nep-com New Economics Papers
on Industrial Competition
Issue of 2015‒12‒12
eleven papers chosen by
Russell Pittman
United States Department of Justice

  1. Do Prices Determine Vertical Integration? By Laura Alfaro; Paola Conconi; Harald Fadinger; Andrew A.F. Newman
  2. UPP Analysis in Five Recent Merger Cases By Baltzopoulos, Apostolos; Kim, Jaewon; Mandorff, Martin
  3. Cournot Competition and "Green" Innovation: An Inverted-U Relationship By Luca Lambertini; Joanna Poyago-Theotoky; Alessandro Tampieri
  4. Evolution of Standards and Innovation By AOKI Reiko; ARAI Yasuhiro
  5. Competition Law Enforcement of Viet Nam and the Necessity of a Transparent Regional Competition Policy By Phan Cong THANH
  6. The Competition Act 2010—the Issues and Development since Coming into Force By Vince Eng Teong SEE
  7. Is it Worth Being Transparent? Evidence from the Russian Banking System By Irina Andrievskaya; Mikhail Raschupkin
  8. La competencia en el ferrocarril: un análisis del nuevo marco institucional en Europa y en España By Javier Campos
  9. Project modifications and bidding in highway procurement auctions By De Silva, Dakshina G.; Dunne, Timothy; Kosmopoulou, Georgia; Lamarche, Carlos
  10. Can EU’s Decarbonisation Agenda Break the State-Company Axis in the Power Sector? By Thomas Sattich; Inga Ydersbond; Daniel Scholten,
  11. Municipal Waste Collection: Market Competition and the EU Policy By Carlo Reggiani; Francesco Silvestri

  1. By: Laura Alfaro; Paola Conconi; Harald Fadinger; Andrew A.F. Newman
    Abstract: A number of theories in organizational economics and industrial organization suggest that vertical integration, while costly, increases productivity. It follows from firms’ maximizing behavior that higher prices in the product market ought to induce more integration. Trade policy provides a source of exogenous price variation to assess this prediction: higher tariffs should lead to higher prices and therefore to more integration. We construct firm- level vertical integration indices for a large set of countries and industries and exploit variation in applied MFN tariffs to examine the impact of tariffs on firm boundaries. The empirical results provide strong support for the view that higher output prices generate more vertical integration. Our estimates of the average price elasticity of vertical integra- tion are in the range 0.4-2.
    Keywords: Theory of the firm, product prices, vertical integration.
    Date: 2016–03–01
  2. By: Baltzopoulos, Apostolos (Konkurrensverket); Kim, Jaewon (Konkurrensverket); Mandorff, Martin (Konkurrensverket)
    Abstract: A recent development in merger review has been the shift from an approach committed to market definitions, market shares and concentration index appraisals to more effect-based analyses. In this paper we Review and summarize the underpinnings of what has become a popular tool in identifying potentially problematic mergers, known as the Upwards Pricing Pressure (UPP) methodology and discuss how it has been applied in five recent cases reviewed by Konkurrensverket (the Swedish Competition Authority). Thepaper attempts to provide an all-inone guide for practitioners who are interested in getting a full grasp of how the UPP framework has been developed and how to apply it.
    Keywords: unilateral effects; merger Review; diversion ratio; GUPPI; UPP; IPR; CMCR
    JEL: K21 L40
    Date: 2015–09–01
  3. By: Luca Lambertini (University of Bologna, Italy); Joanna Poyago-Theotoky (La Trobe University, Australia); Alessandro Tampieri (University of Luxembourg, Luxembourg)
    Abstract: We examine the relationship between competition and innovation in an industry where production is polluting and R&D aims to reduce emissions ("green" innovation). We present an n-firm oligopoly where firms compete in quantities and decide their investment in "green" R&D. When environmental taxation is exogenous, aggregate R&D investment always increases with the number of firms in the industry. Next we analyse the case where the emission tax is set endogenously by a regulator (committed or time-consistent) with the aim to maximise social welfare. We show that an inverted-U relationship exists between aggregate R&D and industry size under reasonable conditions, and is driven by the presence of R&D spillovers.
    Keywords: "Green" R&D, R&D Spillovers, Emission Taxation, Time-Consistent Emission Tax, Pre-Commited Emission Tax
    JEL: Q55 Q56 O30 L13
    Date: 2015–08
  4. By: AOKI Reiko; ARAI Yasuhiro
    Abstract: We examine how a standard evolves when both a standard consortium or firm (incumbent) and an outside firm (potential entrant) innovate to improve the technology. The incumbent improves to deter entry, and the entrant can invest to counter the incumbent's attempt. We show that only when the technology is mature and inertia is sufficiently low will there be entry leading to the coexistence of both standards. When the technology is in its infancy, the incumbent deters entry by technology improvement (upgrade) for any level of inertia. The entrant is never able to drive the incumbent out of the market (replacement). Our results suggest that competition policy to control inertia is not a substitute for policies to promote technological innovation, and that coordination of the two policies is essential.
    Date: 2015–12
  5. By: Phan Cong THANH (Vietnam Competition Authority)
    Abstract: Competition is becoming an important issue among the countries of the Association of Southeast Asian Nations (ASEAN). However, having a transparent and positive competition policy is much more difficult than enacting a competition law. Competition policy strongly depends on the enforcement of competition law and the way the government positions competition law in its general policy for developing the national economy. This paper discusses the enforcement of Viet Nam’s competition law and argues for the need for a regional competition policy for ASEAN and the East Asia area which enhances an individual country’s competition policy and prevents conflicts of interest among countries.
    Keywords: Competition policy, industrial policy, regional competition policy, Viet Nam, ASEAN, East Asia, extraterritorial application, compliance, state-owned enterprises.
    JEL: K21
    Date: 2015–12
  6. By: Vince Eng Teong SEE (University of Malaya Centre of Regulatory Studies)
    Abstract: Competition law was almost unheard of in the first hundred years after the Sherman Act was passed. However, the number of jurisdictions with a competition law increased dramatically in the last 20 years. One of the countries that joined the rank is Malaysia when it passed Competition Act 2010 and Competition Commission Act 2010. Competition Act 2010 represents an attempt to reduce the hitherto European competition jurisprudence to a concise piece of legislation supported by other guidelines. This paper will attempt to examine the two pieces of legislation, and explore various issues, both normative and practical. It will also look at some development that has taken place since the law came into force in January 2012, some cases, and initiatives of the Commission.
    JEL: K21
    Date: 2015–12
  7. By: Irina Andrievskaya (National Research University Higher School); Mikhail Raschupkin (National Research University Higher School)
    Abstract: Information disclosure is considered as an important prerequisite for the efficient functioning of a financial system. Costs and benefits of information disclosure in the banking system have been extensively theoretically and empirically investigated. However, the effect of voluntary transparency on bank market power and market share is still empirically unexplored. Our paper fills this gap in the literature, examining two hundred of the largest Russian banks in the period 2004-2013. The findings confirm that voluntary transparency – absolute and relative - affects a bank’s market power and market shares. Moreover, this relation depends on the bank’s asset quality
    Keywords: banking system, voluntary information disclosure, market power, Lerner index
    JEL: G21 D22 D80
    Date: 2015
  8. By: Javier Campos
    Abstract: En este trabajo se analiza la experiencia en materia de liberalización del sector ferroviario europeo y español.
    Date: 2015–12
  9. By: De Silva, Dakshina G. (Lancaster University); Dunne, Timothy (Federal Reserve Bank of Atlanta); Kosmopoulou, Georgia (University of Oklahoma); Lamarche, Carlos (University of Kentucky)
    Abstract: This paper examines bidding behavior in a setting where post-bid-letting project modifications occur. These modifications change both the costs and payouts to the winning contractor, making the contract incomplete. Recent empirical research shows that bidders incorporate the likelihood of such changes in contracts into their bidding strategies. In particular, contractors may adjust bids to compensate for renegotiation, resequencing of tasks, and other costs associated with project modifications. This paper extends this literature by examining bidding behavior and project modifications in Texas, where there has been a significant shift in change order policy. Specifically, Texas sharply reduced its spending on change orders starting in the mid-2000s. In the period before the change in policy, we estimate that project modifications raised bidder costs by 4 percent to 6 percent. In the period after the change in policy, the impact of project modifications on bidder costs is estimated to be closer to 1 percent.
    Keywords: procurement auctions; incomplete contracts
    JEL: D4 L1 L2
    Date: 2015–12–01
  10. By: Thomas Sattich (Vrije Universiteit Brussel, Belgium); Inga Ydersbond (University of Oslo, Norway); Daniel Scholten,
    Keywords: Decarbonisation, Electricity generation, Energy policy, European Union, Interconnectors, Member States, Political negotiations, Policy making, Power grid, Power transmission system, Power pools, Power system, Regulatory framework, Renewable energy
    JEL: O13 Q4 Q42 Q48
    Date: 2015–06
  11. By: Carlo Reggiani (School of Social Sciences - Economics, University of Manchester); Francesco Silvestri (Department of Economics and Management, University of Ferrara)
    Abstract: Two of the main pillars of the EU waste collection policy are the Proximity Principle and Self-Sufficiency Principle. According to those, waste should be disposed as close as possible to where it has been produced. The effect of such provision is to increase the market power of local disposers, with possible undesirable consequences for other firms in the vertical chain. We show through a simple spatial model that one effect of the Proximity Principle and Self-Sufficiency Principle is to provide an incentive to collectors and waste producers to increase the amount of separated waste.
    Keywords: EU Municipal Waste Policy, Self-Sufficiency Principle, Proximity Principle
    JEL: Q53 L13 L44
    Date: 2015–10

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