nep-ind New Economics Papers
on Industrial Organization
Issue of 2012‒02‒01
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Signalling rivalry and quality uncertainty in a duopoly By Bester, Helmut; Demuth, Juri
  2. On price competition with market share delegation contracts By M. Kopel; L. Lambertini
  3. Resource-based theory and mergers & acquisitions success By Grill, Plina; Bresser, Rudi K. F.
  4. Regulating advertising in the presence of public service broadcasting By Stühmeier, Torben; Wenzel, Tobias
  5. Does self-regulation of advertisement length improve consumer welfare? By Taisuke Matsubae; Noriaki Matsushima
  6. Advertiser Pressure on Newspaper Journalists: A Survey By De Smet, Dries; Vanormelingen, Stijn
  7. 24/7 By Miguel Flores

  1. By: Bester, Helmut; Demuth, Juri
    Abstract: This paper considers a market in which only the incumbent's quality is publicly known. The entrant's quality is observed by the incumbent and some fraction of informed consumers. This leads to price signalling rivalry between the duopolists, because the incumbent gains and the entrant loses when observed prices make the uninformed consumers more pessimistic about the entrant's quality. When the uninformed consumers' beliefs satisfy the intuitive criterion and the unprejudiced belief refinement, only a two-sided separating equilibrium can exist and prices are identical to the full information outcome. --
    Keywords: quality uncertainty,signalling,oligopoly
    JEL: D43 D82 L15
    Date: 2011
  2. By: M. Kopel; L. Lambertini
    Abstract: We identify a mistake in the specification of the demand system used in the strategic delegation model based on market shares by Jansen et al. (2007), whereby the price remains above marginal cost when goods are homogeneous. After amending this aspect, we perform a profit comparison with the alternative delegation scheme à la Fershtman and Judd (1987).
    JEL: L13
    Date: 2012–01
  3. By: Grill, Plina; Bresser, Rudi K. F.
    Abstract: Mergers & acquisitions (M&A) are most popular external growth strategies. While the number of M&A has been increasing during the past decades, on average, only the shareholders of target firms gain value during the acquisitions process, while acquirers do not receive abnormal positive returns. This paper analyses the impact of strategically valuable resources on the success of M&A decisions. We test complementary resource-based hypotheses regarding the value of M&A for the shareholders of both transaction partners. Our sample consists of transactions in the pharmaceutical and biotechnological industry. The results of our study show that the shareholders of both transaction partners will gain above average positive returns only when the acquirer and the target own and combine strategically valuable resources and capabilities. --
    Date: 2011
  4. By: Stühmeier, Torben; Wenzel, Tobias
    Abstract: Television advertising levels in Europe are regulated according to the Audiovisual Service Media Directive where member states of the European Union usually impose stricter regulation on their Public Service Broadcasting (PSB) channels. The present model evaluates the effects of symmetric and asymmetric regulation of ad levels on competition for viewers and advertisers in a duopoly framework where a public and a private broadcaster compete. If both broadcasters face the same advertising cap, regulation can be profit-increasing for both channels. If the public broadcaster is more strictly regulated, this may benefit the commercial rival if higher revenues in the advertising market outweigh the loss in viewership. --
    Keywords: media markets,two-sided markets
    JEL: L82 L13 D43
    Date: 2012
  5. By: Taisuke Matsubae; Noriaki Matsushima
    Abstract: In Japan, TV platforms regulate themselves as to the length of the advertisements they air. Using modified Hotelling models, we investigate whether such self-regulation improves consumer and social welfare or not. When all consumers choose a single TV program (the utility functions of consumers satisfy the standard "full-coverage" condition), self-regulation always reduces consumer welfare. It improves social welfare only if the advertisement revenue of each platform is not small and the cost parameter of investments in improving the quality of TV programs is small. When some consumers have outside options (the standard "full-coverage" condition is not satisfied), self-regulation can benefit consumers because it increases the number of consumers who watch TV programs.
    Date: 2012–01
  6. By: De Smet, Dries (Center of Economic Studies and Licos Centre for Institutions and Economic Performance, K.U.Leuven and Centre for European Economic Research (ZEW), Mannheim); Vanormelingen, Stijn (Hogeschool-Universiteit Brussel (HUB), Belgium)
    Abstract: We conduct a survey among Belgian newspaper journalists to check whether advertisers are putting pressure to steer newspaper content, either directly or indirectly and whether they succeed in doing so. The results indicate that 35 per cent of Belgian journalists are experiencing some pressure of advertisers. However, journalists can to a large extent withstand this pressure, especially if coming directly from advertisers.
    Keywords: advertising; advertising pressure; media bias; survey; newspapers
    JEL: L2 L82 M37
    Date: 2011–12
  7. By: Miguel Flores
    Abstract: This paper studies entry in a market where firms compete in shopping hours and prices. I show that an incumbent firm is able to choose its opening hours strategically to deter entry of a new firm. The potential effects of entry deterrence on social welfare depends on the degree of product differentiation. Entry deterrence increases social welfare when product differentiation is low, while it reduces social welfare when product differentiation is high. In terms of policy, the result of this model suggests that shopping hours deregulation is not always welfare enhancing. 
    Keywords: Entry; Product Differentiation; Shopping Hours
    JEL: D21 L51 L22
    Date: 2011–10

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