nep-ind New Economics Papers
on Industrial Organization
Issue of 2009‒01‒10
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Stackelberg Leadership with Product Differentiation and Endogenous Entry: Some Comparative Static and Limiting Results By Kresimir Zigic
  2. Competition Policy and Market Leaders By Ilir Maçi; Kresimir Zigic
  3. Horizontal market concentration: Theoretical insights from the spatial models By Andreea Cosnita-Langlais

  1. By: Kresimir Zigic
    Abstract: Allowing for endogenous entry in the traditional Stackelberg setup with product differentiation, leads to reverting of the standard comparative static and limiting results. Unlike in the standard Stackelberg setup with barriers to entry, the leader's profit increases when the differentiation becomes lower. The reason is that competition becomes tougher when products become more alike, and consequently, fewer firms enter in equilibrium. On the other hand, increasing product differentiation towards its limit results in number of entrants tending to infinity and for very large market, the profit of the leader approaches zero. Thus market structure approaches monopolistic competition, rather than the standard monopoly outcome that occurs with exogenous number of followers.
    Keywords: Stackelberg leadership, product differentiation, endogenous entry.
    JEL: L1 D43
    Date: 2008–10
  2. By: Ilir Maçi; Kresimir Zigic
    Abstract: We study the potential loss in social welfare and changes in incentives to invest in R&D that result when the market leading firm is deprived of its position. We show that under plausible assumptions like free entry or repeated market interactions there is a social value of market leadership and its mechanical removal by means of competition policy is likely to be harmful for society.
    Keywords: Market leaders, Competition policy, Innovation.
    JEL: F12 F13 L11 L13 L16 K21
    Date: 2008–11
  3. By: Andreea Cosnita-Langlais
    Abstract: This paper aims to further advance the study of horizontal mergers by critically reviewing the theory on spatial models that may be used for the analysis of horizontal market concentration. We examine the incentives conveyed by locations for undertaking merger and merger-related strategies, as well as the impact of merger on strategic location choices. Thereby this paper highlights the two-way relationship between market concentration behavior and firm location.
    Keywords: geographic and product space, strategic location, horizontal market concentration, merger control
    JEL: D43 L41 R32
    Date: 2008

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