nep-ind New Economics Papers
on Industrial Organization
Issue of 2012‒05‒22
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Market Power: How Does it Arise? How is it Measured? By Lawrence J. White
  2. Optimal Regulation of Lumpy Investments By Zwart, G.; Broer, D.P.
  3. The extent of European power markets By Böckers, Veit; Heimeshoff, Ulrich
  4. Price Discrimination in the Housing Market By Patrick Bayer; Marcus D. Casey; Fernando Ferreira; Robert McMillan
  5. Competition and regulation in Italy By Magda Bianco; Silvia Giacomelli; Giacomo Rodano

  1. By: Lawrence J. White
    Date: 2012
  2. By: Zwart, G.; Broer, D.P. (Tilburg University, Tilburg Law and Economics Center)
    Abstract: When a monopolist has discretion over the timing of infrastructure investments, regulation of post-investment prices interferes with incentivizing socially optimal investment timing. In a model of regulated lumpy investment under uncertainty, we study regulation when the regulator can condition price caps on investment timing. We analyse optimal regulation when there is asymmetric information on investment costs and regulation has to respect a budget constraint. We show that optimal regulation involves a price cap that decreases as a function of the monopolist's chosen investment time.
    Keywords: investment under uncertainty;asymmetric information;optimal regulation;budget constraint.
    JEL: D81 D82 L51
    Date: 2012
  3. By: Böckers, Veit; Heimeshoff, Ulrich
    Abstract: This paper analyzes the convergence process of Central-West European wholesale electricity markets from 2004 to the beginning of 2011. Jevon's law of price indifference is scrutinized using price correlation, parametric and nonparametric tests of price-differences and cointegration analysis. As a unique identifaction strategy national bank holidays are used as exogenous system shocks to trace the degree of market integration before the advent of the so-called market coupling of European power markets. In order to avoid overestimation of the degree of market integration, we specifically control for seasonal effects and common input factors. While the overall degree of integration between Germany and its neighbours has increased in the course of time, results suggest that only Austria and Germany already constitute a joint price area and that market coupling increases the convergence of markets at least between its participants. --
    Keywords: Market Structure,Spatial Market Delineation,Time Series Econometrics,Energy Data, Electricity,Europe
    JEL: C32 L1 L40 L94 Q40
    Date: 2012
  4. By: Patrick Bayer; Marcus D. Casey; Fernando Ferreira; Robert McMillan
    Abstract: This paper sets out a new research design to test for price discrimination by sellers in the housing market. The design controls carefully for unobserved differences in the quality of neighborhoods and homes purchased by buyers of each race, using novel panel data from over two million repeat-sales housing transactions in four metropolitan areas. The results indicate that black and Hispanic homebuyers pay premiums of around 3 percent on average across the four cities – differences that are not explained by variation in buyer income, wealth or access to credit. The estimated premiums do not vary significantly with the racial composition of the neighborhood or, most strikingly, the race of the seller. This latter result rules out racial prejudice or animosity on the part of sellers as the primary explanation for the estimated premiums.
    Keywords: Price Discrimination, Housing Market, Home Sales, Discrimination, Racial Differences, Racial Animosity, Prejudice
    JEL: H0 J15 K4 R2 R3
    Date: 2012
  5. By: Magda Bianco (Banca d'Italia); Silvia Giacomelli (Banca d'Italia); Giacomo Rodano (Banca d'Italia)
    Abstract: Insufficient competition remains a major obstacle to growth in Italy. The main culprits include the institutional environment and the regulations governing some economic sectors subject to market failures. As to the former, relative neglect of economic efficiency has produced an unstable and inconsistent regulatory framework, excessive administrative burdens, and an inefficient system of contract enforcement. Past attempts to reform this area have yielded poor results. As to the latter, regulation was satisfactory only in some sectors. The excessive number of activities in which some operators enjoyed exclusive rights to provide services and restrictive regulation hindered competition in professional services. Growing awareness of the importance of competition policies to foster growth has given new impetus to the implementation of a wide programme of liberalization and institutional reform.
    Keywords: competition, regulation, antitrust, institutions
    JEL: K23 K40
    Date: 2012–04

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