nep-ind New Economics Papers
on Industrial Organization
Issue of 2010‒07‒17
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A Simple Theory of Predation By Chiara Fumagalli; Massimo Motta
  2. Mixed oligopoly, vertical product differentiation and fixed qualitydependent costs By Stefan Lutz; Mario Pezzino
  3. Advertising Competition in Retail Markets By Kyle Bagwell; Gea M. Lee
  4. Copyright and brands in the digital age By Olivier Bomsel
  5. The Quality Factor in Patent Systems: (second and revised version) By Bruno Van Pottelsberghe
  6. Competition Policy and Property Rights.. By Vickers, John

  1. By: Chiara Fumagalli (Università Luigi Bocconi, CSEF and CEPR); Massimo Motta (ICREA-Universitat Pompeu Fabra and BarcelonaGSE)
    Abstract: We propose a simple theory of predatory pricing, based on incumbency advantages, scale economies and sequential buyers (or markets). The prey needs to reach a critical scale to be successful. The incumbent (or predator) has an initial advantage and is ready to make losses on earlier buyers so as to deprive the prey of the scale the latter needs, thus making monopoly profits on later buyers. Several extensions are considered, including cases where scale economies exist because of demand externalities or two-sided market effects, and where markets are characterized by common costs. Conditions under which predation may take place in actual cases are also discussed.
    Date: 2010–07–03
    URL: http://d.repec.org/n?u=RePEc:sef:csefwp:255&r=ind
  2. By: Stefan Lutz; Mario Pezzino
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:man:sespap:1015&r=ind
  3. By: Kyle Bagwell (Stanford University); Gea M. Lee (School of Economics, Singapore Management University)
    Abstract: We consider non-price advertising by retail firms that are privately informed as to their respective production costs. We construct an advertising equilibrium, in which informed consumers use an advertising search rule whereby they buy from the highest-advertising firm. Consumers are rational in using the advertising search rule, since the lowest-cost firm advertises the most and also selects the lowest price. Even though the advertising equilibrium facilitates productive efficiency, we establish conditions under which firms enjoy higher expected profit when advertising is banned. Consumer welfare falls in this case, however. Under free entry, social surplus is higher when advertising is allowed. In addition, we consider a benchmark model of price competition; we provide comparative-statics results with respect to the number of informed consumers, the number of firms and the distribution of costs; and we consider the possibility of sequential search.
    Date: 2009–12
    URL: http://d.repec.org/n?u=RePEc:siu:wpaper:04-2010&r=ind
  4. By: Olivier Bomsel (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: The adoption of binary code as the universal standard for globalized communications generates highly positive externalities often referred to as network effects. But what about meaning? What are the externalities associated with the formatting and circulation of meaning, and are they, too,all positive? Within the digital paradigm, is it really possible to separate the notion of expression — covered by copyright — from the meanings it creates? Isn't meaning heavily dependent on the concept of brand? And if so, how do copyright and trademark institutions work together to stimulate and promote meaningful information? To answer these questions, we will look at how the meaningful forms of expression — the works — that have historically been covered by copyright generate specific types of externality, both positive and negative, giving rise to both incentive and censorship mechanisms. We will then show how the institutions of copyright and author's rights that allow the appropriation of a meaningful good also confer a brand on it, identifying its sources. This leads to mixed externalities from both directions, with the result that copyright and trademark institutions cannot be fully separated from each other.
    Keywords: copyright; brand; Intellectual Property; trademark law; media economics
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:hal:journl:hal-00498365_v1&r=ind
  5. By: Bruno Van Pottelsberghe
    Abstract: This paper develops a methodology to compare the quality of examination services across patent offices. Quality is defined as the extent to which patent offices comply with their patentability conditions in a transparent way. The methodology consists of a two-layer analytical framework encompassing “legal standards” and their “operational design”, which includes several interdependent components that affect the stringency and transparency of the filtering process. The comparison of patent offices in Europe (EPO), Japan (JPO) and the US (USPTO) shows that their operational designs differ substantially: the EPO provides higher-quality and more expensive services than the USPTO, while the JPO is in an intermediate position. These results illustrate that different system designs lead to different outcomes in term of backlogs, patent propensity and the number of dubious patent rights in force. In this respect, they: 1) provide an empirical validation of Jaffe and Lerner's (2004) conjecture of a vicious cycle between quality of examinations and demand for patents; and 2) highlight the need for a multi-faceted convergence of patent systems before mutual recognition is put in place.
    Keywords: patent system; quality; patent propensity; intellectual property
    JEL: O30 O31 O34 O38 O57
    Date: 2010–07
    URL: http://d.repec.org/n?u=RePEc:eca:wpaper:2013/59650&r=ind
  6. By: Vickers, John
    Abstract: One of the most controversial questions in current competition policy is when, if ever, should competition law require a firm with market power to share its property, notably intellectual property, with its rivals? And if supply is required, on what terms? These questions are discussed with reference to recent law cases including the EC Microsoft judgment of 2007 and the US linkLine case of 2009. The analysis focuses on whether competition law and regulation are complements or substitutes and on incentives for investment and (sequential) innovation.
    JEL: O34 L41 O31 K21
    Date: 2010–05
    URL: http://d.repec.org/n?u=RePEc:ner:oxford:http://economics.ouls.ox.ac.uk/14784/&r=ind

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