nep-com New Economics Papers
on Industrial Competition
Issue of 2016‒02‒29
23 papers chosen by
Russell Pittman
United States Department of Justice

  1. Exogenous Expenses in Industries with Vertical Product Differentiation and Quality Constraints By Georgi Burlakov
  2. Vertical organization of production and firm growth By Fabio Pieri
  3. An Analytical Approach to Activating Demand Elasticity with a Demand Response Mechanism By Cédric Clastres; Haikel Khalfallah
  4. Welfare Evaluation in a Heterogeneous Agent Model: How Representative is the CES Representative Consumer? By Tito, Maria D.
  5. IPR protection and optimal entry modes of multinationals By Banerjee, Tanmoyee; Biswas, Nilanjana
  6. Reconciling Full-Cost and Marginal-Cost Pricing By Gramlich, Jacob P.; Ray, Korok
  7. False Advertising By Rhodes, Andrew; Wilson, Chris M
  8. Market Structure and Competition in Transition:Results from a Spatial Analysis By Martin Labaj; Karol Morvay; Peter Silanic; Christoph Weiss; Biliana Yontcheva
  9. Prix, taux de profit cible et prévention de l’entrée By Jael, Paul
  10. To Regulate or to Deregulate? The Role of Downstream Competition in Upstream Monopoly Vertically Linked Markets By Polemis, Michael; Eleftheriou, Konstantinos
  11. Competition in Telecommunications and Internet Services: Problems with Asymmetric Regulations By Paul J.J. Welfens
  12. Competition and market strategies in the Swiss fixed telephony market By Balmer, Roberto E.
  13. Optimal Number of Firms in the Wireless Markets By Jeanjean, François; Houngbonon, Georges Vivien
  14. Content providers and co-investment in broadband networks By Anna D'Annunzio; Pierfrancesco Reverberi
  15. The impact of network competition in the mobile industry By Houpis, George; Rodriguez, Jose Maria; Ovington, Thomas; Serdarevic, Goran
  16. Complement and Network Externalisties in the Mobile Devices Industry By Gyu, Lim Yeon; Taek, Kim Sang
  17. Regulatory Implications of FMS for Voice Services in Turkey: Analysis of Recent Regulatory Acts on Deregulation and Margin Squeeze By Ünver, Mehmet Bilal; Göktaylar, Yavuz; Tezel, Fatih
  18. Insight into the Rival Effects of M&As within the Context of Mobile Ecosystem: The Case of Google and Apple By Yang, Seung Ho; Nam, Changi; Kim, Seongcheol
  19. Can Internet news media firms make good deals with Internet portals by making coalitions? By Lee, Seungjoo; Kwon, Youngsun
  20. Reference pricing with endogenous generic entry By Kurt R. Brekke; Chiara Canta; Odd Rune Straume
  21. Market Structure and Competition in the Health-care Industry: Results from a Transition Economy By Martin Lábaj; Alzbeta Siskovicova; Barbora Skalicanova; Peter Silanic; Christoph Weiss; Biliana Yontcheva
  22. Bayesian SUR Heteroskedastic Model for Demand Elasticity Analysis in the Italian Wholesale Electricity Market. By Maria Chiara D'ERRICO
  23. Market Power in the Poultry Sector in Turkey By Gokhan Ozertan; Sayed H. Saghaian; Hasan Tekguc

  1. By: Georgi Burlakov
    Abstract: In this paper we study how an exogenous expense of owning a market good affects the equilibrium outcome in a market with vertical product differentiation i.e. consumers differ by income but have identical preferences for the good’s quality. We identify three possible subgame-perfect equilibrium outcomes dependent on the amount of the exogenous expense. First, at a small exogenous expense tending to zero, quality choice is characterized by maximal product differentiation and all consumers buy one of the two qualities in the market. Second, at a medium exogenous expense, some low-income consumers refrain from buying which incentivizes the producer of the low-quality good to minimize its difference from the high-quality good. In turn, it chooses the best quality from its individually constrained set of quality choices. Third, at a large exogenous expense at which the consumers of the low-quality good cannot afford it, the market is monopolized by the high-quality firm.
    Keywords: vertical product differentiation; commodity taxation; market participation;
    JEL: L11 L13 L15
    Date: 2015–02
  2. By: Fabio Pieri
    Abstract: This paper empirically explores if different vertical organizational forms (i.e. vertical integration versus dis-integration) give rise to unlike growth ''behaviors'' within the same industry. An econometric analysis is conducted in a sample of around 500 Italian machine tool (MT) builders for the period 1998-2007, implementing instrumental variables to control for the endogeneity of the organizational form in the relation. Ceteris paribus, vertically integrated firms result to be characterized by a less dispersed distribution of growth rates than their dis-integrated counterparts. Several concurring factors, such as adjustment costs, organizational slacks and a better management of fluctuations in the markets of intermediate and final products, may explain the more ÒstableÓ growth profile of vertically integrated firms. By means of analyzing how different organizational forms map into the distribution of output growth rates, this work provides insight into the firm dynamics in a mature industry in which both vertically integrated and dis-integrated firms coexist.
    Keywords: Vertical integration, Firm growth, Variance-vertical integration scaling relation, Instrumental variables, Quantile regression, Italian machine tool industry
    JEL: D22 L23 L24 L26 L64
    Date: 2016
  3. By: Cédric Clastres (équipe EDDEN - PACTE - Politiques publiques, ACtion politique, TErritoires - CNRS - Centre National de la Recherche Scientifique - Grenoble 2 UPMF - Université Pierre Mendès France - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UJF - Université Joseph Fourier); Haikel Khalfallah (équipe EDDEN - PACTE - Politiques publiques, ACtion politique, TErritoires - CNRS - Centre National de la Recherche Scientifique - Grenoble 2 UPMF - Université Pierre Mendès France - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UJF - Université Joseph Fourier)
    Abstract: The aim of this work is to demonstrate analytically the conditions under which activating the elasticity of consumer demand could benefit social welfare. We have developed an analytical equilibrium model to quantify the effect of deploying demand response on social welfare and energy trade. The novelty of this research is that it demonstrates the existence of an optimal area for the price signal in which demand response enhances social welfare. This optimal area is negatively correlated to the degree of competitiveness of generation technologies and the market size of the system. In particular, it should be noted that the value of un-served energy or energy reduction which the producers could lose from such a demand response scheme would limit its effectiveness. This constraint is even greater if energy trade between countries is limited. Finally, we have demonstrated scope for more aggressive demand response, when only considering the impact in terms of consumer surplus.
    Keywords: Demand Response, Price Signals, Welfare Analysis
    Date: 2015–12
  4. By: Tito, Maria D. (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: The present paper investigates the impact of asymmetric price changes on welfare in a model with heterogeneous consumers. I consider consumer heterogeneity a la Anderson et al. (1992). The standard welfare equivalence between the CES representative consumer and the discrete choice model breaks down in presence of asymmetric price changes. In fact, asymmetric variation in prices produce differential gains among heterogeneous consumers. I show that there exists no feasible Kaldor-Hicks income transfer such that the gains are equally redistributed. Intuitively, in presence of decreasing marginal utility, aggregation creates an insurance mechanism: the CES representative consumer softens the impact of price changes reallocating consumption among the available varieties. Individual consumers, instead, purchase a single product and do not internalize the effects of changes in prices of other available varieties. This result suggests that only symmetric policy-induced price changes minimize the utility losses across heterogeneous consumers.
    JEL: D11 D60
    Date: 2015–12–02
  5. By: Banerjee, Tanmoyee; Biswas, Nilanjana
    Abstract: The present paper develops a model to analyze the relationship between modes of entry of a Multinational Corporation (MNC) in a vertically differentiated market in a Less Developed Country (LDC) to the Intellectual Property Rights (IPR) protection policy adopted by the LDC government. The MNC has two options of entry: fragment production structure and shift assembling unit to LDC, or shift entire production to LDC with full technology transfer. The MNC incurs investment to control the copying of the original product by a commercial pirate in the two modes of entry. The results show that the optimal anti-copying investment is inversely related with the IPR protection rate chosen by the LDC government. The government may or may not monitor in equilibrium. However, government monitoring may not result in complete deterrence of piracy. Further, the MNC shifts complete production to LDC with full technology transfer if the transport-cost of sending semi-finished product from developed country to LDC is above a critical level, otherwise a fragmented mode of entry takes place with assembly-line FDI in LDC.
    Keywords: assembly line FDI,FDI with technology transfer,piracy,IPR protection
    JEL: L11 O33 O34 O38
    Date: 2016
  6. By: Gramlich, Jacob P. (Board of Governors of the Federal Reserve System (U.S.)); Ray, Korok (Texas A&M School of Business)
    Abstract: Despite the clear prescription from economic theory that a firm should set price based only on variable costs, firms routinely factor fixed costs into pricing decisions. We show that full-cost pricing (FCP) can help firms uncover their optimal price from economic theory. FCP marks up variable cost with the contribution margin per unit, which in equilibrium includes the fixed cost. This requires some knowledge of the firm's equilibrium return, though this is arguably easier a lower informational burden than knowing one's demand curve, which is required for optimal economic pricing. We characterize when FCP can implement the optimal price in a static game, a dynamic game, with multiple products, and under a satisficing objective.
    Keywords: Full Cost Pricing; Marginal Cost Pricing; Optimal Pricing; Pricing
    Date: 2015–09–09
  7. By: Rhodes, Andrew; Wilson, Chris M
    Abstract: There is widespread evidence that some firms use false advertising to overstate the value of their products. Using a model in which a policymaker is able to punish such false claims, we characterize a natural equilibrium in which false advertising actively influences rational buyers. We analyze the effects of policy under different welfare objectives and establish a set of demand and parameter conditions where policy optimally permits a positive level of false advertising. Further analysis considers some wider issues including the implications for product investment and industry self-regulation.
    Keywords: Misleading Advertising; Product Quality; Pass-through; Self-Regulation
    JEL: D83 L15 M37
    Date: 2015–12–14
  8. By: Martin Labaj (Department of Economics, Vienna University of Economics and Business); Karol Morvay (Department of Economic Policy, University of Economics in Bratislava); Peter Silanic (Department of Economic Policy, University of Economics in Bratislava); Christoph Weiss (Department of Economics, Vienna University of Economics and Business); Biliana Yontcheva (Department of Economics, Vienna University of Economics and Business)
    Abstract: The present paper provides first microlevel (indirect) empirical evidence on changes in the determinants of firm profitability, the role of fixed and sunk costs, as well as the nature of competition for a transition economy. We estimate size thresholds required to support different numbers of firms for four retail and professional service industries in a large number of geographic markets in Slovakia. The three time periods in the analysis (1995, 2001 and 2010) characterize different stages of the transition process. Specific emphasis is given to spatial spill-over effects between local markets. Estimation results obtained from a spatial ordered probit model suggest that entry barriers have declined considerably (except for restaurants) and the intensity of competition has increased. We further find that demand spill-overs and/or the effects associated with a positive correlation in unobservable explanatory variables seem to outweigh negative spill-over effects caused by competitive forces between neighboring cities and villages. The importance of these spatial spill-over effects differs across industries.
    Keywords: entry thresholds, competition, Slovakia, transition, geographic markets
    JEL: L22 D22 M13 R11
    Date: 2016–02
  9. By: Jael, Paul
    Abstract: Since the marginalist controversy held from 1939 to the mid-fifties, the full cost principle presents itself as an alternative to the marginalist theory of the producer’s equilibrium, without being able to shake its dominance. Yet, through decades, empirical investigations are rather favourable to it. Its rationality has not been sufficiently emphasized; so, orthodoxy was able to belittle it as an empirical practice compatible with its own precepts. The present article shows that three principles stated by the full costers and their successors would allow to build a sound theory of full cost pricing. These are: - preventing entry of new competitors; - target rate of profit; - competitive price leadership The article proves that full cost pricing is more conducive to profit maximization than marginalist rule, especially in the case of a competitive market with few suppliers, a market structure usually neglected by microeconomics. Opponents to full cost pricing often consider changes in demand as its Achilles heel. The present article analyses this problem in depth.
    Keywords: prix; concurrence; structure de marché; full cost
    JEL: D21 D40 D49
    Date: 2015–08
  10. By: Polemis, Michael; Eleftheriou, Konstantinos
    Abstract: This paper attempts to cast light to the relationship between Cournot-Bertrand controversy and monopoly regulation. To this purpose, we use a simple model of a vertically linked market, where an upstream regulated natural monopoly is trading via two-part tariff contracts with a downstream duopoly. Combining our results to those of the existing literature on deregulated markets, we argue that when the downstream competition is in prices, efficiency dictates regulating the monopoly with a marginal cost based pricing scheme. However, this type of regulation leads to significant welfare loss, when the downstream market is characterized by Cournot competition.
    Keywords: Bertrand; Cournot; Marginal cost pricing; Regulation; Vertical relations
    JEL: L43 L51
    Date: 2015–03–26
  11. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: With the digital convergence of internet services markets and telecommunications markets, the issue of a common, consistent regulation has become more important. While Google or Facebook can exploit knowledge about the content of “data mails” or SMS, data protection rules for telecommunication operators are different – they cannot use info about “structural content” and are thus unable to generate high revenues from advertising that is based on knowledge about structural content. Internet service providers thus can cross-subsidize digital communication services and thereby gain market shares - based on cross-subsidization - in traditional telecommunication markets. Thus there is a fundamental inconsistency of regulations for internet service providers and telecommunication operators which should be remedied by new global rules for the emerging global communications market. The EU and the US, as well as other countries, plus the ITU should launch a joint initiative in order to create a global level playing field.
    Keywords: Internet services, Telecommunication, Regulation, Digital global markets
    JEL: L86 L96 L98
    Date: 2014–12
  12. By: Balmer, Roberto E.
    Abstract: Fixed telephony has long been a fundamentally important market for European telecommunications operators. The liberalisation and the introduction of regulation in the end of the 1990s, however, allowed new entrants to compete with incumbents at the retail level. A rapid price decline and a decline in revenues followed. Increased retail competition eventually led a number of national regulators to deregulate this market. In 2013, however, many European countries (including Switzerland) continued to have partially binding retail price regulation in this market. More than a decade after liberalisation and the introduction of wholesale and retail price regulation, sufficient data is available to empirically measure the success of regulation and assess its continued necessity. This paper develops a market model based on a generalised version of the traditional dominant firm – competitive fringe model allowing for the incumbent a more competitive conduct than that of a dominant firm. A system of simultaneous equations is developed and direct estimation of the incumbent’s residual demand function is performed by instrumenting the market price by incumbent-specific cost shifting variables as well as other variables. Unlike earlier papers that assess market power in this market, this paper also adjusts the market model to ensure a sufficient level of cointegration and avoid spurious regression results. This necessitates the introduction of intertemporal effects. While the incumbent’s conduct cannot be directly estimated using this framework, the concrete estimates show that its residual demand is inelastic (long run price elasticity of residual demand of -0.12). Such a level of elasticity is shown to be only compatible with a profit maximising incumbent in the case of largely competitive conduct (conduct parameter below 0.12 and therefore close to zero). It is consequently found that the Swiss incumbent acted rather competitively in the fixed telephony retail market in the period under review (2004-2012) and that the (partial) retail price caps in place can no longer be justified on the basis of a lack of competition.
    Keywords: residual demand estimation,competition,conduct,time series,dynamic residual demand estimation,fixed voice,fixed telephony,retail market,telecommunications
    Date: 2015
  13. By: Jeanjean, François; Houngbonon, Georges Vivien
    Abstract: In this paper, we design a theoretical model to analyze the impact of the number of firms on investment in the wireless communications industry. Our model extends the Salop’s framework by introducing investment in quality that either reduces the marginal cost of production or shifts the consumers’ valuation upward. We find that an increase in the number of firms reduces their incentives to invest in quality. The impact on the aggregate industry investment can be non-monotone. These theoretical findings are supported by empirical evidence from the mobile telecommunications industry. More specifically, we find that mobile operators’ investment in network infrastructure is not affected when going from two to three firms; but decreases above three firms. In addition, there is an inverted-U relationship between the industry investment and the number of mobile operators; the maximum being reached at three or four mobile operators.
    Keywords: Market structure,Investment,Mobile Telecommunications
    JEL: D21 D22 L13 L40
    Date: 2015
  14. By: Anna D'Annunzio (Telenor Research, Snar¿yveien 30, 1360 Fornebu, Norway); Pierfrancesco Reverberi (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza")
    Abstract: In many countries, Next Generation Access networks (NGA) deployment and penetration rate proceed at a slower pace than expected. We argue that an ex ante contractual arrangement among access Internet Service Providers (ISPs) and Content Providers (CPs), which builds on the complementarity between infrastructure and content, can promote the roll out of NGA. Different from co-investment of ISPs, and from incentive policies based on access regulation, one such contract brings down the investment cost for the telecom industry, promotes end users' demand for improved connectivity, and internalizes investment externalities. We then study how the regulatory regime of the Internet affects firms' investment incentives. Using a simple model, we show that a departure from network neutrality, which allows the access ISP to negotiate with the CP a fee for priority delivery of content, has ambiguous effects on infrastructure investment. The ISP's and the CP's incentives to (co)-invest in NGA depend on the cost of investment and the CP's bargaining power ex post (when investment is sunk).
    Keywords: Next Generation Access networks ; Investment under uncertainty ; Ex-ante and ex-post contracts ; Network neutrality ; Co-investment
    Date: 2015
  15. By: Houpis, George; Rodriguez, Jose Maria; Ovington, Thomas; Serdarevic, Goran
    Abstract: In 2000, there were as many countries served by a single mobile network as by network competition. Today, only 30 countries, representing less than 3% of the world’s population, are served by a single network. There has been considerable discussion about the optimal number of network operators in the mobile industry. More recently, some regulators and governments have considered implementing a single wholesale network to deliver next generation mobile services due to concerns around low coverage, inefficient duplication of costs and lack of competition. To date, the authors are not aware of such single wholesale networks fully implemented in mobile industry. What is clear is that single wholesale networks represent a U-turn with respect the way in which the mobile industry has developed worldwide. Therefore, it is important to carefully examine the available evidence on the performance of mobile markets in countries with a single mobile networks, as this is could shed some light on the expected performance of single wholesale networks. The key result is that countries with network competition have higher coverage, higher take-up and greater innovation than countries with a single mobile network, controlling for other relevant factors. This paper represents a significant contribution to the literature, as the authors are not aware of any other papers that have considered the impact of network competition compared to single networks on outcomes such as coverage. The results of the paper have significant policy implications, as they imply that moving away from the network competition model into the world of single wholesale networks could cause considerable consumer harm, which may be difficult to reverse once there has been a move away from network competition.
    Keywords: regulation,single mobile network,competition,mobile telecommunications
    Date: 2015
  16. By: Gyu, Lim Yeon; Taek, Kim Sang
    Keywords: Hotelling Model,Transportation Cost,Complement Goods,Mobile Devices
    Date: 2015
  17. By: Ünver, Mehmet Bilal; Göktaylar, Yavuz; Tezel, Fatih
    Abstract: FMS (fixed-to-mobile substitution) has increasingly been echoed within the regulatory agenda of the global and domestic policy actors as the usage of mobile telephony has rapidly exceeded that of the fixed telephony in the last decade. In this line of thinking and upon the drastic changes in market figures, e.g., diminishing fixed subscriber number and traffic, Information and Communication Technologies Authority (ICTA), regulatory authority in Turkey has had a survey carried out across the country in 2013, primarily to evaluate the degree of FMS. The survey results demonstrated the existence of one-sided (or imperfect) FMS, which has been found to influence fixed access and calling markets so as to ensure that these two markets are more competitive under a forward-looking approach. Moreover, ICTA has advanced the wholesale regulations within the context of fixed call origination market by imposing margin squeeze remedy on the fixed incumbent (SMP operator). While the latter step is criticized as being in conflict with the deregulation decision, the nature of the remedy being on ex post basis could be speculated to eliminate the concerns to an extent. Aggravating the discussion, an interesting development during the course of ICTA’s intervention has happened in January 2015 when the SMP operator has increased its two retail prices so as to rearrange the margins. In this context, two questions arise from the discussions which extend to the philosophy of market regulation and deregulation: (i) First, does the regulator have a responsibility to pursue a regular (although being ex post) way of examining and when necessary intervening the incumbent’s retail prices despite the fact Competition Authority has opened investigations several times on the same issue. (ii) Would the exposed degree of FMS have had a driving role for deregulation of fixed access and calling markets, which are freed from regulation including margin squeeze remedy on a different route across EU, i.e. mostly inner-market (or VOB-driven) developments towards effective competition. In this paper, such debates are addressed under the light of the reasons that justify margin squeeze as well as deregulation acts issued both by the Turkish regulator itself and in general way of regulatory understanding, i.e. with a particular emphasis to EU perspective and implementation. It is elaborated whether the underlined concerns relating to the degree of market regulation are successfully sorted out and translated into regulatory practice, specifically when thought with Turkey-centric competition problems, i.e. predominant WLR type service-based models, diminishing fixed markets. After discussions, it is found that although belatedly imposed and accompanied by deregulation, such a remedy would serve as a check-balance tool for a transition period, but not suffice to cover all the long-term problems by itself in cases where competing operators have insufficient competitive tools in terms of replicability. Last but not the least it is concluded that although European way of deregulation draws a differing roadmap, EU-centric pillars for regulation are implicitly injected into the Turkish system, which tries to resolve the issue with a trade-off together with the little possibility of ruling in a regulatory vacuum. Should this and a comparable risk of regulatory opportunism be prevented, a hybrid and promising example would be mentioned under the context of deregulatory reform.
    Keywords: margin squeeze,deregulation,FMS,EU regulatory framework,market definition,fixed,mobile,voice,Turkey
    Date: 2015
  18. By: Yang, Seung Ho; Nam, Changi; Kim, Seongcheol
    Keywords: M&A,Rival effects,Google,Apple,Event study,Mobile convergence,Business ecosystem
    Date: 2015
  19. By: Lee, Seungjoo; Kwon, Youngsun
    Keywords: News Content,Internet Portal,Revenue Sharing,Coalition,Core,Nash Strong Equilibrium
    Date: 2015
  20. By: Kurt R. Brekke (Department of Economics, Norwegian School of Economics); Chiara Canta (Department of Economics, Norwegian School of Economics); Odd Rune Straume (Universidade do Minho - NIPE)
    Abstract: In this paper we study the effect of reference pricing on pharmaceutical prices and ex-penditures when generic entry is endogenously determined. We develop a Salop-type model where a brand-name producer competes with generic producers in terms of prices. In the market there are two types of consumers: (i) brand biased consumers who choose between brand-name and generic drugs, and (ii) brand neutral consumers who choose between the different generic drugs. We find that, for a given number of firms, reference pricing leads to lower prices of all products and higher brand-name market shares compared with a reimbursement scheme based on simple coinsurance. Thus, in a free entry equilibrium, the number of generics is lower under reference pricing than under coinsurance, implying that the net effects of reference pricing on prices and expenditures are ambiguous. Allowing for price cap regulation, we show that the negative effect on generic entry can be reversed, and that reference pricing is more likely to result in cost savings than under free pricing. Our results shed light on the mixed empirical evidence on the effects of reference pricing on generic entry.
    Keywords: Pharmaceuticals; Reimbursement schemes; Generic entry
    JEL: I11 I18 L13 L51
    Date: 2015
  21. By: Martin Lábaj (Institute of Economic Research SAS); Alzbeta Siskovicova; Barbora Skalicanova; Peter Silanic; Christoph Weiss; Biliana Yontcheva
    Abstract: The present paper provides first empirical evidence on the relationship between market size and the number of fi rms in the health-care industry for a transition economy. We estimate market size thresholds required to support diff erent numbers of suppliers (fi rms) for three occupations in the health-care industry in a large number of distinct geographic markets in Slovakia, taking into account the spatial interaction between local markets. The empirical analysis is carried out for three time periods (1995, 2001 and 2010) characterizing diff erent stages of the transition process. Our results suggest that the relationship between market size and the number of fi rms diff ers both across industries, and across periods. Furthermore, we fi nd evidence for correlation in entry decisions across administrative borders.
    Keywords: entry thresholds, competition, Slovakia, health-care industry
    JEL: L22 D22
    Date: 2015–12–10
  22. By: Maria Chiara D'ERRICO
    Abstract: The Italian electricity sector undertook a deregulation process starting in the 2004 that has led to overcome the system of vertically integrated monopoly. This process led to the institution of Power Exchange (IPEX). The transition had not been simple since the definition of a proper market structure preserving competition is not an immediate task. In this context, the information provided by demand elasticity have to be exploited since the elasticity is strictly linked with the market power measured on the supply side. The work want to investigate what is the extent of buyer’s elasticity and if buyers can change their consumption profiles within the day given the rational expectation of change in price. The research use a Bayesian approach applying a heteroskedastic SUR regression Model.
    Keywords: Demand Elasticity; Bayesian Estimation; Electricity Markets
    JEL: D43
    Date: 2015–12–18
  23. By: Gokhan Ozertan (Bogazici University); Sayed H. Saghaian (University of Kentucky); Hasan Tekguc (Mardin Artuklu Univeristy)
    Abstract: In 2009, the Competition Authority (CA) in Turkey penalized 27 broiler chicken producers for agreeing to restrict supply and controlling prices, hence, forming a cartel. The CA based its punishment decision on communication records among major broiler chicken producers, using raw price series and without any statistical or econometric analysis. In this research, time-series methods are employed to test directly for the presence of market power along the supply chain in the poultry sector for both demand and supply sides. The findings show that the retail price behavior in the poultry supply chain in Turkey is consistent with an oligopolistic market structure. Classification JEL: Q11, Q13
    Keywords: Market power, poultry, Turkey
    Date: 2014–04

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