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on Industrial Competition |
| By: | Luigi Siciliani (Department of Economics and Centre for Health Economics, University of York, Heslington); Odd Rune Straume (Universidade do Minho - NIPE); Roberto Cellini (Department of Economics, University of Catania) |
| Abstract: | We study incentives for quality provision in markets where providers are motivated (semi-altruistic); prices are regulated and firms are funded by a combination of block grants and unit prices; competition is based on quality, and demand adjusts sluggishly. Health or education are sectors in which the mentioned features are the rule. We show that the presence of motivated providers makes dynamic competition tougher, resulting in higher steady-state levels of quality in the closed-loop solutions than in the benchmark open-loop solution, if the price is sufficiently high. However, this result is reversed if the price is sufficiently low (and below unit costs). Sufficiently low prices also imply that a reduction in demand sluggishness will lead to lower steady-state quality. Prices below unit costs will nevertheless be welfare optimal if the providers are sufficiently motivated. |
| Keywords: | Quality competition; Differential games;Motivated agents |
| JEL: | C73 H42 I18 I21 L13 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:14/2011&r=com |
| By: | Huang, Kuo S. |
| Keywords: | Demand and Price Analysis, Research Methods/ Statistical Methods, |
| Date: | 2011–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea11:103258&r=com |
| By: | Igal Hendel; Aviv Nevo |
| Abstract: | We study intertemporal price discrimination when consumers can store for future consumption needs. To make the problem tractable we offer a simple model of demand dynamics, which we estimate using market level data. Optimal pricing involves temporary price reductions that enable sellers to discriminate between price sensitive consumers, who anticipate future needs, and less price-sensitive consumers. We empirically quantify the impact of intertemporal price discrimination on profits and welfare. We find that sales: (1) capture 25-30% of the profit gap between non-discriminatory and third degree price discrimination profits, and (2) increase total welfare. |
| JEL: | D43 E3 E30 L1 L13 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16988&r=com |
| By: | Armstrong, Mark; Zhou, Jidong |
| Abstract: | We investigate three ways in which firms can become "prominent" and thereby influence the order in which consumers consider options. First, firms can affect an intermediary's sales efforts by means of commission payments. When firms pay commission to a salesman, the salesman promotes the product with the highest commission, and steers ignorant consumers towards the more expensive product. Second, sellers can advertise prices on a price comparison website, so that consumers investigate the suitability of products in order of increasing price. In such a market, equilibrium prices are lower when search costs are higher since a firm's benefit from being investigated first increases with search costs. Finally, consumers might first consider their existing supplier when they purchase a new product, which suggests a relatively benign rationale for the prevalence of cross-selling in markets such as retail banking. |
| Keywords: | Consumer search; e-commerce; price comparison websites; cross-selling; mis-selling; commission sales. |
| JEL: | M31 L13 D83 |
| Date: | 2011–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30529&r=com |
| By: | Schimke, Antje; Brenner, Thomas |
| Abstract: | This paper investigates whether the economic factors that are related to firm growth in the literature also determine the development path of firms. This means that we test which economic factors possess the ability to remain effective for a longer period of time. We examine three variables: firm size, innovation effort and export share. To this end, we use panel-data on 178 German manufacturing firms over the period from 1992 to 2007. We find that the determinants of permanent growth path are not the same as the determinants of firm growth at one point in time. -- |
| Keywords: | firm growth,firm growth paths,firm size,export,innovation effort |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:kitwps:21&r=com |
| By: | Noriaki Matsushima; Koki Arai; Ikuo Ishibashi; Fumio Sensui |
| Abstract: | Using a simple downstream duopoly model with vertical relations and downstream R&D, we investigate the effect of non-assertion of patents (NAP) provisions. A monopoly upstream firm decides whether to employ NAP provisions. If it does so, it freely incorporates the R&D outcomes into its inputs. Incorporation improves the efficiency of the downstream firms' production. We have interpreted the introduction of NAP provisions as a source of technology spillover. Using the technologies of two downstream firms is optimal for the upstream firm if and only if the degree of technology spillover is small. In addition, if the ex ante cost difference between the downstream firms is significant, such technology spillovers erode both the profit of the efficient downstream firm and social welfare. We interpret our result in the context of an actual antitrust case related to this model. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0807&r=com |
| By: | Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Woerter (KOF Swiss Economic Institute, ETH Zurich, Switzerland) |
| Abstract: | Aim of this study is to combine micro-aspects of firm behaviour with macro-aspects of business development and identify market conditions (for example, price competition) and firm characteristics (for example, type of R&D partners) that enable a firm to have a procyclical, anti-cyclical or non-systematic R&D investment behaviour. New elements of our analysis are: (a) the identification in our data of the above three main types of R&D behaviour with respect to the fluctuation of overall economic activity as measured by a standard composite indicator of the business conditions at industry level and (b) the investigation of a series of hypotheses as to innovation-relevant firm characteristics that underline the three different behaviour categories. The empirical results confirm to large extent our hypotheses and allow us to make profiles of the three types of R&D behaviour. |
| Keywords: | R&D, anti-cyclical behaviour, pro-cyclical behaviour |
| JEL: | O3 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:11-277&r=com |
| By: | Iraj Hashi; Nebojsa Stojcic; Shqiponja Telhaj |
| Abstract: | This paper aims to explore the factors influencing the ability of firms to compete in globalised markets. The Austrian and evolutionary economics and the endogeneous growth literature highlight the role of innovation activities in enabling firms to compete more effectively - and expand their market share. On the basis of these theories, and using a large panel of firms from several Central and East European Countries (CEECs), this paper attempts to identify the factors and forces which determine the ability of firms to compete in conditions of transition. The competitiveness of firms, measured by their market share, is postulated to depend on indicators of firms' innovation behaviour such as improvements in cost-efficiency, labour productivity and investment in new machinery and equipment as well as characteristics of firms and their environment such as location, experience, technological intensity of their industries and the intensity of competition. To control for the dynamic nature of competitiveness and the potential endogeneity of its determinants, and to distinguish between short and long run effects of firm behaviour, a dynamic panel methodology is employed. The results indicate that the competitiveness of firms in transition economies is enhanced with improvements in their cost efficiency, productivity of labour, investment and their previous business experience while stronger competition has a negative impact on it. |
| Keywords: | competitiveness, restructuring, transition economies, market share, dynamic panel analysis |
| JEL: | O31 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnstan:0424&r=com |
| By: | Edmond Baranes; Jean-Christophe Poudou |
| Abstract: | This paper studies a model of the Internet broadband market as a platform in order to show how di¤erent pricing schemes from the so-called "net neutrality " can increase economic e¢ ciency by allowing more investment of access providers and enhancing consumers surplus and social welfare. We show that departing from the "net neutrality", where at rates are used, introducing termination fees can increase incentives to invest for the ISP and enhance social surplus. Keywords : Network neutrality, Flat rates, Termination fees. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:11-09&r=com |
| By: | Roeger, Edward; Leibtag, Ephraim |
| Abstract: | The extent to which cost changes pass through a vertically organized production process depends on the value added by each producer in the chain as well as a number of other organizational and marketing factors at each stage of production. Using 36 years of monthly Bureau of Labor Statistics price indices data (1972-2008), we model pass-through behavior for beef and bread, two retail food items with different levels of processing. Both the farmto-wholesale and wholesale-to-retail price responses are modeled to allow for the presence of structural breaks in the underlying long-term relationships between price series. Broad differences in price behavior are found not only between food categories (retail beef prices respond more to farm-price changes than do retail bread prices) but also across stages in the supply chain. While farm-to-wholesale relationships generally appear to be symmetric, retail prices have a more complicated response behavior. For both bread and beef, the passthrough from wholesale to retail is weaker than that from farm to wholesale. |
| Keywords: | pass through, wholesale, retail, farm prices, beef, bread, supply chain, price transmission, price response, Demand and Price Analysis, Livestock Production/Industries, |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersrr:102757&r=com |