nep-ind New Economics Papers
on Industrial Organization
Issue of 2012‒01‒18
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. On the Price Effects of Horizontal Mergers: A Theoretical Interpretation By Emilie Dargaud; Carlo Reggiani
  2. Price Competition or Tacit Collusion By Makoto Yano; Takashi Komatsubara
  3. Buy-it-now or Take-a-chance: A New Pricing Mechanism for Online Advertising By L. Elisa Celis; Gregory Lewis; Markus Mobius; Hamid Nazerzadeh
  4. Knowledge networking and growth in service firms By B. SCHOONJANS; P. VAN CAUWENBERGE; H. VANDER BAUWHEDE

  1. By: Emilie Dargaud; Carlo Reggiani
    Date: 2012
  2. By: Makoto Yano (Institute of Economic Research, Kyoto University); Takashi Komatsubara (Institute of Economic Research, Kyoto University)
    Abstract: Every now and then, we observe a fierce price war in a real world market, through which competing firms end up with a Bertrand-like price competition equilibrium. Despite this, very little has been known in the existing literature as to why a price competition market is formed. We address this question in the context of a choice between engaging in price competition and holding a price leader. Focusing on a duopoly market, we demonstrate that if supply is tight relative to demand, and if the cost differential between firms is reasonably large, a price competition market is formed non-cooperatively.
    Keywords: Keywords: Price Competition, Price Leader, Market Organization Game
    JEL: D21 D43 L11 L13
    Date: 2012–01
  3. By: L. Elisa Celis (Department of Computer Science, University of Washington); Gregory Lewis (Department of Economics, Harvard University); Markus Mobius (Microsoft Research New England); Hamid Nazerzadeh (Marshall School of Business, University of Southern California)
    Abstract: Increasingly sophisticated tracking technology offers publishers the ability to offer targeted advertisements to advertisers. Such targeting enhances advertising efficiency by improving the match quality between advertisers and users, but also thins the market of interested advertisers. Using bidding data from Microsoft's Ad Exchange (AdECN) platform, we show that there is often a substantial gap between the highest and second highest willingness to pay. This motivates our new BIN-TAC mechanism, which is effective in extracting revenue when such a gap exists. Bidders can ``buy-it-now'', or alternatively ``take-a-chance'' in an auction, where the top d > 1 bidders are equally likely to win. The randomized take-a-chance allocation incentivizes high valuation bidders to buy-it-now. We show that for a large class of distributions, this mechanism achieves similar allocations and revenues as Myerson's optimal mechanism, and outperforms the second-price auction with reserve. For the AdECN data, we use structural methods to estimate counterfactual revenues, and find that our BIN-TAC mechanism improves revenue by 11% relative to an optimal second-price auction.
    Keywords: Advertising, Auctions, Mechanism Design
    JEL: D44 L86
    Date: 2011–09
    Abstract: This paper empirically assesses whether knowledge networking affects the growth of small service firms. More specifically, using a large, unbalanced panel data set for the period 1992- 2009, we investigate whether participation in a knowledge network called PLATO is positively related to service firm growth. Our results show that knowledge networking has a highly significant positive effect on the growth in net assets and added value of service firms. Furthermore, we demonstrate that the positive effect of knowledge networking on firm growth is significantly larger for service than for manufacturing firms, indicating that industry drives networking success.
    Keywords: networking, growth, service sector, SME, knowledge
    Date: 2011–10

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