nep-ind New Economics Papers
on Industrial Organization
Issue of 2014‒08‒25
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Patent Trolls: Evidence from Targeted Firms By Lauren Cohen; Umit Gurun; Scott Duke Kominers
  2. Dynamic Efficiency and Incentive Regulation: An Application to Electricity Distribution Networks By Rahmatallah Poudineh; Grigorios Emvalomatis; Tooraj Jamasb
  3. Screening instruments for monitoring market power in wholesale electricity markets: Lessons from applications in Germany By Bataille, Marc; Steinmetz, Alexander; Thorwarth, Susanne
  4. Deterrence Effects of Korean Antitrust Enforcement on Producer Prices and Profit Margins By Robert M. Feinberg; Minsoo Park
  5. Market Regulations and USO in the Revised Swiss Postal Act: Provisions and Authorities By Christian Jaag; Martin Maegli

  1. By: Lauren Cohen; Umit Gurun; Scott Duke Kominers
    Abstract: We provide theoretical and empirical evidence on the evolution and impact of non-practicing entities (NPEs) in the intellectual property space. Heterogeneity in innovation, given a cost of commercialization, results in NPEs that choose to act as "patent trolls" that chase operating firms' innovations even if those innovations are not clearly infringing on the NPEs' patents. We support these predictions using a novel, large dataset of patents targeted by NPEs. We show that NPEs on average target firms that are flush with cash (or have just had large positive cash shocks). Furthermore, NPEs target firm profits arising from exogenous cash shocks unrelated to the allegedly infringing patents. We next show that NPEs target firms irrespective of the closeness of those firms' patents to the NPEs', and that NPEs typically target firms that are busy with other (non-IP related) lawsuits or are likely to settle. Lastly, we show that NPE litigation has a negative real impact on the future innovative activity of targeted firms.
    JEL: D2 K1 O31
    Date: 2014–08
  2. By: Rahmatallah Poudineh; Grigorios Emvalomatis; Tooraj Jamasb
    Abstract: Efficiency and productivity analysis is a central concept in incentive-based regulation of network utilities. However, the efficiency measures obtained from benchmarking predominantly reflect short term performance and hence, provide only a snapshot of the firm’s path towards its long run equilibrium. On the other hand, the factors affecting the short run behaviour of firms may not be adjusted instantaneously when firms undertake investment. In these instances, short run inefficiency caused by investments will be transmitted to subsequent periods. This effect, which arises from costs associated with the adjustment of capital stock or production capacity, is problematic under incentive regulation with ex-post regulatory treatment of capital expenditure. This is because it adversely affects the firms’ short term efficiency and, consequently, regulated revenue. This paper analyses the dynamic behaviour of inefficiency for a balanced panel of 128 Norwegian electricity distribution companies from 2004 to 2010. We show that, in a given period, inefficiency is a combination of period-specific effects (shocks) plus a carry-over component from previous periods due to adjustment costs. Also, we estimate these two components of inefficiency along with the rate of inefficiency transmission between periods.
    Keywords: Dynamic efficiency, innovation, investment incentives, benchmarking, electricity
    JEL: L43 L51 L94 D21 D23 D24
    Date: 2014–08–04
  3. By: Bataille, Marc; Steinmetz, Alexander; Thorwarth, Susanne
    Abstract: While liberalization in energy markets has been a widely successful process all over the world, incumbents often still hold a dominant position. Thus, electricity wholesale markets are subject to market surveillance. Nevertheless, consolidated findings on abusive practices of market power and their cause and effect in wholesale electricity markets are scarce and non-controversial market monitoring practices fail to exist. Our application of the established measure of market concentration RSI shows that it serves as a decent indicator for the rents that can be gained in the market but also reveals considerable weaknesses of the RSI. Therefore, we propose and apply the "Return on Withholding Capacity Index" (RWC) representing a measure of the firms' incentive of withholding capacity as a complementary index to the RSI. --
    Keywords: Market Power,Electric Power Markets,Measurement
    JEL: L11 L43 L94 K23 C13
    Date: 2014
  4. By: Robert M. Feinberg; Minsoo Park
    Date: 2014
  5. By: Christian Jaag; Martin Maegli
    Abstract: This paper analyzes the market regulations and USO as defined in the Swiss Postal Act and their interaction with competition law. Specifically, the paper covers the following aspects of the regulatory framework for the postal sector in Switzerland: First, the scope of the USO, consisting of provisions on the range of products to be offered and their prices, on the density and accessibility of the postal outlet network as well as the coverage and frequency of delivery. Second, it analyzes the financing of the USO, consisting of provisions on the calculation of the net cost, a residual monopoly for letters up to 50 grams and a regulatory cost allocation mechanism to ensure consistency of price regulation and the financing of the USO. Third, it presents the relevant regulatory authorities, consisting of the allocation of competences and the interfaces between the regulators (PostCom, OFCOM, ComCo, Price Supervisor).
    Keywords: Switzerland, Postal Regulation, Universal Service Obligation
    JEL: L43 L51
    Date: 2014–08

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