nep-ind New Economics Papers
on Industrial Organization
Issue of 2008‒04‒21
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Competition and quality in regulated markets: a di¤erential-game approach By Kurt R. Brekke; Roberto Cellini; Luigi Siciliani; Odd Rune Straume
  2. A Model of Vertical Oligopolistic Competition By Reisinger, Markus; Schnitzer, Monika
  3. Product Differentiation and the Equilibrium Structure of the Manufacturer-Retailer Relationship By Jerzy Mycielski; Yohanes Riyanto; Filip Wuyts
  4. The Dynamics of the Transfer and Renewal of Patents By Carlos J. Serrano
  5. Price transmission and market power analysis in the Spanish seafood market chain By Jordi Guillen; Ramon Franquesa

  1. By: Kurt R. Brekke; Roberto Cellini; Luigi Siciliani; Odd Rune Straume
    Abstract: We investigate the e¤ect of competition on quality in regulated markets (e.g., health care, higher education, public utilities) taking a di¤erential game approach, in which quality is a stock variable. Using a Hotelling framework, we derive the open-loop solution (providers commit to an optimal investment plan at the initial period) and the feedback closed-loop solution (providers move investments in response to the dynamics of the states). If the marginal provision cost is constant, the open-loop and closed-loop solutions coincide, and the results are similar to the ones obtained by static models. If the marginal provision cost is increasing, investment and quality are lower in the closed-loop solution: in fact, quality drops to the minimum level in steady state, implying that quality competition is e¤ectively eliminated. In this case, static models tend to exaggerate the positive e¤ect of competition on quality. Our results can explain the mixed empirical evidence on competition and quality for regulated markets.
    Keywords: Regulated markets; Competition; Quality
    JEL: H42 I11 I18 L13
    Date: 2008–04
  2. By: Reisinger, Markus; Schnitzer, Monika
    Abstract: This paper develops a model of successive oligopolies with endogenous market entry, allowing for varying degrees of product differentiation and entry costs in both markets. Our analysis shows that the downstream conditions dominate the overall profitability of the two-tier structure while the upstream conditions mainly affect the distribution of profits. We compare the welfare effects of upstream versus downstream deregulation policies and show that the impact of deregulation may be overvalued when ignoring feedback effects from the other market. Furthermore, we analyze how different forms of vertical restraints influence the endogenous market structure and show when they are welfare enhancing.
    Keywords: Deregulation; Free Entry; Price Competition; Product Differentiation; Successive Oligopolies; Two-Part Tariffs; Vertical Restraints
    JEL: L13 D43 L40 L50
    Date: 2008–04–09
  3. By: Jerzy Mycielski; Yohanes Riyanto; Filip Wuyts
    Abstract: In this paper, we analyse the manufacturers' choice of vertical arrangement with retailers. We focus on two types of vertical arrangements namely exclusive dealing and exclusive territory. Both are used by manufacturers as instruments to dampen manufacturer competition. Exclusive dealing is used to avoid a head-to-head competition with other brands within a retail outlet. Thus, it restricts interbrand competition. Exclusive territory is used to eliminate intrabrand competition. Our results show that the choice of vertical arrangement depends on the degree of product substitution. When products are less subsitutable, in other words the interbrand rivalry is weak, manufacturers prefer to sell the products to a large number of competitive retailers. When the interbrand rivalry is strong, exclusive territory with exclusive dealing might be adopted by manufacturers. We derive welfare and antitrust policy implications.
    Date: 2008–03
  4. By: Carlos J. Serrano
    Abstract: This paper explores the dynamics of the transfer of U.S. patents and the significance of the initial missallocation of patent property rights. Here we find that the initial missallocation of patent property rights is large and differs substantially across patentees and technology fields. We also find that the probability of a patent being traded depends on a number of factors - the age of the patent, the number of citations received by a given age, the patent generality and whether the patent has been previously traded or not. We will also analyze and interpret this new evidence using a theoretical model of patent transfers and renewal.
    JEL: L1 O3
    Date: 2008–04
  5. By: Jordi Guillen; Ramon Franquesa (Universitat de Barcelona)
    Abstract: Spain is one of the largest seafood markets in Europe and the world. Seafood consumption has traditionally been very high in Spain; in 2005, for instance, around 36.7 kg per capita were consumed (MAPA, several years). However, little attention has been paid to the market and how the different levels of the market chain interact. This paper uses weekly data to analyse the price transmission elasticity of the main twelve seafood products in the Spanish market chain (Ex-vessel, Wholesale and Retail stages). We then investigate the price transmission asymmetry in these market stages. The results have significant implications for demand analysis, market power and margins in the seafood value chain.
    Keywords: asymmetry, price transmission, seafood products, market power
    JEL: Q22 Q11 L11
    Date: 2008

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