nep-ind New Economics Papers
on Industrial Organization
Issue of 2010‒02‒13
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Entry Selection By J.J.A. Kamphorst; E. Mendys-Kamphorst; B. Westbrock
  2. Criminalisation of Cartel Behaviour By King, David
  3. Industrial structure, trade and regional economics : market segmentation By Vito Amendolagine; Gabriel Talmain
  4. Competition for Long Distance Passenger Rail Services: The Emerging Evidence By John Preston

  1. By: J.J.A. Kamphorst; E. Mendys-Kamphorst; B. Westbrock
    Abstract: It is well-known in the IO literature that incumbent firms may want to deter entry by behaving as if they are efficient. In this paper we show that incumbents may sometimes prefer to encourage entry by mimicking the behaviour of a less efficient firm for the following reason. If the incumbent cannot deter potential efficient entrants, he may want to elicit entry by an inefficient firm who would not enter if he knows that the incumbent is efficient. The presence of the additional firm in the market prevents further entry. The incumbent then faces a less efficient competitor in the long run.
    Keywords: Duopoly competition, entry deterrence, signalling weakness
    JEL: D43 D82 L11
    Date: 2009–12
  2. By: King, David (Ministry of Economic Development, New Zealand)
    Abstract: This paper considers the case for criminalisation of hard-core cartel behaviour. Two frameworks are applied for considering the issue: retributive justice and deterrence (so as to minimise the social loss). The conclusion is reached that hard-core cartel behaviour has a serious moral dimension and that criminalisation of the offence is justifiable when a retributive approach is taken. It is also concluded that criminalisation is likely to be optimal from a deterrence perspective; this is due to the disutility created by stigma and loss of liberty and to the problems with alternatives such as corporate and individual fines, leniency programmes, and rewards to whistleblowers. Arguments against criminalisation relating to judicial processes and incentives on business are found to be unpersuasive. Achieving broad community support is critical, however. An addendum brings the paper up to date with developments in Australia.
    Keywords: Criminalisation; cartel behaviour
    JEL: D21 D43 K21 L13 L41
    Date: 2010–01
  3. By: Vito Amendolagine; Gabriel Talmain
    Abstract: TWe consider a general equilibrium model a la Bhaskar (Review of Economic Studies 2002): there are complementarities across sectors, each of which com- prise (many) heterogenous monopolistically competitive …rms. Bhaskars model is extended in two directions: production requires capital, and labour markets are segmented. Labour market segmentation models the difficulties of labour migrating across international barriers (in a trade context) or from a poor region to a richer one (in a regional context), whilst the assumption of a single cap- ital market means that capital flows freely between countries or regions. The model is solved analytically and a closed form solution is provided. Adding labour market segmentation to Bhaskar's two-tier industrial structure allows us to study, inter alia, the impact of competition regulations on wages and financial flows both in the regional and international context, and the output, welfare and financial implications of relaxing immigration laws. The analytical approach adopted allows us, not only to sign the effect of policies, but also to quantify their e¤ects. Introducing capital as a factor of production improves the realism of the model and refines its empirically testable implications.
    Keywords: market segmentation, monopolistic competition, industry competition, regional competition, capital flows
    JEL: F22 L11 F16 R13
    Date: 2010–01
  4. By: John Preston
    Abstract: The aim of this paper is to review the emerging evidence on competition in the long distance passenger rail service. This draws on the three bodies of evidence. In section 2, we examine the ex-ante evidence from theoretical models based on Preston (2008a). In section 3, we examine the ex-post evidence on competition for the market, with particular emphasis on the East Coast Main Line franchise in Great-Britain, drawing in part on Preston (2008b). Likewise, in section 4, we consider recent evidence on open access services that are competing in the market in Great-Britain, drawing on Griffiths (2009). Finally, we shall draw some conclusions.
    Date: 2009–12

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