|
on Industrial Competition |
| By: | Çakır, Metin; Nolan, James |
| Abstract: | The use of complementary inputs is a key characteristic of the production process in many food related industries. In this article we explore how market power in a complementary input sector compares to the exertion of market power in a downstream sector for both producer and consumer welfare, as well as for policy. We develop a model of a homogenous product market that encompasses both bilateral and complementary relationships. The model focuses on the primary input sector and allows for exertion of market power by both complementary input suppliers and downstream firms. We use comparative statics analyses and numerical simulations to study the economic equilibrium under different scenarios of market power exertion. With respect to the welfare of primary input suppliers, our main finding is that market power exercised by the supplier of a complementary input generates greater negative effects than the same level of market power exercised by the downstream firms. We provide a discussion of the implications of the results for policy in the context of current problems within the Canadian grain handling and transportation system. |
| Keywords: | Supply Chain Competitiveness, Complementary Sectors, Market Power, Grain Handling and Transportation System, Production Economics, D43, L13, Q13, |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:umaesp:179168&r=com |
| By: | Andreea Cosnita (EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense); Jean-Philippe Tropeano (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This paper deals with the optimal enforcement of competition law between merger and anti-cartel policies. We examine the interaction between these two branches of antitrust, given the budget constraint of the public agency, and taking into account the ensuing incentives for firms in terms of choice between cartels and mergers. To the extent that a tougher anti-cartel action triggers more mergers and vice-versa, we show that the two antitrust branches are complementary. However, if the merger's coordinated effect is taken into account, then for a sufficiently large such effect the agency may optimally have to refrain from controlling mergers and instead spend all resources on fighting cartels. |
| Date: | 2013–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseose:hal-00977619&r=com |
| By: | Marc Blatter; Winand Emons; Silvio Sticher |
| Abstract: | An antitrust authority deters collusion using fines and a leniency program. Unlike in most of the earlier literature, our firms have imperfect cumulative evidence of the collusion. That is, cartel conviction is not automatic if one firm reports: reporting makes conviction only more likely, the more so, the more firms report. Furthermore, the evidence is distributed asymmetrically among firms. Asymmetry of the evidence can increase the cost of deterrence if the high-evidence firm chooses to remain silent. Minimum-evidence standards may counteract this effect. Under a marker system only one firm reports; this may increase the cost of deterrence. |
| Keywords: | antitrust; cartels; deterrence; leniency; evidence |
| JEL: | D43 K21 K42 L40 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:ube:dpvwib:dp1405&r=com |
| By: | Patrice Bougette (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227); Marc Deschamps (BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II); Frédéric Marty (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)) |
| Abstract: | In this article,we use a history of economic thought perspective to analyze the process by which the Chicago School of Antitrust emerged in the 1950s and became dominant in the US. We show the extent to which economic objectives and theoretical views shaped antitrust laws in their inception. After establishing the minor influence of economics in the promulgation of US competition laws, we then highlight US economists' very cautious views about antitrust until the Second New Deal. We analyze the process by which the Chicago School developed a general and coherent framework for competition policy. We rely mainly on the seminal and programmatic work of Director and Levi (1956) and trace how this theoretical paradigm was made collective, i.e. the "economization" process took place in US antitrust. Finally, we discuss the implications, if not the possible pitfalls, of such a conversion to economics - led competition law enforcement. |
| Keywords: | Antitrust, Chicago School, Consumer Welfare, Monopolization, Efficiency |
| Date: | 2014–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01027432&r=com |
| By: | Laure Jaunaux; Marc Lebourges |
| Abstract: | This paper discusses the relevant cost standard for the economic replicability test for Next-Generation Access (NGA) networks, described in the Recommendation on Costing and Non-discrimination adopted by the European Commission. According to the Recommendation itself, in order to reconcile investment and competition, wholesale prices should have nonlinear characteristics and be only partly variable with the number of accesses. We demonstrate that a cost standard for the economic replicability test that implies fully fixed and variable cost recovery for the access seeker, including the total wholesale price, would be incompatible with the economics of NGA networks and that such a test would deter NGA investment. Therefore the cost standard for the economic replicability test should include only the variable part of the wholesale prices. However, we underline that during a transition phase, until competitors have secured access to NGA infrastructure, a temporary second test called the “competition migration test” should be added to ensure incumbent NGA retail prices do not foreclose copper-based efficient entrants. The tests we propose surpass the limits of the “ladder of investment” theory by including the “business migration effect” developed by Bourreau et al. (2012). |
| Keywords: | Margin squeeze test, Regulation, Next-generation access networks |
| JEL: | L51 L96 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2014/75&r=com |
| By: | Florian LEON |
| Abstract: | Many studies have attempted to investigate the determinants and implications of competition in the banking industry. The literature on the measurement of competition can be divided between the structural and non-structural approaches. The structural approach infers the degree of competition from the structure of the market. The non-structural approach, based on the New Empirical Industrial Organization, assesses the degree of competition directly by observing behavior of firms in the market. This paper reviews the most frequently-used structural and non structural measures of competition in banking. It highlights their strengths and weaknesses, especially for studies based on a limited number of observations. |
| Keywords: | Boone indicator, Panzar-Rosse model, Conjectural variation model, Lerner index, HHI, Bank, competition |
| JEL: | O55 L13 L11 G21 D4 |
| URL: | http://d.repec.org/n?u=RePEc:cdi:wpaper:1577&r=com |
| By: | Johannes Stroebel (New York University) |
| Abstract: | Card Accountability Responsibility and Disclosure (CARD) Act in the United States. Using a unique panel data set covering over 150 million credit card accounts, we find that regulatory limits on credit card fees reduced overall borrowing costs to consumers by an annualized 2.8% of average daily balances, with a decline of more than 10% for consumers with the lowest FICO scores. Consistent with a model of low fee salience and limited market competition, we find no evidence of an offsetting increase in interest charges or a reduction in access to credit. Taken together, we estimate that the CARD Act fee reductions have saved U.S. consumers $20.8 billion per year. We also analyze the CARD Act requirement to disclose the interest savings from paying off balances in 36 months rather than only making minimum payments. We find that this “nudge†increased the number of account holders making the 36-month payment value by 0.5 percentage points, with a similarly sized decrease in the number of account holders paying less than this amount. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed014:126&r=com |
| By: | C.A.E. Goodhart |
| Abstract: | The Bank of England’s ‘consultative document’ on Competition and Credit Control was published on May 14th, 1971. It was a landmark occasion, representing a decisive break with the prior system of maintaining direct controls over the, main components of the, UK banking system; the intention was now to achieve the monetary authorities’ objectives of policy via the operation of market mechanisms, notably adjustments in interest rates and open market operations. Although the ‘credit control’ aspect was, over the next few years, notably less successful than the encouragement of competition amongst the banks, (where the London Clearing Banks previously had maintained a restrictive cartel with the support of the authorities), nevertheless the direction of travel towards a more liberal, market based system, remained, despite a partial reversion towards a partial direct control system in the guise of the ‘corset’, introduced at the end of 1973, and finally laid to rest in June 1980. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp229&r=com |
| By: | Yannai A. Gonczarowski; Moshe Tennenholtz |
| Abstract: | Can noncooperative behaviour of merchants lead to a market allocation that prima facie seems anticompetitive? We introduce a model in which service providers aim at optimizing the number of customers who use their services, while customers aim at choosing service providers with minimal customer load. Each service provider chooses between a variety of levels of service, and as long as it does not lose customers, aims at minimizing its level of service; the minimum level of service required to satisfy a customer varies across customers. We consider a two-stage competition, in the first stage of which the service providers select their levels of service, and in the second stage --- customers choose between the service providers. (We show via a novel construction that for any choice of strategies for the service providers, a unique distribution of the customers' mass between them emerges from all Nash equilibria among the customers, showing the incentives of service providers in the two-stage game to be well defined.) In the two-stage game, we show that the competition among the service providers possesses a unique Nash equilibrium, which is moreover super strong; we also show that all sequential better-response dynamics of service providers reach this equilibrium, with best-response dynamics doing so surprisingly fast. If service providers choose their levels of service according to this equilibrium, then the unique Nash equilibrium among customers in the second phase is essentially an allocation (i.e. split) of the market between the service providers, based on the customers' minimum acceptable quality of service; moreover, each service provider's chosen level of service is the lowest acceptable by the entirety of the market share allocated to it. Our results show that this seemingly-cooperative allocation of the market arises as the unique and highly-robust outcome of noncooperative (i.e. free from any form of collusion), even myopic, service-provider behaviour. The results of this paper are applicable to a variety of scenarios, such as the competition among ISPs, and shed a surprising light on aspects of location theory, such as the formation and structure of a city's central business district. |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp663&r=com |