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on Industrial Competition |
| By: | J.J.A. Kamphorst; E. Mendys-Kamphorst; B. Westbrock |
| Abstract: | It is well-known in the IO literature that incumbent firms may want to deter entry by behaving as if they are efficient. In this paper we show that incumbents may sometimes prefer to encourage entry by mimicking the behaviour of a less efficient firm for the following reason. If the incumbent cannot deter potential efficient entrants, he may want to elicit entry by an inefficient firm who would not enter if he knows that the incumbent is efficient. The presence of the additional firm in the market prevents further entry. The incumbent then faces a less efficient competitor in the long run. |
| Keywords: | Duopoly competition, entry deterrence, signalling weakness |
| JEL: | D43 D82 L11 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:1002&r=com |
| By: | Carree, Martin A. (Maastricht University) |
| URL: | http://d.repec.org/n?u=RePEc:ner:maastr:urn:nbn:nl:ui:27-15504&r=com |
| By: | Armstrong, Mark; Huck, Steffen |
| Abstract: | We discuss the literatures on behavioral economics, bounded rationality and experimental economics as they apply to firm behavior in markets. Topics discussed include the impact of imitative and satisficing behavior by firms, outcomes when managers care about their position relative to peers, the benefits of employing managers whose objective diverges from profit-maximization (including managers who are overconfident or base pricing decisions on sunk costs), the impact of social preferences on the ability to collude, and the incentive for profit-maximizing firms to mimic irrational behavior. |
| Keywords: | Behavioral economics; bounded rationality; experimental economics; oligopoly; antitrust |
| JEL: | D21 C92 D43 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20356&r=com |
| By: | Lundberg, Johan (Department of Economics, Umeå University); Lundberg, Sofia (Department of Economics, Umeå University) |
| Abstract: | From economic theory, it is known that consumer loyalty schemes can have lock-in effects resulting in entry barriers and higher prices. This paper concerns consumer loyalty schemes where the main issue is to test the hypothesis that loyalty scheme membership affects the choice of food retailer. This choice is modeled as a random utility maximization problem estimated with maximum likelihood. Based on a data set covering 1,551 Swedish households, we find evidence supporting this hypothesis. Further, according to the results, store characteristics and geographical distance matter for the choice of retailer while household characteristics are not found to have a significant effect. |
| Keywords: | Bonus card; Conditional logit; Consumer choice; Distance; Food retailer; Loyalty scheme |
| JEL: | D12 L49 L66 L81 R10 |
| Date: | 2010–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0034&r=com |
| By: | King, David (Ministry of Economic Development, New Zealand) |
| Abstract: | This paper considers the case for criminalisation of hard-core cartel behaviour. Two frameworks are applied for considering the issue: retributive justice and deterrence (so as to minimise the social loss). The conclusion is reached that hard-core cartel behaviour has a serious moral dimension and that criminalisation of the offence is justifiable when a retributive approach is taken. It is also concluded that criminalisation is likely to be optimal from a deterrence perspective; this is due to the disutility created by stigma and loss of liberty and to the problems with alternatives such as corporate and individual fines, leniency programmes, and rewards to whistleblowers. Arguments against criminalisation relating to judicial processes and incentives on business are found to be unpersuasive. Achieving broad community support is critical, however. An addendum brings the paper up to date with developments in Australia. |
| Keywords: | Criminalisation; cartel behaviour |
| JEL: | D21 D43 K21 L13 L41 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nzmedo:2010_001&r=com |
| By: | Wilco Bolt; Heiko Schmiedel |
| Abstract: | This paper analyzes the welfare implications of creating a Single Euro Payments Area. We study the effects of increased network compatibility and payment scale economies on consumer and merchant card fees and its impact on card usage. In particular, we model competition among debit cards and between debit and credit cards. We show that competitive pressures dampen merchant fees and increase total card acceptance. The paper argues that there is room for multilateral interchange fee arrangements to achieve optimal consumer and merchant fees, taking safety, income uncertainty, default risk, merchant's pricing power, and the avoided cost of cash at the retailers side into account. Consumers and merchants are likely to benefit the most from the creation of SEPA when sufficient payment card competition alleviates potential monopolistic tendencies. Key Words: SEPA, card network competition, optimal pricing, economic welfare |
| Keywords: | SEPA; card network competition; optimal pricing; economic welfare |
| JEL: | L11 G21 D53 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:239&r=com |
| By: | John Preston |
| Abstract: | The aim of this paper is to review the emerging evidence on competition in the long distance passenger rail service. This draws on the three bodies of evidence. In section 2, we examine the ex-ante evidence from theoretical models based on Preston (2008a). In section 3, we examine the ex-post evidence on competition for the market, with particular emphasis on the East Coast Main Line franchise in Great-Britain, drawing in part on Preston (2008b). Likewise, in section 4, we consider recent evidence on open access services that are competing in the market in Great-Britain, drawing on Griffiths (2009). Finally, we shall draw some conclusions. |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:itfaaa:2009/23-en&r=com |