New Economics Papers
on Industrial Organization
Issue of 2012‒04‒17
six papers chosen by
  1. On Cournot Markets By Khadidja Benallou; Daniel Danau; Abderrahmane Ziad
  2. Antitrust Enforcement and Marginal Deterrence By Harold Houba; Evgenia Motchenkova; Quan Wen
  3. Effect of Mergers and Acquisitions on Market Concentration and Interest Spread By Khan, Mehwish Aziz; Kayani, Ferheen; Javid, Attiya Yasmin
  4. Impact of Pricing Schemes on a Market for Software-as-a-Service and Perpetual Software By Juthasit Rohitratana; Jorn Altmann
  5. Informative Advertising in Directed Search By Gomis-Porqueras, Pedro; Julien, Benoit; Chengsi, Wang
  6. The industrial organization of competition in local bus services By Philippe Gagnepain; Marc Ivaldi; Catherine Vibes
  1. By: Khadidja Benallou (Phd student - UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211); Daniel Danau (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211); Abderrahmane Ziad (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211)
    Abstract: This paper focuses on the existence of a Cournot equilibrium in a n- firm Cournot market for a single homogeneous commodity. Using a simple argument and proof, it shows that a Cournot equilibrium exists if each firm's marginal revenue declines with its own output and some weak non-decreasing incremental cost condition is satisfied.
    Keywords: Cournot Competition; existence of Cournot equilibrium; supermodular games
    JEL: L13 C72 C62
    Date: 2012–03
    URL: http://d.repec.org/n?u=RePEc:tut:cremwp:201219&r=ind
  2. By: Harold Houba (VU University Amsterdam); Evgenia Motchenkova (VU University Amsterdam); Quan Wen (Vanderbilt University)
    Abstract: We study antitrust enforcement in which the fine must obey four legal principles: punishments should fit the crime, proportionality, bankruptcy considerations, and minimum fines. We integrate these legal principles into an infinitely-repeated oligopoly model. Bankruptcy considerations ensure abnormal cartel profits. We derive the optimal fine schedule that achieves maximal social welfare under these legal principles. This optimal fine schedule induces collusion on a lower price making it more attractive than on higher prices. Also, raising minimum fines reduces social welfare and should never be implemented. Our analysis and results relate to the marginal deterrence literature by Shavell (1992) and Wilde (1992).
    Keywords: Antitrust enforcement; Antitrust Law; Cartel; Oligopoly; Repeated game
    JEL: L4 K21 D43 C73
    Date: 2011–11–22
    URL: http://d.repec.org/n?u=RePEc:dgr:uvatin:20110166&r=ind
  3. By: Khan, Mehwish Aziz; Kayani, Ferheen; Javid, Attiya Yasmin
    Abstract: This study investigates the relationship of mergers & acquisitions with the interest spread of the banking industry in Pakistan. To assess whether the merger of Pakistani banks were a success or otherwise, profitability, liquidity ratios, and net interest spread are computed which are considered essential to judge the financial performance of any bank. Data is taken for the period of 1997-2010 and this data have been used to calculate the interest spread and market concentration. Market Concentration is calculated by using Herfindahl-Hirschman Index or HHI. Findings show that the profitability and net interest spread of two merged banks declines as a result of mergers. It is also revealed that Concentration of the banking industry shows a rising trend during 2008 and 2009 after mergers occurred during 2007 as a result of merger. However, it shows the level that almost approaches the threshold i.e. 1000. One or two more mergers can push up threshold level of HH index. It means that it is the right time for banking industry of Pakistan to be reviewed by any antitrust authority to maintain the optimum level of competition.
    Keywords: Mergers & Acquisitions; Market Concentration; Banking industry; Interest Spread; and Profitability
    JEL: G1 A1 M2 G0
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:37311&r=ind
  4. By: Juthasit Rohitratana (TEMEP, College of Engineering, Seoul National University); Jorn Altmann (TEMEP, College of Engineering, Seoul National University)
    Abstract: In this paper, we present an agent-based simulation system that allows modeling the interactions between software buyers and vendors in a software market. The market offers Software-as-a-Service (SaaS) and perpetual software (PS) licenses under different pricing schemes. Four dynamic pricing schemes are analyzed: derivative-follower pricing, demand-driven pricing, skimming pricing, and penetration pricing. Customer (buyer) agents respond to these prices by selecting the most appropriate software license scheme based on four criteria using the Analytic Hierarchy Process (AHP) decision support mechanism. The four decision criteria relate to finance, software capability, organization, and vendor. The simulation results show that the demand-driven pricing scheme is the most effective method but hard to implement since it requires perfect knowledge about market conditions. As an alternative, penetration pricing and skimming pricing could be used. In addition to this, it can be stated that SaaS is most attractive for small enterprises while PS is attractive for large enterprises.
    Keywords: SaaS, Software-as-a-Service pricing, perpetual software pricing, agent-based simulation, Analytic Hierarchy Process (AHP), dynamic pricing, decision support, demand-driven pricing, derivative-follower pricing, penetration pricing, skimming pricing.
    JEL: C15 C44 C51 C53 C61 C63 D40 D45 D81 L24 L86 M15
    Date: 2012–03
    URL: http://d.repec.org/n?u=RePEc:snv:dp2009:201288&r=ind
  5. By: Gomis-Porqueras, Pedro; Julien, Benoit; Chengsi, Wang
    Abstract: We consider a directed search environment where capacity constrained sellers reach uncoordinated buyers through costly advertising while buyers observed all prices probabilistically. We show that: (i) the equilibrium advertising intensity has an inverted U-shape in market tightness, (ii) the equilibrium advertising intensity is higher under an auction mechanism than under posted pricing, and (iii) the equilibrium price and measure of informed buyers may {be positively correlated} even in large markets.
    Keywords: costly advertising; directed search; imperfect observability; sales mechanism
    JEL: M37 J64 D83
    Date: 2012–04–10
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:38057&r=ind
  6. By: Philippe Gagnepain (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Marc Ivaldi (TSE - Toulouse School of Economics - Toulouse School of Economics); Catherine Vibes (TSE - Toulouse School of Economics - Toulouse School of Economics)
    Abstract: This article is aimed at deepening our understanding of the functioning of competition in the local bus transportation industry and to evaluate its effectiveness. It provides an overview of the competitive constraints that are at work in the industry as discussed in the economic literature, and sketches empirical tests to check whether the intuitions provided by the economists are in line with the reality of the industry.
    Date: 2011
    URL: http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00684161&r=ind
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