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on Industrial Competition |
| By: | Swati Singla (Department of Economics, Delhi School of Economic); Vishruti Gupta (Department of Economics, Delhi School of Economic) |
| Abstract: | We examine duopoly competition between firms with asymmetric quality, wherein firms compete sequentially in quality and price. We find that the partial shareholding of the high-quality firm in revenue (or profit) of the low-quality firm softens the competition. The market share of the high-quality firm decreases as the percentage of the share in revenue (or profit) increases. Further, we find that the improvement in quality by high-quality firm is lesser than by low-quality firms. The price charged by the high-quality firm is higher than that of the low-quality firm as the high-quality firm continues to have the quality advantage. Comparing the two scenarios, revenue sharing is more desirable than profit sharing for firms, giving higher total profits.Consumers and social planner prefer profit sharing between the firms as it leads to a higher surplus. |
| Keywords: | Revenue share, Profit share, Vertical differentiation, Hoteling line. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:cde:cdewps:353 |
| By: | Patrice Bougette (Université Côte d'Azur, CNRS, GREDEG, France); Oliver Budzinski (Ilmenau University of Technology, Germany); Frédéric Marty (Université Côte d'Azur, CNRS, GREDEG, France) |
| Abstract: | This paper explores the evolving landscape of competition law enforcement, focusing on the dynamic interplay between ex-ante and ex-post approaches. Amidst the digital transformation and regulatory shifts, traditional enforcement mechanisms are being re-evaluated. This study aims to dissect the economic rationale behind these shifts, proposing a hybrid framework that balances legal certainty with the flexibility needed to address contemporary market challenges. In particular, the analysis highlights the emergence of new competition policy approaches that combine regulatory-type interventions with strengthened enforcement strategies. |
| Keywords: | Competition Law Enforcement, Ex-ante and Ex-post Approaches, Anticompetitive Practices, Merger Control, Digital Economy |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:afd:wpaper:2407 |
| By: | Morell, Alexander |
| Abstract: | A bonus on the fine in response to the defendant running a corporate compliance program is superfluous because working leniency programs provide all the incentives necessary to implement efficient compliance. Others opposed to such a bonus argue that unreduced fines are sufficient to incentivize the adoption of effective corporate compliance programs. Proponents, on the other hand, argue that a reduction in fines conditional on running a corporate compliance program incentivizes more investments in compliance. Both arguments are incomplete. It is true that, generally, sanctions alone provide only suboptimal incentives to invest in compliance because some compliance investments (those in detecting infringements, i.e., "policing") can increase the detection probability for cartels that remain. However, leniency programs provide an additional incentive to invest in compliance to find cartels in-house as all cartelists strive for being the first to report. Comparing the two effects shows that under plausible assumptions the latter dominates, rendering a bonus on the fine superfluous. |
| Keywords: | Corporate compliance programs, leniency programs, antitrust sanctioning, corporate governance |
| JEL: | G34 L22 L41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:306362 |
| By: | Po-Lin Chen (Graduate School of Economics, Waseda University) |
| Abstract: | I estimate a structural model of the Japanese bank deposit market, and evaluate the welfare impact of the mega-bank mergers in the early 2000s. Banks compete for deposits through their deposit rates to achieve profit maximization, whereas depositors choose among banks with given deposit rates. The estimation results show that depositors’ demand is insensitive to the deposit rate. Moreover, I find that the demand for deposits decreases when banks experience financial distress, even with deposit insurance coverage. Furthermore, when calculating welfare, I find that most of the mega-bank mergers lead to a reduction in consumer surplus compared with the counterfactual case of no mergers. The contributions of this study are that it quantifies the welfare effect of the mergers for the deposit market in Japan, where the financial market is heavily dominated by banks, and that it is likely to encourage future research on bank consolidation in Japan, which may contribute to verifying and resolving the long-discussed problem of overbanking in the Japanese financial market. |
| Keywords: | : : Deposit market; Discrete choice; Consumer welfare; Banking; Mergers and acquisitions |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:wap:wpaper:2408 |
| By: | Javier Asensio (Departament d'Economia Aplicada, Universitat Autònoma de Barcelona (UAB) & Institut d'Economia de Barcelona (IEB).); Anna Matas (Departament d'Economia Aplicada, Universitat Autònoma de Barcelona (UAB) & Institut d'Economia de Barcelona (IEB).) |
| Abstract: | Spain operates a ‘competition for the market’ system to award the regulated monopoly rights to run intercity bus services across its different regions. Such tendering system has undergone different changes since 2007. We assess the impact of those changes on different outcomes of the auctions, such as participation, submitted prices and frequencies, as well as on outcomes of the whole process in terms of prices and frequencies offered to final consumers. The results show that the design of the terms of tender can significantly modify the conditions under which bus services are operated. The weight given to price bids in the score function is shown to be a relevant variable to increase competition for the market. |
| Keywords: | Tendering, Intercity bus, Coach, Score function auctions, Spain. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:uab:wprdea:wpdea2406 |
| By: | Lind, Joar (Swedish National Road and Transport Research Institute (VTI)) |
| Abstract: | The Swedish container port markets are analysed using the concept of captive and contestable hinterland and foreland. Using a freight transport planning tool, the Swedish national freight transport model Samgods, we identify the geographical markets of Swedish container ports and their market shares for the municipalities of Sweden. Results from the proposed method indicate that within the market segment, about half of municipalities in Sweden are captive, about a third is tied to the market-leading port. In the future, the market segment tends to be more captive, and the market-leading port will strengthen its position. |
| Keywords: | Port competition; Freight transport modelling; Hinterland; Port choice; Captive or contestable areas |
| JEL: | R41 R42 |
| Date: | 2024–11–29 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:vtiwps:2024_006 |
| By: | Serafica, Ramonette B.; Oren, Queen Cel A. |
| Abstract: | This study examines the size and distribution of the Philippine media sector, identifies the challenges to competition and growth, and explores the impact of new technologies. A layered media model was used to map the major players, primarily in traditional media industries such as news publishing, TV broadcasting, and radio broadcasting. Concentration ratios at the national and regional levels were calculated, along with a simple and novel measure that captures diversity in media supply. The extent of market concentration in other relevant industries in the information and communication sector was also assessed. The Philippine media is predominantly privately owned. Many large media companies are owned by families, while a few are affiliated with religious institutions.The business interests of some companies extend beyond the media sector. The radio broadcasting industry is generally less concentrated compared to news publishing and TV broadcasting, and the diversity of voices is relatively higher in radio broadcasting as well. Most of the other industries in the information and communication sector are highly concentrated. While consumer preference is increasingly shifting towards digital media, significant portions of the population, especially outside NCR, still lack access to the internet, particularly fixed broadband. To foster media industry growth, the government should reduce policy and regulatory barriers to entry and expansion and ensure the sustainability of media organizations, especially those that serve local communities or engage in public interest journalism. Other critical factors, such as internet connectivity and literacy, which complement the development of the media sector, must also be strengthened. Comments on this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | media;competition;ownership;concentration;diversity;mass media |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:phd:dpaper:dp_2024-29 |
| By: | Yue Cao; Judith A. Chevalier; Jessie Handbury; Hayden Parsley; Kevin R. Williams |
| Abstract: | A common tactic to estimate willingness-to-travel exploits variation in the relative proximity of consumers to supplier locations. The validity of these estimates relies on the exogeneity of that consumer-supplier distance. We argue that distance to suppliers is endogenous because suppliers strategically choose locations to target consumers; we introduce a novel instrument to address this form of endogeneity. Using geolocation data from millions of smartphones, we estimate consumer preferences for specific retail chains across income groups and regions. We show that accounting for distance endogeneity significantly alters willingness-to-travel measures. Contrary to the prevailing “retail apocalypse” narrative, we find that consumer surplus per trip to general merchandise stores did not significantly decline from 2010 to 2019. For the lowest-income consumers, the expansion of national chains, particularly dollar stores, nearly compensates for the closure of traditional department stores and regional chains. Notably, failing to account for distance endogeneity leads to the erroneous conclusion that lower-income households experienced statistically significant consumer surplus declines. |
| JEL: | C26 C55 D12 L81 R12 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33307 |
| By: | Ologunebi, John; Taiwo, Ebenezer; All, Kazeem |
| Abstract: | This research investigates digital consumer behavior in e-commerce through a comparative case study of Amazon and Temu's customer purchase decision-making processes in the UK and USA. As e-commerce continues to revolutionize retail landscapes, understanding the nuances of consumer behavior within digital environments is critical for businesses aiming to optimize marketing strategies and enhance user experiences. This study aims to shed light on how distinct elements such as consumer demographics, perceived value, and user experience influence purchasing decisions on these two platforms. The study utilizes a quantitative approach to gather insights from consumers who actively shop on Amazon and Temu. The survey captures demographic information and purchasing habits, while interviews provide deeper narratives about decision-making motivations and experiences. Key factors being explored include product variety, pricing strategies, brand loyalty, the impact of online reviews, and the role of personalization in the shopping experience. Preliminary findings suggest distinct consumer behavior patterns between the two platforms. Amazon functionalities such as advanced algorithms, extensive product offerings, and established brand trust appear to significantly influence customer loyalty and repeat purchases. Conversely, Temu's focus on low prices, foreign product access, and aggressive promotional strategies resonate particularly with cost-conscious shoppers, especially those in younger demographics keen on exploring new trends. These factors significantly alter how consumers engage with the brands and impact their overall satisfaction and likelihood of future purchases. This research also explores the geographic nuances of consumer behavior, highlighting how cultural differences between the UK and USA shape online shopping preferences and behaviors. The findings indicate that while both markets exhibit a reliance on price competitiveness, UK consumers may prioritize product quality and sustainability over sheer cost, whereas USA consumers display a greater inclination toward convenience and extensive product variety. The outcomes of this study have substantial implications for e-commerce businesses, suggesting tailored marketing strategies that consider the distinctive attributes of each platform and regional consumer preferences. By deepening the understanding of digital consumer behavior, this research contributes to existing literature on e-commerce and provides practical insights for enhancing customer engagement and satisfaction in an increasingly competitive digital marketplace. |
| Keywords: | Digital consumer behavior, Digital marketing strategies, E-commerce trends, Customer Purchase Decision, Digital marketing, Online shopping, Online Buying Behavior, Brand Loyalty, Understanding consumer psychology |
| JEL: | M30 M31 M37 M39 |
| Date: | 2024–12–25 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123096 |
| By: | Markkanen, Jaakko |
| Abstract: | Abstract I study the transmission of pharmacy mark-ups to retail prices and the policy between retail markups and Value Added Tax (VAT) rates in Finland. My reduced form evidence demonstrates that pharmaceutical manufacturers respond to a decrease in the regulated pharmacy mark-ups by increasing their wholesale prices. I estimate a structural model of pharmaceutical supply and demand using data from the Finnish statin market. I show that only half of the decrease in the pharmacy-markup was transferred to retail prices. I also demonstrate that the government can address the increase in manufacturer revenues by increasing the VAT rate for pharmaceuticals. |
| Keywords: | Pharmaceuticals, Passthrough, Price regulation |
| JEL: | I11 H51 L51 C23 |
| Date: | 2024–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:123 |
| By: | Wesley Blundell; Juan Sebastián Vélez-Velásquez |
| Abstract: | The impact of carbon taxes on consumer welfare and emissions in the transportation sector is influenced by both regulatory and market dynamics. As the sources of climate emissions from transportation evolve, how will this impact change in the future? Utilizing extensive data from retail fuel stations and wholesalers in Colombia, we estimate the factors affecting the pass-through of a carbon tax on gasoline prices. Our findings reveal that the pass-through to Colombian consumers is significant, often exceeding one. This phenomenon of "overshifting" vanishes when markets are regulated or when gas stations are vertically integrated with wholesalers. These results indicate that as the global use of carbon taxes to address climate externalities from automobile use increases, the welfare loss for consumers may be greater than what current literature, often focused on the United States, suggests. **** RESUMEN: El impacto de los impuestos al carbono sobre el bienestar de los consumidores y las emisiones en el sector del transporte está influenciado tanto por la dinámica regulatoria como por la del mercado. A medida que evolucionan las fuentes de emisiones climáticas del transporte, ¿cómo cambiará este impacto en el futuro? Utilizando datos para un amplio número de estaciones de servicio minoristas y mayoristas en Colombia, estimamos los factores que afectan la transferencia de un impuesto al carbono a los precios de la gasolina. Nuestros hallazgos revelan que la transferencia a los consumidores colombianos es significativa, a menudo superior a uno. Este fenómeno de "sobretransferencia" desaparece cuando los mercados están regulados o cuando las estaciones de servicio están integradas verticalmente con los mayoristas. Estos resultados indican que a medida que aumenta el uso global de los impuestos al carbono para abordar las externalidades climáticas del uso del automóvil, la pérdida de bienestar para los consumidores puede ser mayor que lo que sugiere la literatura actual, a menudo centrada en los Estados Unidos. |
| Keywords: | carbon tax, transportation, tax incidence, overshifting, gasoline, Impuesto al carbono, transporte, incidencia de impuestos, sobretransferencia, gas |
| JEL: | L91 L98 Q54 H23 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bdr:borrec:1292 |
| By: | Herbert Dawid (Bielefeld University, Germany); Philipp Harting (Université Côte d'Azur, CNRS, GREDEG, France; Bielefeld University, Germany); Michal Neugart (Technical University of Darmstadt, Germany) |
| Abstract: | Artificial intelligence algorithms are increasingly used for online pricing and are seen as a major threat to competitive markets. We show that if firms use a deep Q-network (DQN) as an example of a state-of-the-art machine learning algorithm, prices are supra-competitive in duopoly but quickly move to competitive prices as the number of competitors in an oligopoly increases. This finding is very robust concerning variations of the exploration and learning rate used in the DQN algorithm. |
| Keywords: | algorithmic price setting, deep Q-network, oligopoly, supracompetitive prices |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2024-32 |