nep-ind New Economics Papers
on Industrial Organization
Issue of 2012‒05‒02
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The strategic interplay between bundling and merging in complementary markets By Andrea Mantovani; Jan Vandekerckhove
  2. Retail Price Stickiness, Market Structure and Distribution Channels By Matsuoka, Takayasu
  3. Competition between clearing houses on the European market By Marie-Noëlle Calès; Laurent Granier; Nadège Marchand

  1. By: Andrea Mantovani (University of Bologna & IEB); Jan Vandekerckhove (Maastricht University)
    Abstract: In this paper, two pairs of complementors have to decide whether to merge and eventually bundle their products. Depending on the degree of competitive pressure in the market, either both pairs decide to merge (with or without bundling), or only one pair merges and bundles, while rivals remain independent. The latter case can very harmful for consumers as it brings surge in prices. We also consider the case in which one pair moves first. Interestingly, we find a parametric region where first movers merge but refrain from bundling, to not induce rivals to merge as well.
    Keywords: Bundling, merger, strategic interaction, antitrust
    JEL: D43 L13 L41
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:ieb:wpaper:2012/4/doc2012-10&r=ind
  2. By: Matsuoka, Takayasu
    Abstract: Using Japanese scanner data of transaction prices and sales for more than 1,600 commodity groups from 1988 to 2008, we find a statistically significant negative correlation between the frequency of price changes and the degree of market concentration. We also find that structural factors of a distribution channel are significantly correlated with rigidity in retail prices. Decomposing the frequency of price changes into the frequency of intraday, sale, and regular price changes, we find that both inter- and intra-brand competition positively affect the frequency of sales. Inter-brand competition among manufacturers has a significant and positive effect on the frequency of regular price changes, whereas intra-brand competition among retailers has no such significant effect. We also document that the term of contracts between manufacturers and retailers has a significant and positive effect on price stickiness.
    Keywords: Market structure, Distribution channels, Sticky prices
    JEL: L11 E31 C41
    Date: 2012–03
    URL: http://d.repec.org/n?u=RePEc:hit:rcpdwp:4&r=ind
  3. By: Marie-Noëlle Calès (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Laurent Granier (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Nadège Marchand (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    Abstract: For several years, European financial markets have been the place of important mutations. These mutations have hit both stock markets themselves as well as the infrastructures including all necessary services for the transactions on financial securities. Among the market services to which the investors appeal, is the clearing of the orders, the service which allows reducing exchanged flows while guaranteeing their safety. The market of clearing became strongly competitive with the arrival of new Pan European clearing houses. Confronted with aggressive pricing policies, “incumbent” clearing houses have to adopt new strategies : merger, simple or mutual links of interoperability. We develop a model of industrial organization to appreciate the consequences of these various strategies in terms of price and social welfare. The strategic incentives of clearing houses and their effects on their customers, i.e. investors, are observed by means of a sequential game. We show that the interoperability agreements are never reached at the equilibrium in spite of the fact that the "European code of good practice" of postmarkets incites them to accept this type of agreements. On the other hand, a merger between incumbent clearing houses can occur under some conditions. The merger is beneficial to these last ones as well as to the investors, but it is unfavourable to the Pan European clearing houses.
    Keywords: bundling, clearing house, interoperability, merger, post-market organization
    JEL: L10 G15 G20 G34
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:gat:wpaper:1206&r=ind

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