nep-ind New Economics Papers
on Industrial Organization
Issue of 2010‒07‒31
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Price and Brand Competition between Differentiated Retailers: A Structural Econometric Model By Dubois, Pierre; Jodar-Rosell, Sandra
  2. Cartel deterrence and settlements: the brazilian experience By Furquim de Azevedo, Paulo; Lauri Henriksen, Alexandre
  3. Competition and Collusion in Grain Markets: Basmati Auctions in North India By J.V. Meenakshi; A Banerji

  1. By: Dubois, Pierre; Jodar-Rosell, Sandra
    Abstract: We develop a model of competition between retailer chains with a structural estimation of the demand and supply in the supermarket industry in France. In the model, supermarkets compete in price and brand offer over all food products to attract consumers, in particular through the share of private labels versus national brands across all their products. Private labels can serve as a differentiation tool for the retailers in order to soften price competition. They may affect the marginal costs of all products for the retailer because of eventual quality differences and also by helping retailers to obtain better conditions from their manufacturers. Differentiation is taken into account by estimating a discrete-continuous choice model of demand where outlet choice and total expenditures are determined endogenously. On the supply side, we consider a simultaneous competition game in brand offer and price between retailers to identify marginal costs. After estimation by simulated maximum likelihood, the structural estimates allow to simulate the effect on the equilibrium behavior of retailer chains of a demand shock through an increase in transportation costs for consumers and a merger between two retailer chains.
    JEL: L13 L22 L81
    Date: 2010–04
  2. By: Furquim de Azevedo, Paulo; Lauri Henriksen, Alexandre
    Abstract: Settlements are an important part of a program of cartel deterrence, particularly when the likelihood ofconviction and the litigation costs are higher. This type of negotiated procedure to reach finality is inessence complementary to the fully adversarial procedures associated to the trial by the administrative orjudicial courts, and to other investigative instruments, such as the leniency agreement. The Brazilianexperience provides some insights about the different models of direct settlement in cartel cases and thecomplex interaction among settlements, leniency agreements, and trial outcome. First, there is leeway forthe complementary models of settlements, the first oriented mainly to increasing the likelihood ofdetection, and the second oriented to saving social costs of litigation. Second, the concern with thepreservation of the demand for leniency agreements led the competition authority to restrict the use ofsettlements, which are effectively designed for the defendants that are likely guilty and give higher valueto finality. The recent experience illustrates that the current settlement policy has not caused any adverseeffect on leniency agreements, while reducing litigation costs and granting finality in some cases.
    Date: 2010–07–22
  3. By: J.V. Meenakshi; A Banerji
    Abstract: Many small wholesale grain markets in India are characterized by large numbers of sellers and a relatively small number of buyers, thereby lending the price formation process open to manipulation through collusion. Government intervention limits the extent of such manipulation through the institution of regulated markets, where the rules of exchange are clearly spelled out and the price formation process is transparent. Unfortunately, recent studies that document how agricultural markets operate—especially in Northern India—and the extent to which they hinder or serve farmers, are rare. In this paper we attempt to fill this gap by studying the functioning of a regulated basmati paddy market in the state of Haryana in North India. [Working Paper No. 91]
    Keywords: Wholesale, grain markets, manipulation, price formation, transparent, agricultural markets, basmati, paddy markets
    Date: 2010

This nep-ind issue is ©2010 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.