nep-ind New Economics Papers
on Industrial Organization
Issue of 2005‒01‒16
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A Review of the Monitoring of Market Power The Possible Roles of TSOs in Monitoring for Market Power Issues in Congested Transmission Systems By Paul Twomey; Richard Green; Karsten Neuhoff; David Newbery
  2. Monopoly and Product Diversity: The Role of Retailer Countervailing Power By Zhiqi Chen
  3. History friendly simulations for modelling industrial dynamics By Garavaglia, C.
  4. Cournot Competition and Endogenous Firm Size By Jason Barr; Francesco Saraceno
  5. Mergers, Investment Decisions and Internal Organisation By Albert Banal-Estaño; Inés Macho-Stadler; Jo Seldeslachts
  6. Price Competition, Business Hours, and Shopping Time Flexibility By Oz Shy; Rune Stenbacka

  1. By: Paul Twomey; Richard Green; Karsten Neuhoff; David Newbery
    Abstract: The paper surveys the literature and publicly available information on market power monitoring in electricity wholesale markets. After briefly reviewing definitions, strategies and methods of mitigating market power we examine the various methods of detecting market power that have been employed by academics and market monitors/regulators. These techniques include structural and behavioural indices and analysis as well as various simulation approaches. The applications of these tools range from spot market mitigation and congestion management through to long-term market design assessment and merger decisions. Various market-power monitoring units already track market behaviour and produce indices. Our survey shows that these units collect a large amount of data from various market participants and we identify the crucial role of the transmission system operators with their access to dispatch and system information. Easily accessible and comprehensive data supports effective market power monitoring and facilitates market design evaluation. The discretion required for effective market monitoring is facilitated by institutional independence.
    Keywords: Electricity, liberalisation, market power, regulation
    JEL: D43 L13 L51 L94
    Date: 2005–01
    URL: http://d.repec.org/n?u=RePEc:cam:camdae:0504&r=ind
  2. By: Zhiqi Chen (Department of Economics,Carleton University)
    Date: 2004–11–08
    URL: http://d.repec.org/n?u=RePEc:car:carecp:04-19&r=ind
  3. By: Garavaglia, C. (CESPRI, Bocconi University, Milan, Italy and Cattaneo University, LIUC, Castellanza (VA), Italy)
    Keywords: simulation, models, industrial dynamics
    Date: 2004
    URL: http://d.repec.org/n?u=RePEc:dgr:tuecis:0419&r=ind
  4. By: Jason Barr; Francesco Saraceno
    Abstract: We study the dynamics of firm size in a repeated Cournot game with unkown demand function. We model the firm as a type of artificial neural network. Each period it must learn to map environmental signals to both demand parameters and its rival's output choice. But this learning game is in the background, and we focus on the endogenous adjustment of network size. We investigate the long-run behavior of firm/network size as a function of profits, rival's size, and the type of adjustment rules used.
    Keywords: Firm size, adjustment dynamics, artificial neural networks, Cournot games
    JEL: C63 D21 D83 L13
    URL: http://d.repec.org/n?u=RePEc:run:wpaper:2005-001&r=ind
  5. By: Albert Banal-Estaño; Inés Macho-Stadler; Jo Seldeslachts
    Abstract: We analyse the effects of investment decisions and firms’ internal organisation on the efficiency and stability of horizontal mergers. In our framework synergies are endogenous and there might be internal conflict within merged firms. We show that often stable mergers do not lead to more efficiency and may even lead to efficiency losses. These mergers lead to lower welfare, suggesting that a regulator should be careful in assuming that possible efficiency gains of a merger will be effectively realised. Moreover, the paper offers a possible explanation for merger failures. <br> <br> <i>ZUSAMMENFASSUNG - (Fusionen, Investitionsentscheidungen und unternehmensinterne Organisation) <br> Wir analysieren die Auswirkungen von Investitionsentscheidungen und internen Organisationsstrukturen auf die Effizienz und Stabilität von horizontalen Firmenzusammenschlüssen. In unserer Untersuchung sind Synergien endogen und es können interne Konflikte in dem fusionierten Unternehmen auftreten. Es zeigt sich, dass "stabile" Fusionen häufig nicht zu mehr Effizienz, sondern sogar zu Effizienzverlusten führen können. Da solche Firmenzusammenschlüsse zu einer geringeren Wohlfahrt führen, sollte der Regulierer nicht ungeprüft annehmen, dass potentielle Wohlfahrtsgewinne auch immer tatsächlich erreicht werden. Außerdem bietet das Papier eine mögliche Erklärung für das Scheitern von Fusionen.</i>
    Keywords: Horizontal Mergers, Investment, Efficiency gains, Internal Conflict.
    JEL: L22 D43
    Date: 2004–12
    URL: http://d.repec.org/n?u=RePEc:wzb:wzebiv:spii2004-13&r=ind
  6. By: Oz Shy; Rune Stenbacka
    Abstract: We analyze differentiated retail industries where shops engage in two-stage competition with respect to opening hours and prices. We explore the effects of consumers' shopping time flexibility by comparing bi-directional consumers with forward- or backward-oriented consumers, who can either postpone or advance their shopping, but not both. We demonstrate that retailers with longer opening hours charge higher prices and that opening hour differentiation softens price competition. We calculate both symmetric and asymmetric subgame perfect equilibria in closing hours and demonstrate how the equilibrium configurations depend on the cost increases associated with extended business hours, as well as the relative densities of day and night shoppers. <br> <br> <i>ZUSAMMENFASSUNG - (Preiswettbewerb, Öffnungszeiten und Flexibilität der Einkaufszeit) <br> Wir analysieren unterschiedliche Einzelhandelsindustrien, in denen Läden in einem zweistufigen Wettbewerb bezüglich Öffnungszeiten und Preisen stehen. Wir erforschen die Effekte von Kundenflexibilität, indem wir völlig flexible Kunden mit vor- bzw. rückwärtsorientierten Kunden vergleichen können, welche ihren Einkauf nur vorziehen oder verschieben können, aber nicht beides. Wir zeigen, dass Einzelhändler mit längeren Öffnungszeiten höhere Preise verlangen und dass die Differenzierung der Öffnungszeiten den Preiswettbewerb abschwächt. Wir berechnen sowohl symmetrische als auch unsymmetrische teilspielperfekte Gleichgewichte für die Öffnungszeiten und zeigen, wie die Ausgestaltung der Gleichgewichte von den zusätzlichen Kosten der ausgedehnten Öffnungszeiten und der relativen Dichte von Tag- und Nachteinkäufern abhängt.</i>
    Keywords: Business Hours, Delayed or Advanced Shopping, Differentiated Business Hours, Price Competition, Shopping Time Flexibility.
    JEL: L1 L81 M2
    Date: 2004–12
    URL: http://d.repec.org/n?u=RePEc:wzb:wzebiv:spii2004-14&r=ind

This nep-ind issue is ©2005 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <director@nep.repec.org>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.