nep-ind New Economics Papers
on Industrial Organization
Issue of 2014‒12‒24
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Horizontal mergers in the presence of vertical relationships By Ghosh, Arghya; Morita, Hodaka; Wang, Chengsi
  2. The institutional framework of Industrial policies By Sandrine Labory; Patrizio Bianchi
  3. A Survey of the Economics of Patent Systems and Procedures By Eckert, Andrew; Langinier, Corinne
  4. Public regulatory intervention in consumer-friendly firms By Vitor Miguel Ribeiro
  5. Welfare Analysis of Dynamic Voluntary Advertising in Covered Markets By Tenryu, Yohei; Kamei, Keita
  6. Competition in the Cryptocurrency Market By Gandal, Neil; Halaburda, Hanna

  1. By: Ghosh, Arghya; Morita, Hodaka; Wang, Chengsi
    Abstract: We study welfare effects of horizontal mergers under a successive oligopoly model and find that downstream mergers can increase welfare if they reduce input prices. The lower input price shifts some input production from cost- inefficient upstream firms to cost-efficient ones. Also, the lower input price makes upstream entry less attractive, reduces the number of upstream entrants, and decreases their average costs in the presence of fixed entry costs. We identity necessary and sufficient conditions for a reduction in input prices and welfare-improving horizontal mergers under a general demand function. Qualitative nature of our findings remains unchanged for upstream mergers.
    Keywords: merger , successive oligopoly , welfare , reallocation , rationalization
    JEL: L13 L41 L42
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:mnh:wpaper:37301&r=ind
  2. By: Sandrine Labory; Patrizio Bianchi
    Abstract: This paper argues that the institutional framework of industrial policies derives from the analysis of industries as systems. Industries are embedded in specific institutional frameworks with which they co-evolve. However, industrial systems are primarily organised at local level: industries may be global but in the sense that they constitute global networks of local systems. The institutional framework of industrial policy derives from this result: industrial policy acts at different levels, primarily the local one with regional policies, but also national and supranational. The paper argues that regional industrial policies are key policies to favour industrial development, and performing regions are those that combine dynamic capabilities (pool of resources: raw materials, infrastructure, competencies and knowledge, human capital) and an institutional system characterised by governance and leadership. This is illustrated with the case of the Emilia Romagna region in Italy. Dynamic capabilities both favour the development of local firms and attract firms and resources (financial, human) from outside the region. Governance is taken in the sense of Stoker (1998) of a collective decision-making process, involving all stakeholders. We add that leadership is also essential in such a framework. Finally, the success of industrial policy depends not only on the local institutions but also on their relationship with the wider institutional framework.
    Keywords: industrial policy; institutional framework; regions; Emilia-Romagna
    JEL: L52 O25 O18
    Date: 2014–12–05
    URL: http://d.repec.org/n?u=RePEc:udf:wpaper:2014203&r=ind
  3. By: Eckert, Andrew (University of Alberta, Department of Economics); Langinier, Corinne (University of Alberta, Department of Economics)
    Abstract: The last several decades have seen increases in patenting activity worldwide, as well as growing issues related to patent quality. In response to these quality issues a recent patent literature has emerged, that investigates the behavior and incentives of patent examiners, applicants, and third parties. In this paper, we provide an overview of patent procedures, patent systems and a survey of the new economic literature on patent systems. Both theoretical and empirical papers are considered. Policy implications coming from this literature are presented.
    Keywords: patents; patent examination; patent systems; innovation; incentives
    JEL: K40 O31
    Date: 2014–09–01
    URL: http://d.repec.org/n?u=RePEc:ris:albaec:2014_010&r=ind
  4. By: Vitor Miguel Ribeiro (Vitor Miguel Ribeiro - FEP - Vitor Miguel de Sousa Ribeiro)
    Abstract: We study a duopoly with differentiated and substitutable goods composed of one consumer-friendly firm and one pure-profit maximizing firm. In such a duopoly, a regulatory authority intervenes to control the degree of altruism of the consumer-friendly firm. We conclude that under quantity competition, if firms sell goods that are too homogeneous the policymaker should impose a ceiling on the level of benevolence of the consumer-friendly firm. However, under price competition, the policymaker never imposes a ceiling on the level of kindness of the consumer-friendly firm. Our results also show that, whatever the degree of product differentiation, the social welfare under price competition is always higher than the social welfare under quantity competition, which restores the arguments pointed out by the traditional literature and constitutes a sharp contrast with Nakamura (2013).
    Keywords: Consumer-Friendly Firm, Product Differentiation, Public Intervention
    JEL: D43 L11 L13 R12
    Date: 2014–11
    URL: http://d.repec.org/n?u=RePEc:por:fepwps:548&r=ind
  5. By: Tenryu, Yohei; Kamei, Keita
    Abstract: In this study, we analyze a dynamic duopoly game in which firms can use advertising and price as competitive tools. The market is assumed to be completely covered in the sense that all consumers purchase a product from one of the two firms. We assume that advertising creates a positive externality. Thus, each firm voluntarily advertises to persuade consumers to buy its products over those of the other firm, even though the firms compete with one another in price. Two cases are considered: an interior case and a corner case. In this situation, we investigate how changes in consumer preference and firm technology level affect advertising, profits, and economic welfare and highlight the differences between the two cases.
    Keywords: Advertising, vertical product differentiation, differential games, duopoly.
    JEL: C72 L13 M37
    Date: 2014–12
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:60694&r=ind
  6. By: Gandal, Neil; Halaburda, Hanna
    Abstract: We analyze how network effects affect competition in the nascent cryptocurrency market. We do so by examining the changes over time in exchange rate data among cryptocurrencies. Specifically, we look at two aspects: (1) competition among different currencies, and (2) competition among exchanges where those currencies are traded. Our data suggest that the winner-take-all effect is dominant early in the market. During this period, when Bitcoin becomes more valuable against the U.S. dollar, it also becomes more valuable against other cryptocurrencies. This trend is reversed in the later period. The data in the later period are consistent with the use of cryptocurrencies as financial assets (popularized by Bitcoin), and not consistent with "winner-take-all" dynamics.
    Keywords: Bitcoin; cryptocurrency; network effects
    JEL: L17 L86
    Date: 2014–09
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:10157&r=ind

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