nep-ind New Economics Papers
on Industrial Organization
Issue of 2008‒09‒20
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Merger Simulation in Competition Policy: A Survey By Oliver Budzinski; Isabel Ruhmer
  2. Vertical Integration and Costly Network Industries By Elisabetta Iossa; Francesca Stroffolini
  3. A comment on efficiency gains and myopic antitrust authority in a dynamic merger game By Pedro Cosme da Costa Vieira
  4. Monopoly, Non-linear Pricing, and Imperfect Information : A Reconsideration of the Insurance Market By Szalay, Dezsö
  5. Concentration, entry and exit barriers : effects on the entrepreneurship in the Senegal industry By SENE, Serigne Moustapha

  1. By: Oliver Budzinski (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Isabel Ruhmer (Center for Doctoral Studies in Economics (CDSE) University of Mannheim)
    Abstract: Advances in competition economics as well as in computational and empirical methods have offered the scope for the employment of merger simulation models in merger control procedures during the past almost 15 years. Merger simulation is, nevertheless, still a very young and innovative instrument of antitrust and, therefore, its ‘technical’ potential is far from being comprehensively exploited and teething problems in its practical use in the antitrust environment prevail. We provide a classification of state-of-the-art merger simulation models and review their previous employment in merger cases as well as the problems and limitations currently associated with their use in merger control. In summary, merger simulation models represent an important and valuable extension of the toolbox of merger policy. However, they do not qualify as a magic bullet and must be combined with other, more traditional instruments of competition policy in order to comprehensively unfold its beneficial effects.
    Keywords: merger simulation, merger control, antitrust, oligopoly theory, auction models, mergers & acquisitions
    JEL: L40 C15 K21
    Date: 2008
  2. By: Elisabetta Iossa; Francesca Stroffolini
    Abstract: We study how vertical integration in regulated network industries affects the acquisition and transmission of socially valuable information on demand. We consider a regulated upstream monopoly with downstream unregulated Cournot competition and demand uncertainty. Demand information serves to set the access price and to foster competition in the unregulated segment but demand realizations can be observed at some cost only by the upstream monopolist; information acquisition is also unobservable. We show that vertical integration favours acquisition of demand information because of the transmission of information generated by the public nature of the regulatory mechanism. This holds both when access to information is easier for the upstream firm and when it is easier for downstream firms.
    Date: 2008–02
  3. By: Pedro Cosme da Costa Vieira (Faculdade de Economia, Universidade do Porto)
    Abstract: This paper relaxes the Motta & Vasconcelos’ (2005) short-term assumption that firms’ capital is fixed. We demonstrate that, contrary to the conclusion of that article, in the best interest of consumers, even when firms have large economies of scale, long-term forward-looking Antitrust Authorities must block firms’ merger plans whenever profits of firms are positive.
    Keywords: Antitrust policy, Economies of scale
    JEL: D43 L13 L25 L41
    Date: 2008–09
  4. By: Szalay, Dezsö (Economics Department, University of Warwick.)
    Abstract: I reconsider Stiglitz's (1977) problem of monopolistic insurance with a continuum of types. Using a suitable transformation of control variables I obtain an analytical characterization of the optimal insurance policies. Closed form solutions and comparative statics results for special cases are provided.
    Keywords: nonlinear pricing ; screening ; risk aversion
    JEL: D82
    Date: 2008
  5. By: SENE, Serigne Moustapha
    Abstract: This paper deals with the explicative factors of entry rate for Senegalese industry branches. The entry rate is considered as a function of branches specificities and affaires environment features. One distinguishes the structural entry barriers, no linked to the strategic behaviors of firms already installed, of other explicative variables, namely concentration, profit rate and exit barriers. The estimation by the generalized least squares method shows that, a fall of 10% of structural barriers involves a growth of 1% of the entry rate. Also, the exit barriers and the development of the competition improve significantly the entry rate which is not meanwhile sensitive to the profit rate. Besides, a semi parametric model is estimated by taking into account the expectancy of the entry rate and the conditional competition at exit barriers. The results reveal that, if the firms already in activity maintain their strategic behaviors, with the same profit rate and if the economy structures are unchanged, then the number of industrial firms in activity may widely increase in relation to the number of the previous year.
    Keywords: Key words : entrepreneurship; market structure; panel data
    JEL: L11 C23 L26
    Date: 2008–09–08

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