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on Industrial Competition |
| By: | Hunold, Matthias |
| Abstract: | Entry deterrence can occur when downstream incumbents hold non-controlling ownership shares of a supplier which is commited to charge uniform prices to all downstream firms. The ownership shares imply a rebate on the input price for the incumbents through the profit participation. Such backward ownership induces the supplier to accommodate entry by charging a low uniform price to all downstream firms in case of entry. However, just the entry-accommodating behavior reduces entry profits and thereby can lead to market foreclosure. Based on this theory, the article reviews a merger case in the financial services industry and draws conclusions for regulation and competition policy. |
| Keywords: | entry deterrence,foreclosure,minority shareholdings,non-controlling partial ownership,uniform pricing,vertical integration |
| JEL: | G34 L22 L40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:250&r=com |
| By: | Bazhanov, Andrei; Levin, Yuri; Nediak, Mikhail |
| Abstract: | We consider a decentralized supply chain (DSC) under resale price maintenance (RPM)selling a limited-lifetime product to forward-looking customers with heterogeneous valuations. When customers do not know the inventory level, double marginalization in DSC leads to a higher profit and lower aggregate welfare than in centralized supply chain (CSC). When customers know the inventory, DSC coincides with CSC. Thus, overestimation of customer awareness may lead to overcentralization of supply chains with profit loss comparable with the loss from strategic customers. The case with unknown inventory is extended to an arbitrary number of retailers with inventory-independent and inventory-dependent demand. In both cases, the manufacturer, by setting a higher wholesale price, mitigates the inventory-increasing effect of competition and reaches the same profit as with a single retailer. The high viability of RPM as a strategic-behavior-mitigating tool may serve as another explanation of why manufacturers may prefer DSC with RPM to a vertically integrated firm. |
| Keywords: | limited-lifetime product, strategic customers, limited information, aggregate welfare, oligopoly |
| JEL: | D9 L13 L42 |
| Date: | 2017–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79467&r=com |
| By: | HOSONO Kaoru; TAKIZAWA Miho; YAMANOUCHI Kenta |
| Abstract: | Uncertainty delays investment that involves disruption cost or time-to-build, resulting in capital misallocation from a static point of view. However, theory predicts that uncertainty will affect investment, and hence static misallocation, depending on the degree of product market competition. Using a large panel dataset of manufacturing plants in Japan, we find that although uncertainty results in static misallocation, the effect is weaker for industries with less severe product market competition. We further find that competition worsens uncertainty-driven misallocation through the misallocation among firms that invested in the previous year (the active margin) rather than among those that did not (the inactive margin). While competition increases the probability of investment, it increases the variability of the optimal level of capital as well, which worsens misallocation. To improve allocative efficiency, reduced uncertainty complements competition policies. |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17071&r=com |
| By: | Li, Zheng |
| Abstract: | Using two-player all-pay auctions, the author fully characterizes the Nash equilibrium under a discrete bidding strategy space. In particular, he shows that under the random tiebreaking rule, the cardinality of the set of Nash equilibrium depends on the parity of the reward size and a continuum of Nash equilibria exists. Additionally, when a simple favorone-sided tie-breaking rule is used, the equilibrium solution becomes independent of the reward size. |
| Keywords: | asymmetric Nash equilibrium,all-pay auction |
| JEL: | D44 D72 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201722&r=com |
| By: | Yair Tauman; Chang Zhao |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:17-05&r=com |
| By: | Yair Tauman; Yoram Weiss; Chang Zhao |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:17-04&r=com |
| By: | Francisco Costa-Cabral; Orla Lynskey |
| Abstract: | Personal data has become the object of trade in the digital economy, and companies compete to acquire and process this data. This rivalry is subject to the application of competition law. However, personal data also has a dignitary dimension which is protected through data protection law and the EU Charter rights to data protection and privacy. This paper maps the relationship between these legal frameworks. It identifies the commonalities that facilitate their intersection, whilst acknowledging their distinct methods and aims. It argues that when the material scope of these legal frameworks overlap, competition law can incorporate data protection law as a normative yardstick when assessing non-price competition. Data protection can thus act as an internal constraint on competition law. In addition, it advocates that following the legal and institutional changes brought about by the Lisbon Treaty, data protection and other fundamental rights also exercise an external constraint on competition law and, in certain circumstances, can prevent or shape its application. As national and supranational regulators grapple with the challenge of developing a dynamic information economy that respects fundamental rights, recognition of these constraints would pave the way for a more coherent EU law approach to a digital society. |
| JEL: | L81 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68470&r=com |
| By: | Cagé, Julia; Hervé, Nicolas; Viaud, Marie-Luce |
| Abstract: | This paper documents the extent of copying and estimates the returns to originality in online news production. We build a unique dataset combining all the online content produced by the universe of news media (newspaper, television, radio, pure online media, and a news agency) in France during the year 2013 with new micro audience data. We develop a topic detection algorithm that identifies each news event, trace the timeline of each story and study news propagation. We show that one quarter of the news stories are reproduced online in less than 4 minutes. High reactivity comes with verbatim copying. We find that only 32.6% of the online content is original. The negative impact of copying on newsgathering incentives might however be counterbalanced by reputation effects. By using media-level daily audience and article-level Facebook shares, we show that original content represents 57.8% of online news consumption. Reputation mechanisms actually appear to solve about 40% of the copyright violation problem. |
| Keywords: | Copyright; Facebook; Information spreading; internet; Investigative journalism; reputation |
| JEL: | L11 L15 L82 L86 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12066&r=com |
| By: | Pandey, Ashish |
| Abstract: | This short perspective article discusses the effect of a start-up firm's capital structure on the nature and degree of competition in the marketplace. Specifically, the article argues that the nature of financing availed by the start-up firms expose them to the risk of predatory price-based competition from a well-capitalized competitor. The staged model of capital infusion works best when tangible progress can be demonstrated at every new round of financing. Indian start-up firms need to acknowledge this fact, pursue innovations that complement the local realities and develop a distinct local model that justifies the need for additional capital. |
| Keywords: | Venture Financing, Start-Up Firms, Predatory Competition, Capital Dumping |
| JEL: | D43 G32 G38 K42 M13 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79399&r=com |
| By: | Qihong Liu (Department of Economics, University of Oklahoma); Oksana Loginova (Department of Economics, University of Missouri); X. Henry Wang (https://economics.missouri.edu/people/wang) |
| Abstract: | Platforms such as Uber, Lyft and Airbnb serve two-sided markets with drivers (property owners) on one side and riders (renters) on the other side. Some agents multi-home. In the case of ride-hailing, a driver may drive for both Uber and Lyft, and a rider may use both apps and request a ride from the company that has a driver close by. In this paper, we are interested in welfare implications of multi-homing in such a market. Our model abstracts away from entry/exit by drivers and riders as well as pricing by platforms. Both drivers' and riders' surpluses are determined by the average time between a request and the actual pickup. The benchmark setting is a monopoly platform and the direct comparison is a single-homing duopoly. The former is more efficient since it has a thicker market. Next, we consider two multi-homing settings, multi-homing on the rider side and multi-homing on the driver side respectively. Relative to single-homing duopoly, we find that multi-homing on either side improves the overall welfare. However, multi-homing drivers potentially benefit themselves at the cost of single-homing drivers. In contrast, multi-homing riders benefit themselves as well as single-homing riders, representing a more equitable distribution of gains from multi-homing. |
| Keywords: | Ride-hailing platform, two-sided markets, network externalities, multi-homing |
| JEL: | D85 L12 L13 |
| Date: | 2017–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1707&r=com |
| By: | Sylvain Sourisseau (ADEME - French Agency of Environment and Energy Management, University of Paris Saclay - Evry Val d’Essonne, TEPP-CNRS, Department of Economics); Jean De Beir (University of Paris Saclay - Evry Val d’Essonne, TEPP-CNRS, Department of Economics); Thai Ha Huy (University of Paris Saclay - Evry Val d’Essonne, TEPP-CNRS, Department of Economics) |
| Abstract: | In a view of switching from a linear to a circular economy, recycling plays a fundamental role. While the literature on the effect of recycling over the mining activity is focused on a monopoly, here we only deal with a mining oligopoly, which better reflects realistic market conditions. Our results show a decreasing mining output with the presence of recycling and unexpectidly a greater market power. Nevertheless, we point out the need for recylers to benefit from a minimum recycling efficiency technology to enter the market. A second technologic threshold also allows the recyclers to lower the oligopolistic market power. In this case of extreme foreclosure, since the mining output rises with the number of firms, a cooperation is necessary to prevent the entry of recycling. In terms of strategy, an horizontal integration could strengthen their position in the upstream industrial process and would also represent a good way to step forward to the so-called circular economy. |
| Keywords: | oligopoly, market power, recycling, Alcoa case, iron and steel industry |
| JEL: | L13 L72 D43 Q40 Q53 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:eve:wpaper:17-05&r=com |
| By: | Gehrig, Thomas; Stenbacka, Rune |
| Abstract: | We explore how the nature of the screening technology and the organization of the submission system affect the screening incentives of competing journals. Total screening in a duopolistic journal industry exceeds that of a monopoly. Exclusivity requirements for submissions induce more screening than systems with parallel submission. Interestingly, in the sequential screening model established journal rankings tend to reduce screening incentives. The screening technology determines whether the high-ranked or low-ranked journal have stronger screening incentives, which has implications for the long-run stability of established rankings. |
| Keywords: | assessment of research quality; competition between journals; Information Acquisition; simultaneous versus sequential screening |
| JEL: | D80 L10 L13 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12065&r=com |
| By: | Kurdin, Alexander (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | The process of reforming Russian industry, which has lasted for the last decade, is accompanied by a discussion on the establishment of such an industry regulation system that, on the one hand, would create incentives for market participants to invest in the development of the industry and upgrade capacities, and, on the other hand, would not be accompanied by faster growth of prices and indexation of tariffs. Traditionally, this issue is relevant for infrastructure industries, their cost of services directly affects the costs of citizens and the cost of the final products of enterprises. The paper reviews the theoretical and applied aspects of regulation of prices and tariffs in the gas industry, the methods used are systematized, the specifics of Russian practice and prospects for the development of the gas industry in Russia and the world are analyzed, recommendations are formulated for Russian authorities. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:031703&r=com |
| By: | Timothy Layton; Ellen J. Montz; Mark Shepard |
| Abstract: | The Affordable Care Act Marketplaces were introduced in 2014 as part of a reform of the U.S. individual health insurance market. While the individual market represents a small slice of the U.S. population, it has historically been the market segment with the lowest rates of take-up and greatest concerns about access to robust coverage. As part of the reform of the individual insurance market, the Marketplaces invoke many of the principles of regulated competition including (partial) community rating of premiums, mandated benefits, and risk adjustment transfers. While the Marketplaces initially appeared to be successful at increasing coverage and limiting premium growth, more recent outcomes have been less favorable and the stability of the Marketplaces is currently in question. In this paper, we lay out in detail how the Marketplaces adopt the tools of regulated competition. We then discuss ways in which the Marketplace model deviates from the more conventional model and how those deviations may impact the eventual success or failure of these new markets. |
| JEL: | I11 I13 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23444&r=com |
| By: | Gabueva, Larisa A. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Pavlova, Nina F. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | In recent years, in the context of rejection of non-rigid state regulation of budgetary and autonomous health institutions, large participation of big private foreign companies in the security functions of the industry (equipment, medicines and supplies, food and so forth.), coming to the market of network domestic private clinics, which "take away" a big part of work from the state programs for free medical insurance, the issue of establishing new competitive advantages for stable public and private clinics, which would be based on knowledge and information generated by the human resource. The article is devoted to the analysis of these tendencies in competition of health care companies. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:021705&r=com |
| By: | Gabueva, Larisa (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | Competition in the field of health care should not only be Manufacturers of medical services of all forms of ownership, but, above all Patients making conscious choice of institutions for treatment and Prevention of health problems. State control can create all conditions for a safe and Choice by a citizen of a doctor, institution, regardless of which The program is serviced by a person: compulsory insurance, VMI (Voluntary medical insurance) or for his own by direct payment of services in a medical organization under a contract. This process, in our opinion, will contribute to the growth of the "Index Openness "of medical organizations, a correct evaluation of the results of their Activities. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:021715&r=com |
| By: | Strittmatter, Anthony; Lechner, Michael |
| Abstract: | The disclosure of the VW emission manipulation scandal caused a quasi-experimental market shock in the observable quality of VW diesel vehicles. We consider a classical model for adverse selection and sorting to derive an empirically testable hypothesis about the impact of observable quality on the supply of used cars. We test the hypothesis with data collected from an online car selling platform which reflects about 50% of the German used-car market. The empirical approach is based on a conditional difference-in-differences method. We find that the supply of used VW diesel vehicles increases after the VW emission scandal. This finding is consistent with the predictions of the theoretical model. Furthermore, we find the positive supply effects increase with the probability of manipulation. |
| Keywords: | Supply of used cars, quality of durable goods, sorting, difference-in-differences, management fraud |
| JEL: | D82 L15 L62 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2017:06&r=com |
| By: | Sylvain Sourisseau (ADEME (French Environment and Energy Management Agency – University of Paris Saclay, TEPP-CNRS) |
| Abstract: | China’s growing urbanization and the speed of its manufacturing industry development led to a shock in steel demand at the beginning of the 2000’s and consequently to a shock across the iron and steel industry. In this paper, we carry out descriptive analysis of the evolution in the market structure and the related power market shifting. From a steady situation where few steelmakers negotiated with few mining firms in order to set up the annual price, the market evolved to a new price fixing process resulting from a supply-demand confrontation, like the move seen for most of the other materials a few decades ago. Moreover, the shock and the related events that occurred years after, led to a new composition of stakeholders in the iron and steel sectors, both on the demand and supply sides. In this new context, China has become an essential actor, modifying the industrial structure from a bilateral oligopoly to a thwarted monopsony. |
| Keywords: | steelmaking industry, iron ore, industrial economics, oligopoly, monopsony |
| JEL: | L10 L61 L72 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:eve:wpaper:17-03&r=com |
| By: | Cantillo, Miguel |
| Abstract: | Abstract This paper analyzes and measures the value that American private banks added as directors of non financial companies. Using data between 1874 and 1913, and an event study from 1906, I find that bank directors added about 20% of a firm's market capitalization. Collusive practices encouraged by private banks accounted for 65% of this value, and were the equivalent of creating a three player market among railroads. About 35% of the value added by banks came from better governance. I argue that although policymakers were partly right in sidelining private banks as activist investors, this helped entrench managers. |
| Keywords: | Antitrust; Collusion; Corporate Governance; Financial History |
| JEL: | G21 G24 G34 K21 L41 N21 |
| Date: | 2016–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:79354&r=com |
| By: | Kurdin, Alexander A. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | The paper assesses the industrial policy of the Russian Empire and the Soviet Union in the XVIII-XX centuries. in terms of their effects on competition. The pro-competitive and anti-competitive practices of industrial policy are identified by the economic and historical analysis, the reasons for the application of differenet types of measures and their impact are identified and assessed. The author shows that despite the long tradition of selective industrial policy, the pro-competitive instruments have also been an important element of the Russian government's policies in different historical periods and often led to relatively successful results. |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:021703&r=com |