New Economics Papers
on Industrial Organization
Issue of 2010‒12‒04
five papers chosen by

  1. Dynamic Pricing Problems with Elastic Demand By Grigoriev Alexander; Hiller Benjamin; Marbán Sebastián; Vredeveld Tjark; Zwaan Ruben van der
  2. The Cournot-Bertrand Profit Differential in a Differentiated Duopoly with Unions and Labour Decreasing Returns By Luciano Fanti; Nicola Meccheri
  3. Price Competition in International Mixed Oligopolies By Alessandra Chirco; Marcella Scrimitore
  4. Competition of E-Commerce Intermediaries By Alexander Matros; Andriy Zapechelnyuk
  5. Patent Policy, Patent Pools, And The Accumulation Of Claims In Sequential Innovation By Gastón Llanes; Stefano Trento

  1. By: Grigoriev Alexander; Hiller Benjamin; Marbán Sebastián; Vredeveld Tjark; Zwaan Ruben van der (METEOR)
    Abstract: We study a dynamic pricing problem for a company that sells a single product to a group of customers over a finite time horizon. These customers are price sensitive and the price of today influences the group of customers of tomorrow. The objective is to set the prices over time so as to maximize revenue. We study two customer models: a multiplicative and an additive model. Our main contribution is considering the case when the demand is deterministic. We give a polynomial time algorithm for the multiplicative model, and prove that the additive model is (weakly) NP-hard and allows a fully polynomial approximation scheme. Further, when the choice of prices is limited we prove that the optimal solution has a specific structure. Complementing the results for the deterministic setting, we finally provide two algorithms when the demand is stochastic.
    Keywords: operations research and management science;
    Date: 2010
  2. By: Luciano Fanti (Department of Economics, University of Pisa, Italy); Nicola Meccheri (Department of Economics, University of Pisa, Italy; The Rimini Centre for Economic Analysis (RCEA), Italy)
    Abstract: This paper compares Cournot and Bertrand equilibria in a differentiated duopoly (with imperfect substitutes), total wage bill maximizing unions and labour decreasing returns. It is shown that the standard result, that equilibrium profits are always higher under Cournot, may be reversed even for a fairly low degree of product differentiation. Moreover, the presence of labour decreasing returns tends to reinforce the mechanisms that contribute to the reversal result, making this event possible for a wider range of situations, with respect to those identified by the earlier literature.
    Keywords: Cournot-Bertrand profit differential, unions, labour decreasing returns
    JEL: J43 J50 L13
    Date: 2010–01
  3. By: Alessandra Chirco (University of Salento, Lecce, Italy); Marcella Scrimitore (University of Salento, Lecce, Italy; The Rimini Centre for Economic Analysis (RCEA), Rimini, Italy)
    Abstract: In this paper we analyze the effects of international competition in a mixed oligopoly framework, with price competition and differentiated products. The properties of equilibria, and the impact of policy measures such as privatizations and cross-border acquisitions, are studied both in a single-country and in a two-country framework, under the hypothesis that all firms share the same linear technology. Besides showing that the international competition in a mixed market allows for efficiency gains which are consistent with binding budget constraints for the public firm, we identify the market structures and the competitive environment which support welfare enhancing privatization policies, independently of any exogenous or endogenous cost differential between public and private producers. In particular, we suggest that the cross-country distribution of firms, the degree of product substitutability and the overall density of the market are the key elements in the assessment of the desirability of public ownership.
    Keywords: International mixed oligopoly, price competition, privatization
    JEL: F23 L13 L32
    Date: 2010–01
  4. By: Alexander Matros (University of South Carolina); Andriy Zapechelnyuk (Queen Mary, University of London)
    Abstract: In e-commerce, where information collection is essentially costless and geographic location of traders matters very little, fierce competition between providers of similar services is expected. We consider a model where two e-commerce intermediaries (internet shops) compete for sellers. We show that two non-identical shops may coexist in equilibrium if the population of sellers is sufficiently differentiated in their time preferences. In such an equilibrium less patient sellers choose the more popular (with a higher rate of arrival of new buyers) and more expensive shop, while more patient sellers prefer the less popular and cheaper one.
    Keywords: E-commerce, Intermediary, Competition, Listing fee, Closing fee
    JEL: C73 D43 D82
    Date: 2010–11
  5. By: Gastón Llanes; Stefano Trento
    Abstract: We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes -patents, no-patents, and patent pools- and find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsidy when they innovate, and are taxed with subsequent innovations. This finding implies that optimal transfers work in the exact opposite way as traditional patents. Finally, we consider patents of finite duration and determine the optimal patent length.
    Keywords: Sequential Innovation, Patent Policy, Patent Pools, Anticommons, Double Marginalization, Complementary Monopoly
    JEL: L13 O31 O34
    Date: 2010–11–25

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