nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒01‒31
eight papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A Note on Endogenous Heterogeneity in a Duopoly By X. Henry Wang ; Chenhang Zeng
  2. Competition among Coalitions in a Cournot Industry: A Validation of the Porter Hypothesis By L. Lambertini ; G. Piagnataro ; A. Tampieri
  3. Collusive Effects of a Monopolist's Use of an Intermediary to Deliver to Retailers By Isabel Teichmann ; Vanessa von Schlippenbach
  4. On the Sustainability of Product Market Collusion Under Credit Market Imperfection By Sugata Marjit ; Arijit Mukherjee ; Lei Yang
  5. Agricultural Production Restrictions and Market Power: An Antitrust Analysis By Bolotova, Yuliya
  6. Price discrimination and pricing to market behavior of Black sea region wheat exporters By Gafarova, Gulmira ; Perekhozhuk, Oleksandr ; Glauben, Thomas
  7. Which firms use trademarks - and why? Representative firm-level evidence from Germany By Crass, Dirk
  8. A Nodal Pricing Model for the Nordic Electricity Market By Bjørndal, Endre ; Bjørndal, Mette ; Gribkovskaia, Victoria

  1. By: X. Henry Wang (Department of Economics, University of Missouri-Columbia ); Chenhang Zeng (Research Center for Games and Economic Behavior, Shandong University )
    Abstract: This note extends the simultaneous-move endogenous technology choice model of Mills and Smith (1996) in two directions. First, expanding consideration to when the technology set is sufficiently convex, we find that the likelihood for asymmetric equilibrium in technology choice does not expand under simultaneous moves. Second, introducing sequential moves in the technology choice stage, we find that (i) if the technology set is insufficiently convex then the same amount of asymmetry is obtained as under simultaneous moves, (ii) if the technology set is sufficiently convex then sequential moves lead to more asymmetric technology choices, and (iii) the first mover always chooses a more efficient technology in any asymmetric equilibrium.
    Keywords: technology choice, endogenous heterogeneity, duopoly.
    JEL: D2 D8 L2
    Date: 2014–10
  2. By: L. Lambertini ; G. Piagnataro ; A. Tampieri
    Abstract: We determine the emergence of the Porter Hypothesis in a large oligopoly setting where the industry-wide adoption of green technologies is endogenously determined as a result of competition among coalitions. We examine a setting where the initial technology is polluting, firms decide whether to be brown or green and compete in quantities. We find that the Porter hypothesis may emerge as a market configuration with all green firms spurred by environmental regulation, even if consumers are not environmentally concerned. Finally, we single out the necessary and sufficient conditions under which the green grand coalition is socially optimal and therefore yields a win-win outcome.
    JEL: L13 L51 Q50
    Date: 2015–01
  3. By: Isabel Teichmann ; Vanessa von Schlippenbach
    Abstract: A manufacturer contracting secretly with several downstream competitors faces an opportunism problem, preventing it from exerting its market power. In an infinitely repeated game, the opportunism problem can be relaxed. We show that the upstream firm's market power can be restored even further if the upstream firm chooses a mixed distribution system in which it makes use of an intermediary to distribute the good to a subset of the retailers and delivers directly only to the remaining downstream firms.
    Keywords: Vertical relations, delegation, downstream monopolization, commitment problem, channel structure, multi-tier industry
    JEL: L12 L14 L42
    Date: 2014
  4. By: Sugata Marjit ; Arijit Mukherjee ; Lei Yang
    Abstract: We study the implication of credit constraints for the sustainability of product market collusion in a bank financed Cournot duopoly when firms face an imperfect credit market. We consider two situations without or with credit rationing. When there is no credit rationing moderately higher cost of external finance may affect the degree of collusion, but a substantial increase keeps it unaffected. Permanent adverse demand shock in this set up does not affect the possibility of collusion, but may aggravate the finance constraint and eventually lead to collusion. We also discuss the case with credit rationing.
    Keywords: Collusion, Credit Market JEL Classification: D21, D43, G21
    Date: 2015
  5. By: Bolotova, Yuliya
    Abstract: During the recent decade the organizations of agricultural producers in the national dairy, potato, egg and mushroom industries implemented various pre-production and production restriction practices with the primary objective of agricultural output price stabilization. The buyers of the affected agricultural commodities have challenged the legal status of production restrictions in a number of recent and current antitrust lawsuits, arguing that the Capper-Volstead Act, a limited antitrust exemption, does not protect production restrictions. Using the theory of oligopoly, this research evaluates potential market effects of agricultural production restrictions by comparing the organizations of agricultural producers with classic illegal cartels, which harmful effects antitrust law aims to prevent. The available empirical evidence on the market and price effects of agricultural output control practices is discussed in light of the theoretical analysis.
    Keywords: Antitrust, Capper-Volstead Act, cartels, cooperatives, output control agreements, Sherman Act., Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, Industrial Organization, Institutional and Behavioral Economics, Marketing, D4, D7, K2, L1, L2, L4, Q1.,
    Date: 2015–01–15
  6. By: Gafarova, Gulmira ; Perekhozhuk, Oleksandr ; Glauben, Thomas
    Abstract: As a result of some important changes in the international wheat market, market shares of leading exporters have recently altered. The Black Sea region countries – Kazakhstan, Russia and Ukraine have become important wheat exporters. Consequently, the pricing behavior of these countries has become a key issue. By applying the pricing-to-market model to annual wheat exports, this study analyses price discriminating behavior of the KRU exporters in foreign markets during 1996-2012. The results demonstrate that even though the KRU countries are able to exercise price discrimination in some importing countries, they usually face perfect competition in most destinations.
    Keywords: fixed-effects model, mark-up, price discrimination, pricing-to-market, wheat export, Demand and Price Analysis, International Relations/Trade,
    Date: 2014–08
  7. By: Crass, Dirk
    Abstract: Trademarking firms are more productive, generate higher profits, and have a better survival rate. Trademarking firms are in one word more successful, which might motivate non-trademarking firms to adopt a trademark strategy. But this seems not to be the case. The proportion of trademarking firms in the German business sector amounts to just 18%. This figure is quite low, given that nearly each firm has reputation to protect. But why has the vast majority of firms no registered trademarks? Using a representative sample of German firms, the present paper links certain firm characteristics to a firms' propensity to register trademarks. The empirical results point to circumstances under which trademarks are significantly more often used: this is the case where a large distance between a firm and its customers exists, a firm's product quality is difficult to assess, a firm's products are characterized by a limited (but not strong) substitutability, and where a firm is engaged in R&D and introduces innovative products. Trademarks are considerably less frequently used if none of this is the case.
    Keywords: Intellectual Property Rights,Trademarks,Reputation,Innovation
    JEL: C25 D21 L14 O34
    Date: 2014
  8. By: Bjørndal, Endre (Dept. of Business and Management Science, Norwegian School of Economics ); Bjørndal, Mette (Dept. of Business and Management Science, Norwegian School of Economics ); Gribkovskaia, Victoria (Dept. of Business and Management Science, Norwegian School of Economics )
    Abstract: In the Nordic day-ahead electricity market zonal pricing or market splitting is used for relieving congestion between a predetermined set of bidding areas. This congestion management method represents an aggregation of individual connection points into bidding areas, and flows from the actual electricity network are only partly represented in the market clearing. Because of several strained situations in the power system during 2009 and 2010, changes in the congestion management method have been considered by the Norwegian regulator. In this paper we discuss nodal pricing in the Nordic power market, and compare it to optimal and simplified zonal pricing, the latter being used in today’s market. A model of the Nordic electricity market is presented together with a discussion of the calibration of actual market data for four hourly case studies with different load and import/exports to the Nordic area. The market clearing optimization model incorporates thermal and security flow constraints. We analyze the effects on prices and grid constraints and quantify the benefits and inefficiencies of the different methods. We find that the price changes with nodal pricing may not be dramatic, although in cases where intra-zonal constraints are badly represented by the aggregate transfer capacities in the simplified zonal model the nodal prices may be considerably higher on average and vary more than the simplified zonal prices. On the other hand nodal prices may vary less than the simplified zonal prices if aggregate transfer capacities are set too tightly. Allowing for more prices in the Nordic power market would make dealing with capacity limits easier and more transparent.
    Keywords: Nodal pricing; Zonal pricing; Congestion management; Electricity market simulation
    JEL: Q00
    Date: 2014–12–19

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