New Economics Papers
on Industrial Organization
Issue of 2013‒02‒16
four papers chosen by

  1. The Antitrust Analysis of Multi-Sided Platform Businesses By David S. Evans; Richard Schmalensee
  2. Testing Market Power with Profit Functions: a Dual Approach with Normalized Quadratic By Gao, Zhifeng; Moss, Charles B.
  3. Procurement Auctions with General Price-Quality Evaluation By Makoto HANAZONO; Jun NAKABAYASHI; Masanori TSURUOKA
  4. Oligopolistic Structure in the Japanese Pistachio Import Market By Asgari, Mahdi; Saghaian, Sayed H.

  1. By: David S. Evans; Richard Schmalensee
    Abstract: This Chapter provides a survey of the economics literature on multi-sided platforms with particular focus on competition policy issues, including market definition, mergers, monopolization, and coordinated behavior. It provides a survey of the general industrial organization theory of multi-sided platforms and then considers various issues concerning the application of antitrust analysis to multi-sided platform businesses. It shows that it is not possible to know whether standard economic models, often relied on for antitrust analysis, apply to multi-sided platforms without explicitly considering the existence of multiple customer groups with interdependent demand. It summarizes many theoretical and empirical papers that demonstrate that a number of results for single-sided firms, which are the focus of much of the applied antitrust economics literature, do not apply directly to multi-sided platforms.
    JEL: L19 L40
    Date: 2013–02
  2. By: Gao, Zhifeng; Moss, Charles B.
    Abstract: The dual relationship between parameters of normalized quadratic cost and profit functions is determined when firms can implement market power on the output market. An approach is developed to test the market power by comparing the profits of a firm with and without market power. Simulations demonstrate the efficiency of this approach.
    Keywords: Normalized quadratic cost function, Normalized quadratic profit functions, Duality, Market power, Production Economics,
    Date: 2013–02–02
  3. By: Makoto HANAZONO (School of Economics, Nagoya University); Jun NAKABAYASHI (Institute of Social and Economic Research, Osaka University); Masanori TSURUOKA (Department of Economics, University of Tokyo)
    Abstract: We offer a general framework to study procurement auctions when quality matters. In this environment, sellers compete for a project by bidding a price-quality pair, and the winning bidder is determined by the score assigned to each bid. In contrast to the existing study in which only the quasilinear scoring rule is considered, our analysis allows a broad class of scoring rules including many other realistic ones. We focus on the analyses of the equilibrium bidding behavior of first-score (FS) and second-score (SS) auctions. We find that FS or SS auctions can be transformed into equivalent, single-dimensional score-bid auctions where the bidder's utility (payoff upon winning) is non-linear in the score-bid. Our analysis demonstrates that the ranking of the two auction formats, in terms of expected scores, depends on the scoring rule and that the equivalence fails unless scoring rules are quasilinear. FS auctions induce less aggressive bidding than SS auctions if, for example, the scoring rule is price-quality ratio (PQR).
    Keywords: scoring auctions, non-quasilinear scoring rules, procurement
    JEL: D44 H57 L13
    Date: 2013–01
  4. By: Asgari, Mahdi; Saghaian, Sayed H.
    Abstract: Iran is the major producer of pistachio nuts in the world. Iran dominated the international pistachio export markets until 1982, when a new competitor, the United States, emerged in the international markets. Currently, both Iran and the U.S. are major pistachio exporters to Japan. The empirical question being investigated in this study is whether the Japanese pistachio import market is best characterized by Cournot or Bertrand duopoly competition or some other form of game. In this research, using historical data on pistachio prices and quantity imported by Japan from Iran and the U.S., demand functions for these two main exporters are estimated. Considering two different strategic variables, quantity and price, full information maximum likelihood (FIML) resulted in different estimates. Normalized likelihood ratio statistics is used for the model comparison. Having proper game-specific nonlinear-equation restrictions enabled us to form six alternative models. The model that best fit the data was the Stackelberg model with US quantity leadership.
    Keywords: Oligopolistic markets, Cournot Model, Bertrand Model, Stackelberg Model, Likelihood ratio tests, Pistachio nuts, Japan, Agribusiness, Industrial Organization, International Relations/Trade, Q17, F12, C72,
    Date: 2013

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