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on Industrial Organization |
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Issue of 2012‒12‒15
eight papers chosen by |
| By: | Zhu Wang; Julian Wright |
| Abstract: | This paper investigates a puzzle and possible policy concern: Why do platforms such as eBay and Visa that enable the trade of goods of different unobserved costs and values rely predominantly on linear ad-valorem fees, that is, fees that increase in proportion to the sale price of the trades that they enable? Under a broad class of demand functions, we show that a linear ad-valorem fee schedule enables a platform to maximize its profit as if it could actually observe the costs and values of the goods traded and set a different optimal fee for each good. Surprisingly, we find for this class of demands, allowing the platform to set ad-valorem fees (i.e. price discriminate) increases social welfare, both when the platform is regulated to recover costs and when the platform is unregulated. |
| Keywords: | Financial markets ; Payment systems |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:12-08&r=ind |
| By: | L. Elisa Celis; Gregory Lewis; Markus M. Mobius; Hamid Nazerzadeh |
| Abstract: | Increasingly detailed consumer information makes sophisticated price discrimination possible. At fine levels of aggregation, demand may not obey standard regularity conditions. We propose a new randomized sales mechanism for such environments. Bidders can "buy-it-now" at a posted price, or "take-a-chance" in an auction where the top d > 1 bidders are equally likely to win. The randomized allocation incentivizes high valuation bidders to buy-it-now. We analyze equilibrium behavior, and apply our analysis to advertiser bidding data from Microsoft Advertising Exchange. In counterfactual simulations, our mechanism increases revenue by 4.4% and consumer surplus by 14.5% compared to an optimal second-price auction. |
| JEL: | D4 D44 D82 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18590&r=ind |
| By: | Jeffrey V. Butler (EIEF); Enrica Carbone (University of Naples "SUN"); Pierluigi Conzo (CSEF); Giancarlo Spagnolo (Stockholm School of Economics-SITE, University of Rome "Tor Vergata" and CEPR) |
| Abstract: | This paper reports results from a laboratory experiment exploring the relationship between reputation and entry in procurement. There is widespread concern among regulators that favoring suppliers with good past performance, a standard practice in private procurement, may hinder entry by new (smaller or foreign) firms in public procurement markets. Our results suggest that while some reputational mechanisms indeed reduce the frequency of entry, so that the concern is warranted, appropriately designed reputation mechanisms actually stimulate entry. Since quality increases but not prices, our data also suggest that the introduction of reputation may generate large welfare gains for the buyer. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1215&r=ind |
| By: | Chiara Franzoni; Giuseppe Scellato; Paula Stephan |
| Abstract: | We investigate performance differentials associated with mobility for research active scientists residing in a broad spectrum of countries and working in a broad spectrum of fields using data from the GlobSci survey. We distinguish between two categories of mobile scientists: (1) those studying or working in a country other than that of origin and (2) those who have returned to their native country after a spell of study or work abroad. We compare the performance of these mobile scientists to natives who have never experienced a spell of mobility and are studying or working in their country of origin. We find evidence that mobile scientists perform better than those who have not experienced mobility. Among the mobile, we find some evidence that those who return perform better than the foreign born save in the United States, suggesting that positive selection is not at work in determining who remains outside the country. This is supported by the finding that for most countries the performance of returnees is no different than that of compatriots who remain abroad after controlling for other effects. |
| JEL: | F22 J24 J61 O30 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18577&r=ind |
| By: | Funaki, Y.; Houba, H.E.D.; Motchenkova, E. (Tilburg University, Tilburg Law and Economics Center) |
| Abstract: | Abstract: We consider price-fee competition in bilateral oligopolies with perfectly-divisible goods, non-expandable infrastructures, concentrated agents on both sides, and constant marginal costs. We define and characterize stable market outcomes. Buyers exclusively trade with the supplier with whom they achieve maximal bilateral joint welfare. Prices equal marginal costs. Threats to switch suppliers set maximal fees. These also arise from a negotiation model that extends price competition. Competition in both prices and fees necessarily emerges. It improves welfare compared to price competition, but consumer surpluses do not increase. The minimal infrastructure achieving maximal aggregate welfare differs from the one that protects buyers most. |
| Keywords: | Assignment Games;Infrastructure;Negotiations;Non-linear pricing;Market Power. |
| JEL: | C78 L10 L14 D43 R10 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:2012041&r=ind |
| By: | Ciarreta Antuñano, Aitor; García Enríquez, Javier; Gutiérrez Hita, Carlos |
| Abstract: | In a two-stage delegation game model with Nash bargaining between a manager and an owner, an equivalence result is found between this game and Fershtman and Judd's strategic delegation game (Fershtman and Judd, 1987). Interestingly, although both games are equivalent in terms of profits under certain conditions, managers obtain greater rewards in the bargaining game. This results in a redistribution of profits between owners and managers. |
| Keywords: | strategic delegation, bargaining, product substitutability, price |
| JEL: | C72 L13 M54 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:dfaeii:9151&r=ind |
| By: | M.C. Di Guardo; Raffaele Paci |
| Abstract: | In the last two decades Merger & Acquisition (M&A) activities worldwide rose to an unprecedented level mainly due to two factors - globalization and technological progress. M&A transactions, whatever is their motivation, generate potential knowledge flows between bidder and target firms that happen before, during and after the deal in the form of - information exchange in the due diligence phase and among managers; access to new technologies and organizational competencies; task and human integration; interaction of different organizational cultures; transfers of capabilities and resource sharing. Consequently, M&A transactions represent a valuable proxy for the exchange of knowledge across the geographical areas where companies are located offering therefore the opportunity to investigate into the knowledge flows between the European Union and its neighboring countries. The aim of the paper is to analyse in details the M&A deals in the European Neighboring Countries (ENC) in order to explore the knowledge flows between firms in those areas and external firms. More specifically, we will examine the geographical directions of M&As and their sectoral scope. Data on M&A deals are retrieved from the SDC Platinum database (Thomson Financial) considering the period 2000-2011. Taken together, M&A data provide interesting evidence on the overall market-level impact of M&A on ENC and thus on the knowledge links that have been generated. |
| Keywords: | Merger & Acquisition; knowledge flows; European Neighboring Countries |
| JEL: | F23 G34 L24 O33 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201236&r=ind |
| By: | Wilko Bolt; David Humphrey |
| Abstract: | The three main measures of competition (HHI, Lerner Index, and H-Statistic) are uncorrelated for U.S. banks. We investigate why this occurs, propose a frontier measure of competition, and apply it to five major bank service lines using data only available since 2008. Fee-based banking services comprise 35% of bank revenues so assessing competition by service line is preferred to using a single measure for traditional activities extended to the entire bank. Academic-based competition measures explain only 1% of HHI variation. HHI merger/acquisition guidelines could be raised since current banking concentration seems unrelated to competition. |
| Keywords: | Competition; banks; frontier analysis |
| JEL: | L11 G21 C21 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:dnb:dnbwpp:359&r=ind |