|
on Industrial Competition |
| By: | Andras Niedermayer |
| Abstract: | We consider a software vendor first selling a monopoly platform and then an application running on this platform. He may face competition by an entrant in the applications market. The platform monopolist can benefit from competition for three reasons. First, his profits from the platform increase. Second, competition serves as a credible commitment to lower prices for applications. Third, higher expected product diversity may lead to higher demand for his application. Results carry over to non-software platforms and, partially, to upstream and downstream firms. The model also explains why Microsoft Office is priced significantly higher than Microsoft's operating system. |
| Keywords: | Platforms; entry; complementary goods; price commitment; product diversity; Microsoft; vertical integration; two-sided markets |
| JEL: | D41 D43 L13 L86 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:ube:dpvwib:dp0604&r=com |
| By: | Fridolfsson, Sven-Olof (Research Institute of Industrial Economics) |
| Abstract: | A government wanting to promote an efficient allocation of resources as measured by the total surplus, should strategically delegate to its competition authority a welfare standard with a bias in favour of consumers. A consumer bias means that some welfare increasing mergers will be blocked. This is optimal, if the relevant alternative to the merger is another change in market structure that will even further increase the total surplus. Furthermore, a consumer bias is shown to enhance welfare even though it blocks some welfare increasing mergers when the relevant alternative is the status quo. |
| Keywords: | Merger Control; Competition Policy; Consumer Surplus |
| JEL: | L11 L13 L41 |
| Date: | 2007–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0686&r=com |
| By: | Fridolfsson, Sven-Olof (Research Institute of Industrial Economics); Stennek, Johan (Research Institute of Industrial Economics) |
| Abstract: | There is diverging empirical evidence on the competitive effects of horizontal mergers: consumer prices (and thus presumably competitors' profits) often rise while competitors' share prices fall. Our model of endogenous mergers provides a possible reconciliation. It is demonstrated that anticompetitive mergers may reduce competitors' share prices, if the merger announcement informs the market that the competitors' lost a race to buy the target. Also the use of "first rumor" as an event may create similar problems of interpretation. We also indicate how the event-study methodology may be adapted to identify competitive effects and thus, the welfare consequences for consumers. |
| Keywords: | Mergers & Acquisitions; Event Studies; Antitrust; In-play; Coalition Formation |
| JEL: | G14 G34 L12 L41 |
| Date: | 2006–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0682&r=com |
| By: | Stennek, Johan (Research Institute of Industrial Economics); Tangerås, Thomas (Research Institute of Industrial Economics) |
| Abstract: | This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome prevails independently of market concentration when access prices are determined in bilateral negotiations. A light-handed regulatory policy can induce effective competition. Call prices are close to the marginal cost if the networks are sufficiently close substitutes. Neither demand nor cost information is required. A unique and symmetric call price equilibrium exists under symmetric access prices, provided that call demand is sufficiently inelastic. Existence encompasses the case of many networks and high network substitutability. |
| Keywords: | Network Competition; Two-way Access; Access Price Competition; Entry; Regulation; Network Substitutability |
| JEL: | L51 L96 |
| Date: | 2006–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0685&r=com |
| By: | Jim Jin; Osiris J. Parcero |
| Abstract: | Duopoly competition can take different forms: Bertrand, Cournot, Bertrand-Stackelberg, Cournot-Stackelberg and joint profit maximization. In comparing these market structures this paper make three contributions. First, we find a clear price (output) ranking among these five markets when goods are substitutes (complements). Second, these rankings can be explained by different levels of conjectural variation associated with each market structure. Third, in a more general non-linear duopoly model we find that CV in prices tends to hurt consumers, while CV in quantities is often good for social welfare. In this last case the policy recommendation for regulators seems to be to encourage the establishment of firms’ reputation in quantity responses, but to discourage it in price responses. |
| Keywords: | Optimal Bertrand, Cournot, Stackelberg, monopoly, ranking, conjectural variation. |
| JEL: | L11 L13 D43 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:san:crieff:0613&r=com |
| By: | Victor Aguirregabiria; Pedro Mira; Hernan Roman |
| Abstract: | This paper presents an estimable dynamic structural model of an oligopoly retail industry. The model can be estimated using panel data of local retail markets with information on new entries, exits and the size and growth of incumbent firms. In our model, retail firms are vertically and horizontally differentiated, compete in prices, make investments to improve the quality of their businesses, and decide to exit or to continue in the market. The model extends in two important ways the entry-exit model estimated in Aguirregabiria and Mira (2007). First, it includes firm size and growth as endogenous variables. And second, the empirical model has two sources of permanent unobserved heterogeneity: local-market heterogeneity and firm heterogeneity. This allows the researcher to control for potentially important sources of bias when using firm panel data with many local markets and several time periods. |
| Keywords: | Industry dynamics; Oligopoly retail markets; Structural estimation |
| JEL: | L11 L13 C51 |
| Date: | 2007–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-275&r=com |
| By: | Nicita, Antonio; Ramello, Giovanni B. |
| Abstract: | This paper investigates the interplay between copyright law and antitrust law in two distinct respects. We first argue that the origin of copyright seems to be rooted not only in the need to foster the production and the spread of knowledge but also in the necessity of limiting market power on the side of distributors. We then show the potential impact on market competition of the evolution of copyright as a property rule. While property rules reduce transaction costs in the standard case of bilateral monopoly over the exchange of information goods, they might increase transaction costs. When coupled with market power, a property rule enables the right holder to control uses and prices so as to implement entry deterrence strategies against potential competitors. Conversely, we argue that reversing property rules in favor of competitors or switching to liability rules for copyright may restore competitive outcomes. This conclusion brings new insights on the application of the essential facility doctrine to copyrighted works. |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:uca:ucapdv:75&r=com |
| By: | Daron Acemoglu; Kostas Bimpikis; Asuman Ozdaglar |
| Abstract: | We study the efficiency of oligopoly equilibria in a model where firms compete over capacities and prices. The motivating example is a communication network where service providers invest in capacities and then compete in prices. Our model economy corresponds to a two-stage game. First, firms (service providers) independently choose their capacity levels. Second, after the capacity levels are observed, they set prices. Given the capacities and prices, users (consumers) allocate their demands across the firms. We first establish the existence of pure strategy subgame perfect equilibria (oligopoly equilibria) and characterize the set of equilibria. These equilibria feature pure strategies along the equilibrium path, but off-the-equilibrium path they are supported by mixed strategies. We then investigate the efficiency properties of these equilibria, where "efficiency" is defined as the ratio of surplus in equilibrium relative to the first best. We show that efficiency in the worst oligopoly equilibria of this game can be arbitrarily low. However, if the best oligopoly equilibrium is selected (among multiple equilibria), the worst-case efficiency loss has a tight bound, approximately equal to 5/6 with 2 firms. This bound monotonically decreases towards zero when the number of firms increases. We also suggest a simple way of implementing the best oligopoly equilibrium. With two firms, this involves the lower-cost firm acting as a Stackelberg leader and choosing its capacity first. We show that in this Stackelberg game form, there exists a unique equilibrium corresponding to the best oligopoly equilibrium. We also show that an alternative game form where capacities and prices are chosen simultaneously always fails to have a pure strategy equilibrium. These results suggest that the timing of capacity and price choices in oligopolistic environments is important both for the existence of equilibrium and for the extent of efficiency losses in equilibrium. |
| JEL: | C72 L13 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12804&r=com |
| By: | Bonnet, C.; Dubois, P.; Simioni, M. |
| Abstract: | We present a methodology allowing to introduce manufacturers and retailers vertical contracting in their pricing strategies on a differentiated product market. We consider in particular two types of non linear pricing relationships, one where resale price maintenance is used with two part tariffs contracts and one where no resale price maintenance is allowed in two part tariffs contracts. Our contribution allows to recover price-cost margins from estimates of demand parameters both under linear pricing models and two part tariffs. The methodology allows then to test between different hypothesis on the contracting and pricing relationships between manufacturers and retailers in the supermarket industry using exogenous variables supposed to shift the marginal costs of production and distritution. We apply empirically this method to study the market for retailing bottled water in France. Our empirical evidence shows that manufacturers and retailers use non linear pricing contracts and in particular two part tariffs contracts with resale price maintenance. At last, thanks to the estimation of our structural model, we present some simulations of counterfactual policy experiments like the change of ownership of some products between manufacturers. ...French Abstract : Dans cet article, les auteurs présentent une méthodologie permettant de modéliser des contrats dans les stratégies de fixation des prix des distributeurs et des producteurs sur un marché oû les produits sont différenciés. Notamment, ils considèrent deux types de contrats à tarifs binômes pour modéliser les relations verticales : avec ou sans prix de revente imposés par les producteurs. Ce papier permet de déterminer les marges prix coût à partir de paramètres estimés de la demande à la fois pour des modèles de double marginalisation et pour des modèles à tarifs binômes. Différentes hypothèses sur les relations entre producteurs et distributeurs sont alors testées en utilisant des variables exogènes supposées faire varier les coûts marginaux de production et de distribution. Les auteurs appliquent empiriquement cette méthode au marché de l'eau plate nature embouteillée en France. Les résultats empiriques montrent que les producteurs et les distributeurs utilisent des contrats à tarifs binômes avec prix de revente imposés. De plus, grâce aux estimations du modèle structurel, les auteurs simulent des changements de propriété des produits entre producteurs et distributeurs. |
| Keywords: | VERTICAL CONTRACTS; TWO PART TARIFFS; MANUFACTURERS; RETAILERS; DOUBLE MARGINALIZATION; COLLUSION; COMPETITION; WATER; DIFFERENTIATED PRODUCTS; NON NESTED TESTS ; CONTRAT; PRODUCTEUR; DISTRIBUTION; COUT MARGINAL; CONCURRENCE ECONOMIQUE; DIFFERENCIATION DES PRODUITS; PRIX; EAU MINERALE; MODELE |
| JEL: | L13 L81 C12 C33 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:rea:inrawp:200604&r=com |
| By: | Dubois, P.; Hernandez Perez, A.; Ivaldi, M. |
| Abstract: | This paper analyzes the demand and cost structure of the french market of academic journals, taking into account its intermediary role between researchers, who are both producers and consumers of knowledge. This two sidedness feature will echoes similar problems already observed in electronic markets-payment card systems, video games console, etc-such as the chicken and egg problem, where readers won't buy a journal if they do not expect its articles to be academically relevant and researchers, that live under the mantra "publish or perish", will not submit to a journal with either limited public reach or weak reputation. After the merging of several databases, we estimate the aggregated nested logit demand system combined simultaneously with a cost function. We identify the structural parameters of this market and find that price elasticities of demand are quite large and margins relatively low, indicating that this industry experiences competitive constraints. ...French Abstract : Cet article analyse la structure de la demande et des coûts du marché français des revues scientifiques. Nous estimons un "nested logit" pour le modèle de demande et identifions les paramètres structurels de ce marché. Nous trouvons que les élasticités prix de la demande sont assez grandes et les marges relativement faibles ce qui indique que cette industrie est relativement concurrentielle. |
| Keywords: | REVUE; RECHERCHE SCIENTIFIQUE; PUBLICATION PERIODIQUE; EVALUATION; CHERCHEUR |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:rea:inrawp:200606&r=com |
| By: | Giammario Impullitti (Economics NYU) |
| Abstract: | In this paper I examine the effects of international technological competition on innovation, growth, and optimal R&D subsidies. I focus on a particular dimension of competition: the share of industries where domestic and foreign research firms compete for innovation. In a version of the fully-endogenous quality-ladder growth model I show that the effect of competition on innovation and growth depends on the specification of the research technology. Secondly, I find that increases in foreign competition trigger a business-stealing effect that reduces income and welfare and, regardless of the innovation effect, raises the optimal domestic R&D subsidy. Intuitively, the higher the threat of international competition the more instrumental innovation subsidies will be in helping domestic incumbent firms to retain their shares of the global market. Thirdly, I perform a quantitative exercise: I first build an empirical index of international technological competition and find that in the OECD countries the share of competitive sectors increased from 35 percent in 1973 to 70 percent in 1989. Then, I use this evidence to evaluate the optimality of the U.S. R&D subsidy response to observed competition in that period. I find a welfare loss of the observed policy, relative to the optimal, ranging between 0.2 and 0.5 percentage points of quality-adjusted per-capita consumption. Finally, I extend the model to account for strategic policy complementarities and show that the positive effect of competition on the optimal subsidy is robust to this set up. In addition, I find that competition increases the benefits from R&D policy cooperation. |
| Keywords: | international competition, trade and gowth, endogenous technical change, strategic industrial policy |
| JEL: | F12 F43 O31 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:739&r=com |
| By: | Marco, Alan C. (Vassar College Department of Economics) |
| Abstract: | This paper merges patent citation data with data on pharmaceutical patent expirations, generic entry, and pricing to explore the effects of observable patent characteristics on off-patent and on-patnet pharmaceutical pricing. Using a sample of drug patents facing generic entry in the 1990s, I find that the price of branded drugs increased on average in the face of generic entry. Importantly, I find that the number of patent citations that a drug receives from other firms is correlated with a decrease in markup and a decrease in the duration of the markup. Conversely, self-citations are correlated with higher prices and slower decay in prices. The results indicate that patent citations may signal the degree of inter-molecule substitution. And, importantly, self-citations may indicate a degree of cumulative patenting that enables a firm to effectively extend or strengthen the original patent protection. This research takes a step forward in understanding the distinction between “positive” citations and “negative” citations related to creative destruction. |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:vas:papers:83&r=com |
| By: | Gabriel Weintraub; Lanier Benkard (Stanford University); Benjamin Van Roy |
| Abstract: | We propose an approximation method for analyzing Ericson and Pakes (1995)-style dynamic models of imperfect competition. We develop a simple algorithm for computing an ``oblivious equilibrium,'' in which each firm is assumed to make decisions based only on its own state and knowledge of the long run average industry state, but where firms ignore current information about competitors' states. We prove that, as the market becomes large, if the equilibrium distribution of firm states obeys a certain ``light-tail'' condition, then oblivious equilibria closely approximate Markov perfect equilibria. We develop bounds that can be computed to assess the accuracy of the approximation for any given applied problem. Through computational experiments, we find that the method often generates useful approximations for industries with hundreds of firms and in some cases even tens of firms |
| Keywords: | dynamic oligopoly, computational methods, industrial organization |
| JEL: | C63 C73 L11 L13 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:6&r=com |
| By: | Ariane Lambert Mogiliansky; Grigory Kosenok |
| Abstract: | In this paper, we investigate interaction between two firms, which are engaged in a repeated procurement relationship modelled as a multiple criteria auction, and an auctioneer (a government employee) who has discretion in devising the selection criteria. A first result is that, in a one-shot context, favoritism turns the asymmetric information (private cost) procurement auction into a symmetric information auction (in bribes) for a common value prize. In a repeated setting we show that favoritism substantially facilitates collusion. It increases the gains from collusion and contributes to solving basic implementation problems for a cartel of bidders that operates in a stochastically changing environment. A most simple allocation rule where firms take turn in winning independently of stochastic government preferences and firms'costs achieves full cartel efficiency including price, production and design efficiency. In each period the selection criteria is fine-tailored to the in-turn winner: the "environment" adapts to the cartel. This result holds true when the expected punishment is a fixed cost. When the cost varies with the magnitude of the distortion of the selection criteria (compared with the true government's preferences), favoritism only partially shades the cartel from the environment. We thus find that favoritism generally facilitates collusion at a high cost for society. Our analysis suggests some anti-corruption measures that can be effective to curb favoritism and collusion in public markets. It also shows that the rotation of officials is not one of them. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2006-39&r=com |
| By: | Minjae Song (School of Economics Georgia Institute of Technology) |
| Abstract: | The paper has two objectives. The first is to construct a dynamic model of research joint ventures (RJVs) in which firms competing in the product market cooperate in investing to improve generic manufacturing technology. The second objective is to analyze cooperative research led by SEMATECH in the semiconductor industry using the dynamic model. The estimation consists of two stages. In the first stage, consumer demand is estimated using product level data, and state variables are constructed to reflect a technological advance and an evolution of firms' competitiveness in the product market. In the second stage, research expenditure level and firms' value functions are computed for every combination of the state variables as solutions to the dynamic model. I also compute firms' research expenditures for competitive research by making firms unilaterally invest in research. The results show that in RJVs firms' research expenditures go down to one fifth of what they would spend in competitive research. Lower research expenditure results in higher net profits in RJVs, although variable profits are similar in all regimes. RJVs are also more likely to generate higher consumer surplus than competitive research. This is because, while consumers benefit from more frequent introductions of higher quality products in competitive research, they occasionally pay higher prices than they do in RJVs for the same quality products. The net effect is that consumers are hurt more by higher price in competitive research than by less frequent introductions of new products in RJVs. Firms also make different research decisions for the same changes in the product market conditions, depending on whether they cooperate or compete in research |
| Keywords: | Research Joint Venture, Dynamic Model of Oligopoly Market, Product Innovation |
| JEL: | C73 D92 L63 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:468&r=com |
| By: | Andrea Di Liddo; Steffen Jørgensen |
| Abstract: | The paper deals with the imitation of fashion products, an issue that attracts considerable interest in practice. Copying of fashion originals is a major concern of designers and, in particular, their financial backers. Fashion firms are having a hard time fighting imitations, but legal sanctions are not easily implemented in this industry. We study an alternative strategy that has been used by designers. Instead of fighting the imitators in the courtroom, designers fight them in the market. The designer markets her products in separate markets, typically a ”high class” market in which the products are sold in exclusive stores at high prices. Customers in this market seek exclusivity and their utility diminishes when seeing an increasing number of copies around. Their perception of the brand tend to dilute which poses a serious threat to a fashion company. The second market is a ”middle class” market in which there are many more buyers, and the fashion firm competes directly with the imitators in this market. This market can be used to practise price discrimination, to sell off left-over inventories, and to get a spin-off from the design. The paper models the decision problems of the fashion firm and the imitators as a two-period game in which firms make pricing decisions and decisions on when to introduce their products in the markets. In addition, the fashion firm decides how much efforts to spend to increase its brand image in the two markets. |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:ufg:qdsems:06-2006&r=com |
| By: | Zhu Wang (Payments System Research Federal Reserve Bank of Kansas City) |
| Abstract: | This paper explains market turbulence, such as the recent dotcom boom/bust cycle, as equilibrium industry dynamics triggered by technology innovation. When a major technology innovation arrives, a wave of new firms implement the innovation and enter the market. However, if the innovation complements existing technology, some new entrants will later be forced out as more and more incumbent firms succeed in adopting the innovation. It is shown that the diffusion of Internet technology among traditional brick-and-mortar firms is indeed the driving force behind the rise and fall of dotcoms as well as the sustained growth of e-commerce. Systematic empirical evidence from retail and banking industries supports the theoretical findings |
| Keywords: | Technology Diffusion, Industry Dynamics, Shakeout |
| JEL: | E30 L10 O30 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:508&r=com |
| By: | Giovanni Villani |
| Abstract: | One of the problems of using the financial options methodolgy to analyse investment decisions is that strategic considerations become extremely important. So, the theory of real option games combines two successful theories, namely real options and game theory. The value of flexibility can be valued as a real option while the competition can be analyzed with game theory. In our model we develop an interaction between two firms that invest in R&D. The firm that invests first, defined as the Leader, acquires a first mover advantage that we assume as a higher share of market. But the R&D investments present positive externalities and so, the option exercise by the Leader generates an “Information Revelation” that benefits the Follower. |
| Keywords: | Real Options; Exchange Options; Option games; Information Revelation. |
| JEL: | C70 G14 G31 L13 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:ufg:qdsems:10-2006&r=com |
| By: | Bontems, P.; Meunier, V. |
| Abstract: | We analyze a two-sender quality-signaling game in a duopoly model where goods are horizontally and vertically differentiated. While locations are chosen under quality undertainty, firms choose prices and advertising expenditures being privately informed about their thpes. We show that pure price separation is impossible, and that dissipative advertising is necessary to ensure existence of separating equilibria. Equilibrium refinements discard all pooling equilibria and select a unique separating equilibrium. When vertical differentiation is not too high, horizontal differentiation is at a maximum, the high-quality firm advertises, and both firms adopt prices that are distorted upwards (compared to the symmetric-informati on benchmark). When vertical differentiation is high, firms choose identical locations and espost, only the high-quality firm obtains positive profits and signals its type through advertising only. Incomplete information and the subsequant signaling activity are chowh to increase the set of parameters values for which maximum horizontal differentiation occurs. ...French Abstract : Les auteurs étudient dans cet article, un modèle de concurrence au sein d'un duopole dans un contexte de différenciation horizontale. Les produits vendus par les firmes peuvent aussi potentiellement différer selon leur qualité. Les firmes choisissent tout d'abord leurs localisations de manière séquentielle puis simultanément leurs prix. A l'étape de localisation, la qualité du suiveur est connaissance commune tandis que la qualité du leader est incertaine mais révélée de manière privée avant l'étape de compétition par les prix. Ils montrent que la perspective de devoir signaler une qualité haute par le prix induit le leader à accroître au maximum la différenciation horizontale du produit. Ce résultat contraste fortement avec l'équilibre en information complète, qui peut impliquer une différenciation minimale ou intermédiaire selon les paramètres du modèle. Ainsi, le principe de différentiation maximale est restauré en présence d'information incomplète. |
| Keywords: | ADVERTISING; LOCATION CHOICE; QUALITY; INCOMPLETE INFORMATION; MULTI-SENDER SIGNALING GAME ; DIFFERENCIATION DES PRODUITS; PRIX; QUALITE DES PRODUITS; CONCURRENCE ECONOMIQUE; OLIGOPOLE |
| JEL: | D43 L15 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:rea:inrawp:200603&r=com |
| By: | Saphores, Jean-Daniel; Vincent, Jeffrey R.; Marochko, Valy; Abrudan, Ioan; Bouriaud, Laura; Zinnes, Clifford |
| Abstract: | Romania was one of the first transition countries in Europe to introduce auctions for allocating standing timber (stumpage) in public forests. In comparison with the former system in the country-administrative allocation at set prices-timber auctions offer several potential advantages: greater revenue generation for the government, a higher probability that tracts will be allocated to the firms that value them most highly, and stronger incentives for technological change within industry and efficiency gains in the public sector. Competition is the key to realizing these advantages. Unfortunately, collusion among bidders often limits competition in timber auctions, including in well-established market economies such as the United States. The result is that tracts sell below their fair market value, which undermines the advantages of auctions. This paper examines the Romanian auction system, with a focus on the use of econometric methods to detect collusion. It begins by describing the historical development of the system and the principal steps in the auction process. It then discusses the qualitative impacts of various economic and institutional factors, including collusion, on winning bids in different regions of the country. This discussion draws on information from a combination of sources, including unstructured interviews conducted with government officials and company representatives during 2003. Next, the paper summarizes key findings from the broader research literature on auctions, with an emphasis on empirical studies that have developed econometric methods for detecting collusion. It then presents an application of such methods to timber auction data from two forest directorates in Romania, Neamt and Suceava. This application confirms that data from Romanian timber auctions can be used to determine the likelihood of collusion, and it suggests that collusion reduced winning bids in Suceava in 2002 and perhaps also in Neamt. The paper concludes with a discussion of actions that the government can take to reduce the incidence of collusion and minimize its impact on auction outcomes. |
| Keywords: | Forestry,Wildlife Resources,Markets and Market Access,Access to Markets,Technology Industry |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4105&r=com |
| By: | Peter L. Rousseau (Vanderbilt University) |
| Abstract: | The main implications of the Q-theory of mergers are tested for United States and seven continental European countries in both the domestic and cross-border cases. I find that European firms, much like those in the United States, tend to use mergers and acquisitions to make large increases in their capital stocks, that this choice is more sensitive to the acquirer's Tobin's Q than its direct investment, and that mergers raise the efficiency of target assets. Data from cross-border mergers between U.S. acquirers and European targets support the theory most emphatically |
| Keywords: | reallocation, Tobin's Q, European Union |
| JEL: | O3 L2 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:153&r=com |
| By: | Jean, JASKOLD-GABSZEWICZ (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Didier, LAUSSEL; Nathalie, SONNAC |
| Abstract: | We study access pricing by platforms providing internet services or pay-TV to users while they allow advertisers to have access to these users against payment via ads or banners. Users are assumed to be ad-haters. It is shown that equilibrium access prices in the usersÕ market are increasing in the dimension of the advertising market : the larger the number of advertisers, the higher the access prices for both platforms. |
| Date: | 2006–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2006044&r=com |
| By: | Roberto M Samaniego (Department of Economics George Washington University) |
| Abstract: | The paper presents a vintage capital model that is consistent with the the relationship between the rate of embodied technical change and the rate of entry and exit across industries. In the model, the costs imposed by the regulation of entry may bias the sectoral composition of an economy towards industries in which the rate of technical change is low -- an effect termed technological skew. This prediction matches the empirical relationship between institutional entry costs and several indicators of sectoral composition across industrialized economies |
| Keywords: | Entry, exit, embodied technical change, regulation of entry, sectoral composition, technological skew, information technology, services. |
| JEL: | H25 L63 O33 O38 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:765&r=com |
| By: | Andrea Di Liddo; Luigi De Cesare |
| Abstract: | Let us consider two new perfect substitute durable products which are produced and sold in a market by two competing firms. Looking at a potential buyer, we build a stochastic rule by which she purchases the good from one of the two firms (so that she becomes an adopter). The model is considered discrete in time and space. The probability of transition from the non adopter state to the adopter one depends on an imitation mechanism (word-ofmouth) as well as on the pricing and advertising policies of the producers/sellers. It is assumed that only actual information about the market determine the evolution in the subsequent time step so that a Markov process arises. Both firms maximize their expected discounted profits by choosing optimal marketing strategies. Suitable equilibria are characterized and, because of the lack of convexity in the model, the simulated annealing algorithm is proposed to compute them. |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:ufg:qdsems:07-2006&r=com |
| By: | Matthew Mitchell (Department of Economics University of Iowa); Andy Skrzypacz |
| Abstract: | We study a model where innovation comes in two varieties: improvements on existing products, and new products that expand the scope of a technology. We make this distinction in order to highlight how market structure can determine not only the quantity of innovation but also its direction. We study two market structures. The first is the canonical one from the endogenous growth literature, where innovations can be developed by anyone, and developers market their own innovations. We then consider a more concentrated industry, where all innovation and pricing for a given technology is monopolized. We study the implications of the different market structures for both types of innovation, focusing on differences they induce in the direction of technological change. We apply our model model to the case of a hardware/software technology and analyze which market structure offers greater profits to a monopolist who can monopolize either hardware or software. We compare social welfare across the market structures, and discuss whether one type of innovation should be subsidized over another |
| Keywords: | Market Strucuture, Innovation |
| JEL: | L16 |
| Date: | 2006–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed006:422&r=com |