nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒08‒19
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A Note on the Limits to Monopoly Pricing By Xavier Méra
  2. Advertising competition in the French free-to-air television broadcasting industry By Ivaldi, Marc; Zhang, Jiekai
  3. Do Hospitals Respond to Increasing Prices by Supplying Fewer Services? By Salm, Martin; Wübker, Ansgar

  1. By: Xavier Méra (Granem - Groupe de Recherche ANgevin en Economie et Management - UA - Université d'Angers - Agrocampus Ouest - Institut National de l'Horticulture et du Paysage)
    Abstract: Ludwig von Mises and Murray Rothbard tended to emphasize the same requirement for a monopoly price to emerge, as far as the demand schedule for the monopolized good is concerned, in the long run and in the immediate run. This is problematic because, as this paper explains, their criterion of a seller or a cartel of sellers facing an " inelastic demand " above the " competitive price " (Mises) or the " free-market price " (Rothbard) is only required in the immediate run. This has consequences in regard to the question of the limits to monopoly pricing. The inelasticity of demand criterion of both authors left less room for monopoly prices in their theoretical constructs of a hampered market economy than there really is. If one wants to spare the bulk of consumers from the effects of factor misallocation, refraining from granting monopolistic privileges becomes even more urgent than what both authors suggested.
    Date: 2015–04–01
  2. By: Ivaldi, Marc; Zhang, Jiekai
    Abstract: This paper studies the advertising competition in the French free TV broadcasting industry, following a decision of the French anti-trust authority on the acquisition of two channels by the most active media group of the sector. After specifying a structural model of oligopoly competition of free TVs, we identify the shape and magnitude of the feedback loop between TV viewers and advertisers using French market data from March 2008 to December 2013. We implement a simple procedure to test the market conduct of TV channels, and identify that the nature of competition is of Cournot type in this industry. Finally, based on a series of competitive analysis, we conclude that the approved acquisition has not significantly affected the industry's competitiveness, and that the implemented behavioral remedies seems to be efficient in protecting the consumer surplus.
    Keywords: Advertising, competition, media, TV, two-sided market, market conduct, behavioral remedies
    Date: 2015–05
  3. By: Salm, Martin (Tilburg University); Wübker, Ansgar (RWI)
    Abstract: Medical providers often have a significant influence on treatment decisions which they can use in their own financial interest. Classical models of supplier-induced demand predict that medical providers will supply fewer services if they face increasing prices. We test this prediction based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement – with increasing prices for some hospitals and decreasing prices for others – without affecting the relative prices for different types of patients. Based on administrative data, we find that hospitals do indeed react to increasing prices by reducing service supply.
    Keywords: physician-induced demand, hospital care, prospective payment
    JEL: I11 L10 L21
    Date: 2015–07

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