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on Industrial Competition |
| By: | Villas-Boas, Sofia B; Chambolle, Claire |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2015–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt0wz728n8&r=com |
| By: | Pio Baake; Andreas Harasser; Friederike Heiny |
| Abstract: | We analyze a simple supply chain with one supplier, one retailer and uncertainty about market demand. Focusing on the incentives of the supplier and the retailer to enhance their private information about the actual market conditions, we show that choices on information acquisition are strategic complements. While the retailer's incentives are mainly driven by the information rent that he can earn, the supplier will choose to acquire information only if the retailer is rather well informed, even though the information is free of charge. |
| Keywords: | Asymmetric information, information acquisition, vertical relations |
| JEL: | D82 D83 D86 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1543&r=com |
| By: | Villas-Boas, Sofia B; Bonnet, Celine |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2016–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt172676f9&r=com |
| By: | Sarah Auster; Piero Gottardi |
| Abstract: | We study the competitive equilibria in a market with adverse selection and search frictions. Uninformed buyers post general direct mechanisms and informed sellers choose where to direct their search. We demonstrate that there exists a unique equilibrium allocation and characterize its properties: all buyers post the same mechanism and a low quality object is traded whenever such object is present in a meeting. Sellers are thus pooled at the search stage and screened at the mechanism stage. If adverse selection is sufficiently severe, this equilibrium is constrained inefficient. Furthermore, the properties of the equilibrium differ starkly from the case where meetings are restricted to be bilateral, in which case in equilibrium sellers sort themselves at the search stage across different mechanisms. Compared to such sorting equilibria, our equilibriumyields a higher surplus for most, but not all, parameter specifications. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:568&r=com |
| By: | Gabriel Garber; Márcio Issao Nakane |
| Abstract: | We study two-sided markets where there are buyers and sellers, with heterogeneous participants on each side. Buyers care about the quality of the good purchased, but sellers care only about the price they get. When there is informational asymmetry about types between the sides, the role of a platform as a certifier that guarantees a minimum quality becomes central to the transactions. We analyze first-best (perfect information) and pooling equilibria without platforms and a monopolist platform that coexists with an external pooling. We also show there is no equilibrium in a simultaneous game with two platforms |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:417&r=com |
| By: | Antonios Garas; Athanasios Lapatinas |
| Abstract: | We develop a location analysis spatial model of firms' competition in multi-characteristics space, where consumers' opinions about the firms' products are distributed on multilayered networks. Firms do not compete on price but only on location upon the products' multi-characteristics space, and they aim to attract the maximum number of consumers. Boundedly rational consumers have distinct ideal points/tastes over the possible available firm locations but, crucially, they are affected by the opinions of their neighbors. Our central argument is that the consolidation of a dense underlying consumers' opinion network is the key for the firm to enlarge its market-share. Proposing a dynamic agent-based analysis on firms' location choice we characterize multi-dimensional product differentiation competition as adaptive learning by firms' managers and we argue that such a complex systems approach advances the analysis in alternative ways, beyond game-theoretic calculations. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1601.05660&r=com |
| By: | Mathieu Parenti (National Research University Higher School of Economics); Philip Ushchev (National Research University Higher School of Economics); Jacques-Francois Thisse (National Research University Higher School of Economics) |
| Abstract: | We propose a general model of monopolistic competition which encompasses existing models while being exible enough to take into account new demand and competition features. Even though preferences need not be additive and/or homothetic, the market outcome is still driven by the sole variable elasticity of substitution. We impose elementary conditions on this function to guarantee empirically relevant properties of a free-entry equilibrium. Comparative statics with respect to market size and productivity shock are characterized through necessary and sucient conditions. Furthermore, we show that the attention to the constant elasticity of substitution (CES) based on its normative implications was misguided: constant mark-ups, additivity and homotheticity are neither necessary nor sucient for the market to deliver the optimum outcome. Our approach can cope with heterogeneous rms once it is recognized that the elasticity of substitution is rm-specic. Finally, we show how our set-up can be extended to cope with multiple sectors. |
| Keywords: | monopolistic competition, general equilibrium, additive preferences, homothetic preferences. |
| JEL: | D43 L11 L13 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:121/ec/2016&r=com |
| By: | Bakó, Barna; Kálecz-Simon, András |
| Abstract: | Managerial bonus schemes and their effects on firm strategies and market outcomes are extensively discussed in the literature. Though quota bonuses are not uncommon in practice, they have not been analysed so far. In this article we compare quota bonuses to profit-based evaluation and sales (quantity) bonuses. In a duopoly setting with independent demand shocks we find that under certain circumstances choosing quota bonuses is a dominant strategy. This may explain the widespread use of quota bonuses in situations where incentive problems are relevant. |
| Keywords: | strategic delegation, oligopoly, managerial incentives |
| JEL: | C73 D21 D43 L13 |
| Date: | 2015–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:cvh:coecwp:2016/01&r=com |
| By: | Guillaume Plantin (Département d'économie); Jean Tirole (Toulouse School of Economics (TSE)) |
| Abstract: | While the debate on cost and market-value accounting has been raging for years, economists lack a framework allowing a comparison of their relative merits. This paper considers an agency model in which the measurement of an asset can be based on public market data (marking to market) and/or on the realization of its value through costly resale to an informed buyer (taking to market). At the optimal contract, noisier market data lead to cost accounting and gains trading (selling winners/keeping losers) whereas accurate data naturally favor market-value accounting. The quality of market data and the magnitude of resale costs both depend on the volume of transactions, and therefore on accounting rules. The paper studies the mutual feedback between individually optimal accounting rules and asset market liquidity. This equilibrium approach reveals a socially excessive use of market-value accounting that dries up market liquidity and reduces the informativeness of price signals. |
| Keywords: | Cost and market value accounting; Agency; Gains trading; Equilibrium accounting rules |
| JEL: | D82 M41 M52 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/7pu0mfr14h9ba9rsrotsskha8c&r=com |
| By: | Bhattacharya, Haumanti; Innes, Robert |
| Abstract: | Competing theories in industrial organization predict that more concentrated industries will lead to a smaller and more efficient variety of products, or alternately, a larger and less efficient array of products. This paper presents an empirical study of these competing implications that estimates the impact of market concentration on new product introductions in a panel of nine food processing industries over 1983 to 2004. Controlling for industry-level unobservables (using fixed effects) and endogeneity of industry market structure, we find that industry concentration promotes the introduction of new products. Preliminary evidence also suggests that new product introductions spur subsequent food industry mergers. Both conclusions are consistent with the “entry for merger” theory of product variety wherein small firms introduce new products in anticipation of profitable future mergers with concentrated firms. |
| Keywords: | New Product Introductions, Market Concentration, Mergers, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, L1, L2, L66, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:assa16:212836&r=com |
| By: | Tim Brühn (University of Giessen); Georg Götz (University of Giessen) |
| Abstract: | This paper analyzes exclusionary conduct of platforms in two-sided markets. Motivated by recent antitrust cases against shopping centers introducing radius restrictions on their tenants, we provide a discussion of the likely positive and normative effects of exclusivity clauses, which prevent tenants from opening outlets in other shopping centers covered by the clause. In a standard two-sided market model with two competing shopping centers, we analyze incentives to introduce exclusivity clauses and the likely effects on social welfare. We show that exclusivity agreements are especially profitable for shopping centers and detrimental to social welfare if competition is intense between the two shopping centers. We argue that the focus of courts on market definition is misplaced in markets determined by competitive bottlenecks. |
| Keywords: | Platform competition, exclusive dealing, network effects, competitive bottlenecks |
| JEL: | D43 D62 L13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201518&r=com |
| By: | Villas-Boas, Sofia B; Turolla, Stephane; Chambolle, Claire; Allain, MArie-Laure |
| Keywords: | Social and Behavioral Sciences |
| Date: | 2016–01–28 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:agrebk:qt30t981mm&r=com |
| By: | Kim, GwanSeon; Tyler, Mark |
| Keywords: | Agricultural and Food Policy, International Relations/Trade, |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iats15:229243&r=com |
| By: | Djuric, Ivan; Götz, Linde; Glauben, Thomas |
| Keywords: | Agricultural and Food Policy, International Relations/Trade, |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iats15:229240&r=com |
| By: | Saeyeon Oh (Department of Economics, Sogang University, Seoul); Jungsoo Park |
| Abstract: | This paper provides empirical evidence on how bank branch competition affects household credit constraints based on Korean household and nation-wide bank branch data. The main findings are as follow. First, regression results show that banks alleviate household credit constraint when bank branch competition is strong. Second, relaxation of credit constraint occurs at the internal margin, while external margin is not affected. Finally, main beneficiaries from increase in banking competition are older households with head age 35 or above. These results are consistent with the fact that most Korean banks are multi-branch nation-wide banks transacting based on hard information. Banks are compelled to provide more household credit in order to compensate for the lower profitability in competitive market. |
| Keywords: | Bank branch competition, credit constraints, information asymmetry |
| JEL: | G01 G21 E44 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:sgo:wpaper:1501&r=com |
| By: | Karsten Neuhoff; Nolan Ritter; Aymen Salah-Abou-El-Enien; Philippe Vassilopoulos |
| Abstract: | A fundamental question regarding the design of electricity markets is whether adding auctions to the continuous intraday trading is improving the performance of the market. To approach this question, we assess the experience with the implementation of the 3 pm local auction for quarters in Germany at the European Power Exchange (EPEX SPOT) in December 2014 to assess the impact on trading volumes/liquidity, prices, as well as market depth. We discuss further opportunities and challenges that are linked with a potential implementation of an intraday auction. |
| Keywords: | Auctions, electricity, empirical analysis, market design |
| JEL: | C5 C93 D44 L50 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1544&r=com |
| By: | Nicholas Economides (Department of Economics, Leonard N. Stern School of Business, New York University, 44 West 4th Street, New York 10012, NY, USA) |
| Abstract: | Network neutrality has facilitated businesses Innovation “at the edge of the Internet.” Network neutrality has contributed very significantly to the fast and vigorous growth of the high technology sector in the United States and the rest of the world. Departures from network neutrality, such as paid prioritization, are likely not to be in the public interest and to result in a number of detriments to the total benefits of the Internet ecosystem. I present a number of reasons why we should not be concerned about short term investment patterns. It seems very unlikely that these investment patterns are a result of the passage of the network neutrality rules. |
| Keywords: | network neutrality, two-sided markets, Internet, monopoly, price discrimination, regulation, AT&T, Verizon, Comcast, Time-Warner |
| JEL: | L1 D4 L12 L13 C63 D42 D43 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1518&r=com |