nep-com New Economics Papers
on Industrial Competition
Issue of 2014‒12‒19
twenty-six papers chosen by
Russell Pittman
United States Department of Justice

  1. Raising rivals' costs through buyer power By Dertwinkel-Kalt, Markus; Haucap, Justus; Wey, Christian
  2. Investments in Quality, Collective Reputation and Information Acquisition By Fulvio Fontini; Katrin Millock; Michele Moretto
  3. Credence goods, experts and risk aversion By Olivier Bonroy; Stéphane Lemarié; Jean-Philippe Tropeano
  4. Number of Sellers and Quantal Response Equilibrium Prices By Ralph-C. Bayer
  5. Markovian Equilibrium in a Model of Investment Under Imperfect Competition By Thomas Fagart
  6. Explaining Price Dispersion and Dynamics in Laboratory Bertrand Markets By Ralph-C. Bayer
  7. Non-Cooperative Asymptotic Oligopoly in Economies with Infinitely Many Commodities By Sayantan Ghosal; Simone Tonin
  8. A Partial Characterization of the Core in Bertrand Oligopoly TU-games with Transferable Technologies By Aymeric Lardon
  9. Bargaining in vertical relationships and suppliers' R&D profitability By Köhler, Christian
  12. The Effects of Leniency on Cartel Pricing By Harold Houba; Evgenia Motchenkova; Quan Wen
  13. Determinants of the duration of European appellate court proceedings in cartel cases By Smuda, Florian; Bougette, Patrice; Hüschelrath, Kai
  14. Estimating demand for quadruple-play tariffs: The impact on consumer surplus By Grzybowski, Lukasz; Liang, Julienne
  15. How Google and others upset competition analysis: disruptive innovation and European competition law By Graef, Inge; Wahyuningtyas, Sih Yuliana; Valcke, Peggy
  16. Do LTE service customers have different customer loyalty determinants? By Jung, Wonsuk; Kwon, Youngsun
  17. Fixed broadband deployment in the Netherlands: Success and failure in policy and technology or the paradox of successful competition By van Eijk, Nico; Doorenspleet, Henk
  18. The impact of Broadband quality standards on Internet services market structure in Colombia By Hidalgo, Julian; Oviedo, Juan D.
  19. Mergers and Market Power in the US Nitrogen Fertilizer Industry By Humber, Jacob
  20. Incentives for Non-Price Competition in the California WIC Program By McLaughlin, Patrick W.
  21. Pricing under Uncertainty in Agricultural Grain Markets and the Objectives of Cooperatives: A Mixed Oligopoly Analysis By Li, Ziran; Hang, Qian
  22. The behavioural economics of competitive balance: Implications for league policy and championship management By Budzinski, Oliver; Pawlowski, Tim
  23. Clash of TV platforms: How broadcasters and distributors build platform leadership By Evens, Tom
  24. Beer Snobs do Exist: Estimation of Beer Demand by Type By Toro-González, Daniel; McCluskey, Jill J.; Mittelhammer, Ron C.
  25. Learning in Credence Good Markets: An Example of Vitamins By Demko, Iryna; Jaenicke, Edward
  26. Economic effects of air transport market liberalization in Africa By Abate, Megersa

  1. By: Dertwinkel-Kalt, Markus; Haucap, Justus; Wey, Christian
    Abstract: We re-examine the view that a ban on price discrimination in input markets is particularly desirable in the presence of buyer power. This argument crucially depends on an inverse relationship between downstream firms' profits and the uniform input price. Assuming different input efficiencies among downstream firms, we derive a necessary and sufficient condition such that a higher input price benefits a subset of relatively efficient downstream firms. In such instances, consumers may be better off if discriminatory pricing is feasible.
    Keywords: Price discrimination,Buyer Power,Raising Rivals,Costs
    JEL: L13 D43 K31
    Date: 2014
  2. By: Fulvio Fontini (Department of Economics and Management - Università degli Studi di Padova - University of Padua); Katrin Millock (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); Michele Moretto (Department of Economics and Management - Università degli Studi di Padova - University of Padua)
    Abstract: In many cases consumers cannot observe firms' investment in quality or safety, but have only beliefs on the average quality of the industry. In addition, the outcome of the collective investment game of the firms may be stochastic since firms cannot control perfectly the technology or external factors that may affect production. In such situations, when only consumers' subjective perceptions of the industry level of quality matters, the regulator may make information available to firms or subsidize their information acquisition. Under what conditions is it desirable to make information available? We show how firms' overall level of investment in quality depends upon the parameters of the quality accumulation process, the cost of investment and the number of firms in the industry. We also show the potentially negative effects on the total level of quality from providing information on consumers' actual valuation.
    Keywords: Collective reputation; option value; quality
    Date: 2013–05
  3. By: Olivier Bonroy (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Institut national de la recherche agronomique (INRA) : UMR1215 - Université Grenoble Alpes - Grenoble II); Stéphane Lemarié (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Institut national de la recherche agronomique (INRA) : UMR1215 - Université Grenoble Alpes - Grenoble II); 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: The existing literature on credence goods and expert services has overlooked the importance of risk aversion. In this paper we extend a standard expert model of credence goods with verifiable service quality by considering risk-averse consumers. Our results show that the presence of risk aversion reduces the expert's incentive to invest in diagnosis and may thus lead to consumers' mistreatment.
    Keywords: Credence goods; Expert services; Risk aversion
    Date: 2013–09
  4. By: Ralph-C. Bayer (School of Economics, University of Adelaide)
    Abstract: This paper studies the effects of increasing the number of sellers on Quantal Response Equilibrium (QRE) prices in homogeneous product Bertrand oligopoly markets. We show that the two most commonly used choice functions (power and logistic) lead to qualitatively different comparative-static predictions with respect to the relationship between number of firms and prices.
    Keywords: Bertrand Oligopoly, Quantal Response Equilibrium, Comparative Statics
    JEL: C73 D83 L13
    Date: 2013–10
  5. By: Thomas Fagart (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 develops and analyzes a dynamic model of partially irreversible investment under cournot competition and stochastic evolution of demand. In this framework, I characterize the markov perfect equilibrium in which player's strategies are continuous in the state variable. There exists a zone in the space of capacities, named the no-move zone, such that if firms capacity belongs to this area, no firm invest nor disinvest at the equilibrium. Thereby, initial asymmetry between firms capacity can be preserved. If firms are outside this area, they invest in order to reached the no-move zone. The equilibrium as an efficiency property: the point of this area which is reached by the firms minimizes the investment cost of the all industry.
    Keywords: Capacity investment and disinvestment; dynamic stochastic games; Markov perfect equilibrium; real option games
    Date: 2014–05
  6. By: Ralph-C. Bayer (School of Economics, University of Adelaide)
    Abstract: This paper develops a quantal-response adaptive learning model which combines sellers’ bounded rationality with adaptive belief learning in order to explain price dispersion and dynamics in laboratory Bertrand markets with perfect information. In the model, sellers hold beliefs about their opponents’ strategies and play quantal best responses to these beliefs. After each period, sellers update their beliefs based on the information learned from previous play. Maximum likelihood estimation suggests that when sellers have full past price information, the learning model explains price dispersion within periods and the dynamics across periods. The fit is particularly good if one allows for sellers being risk averse. In contrast, Quantal Response Equilibrium does not organize the data well.
    Keywords: Price dispersion, Adaptive Learning, Bounded rationality, Quantal Response Equilibrium.
    JEL: C73 C91 D83 L13
    Date: 2013–10
  7. By: Sayantan Ghosal; Simone Tonin
    Abstract: In this paper, we extend the non-cooperative analysis of oligopoly to exchange economies with innitely many commodities by using strategic market games. This setting can be in- terpreted as a model of oligopoly with dierentiated commodities by using the Hotelling line. We prove the existence of an \active" Cournot-Nash equilibrium and show that, when traders are replicated, the price vector and the allocation converge to the Wal- ras equilibrium. We examine how the notion of oligopoly extends to our setting with a coutable innity of commodities by distinguishing between asymptotic oligopolists and asymptotic price-takers. We illustrate these notions via a number of examples.
    JEL: C72 D43 D50
    Date: 2014–09
  8. By: Aymeric Lardon (University of Nice Sophia Antipolis, France; GREDEG CNRS)
    Abstract: In this article we study Bertrand oligopoly TU-games with transferable technologies under the Alpha and Beta-approaches (Aumann 1959). Although the convexity property does not always hold, we show that it is satisfied when firms' marginal costs are not too heterogeneous. Furthermore, we prove that the core of any game can be partially characterized by associating a Bertrand oligopoly TU-game derived from the most efficient technology. Such a game turns to be an efficient convex cover (Rulnick and Shapley 1997) of the original one. This result implies that the core is non-empty and contains a subset of payoff vectors with a symmetric geometric structure easy to compute.
    Keywords: Bertrand oligopoly TU-games, Transferable technologies, Core, Convexity property
    JEL: C71 D43
    Date: 2014–11
  9. By: Köhler, Christian
    Abstract: This paper explores the effect of bargaining in vertical relationships on the profitability of suppliers' R&D investments. Studies on the relationship between R&D and firm profitability mostly concentrate on the impact of horizontal market structure and neglect vertical interac-tions. Building on theoretical and empirical evidence about the effects of bargaining in vertical relationships, the crucial determinants of a supplier's bargaining power are identified as the market position and the degree of concentration in the buyer portfolio. With respect to R&D profitability the latter is expected to diminish returns from R&D, while the former is expected to increase it. The hypotheses are tested using a sample of 472 German manufactur-ing firms. The empirical findings support all hypotheses and highlight the importance of tak-ing a supplier's bargaining power into account when estimating R&D profitability. The esti-mated effects are considerable: for an average R&D performing supplier an increase of R&D intensity in 2010 by a percentage point would reduce profits by about 14 % in 2012 given the supplier depends completely on the largest three buyers and does hold an average market share. Contrastingly, a monopolist R&D performing supplier with average buyer concentra-tion would experience a profit increase by 10 % in 2012.
    Keywords: Bargaining,Firm performance,Vertical relationships
    JEL: D22 L22 O32
    Date: 2014
  10. By: Paul O'Sullivan (Economics, National University of Ireland, Maynooth);
    Abstract: This paper analyses the desirability of RJV formation when firms may choose their R&D investment before or after any demand uncertainty is resolved. If a R&D leader accommodates a follower, multiple Nash equilibria are possible under both R&D competition and RJV formation. If a R&D leader prevents activity by the follower, this is only expected to be profitable at very low spillover and unit R&D cost levels. Whether R&D leadership when competing in R&D is expected to be more profitable than waiting and forming a RJV will depend on unit R&D costs and spillovers. Maximising expected welfare may require an active role for government.
    JEL: D21 D81 L13
    Date: 2014
  11. By: David Encaoua (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); Thierry Madies (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie, Université de Fribourg - University of Fribourg)
    Abstract: The contemporary tensions between patents and competition no longer reside in the traditional trade-off between the exclusionary right given to an inventor to encourage innovation, and the welfare loss induced by the market power associated to this right. They rather result from three important distortions of the patent system that create conflicts between patents and competition on the product market, the technology market, and the innovation market. The first distortion is related to the existence of dubious or weak patents: too many patents are granted to applications of bad quality according to the patentability criteria. This increases the uncertainty attached to patents, reduces the credibility of the system and calls into question the justification of the patent as a protective mechanism. Second, the configuration of a patent, originally designed in the context of an isolated innovation, is not quite adapted to the context of sequential innovations. While sequential patents requires fine limitations between successive generations of innovations, the strengthening of intellectual property rights, including the extension of the patentable subject matters, opened the door to opportunistic behavior and adversely affected the technological exchanges. Third, the emergence of complex technologies, in which the use of a large number of fragmented patents is necessary to produce a new product, implies the necessity to coordinate the behavior of numerous patent holders. Some entrants in these complex technologies are struck by the imperfect coordinated behavior of these patent holders as illustrated in different settings such as the pooling of complementary patents and the licensing of essential patents by the Standard Setting Organisation members. Very often, patents serve to create ambushes or to capture unjustified rents through excessive license fees, which in turn create barriers to entry for new competitors in the innovation market. Two important consequences of these distortions are derived. First, the resolution of the conflicts cannot rely exclusively on the application of the antitrust law. Second, the distortions lead to a very expensive judicial implementation of the patent system.
    Keywords: uncertain patents, product market, technology market, innovation market, litigation, licensing cost,fragmentation, patent pools, competition policy
    Date: 2014
  12. By: Harold Houba (VU University Amsterdam); Evgenia Motchenkova (VU University Amsterdam); Quan Wen (University of Chicago, United States)
    Abstract: We analyze how leniency affects cartel pricing in an infinitely-repeated oligopoly model where the fine rates are linked to illegal gains and detection probabilities depend on the degree of collusion. A novel aspect of this study is that we focus on the worst possible outcome. We investigate the maximal cartel price, the largest price for which the conditions for sustainability hold. We analyze how the maximal cartel price supported by different cartel strategies adjusts in response to the introduction of (ex-ante and ex-post) leniency programs. We disentangle the effects of traditional antitrust enforcement, leniency, and cartel strategies on the maximal cartel price. Ex-ante leniency cannot reduce the maximal cartel price below the price under antitrust without leniency. On the other hand, for ex-post leniency, improvement is possible and granting full immunity to single-reporting firms achieves the largest reduction in the maximal cartel price. To reduce adverse effects under both leniency programs, fine reductions to multiple-reporting firms should be moderate or absent. Finally, ex-post leniency should provide less generous fine reductions to multiple-reporting firms, which is supported by the current practice in the US and the EU.
    Keywords: Cartel, Antitrust, Competition Policy, Leniency Program, Self-reporting, Repeated Game
    JEL: L41 K21 C72
    Date: 2014–11–10
  13. By: Smuda, Florian; Bougette, Patrice; Hüschelrath, Kai
    Abstract: The duration of appellate court proceedings is an important determinant of the efficiency of a court system. We use data of 234 firm groups that participated in 63 cartels convicted by the European Commission between 2000 and 2012 to investigate the determinants of the duration of the subsequent one- or two-stage appeals process. We find that while the speed of the firststage appellate court decision depends on the court's appeals-related workload, the complexity of the case, the degree of cooperation by the firms involved and the clarity of the applied rules and regulations, the second-stage appellate court proceedings appear to be largely unaffected by those drivers. We take our empirical results to derive conclusions for both firms that plan to file an appeal as well as public policy makers.
    Keywords: Law and economics,antitrust policy,cartels,appeals,European Union
    JEL: K21 K41 K42 L41
    Date: 2014
  14. By: Grzybowski, Lukasz; Liang, Julienne
    Abstract: This paper estimates demand for quadruple play mobile tariffs using a database of subscribers to a single mobile operator from a single town in a European country which has full coverage with both ADSL and FTTH broadband technologies. Based on the demand estimation we find that consumer valuation of FTTH broadband in 2013 increased over time while ADSL lost on attractiveness relative to FTTH but also in absolute terms, which suggests that consumers increasingly care about the speed of connection offered by FTTH. The consumer surplus increased substantially due to the introduction of quadruple play tariffs, and especially with the introduction of FTTH, and ongoing transition of consumers from less valued quadruple play tariffs with ADSL to more valued with FTTH. We also find that for quadruple play subscribers mobile data is complementary to fixed broadband access, which suggests that these consumers use Internet access via mobile handsets to sample online content but they complete their online activity using fixed Internet access at home. On the other hand, mobile voice usage is a substitute to fixed broadband access and consumers reduce their voice consumption once they get broadband connection. We also find that there are substantial switching costs between tariffs, which other things being equal greatly decrease consumer surplus.
    Keywords: Quadruple play,FTTH,ADSL,Mobile data,Switching costs
    JEL: L13 L43 L96
    Date: 2014
  15. By: Graef, Inge; Wahyuningtyas, Sih Yuliana; Valcke, Peggy
    Abstract: Because of the reliance on market analysis, current competition law may not be sufficiently fit for taking account of disruptive innovation which leads to the introduction of new products or services overthrowing existing markets. In the US, innovation has been given a more prominent place in competition analysis by way of recognizing the existence of 'innovation markets' and 'innovation competition' in, respectively, the 1995 Antitrust Guidelines for the Licensing of Intellectual Property and the 2010 US Merger Guidelines. Although a similar notion of 'competition in innovation' has been introduced in the EU in policy documents in the area of Article 101 TFEU, in merger review and abuse of dominance cases such a concept has not been applied yet. By giving insight into the way in which the different pillars of EU competition law deal with disruptive innovation, this paper aims to contribute to the debate on how competition policy could be more conducive towards innovation in dynamic industries.
    Keywords: Disruptive innovation,dynamic competition,restrictive agreements,merger review,abuse of dominance
    Date: 2014
  16. By: Jung, Wonsuk; Kwon, Youngsun
    Abstract: This study explores the determinants of customer loyalty in the Korean mobile telecommunications market with the emphasis on customer satisfaction and switching costs as major predictors of customer loyalty. South Korea has now become one of the world's most leading mobile service markets with the launch of its advanced LTE services; the LTE service subscription rate in Korea has exceeded 50% as of November 2013. This raises a question as to whether LTE service subscribers are different from 3G service subscribers. In this rapidly changing environment of mobile service markets, this study examines the validity of the traditional determinants of customer satisfaction in data-service oriented mobile markets, analyzes the effect of customer satisfaction and switching costs on customer loyalty, and assesses the difference between 3G and LTE subscribers with respect to their determinants of customer loyalty. The results showed that there are significant differences between 3G and LTE subscribers while traditional factors such as call quality, data quality, customer support, and price perception are still significant determinants of customer satisfaction.
    Keywords: LTE,3G,Customer Satisfaction,Switching Cost,Loyalty,Smartphone
    Date: 2014
  17. By: van Eijk, Nico; Doorenspleet, Henk
    Abstract: This paper describes the underlying policy and technological/market framework that created this situation of two competing local networks. We will explain why and how the present strong fixed infrastructure competition could develop by using an integrated multi-disciplinary approach. On the one hand technological developments have changed the market situation of two non-competing networks (POTS versus CATV, both servicing unique functions) into competing networks (by using technology innovation). Historical policy decisions created the basis for this (both networks were built before issues such as government subsidies/ownership and unauthorized state aid started to become relevant). However, combined with the European/national general policy choices to liberalize and privatise the telecommunications market (as formulated and put into place in the early nineties, strong incentives were created for market driven competition (instead of detailed regulatory intervention being the main driver). The paper shows that the impact of both technological/policy created market convergence and the creation of a 'triple play'-product have resulted in a disruptive situation where vacancy rates in both networks are increasing. We estimate that more than 40% of the local loops is no longer active.
    Date: 2014
  18. By: Hidalgo, Julian; Oviedo, Juan D.
    Abstract: This paper develops a structural model which allows estimating the impact of regulatory decisions looking for the setting of download-speed standards on market structure and performance. We characterize a setting under which quality standards improve both service quality and availability. As to quality, we evaluate the impact of quality standards on the performance of local demand from a detailed database of broadband internet subscribers, discriminated by the main attributes of an internet subscription contract as location, supplier, monthly-fee, download- and upload-speed features. From these results, we are able to identify the effect of quality regulation on the behavior of internet providers in a differentiated product market approach. As a consequence, we are able to assert that the response of internet service providers to quality regulation is a more intense product differentiation that contributes to demand expansion and therefore to improve broadband penetration indicators.
    Keywords: Regulation,Telecommunication,Information Services,Internet Economics
    JEL: L51 L96 L86
    Date: 2014
  19. By: Humber, Jacob
    Abstract: Nitrogenous fertilizer prices spiked in early 2010 despite the fact that natural gas prices, nitrogen fertilizer’s main production cost, have dramatically fallen during this time period. We hypothesize that a merger which occurred between CF and Terra industries in 2010 exacerbated market power in an already concentrated industry, causing nitrogen fertilizer prices to increase. To test this hypothesis, we propose a structural vector autoregressive (SVAR) model. By including corn futures, natural gas and nitrogen fertilizer prices within an SVAR model we control for demand and supply shocks which affect the nitrogen fertilizer market. The remaining variation in fertilizer prices at 2010 not explained by the model is attributed to the merger. If we set this residual to zero, we can then use the SVAR model to forecast a counterfactual fertilizer price series which represents the price of nitrogen fertilizer in the absencebsence of the merger. Applying this technique to the data suggests that the merger raised prices by roughly 75%. This approach presents a middle-ground between the current methodologies used in the retrospective merger analysis literature. It is more transparent than structural approaches such as Nevo (2000) which make strong assumptions on demand and market conduct. Conversely, this time series approach is more applicable than the reduced form approaches such as Hastings (2004) that employ a difference in difference method and consequently rely on the existence of a credible control group.
    Keywords: Industrial Organization, Production Economics,
    Date: 2014–05–28
  20. By: McLaughlin, Patrick W.
    Keywords: non-price competition, WIC, Food Consumption/Nutrition/Food Safety, Industrial Organization, Marketing,
  21. By: Li, Ziran; Hang, Qian
    Keywords: Agricultural cooperative, Mixed oligopoly, Decision under uncertainty, Agribusiness, Industrial Organization, Risk and Uncertainty, D4, D43, L1, L2, Q1,
    Date: 2014
  22. By: Budzinski, Oliver; Pawlowski, Tim
    Abstract: The theory of competitive balance represents one of the core concepts of sports economics. Based upon an international research project analyzing the perception of competitive balance by consumers (Pawlowski 2013a, 2013b; Pawlowski & Budzinski 2013, 2014), we argue in this paper that behavioural explanations of competitive balance may offer additional insights for selected sports economics and, in particular, sports policy problems, complementing the standard view on competitive balance. After summarizing the standard analysis of competitive balance in sports economics concerning theory, policy and empirical record in chapter 2, we report the main theoretical and empirical insights from our research project (chapter 3, closely drawing on the respective publications). In addition to providing a more comprehensive picture of the behavioural economics of competitive balance, we add a discussion of sports policy implications (chapter 4). While perceived competitive balance is found to matter, there are rather narrow conditions for sports policy interventions or restrictive regulations of competition by the league management (or sports associations). Furthermore, it is not the balance of the overall league that matters. Instead, it is sufficient or even advantageous if the most relevant subcompetitions, like the race for the championship or the fight against relegation, are 'balanced' among a narrow oligopoly of contenders.
    Keywords: sports economics,sports policy,sports management,competitive balance,behavioural economics,competitive balance defense
    JEL: D12 L83
    Date: 2014
  23. By: Evens, Tom
    Abstract: The TV industry has evolved into a multi-sided market in recent years, with distribution platforms increasingly occupying a central position in the market. Whereas until recently their business models resembled that of utility providers, distributors start playing a multi-sided role, liaising with third-party content providers, advertisers and viewers. As a result, we might expect a struggle for platform leadership between TV broadcasters and distributors. This struggle is further intensified by the rise of over-the-top (OTT) TV platforms, which challenge existing power relationships in the TV industry and give rise to conflicts of interests in the media value chain. This paper attempts to provide a deeper understanding of the platformisation in the TV industry, and explore the levers both TV broadcasters and distributors employ in building power to pursue platform leadership.
    Keywords: TV industry,platformisation,business models,power
    Date: 2014
  24. By: Toro-González, Daniel; McCluskey, Jill J.; Mittelhammer, Ron C.
    Abstract: Although mass-produced beers still represent the vast majority of U.S. beer sales, there has been a significant growth trend in the craft beer segment. This study analyzes the demand for beer as a differentiated product and estimates own-price, cross-price and income elasticities for beer by type: craft beer, mass-produced beer, and imported beer. We verify that beer is a normal good with a considerably inelastic demand and also find that the cross price elasticity across types of beer is close to zero. The results suggest that there are effectively separate markets for beer by type.
    Keywords: craft beer, demand analysis, differentiated products, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, L11, L13, L66.,
    Date: 2014
  25. By: Demko, Iryna; Jaenicke, Edward
    Abstract: Unlike many studies of learning and pharmaceuticals, this paper considers credence goods such as vitamins and the role of consumer experience in resolving uncertainty when the user cannot observe the effects of the goods after consumption. The Homescan data justifies variations in the purchases: 45% of households choose different Universal Product Code (UPC) items during subsequent shopping trips than the ones they bought originally. My findings suggest that the probability of choosing Brand 1 increases after a positive experience with Brand 1 and declines after a positive experience with Brand 2. This is based on the assumption that the consumer has had a positive experience about the product if she bought it with a current purchase and three periods back. In a structural model I intend to relax this assumption and compare the endogenous speed of learning about vitamins with the speed of learning about drugs.
    Keywords: credence good, vitamin, learning, speed of learning, spillover effect, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, D83, L15, I1,
    Date: 2014–05–25
  26. By: Abate, Megersa (VTI)
    Abstract: Although the aviation industry is increasingly becoming important for Africa's economic development and integration, the ability of airlines to access foreign markets remains hindered by restrictive regulatory policies. Attempts have been made to fully liberalize the intra-African air transport market. Except for general assertions about the merits/demerits of liberalization, our empirical understanding of the welfare effects of such polices in Africa remains rudimentary. This study empirically measures the economic effects of air transport liberalization, mainly on two supply side variables: fare and service quality, measured as departure frequency. The results show up to 40 % increase in departure frequency in routes that experienced some type of liberalization compared to those governed by restrictive bilateral air service agreements. While the effect of liberalization is substantial in improving service quality, there is no evidence of its fare reducing effect.
    Keywords: Air transport; Liberalization; Yamoussoukro decision; Bilateral air service agreements
    JEL: L51 L93 R40
    Date: 2014–11–11

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