nep-ind New Economics Papers
on Industrial Organization
Issue of 2008‒08‒06
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Mergers, cartels and leniency programs : the role of production capacities By Emilie Dargaud
  2. Oligopolistic Competition in Price and Quality By Andrei Dubovik; Maarten C.W. Janssen
  3. External referencing and pharmaceutical price negotiation By Begoña Garcia Mariñoso; Izabela Jelovac; Pau Olivella
  4. Environmental Regulation and Horizontal Mergers in the Eco-industry By Joan Canton; Maia David; Bernard Sinclair-Desgagné

  1. By: Emilie Dargaud (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: In this paper, we study the impact of a merger on collusion depending on the endowment of capital asset among firms. We show that the merger makes the collusion easier to sustain when asymmetric capital stock combines with less efficient insiders because of more symmetric conditions and closer incentive constraints. Moreover, this model allows us to determine<br />an optimal threshold of asymmetry among insiders and outsiders such as a merger has pro-competitive effects and we compare this value with the value which would restore perfect symmetry between firms after the merger.
    Keywords: mergers ; collusion ; leniency programs
    Date: 2008
  2. By: Andrei Dubovik (Erasmus University Rotterdam); Maarten C.W. Janssen (University of Vienna)
    Abstract: We consider an oligopolistic market where firms compete in price and quality and where consumers are heterogeneous in knowledge: some consumers know both the prices and quality of the products offered, some know only the prices and some know neither. We show that two types of signalling equilibria are possible. Both are characterised by dispersion and Pareto-inefficiency of the price/quality offers. But, better price/quality combinations are signalled with lower prices in one type and with higher prices in the other type.
    Keywords: oligopoly; competition; price; quality; imperfect information; signalling
    JEL: D43 D83 L13 L15
    Date: 2008–07–14
  3. By: Begoña Garcia Mariñoso (CMT - Comisión del Mercado de las Telecomunicaciones - Comisión del Mercado de las Telecomunicaciones); Izabela Jelovac (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Pau Olivella (CODE - Center for the study of the Organizations and Decisions in Economics - Universitat Autónoma de Barcelona)
    Abstract: External referencing (ER) imposes a price cap for pharmaceuticals based on prices of identical products in foreign countries. Suppose a foreign country (F) negotiates prices with a pharmaceutical firm while a home country (H) can either negotiate independently or implement ER based on the foreign price. We show that country H always prefers ER if (i) it can condition ER on the drug being subsidized in the foreign country and (ii) copayments are higher in H than in F. H’s preference is<br />reinforced when the difference between country copayments is large and/or H’s population is small. External referencing by H always harms F if (ii) holds, but less so if (i) holds.
    Keywords: pharmaceuticals ; external referencing ; price negotiation
    Date: 2008
  4. By: Joan Canton (University of Ottawa); Maia David (UMR INRA-AgroParisTech Economie publique); Bernard Sinclair-Desgagné (HEC Montreal, CIRANO and Ecole Polytechniqu)
    Abstract: This paper considers the environmental policy and welfare implications of a merger between environment firms (i.e., firms managing environmental resources or supplying pollution abatement goods and services). The traditional analysis of mergers in Cournot oligopolies is extended in two ways. First, we show how environmental policy affects the incentives of environment firms to merge. Second, we stress that mergers in the eco-industry impact welfare beyond what is observed in other sectors, due to an extra effect on pollution abatement efforts; this might lead to disagreements between an anti-trust agency seeking to limit market concentration which can be detrimental to consumer surplus and a benevolent regulator who maximizes total welfare.
    Keywords: Eco-Industry, Environmental Policy, Horizontal Mergers
    JEL: D62 H23 L11
    Date: 2008–05

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 For comments please write to the director of NEP, Marco Novarese at <>. 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.