nep-ind New Economics Papers
on Industrial Organization
Issue of 2013‒11‒09
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Entry, exit, and the determinants of market structure By Timothy Dunne; Shawn D. Klimek; Mark J. Roberts; Daniel Yi Xu
  2. The effects of cartel damage compensations By Hunold, Matthias
  3. "Testing the Effectiveness of Regulation and Competition on Cable Television Rates" By Mary T. Kelly; John S. Ying

  1. By: Timothy Dunne; Shawn D. Klimek; Mark J. Roberts; Daniel Yi Xu
    Abstract: This paper estimates a dynamic, structural model of entry and exit in an oligopolistic industry and uses it to quantify the determinants of market structure and long-run firm values for two U.S. service industries, dentists and chiropractors. Entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are all found to be important determinants of long-run firm values, firm turnover, and market structure. Estimates for the dentist industry allow the entry cost to differ for geographic markets that were designated as Health Professional Shortage Areas and in which entry was subsidized. The estimated mean entry cost is 11 percent lower in these markets. Using simulations, we compare entry-cost versus fixed-cost subsidies and find that entry-cost subsidies are less expensive per additional firm.
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:fip:fedawp:2013-10&r=ind
  2. By: Hunold, Matthias
    Abstract: Damage compensation claims in case of cartels are supposed to increase deterrence, compensate losses and increase efficiency. I show that such claims can instead have adverse effects: If suppliers or buyers of cartelists are compensated in proportion to the profits lost due to the cartel, expected cartel profits can increase. Claims of downstream firms against upstream cartelists who do not monopolize the market increase consumer prices. Suppliers of cartelists can be worse off when eligible to compensation. These results apply also to abuses of dominance and call for a more careful approach towards the private enforcement of competition law. --
    Keywords: competition law,cartel damage compensation,deterrence,overcharge,private enforcement,vertical relations
    JEL: K21 L41
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:13081&r=ind
  3. By: Mary T. Kelly (Department of Economics, Villanova University); John S. Ying (Department of Economics, University of Delaware)
    Abstract: Regulation of the cable television industry was marked by remarkable periods of deregulation, re-regulation, and re-deregulation during the 1980s and 1990s. Using FCC firm-level survey data spanning 1993 to 2001, we model and econometrically estimate the effect of regulation and competition on cable rates. Our calculations indicate that while regulation lowered rates for small system operators, it raised them for medium and large systems. Meanwhile, competition consistently decreased rates from 5.6 to 8.8 percent, with even larger declines during periods of regulation. Our results suggest that competition is more effective than regulation in containing cable prices.
    Keywords: cable rates; regulation; competition.
    JEL: L50 L51 L96 L97 L98
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:dlw:wpaper:13-06.&r=ind

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