nep-ind New Economics Papers
on Industrial Organization
Issue of 2007‒06‒02
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Can price discrimination lead to product differentiation? A vertical differentiation model By Fabian Herweg
  2. Market power in oligopoly: The case of the Ukrainian cement industry By Isayenko Oleksiy; Maryanchyk Ivan

  1. By: Fabian Herweg
    Abstract: In this paper, I compare two-part tariff competition to linear pricing in a vertically differentiated duopoly. Consumers have identical tastes for quality but differ in their preferences for quantity. The main finding is that quality differentiation occurs in equilibrium if and only if two-part tariffs are permitted. Furthermore, two-part tariff competition encourages entry, which in turn increases welfare. Nevertheless, two-part tariff competition decreases consumers' surplus compared to linear pricing.
    Keywords: Duopoly, Two-part tariff, Vertical differentiation
    JEL: D43 L11 L13
  2. By: Isayenko Oleksiy; Maryanchyk Ivan
    Abstract: The object under consideration is the Ukrainian cement industry, which has undergone a serious change in many dimensions, including ownership structure and market structure. We analyze the dynamics of the output market structure and test the hypothesis of a possible collusive behavior introduced by a change in the ownership structure, especially by the big international cement players entering the market. Empirical results point towards intensified competition and reject the hypothesis of the collusion. Unconstrained capacities and dynamic property redistribution make tacit collusion very unstable and demand further optimization of production process. Patterns of interregional trade, exporting behavior and mergers' dynamics pose questions about the validity of the profit-maximizing behavior assumption.
    Keywords: Ukraine, cement, collusion
    JEL: D21 D24 D43 L10 L13 L61
    Date: 2006–11–25

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