nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒05‒02
six papers chosen by

  1. Price caps, oligopoly, and entry By Stanley Reynolds; David Rietzke
  2. Socially optimal Nash equilibrium locations and privatization in a model of spatial duopoly with price discrimination By Eleftheriou, Konstantinos; Michelacakis, Nickolas
  3. Cournot Retrouvé under Price or Supply Function Competition By F. Delbono; L. Lambertini
  4. Price Leadership and Unequal Market Sharing: Collusion in Experimental Markets By Dijkstra, Peter T.
  5. Alliance Formation in a Vertically Differentiated Market By Jean J. Gabszewicz; Marco A. Marini; Ornella Tarola
  6. World Corporate Top R&D Investors: Innovation and IP bundles By Hélène Dernis; Mafini Dosso; Fernando Hervas; Valentine Millot; Mariagrazia Squicciarini; Antonio Vezzani

  1. By: Stanley Reynolds; David Rietzke
    Abstract: We extend the analysis of price caps in oligopoly markets to allow for sunk entry costs and endogenous entry. In the case of deterministic demand and constant marginal cost, reducing a price cap yields increased total output, consumer welfare, and total welfare; results consistent with those for oligopoly markets with a fixed number of firms. With deterministic demand and increasing marginal cost these comparative static results may be fully reversed, and a welfare-improving cap may not exist. Recent results in the literature show that for a fixed number of firms, if demand is stochastic and marginal cost is constant then lowering a price cap may either increase or decrease output and welfare (locally); however, a welfare improving price cap does exist. In contrast to these recent results, we show that a welfare-improving cap may not exist if entry is endogenous. However, within this stochastic demand environment we show that certain restrictions on the curvature of demand are sufficient to ensure the existence of a welfare-improving cap when entry is endogenous.
    Keywords: Price caps, oligopoly, entry, stochastic demand
    JEL: D21 L13 L51
    Date: 2015
  2. By: Eleftheriou, Konstantinos; Michelacakis, Nickolas
    Abstract: We generalize Beladi et al. (2014) for any non-negative, increasing, continuous function of distance as transportation costs function. By doing so, we show that in a duopoly, partial privatization does not change the socially optimal character of the Nash equilibrium location. Our results call for further research on testing their robustness under the existence of more than two competing firms.
    Keywords: Privatization; Spatial competition; Transportation costs
    JEL: L13 L32 R32
    Date: 2015–04–12
  3. By: F. Delbono; L. Lambertini
    Abstract: This paper aims at participating in the long-lasting debate about the analytical foundations of the Cournot equilibrium. In a homogeneous oligopoly, under standard regularity conditions, we prove that Cournot-Nash emerges both under (i) price competition and Cournot conjectures; and (ii) supply function competition with ex post market clearing. We demonstrate both results within a model of exogenous product differentiation.
    JEL: D43 L13
    Date: 2015–04
  4. By: Dijkstra, Peter T. (Groningen University)
    Abstract: We consider experimental markets of repeated homogeneous price-setting duopolies. We investigate the effect on collusion of sequential versus simultaneous price setting. We also examine the effect on collusion of changes in the size of each subject's market share in case both subjects set the same price.<br/>Our results show that sequential price setting compared with simultaneous price setting facilitates collusion, if subjects have equal market shares or if the follower has the larger market share.<br/>With sequential price setting, we find more collusion if subjects have equal market shares rather than unequal market shares. We observe more collusion if the follower has the larger market share than if the follower has the smaller market share.
    Date: 2014
  5. By: Jean J. Gabszewicz (CORE UniversitŽ Catholique de Louvain); Marco A. Marini (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); Ornella Tarola (Dipartimento di Scienze sociali ed economiche, Universita' degli Studi di Roma "La Sapienza")
    Abstract: This paper studies how the possibility for firms to sign collusive agreements (as for instance being part of alliances, cartels and mergers) may affect their quality and price choice in a market with vertically differentiated goods. For this purpose we model the firm decisions as a three-stage game in which, at the first stage, firms can form an alliance via a sequential game of coalition formation and, at the second and third stage, they decide simultaneously their product qualities and prices, respectively. In such a setting we study whether there exist circumstances under which either full or partial collusion can be sustained as a subgame perfect Nash equilibrium of the coalition formation game. Also, we analyse the effects of different coalition structures on equilibrium qualities, prices and profits accruing to firms. It is shown that only intermediate coalition structures arise at the equilibrium, with the bottom quality firm always included. Moreover, all equilibrium price and quality configurations always coincide with that observed in the duopoly case, with only two quality variants on sale.
    Keywords: Vertically differentiated market ; endogenous alliance formation ; coalition structures ; price collusion ; grand coalition ; coalition stability ; sequential games of coalition formation
    Date: 2015
  6. By: Hélène Dernis (OECD); Mafini Dosso (European Commission JRC-IPTS); Fernando Hervas (European Commission JRC-IPTS); Valentine Millot (OECD); Mariagrazia Squicciarini (OECD); Antonio Vezzani (European Commission JRC-IPTS)
    Abstract: This report presents original data and statistics on the innovation output of world top corporate R&D investors. Essentially descriptive in nature, it presents statistics about the technological profiles of companies, their trademark strategies for new products and services and about the extent to which these two forms of Intellectual Property Rights (IPR) are bundled to protect and appropriate the returns from investment in knowledge-based assets. The report provides interesting insights about the innovation strategies of this sample of world leading corporate R&D investors and opens the door to further research and analysis about companies' global strategies for knowledge development and exploitation. The main target audience of this report is the policy and research communities, as well as analysts with an interest in supporting evidence-based policy making in the area of innovation and industrial policies. This joint EC-OECD report builds on the efforts to collect up-to-date, reliable and comparable company data on the top corporate R&D investors worldwide carried-out by the European Commission since 2004 (the EU Industrial R&D Investment Scoreboard publication) and on the solid knowledge and experience of the OECD in developing and providing robust and state of the art indicators on science, technology and industry (see for example OECD's STI Scoreboard publications).
    Keywords: Patent, Trademark, IP bundle, Scoreboard, Top corporate R&D investors
    Date: 2015–03

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