nep-ind New Economics Papers
on Industrial Organization
Issue of 2009‒07‒17
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Downstream merger and welfare in a bilateral oligopoly By George Symeonidis
  2. A Simple Model of Foreign Brand Penetration under Monopolistic Competition By Toru Kikuchi
  3. Hospital Markets and the Effect of Competition on Quality By Alfons Palangkaraya; Jongsay Yong

  1. By: George Symeonidis
    Abstract: I analyse the effects of a downstream merger in a differentiated oligopoly when there is bargaining between downstream firms and upstream agents (firms or unions). Bargaining outcomes can be observable or unobservable by rivals. When competition is in quantities, upstream agents are independent and bargaining is over a uniform input price, a merger between downstream firms may raise consumer surplus and overall welfare. However, when competition is in prices or the upstream agents are not independent or bargaining is over a two-part tariff or bargaining covers both the input price and the level of output, the standard welfare results are restored: a downstream merger always reduces consumer surplus and overall welfare.
    Date: 2009–07–13
    URL: http://d.repec.org/n?u=RePEc:esx:essedp:671&r=ind
  2. By: Toru Kikuchi (Graduate School of Economics, Kobe University)
    Abstract: The main purpose of this study is to illustrate, with a simple monopolistic competition trade model, how trade liberalization (i.e., a decline in trade costs) can affect domestic entrepreneurs' decisions between domestic brands and foreign brands, and thus the degree of foreign brand penetration. It is shown that, as trade costs decrease, more entrepreneurs choose to provide foreign brands. However, the impact of trade liberalization (in terms of changes in profitt levels) becomes smaller as more entrepreneurs switch to foreign brands.
    Keywords: Foreign brand penetration, trade liberalization, monopolistic competition
    JEL: F12
    Date: 2009–07
    URL: http://d.repec.org/n?u=RePEc:koe:wpaper:0910&r=ind
  3. By: Alfons Palangkaraya (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Jongsay Yong (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: This paper investigates the effects of competition on hospital quality. It proposes to extend the Elzinga-Hogarty quantity flow approach of defining markets by first determining the trading cluster to which each hospital belongs and then delineating markets using patient flow information. After defining hospital markets and computing measures of competition, this paper examines the effect of competition on hospital quality using hospital administration data from the state of Victoria, Australia. We approximate quality using two indicators, namely mortality within 30 days of discharge and unplanned readmission within 28 days of discharge. For each quality indicator, a random intercept logit model is estimated. Two main findings are reported. First, the boundaries of markets and hence the degree of competition depend on the nature of the medical services provided. Second, competition is found to have a mixed effect on quality of hospital care–increasing the number of private hospitals appears to lower quality, while increasing the number of public hospitals has the opposite effect. The intensity of competition, on the other hand, does not appear to have a statistically significant effect on quality.
    Keywords: Hospital markets; Elzinga-Hogarty; Hospital competition; Hospital Quality.
    JEL: I11 D24
    Date: 2009–06
    URL: http://d.repec.org/n?u=RePEc:iae:iaewps:wp2009n17&r=ind

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