nep-ind New Economics Papers
on Industrial Organization
Issue of 2008‒06‒27
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Theory and Empirical Work on Imperfectly Competitive Markets By Ariel Pakes
  2. Regulating a Monopolist with unknown costs and unknown quality capacity By Blackorby, Charles; Szalay, Dezsö
  3. Games of capacity allocation in many-to-one matching with an aftermarket By Mumcu, Ayse; Saglam, Ismail
  4. Regulation, Allocative Efficiency and Productivity in OECD Countries: Industry and Firm-Level Evidence By Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta
  5. Market Power in Power Markets: Evidence from Forward Prices of Electricity By Bent Jesper Christensen; Thomas Elgaard Jensen; Rune Mølgaard

  1. By: Ariel Pakes
    Abstract: This paper reviews recent methodological developments in the empirical analysis of imperfectly competitive markets highlighting outstanding problems. Some of these problems are econometric; e.g. the need for a deeper understanding of the small sample properties of our estimators. Most of the other problems relate to issues which have been a central part of ongoing research programs in economic theory for some time. We consider ways in which applied work can cope with these problems and, in so doing, also inform theory. The use of estimators based on moment inequalities opens up several possibilities in this regard and a detailed discussion of the assumptions used to rationalize these estimators is provided. An example, the analysis of contracts in buyer-seller networks, is used to highlight these points.
    JEL: C01 C5 C73 L0 L1 L4
    Date: 2008–06
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:14117&r=ind
  2. By: Blackorby, Charles (Department of Economics, University of Warwick); Szalay, Dezsö (Department of Economics, University of Warwick)
    Abstract: We study the regulation of a firm with unknown demand and cost information. In contrast to previous studies, we assume demand is influenced by a quality choice, and the firm has private information about its quality capacity in addition to its cost. Under natural conditions, asymmetric information about the quality capacity is irrelevant. The optimal pricing is weakly above marginal costs for all types and no type is excluded.
    Keywords: Asymmetric Information ; Multi-dimensional Screening ; Regulation
    JEL: D82 L21
    Date: 2008
    URL: http://d.repec.org/n?u=RePEc:wrk:warwec:858&r=ind
  3. By: Mumcu, Ayse; Saglam, Ismail
    Abstract: In this paper, we study many-to-one matching (hospital-intern markets) with an aftermarket. We analyze the Nash equilibria of capacity allocation games, in which preferences of hospitals and interns are common knowledge and every hospital determines a quota for the regular market given its total capacity for the two matching periods. Under the intern-optimal stable matching system, we show that a pure-strategy Nash equilibrium may not exist. Common preferences for hospitals ensure the existence of equilibrium in weakly dominant strategies whereas unlike in games of capacity manipulation strong monotonicity of population is not a sufficient restriction on preferences to avoid the nonexistence problem. Besides, in games of capacity allocation, it is not true either that every hospital weakly prefers a mixed-strategy Nash equilibrium to any larger regular market quota profiles.
    Keywords: Many-to-one matching; hospital-intern market; aftermarket; capacity allocation game
    JEL: C78 D71 C72
    Date: 2008–06–19
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:9239&r=ind
  4. By: Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta
    Abstract: This paper relates diverging productivity performances across OECD countries over the past fifteen years to differences in the stringency of regulations in the product market. We first summarize industry-level evidence linking these diverging patterns to delays in service markets reforms in the wake of the ICT shock. The evidence we survey suggests that, especially in continental EU countries, tight regulation of services has slowed down growth in ICT-using sectors, which use intermediate service inputs intensively. Based on harmonised cross-country firm-level data, we then provide new evidence that one of the key channels through which inappropriate service regulations affect productivity growth is by hindering the allocation of resources towards the most dynamic and efficient firms. At the industry level, resources were allocated less efficiently across firms in countries where service regulations are less market-friendly. Firmlevel econometric estimates confirm that anti-competitive service regulations hamper productivity growth in ICT-using sectors, with a particularly pronounced effect on firms that are catching up to the technology frontier and that are close to international best practice. In other words, regulations hurt in particular those firms that have the potential to excel in domestic and international markets. <P>Réglementation, allocation des ressources et productivité dans les pays de l’OCDE : évidence empirique au niveau des secteurs et des entreprises <BR>Cette étude établi un rapport entre trajectoires divergentes de productivité dans les pays OCDE pendant les dernières 15 années, et différences dans la rigidité de la réglementation sur les marchés des biens. La première partie du papier résume les résultats empiriques existants au niveau des industries sur le rapport entre productivité et réglementation dans les secteurs de services, ainsi que son rapport avec le choc technologique dans les technologies de l'information et de la communication (TIC). L’évidence empirique que nous examinons suggère qu’en particulier dans les pays d’Europe continentale la réglementation rigide a ralenti la croissance dans les secteurs «utilisateur des TIC», qui utilisent de manière intensive les services réglementés. Sur la base de données harmonisées au niveau des entreprises, ce papier présente ensuite des résultats nouveaux qui montrent que l’effet de la réglementation sur la croissance de la productivité se transmet principalement à travers des obstacles à l’allocation des ressources vers les entreprises les plus dynamiques et efficientes. L’allocation des ressources au sein de chaque industrie est moins efficiente dans les pays ayant une réglementation plus rigide dans les secteurs des services. Nos estimations économétriques au niveau des entreprises montrent ensuite que la réglementation des services réduit la croissance de la productivité dans les secteurs « utilisateur des TIC », avec un effet particulièrement prononcé sur les entreprises qui sont proches de la frontière technologique et y convergent rapidement. Autrement dit, la réglementation nuit surtout aux entreprises qui ont le plus haut potentiel de succès dans les marchés nationaux et internationaux.
    Keywords: product market regulation, productivity, productivité, allocative efficiency, firm-level data, réglementation dans les marchés des biens, efficience dans l’allocation de ressources, données individuelles d’entreprise
    JEL: D24 E23 K23 L11 L51
    Date: 2008–06–13
    URL: http://d.repec.org/n?u=RePEc:oec:ecoaaa:616-en&r=ind
  5. By: Bent Jesper Christensen; Thomas Elgaard Jensen; Rune Mølgaard (School of Economics and Management, University of Aarhus, Denmark)
    Abstract: We examine the forward market for electricity for indications of misuse of market power, using a unique data set on OTC price indications posted by Elsam A/S, the dominant producer in Western Denmark, which is one of the price areas under the Nordic power exchange Nord Pool. The Danish Competition Council (the regulatory government agency) has ruled that Elsam has used its dominant position to obtain excessive spot prices over a period from July 2003 through December 2006. We show that significant forward premia exist, and that they are related both to spot market volatility and misuse of market power in the spot market, indicating that misuse of market power in the forward market accompanied that which took place in the spot market, according to this ruling. This is consistent with the hypothesis that Elsam used the forward market to disguise its spot market manipulation. The findings are consistent across forward premium regressions and structural forward pricing models.
    Keywords: Electricity, forward prices, market power
    JEL: G13 L12
    Date: 2007–10–26
    URL: http://d.repec.org/n?u=RePEc:aah:create:2007-30&r=ind

This nep-ind issue is ©2008 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.