nep-com New Economics Papers
on Industrial Competition
Issue of 2018‒12‒17
thirty papers chosen by
Russell Pittman
United States Department of Justice

  1. Spatial Competition with Capacity Constraints and Subcontracting By Matthias Hunold; Johannes Muthers
  2. Patterns of Competition with Captive Customers By Armstrong, Mark; Vickers, John
  3. Licensing with Free Entry By Johannes Muthers; Toker Doganoglu; Firat Inceoglu
  4. Impact of Technical Progress on the relationship between Competition and Investment By Jeanjean, François
  5. Niche vs. central firms: Technology choice and cost-price dynamics in a differentiated oligopoly By E. Bacchiega; P. G. Garella
  6. Mixed duopolies with advance production By Balogh, Tamás László; Tasnádi, Attila
  7. Competition policy, trade and the global economy: Existing WTO elements, commitments in regional trade agreements, current challenges and issues for reflection By Anderson, Robert D.; Kovacic, William E.; Müller, Anna Caroline; Sporysheva, Nadezhda
  8. Inventory Behavior, Demand, and Productivity in Retail By Maican, Florin; Orth, Matilda
  9. Price Transmission at the Micro Level: What Accounts for the Heterogeneity? By Lloyd, T.; McCorriston, S.; Lan, H.; Morgan, W.
  10. Profitability of Firms in EU Food Retailing By Finger, R.; Hirsch, S.; Lanter, D.
  11. Market Structure and Competition in Airline Markets By Ciliberto, Federico; Murry, Charles; Tamer, Elie
  12. Price Discrimination in International Airline Markets By Gaurab Aryal; Charles Murry; Jonathan W. Williams
  13. Bit-by-Bit Towards Unlimited: An Analysis of Zero Rating and Sponsored Data Practices of Internet Service Providers By Schnurr, Daniel; Wiewiorra, Lukas
  14. Net neutrality and market power: the case of South Africa By Robb, Genna; Hawthorne, Ryan
  15. Burger Thy Neighbour By Torshizi, M.
  16. Demand peaks and cost pass-through: a case of Irans's poultry market By Zamani, O.; Bittmann, T.; Loy, J.-P.
  17. Supply flexibility in electricity markets By Crampes, Claude; Renault, Jérôme
  18. Climate Policy and Resource Extraction with Variable Markups and Imperfect Substitute By Malik Curuk; Suphi Sen
  19. From China with Love: The Role of FDI from Third Countries on EU Competition and R&D Activities By Ronald B. Davies
  20. Antitrust and consumer enforcement in data markets – Are new theories of harm based on privacy degradation hitting the mark? By Abate, Serafino
  21. Benchmark Regulation of Multiproduct Firms: An Application to the Rail Industry By Wesley W. Wilson; Frank A. Wolak
  22. The role of Centrality in Preventing Free Trade of Processed Agricultural Goods under Imperfect Competition By May, D.; McCorriston, S.
  23. Antitrust Failures: The Internet Giants By Taschdjian, Martin; Alleman, James
  24. Purchase behavior of consumers in emerging markets By van Ewijk, Bernadette
  25. Costly Information Intermediation as a Natural Monopoly By Monte, Daniel; Pinheiro, Roberto
  26. Endogenous Firm Location with a Decreasing Density of Consumers By John Harter
  27. Optimal leniency programe for cartel abuses - an US and European perspective By Aleksander Maziarz
  28. Growing Oligopolies, Prices, Output, and Productivity By Sharat Ganapati
  29. Interstate Competition in Agriculture: Cheer or Fear? Evidence from the United States and China By Gong, B.
  30. Trade Exposure and Firms Markup Dynamics in the Food Industry By Curzi, D.; Garrone, M.; Olper, A.

  1. By: Matthias Hunold; Johannes Muthers
    Abstract: We characterize mixed-strategy equilibria when capacity constrained suppliers can charge location-based prices to different customers. We establish an equilibrium with prices that weakly increase in the costs to supply a customer. Despite prices above costs and excess capacities, each supplier exclusively serves its home market in equilibrium. Competition yields volatile market shares and an inefficient allocation of customers to firms. Even ex-post cross-supplies may restore efficiency only partly. We use our findings to discuss recent competition policy cases and provide hints for a more refined coordinated-effects analysis.
    Keywords: Bertrand-Edgeworth, capacity constraints, inefficient competition, spatial price discrimination, subcontracting, transport costs.
    JEL: L11 L41 L61
    Date: 2018–10
  2. By: Armstrong, Mark; Vickers, John
    Abstract: We study mixed-strategy equilibrium pricing in oligopoly settings where consumers vary in the set of suppliers they consider for their purchase---some being captive to a particular firm, some consider two particular firms, and so on. In the case of "nested reach" we find equilibria, unlike those in more standard models, in which firms are ranked in terms of the prices they might charge. We characterize equilibria in the three-firm case, and contrast them with equilibria in the parallel model with capacity constraints. A theme of the analysis is how patterns of consumer interaction with firms matter for competitive outcomes.
    Keywords: Oligopoly, Bertrand competition, Bertrand-Edgeworth competition, Consideration sets, Mixed strategies
    JEL: C72 D43 D83 L1 L15
    Date: 2018–12–03
  3. By: Johannes Muthers; Toker Doganoglu (University Würzburg); Firat Inceoglu (University Würzburg)
    Abstract: We introduce a fairly general licensing model with an endogenous industry structure – in terms of number of active firms – and general licensing contracts. We show that when the patentee can employ contracts that can condition on market entry or price, it can implement an outcome that yields monopoly profits by awarding the license to a single firm. Furthermore, when the patentee can only use contracts based on the quantities of the licensees, it still captures the entire market via a single licensee, albeit not at the monopoly price. Commonly assumed two-part tariff contracts cannot duplicate this last outcome and yield lower profits. We discuss the welfare implications of various contractual schemes.
    Keywords: Patent licensing, free entry, quantity competition.
    JEL: D45 K11 L11 L13 L21 L41
    Date: 2018–09
  4. By: Jeanjean, François
    Abstract: This paper investigates the impact of technical progress on the relationship between competition an investment. Using a model of oligopoly competition with di¤erentiated products where firms invest to reduce their marginal cost of production, I find that technical progress, which increases the impact of investment on cost reduction, decreases the level of competition that maximizes investment of the industry. This feature holds also for consumer surplus and Welfare. In the model, competition is measured either by the number of competitors or by the degree of substitutability between o¤ers. Result holds for both measures.Two parametric examples illustrate these features.
    Keywords: Market structure,Investment,technical progress,competition
    JEL: D21 D43 D92 L13 O31
    Date: 2018
  5. By: E. Bacchiega; P. G. Garella
    Abstract: This paper is about technology choices in a differentiated oligopoly. The main questions are: whether the position in the product space affects the choice of technology, how changes in fixed costs affect price outcomes, the strategic responses to policy interventions. The industry is an oligopoly where a central firm is competing with two peripheral (or marginal) ones. The former is shown to be more ready than the latter to adopt a technology with low marginal costs and high fixed costs (Increasing Returns to Scale) rather than one with the opposite pattern (Constant Returns to Scale). The fixed cost in the IRS affects the technology configuration and hence output prices. For instance, a lower fixed cost may trigger lower prices and it is neutral only for given technologies. A price-cap may forestall a change in technologies; nondiscriminatory ad-valorem tax and taxes on variable input, or discriminatory unit taxes can also affect the technology pattern and deliver important effects on prices.
    JEL: D43 L11 L13
    Date: 2018–12
  6. By: Balogh, Tamás László; Tasnádi, Attila
    Abstract: Production to order and production in advance have been compared in many frameworks. In this paper we investigate a production in advance version of the capacityconstrained Bertrand-Edgeworth mixed duopoly game and determine the solution of the respective timing game. We show that a pure-strategy (subgame-perfect) Nashequilibrium exists for all possible orderings of moves. It is pointed out that unlike the production-to-order case, the equilibrium of the timing game lies at simultaneous moves. An analysis of the public firm's impact on social surplus is also carried out. All the results are compared with those of the production-to order version of the respective game and with those of the mixed duopoly timing games.
    Keywords: Bertrand-Edgeworth, mixed duopoly, timing games
    JEL: D43 L13
    Date: 2018–11–30
  7. By: Anderson, Robert D.; Kovacic, William E.; Müller, Anna Caroline; Sporysheva, Nadezhda
    Abstract: Competition policy, today, is an essential element of the legal and institutional framework for the global economy. Whereas decades ago, anti-competitive practices tended to be viewed mainly as a domestic phenomenon, most facets of competition law enforcement now have an important international dimension. Examples include: the investigation and prosecution of price fixing and market sharing arrangements that often spill across national borders and, in important instances, encircle the globe; multiple recent, prominent cases of abuses of a dominant position in high-tech network industries; important current cases involving transnational energy markets; and major corporate mergers that often need to be simultaneously reviewed by multiple jurisdictions. Beyond competition law enforcement per se, increasingly, major issues of competition policy (e.g., the impact on competition of the structure and scope of intellectual property rights or the role of state-owned enterprises) implicate the interests of multiple jurisdictions. [...]
    Keywords: competition policy,anti-competitive practices,international trade policy,WTO agreements,regional trade agreements,state-owned enterprises,competitive neutrality,the digital economy
    JEL: F02 F13 F23 F53 L40 L44 L49 N40
    Date: 2018
  8. By: Maican, Florin; Orth, Matilda
    Abstract: This paper studies the factors underlying the heterogeneity in inventory behavior and performance across retail stores. We use a dynamic model of multi-product retailers and local competition to estimate store productivity and consumers' perceived quality of the shopping experience, and we analyze their relationship with inventory behavior and product variety. Using novel and detailed data on Swedish stores and their products, we find that stores learn from demand to improve future productivity. Store productivity is the main primitive that increases inventory turnover and product variety, and this increase is larger for stores with already high inventory turnover. Stores in small markets with intense competition from rivals have higher inventory turnover. Consumers in large markets and markets with large investments in technology benefit from a broader product variety. Counterfactual experiments show that the increase in inventory turnover due to innovations in productivity is three times greater when uncertainty in demand is reduced by 30 percent. Our analysis highlights important trade-offs between productivity and demand that allow retailers to reach high levels of inventory turnover and offer a broad product variety to consumers.
    Keywords: inventory performance; product variety; productivity; supply chain management
    JEL: L11 L13 L25 L81 M21
    Date: 2018–11
  9. By: Lloyd, T.; McCorriston, S.; Lan, H.; Morgan, W.
    Abstract: We use high-frequency scanner data to estimate product-specific price transmission elasticities across product types, between national brands and private labels and across retail chains in the UK. The results provide new insights into the determinants of price transmission including the role of vertical control in the retail chain, the elasticity of retail mark-ups and retailer market power. Using data on 106 orange juice products over 130 weeks for 7 UK retail chains, we highlight significant variation in price transmission by chain and that the characteristics of pricing behaviour and differences in vertical control across are important determinants of price transmission. Acknowledgement :
    Keywords: Demand and Price Analysis
    Date: 2018–07
  10. By: Finger, R.; Hirsch, S.; Lanter, D.
    Abstract: This article investigates the drivers and the persistence of firm profits in EU food retailing thereby generating insights for the derivation of managerial strategies as well as antitrust policies in this highly dynamic sector. Using a dynamic panel model, a sample of 13,256 food retailers from five EU countries France, Poland, Spain, Sweden, and the UK is analyzed over the period 2006 to 2014. Our findings indicate that profits in food retailing are more persistent than in other retail sectors presumably caused by high bargaining power towards processors and entry barriers that lead to less pronounced competition. The results also show that profits are influenced by firm- and industry-specific characteristics. While industry concentration and firm size positively influence profitability, firm age and financial risk tend to have a negative impact. Acknowledgement :
    Keywords: Agribusiness
    Date: 2018–07
  11. By: Ciliberto, Federico; Murry, Charles; Tamer, Elie
    Abstract: We provide an econometric framework for estimating a game of simultaneous entry and pricing decisions in oligopolistic markets while allowing for correlations between unobserved fixed costs, marginal costs, and demand shocks. Firms' decisions to enter a market are based on whether they will realize positive profits from entry. We use our framework to quantitatively account for this selection problem in the pricing stage. We estimate this model using cross-sectional data from the US airline industry. We find that not accounting for endogenous entry leads to overestimation of demand elasticities. This, in turn, leads to biased markups, which has implications for the policy evaluation of market power. Our methodology allows us to study how firms optimally decide entry/exit decision in response to a change in policy. We simulate a merger between American and US Airways and we find that the post-merger market structure and prices depend crucially on how we model the characteristics of the post-merger firm as a function of the pre-merger firms' characteristics. Overall, the merged firm has a strong incentive to enter new markets; the merged firm faces a stronger threat of entry from rival legacy carriers, as opposed to low cost carriers; and, post-merger entry mitigates the adverse effects of increased concentration.
    Keywords: Entry; market power; market structure; merger; multiple equilibria; oligopoly; Self-selection
    JEL: C35 C51 D43 L13 L41 L44
    Date: 2018–11
  12. By: Gaurab Aryal (Department of Economics, University of Virginia); Charles Murry (Department of Economics, Boston College); Jonathan W. Williams (Department of Economics, University of North Carolina - Chapel Hill)
    Abstract: We develop a model of inter-temporal and intra-temporal price discrimination by airlines to study the ability of different discriminatory mechanisms to remove sources of inefficiency and the associated distributional implications. To estimate the model’s multi-dimensional distribution of preference heterogeneity, we use unique data from international airline markets with flight-level variation in prices across time and cabins, and information on passengers’ reason for travel. We find that current pricing practices grant late-arriving business passengers substantial informational rents and yield 81% of first-best welfare, with stochastic demand and asymmetric information accounting for 65% and 35% of the gap, respectively.
    Keywords: dynamic pricing, screening, perishable goods
    JEL: L00 D42 L93
    Date: 2018–11–26
  13. By: Schnurr, Daniel; Wiewiorra, Lukas
    Abstract: Zero rating and sponsored data have recently been introduced as new tari↵ options in mobile telecommunications markets. Both practices exempt data traffic of specific Internet services from an Internet user's download limit and thus allow for unlimited consumption of the respective content. Whereas network operators have advertised these options as consumer-friendly innovations, both practices have been criticized by net neutrality proponents and are currently under regulatory scrutiny in several countries. Based on a model of a monopolistic Internet access provider and two advertising-financed content providers, we investigate market outcomes under both zero rating and sponsored data and assess optimal pricing schemes, firms' profits, consumer surplus and total welfare. We then analyze welfare e↵ects if network operators are prohibited from o↵ering service-specific exemptions from users' data allowance and derive policy implications for the current regulatory debate on net neutrality.
    Keywords: Internet access,data caps,zero rating,sponsored data,price discrimination,net neutrality,regulation,public policy
    Date: 2018
  14. By: Robb, Genna; Hawthorne, Ryan
    Abstract: Net neutrality rules have been implemented in many developed countries, often in response to concerns over ISP market power and potential blocking or throttling of content (Greenstein et al, 2016 and Easley et al, 2018). However, developing countries have significantly lower levels of internet penetration and usage, and ISPs charging content providers in violation of net neutrality may result in lower prices to consumers and greater adoption of internet services (Kramer et al, 2013 and Easley et al, 2018). Furthermore, the case for ex-ante net neutrality regulation in markets with competition among ISPs is not clear (Crocioni, 2011 and Kramer et al, 2013). Market power in respect of internet access looks quite different in developing countries, given that mobile is the predominant means of connection and there are often three or more mobile operators. In certain developing countries, including South Africa and Kenya, fibre to the premises is being rolled out, in some cases on an 'open-access' basis. A further consideration in developing countries like South Africa and many other African countries is that there is a quasi-monopoly in the paid broadcasting market which is not vertically integrated into internet services (the same satellite TV provider, Multichoice, broadcasts across much of the African continent). Competition from mobile operators in offering their own content and that of third parties (such as Netflix) at lower data prices may help to bring about more competition in markets for paid TV. This means that developing countries may have quite different policy objectives where net neutrality is concerned, depending on market circumstances. First, we describe the market structure and dynamics in ISP and content provider markets in South Africa. Next, we investigate the theories of harm in more detail. In terms of the ISP market we investigate whether conduct in violation of net neutrality such as throttling and blocking has been taking place and whether it is likely to in future. We explore data on the number of announced prefixes and peers and IP addresses originated in order to get a sense of the size and market power of ISPs and the relationships between them. We then assess competition at the content provision level including websites, social media over-the-top services, video on demand and broadcasting. We consider examples of bundling and zero-rating conduct by ISPs which appear to be the result of vibrant competition and beneficial for consumers. We provide conclusions in a final section.
    Date: 2018
  15. By: Torshizi, M.
    Abstract: Labels such as hormone-free and antibiotics-free are being advertised more often than ever. One cannot help but wonder about the underlying negative perception that such labels might create about products that may contain hormones and antibiotics in the consumers mind. This paper develops a theoretical model that helps provide a better understanding of the effect of such hostile marketing and advertisement strategies on competition. We show that marketing campaigns that negatively impact consumers perception of their rivals products can change the nature of competition by impacting the distribution of consumers preferences and subsequently elasticity of demand for own and rival products. We show that negatively influencing consumers perception of rivals products may be a more effective marketing tool than the beggar-thy-neighbor advertising where one firm steals some market share from its rivals by means of positive promotion of its own product. This may explain the increasing popularity of such strategies in the food industry in the last few years. Acknowledgement :
    Keywords: Livestock Production/Industries
    Date: 2018–07
  16. By: Zamani, O.; Bittmann, T.; Loy, J.-P.
    Abstract: This article examines cost pass-through and pricing behavior for fresh poultry meat during periods of peak demand. The analysis is conducted on weekly poultry wholesale-retail price data collected in all provinces of Iran from 2010 to 2016. Two traditional festivals are identified as periods of peak demand. We use a panel co-integration framework to estimate pass-through elasticity and speed of adjustment during peak and off-peak periods. We find that wholesale and retail prices increase during these periods, while retail margins decline. We interpret these findings as increased retail competition during periods of peak demand. Moreover, our findings confirm a more sluggish price adjustment during these periods. Acknowledgement : This research was supported by Kiel University funding.
    Keywords: Marketing
    Date: 2018–07
  17. By: Crampes, Claude; Renault, Jérôme
    Abstract: The development of non-dispatchable renewable sources of energy requires more flexible reliable thermal equipment to match residual demand. We analyze the advantages of delaying production decisions to benefit from more precise information on states of the world, at the expense of higher production costs in a two-period framework where two technologies with different flexibility characteristics are available. We determine firstbest production levels ex ante and ex post, that is, when demand is still random and is known with certainty respectively. We then show that, under perfect competition, first best can be implemented indifferently either by means of ex post state-contingent markets or by means of a day-ahead market followed by adjustment markets. By contrast, when the industry is imperfectly competitive, the two market designs are not equivalent.
    JEL: C72 D24 L23 L94
    Date: 2018–07
  18. By: Malik Curuk; Suphi Sen
    Abstract: We develop a resource extraction model that features imperfect substitution and endogenous market power. We analytically characterize the effect of anticipated future demand shocks on the resource extraction path and show that endogenous market power can dampen the adverse consequences of climate policies due to intertemporal carbon leakages compared to the perfect or monopolistic competition benchmarks. Next, we show that under constant elasticity of substitution between alternative energy resources, resource owner's current market share and reserves-to-extraction ratio are sufficient statistics to calculate the degree of intertemporal leakage. Applying data on OPEC, we find a minor increase in current extraction due to an anticipated increase in the productivity of alternative energy technologies.
    Keywords: Climate policy; variable markups; nonrenewable energy resources; imperfect competition; imperfect substitution
    JEL: Q48 L10 H23
    Date: 2018
  19. By: Ronald B. Davies
    Abstract: This report presents empirical analysis on the linkage between mergers and acquisition FDI and acquirer innovation efforts. The data indicates that acquisitions tend to result in a spike in research in the two following years. This impact, however, is contingent on industrial linkages between target and acquirer. In particular, nonmanufacturing targets appear to have the largest impact. Further investigation using input-output linkages finds that acquirer R&D increases more when the target is a primary source of inputs for the acquirer. These effects, however, are smaller for Chinese acquirers, suggesting that concerns over whether acquisition of foreign technology is spurring faster Chinese technological growth may be misguided. Finally, these effects are smaller in more concentrated industries, suggesting the need to consider industry concentration when projecting the R&D implications of cross-border mergers.
    Keywords: Innovation; M&A; FDI
    JEL: F23 O31
    Date: 2018–07
  20. By: Abate, Serafino
    Abstract: The part of the economy that depends, directly or indirectly, fully or partially, on the flow and analysis of data is growing of importance2. Data-driven businesses are spilling over from the online to the offline economy, changing traditional industries. They are set to become pervasive in the coming decade, with the rise of the industrial internet, the development and adoption of AI, and the advent of new, more advanced networks. As a result, it is not surprising to find that antitrust enforcement in data markets is rising, and the nature of it is in part changing. This raises different issues that are relevant for competition policy in general, antitrust enforcement and consumer protection. Firstly, alongside traditional theories of harm, new theories of harm are being tested. Some of the recent enforcement cases based on privacy degradation aim at detecting whether or not some platforms have abused their dominance and exploited their customers in the form of data harvesting which goes behind what is permitted ("data exploitation"). Due to the unique nature of data markets and its economics, these new theories of harm rise issues with respect to remedies that are worth considering further. This working paper focuses on the first aspect, namely to consider whether new exploitative theories of harm based on privacy degradation are plausible...
    Date: 2018
  21. By: Wesley W. Wilson; Frank A. Wolak
    Abstract: A number of formerly regulated multiproduct industries have a transitional or permanent residual regulatory mandate to protect consumers from "excessive" prices. The legislation that deregulated most rail rates contains a statutory mandate for the regulator to protect shippers from "excessive" prices. Fulfilling this mandate has been challenging because of the cost and administrative burden to shippers in obtaining regulatory relief. Moreover, as argued by Wilson and Wolak (2016), the existing rate relief mechanism is based on a cost concept that does not reflect the actual incremental cost of a shipment and it does not adequately address the question of what constitutes an "excessive" rate for a multiproduct firm with significant common costs. This paper analyzes a benchmark price approach to identifying "excessive" prices in multiproduct industries subject to residual price regulation. Our empirical analyses demonstrate how the mechanism can be used to fulfill the statutory mandate to protect shippers from "excessive" prices at substantially lower cost, with less administrative burden, and without significant adverse consequences for the long-term financial viability of the railroads.
    JEL: L5 L9 L92
    Date: 2018–11
  22. By: May, D.; McCorriston, S.
    Abstract: Most trade in food and agricultural products involves processed food. We take this observation as our starting point to address why trade in food and agricultural products has been difficult to achieve. Drawing on recent developments in the theory of networks, we allow for the role of intermediaries with potential market power and where the bias of trade policy may reflect special interests. We draw on recent developments in the theory of networks to show that global free trade in food and agricultural markets is unlikely when there are countries occupying a central position in the network independently of any policy bias. Acknowledgement :
    Keywords: International Relations/Trade
    Date: 2018–07
  23. By: Taschdjian, Martin; Alleman, James
    Abstract: Facebook, Amazon, Netflix and Google, as well as Twitter – the FANG companies – have transformed society with both positive and negative effects. Soaring consumer access to information, news, social networks, and entertainment has been stimulated by the ever-more ubiquitous and falling prices of broadband services. E-government has transformed the delivery of public services. However, negative effects have likewise been stark. Certainly, there have been huge disruptions caused by e-commerce. State tax collectors are fighting the loss of sales tax collections. Because Facebook and Google can identify you, the ads can be targeted to your specific wants and needs, even creating "wants and needs" based on your profile. So, what the "customer" – you – perceived as free is not. Indeed, you are the commodity being sold to the advertisers. Because Facebook and Google are two-sided markets, their economic rents are "hidden" from the public (and, apparently, from the antitrust authorities) . On the user side of the market, prices are zero – "free." The other side, advertising rates are "hidden." Facebook's and Google's revenues are derived from advertising which appears when you go to their sites. They can extract exorbitant prices for ads, since they are virtually the only source that can target ads directly to potential clients. This paper examines the potential for antitrust cases against Facebook and Google as a response to their perceived threats to consumer privacy, political influences and advertising dominance. The argument for antitrust action against them is based on the following arguments. Formally, their Herfindahl-Hirschman index (HHI) for search is 8,476. Combined they currently control over half of US digital advertising; these companies together have an HHI of 2,024. In terms of "social media" United States share of visits, Facebook and Google's HHI is "highly concentrated" at 2,471. Each has obtained de facto monopoly or oligopolistic power without any concern on the part of government. Their economic rents are "hidden" from the public because their revenues are derived from advertising which appear when you go to their sites. Thus, they can extract exorbitant prices for ads. Facebook and Google Herfindahl-Hirschman indices (HHI) are high, indicating a concentrated market or highly concentrated market by several different definitions of their markets. Nevertheless, no serious antitrust case or legislation has addressed this monopoly power.
    Keywords: Advertising,antitrust,competition,internet,media,regulation,pricing,two-sided market
    JEL: D4 K2 L1 L2 L5 L9
    Date: 2018
  24. By: van Ewijk, Bernadette (Tilburg University, School of Economics and Management)
    Abstract: This thesis consists of three essays regarding the purchase behavior of consumers in emerging markets (EMs). The first essay focuses on one of the most important issues in marketing, namely pricing. A comprehensive analysis of price elasticities is conducted for a large set of brands and categories in China. The essay presents a framework for the moderating effect of category and brand factors, some of which specific to an EM setting, which is then empirically tested. In addition, it documents the relative importance of price versus three other key marketing instruments (advertising, distribution, and line length) in an EM. The second essay studies whether Chinese consumers attach different quality beliefs and/or uncertainties to global versus local brands, and investigates how important quality and uncertainty are in driving brand choice, for these brands. Moreover, differences across consumers with different geographic and sociodemographic profiles are explored with respect to both their global versus local brand quality (uncertainty), as well as to the importance of quality (uncertainty) and other marketing mix instruments in brand choice. The third essay looks at how the rise of e-commerce in grocery affects brand performance. It formally shows how a brand’s total (online plus off line) sales change as the fraction of groceries sold online goes up, and identifies brand and category factors that drive this evolution, thereby providing insights to brand managers on how to benefit from this online trend.
    Date: 2018
  25. By: Monte, Daniel (São Paulo School of Economics, FGV); Pinheiro, Roberto (Federal Reserve Bank of Cleveland)
    Abstract: Many markets rely on information intermediation to sustain cooperation between large communities.We identify a key trade-off in costly information intermediation: intermediaries can create trust by incentivizing information exchange, but with too much information acquisition, intermediation becomes expensive, with a resulting high equilibrium default rate and a low fraction of agents buying this information. The particular pricing scheme and the competitive environment affect the direct and indirect costs of information transmission, represented by fees paid by consumers and the expected loss due to imperfect information, respectively. Moreover, we show that information trade has characteristics similar to a natural monopoly, where competition may be detrimental to efficiency either because of the duplication of direct costs or the slowing down of information spillovers. Finally, a social-welfare-maximizing policymaker optimally chooses a low information sampling frequency in order to maximize the number of partially informed agents. In other words, maximizing information spillovers, even at the cost of slow information accumulation, enhances welfare.
    Keywords: Costly Information trade; Market Structure; Natural Monopoly;
    JEL: D83 D85
    Date: 2018–12–07
  26. By: John Harter (Eastern Kentucky University)
    Abstract: This note will use the Hotelling?s line model with a non-uniform distribution of consumers. Instead, a linear, decreasing density is employed to represent a decreasing population density as distance from a metropolitan area is increased along some transportation artery. Entry is sequential, and the number of firms is assumed endogenous after an initial firm is located, making the entrants consider the possibility of later firms. Entrants into this market have neither maximum nor minimum differentiation. Earlier entrants generally locate closer to the population center with the possible exception of the equilibrium location closest to the densest point on the line. The differentiation increases as the firms are farther from the population center.
    Keywords: LocationProduct differentiationHotelling model
    JEL: L19 R32 D21
    Date: 2018–10
  27. By: Aleksander Maziarz (Kozminski University)
    Abstract: Leniency is a program which gives immunity from fines or reduction of fines in cartel cases for those companies which decide to cooperate with antitrust agencies. The leniency program significantly reduces the difficulties, time and administrative costs of evidence of cartel violations, as the antitrust bodies receives assistance through leniency applications and further cooperation of cartel participant during the administrative procedure. Thanks to this, the antitrust bodies can detect and punish more cartels focusing on other abuses.Recently leniency programs are being misused because the same companies apply for leniency many times without being punished. Therefore, the program needs changes. The paper analyses US and European leniency programs and tries to find optimal solution for elimination of misuse of leniency.
    Keywords: cartel, restrictive agreement, leniency, immunity form fines
    JEL: K21 K22
    Date: 2018–10
  28. By: Sharat Ganapati
    Abstract: American industries have grown more concentrated over the last forty years. In the absence of productivity innovation, this should lead to price hikes and output reductions, decreasing consumer welfare. Using public data from 1972-2012, I use price data to disentangle revenue from output. Difference-in-difference estimates show that industry concentration increases are positively correlated to productivity and real output growth, uncorrelated with price changes and overall payroll, and negatively correlated with labor’s revenue share. I rationalize these results in a simple model of competition. Productive industries (with growing oligopolists) expand real output and hold down prices, raising consumer welfare, while maintaining or reducing their workforces, lowering labor’s share of output.
    Date: 2018–11
  29. By: Gong, B.
    Abstract: This article aims to evaluate the effects of multi-dimensional interstate competitions on agricultural production, which is achieved using spatial econometrics and model averaging methods. Using panel data, this article finds that interstate agricultural competition ought to be encouraged in the United States due to their positive impacts on spillovers and productivity but should be discouraged in China as it leads to negative spillovers and a decrease in productivity. U.S. agriculture enjoys the benefits of competition thanks to agricultural industrialization and a competitive market, whereas the planned system with government interference found in China has benefits as well as detriments. Acknowledgement :
    Keywords: International Relations/Trade
    Date: 2018–07
  30. By: Curzi, D.; Garrone, M.; Olper, A.
    Abstract: By examining the roles played by imports of intermediate inputs and final goods separately, this paper investigates the relationship between trade exposure, firm-level markups and industry markup dispersion. We exploit a rich micro-level dataset of French food companies from 2001 to 2013 and find a negative (positive) effect of an increased output (input) import competition on firm-level markups. This result is consistent with the recent predictions of the international trade literature. A similar pattern holds when considering the relationship between trade exposure and industry markup dispersion. We provide a theoretical intuition behind these findings, which represent an important insight introduced by our analysis. Acknowledgement :
    Keywords: International Relations/Trade
    Date: 2018–07

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