nep-ind New Economics Papers
on Industrial Organization
Issue of 2006‒10‒14
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Competitive Nonlinear Pricing and Bundling By Mark Armstrong; John Vickers
  2. A Brief History of Mobile Telecommunication in Europe By Dunnewijk, Theo; Hultén, Staffan
  3. Entry, Exit and Patenting in the Software Industry By Iain M. Cockburn; Megan J. MacGarvie
  4. Competition Policy in Turkey By Kulaksizoglu, Tamer

  1. By: Mark Armstrong; John Vickers
    Abstract: We examine the impact of multiproduct nonlinear pricing on profit, consumer surplus and welfare in a duopoly. When consumers buy all their products from one firm (the one-stop shopping model), nonlinear pricing leads to higher profit and welfare, but often lower consumer surplus, than linear pricing. By contrast, in a unit-demand model where consumers may buy one product from one firm and another product from another firm, bundling generally acts to reduce profit and welfare and to boost consumer surplus. In a more general model where consumers may buy from more than one firm and where consumers have elastic demands for each product, nonlinear pricing has ambiguous effects. Compared with linear pricing, nonlinear pricing tends to raise profit but harm consumer surplus when: (i) demand is elastic, (ii) there is substantial product differentiation, (iii) there is substantial heterogeneity in consumer demand, (iv) consumers face substantial shopping costs when visiting more than one firm, and (v) a consumer`s brand preference for one product is strongly correlated with her brand preference for another product. Nonlinear pricing is more likely to lead to welfare gains when (i), (ii), (iv) and (v) hold, but (iii) does not.
    Keywords: Nonlinear Pricing, Bundling, Discounts
    JEL: D43 L13
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:oxf:wpaper:281&r=ind
  2. By: Dunnewijk, Theo (UNU-MERIT); Hultén, Staffan (Stockholm School of Economics)
    Abstract: Since the introduction of mobile telephony in the early fifties in Europe, US and Japan the demand for this service exploded. It seems that the latent demand for mobile telecommunication services for decade's continued to be very strong. Since the introduction of cellular technology the capacity of the services increasingly became able to meet the massive demand. Next and future generations of mobile telecommunication technologies bring increased transmission speed and more versatile services. This forces network operators to organise multi- sourced information flows supplied by service providers to increase the network effect of the system instead of providing the network infrastructure and leave the content to the users as in pure voice telephony. The drivers and inhibitors behind the emergence and recent developments of mobile telecommunications systems in Europe are highlighted in this paper. Liberalisation of the telecom markets in Europe drove new entrants to the market and curbed excessive pricing. However, in recent years the lack of challenging service is the main cause for the wavering development of newer generations of mobile telecommunication services.
    Keywords: Telecommunications, Market Structure, Production, Pricing, Technological Change, Economic History, Europe
    JEL: L96 L11 O31 N70
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:dgr:unumer:2006034&r=ind
  3. By: Iain M. Cockburn; Megan J. MacGarvie
    Abstract: We examine the effects of software patents on entry and exit in 27 narrowly-defined classes of software products, using a dataset with comprehensive coverage of both mature public firms and small privately held firms between 1994 and 2004. Reflecting the complex economics underlying the relationship between patent protection, entry costs and industry structure, we find that patents have a mixture of effects on entry and exit. Controlling for firm and market characteristics, firms are less likely to enter product classes in which there are more software patents. However, all else equal, firms that hold software patents are more likely to enter these markets. The net effect on entry of increasing the number of software patents is difficult to measure precisely: estimates of the effect of an across-the-board 10% increase in patent holdings on the number of entrants into the average market in this sample range from -5% to +3.5%, with quite large standard errors. Evidence on exit and survival is consistent with these findings - holding patents appears to enhance the survival prospects of firms after entering a market.
    JEL: L1 L6 O34
    Date: 2006–10
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:12563&r=ind
  4. By: Kulaksizoglu, Tamer
    Abstract: This paper evaluates the current competition policy framework in Turkey. A brief history of competition policy is presented. An account of the Law on the Protection of Competition, the main law on competition in Turkey, is given. The structure of the Competition Authority, the body responsi- ble for applying the Law, and the way the enforcement system works are explained. Detailed statistics are given about all the cases submitted to the Competition Authority by 2002. Accounts of some selected cases are reported and a general assessment of the implementation of competition policy is offered. The main finding of the paper is that, although there is a movement in the right direction, competition policy implementation in Turkey still needs to be developed and strengthened.
    Keywords: Competition policy; Competition law
    JEL: L40
    Date: 2004–11–26
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:179&r=ind

This nep-ind issue is ©2006 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.