nep-com New Economics Papers
on Industrial Competition
Issue of 2015‒11‒01
25 papers chosen by
Russell Pittman
United States Department of Justice

  1. Private Contracts in Two-Sided Markets By Gaston Llanes; Francisco Ruiz-Aliseda
  2. Quality differences, third-degree price discrimination, and welfare By Franciso Galera; Pedro Mendi; Juan Carlos Molero
  3. Lack of Preemption Under Irreversible Investment By Thomas Fagart
  4. Directed Consumer Search By Siekman, Wilhelm
  5. Price and match-value advertising with directed consumer search By Haan, Marten; Moraga Gonz
  6. Price leadership and unequal market sharing By Dijkstra, Pieter
  7. Prizes versus Contracts as Incentives for Innovation By Yeon-Koo Che; Elisabetta Iossa; Patrick Rey
  8. Dynamische Modellierung des Cournot Oligopols mit Methoden der Regelungstechnik By Schüssler, Robert
  9. Vertical organization of production and firm growth behavior By Fabio Pieri
  10. The sources of sharing externalities: Specialization vs Competition By Philip Ushchev
  11. Exploding Offers with Experimental Consumer Goods By Alexander L. Brown; Ajalavat Viriyavipart; Xiaoyuan Wang
  12. Entry with Two Correlated Signals By Alex Barrachina; Yair Tauman; Amparo Urbano
  13. Roadblock to Innovation: The Role of Patent Litigation in Corporate R&D By Filippo Mezzanotti
  14. Promotions in retailing By Guyt, Jonne
  15. Deceptive Advertising with Rational Buyers By Salvatore Piccolo; Piero Tedeschi; Giovanni Ursino
  16. Identification in differentiated product markets By Steven Berry; Philip Haile
  17. Minimum Distance Estimation of Search Costs using Price Distribution By Fabio A. Miessi Sanches; Daniel Silva Junior, Sorawoot Srisuma
  18. Price Dispersion and Informational Frictions: Evidence from Supermarket Purchases By Dubois, Pierre; Perrone, Helena
  19. Cartels: a Good or a Bad Strategy? By Pop, Izabela Luiza
  20. Macroeconomic Effects of Competition Restrictions By Shastitko, Andrey E; Golovanova, Svetlana; Kurdin, Alexander; Novikov, Vadim; Pavlova, Natalia
  21. Media see-saws: Winners and losers on media platforms By Anderson, Simon P.; Peitz, Martin
  22. Competition and antitrust in internet markets By Haucap, Justus; Stühmeier, Torben
  23. Kartellrecht und Wettbewerbspolitik für Online-Plattformen By Hamelmann, Lisa; Haucap, Justus
  24. Investment, Subsidies, and Universal Service: Broadband Internet in the United States By Kyle Wilson;
  25. Spatial Competition and Transport Infrastructure: The Case of Moscow Office Rental Market By Tatiana Mikhailova

  1. By: Gaston Llanes (Escuela de Administracion, Pontificia Universidad Catolica de Chile); Francisco Ruiz-Aliseda (Escuela de Administracion, Pontificia Universidad Catolica de Chile)
    Abstract: We study a two-sided market in which a platform connects consumers and sellers, and signs private contracts with sellers. We compare this situation with a two-sided market with public contracts. We find that the platform provider sets positive (negative) royalties to sellers and earns a negative (positive) markup on consumers when contracts are private (public). Thus, private contracting has a significant effect on the price structure. Private contracting leads to lower platform profits, consumer surplus, and social welfare. We study the welfare effects of most-favored-nation clauses, price-forcing contracts, and integration with sellers; and relate our results with the agency model of sales. Our results indicate that enhancing the market power of a dominant platform over sellers may increase welfare because it acts as a commitment device for inducing lower seller prices, mitigating the hold-up problem borne by consumers when they cannot observe sellers' contracts.
    Keywords: Two-Sided Markets; Platforms; Vertical Relations; Most-Favored Nation; Price-Forcing Contracts; Resale Price Maintenance; Integration; Agency Model of Sales
    JEL: L12 L14 L42
    Date: 2015–09
  2. By: Franciso Galera (University of Navarra); Pedro Mendi (University of Navarra); Juan Carlos Molero (University of Navarra)
    Abstract: We propose a theoretical model to analyze the welfare implications of price discrimination in the presence of differences in quality. The model considers two markets where in each market competition takes place between a local firm that operates in that market only and a global firm that operates in both markets. All firms are assumed to be producing with zero marginal costs. Local firms produce a good that is perceived by consumers to have superior quality than that produced by the global firm. We find that there are parameter values such that welfare increases while total output decreases if the global firm engages in price discrimination. This is due to a positive allocation effect brought about precisely by the global firm engaging in price discrimination.
    Keywords: Vertical diff erentiation, third-degree price discrimination, welfare
    JEL: D43 D60
    Date: 2015–10–27
  3. By: Thomas Fagart (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: This article considers the classic model of irreversible investment under imperfect competition and stochastic demand and characterizes the markov perfect equilibrium. To do so, I introduce a new way to define strategies permitting the players to create endogenous jumps in the state variable. The markov equilibrium is then similar to the open-loop equilibrium, meaning that the irreversibility of investment does not create a preemption effect in this model. This is due to the form of investment's cost, which creates an incentive to invest as soon as possible, reducing the strategic interaction to the one of a static problem
    Keywords: Capacity investment; Cournot competition; Markov-perfect equilibrium; Real option games; Differential games
    JEL: D43 L13 L25
    Date: 2015–10
  4. By: Siekman, Wilhelm (Groningen University)
    Date: 2015
  5. By: Haan, Marten; Moraga Gonz (Groningen University)
    Date: 2015
  6. By: Dijkstra, Pieter (Groningen University)
    Date: 2015
  7. By: Yeon-Koo Che (Department of Economics, Columbia University); Elisabetta Iossa (DEF and CEIS,University of Rome Tor Vergata, CEPR, IEFE-Bocconi and EIEF); Patrick Rey (Toulouse School of Economics, GREMAQ, IDEI and CEPR)
    Abstract: The procurement of an innovation involves motivating a research effort to generate a new idea and then implementing that idea efficiently. If research efforts are unverifiable and implementation costs are private information, a trade-off arises between the two objectives. The optimal mechanism resolves the tradeoff via two instruments: a monetary prize and a contract to implement the project. The optimal mechanism favors the innovator in contract allocation when the value of innovation is above a certain threshold, and handicaps the innovator in contract allocation when the value of innovation is below that threshold. A monetary prize is employed as an additional incentive but only when the value of innovation is sufficiently high.
    Keywords: Contract rights, Inducement Prizes, Innovation, Procurement and R&D.
    JEL: D44 H57 D82 O31 O38 O39
    Date: 2015–10–22
  8. By: Schüssler, Robert
    Abstract: In the paper a dynamic model for the price formation process in a Cournot oligopoly market is provided. Model development is carried out using control engineering methods. At first, as common in control engineering the feedback structure of the Cournot market price mechanism is depicted as a block diagram. Then, this structure is enhanced by dynamic models reflecting an assumed time-delayed response behaviour of the market participants to changes in market price. This approach leads to a dynamic model for the Cournot oligolpolistic market which is self-evident and modularly expandable. The performance of the model is shown using simulation results for an oligopoly composed of three market participants. The simulation examples presented are related to differing response dynamics of the individual participants as well as to capacity limitations and alterations in market demand. The results show that control engineering methods can effectively be applied to dynamic modeling of economics processes as well. Im Beitrag wird ein dynamisches Modell für den Preisbildungsprozess in einem Cournot-Oligopol Markt vorgestellt. Die Modellbildung erfolgt mit ingenieur-wissenschaftlichen Methoden. Zunächst wird, wie in der Regelungstechnik üblich, die Rückkopplungsstruktur des Cournot-Preisbildungsmechanismus als Blockdiagramm dargestellt. Diese Struktur wird dann um dynamische Modelle erweitert, welche ein angenommenes, zeitlich verzögertes Reaktionsverhalten der Marktteilnehmer auf Marktpreisänderungen beschreiben. Auf diese Weise erhält man ein einfach verständliches und modular-erweiterbares dynamisches Modell des Cournot-Oligopol-Marktes. Die Leistungsfähigkeit des Modells wird anhand von Simulationsergebnissen für ein aus drei Marktteilnehmern bestehendes Oligopol veranschaulicht. Die vorgestellten Simulationsbeispiele beinhalten sowohl unterschiedliche Reaktionsdynamik der einzelnen Teilnehmer als auch Kapazitätsbeschränkungen und Änderungen der Marktnachfrage. Die Ergebnisse zeigen, dass Methoden der Regelungstechnik auch für die dynamische Modellierung ökonomischer Prozesse effektiv nutzbar sind.
    Keywords: Dynamische Modellierung - Cournot-Oligopol - Industrieökonomik
    JEL: C60
    Date: 2015–10–30
  9. By: Fabio Pieri (Departamento de Economía Aplicada, Universitat de València)
    Abstract: Many industries are characterized by a marked heterogeneity in vertical boundaries among their firms: some firms are vertically integrated in the production of inputs while others adopt disintegration strategies. This paper empirically explores if different vertical organizational forms are associated with unlike growth “behaviors” within the same industry. To this end, an econometric analysis is conducted over a sample of around 500 Italian machine tool (MT) builders for the period 1998-2007. Ceteris paribus, vertically integrated firms show a distribution of growth rates with a higher number of episodes of “moderate” growth, and this is true in case of both output expansion and contraction. Adjustment costs, organizational slacks, a better coordination along the production chain and a more effective handling of changes in customers’ needs may all concur to explain their more “moderate” growth profile with respect to disintegrated firms. This work provides insight into the output dynamics in a mature industry in which both vertically integrated and dis-integrated firms coexist.
    Keywords: Vertical integration, Firm growth, Quantile regression, Variance-vertical integration scaling, Italian machine tool industry
    JEL: D22 L23 L24 L26 L64
    Date: 2015–10
  10. By: Philip Ushchev
    Abstract: In this paper, we undertake an in-depth inquiry into the nature of sharing externalities, and study how they affect the market outcome. We show that the key thing for understanding sharing externalities is the interplay between two forces: the specialization/complexity effect, on the one hand, and the competition effect, on the other hand. How the interaction between these two forces generates endogenous increasing returns to scale is definitely understudied in the literature because of the widely used assumption that technology in the final sector displays constant elasticity of substitution (CES) across the employed intermediates. Under CES technologies, the equilibrium markup, which may serve as a reverse measure of the toughness of competition, remains unaffected by entry, as well as by market-size shocks. As a consequence, the competition effect is washed out. The aim of our article is to fix this drawback. In order to achieve our purpose, we develop an extension of the Ethier's (1982) model to the case of a non-specified constant-returns-to-scale (CRS) technology in the final-good sector. The main result of our approach is a lucid decomposition of external increasing returns to scale into two components: (i) a competition effect, which stems from the market interactions between producers of intermediate inputs, and (ii) a specialization/complexity effect. Through this decomposition, we show that the gains from specialization are, in general, not the only factor of external increasing returns to scale. Competition in the intermediate sector also plays a fundamental role. In the CES case (which dominates in the literature), external increasing returns to scale are fully driven by the gains from specialization. At the other extreme is the translog technology, where the external increasing returns to scale are induced solely by the competition effect. In between these two limit-situations, we find that both effects (specialization/complexity and competition) do matter in shaping market outcomes. The other findings of the paper are as follows. First, we obtain a full characterization of the impact of horizontal innovation on prices, markups, and wages. Our model allows us to make a distinction between price-decreasing/increasing and markup-decreasing/increasing competition, and provides necessary and sufficient conditions for each type of competition to occur. Second, we also discriminate between wage-increasing and wage-decreasing competition, which suggests a microeconomic foundation for flexible functional forms of the relationship between. In addition, we find that the competition effect may either reinforce or weaken the impact of the specialization effect on aggregate output.
    Keywords: Sharing Externalities; Elasticity of Substitution; Specialization; Competition
    JEL: D24 D43 F12 L13
    Date: 2015–10
  11. By: Alexander L. Brown (Texas A&M University, Department of Economics); Ajalavat Viriyavipart (Texas A&M University, Department of Economics); Xiaoyuan Wang (University of Electronic Science and Technology of China, School of Management and Economics)
    Abstract: Recent theoretical research indicates that search deterrence strategies are generally optimal for sellers in consumer goods markets. Yet search deterrence is not always employed in such markets. To understand this incongruity, we develop an experimental market where profit-maximizing strategy dictates sellers should exercise one form of search deterrence, exploding offers. We find that buyers over-reject exploding offers relative to optimal. Sellers underutilize exploding offers relative to optimal play, even conditional on buyer over-rejection. This tendency dissipates when sellers make offers to computerized buyers, suggesting their persistent behavior with human buyers may be due to a preference rather than a miscalculation.
    Keywords: exploding offer, search deterrence, experimental economics, quantal response equilibrium
    JEL: C91 D21 L10 M31
    Date: 2014–10–06
  12. By: Alex Barrachina (Department of Economics, Universitat Jaume I, Castellón, Spain); Yair Tauman (IDC Herzliya, Israel and Department of Economics, Stony Brook University, NY, USA); Amparo Urbano (Department of Economic Analysis, University of Valencia,Spain)
    Abstract: We analyze the effect of industrial espionage on limit-pricing models. We consider an incumbent monopolist engaged in R&D trying to reduce his cost of production and deter a potential entrant from entering the market. The R&D project may be successful or not and its outcome is a private information of the incumbent. The entrant has an access to an Intelligence System (IS hereafter) of a certain precision that generates a noisy signal on the outcome of the R&D project, and she decides whether to enter the market based on two signals: the price charged by the incumbent and the signal sent by the IS. It is assumed that the precision of the IS is exogenous and common knowledge. Our fundamental result is that for intermediate values of the IS precision, the set of pooling equilibria is non-empty even with profitable entry and the entrant enters if the IS tells her the R&D project was not successful. Since in the classical limit- pricing models the entrant never enters in a pooling equilibrium, the use of the IS by the entrant increases competition in pooling equilibrium with high probability. Moreover, the incumbent can deter profitable entry with positive probability.
    Keywords: Espionage, Entry deterrence, Asymmetric information, Pooling equilibria
    JEL: C72 D82 L10 L12
    Date: 2015
  13. By: Filippo Mezzanotti
    Date: 2015–10
  14. By: Guyt, Jonne (Tilburg University, School of Economics and Management)
    Abstract: This doctoral thesis contains three empirical essays regarding the effect of promotions on consumer choices in a retailing context. The first essay studies the scheduling of featured price cuts for national brands, across retail chains. It shows that coordinating promotions across chains influences the performance outcomes for both manufacturers and retailers in several consumer packaged goods (CPG) categories. The second essay investigates the impact of consumers’ decision making processes on store-flyer and discount promotions. It shows that the effect of such promotions depends on whether a consumer follows a brand-focused structure (in which case s/he disproportionately substitutes between retailers) or a retailer-focused structure (in which case s/he primarily switches among brands within a given retail chain), and that a mixture of these structures is at work in CPG categories. The third essay examines large-scale promotional events (“Savings Weeks”). It provides insights into the mechanisms that set these events apart from ‘business-as-usual’ promotions, and sheds light on how they influence households’ retailer visit and spending decisions.<br/>
    Date: 2015
  15. By: Salvatore Piccolo (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Piero Tedeschi (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Giovanni Ursino (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: We study a game in which two competing sellers supplying experience goods of different quality can induce a perspective buyer into a bad purchase through (costly) deceptive advertising. We characterize the equilibrium set of the game and argue that an important class of these outcomes features pooling behavior at the pricing stage while requiring low quality sellers to air false claims about their product. These claims deceive the buyer and induce a bad purchase with positive probability. Although the low-quality product is purchased with positive probability in these equilibria, the buyer's (expected) utility can be higher than in a fully separating equilibrium. This result suggests that, surprisingly, deceptive practices may actually enhance competition. Finally, we characterize the optimal deterrence by a regulatory agency that seeks to punish deceptive practices. We show that consumer surplus maximization requires lower deterrence than social welfare maximization. The analysis is robust to various extensions.
    Keywords: Asymmetric Information, Bayesian Consumers, Deception, Misleading Advertising, Signaling
    JEL: L13 L15 L4
    Date: 2015–06
  16. By: Steven Berry (Institute for Fiscal Studies and Yale); Philip Haile (Institute for Fiscal Studies and Yale University)
    Abstract: Empirical models of demand for - and, often, supply of – differentiated products are widely used in practice, typically employing parametric functional forms and distributions of consumer heterogeneity. We review some recent work studying identification in a broad class of such models. This work shows that parametric functional forms and distributional assumptions are not essential for identification. Rather, identification relies primarily on the standard requirement that instruments be available for the endogenous variables - here, typically, prices and quantities. We discuss the kinds of instruments needed for identification and how the reliance on instruments can be reduced by nonparametric functional form restrictions or better data. We also discuss results on discrimination between alternative models of oligopoly competition.
    Date: 2015–08
  17. By: Fabio A. Miessi Sanches; Daniel Silva Junior, Sorawoot Srisuma
    Abstract: Hong and Shum (2006) show equilibrium restrictions in a search model can be used to identify quantiles of the search cost distribution from observed prices alone. These quantiles can be difficult to estimate in practice. This paper uses a minimum distance approach to estimate them that is easy to compute. A version of our estimator is a solution to a nonlinear least squares problem that can be straightforwardly programmed on softwares such as STATA. We show our estimator is consistent and has an asymptotic normal distribution. Its distribution can be consistently estimated by a boostrap. Our estimator can be used to estimate the cost distribution nonparametrically on a larger support when prices from heterogeneous markets are available. There we propose a two-step sieve estimator. The first step estimates quantiles from each market. They are used in the second step as generated variables to perform nonparametric sieve estimation. We derive the uniform rate of convergence of the sieve estimator that can be used to quantify the errors incurred from interpolating data across markets. To illustrate we use online bookmaking odds for English football leagues’ matches, as prices, and find evidence that suggests search costs for consumers have fallen following a change in the British law that allows gambling operators to advertise more widely.
    Keywords: Bootstrap; Generated Variables; M-Estimation; Search Cost; Sieve Estimation
    JEL: C13 C15 D43 D83 L13
    Date: 2015–10–13
  18. By: Dubois, Pierre; Perrone, Helena
    Abstract: Traditional demand models assume that consumers are perfectly informed about product characteristics, including price. However, this assumption may be too strong. Unannounced sales are a common supermarket practice. As we show, retailers frequently change position in the price rankings, thus making it unlikely that consumers are aware of all deals offered in each period. Further empirical evidence on consumer behavior is also consistent with a model with price information frictions. We develop such a model for horizontally differentiated products and structurally estimate the search cost distribution. The results show that in equilibrium, consumers observe a very limited number of prices before making a purchase decision, which implies that imperfect information is indeed important and that local market power is potentially high. We also show that a full information demand model yields severely biased price elasticities.
    Keywords: consumer behavior; demand estimation; imperfect information; price dispersion; price elasticities; product differentiation; sales; search costs
    JEL: D4 D83 L11 L66
    Date: 2015–10
  19. By: Pop, Izabela Luiza
    Abstract: Any organization should seek the efficiency maximization, namely the achievement of an effect/effort ratio as high as possible. In order to apply this economic ground rule, some companies use strategies based on gaining a competitive advantage over competitors. In contrast, other companies choose lighter options to increase profitability. They apply strategies focused on agreements with competitors that aim to maintain prices at a certain level regardless of economic factors governing the market mechanism. The purpose of this paper is to highlight the positive and negative effects of cartels as a management strategy. In this regard, the first part of the article summarizes the most important theories about cartels and their characteristics, while the second part presents some European and Romanian cartels, based on data provided by the European Commission and the Competition Council. The final part presents the most important findings and conclusions but also some recommendations for future research.
    Keywords: cartels, competition, strategies, development, price
    JEL: L10 L12 M10 M21
    Date: 2015–06
  20. By: Shastitko, Andrey E (Lomonossov Moscow State University; Russian presidental academy of national economy and public administration (RANEPA)); Golovanova, Svetlana (National Research University Higher School of Economics); Kurdin, Alexander (Russian presidental academy of national economy and public administration (RANEPA)); Novikov, Vadim (Russian presidental academy of national economy and public administration (RANEPA)); Pavlova, Natalia (National Research University Higher School of Economics; Lomonossov Moscow State University; Russian presidental academy of national economy and public administration (RANEPA))
    Abstract: The work is an attempt to give the first Russian integrated quantitative assessment of the losses arising from the restrictions of competition. For the analysis of selected several key areas: gas industry, railway cargo transportation, construction, pharmaceutical industry and the restriction of competition from imports. Presented in the report empirical estimates allow to rethink the role of competition policy in promoting economic growth and development. For experts in the field of competition policy and economic regulation, students current problems of economic development, as well as all interested in the modern development of the Russian economy.
    Keywords: Russian economy, macroeconomy, competition restrictions, industry
    JEL: Y30
    Date: 2014–07–31
  21. By: Anderson, Simon P.; Peitz, Martin
    Abstract: We customize the aggregative game approach to oligopoly to study asymmetric media markets. Advertiser, platform, and consumer surplus are tied together by a simple summary statistic. When media are ad-financed and ads are a nuisance to consumers we establish see-saws between consumers and advertisers. Entry of a lower-quality platform increases consumer surplus, but decreases advertiser surplus if industry platform profits decrease with entry. Merger decreases consumer surplus, but advertiser surplus increases when the profits of the higher-quality platform within the merger increase. By contrast, when platforms use two-sided pricing or consumers like advertising,advertiser and consumer interests are often aligned.
    Keywords: media economics , mergers , entry , advertising , aggregative games
    JEL: D43 L13
    Date: 2015
  22. By: Haucap, Justus; Stühmeier, Torben
    Abstract: This paper summarizes the peculiarities of online markets and discusses recent antitrust cases related to online markets. Following a brief description of the online markets' characteristics and potential tendencies for concentration the paper first discusses the antitrust allegations and proceedings against Google, before commenting on the most prominent cases related to vertical restraints, including the Apple ebook case and the ECJ's Pierre Fabre case. We also highlight competition issues at the infrastructure level, namely margin or price squeezing of incumbent operators vis-à-vis new ISPs and network neutrality. Finally, policy conclusions and further research questions are discussed in the paper's concluding section.
    Keywords: digital markets,Google,E-Book,online markets,net neutrality,vertical restraints
    Date: 2015
  23. By: Hamelmann, Lisa; Haucap, Justus
    Abstract: Online-Plattformen wie Suchmaschinen und Marktplätze, die als Intermediäre zwischen verschiedenen Kundengruppen agieren, rücken zunehmend in den Fokus zahlreicher Wettbewerbsbehörden weltweit. Aufgrund ihrer mehrseitigen und dynamischen Strukturen kann sich die Marktposition einzelner Unternehmen schnell verschieben, sodass kartellrechtliche Eingriffe oftmals als strittig eingestuft werden. Der vorliegende Beitrag diskutiert die wesentlichen wettbewerbsrechtlichen Verfahren auf Online-Märkten. Vorab werden spezifische Eigenarten von Online-Märkten erörtert, um eine gemeinsame Basis für die anschließenden Fall-Analysen zu schaffen. Neben dem Kartellverfahren gegen Google wird dann eine Einordnung der kartellrechtlichen Behandlung von diversen Vertikalbeschränkungen vorgenommen. Grundsätzlich wird festgestellt, dass auf Online-Märkten und im stationären Handel ähnliche Wettbewerbsbedenken hervorgerufen werden, sodass bestehende Methoden angewendet werden können. Gleichzeitig muss jedoch berücksichtigt werden, dass aufgrund der speziellen Marktcharakteristika auf Online-Märkten einige Instrumente des Wettbewerbsrechts angepasst werden müssen. Nur so können mögliche Wettbewerbseffekte verlässlich festgestellt werden und Regulierungen vorgenommen werden, die weder zukünftige Innovationen noch den technischen Fortschritt hemmen.
    Abstract: Online platforms such as search engines and market places, which act as intermediaries between customer groups, are increasingly at the focus of numerous competition authorities worldwide. Because of their multi-sided and dynamic nature, market positions can change quickly, thus the application of competition law may prove challenging. After discussing the key characteristics and possible approaches towards market definition, this paper analysis the most prominent proceedings such as the antitrust case against google as well as different cases on vertical restraints in e-commerce. The paper posits that in principle, online markets are prone to similar competition concerns as offline markets and existing competition concepts can adequately be applied. However, some of the tools need to be adjusted to account for the special characteristics of online markets, to reliably assess potential competition issues in order not to retard innovation and technological advances.
    Keywords: Digitale Märkte,Vertikalbeschränkungen,Zweiseitige Plattformen,Digital Markets,E-Commerce,Two-Sided Platforms,Google,Vertical Restraints
    Date: 2015
  24. By: Kyle Wilson (University of Arizona, Department of Economics, McClelland Hall 401, PO Box 210108, Tucson, AZ 85721-0108);
    Abstract: Access to the internet is critical for participating in modern society, yet, 17% of Americans lack access to broadband internet, according to the Federal Communications Commission (FCC). A key objective of the FCC is to promote policies that advance the availability of quality telecommunications services across the United States. To that end, the FCC has recently secured funding to provide subsidies to internet service providers on a massive scale, and has been given considerable flexibility in the distribution of these funds. The aim of this paper is to identify the determinants of internet service providers' decisions about entry into new markets and upgrades to existing infrastructure, and to use this information to provide policy recommendations about how to target subsidies in order to best accomplish the longstanding goal of Universal Service. To do this, I develop a dynamic model, which encapsulates potential entrants' decisions to enter new markets as a low-speed or high-speed provider, as well as incumbents' decisions to upgrade their infrastructure, maintain service, or exit markets. I then estimate this model using data from the National Broadband Map, a recent initiative to precisely track availability of broadband internet across the United States. Then, I use this model to perform counterfactuals, which generate predictions of firm behaviors under a variety of proposed subsidy structures.
    Keywords: broadband internet; subsidies
    JEL: L13 L96 L98
    Date: 2015–09
  25. By: Tatiana Mikhailova
    Abstract: This paper studies the geography of competition on Moscow commercial real estate market. We estimate the elasticity of office rental price to the prices of competing objects as a function of the geographical distance. We found that office real estate market in Moscow, although saturated, is surprisingly local. The evidence of price competition exists primarily at a walking distance, and dies down quickly at a distances beyond one kilometer. However, if competing objects are connected by a subway line, the geographical radius of competition extends to up to three kilometers. Thus, in the case of Moscow real estate transportation infrastructure works to integrate local markets and promote competition, although the magnitude of these effects are modest.
    Keywords: spatial competition; real estate; transport
    JEL: R32 R33 L85
    Date: 2015–10

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