nep-ind New Economics Papers
on Industrial Organization
Issue of 2006‒08‒12
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. MARKETS FOR POWER IN THE UNITED STATES - AN INTERIM ASSESSMENT By Paul L. Joskow
  2. Regulation of Natural Monopolies By Paul L. Joskow
  3. A note on price-taking and price-making behaviours in general equilibrium oligopoly models By Ludovic Julien; Fabrice Tricou
  4. Does Competition Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency By Nancy L. Rose; Kira Markiewicz; Catherine Wolfram
  5. How to Promote Quality Perception in Wine Markets: Brand Advertising or Geographical Indication? By Chengyan Yue; Stephan Marette; John C. Beghin
  6. Market power in the beef packing industry: is it time for a new approach? By L. Hunnicutt

  1. By: Paul L. Joskow
    Abstract: The transition to competitive wholesale and retail markets for electricity in the U.S. has been a difficult and contentious process. This paper examines the progress that has been made in the evolution of wholesale and retail electricity market institutions. Various indicia of the performance of these market institutions are presented and discussed. Significant progress has been made on the wholesale competition front but major challenges must still be confronted. The framework for supporting retail competition has been less successful, especially for small customers. Empirical evidence suggests that well-designed competitive market reforms have led to performance improvements in a number of dimensions and have benefited customers through lower retail prices.
    Date: 2005–08
    URL: http://d.repec.org/n?u=RePEc:mee:wpaper:0512&r=ind
  2. By: Paul L. Joskow
    Abstract: This chapter provides a comprehensive overview of the theoretical and empirical literature on the regulation of natural monopolies. It covers alternative definitions of natural monopoly, regulatory goals, alternative regulatory institutions, price regulation with full information, regulation with imperfect and asymmetric information, and topics on the measurement of the effects of price and entry regulation in practice. The chapter also discusses the literature on network access and pricing to support the introduction of competition into previously regulated monopoly industries.
    Date: 2005–04
    URL: http://d.repec.org/n?u=RePEc:mee:wpaper:0508&r=ind
  3. By: Ludovic Julien (EconomiX - [CNRS : UMR7166] - [Université de Paris X - Nanterre]); Fabrice Tricou (EconomiX - [CNRS : UMR7166] - [Université de Paris X - Nanterre])
    Abstract: This paper explores the rationale of price-taking and price-making behaviours in the context of Walrasian and Cournotian pure exchange economies. Beside the influence of the number of agents, we underline the role of the structure of preferences. Through three equilibrium variations of the same basic economy, we obtain several results about price manipulation, about asymptotic identifications for large economies and for degenerate preferences, and about welfare comparisons. Perfect competition does not only correspond to the case of large economies, but may also concern economies where market powers are more or less equivalent.
    Keywords: Cournot-Walras equilibria, oligopoly, perfect competition
    Date: 2006–07–28
    URL: http://d.repec.org/n?u=RePEc:hal:papers:halshs-00088012_v1&r=ind
  4. By: Nancy L. Rose; Kira Markiewicz; Catherine Wolfram
    Abstract: Although the allocative efficiency benefits of competition are a tenet of microeconomic theory, the relation between competition and technical efficiency is less well understood. Neoclassical models of profit-maximization subsume static cost-minimizing behavior regardless of market competitiveness, but agency models of managerial behavior suggest possible scope for competition to influence cost-reducing effort choices. This paper explores the empirical effects of competition on technical efficiency in the context of electricity industry restructuring. Restructuring programs adopted by many U.S. states made utilities residual claimants to cost savings and increased their exposure to competitive markets. We estimate the impact of these changes on annual generating plant-level input demand for non-fuel operating expenses, the number of employees and fuel use. We find that municipally-owned plants, whose owners were for the most part unaffected by restructuring, experienced the smallest efficiency gains over the past decade. Investor-owned utility plants in states that restructured their wholesale electricity markets had the largest reductions in nonfuel operating expenses and employment, while investorowned plants in nonrestructuring states fell between these extremes. The analysis also highlights the substantive importance of treating the simultaneity of input and output decisions, which we do through an instrumental variables approach.
    Date: 2004–11
    URL: http://d.repec.org/n?u=RePEc:mee:wpaper:0418&r=ind
  5. By: Chengyan Yue; Stephan Marette (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); John C. Beghin (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: In the context of the wine industry, we investigate producers' choice between geographical indications and brand advertising to convey information to consumers. Producers also decide whether or not to select an effort level for improving the quality of their products. We show that if this effort level is selected, a producer will prefer to rely on brand advertising for promoting its products and setting up its own reputation. Despite allowing the cost of promotion to be shared, a geographical indication does not sufficiently reward the effort to improve quality. Finally, the selection of both instruments by producers is examined.
    Keywords: brand advertising, effort, geographical indication, GI, quality, wine. JEL Classification: L15, L66, Q13
    Date: 2006–08
    URL: http://d.repec.org/n?u=RePEc:ias:cpaper:06-wp426&r=ind
  6. By: L. Hunnicutt
    Abstract: Consolidations in the U.S. beef packing industry have prompted concern within the government and interest among academics over whether packers possess and are able to exercise market power. Economists have generated numerous studies to test for and measure market power in beef packing, but the empirical studies have failed to provide definitive results on the presence of market power and whether any existing market power is exercised. The thesis of this paper is that the standard approach to measuring market power, conjectural variations, is based on a model which may not accurately describe competition between packing firms. I first discuss the institutional factors of beef packing that are not captured by the conjectural variations approach. I then present a theoretical extension of the CV approach which is based on a more realistic description of competition between packing firms. The paper concludes by suggesting alternative techniques for measuring market power.
    URL: http://d.repec.org/n?u=RePEc:usu:wpaper:2000-31&r=ind

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