nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒03‒22
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Multi-Firm Mergers with Leaders and Followers By Gamal Atallah
  2. Asymmetric price adjustments: A supply side approach By Antoniou, Fabio; Fiocco, Raffaele; Guo, Dongyu
  3. Is zero the best price? Optimal pricing of mobile applications By Buck, Christoph; Graf, Julia
  4. Consumer Search and Prices in the Automobile Market By Moraga-González, José-Luis; Sándor, Zsolt; Wildenbeest, Matthijs
  5. Hotelling competition and teaching efficiency of Italian university faculties. A semi-parametric analysis. By Bergantino, Angela Stefania; Capozza, Claudia; Porcelli, Francesco

  1. By: Gamal Atallah (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: This paper analyzes mergers involving several leaders and followers in Stackelberg models, with the merged entity acting as a leader. Adding a follower to a merger increases its profitability or reduces its losses. A merger between one leader and any number of followers is always profitable. When a merger involves two leaders, it requires a sufficiently large proportion of followers to participate in it to be profitable. A merger is less likely to be profitable when the number of participating leaders is intermediate and the number of participating followers is small. All mergers involving leaders and followers are welfare reducing. Overall, Stackelberg leadership partially alleviates the merger paradox.
    Keywords: Fusions, Profitabilité des fusions, Paradoxe des fusions, Stackelberg, Meneurs, Suiveurs
    JEL: D43 L13
    Date: 2015
  2. By: Antoniou, Fabio; Fiocco, Raffaele; Guo, Dongyu
    Abstract: Using a model of dynamic price competition, this paper provides an explanation from the supply side for the well-established observation that retail prices adjust faster when input costs rise than when they fall. The opportunity of profitable storing for the next period induces competitive firms to immediately increase their prices in anticipation of higher future input costs. This relaxes competition and firms earn positive profits. Conversely, when input costs are expected to decline, firms adjust their prices only after a cost reduction materializes, and the firms' incentives for price undercutting lead to the standard Bertrand outcome.
    Keywords: Asymmetric price adjustments; Bertrand-Edgeworth competition; Storage; Gasoline
    JEL: D4 L1
    Date: 2015–03
  3. By: Buck, Christoph; Graf, Julia
    Abstract: [Introduction ...] This leads us to our major research question: How to optimally set prices of mobile applications depending on their utility-classification? Each of the following chapters sequentially contributes to the answer of this question. Chapter 2 focuses on the managerial relevance of pricing and the specific characteristics of mobile applications. In chapter 3, we develop a model for mobile application pricing and derive advises for profit-maximizing mobile application pricing. The article closes with a discussion and conclusion in chapter 4.
    Keywords: Optimal Pricing,Mobile Applications,Apps,Price
    Date: 2015
  4. By: Moraga-González, José-Luis; Sándor, Zsolt; Wildenbeest, Matthijs
    Abstract: In many markets consumers have imperfect information about the utility they derive from the products that are on offer and need to visit stores to find the product that is the most preferred. This paper develops a discrete-choice model of demand with optimal consumer search. Consumers first choose which products to search; then, once they learn the utility they get from the searched products, they choose which product to buy, if any. The set of products searched is endogenous and consumer specific. Therefore imperfect substitutability across products does not only arise from variation in their characteristics but also from variation in the costs of searching them. We apply the model to the automobile industry. Our search cost estimate is highly significant and indicates that consumers conduct a limited amount of search. Estimates of own- and cross-price elasticities are lower and markups are higher than if we assume consumers have full information.
    Keywords: automobiles; consumer search; demand and supply; differentiated products
    JEL: C14 D83 L13
    Date: 2015–03
  5. By: Bergantino, Angela Stefania; Capozza, Claudia; Porcelli, Francesco
    Abstract: In this paper we explore the effect of competition (à la Hotelling) on teaching efficiency of the Italian university system at faculty-level, over the period 2004 to 2008. The analysis is performed in two stages. First, we use Data Envelopment Analysis (DEA) to calculate an index of teaching efficiency. Second, a parametric approach is used to evaluate the determinants of teaching efficiency, focusing on the impact of competition. Our results are in favour of competition: when faculties operate in a more competitive environment, they are induced to carry out teaching activity in a more efficient way.
    Keywords: teaching efficiency, competition, two step DEA analysis
    JEL: A2 L13
    Date: 2015–03–16

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