nep-com New Economics Papers
on Industrial Competition
Issue of 2018‒06‒25
ten papers chosen by
Russell Pittman
United States Department of Justice

  1. All-Pay Oligopolies: Price Competition with Unobservable Inventory Choices By Montez, João; Schutz, Nicolas
  2. An Aggregative Games Approach to Merger Analysis in Multiproduct-Firm Oligopoly By Volker Nocke; Nicolas Schutz
  3. Multiple Long-Run Equilibria in a Free-Entry Mixed Oligopoly By Haraguchi, Junichi; Matsumura, Toshihiro
  4. Optimal fines for cartel agreements: the case of Slovakia By Richard Kalis; Martin Labaj; Daniela Zemanovicova
  5. Políticas de competencia para una economía digital: el marco regulatorio e institucional y el contexto internacional By Núñez Reyes, Georgina; De Furquim, Júlia; Pereira Dolabella, Marcelo
  6. Percepția consumatorilor de internet asupra publicității online By Istrate, Flavia Andreea; Miroslav, Cristina Andreea; Olaru, Bianca Helene
  7. Cream Skimming and Information Design in Marching Markets By Romanyuk, Gleb; Smolin, Alexey
  8. Common ownership and market entry: Evidence from the pharmaceutical industry By Melisa Newham; Jo Seldeslachts; Albert Banal-Estañol
  9. Retailing with 3D Printing By Chen, Li; Cui, Yao; Lee, Hau L.
  10. On the Geographic Scope of Retail Mortgage Markets By Dean F. Amel; Elliot Anenberg; Rebecca Jorgensen

  1. By: Montez, João; Schutz, Nicolas
    Abstract: We study a class of games where stores source unobservable inventories in advance, and then simultaneously set prices. Our framework allows for firm asymmetries, heterogeneity in consumer tastes, endogenous consumer information through advertising, and salvage values for unsold units. The payoff structure relates to a complete-information all-pay contest with outside options, non-monotonic winning and losing functions, and conditional investments. In the generically unique equilibrium, stores randomize their price choice and, conditional on that choice, serve all their targeted demand---thus, some inventories may remain unsold. As inventory costs become fully recoverable, the equilibrium price distribution converges to an equilibrium of the associated Bertrand game (where firms first choose prices and then produce to order). This suggests that with production in advance, the choice between a Cournot analysis and a Bertrand-type analysis, as properly generalized in this paper, should depend on whether or not stores observe rivals' inventories before setting prices.
    Keywords: all-pay contests; Bertrand convergence.; inventories; oligopoly; production in advance
    JEL: L13
    Date: 2018–05
  2. By: Volker Nocke; Nicolas Schutz
    Abstract: Using an aggregative games approach, we analyze horizontal mergers in a model of multiproduct-firm price competition with nested CES or nested logit demands. We show that the Herfindahl index provides an adequate measure of the welfare distortions introduced by market power, and that the induced change in the naively-computed Herfindahl index is a good approximation for the market power effect of a merger. We also provide conditions under which a merger raises consumer surplus, and conditions under which a myopic, consumer-surplus-based merger approval policy is dynamically optimal. Finally, we study the aggregate surplus and external effects of a merger.
    Date: 2018–06
  3. By: Haraguchi, Junichi; Matsumura, Toshihiro
    Abstract: We investigate a free-entry mixed oligopoly with constant marginal costs. A privatization policy is implemented after private firms enter the market. We find that both full privatization and full nationalization are equilibrium policies, and the former is the worst privatization policy for welfare.
    Keywords: entry-then-privatization, constant marginal costs, profit-enhancing entry, two polar equilibrium privatization policies
    JEL: D43 H44 L33
    Date: 2018–05–14
  4. By: Richard Kalis (Department of Economic Policy, University of Economics in Bratislava); Martin Labaj (Department of Economic Policy, University of Economics in Bratislava); Daniela Zemanovicova
    Abstract: The paper deals with theoretical and empirical aspects of optimal fines for cartel agreements with a special focus on the practices of the Antimonopoly Office of the Slovak Republic. First, we discuss the theoretical requirements in order to make fines for cartel agreements effective in the sense of preventive and repressive function. Then, we review the current literature on the empirics of fines for cartel agreements. In the empirical part, we evaluate the fines for cartel agreements in the Slovak Republic. The analysis is based on a unique dataset collected from publicly available information on cartel agreements cases of the Antimonopoly Office of the Slovak Republic.
    Keywords: cartel agreements, fines, competition policy
    JEL: K21 L40
    Date: 2016–12–01
  5. By: Núñez Reyes, Georgina; De Furquim, Júlia; Pereira Dolabella, Marcelo
    Abstract: En este documento se identifican distintas tendencias de la política de competencia en la economía digital, haciendo hincapié en la protección de datos y los procesos industriales. Se analiza el contexto de la política de competencia en la realidad económica de América Latina, marcada por un intenso proceso de digitalización. Este proceso conduce a un nuevo paradigma caracterizado por el uso de tecnologías más avanzadas, la globalización de los mercados y el estado de hiperconectividad de la economía. También se examinan las sinergias entre la competencia de los mercados y el desempeño de los gobiernos empresariales en un contexto de fusiones y nuevos modelos de negocio.
    Date: 2018–06–07
  6. By: Istrate, Flavia Andreea; Miroslav, Cristina Andreea; Olaru, Bianca Helene
    Abstract: Internetul s-a bucurat de o adevarata transformare de-a lungul timpului, odata cu dezvoltarea tehnologiilor, devenind in prezent cel mai folosit mediu de comunicare. Spre deosebire de media de comunicare traditionala, internetul a devenit, totodata, un important mediu de publicitate, datorita versalitilitatii, interactivitatii si posibilitatii de targhetare a consumatorilor relevanti. Articolul de fata, prezinta perceptia consumatorilor asupra publicitatii online, avand o baza teoretica si una practica, reprezentata de o cercetare realizata pe un esantion alcatuit din 50 de respondenti, utilizatori de internet, ce vor arata care sunt tendintele mediului publicitar la momentul actual in Romania. Cuvinte cheie: publicitate online, comportamentul consumatorului online, internet, targhetare, publicitate personalizată, publicitate mobilă
    Keywords: publicitate online, comportamentul consumatorului online, internet, targhetare, publicitate personalizată, publicitate mobilă
    JEL: A19
    Date: 2018–05–10
  7. By: Romanyuk, Gleb; Smolin, Alexey
    Abstract: Short-lived buyers arrive to a platform over time and randomly match with sellers. The sellers stay at the platform and sequentially decide whether to accept incoming requests. The platform designs what buyer information the sellers observe before deciding to form a match. We show full information disclosure leads to a market failure because of excessive rejections by the sellers. If sellers are homogeneous, then coarse information policies are able to restore efficiency. If sellers are heterogeneous, then simple censorship policies are often constrained efficient as shown by a novel method of calculus of variations.
    Keywords: cream skimming, matching markets, market failure, information design, calculus of variations
    JEL: C73 C78 D82 D83
    Date: 2018–05–14
  8. By: Melisa Newham; Jo Seldeslachts; Albert Banal-Estañol
    Abstract: Common ownership - where two firms are at least partially owned by the same investor - and its impact on product market outcomes has recently drawn a lot of attention from scholars and practitioners alike. Theoretical and empirical research suggests that common ownership can lead to higher prices. This paper focuses on implications for market entry. To estimate the effect of common ownership on entry decisions, we focus on the pharmaceutical industry. In particular, we consider the entry decisions of generic pharmaceutical firms into drug markets opened up by the end of regulatory protection in the US. We first provide a theoretical framework that shows that a higher level of common ownership between the brand firm (incumbent) and potential generic entrant reduces the generic's incentives to entry. We provide robust evidence for this prediction. The effect is large: a one-standard-deviation increase in common ownership decreases the probability of generic entry by 9-13%. We extend our basic theoretical framework and allow for multiple entrants. Our model shows that for sufficiently high levels of common ownership, the classical idea of entry decisions being strategic substitutes can be reversed into being strategic complements. Our empirical results provide some support for these predictions.
    Keywords: Market Entry, Ownership Structure, Pharma
    JEL: G23 K21 L11 L41 L65
    Date: 2018–05
  9. By: Chen, Li (Cornell University); Cui, Yao (Stanford University); Lee, Hau L.
    Abstract: Given the promise of 3D printing, also known as additive manufacturing, some innovative consumer goods companies have started to experiment with such a technology for on-demand production. However, the potential impact of 3D printing on retail and supply chain operations is not well understood. In this paper, we consider two adoption cases of 3D printing in a dual-channel (i.e., online and in-store) retail setting, and evaluate its impact on a firm's product offering, prices for the two channels, as well as inventory decisions. Our analysis uncovers the following effects of 3D printing. First, 3D printing at the factory has the substitution effect of technological innovation for online demands, as 3D printing replaces the traditional mode of production. Such technology substitution not only leads to increased product variety offered online, which allows the firm to charge a price premium for online customers, but also induces the firm to offer a smaller product variety and a reduced price in-store. Second, when 3D printing is used in-store as well, in additional to the substitution effect, the firm also achieves a structural effect due to the fundamental change in the supply chain structure. Since the in-store demand is served in a build to order fashion, the firm achieves postponement benefits in inventory management. Moreover, using 3D printing in-store will require a new supplier-retailer relationship. We find that cost-sharing contracts can coordinate the supply chains where 3D printing is used in-store and the supplier controls the raw material inventory.
    Date: 2017–09
  10. By: Dean F. Amel; Elliot Anenberg; Rebecca Jorgensen
    Abstract: In this note, we first discuss why markets for mortgage originations are likely to be national in scope. We then show that even if mortgage markets were local, they would be unconcentrated. Finally, we test for an empirical relationship between the local concentration of mortgage lending and changes in mortgage rates and find essentially no correlation of concentration and rates.
    Date: 2018–06–15

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