nep-ind New Economics Papers
on Industrial Organization
Issue of 2012‒07‒01
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Dynamic Spatial Competition Between Multi-Store Firms By Victor Aguirregabiria; Gustavo Vicentini
  2. Screening for Collusion: A Spatial Statistics Approach By Pim Heijnen; Marco A. Haan; Adriaan R. Soetevent
  3. Tacit collusion in a non-repeated price competition game with a soft capacity constraint By Marie-Laure Cabon-Dhersin; Nicolas Drouhin

  1. By: Victor Aguirregabiria; Gustavo Vicentini
    Abstract: We propose a dynamic model of an oligopoly industry characterized by spatial competition between multi-store retailers. Firms compete in prices and decide where to open or close stores depending on demand conditions and the number of competitors at different locations, and on location-specific private-information shocks. We develop an algorithm to approximate a Markov Perfect Equilibrium in our model, and propose a procedure for the estimation of the parameters of the model using panel data on number of stores, prices, and quantities at multiple geographic locations within a city. We also present numerical examples to illustrate the model and algorithm.
    Keywords: Spatial competition; Store location; Industry dynamics; Sunk costs.
    JEL: C73 L13 L81 R10 R30
    Date: 2012–06–14
    URL: http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-457&r=ind
  2. By: Pim Heijnen (University of Groningen); Marco A. Haan (University of Groningen); Adriaan R. Soetevent (University of Amsterdam)
    Abstract: We develop a method to screen for local cartels. We first test whether there is statistical evidence of clustering of outlets that score high on some characteristic that is consistent with collusive behavior. If so, we determine in a second step the most suspicious regions where further antitrust investigation would be warranted. We apply our method to build a variance screen for the Dutch gasoline market.
    Keywords: collusion; variance screen; spatial statistics; K-function
    JEL: C11 D40 L12 L41
    Date: 2012–06–18
    URL: http://d.repec.org/n?u=RePEc:dgr:uvatin:20120058&r=ind
  3. By: Marie-Laure Cabon-Dhersin (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - Université de Rouen : EA4702); Nicolas Drouhin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne)
    Abstract: This paper analyses price competition in the case of two firms operating under constant returns to scale with more than one production factor. Factors are chosen sequentially in a two-stage game generating a soft capacity constraint and implying a convex short term cost function in the second stage of the game. We show that tacit collusion is the only predictable result of the whole game i.e. the unique payoff-dominant pure strategy Nash equilibrium. Technically, this paper bridges the capacity constraint literature on price competition and that of the convex cost function.
    Keywords: price competition; tacit collusion; convex cost; Bertrand Paradox; capacity constraint
    Date: 2012–06–12
    URL: http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00709093&r=ind

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