nep-ind New Economics Papers
on Industrial Organization
Issue of 2006‒09‒03
eleven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Horizontal Mergers with Scale Economies By D. Dragone; L. Lambertini; A. Mantovani
  2. Weak and Strong Time Consistency in Differential Oligopoly Games with Capital Accumulation By R. Cellini; L. Lambertini
  3. The Effects of Mergers with Dynamic Capacity Accumulation By Jiawei Chen
  4. Price Competition over Boundedly Rational Agents By B. Luppi
  5. Failing Firm Defense with Entry Deterrence By A. Fedele; M. Tognoni
  6. The Anatomy of a Price Cut: Discovering Organizational Sources of the Costs of Price Adjustment By Mark J. Zbaracki; Mark Bergen; Daniel Levy
  7. Complementarity between Product and Process innovation in a Monopoly Setting By A. Mantovani
  8. "Process and Product Innovation by a Multiproduct Monopolist: A Dynamic Approach" By L. Lambertini; A. Mantovani
  9. Persuasive Advertising in Oligopoly: A Linear State Differential Game By R. Cellini; L. Lambertini; A. Mantovani
  10. Pseudo-Generic Products and Mergers in Pharmaceutical Markets By Granier, L.; Trinquard, S.
  11. Airline Schedule Competition: Product-Quality Choice in a Duopoly Model By Jan K. Brueckner; Ricardo Flores-Fillol

  1. By: D. Dragone; L. Lambertini; A. Mantovani
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:bol:bodewp:571&r=ind
  2. By: R. Cellini; L. Lambertini
    Date: 2005
    URL: http://d.repec.org/n?u=RePEc:bol:bodewp:544&r=ind
  3. By: Jiawei Chen (Department of Economics, University of California-Irvine)
    Abstract: We investigate the price and welfare effects of mergers through simulations using a dynamic model of capacity accumulation in which firms produce near-homogeneous products and compete in prices. We find that mergers are welfare-reducing and that their long-run effects are worse than their short-run effects: in the long run average price increases further while total surplus and consumer surplus decrease further. A key feature of the model is that firms are ex ante identical but the industry evolves towards an asymmetric size distribution. If we instead fit the simulated data with an asymmetric costs model, which is a standard approach to explaining persistent asymmetries in market shares, we will systematically underestimate the long-run welfare-reducing effects of mergers, giving rise to misguided antitrust policies.
    Keywords: Merger effects; Dynamic oligopoly; Capacity; Cost misspecification; Simulation
    JEL: C73 D24 L11 L41
    Date: 2006–03
    URL: http://d.repec.org/n?u=RePEc:irv:wpaper:060701&r=ind
  4. By: B. Luppi
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:bol:bodewp:565&r=ind
  5. By: A. Fedele; M. Tognoni
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:bol:bodewp:562&r=ind
  6. By: Mark J. Zbaracki; Mark Bergen; Daniel Levy
    Abstract: The fact that organizations find it hard to change in response to shocks in the environment is a crucial feature of the economy. Yet we know little about why it is so difficult for organizations to adjust, and where these limitations come from. In an effort to discover some of these reasons we ground ourselves in the context of price adjustment, and present a qualitative analysis of an intensive ethnographic field study of the pricing practices at a one-billion dollar Midwestern industrial manufacturing firm and its customers. We go into depth on a specific episode, a price cut, which most vividly exemplifies the themes that emerged from our data. In the specific situation, market forces clearly dictate that the firm should cut prices, and everyone in the firm agrees with this assessment, suggesting a fairly straightforward price adjustment decision. Yet when we look deeper, and dissect how the firm implemented the price cut, we uncover a rich tapestry of frictions hidden within the organization. At their core, these frictions relate to how managers, in the context of an organization, attempt to apply the fundamental elements of economic theory. Essentially they face a series of constraints that make sense in the context of an organization trying to make these adjustments, but constraints that are rarely articulated or incorporated into economic understanding of price adjustment. We discover that the largest barriers to price adjustment are related to disputes arising from collisions between "partial models" used by different organizational participants as they confront fundamental economic issues. Often, these issues have not been settled and exist in a tenuous truce within the organization – and adjustment requires the organization to deal with them in order to react to these changes.
    Date: 2006–08
    URL: http://d.repec.org/n?u=RePEc:emo:wp2003:0610&r=ind
  7. By: A. Mantovani
    Date: 2005
    URL: http://d.repec.org/n?u=RePEc:bol:bodewp:533&r=ind
  8. By: L. Lambertini; A. Mantovani
    Date: 2005
    URL: http://d.repec.org/n?u=RePEc:bol:bodewp:551&r=ind
  9. By: R. Cellini; L. Lambertini; A. Mantovani
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:bol:bodewp:564&r=ind
  10. By: Granier, L.; Trinquard, S.
    Abstract: This paper fills the gap in the theoretical literature concerning mergers between brand-name and generic laboratories in pharmaceutical markets. To prevent generic firms from increasing their market share, some brand-name furms produce generics themselves, called pseudo-generics, enabling them to set up barriers to entry. We develop this topic by considering the pseudo-generics production as a mergers.catalyst. We show, in a duopoly model with substitutable goods, in which a brand-name firm and a generic firm compete à la Cournot, that a brand-name company always has an incentive to purchase its competitor. The key insight of this paper is that the brand-name laboratory can increase its merger gain by producing pseudo-generics beforehand. In some cases, pseudo-generics would not otherwise be produced.
    Keywords: Mergers, Pharmaceutical Market, Pseudo-Generics.
    JEL: I11 L12
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:mop:lasrwp:2006.21&r=ind
  11. By: Jan K. Brueckner (Department of Economics, University of California-Irvine); Ricardo Flores-Fillol (Departament d’Economia i d’Historia Economica, Universitat Autonoma de Barcelona)
    Abstract: This paper presents a simple model of airline schedule competition that circumvents the complexities of the spatial approach used in earlier papers. Consumers choose between two duopoly carriers, each of which has evenly spaced flights, by comparing the combinations of fare and expected schedule delay that they offer. In contrast to the spatial approach, the particular departure times of individual flights are thus not relevant. The model generates a number of useful comparative-static predictions, while welfare analysis shows that equilibrium flight frequencies tend to be inefficiently low.
    Date: 2006–04
    URL: http://d.repec.org/n?u=RePEc:irv:wpaper:050629&r=ind

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