a restriction on the size of blockholdings has anti-competitive results.
    Keywords: Financial institutions; Financial services; Financial system regulation and policies
    JEL: G21 G28 G32 L10
    Date: 2006
  5. By: BONTEMPS, Christophe; OROZCO, Valérie; RÉQUILLART, Vincent
    JEL: L81 Q13 D40
    Date: 2006–04
  6. By: David Rae; Line Vogt; Michael Wise
    Abstract: While Ireland’s economic performance has been impressive, there are too many sectors where producers are shielded from competition, at the expense of consumers. The loss in efficiency from these policies will become more noticeable as Ireland’s growth rate settles down towards more normal levels. International evidence suggests that enhancing competition is an important means for lowering prices and boosting productivity and innovation. This paper reviews the main areas for reform, including retail trade, pharmacies, professional services such as legal and medical services, and various network industries including electricity, telecommunications and inter-city buses. It also appraises the structure and enforcement of competition law. <P>Dynamiser la concurrence en Irlande Bien que les performances économiques de l’Irlande soient impressionnantes, il subsiste encore trop de secteurs où les producteurs sont protégés de la concurrence, au dépend des consommateurs. Le manque d’efficience résultant de ces politiques devient plus manifeste à mesure que le taux de croissance s’établit à des niveaux plus normaux. D’un point de vue international, tout indique que renforcer la concurrence est un moyen efficace pour réduire les prix et stimuler la productivité et l’innovation. Ce document passe en revue les principaux secteurs à réformer, notamment le commerce de détail, les pharmacies, les services professionnels tels que les services de santé et juridiques, ainsi que divers secteurs de réseaux, en particulier celui de l’électricité, des télécommunications et des bus intercommunaux. Ce document examine aussi la structure et l’application de la loi sur la concurrence.
    Keywords: productivity, productivité, competition, regulatory reforms, réforme réglementaire, concurrence, residential construction, construction résidentielle, immobilier, taxe foncière
    JEL: K21 L11 L16 L22 L8 L9
    Date: 2006–06–15
  7. By: Marina Grusevaja
    Date: 2006–06
  8. By: Eirik Lund Sagen; Marina Tsygankova
    Abstract: Gazprom, the dominant gas company in Russia, is widely believed to be the key supplier of gas to Europe in the foreseeable future. However, there are numerous uncertainties and challenges within the Russian and European gas industry that may alter the allocation of Gazprom´s gas sales between domestic and export markets. In this paper we use both theoretical and numerical models to study potential effects on Russian gas exports from changes in Russian domestic gas prices and the production capacities in 2015. We also investigate whether the liberalization of the European gas markets may provide incentives for Gazprom to induce monopoly power in its export markets. Our main findings suggest that both increased domestic gas prices and sufficient production capacities are vital to maintain Gazprom´s market share in Europe over the next decade. At low domestic prices, Gazprom may even have difficulties to carry out its long-term export commitments. However, if export possibilities are ample due to both lower domestic demand at higher prices and high overall production capacities, a large share of spot trades in Europe may encourage Gazprom to exercise market power in its export markets.
    Keywords: Russia, Natural gas, production capacity, export, Western Europe, price, numerical model
    JEL: F17 D42 Q31 Q38
    Date: 2006
  9. By: SANTIAGO KRAISELBURD (Instituto de Empresa)
    Abstract: When is having no previous contract better than having one, if ever? When should a manufacturer/retailer take over part (or all) of the other party´s operation, instead of considering just a contract? How about the opposite situation? This paper responds these questions in the context of a Supply Chain under a single period scenario where both the manufacturer and the retailer can exert uncontractible effort that may or may not be specific to the relationship.
    Keywords: newsvendor, Vendor Managed Inventory, retailer effort, Manufacturer effort, vertical integration
  10. By: AURIOL, Emmanuelle; PICARD, Pierre
    JEL: L43 L51 D82 L33
    Date: 2006–01
  11. By: David Newbery;
    Abstract: Modern infrastructure, particularly electricity, is critical to economic development. South Asia, with inefficient and bankrupt state-owned vertically integrated electricity supply industries, encouraged private generation investment to address shortages selling power to largely unreformed state electricity boards, exacerbating financial distress. Reforming the SEBs is an essential first step, followed by privatisation to sustain reform. Reducing losses and increasing plant load factors yield far higher returns than generation investment, where India and Pakistan under-price and exceed predicted levels of electric intensity. Private investors will require assurances that the contracts needed for IPPs are honoured, that legal disputes are efficiently and fairly resolved, subject to fall-back international arbitration, and that their purchasers are credit-worthy. This is easier with cheap gas, which is available to Bangladesh, but scarce in India. Regional energy trade would therefore do much to improve the investment climate, and a South Asia Energy Charter could underwrite increased energy trade.
    Keywords: infrastructure, electricity, direct foreign investment, gas, privatisation, regional co-operation, South Asia
    JEL: H54 K23 L32 L94 Q48 R58
    Date: 2006–06
  12. By: Felicitas Nowak-Lehmann D. (Universität Göttingen, Ibero-Amerika Institut); Dierk Herzer (Universität Frankfurt / Universität Göttingen); Sebastian Vollmer (Universität Göttingen, Ibero-Amerika Institut); Inmaculada Martínez-Zarzoso (Universität Göttingen, Ibero Amerika Institut)
    Abstract: It is the objective of this paper to analyze Chile’s development of market shares in the EU market in the period of 1988 to 2002, testing for the impact of price competitiveness on market shares with panel data. Price competitiveness is considered a decisive determinant of Chile’s market shares since Chile’s successful export products are rather homogeneous products (fish, fruit, beverages, ores, copper, and wood and products thereof). Six EU countries, namely France, Germany, Italy, the Netherlands, Spain and the UK, with perceptible imports from Chile in the above-mentioned sectors, serve as cross-sections in this study. It is found that Chile’s market shares in all seven sectors under investigation were unstable in economic terms in the 1988-2002 period. From a statistical point of view market shares were non-stationary variables, integrated of order one (I(1)) and so were Chile’s relatives prices and its competitors’ relative prices, which turned out to be I(1), too. All variables being I(1), a panel cointegration test was conducted. Pedroni’s residual based cointegration test revealed cointegration between market shares and relative prices in all seven sectors allowing regression coefficients to be estimated by means of Dynamic Ordinary Least Squares (DOLS). The DOLS results were then compared with the ones obtained by the Three Stage Feasible Generalized Least Squares (3SFGLS) and the Generalized Method of Moments (GMM) technique.
    Keywords: Market shares, panel unit root tests, panel cointegration tests, panel DOLS modeling, 3SLS -
    JEL: F14 F17 C23
    Date: 2006–06–06
  13. By: GAUDEUL, Alexandre; JULLIEN, Bruno
    Date: 2005–01
  14. By: Narjess Boubakri; Georges Dionne; Thouraya Triki
    Abstract: We examine the long run performance of M&A transactions in the property-liability insurance industry. We specifically investigate whether such transactions create value for the bidders' shareholders and assess how corporate governance mechanisms affect such performance. Our results show that M&A create value in the long run as buy and hold abnormal returns are positive and significant after three years. While tender offers appear to be more profitable than mergers, our evidence does not support the conjecture that domestic transactions create more value than cross border transactions. Furthermore, positive returns are significantly higher for frequent acquirers and in countries where investor protection is better. Internal corporate governance mechanisms are also significant determinants of the performance of bidders.
    Keywords: Merger and acquisition, property-liability insurance, governance, value creation, performance of bidders
    JEL: D80 G22
    Date: 2006
  15. By: Jyrki Ali-Yrkkö
    Keywords: acquisition, M&A, patent, quality, value, target, likelihood
    JEL: F21 F23 G34
    Date: 2006–06–16

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