nep-ind New Economics Papers
on Industrial Organization
Issue of 2007‒03‒03
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Market structure and market access By Joseph F. Francois; Ian Wooton
  2. Entry into Local Retail Food Markets in Sweden: A Real-Options Approach By Daunfeldt, Sven-Olov; Orth, Matilda; Rudholm, Niklas
  3. Mergers and Economies of Scale: Volkswagen AG 1976 - 2000 By Rudholm, Niklas
  4. Modelling Spikes in Electricity Prices By Ralf Becker; Stan Hurn; Vlad Pavlov
  5. Enty, Exit and Productivitry - Empirical Results for German Manufacturing Industries By Joachim Wagner
  6. Did the entry of low cost companies foster the growth of strategic alliances in the airline industry? By A. Mantovani; O. Tarola
  7. Social Learning of Efficiency Enhancing Trade With(out) Market Entry Costs - An experimental study By Nadine Chlaß; Werner Güth; Christoph Vanberg

  1. By: Joseph F. Francois (Department of Economics, Johannes Kepler University Linz, Austria); Ian Wooton (University of Strathclyde, Glasgow)
    Abstract: We examine an issue at the nexus of domestic competition policy and international trade, the interaction between goods trade and market power in domestic trade and distribution sectors. Theory suggests a set of linkages between service-sector competition and goods trade supported by econometrics involving imports of 22 OECD countries vis-´a-vis 69 exporters. Competition in services affects the volume of goods trade. Additionally, because of interaction between tariffs and competition, the market structure of the domestic service sector becomes increasingly important as tariffs are reduced. Empirically service competition apparently matters most for exporters in smaller, poorer countries. Our results also suggest that while negotiated agreements leading to crossborder services liberalization may boost goods trade as well, they may also lead to a fall in goods trade when such liberalization involves FDI leading to increased service sector concentration.
    Keywords: distribution sector competition; market access; services; trade liberalization; GATS
    JEL: L16 L8 F12 F13
    Date: 2007–02
  2. By: Daunfeldt, Sven-Olov (The Swedish Retail Institute (HUI)); Orth, Matilda (School of Economics and Commercial law, Gothenburg University); Rudholm, Niklas (The Swedish Retail Institute (HUI))
    Abstract: A real-options approach was used, incorporating uncertainty and irreversibility of investments, to study the number of stores entering the Swedish retail food market during the period 1994-2002. It was found that uncertainty affected the entry-decision. Entry was less frequent in highly concentrated local retail food-markets characterized by a high degree of uncertainty, whereas higher profit opportunities seem to have increased the probability of entry.
    Keywords: Real options; uncertainty; retail food; entry; negative binomial regression
    JEL: L13 L81
    Date: 2007–02–22
  3. By: Rudholm, Niklas (The Swedish Retail Institute (HUI))
    Abstract: The purpose of this paper is to study if the acquisitions of the SEAT and Skoda has lead to increased economic efficiency for Volkswagen AG due to economies of scale. This is achieved by estimation of the VAG cost function, using a translog specification. The results indicate that the merger with SEAT did increase the economies of scale available as production volumes increased due to the merger. No such effects was, however, found for the aquisition of Skoda.
    Keywords: Automobile production; economies of scale; technological change
    JEL: D21 D24 L25
    Date: 2006–10–01
  4. By: Ralf Becker; Stan Hurn; Vlad Pavlov
    Abstract: During periods of market stress, electricity prices can rise dramatically. Electricity retailers cannot pass these extreme prices on to customers because of retail price regulation. Improved prediction of these price spikes, therefore, is important for risk management. This paper builds a time-varying-probability Markov-switching model of Queensland electricity prices, aimed particularly at forecasting price spikes. Variables capturing demand and weather patterns are used to drive the transition probabilities. Unlike traditional Markov-switching models, that assume normality of the prices in each state, the model presented here uses a generalized beta distribution to allow for the skewness in the distribution of electricity prices during high-price episodes.
    Keywords: electricity prices, regime switching, time-varying probabilities, beta
    JEL: C22 C53 Q49
    Date: 2007–02–27
  5. By: Joachim Wagner (Institute of Economics, University of Lüneburg)
    Abstract: Using panel data from Spain Farinas and Ruano (IJIO 2005) test three hypotheses from a model by Hopenhayn (Econometrica 1992): (H1) Firms that exit in year t were in t-1 less productive than firms that continue to produce in t. (H2) Firms that enter in year t are less productive than incumbent firms in year t. (H3) Surviving firms from an entry cohort were more productive than non-surviving firms from this cohort in the start year. Results for Spain support all three hypotheses. This paper replicates the study using a unique newly available panel data sets for all manufacturing plants from Germany (1995 – 2002). Again, all three hypotheses are supported empirically.
    Keywords: Exports, Entry, exit, productivity
    JEL: L11 L60
    Date: 2007–03
  6. By: A. Mantovani; O. Tarola
    Date: 2006–09
  7. By: Nadine Chlaß; Werner Güth; Christoph Vanberg
    Abstract: We investigate experimentally whether entry costs have an impact on the evolution of cooperation in a social dilemma game. In particular, subjects repeatedly play the so-called takeover game with anonymous partners randomly drawn from a fixed population of participants. The game represents a social dilemma because selfishly rational players can fail to make efficient trades due to information asymmetries. In order to create a potential for social learning, we provide subjects with feedback about average results in the population. Our interest lies in observing the extent to which cooperative behaviors facilitating trade are adopted. Our main conjecture is that market entry costs inspire more trade. This is only partly confirmed by the data.
    Keywords: Cooperation, sunk costs, social learning, takeover game
    JEL: C78 C91 C92
    Date: 2007–01

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