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on Industrial Competition |
| By: | Boone, J.; Müller, W.; Suetens, S. (Tilburg University, Center for Economic Research) |
| Abstract: | We report experimental results on exclusive dealing inspired by the literature on "naked exclusion". Our key findings are: First, exclusion of a more efficient entrant is a widespread phenomenon in lab markets. Second, allowing incumbents to discriminate between buyers increases exclusion rates compared to the non-discriminatory case only when payments to buyers can be offered sequentially and secretly. Third, allowing discrimination does not lead to significant decreases in costs of exclusion. Accounting for the observation that buyers are more likely to accept an exclusive deal the higher is the payment, substantially improves the fit between theoretical predictions and observed behavior. |
| Keywords: | exclusive dealing;entry deterrence;foreclosure;contracts;externalities;coordination;experiments. |
| JEL: | C91 L12 L42 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200930&r=com |
| By: | Gonzalez, Aldo; Benitez, Daniel |
| Abstract: | The authors compare the two merger control systems currently employed worldwide: a mandatory system based on merger size threshold and a voluntary system with ex-post monitoring and fines. The voluntary system possesses two informational advantages: (i) the enforcement agency employs more information -verifiable and non verifiable parameters- to decide the set of mergers to investigate, and (ii) the first move of merging firms reveals useful information to the agency about the competitive risk of a merger. If fines for undue omission to notify are upward limited, then a mixed mechanism is optimal, where small transactions are under a voluntary regime while the big mergers are obliged to report. Remedies for fixing anticompetitive mergers act as an instrument that induces firms to notify the operation, improving further the advantage of the voluntary mechanism. |
| Keywords: | Microfinance,Bankruptcy and Resolution of Financial Distress,Corporate Law,Economic Theory&Research,Small Scale Enterprise |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4936&r=com |
| By: | Kathryn Graddy; George Hall |
| Abstract: | We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model's predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small. |
| JEL: | D21 D4 L1 L81 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15019&r=com |
| By: | Michele Boldrin; David K Levine |
| Date: | 2009–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:814577000000000211&r=com |
| By: | Juan Luís Jiménez (Departamento de Análisis Económico Aplicado. Grupo de Economía de las Infraestructuras y el Transporte. Universidad de Las Palmas de Gran Canaria); Jordi Perdiguero (PPRE-IREA, Universitat de Barcelona) |
| Abstract: | Various methodologies in economic literature have been used to analyse the international hydrocarbon retail sector. Nevertheless at a Spanish level these studies are much more recent and most conclude that generally there is no effective competition present in this market, regardless of the approach used. In this paper, in order to analyse the price levels in the Spanish petrol market, our starting hypothesis is that in uncompetitive markets the prices are higher and the standard deviation is lower. We use weekly retail petrol price data from the ten biggest Spanish cities, and apply Markov chains to fill the missing values for petrol 95 and diesel, and we also employ a variance filter. We conclude that this market demonstrates reduced price dispersion, regardless of brand or city. |
| Keywords: | Competition, Petrol, Variance filter analysis, Gibbs sampling, Markov chain Monte Carlo. |
| JEL: | L13 L59 L71 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2009-5&r=com |
| By: | Julien Chevallier (EconomiX - CNRS : UMR7166 - Université de Paris X - Nanterre) |
| Abstract: | In international emissions trading schemes such as the Kyoto Protocol and the European Union Emissions Trading Scheme, the suboptimal negotiation of the cap with respect to total pollution minimization leads us to critically examine the proposition that generous allocation of grandfathered permits by the regulator based on recent emissions might pave the way for dominant positions. Stemming from this politically given market imperfection, this chapter develops a differential Stackelberg game with two types of non cooperative agents: a large potentially dominant agent, and a competitive fringe whose size are exogenously determined. The strategic interactions are modeled on an intra-industry permits markets where agents can freely bank and borrow permits. This chapter contributes to the debate on initial permits allocation and market power by focusing on the effects of allowing banking and borrowing. A documented appraisal on whether or not such provisions should be included is frequently overlooked by the debate to introduce the permits market itself among other environmental regulation tools. Numerical simulations provide a quantitative illustration of the results obtained. |
| Keywords: | Emissions Trading; Banking; Borrowing; Market Power. |
| Date: | 2009–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00388207_v1&r=com |
| By: | Luo, Guo Ying |
| Abstract: | This paper builds an evolutionary model of an industry where firms produce differentiated products. Firms have different average cost functions and different demand functions. Firms are assumed to be totally irrational in the sense that firms enter the industry regardless of the existence of profits; firms' outputs are randomly determined rather than generated from profit maximization problems; and firms exit the industry if their wealth is negative. It shows that without purposive profit maximization assumption, monopolistic competition still evolves in the long run. The only long run survivors are those that possess the most efficient technology, face the most favorable market conditions and produce at their profit maximizing outputs. This paper modifies and supports the classic argument for the derivation of monopolistic competition. |
| Keywords: | Evolution; Natural Selection; Irrationality; Monopolistic Competition; Survival of the Fittest; Market Rationality |
| JEL: | D21 L11 D43 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15357&r=com |
| By: | Iacovone, Leonardo |
| Abstract: | This paper studies how liberalization affects productivity growth using micro-level plant data. While previous studies have already shown the existence of a positive relationship between competition and economic performance, the novelty of this paper is that it analyzes not only the average impact of liberalization, but also goes"beyond the average"and shows how the liberalization can affect dissimilar plants in a different way. The author first develops a model which predicts that, while the impact of liberalization on productivity growth is positive"on average", more advanced firms tend to benefit more. In fact, liberalization generates two competing effects: on one side it spurs more innovative efforts because of the increased entry threat by foreign competitors, on the other side, enhanced competition curtails expected profits and reduces the funds available to finance innovative activities. The pro-competitive effect is weaker for less advanced firms as for them it is harder to catch-up with the"technology frontier". These predictions are then tested focusing on Mexican plants during the NAFTA liberalization. The results show that a 1 percent reduction in tariffs spurred productivity growth between 4 and 8 percent on average. However, for backward firms this effect is much weaker if not close to zero, otherwise for more advanced ones this effect is stronger with productivity growing between 11 and 13 percent. Consistent with the theoretical model the results are stronger in those sectors where the scope for innovative activities is more pronounced. These results are particularly important for policy makers because they suggest that while increasing competition may be good in spurring average productivity, it is also true that this effect does not hold for all type of firms, in particular more backward firms may need some complementary support policy to upgrade their capacities and keep up with the more competitive environment. |
| Keywords: | Economic Theory&Research,Labor Policies,E-Business,Political Economy,Education for Development (superceded) |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4930&r=com |
| By: | Bayo, Alberto (Universidad Publica de Navarra); Galdon-Sanchez, Jose E. (UC-Santa Cruz); Gil, Ricard (UC-Santa Cruz) |
| Abstract: | In this paper we empirically examine the determinants of changes in the organization of production using detailed information on a data set from a new plant-level survey of 1003 plants covering the full range of manufacturing industries in Spain. In particular, and among many other things, survey respondents were asked how service outsourcing practices had changed in the last three years. The answer to this question is indicative of the changes in the importance of backward integration for each of the plants studied. Using other information provided in the survey, we relate the reported changes in outsourcing to changes in other relevant dimensions as possible determinants of the boundaries of the firm. These dimensions are: plant size, downstream market power, cost of inputs, price and quality of the final good and technological progress. Our findings show that outsourcing increases are strongly positively correlated with increases in market share and in market competition. We also find that outsourcing increases when plants face simultaneous increases in product quality and product prices and that it decreases when plants face simultaneous increases in market share and market competition. Finally, we find that multi-plant and one-plant firms adjust their outsourcing practices differently to outside changes. Since neither TCE nor PRT theories of vertical integration fully explain the patterns found in our data, we close this paper by following Adam Smith's claim that the extent of the market seems to be the only factor consistently limiting the degree of specialization in our setting. |
| Keywords: | outsourcing; vertical integration; competition; manufacturing plants; |
| JEL: | L22 L23 L60 |
| Date: | 2009–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0783&r=com |
| By: | Huang, Weiting |
| Abstract: | How different political market structures influence the behaviors of participants and the distribution of benefits was studied n the framework of game theory. Theoretical model showed that in the monopolized political market, the participation surplus of participants would serve as the rents of monopoly power. However, when the political market competition, such as the oligarchic political market, would lead to reverse the redistribution of benefits, that is, the leaders’ surplus of political oligarchy would transferred to the participants. Additionally, in the extended spatial model, we concluded the basic distribution of political alliance. Based on these conclusions, we discussed the "center-periphery" proposition, and pointed out that there exist a trap of development; we also pointed how ideological conflict, clash of civilizations, economic geographic proximity would influence the political behaviors. In the end, two cases, that is, Japan's postwar development and cross-strait “diplomatic war” were studied. |
| Keywords: | political market structure and behavior rents surplus |
| JEL: | F59 F02 D72 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15333&r=com |