nep-ind New Economics Papers
on Industrial Organization
Issue of 2013‒05‒05
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. RESALE PRICE MAINTENANCE AND UP-FRONT PAYMENTS: ACHIEVING HORIZONTAL CONTROL UNDER SELLER AND BUYER POWER By Gabrielsen, Tommy Staahl; Johansen, Bjørn Olav
  2. Investment under uncertainty and regulation of new access networks By Inderst, Roman; Peitz, Martin

  1. By: Gabrielsen, Tommy Staahl (Department of Economics, University of Bergen); Johansen, Bjørn Olav (Department of Economics, University of Bergen)
    Abstract: We consider a setting where an upstream producer and a competitive fringe of producers of a substitute product may sell their products to two differentiated downstream retailers. We investigate two different contracting games; one with seller power and a second game with buyer power. In each game we characterize the minimum set of vertical restraints that make the vertically integrated profit sustainable as an equilibrium outcome, and we also characterize sufficient conditions for having interlocking relationships (i.e. no exclusion). In line with the recent literature, we focus on the performance of simple two-part tariffs, upfront payments and RPM as facilitating devices for reducing competition under both buyer and seller power. With seller power we show that minimum RPM, possibly coupled with a quantity roof, will allow the manufacturer to induce industry wide monopoly prices. With buyer power we show that monopoly prices may be induced if the retailers may use an upfront fee together with a two-part tariff and a minimum RPM.
    Keywords: resale price maintenance; seller power; buyer power; horsizontal control
    JEL: L42
    Date: 2013–04–11
    URL: http://d.repec.org/n?u=RePEc:hhs:bergec:2013_002&r=ind
  2. By: Inderst, Roman; Peitz, Martin
    Abstract: Contractual and regulatory provisions for access affect incentives to invest in an upgraded network and, in particular, a next-generation access network. Investment decisions are made under uncertainty and have to be made over time. This papers provides a framework for taking uncertainty, risk aversion, and the timing of investment explicitly into account. First, it evaluates various access price policies in a framework in which the incremental value over the legacy network is uncertain. Second, introducing risk aversion, the access price structure turns out to be critical for the risk profile of the investing telecom operator and of the access-seeking alternative operator. Third, some implications of the time structure of access payments are derived. --
    Keywords: NGA,investment under uncertainty,access price rule,telecommunications
    JEL: L1 L5
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:13020&r=ind

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