nep-ind New Economics Papers
on Industrial Organization
Issue of 2013‒11‒02
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Monopoly and Dominant Firms: Antitrust Economics and Policy Approaches By Lawrence J. White
  2. Indirect Taxation, Public Pricing and Price Cap Regulation: a Synthesis By Valentini, Edilio
  3. Anticompetitive Vertical Merger Waves By Hombert, Johan; Pouyet, Jérôme; Schutz, Nicolas
  4. M&A and R&D - Asymmetric Effects on Acquirers and Targets? By Florian Szücs
  5. Merger, Product Differentiation, and Trade Policy By Cavagnac, Michel; Cheikbossian, Guillaume
  6. The Dragon awakes: Is Chinese competition policy a cause for concern? By Mario Mariniello

  1. By: Lawrence J. White
    Date: 2013
  2. By: Valentini, Edilio
    Abstract: It is well known that many standard results on optimal taxation and tax reforms have a straightforward counterpart in the monopoly pricing context and the Ramsey-Boiteux pricing rule represents the most obvious and well known example of this connection. What is less acknowledged, maybe even by many regulatory economists, is that this parallelism exists also with respect to a number of properties that characterize some types of price cap regulation. This paper reviews the economic literature that explored such properties, showing that there is a strong parallelism between the price cap results that are surveyed in this paper and those originating from the well-established theories on optimal indirect taxation and tax reforms, as well as public pricing.
    Keywords: Indirect taxation, public pricing, price cap regulation
    JEL: H21 L51
    Date: 2013–09–30
  3. By: Hombert, Johan; Pouyet, Jérôme; Schutz, Nicolas
    Abstract: We develop a model of vertical merger waves leading to input foreclosure. When all upstream firms become vertically integrated, the input price can increase substantially above marginal cost despite Bertrand competition in the input market. Input foreclosure is easiest to sustain when upstream market shares are the most asymmetric (monopoly-like equilibria) or the most symmetric (collusive-like equilibria). In addition, these equilibria are more likely when (i) mergers generate strong synergies; (ii) price discrimination in the input market is not allowed; (iii) contracts are public; whereas (iv) the impact of upstream and downstream industry concentration is ambiguous.
    Date: 2013–09–25
  4. By: Florian Szücs
    Abstract: We evaluate the impact of M&A activity on the growth of R&D spending and R&D intensity of 265 acquiring firms and 133 merger targets between 1990 and 2009. We use different matching techniques to construct separate control groups for acquirers and targets and use appropriate difference-in-difference estimation methods to single out the causal effect of mergers on R&D growth and intensity. We find that target firms substantially decrease their R&D efforts after a merger, while the R&D intensity of acquirers drops due to a sharp increase in sales.
    Keywords: Mergers, R&D growth, R&D intensity, propensity-score matching, difference in difference estimation
    JEL: D22 G34 O3
    Date: 2013
  5. By: Cavagnac, Michel; Cheikbossian, Guillaume
    Abstract: In a two-stage game with three firms and two countries, we study the profitability of a domestic merger in the context of an international oligopoly game with differentiated products and in a strategic trade policy environment. In contrast to a completely unregulated economy, we show that the domestic merger under Cournot competition is always profitable to the host country irrespective of the degree of product differentiation. Furthermore, it is also profitable to the competing country - hosting one firm only if products are sufficiently differentiated. Under Bertrand competition the merger is always profitable to both countries independently of the product range rivalry. But in a strategic trade environment it is more profitable to the country in which the merger occurs than to the other country.
    Keywords: ,
    JEL: D43 F12 F13 L13
    Date: 2013–04
  6. By: Mario Mariniello
    Abstract: Chinaâ??s Anti-Monopoly Law, adopted in 2007, is largely compatible with antitrust law in the European Union, the United States and other jurisdictions. Enforcement activity by the Chinese authorities is also approaching the level seen in the EU. The Chinese law, however, leaves significant room for the use of competition policy to further industrial policy objectives. The data presented in this Policy Contribution indicates that Chinese merger control might have asymmetrically targeted foreign companies, while favouring domestic companies. However, there are no indications that antitrust control has been used to favour domestic players. A strategy to achieve convergence in global antitrust enforcement should include support for Chinese competition authorities to develop the institutional tools they already have, and to improve merger control by promoting the adoption of a consumer-oriented test and enforcing M&A notification rules.
    Date: 2013–10

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