nep-ind New Economics Papers
on Industrial Organization
Issue of 2014‒09‒05
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Supplier Fixed Costs and Retail Market Monopolization By Stéphane Caprice; Vanessa von Schlippenbach; Christian Wey
  2. Price Setting in Online Markets: Basic Facts, International Comparisons, and Cross-border Integration By Yuriy Gorodnichenko; Oleksandr Talavera
  3. Improving the Merger Control Process in Ireland By Gorecki, Paul

  1. By: Stéphane Caprice; Vanessa von Schlippenbach; Christian Wey
    Abstract: Considering a vertical structure with perfectly competitive upstream firms that deliver a homogenous good to a differentiated retail duopoly, we show that upstream fixed costs may help to monopolize the downstream market. We find that downstream prices increase in upstream firms' fixed costs when both intra- and interbrand competition exist. Our findings contradict the common wisdom that fixed costs do not affect market outcomes.
    Keywords: Fixed costs, vertical contracting, monopolization
    JEL: L13 L14 L42
    Date: 2014
  2. By: Yuriy Gorodnichenko; Oleksandr Talavera
    Abstract: We document basic facts about prices in online markets in the U.S. and Canada, a rapidly growing segment of the retail sector. Relative to prices in regular stores, prices in online markets are more flexible as well as exhibit stronger pass-through (60-75 percent) and faster convergence (half-life less than 2 months) in response to movements of the nominal exchange rate. Multiple margins of adjustment (frequency of price changes, direction of price changes, size of price changes, exit of sellers) are active in the process of responding to nominal exchange rate shocks. Furthermore, we use the richness of our dataset to show that degree of competition, stickiness of prices, synchronization of price changes, reputation of sellers, and returns to search effort are important determinants of pass-through and speed of price adjustment for international price differentials.
    JEL: E3 F40 F41
    Date: 2014–08
  3. By: Gorecki, Paul
    Date: 2014–06

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