nep-com New Economics Papers
on All new papers
Issue of 2014‒09‒08
ten papers chosen by
Russell Pittman
United States Department of Justice

  1. On the economics of labels : how their introduction affects the functioning of markets and the welfare of all participants By Bonroy, O.; Constantatos, C.
  2. Pro-competitive Rationing in Multi-unit Auctions By Holmberg, Pär
  3. Precluding Collusion in the Vickrey Auction By Olga Gorelkina
  4. The Effects Of Competition Policy: Merger Approval, Entry Barrier Removal, Antitrust Enforcement Compared By Svetlana B. Avdasheva; Dina V. Tsytsulina
  5. Strengthening Competition in Poland By Balázs Égert; Antoine Goujard
  6. Enhancing Competition and the Business Environment in Hungary By Alvaro Pina
  7. Is Knowledge Power? Competition and Information in Agricultural Markets By Tara Mitchell
  8. Fidélisation et fidélité dans l’hôtellerie : une comparaison franco-slovaque By Lubica Hikkerova; Pierre-Charles Pupion; Jean-Michel Sahut
  9. Asymmetric and nonlinear passthrough of crude oil prices to gasoline and natural gas prices By Ahmed Atil; Amine Lahiani; Duc Khuong Nguyen
  10. Price convergence and integration in the Germany, France and Italy electricity markets By Lanouar Charfeddine; Rafik Jbir; Jihane Karboul

  1. By: Bonroy, O.; Constantatos, C.
    Abstract: Are labels good or bad for consumers and firms? The answers may seem straightforward since labels improve information, yet economic theory reveals situations where their introduction reduces the welfare of, at least, some market participants. This essay reviews the theoretical literature on labels in order to identify and explain the main reasons that may cause labeling to produce undesirable side-effects. In constrast to early reviews that either concentrate on narrow topics or treat the subject in a more or less informal way, we bring together the main results from all the currently important topics by presenting and discussing the assumptions and model-building underpinning them. The advantage of this approach is that it identifies the origin of the differences between results, thus allowing the synthesis of results that sometimes appear even to be contradictory. We focus on "quality labels" and exemine: i) the impact of labeling on market structure; ii) the side-effects of costly certification; iii) issues related to the label's trustworthiness; iv) the rationale for mandatory vs voluntary labeling; v) the level at which the label's standard is set according to the agency that selects it; vi) the political economy of labels, i.e. pro or anti-label lobbying, lobbying to affect the label's standard, and lobbying in favor or against the label's mandatory imposition. These topics cover a wide range of applications, including GMOs, Organic Produce, Geographic Indicators, Contolled Origin, Eco-Labels, etc. We conclude by identifying topics that need further research.
    JEL: L15 L5
    Date: 2014
  2. By: Holmberg, Pär (Research Institute of Industrial Economics (IFN))
    Abstract: In multi-unit auctions, such as auctions of commodities and securities, and financial exchanges, it is necessary to specify rationing rules to break ties between multiple marginal bids. The standard approach in the literature and in practice is to ration marginal bids proportionally. This paper shows how bidding can be made more competitive if the rationing rule instead gives increasing priority to bidders with a small volume of marginal bids at clearing prices closer to the reservation price. In comparison to standard rationing, such a rule can have almost the same effect on the competitiveness of bids as a doubling of the number of bidders.
    Keywords: C72; D44; D45
    JEL: C72 D44 D45
    Date: 2014–08–22
  3. By: Olga Gorelkina (Max Planck Institute for Research on Collective Goods)
    Abstract: This paper studies collusion in one-shot auctions, where a buyer can bribe his competitors into lowering their bids. We modify the single-unit Vickrey auction to incite deviations from the designated-winner scenario and thus undermine collusion. The construction of mechanism does not require the knowledge of colluders’ identities or distributions of valuations, in which sense it is entirely detail-free.
    Keywords: Bidder collusion, detail-free auctions, Vickrey auction
    JEL: D82 C72 D44
    Date: 2014–08
  4. By: Svetlana B. Avdasheva (National Research University Higher School); Dina V. Tsytsulina (National Research University Higher School)
    Abstract: There is little evidence on the comparative effectiveness of different competition policy measures, especially in transition economies. This research represents the effort to expand the financial event study method for the assessment of different competition policy measures: merger control, antitrust investigations on abuse of dominance, and changes of import tariffs in the Russian ferrous and non-ferrous metals markets from 2007 to 2012. According to the reaction of financial market, mergers between Russian metal producers restrict competition and reduce consumer welfare. Antitrust investigations have a positive effect on stock prices of buyers of metal and no significant impact on the market valuation of target of investigation. Changes in import tariffs have a positive significant impact on the company stock prices. The sign of each effect allows the comparison of different measures of competition policy.
    Keywords: competition policy, event studies, Russia, metal markets
    JEL: L40 G14
    Date: 2014
  5. By: Balázs Égert; Antoine Goujard
    Abstract: Poland’s productivity has grown strongly over the past decade, and efforts to reduce the regulatory burden have been significant. Despite impressive progress, product market regulation remains more burdensome than in most OECD countries, partly due to the importance of red tape and the level of state involvement in the economy. Further reduction in red tape and pursuing privatisation in competitive markets would increase competitive pressures and ensure neutrality, notably in public procurement processes. Economic rents in many sectors seem high, as stringent entry regulations, regulatory barriers and inefficient bankruptcy procedures induce significant resource misallocation. A welcome deregulation of professional services is ongoing, and the government plans to further ease firm registrations and reform bankruptcy procedures. The independence of the sector regulators in network industries and the powers of the Competition Authority can still be enhanced, as the reform efforts in these sectors remain patchy. The dominant positions of the incumbents and the failure of network sector regulators to introduce a level playing field in order to secure third-party access to the sectoral infrastructure and allow new entry in the competitive segments are another main issue. The advantages of being considered a farmer are also slowing the consolidation process in the agricultural sector. This Working Paper relates to the 2014 OECD Economic Survey of Poland ( Renforcer la concurrence en Pologne La productivité de la Pologne a fortement augmenté au cours des dix dernières années et les efforts déployés pour réduire le poids de la réglementation ont été significatifs. Malgré des progrès impressionnants, la réglementation des marchés de produits demeure plus pesante que dans la plupart des autres pays de l'OCDE, ce qui tient en partie à l'importance des formalités administratives et à l'ampleur de l'intervention de l'État dans l'économie. De nouvelles mesures de réduction des formalités administratives et de privatisation sur les marchés concurrentiels accentueraient les pressions de la concurrence et assureraient la neutralité concurrentielle, notamment dans le cadre de la passation des marchés publics. De nombreux secteurs semblent se caractériser par des rentes économiques élevées, dans la mesure où des règles d'entrée rigoureuses, des obstacles réglementaires et des procédures de faillite inefficaces faussent sensiblement l'affectation des ressources. Une déréglementation bienvenue des services professionnels est en cours, et le gouvernement projette d'assouplir encore les procédures d'immatriculation des entreprises ainsi que de réformer les procédures de faillite. L'indépendance des autorités de régulation sectorielles dans les industries de réseau et les prérogatives de l'Autorité de la concurrence peuvent être encore renforcées, étant donné que les efforts de réforme déployés à cet égard demeurent fragmentaires. Un autre problème essentiel tient aux positions dominantes occupées par les opérateurs historiques et au fait que les autorités de régulation sectorielles n'aient pas instauré des règles du jeu équitables, garantissant l'accès des tiers aux infrastructures sectorielles et permettant l'entrée de nouveaux acteurs sur les segments concurrentiels. Les avantages associés au statut d'agriculteur ralentissent par ailleurs le processus de regroupement des exploitations dans le secteur agricole. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Pologne 2014 ( ique-pologne.htm).
    Keywords: Poland, productivity, growth, competition, regulation, réglementation, croissance, Pologne, productivité, concurrence
    JEL: F43 L1 L3 L4 L5 O3 O43
    Date: 2014–06–04
  6. By: Alvaro Pina
    Abstract: Over the past decade, the growth potential of the Hungarian economy has declined substantially. Trend productivity has ceased to increase, and investment has fallen to historically low levels. To an important extent, the explanation lies in a business environment characterised by high administrative burdens, regulatory volatility, barriers to growth of small and medium-sized enterprises (SMEs) and entrepreneurship, and limited competition in major non-tradable sectors, problems which have sometimes become worse in recent years. Under these conditions, many SMEs find it hard to leave semi-informality and grow. Large multinational firms operating in manufacturing often have supplier networks weakly anchored in Hungary, while those in the non-tradable sectors sometimes face little competitive pressure; in both cases, positive spillovers to the domestic economy remain limited. Steps should be taken both at the economy-wide level and in specific sectors to increase investment and restore productivity growth. Such measures must include fostering greater regulatory stability, inter alia by reducing the flow of new regulation and improving its quality, not least in taxation. Investor confidence would benefit from promoting trust and transparency in public institutions. Apart from vigorous competition enforcement across the economy, it is essential to remove sector-specific obstacles to competition, such as barriers to entry of different types, lock-in effects and distortive regulated prices, in retail, professional services, energy, and telecommunications. This Working Paper relates to the 2014 OECD Economic Survey of Hungary ( Renforcer la concurrence et améliorer le climat des affaires en Hongrie Le potentiel de croissance de l’économie hongroise a considérablement diminué au cours de la dernière décennie. La productivité tendancielle ne s’améliore plus et l’investissement est tombé à des niveaux historiquement bas. La raison de cette situation tient dans une large mesure à un environnement économique général caractérisé par des charges administratives élevées, une réglementation instable, des obstacles à la croissance des petites et moyennes entreprises (PME) et à l’entrepreneuriat, et une concurrence limitée dans les principaux secteurs non exportateurs, problèmes qui se sont en partie aggravés ces dernières années. Dans ces conditions, il est difficile pour beaucoup de PME de sortir de la situation semi-informelle dans laquelle elles se trouvent et de se développer. Quant aux grandes entreprises multinationales, celles qui sont présentes dans le secteur manufacturier ont souvent des réseaux de fournisseurs faiblement implantés en Hongrie, tandis que les autres, dans les secteurs non exportateurs, sont largement à l’abri des pressions de la concurrence ; dans un cas comme dans l’autre, par conséquent, les retombées positives de leurs activités sur l’économie nationale demeurent limitées. Des mesures générales et sectorielles s’imposent pour accroître l’investissement et rétablir la croissance de la productivité. Il est indispensable en particulier de promouvoir une plus grande stabilité réglementaire, notamment en réduisant le nombre de réglementations nouvelles et en améliorant leur qualité, surtout dans le domaine de la fiscalité. Une transparence accrue et une plus grande confiance dans les institutions publiques seraient en outre propices à l’investissement. Il est essentiel non seulement de veiller à ce que le droit de la concurrence soit vigoureusement appliqué de façon générale, mais aussi d’éliminer tout ce qui fait obstacle à la concurrence au niveau sectoriel, notamment les différentes formes de barrières à l’entrée, les effets de verrouillage et les distorsions induites par les prix réglementés dans le commerce de détail, les services professionnels, l’énergie et les télécommunications. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Hongrie, 2014 ( ique-hongrie.htm).
    Keywords: SMEs, competition enforcement, regulated prices, special taxes, business environment, productivity, Hungary, administrative burdens, institutional quality, barriers to entry, PME, productivité, concurrence, qualité institutionnelle, prix réglementés, Hongrie, barrières à l'entrée, charges administratives
    JEL: H2 K2 L4 L8 L9
    Date: 2014–06–04
  7. By: Tara Mitchell (Institute for International Integration Studies, Trinity College Dublin)
    Abstract: This paper investigates an important channel through which access to market information could increase the prices that producers receive from middlemen. I develop a model of trade between a farmer and a middleman, allowing for different types of middlemen, and provide an empirical test of the theory from a framed field experiment carried out in India. The model predicts a non-monotonic relationship between the benefit of information and the cost of switching to a new middleman. I find that middlemen differ in their attitudes towards fairness and the benefit of information to the farmer varies with the cost of switching.
    Keywords: Development, Agriculture, Information, Middlemen
    JEL: O12 O13 Q13
    Date: 2014–08
  8. By: Lubica Hikkerova; Pierre-Charles Pupion; Jean-Michel Sahut
    Abstract: The development of competition in the tourism sector questioned the impact of loyalty programs hotels. Taking commitment and confidence as mediated variable we try to highlight factors loyalty. Conducting a comparative study in France and Slovakia we try to determine how and to what extent loyalty programs fail to act on customer loyalty.
    Keywords: loyalty, commitment, trust, loyalty program, hotel
    Date: 2014–08–29
  9. By: Ahmed Atil; Amine Lahiani; Duc Khuong Nguyen
    Abstract: In this article, we use the recently developed nonlinear autoregressive distributed lags (NARDL) model to examine the pass-through of crude oil prices into gasoline and natural gas prices. Our approach allows us to simultaneously test the short- and long-run nonlinearities through positive and negative partial sum decompositions of the predetermined explanatory variables. It also offers the possibility to quantify the respective responses of gasoline and natural gas prices to positive and negative oil price shocks from the asymmetric dynamic multipliers. The obtained results indicate that oil prices affect gasoline prices and natural gas prices in an asymmetric and nonlinear manner, but the price transmission mechanism is not the same. Important policy implications can be learned from the empirical findings.
    Keywords: oil price shocks, gasoline, natural gas, NARDL model, asymmetric pass-through.
    JEL: C58 Q40 Q47
    Date: 2014–08–29
  10. By: Lanouar Charfeddine; Rafik Jbir; Jihane Karboul
    Abstract: This paper examines empirically the electricity market integration process for Germany, France and Italy countries by investigating possible price convergence. Two empirical approaches have been considered to investigate this issue : cointegration analysis and state space model with time varying coefficients during the period 06 July 2009 to 15 April 2011. Using both methods, empirical results show that the Germany and France markets are highly integrated. For the Germany and Italy, and France and Italy pairs no price convergence has been detected when the cointegration analysis is employed and when using the time varying coefficients model, empiricl results show evidence for weak convergence.
    Keywords: Electricity market integration, Price convergence, cointegration, time varying coefficients model.
    Date: 2014–08–29

This nep-com issue is ©2014 by Russell Pittman. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.