nep-ind New Economics Papers
on Industrial Organization
Issue of 2011‒03‒05
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. On Butterflies and Frankenstein: A Dynamic Theory of Regulation By Johan F.M.Swinnen; Thijs Vandemoortele;
  2. Does regulation drive market competition? Evidence from the Spanish local TV industry By Gil, Ricard
  3. Price discrimination and competition in two-sided markets: Evidence from the Spanish local TV industry By Gil, Ricard; Riera-Crichton, Daniel
  4. The entry price threshold in EU F&V sector: deterrence or effective barrier? By Cioffi, Antonio; Santeramo, Fabio G.
  5. Vertical integration and product market competition: Evidence from the Spanish local TV industry By Gil, Ricard

  1. By: Johan F.M.Swinnen; Thijs Vandemoortele;
    Abstract: There are major differences in regulation among various countries. A particular case is the difference between the EU and US in regulating biotechnology.We develop a formal and dynamic model of government decision-making on regulation. We show that minor differences in consumer preferences can lead to important and persistent regulatory differences, and that temporary shocks to preferences can have long-lasting effects. This hysteresis in regulatory differences is shown to be caused by producer protectionist motives. We argue that this model may contribute to explain the difference between EU and US biotechnology regulation.
    Date: 2011
  2. By: Gil, Ricard (IESE Business School)
    Abstract: This paper empirically examines whether regulation decreases market competition. For this purpose, I use data from Spanish local TV stations for 1996, 1999 and 2002. During this period of time, this industry transitioned from a state of alegality (no regulation in place whatsoever), to being highly regulated and finally to being liberalized. I estimate station population entry thresholds by number of entrants across years to proxy by the nature of competition by determining the necessary market size to sustain an extra station. I find that stations soften competition the most under no regulation and they seem to compete the hardest when highly regulated. I explain in the paper that, even though this is at odds with previous literature, this result is explained by the industry institutions, its low profitability and the nature of the first regulation and its consequent liberalization.
    Keywords: regulation; market; competition; TV industry; liberalization;
    Date: 2011–01–15
  3. By: Gil, Ricard (IESE Business School); Riera-Crichton, Daniel (Bates College)
    Abstract: In this paper, we empirically test the relation between price discrimination and product market competition in a two-sided market setting using a new data set of Spanish local TV stations that provides information on subscription and advertising prices per station for 1996, 1999 and 2002. During these years, changes in regulation in this sector had a deep impact on the degree of local market competition. We use differences in market structure across markets and across years to study the relation between competition and price discrimination in this setting. Our findings suggest that stations in more competitive markets are less likely to use price discrimination. We also find evidence that stations price discriminating in a market are also more likely to price discriminate on the other market. Finally, cable subscription fees and advertising prices are higher in more competitive markets which suggests that tougher competition may increase market segmentation through station differentiation, driving stations to charge higher uniform prices to more loyal customers. This may indicate that less price discrimination may be associated with lower consumer surplus in all markets.
    Keywords: Price discrimination; market competition; Local TV Industry; product; subscription; advertising;
    Date: 2011–01–13
  4. By: Cioffi, Antonio; Santeramo, Fabio G.
    Abstract: The paper investigates the effects of the entry price scheme for fresh fruit and vegetables. The analysis is conducted on the EU prices of tomatoes, lemons and apples for some of the main competing countries on the EU domestic markets: Morocco, Argentina, Turkey and China. The econometric analysis is based on testing and estimating a switching vector autoregressive model with endogenous threshold entry price level. The model shows the isolation effects and the accumulation of SIVs above the trigger entry price. This paper contributes to clarify the role played by the EPS in avoid or deter low priced imports from main EU partner Countries.
    Keywords: Fruits and vegetables, Entry price system, trade policy, TVAR, Agricultural and Food Policy, F13, Q17, Q18,
    Date: 2011–02–10
  5. By: Gil, Ricard (IESE Business School)
    Abstract: This paper empirically examines the relation between product market competition and vertical integration in the Spanish local TV industry. For this reason, I use a data set of Spanish local TV stations that provides station level information on vertical integration and product market competition, as well as other station and market characteristics, for the years 1996, 1999 and 2002. During this period, changes in regulation in this industry had a strong impact on the level of market competition faced by local TV stations. I use differences in market structure across markets and years to empirically study the relation between vertical integration and competition. My results show that there exists a negative relation between vertical integration and market competition. I also find that despite the fact that private stations are less likely to integrate content production, they are more likely to do so the higher the number of competing stations in their coverage area. Private stations do so because by increasing the percentage of content produced in-house they differentiate themselves from competition and therefore soften competition and maximize profits.
    Keywords: market competition; local TV Industry; product; vertical integration;
    Date: 2011–01–11

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