nep-ind New Economics Papers
on Industrial Organization
Issue of 2011‒10‒01
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A quality index for patent systems By Bruno Van Pottelsberghe; Matthis de Saint-Georges
  2. Temptation, horizontal differentiation and monopoly pricing By Joaquín Gómez Miñambres
  3. Structural versus Behavioral Measures in the Deregulation of Electricity Markets: An Experimental Investigation Guided by Theory and Policy Concerns By Silvester van Koten; Andreas Ortmann
  4. Law & Economics Perspectives on Electricity Regulation By Adrien de Hauteclocque; Yannick Perez
  5. The Mobile Broadband and Fixed Broadband Battle in Swedish Market: Complementary or substitution? By Pratompong Srinuan; Chalita Srinuan; Erik Bohlin
  6. Access Regulation, Entry, and Investment in Telecommunications By Fabio Manenti; Antonio Scialà

  1. By: Bruno Van Pottelsberghe; Matthis de Saint-Georges
    Abstract: This paper presents a quality index for patent systems. The index is composed of nine operational design components that help shape the transparency of patent systems and affect the extent to which they comply with patentability conditions. Seven factors are related to rules and regulations (e.g. grace period, opposition process and continuation-inparts), while two factors measure patent offices’ resource allocation (i.e. workload per examiner and incentives). The index is computed for 32 national patent systems, it displays a high heterogeneity across countries. Cross-sectional quantitative analyses suggest that the demand for patent rights -or the propensity to patent- is lower in patent systems with a higher quality index, controlling for research efforts, patent fees and the “strength” of enforcement mechanisms.
    Keywords: Patent system; Quality; Patent prosperity; Intellectual property
    JEL: O30 O31 O34 O38 O57
    Date: 2011–05
    URL: http://d.repec.org/n?u=RePEc:eca:wpaper:2013/87167&r=ind
  2. By: Joaquín Gómez Miñambres
    Abstract: We study the implications for pricing strategies and product offerings of consumers’ temptation when the differentiation of the product is horizontal. With horizontal differentiation, the temptation state is represented by a change in the consumers’ ideal product on the Hotelling line, so that consumers have two (possibly distinct) ideal products: one when committed and another when tempted. The firm faces the following trade-off: for the consumer who diverge the most between the ideal product with temptation and commitment, if the firm positions a product close to the consumer’s temptation ideal product, it increases the consumer’s surplus when tempted but decreases surplus with commitment, which lowers the consumer’s incentive to participate. This paper shows that, because of this trade-off, the firm may exclude products that are too close to the temptation preferences in the optimal menu. Moreover, it is shown that product diversity and firm’s profits decrease with the probability of temptation and with the consumers’ awareness of their dynamic inconsistency
    Keywords: Temptation; Commitment; Price discrimination
    JEL: D11 D42 D82 L11 L12 L15
    Date: 2011–07
    URL: http://d.repec.org/n?u=RePEc:cte:werepe:we1124&r=ind
  3. By: Silvester van Koten; Andreas Ortmann
    Abstract: We try to better understand the comparative advantages of structural and behavioral measures of deregulation in electricity markets, an eminent policy issue for which the experimental evidence is scant and problematic. In the present paper we investigate theoretically and experimentally the effects of the introduction of a forward market on competition in electricity markets. We compare this scenario with the best alternative, reducing concentration by adding one more competitor by divestiture. Our work contributes to the literature by introducing more realistic cost configurations, teasing apart number and asset effect, and studying numbers of competitors that reflect better the market concentration in the European electricity industries. Our experimental data suggest that introducing a forward market has a positive effect on the aggregate supply in markets with two or three major competitors, configurations typical for both the newly accessed and the old European Union member states. Introducing a forward market also increases efficiency. Our data furthermore suggest, in contrast to previous findings, that the effects of introducing a forward market is stronger than adding one more competitor both in markets with two, and particularly three, producers. Our data thus suggest that the behavioral measure of introducing a forward market is more effective than the structural measure of adding one more competitor by divestiture. Thus competition authorities should, in line with EU law, focus on the behavioral measure of introducing, or at least facilitating the emergence of, forward markets rather than on the structural measure of lowering market concentration by divestiture.
    Keywords: economics experiments; market power; competition; forward markets; EU electricity market
    Date: 2011–02–24
    URL: http://d.repec.org/n?u=RePEc:rsc:rsceui:2011/07&r=ind
  4. By: Adrien de Hauteclocque; Yannick Perez
    Abstract: This paper first reviews some of the main contributions of the new institutional economics to the analysis of the process of competitive transformation of network industries. It shows that neoinstitutional analysis is complementary to the microeconomics of rational pricing, since it accounts for the decisive role of an institutional framework adapted to new transactions. It emphasizes the importance of the political reform process, which draws on the conditions of attractiveness and feasibility to define an initial reorganization of property rights in these industries. The paper then analyzes in this light some of the main challenges ahead for electricity regulation: the question of investment in generation capacities and the link to long term contracts, the regulation of wholesale market power, the support to Renewable Energy Sources for Electricity (RES-E) and the design of new regulatory authorities.
    Keywords: Electricity Markets; New Institutional Economics; Law & Economics
    Date: 2011–03–31
    URL: http://d.repec.org/n?u=RePEc:rsc:rsceui:2011/21&r=ind
  5. By: Pratompong Srinuan; Chalita Srinuan; Erik Bohlin
    Abstract: This paper aims to investigate the current broadband situation in Swedish market, in particular whether the mobile broadband (MBB) is a complementary or substitute service to fixed broadband (FBB) by using multinomial logit model. The data is collected from the Post- och telestyrelsen (PTS) survey in 2009 together with a secondary data on price of broadband service for each service providers. The findings indicate that price and type of housing are the major determinant for broadband connections. In addition, the living area and service provider affect the probability of using broadband. Considering the own price elasticities, cable is more inelastic compared to DSL, LAN/Fiber and MBB while the cross price elasticities show that MBB is complementary service to FBB in Sweden at this stage. However, the cross price elasticities of FBBs and MBB report that there is high possibility that MBB could be substitution service to FBB in the near future.
    Keywords: mobile broadband; fixed broadband; Complementary; substitution
    Date: 2011–06–26
    URL: http://d.repec.org/n?u=RePEc:rsc:rsceui:2011/36&r=ind
  6. By: Fabio Manenti; Antonio Scialà
    Abstract: This paper presents a model of competition between an incumbent and an entrant firm in telecommunications. The entrant has the option to enter the market with or without having preliminary invested in its own infrastructure; in case of facility based entry, the entrant has also the option to invest in the provision of enhanced services. In case of resale based entry the entrant needs access to the incumbent network. Unlike the rival, the incumbent has always the option to upgrade the existing network to provide advanced services. We study the impact of access regulation on the type of entry and on firms' investments. Without regulation, we find that the incumbent sets the access charge to prevent resale based entry and this overstimulates rival's investment that may turn out to be socially inefficient. Access regulation may discourage welfare enhancing investments, thus also inducing a socially inefficient outcome. We extend the model to account for negotiated interconnection in case of facilities based entry.
    Keywords: telecommunications; ladder of investment; access regulation; interconnection
    Date: 2011–06–24
    URL: http://d.repec.org/n?u=RePEc:rsc:rsceui:2011/37&r=ind

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