New Economics Papers
on Industrial Organization
Issue of 2005‒02‒20
three papers chosen by

  1. The economics of books By Canoy,Marcel; Ours,Jan C. van; Ploeg,Frederick van der
  2. Assessing Consumer Gains from a Drug Price Control Policy in the U.S. By Rexford Santerre; John A. Vernon
  3. The role of technical efficiency in takeovers : evidence from the french cheese industry, 1985-2000 By Chaaban, J.; Réquillart, V.; Trévisiol, A.

  1. By: Canoy,Marcel; Ours,Jan C. van; Ploeg,Frederick van der (Tilburg University, Center for Economic Research)
    Abstract: The tensions between books and book markets as expressions of culture and books as products in profit-making businesses are analysed and insights from the theory of industrial organisation are given. Governments intervene in the market for books through laws concerning prices of books, grants for authors and publishers, a lower value-added tax, public libraries and education in order to stimulate the diversity of books on offer, increase the density of retail outlets and to promote reading. An overview of the different ways by which countries differ in terms of market structures and government policies is given. Particular attention is paid to retail price maintenance. Due to differences between European countries it is not a good idea to harmonise European book policies. Our analysis suggests that the book market seems quite able to invent solutions to specific problems of the book trade and that, apart from promoting reading, there is little need for government intervention.
    JEL: Z11 D4 D6 L1 L4
    Date: 2005
  2. By: Rexford Santerre; John A. Vernon
    Abstract: This paper uses national data for the period 1960 to 2000 to estimate an aggregate private consumer demand for pharmaceuticals in the U.S. The estimated demand curve is then used to simulate the value of consumer surplus gains from a drug price control regime that holds drug price increases to the same rate of growth as the general consumer price level over the time period from 1981 to 2000. Based upon a 7 percent real interest rate, we find that the future value of consumer surplus gains from this hypothetical policy would have been $319 billion at the end of 2000. According to a recent study, that same drug price control regime would have led to 198 fewer new drugs being brought to the U.S. market over this period. Therefore, we approximate that the average social opportunity cost per drug developed during this period to be approximately $1.6 billion. Recent research on the value of pharmaceuticals suggests that the social benefits of a new drug may be far greater than this estimated social opportunity cost.
    JEL: I1 L5 K2
    Date: 2005–02
  3. By: Chaaban, J.; Réquillart, V.; Trévisiol, A.
    Abstract: The paper aims to identify whether production characteristics, such as technical efficiency and returns to scale, affect takeovers. Applying a two-stage procedure on original panel data on french ceese manufacturers, the paper first estimates firm-specific productive efficiency and scale economies using Data Envelopment Analysis. The paper then uses the findings of the first stage to evaluate a random effects logit model of the determinants of takeover in the french cheese industry for the period 1985-2000. The paper finds that technical efficiency is not a significant determinat of takeovers, whereas the nature of scale economies is. Firms with Decreasing Returns to Scale (i. e. an over-sized production capacity) face a higher risk of takeover. This suggests that cheese manufacturers have been seeking to expand their milk processing capacities by acquiring large firms. This proves to be an indirect consequence of the non-transferable milk quota regime affecting the scarce milk input commodity. ...French Abstract : Ce papier vise à identifier si les caractéristiques de production, telles que l'efficacité et les économies d'échelle, affectent le rachat des entreprises. Appliquant une méthode à deux étapes sur des données originales de panel issue de l'industrie fromagère en France, on estime d'abord les économies d'échelles et l'efficacité technique pour chaque firme en utilisant la méthode Data Envelopment Analysis DEA. On utilise les résultats de la première étape pour estimer un modèle de logit aléatoire des déterminants du rachat des entreprises dans l'industrie fromagère française pour la période 1985-2000. Les résultats montrent que les économies d'échelle, et non l'efficacité technique, sont un facteur essentiel dans la décision d'acquisition d'une entreprise par une autre. On montre aussi que les entreprises rachetées ont des rendements décroissants (donc une structure et une taille relativement grande), des charges financières élevées (traduisant un certain endettement) mais ne constituent pas de coopératives.
    JEL: C23 L11 L66
    Date: 2004

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