nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒09‒11
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Downstream Competition and the Effects of Buyer Power By Zhiqi Chen; Hong Ding; Zhiyang Liu
  2. Product Line Strategy in a Vertically Di¤erentiated Duopoly By Ryoma Kitamura; Tetsuya Shinkai
  3. The duration of the EC merger control process: Determinants and the impact of the 2004 merger regulation reform By Heim, Sven; Hüschelrath, Kai; Laitenberger, Ulrich
  4. The settlement procedure in EC cartel cases: An empirical assesment By Hüschelrath, Kai; Laitenberger, Ulrich
  5. Deregulation, competition, and consolidation: The case of the German interurban bus industry By Dürr, Niklas S.; Heim, Sven; Hüschelrath, Kai

  1. By: Zhiqi Chen (Department of Economics, Carleton University); Hong Ding (Deloitte Enterprise Consulting); Zhiyang Liu (Shanghai University of Finance and Economics)
    Abstract: To examine the interaction between buyer power and competition intensity in a downstream market, we consider four variations of a model in which oligopolistic retailers compete in the downstream market and one of them is a large retailer that has its own exclusive supplier. We demonstrate that an increase in the buyer power of the large retailer against its supplier leads to a fall in retail price and an improvement in consumer welfare, and this is true even in the extreme case where the large retailer is a monopoly in the downstream market. More interestingly, we find that the beneficial effects of an increase in buyer power are large when the intensity of downstream competition is low, with the effects being the largest in the case of downstream monopoly.
    Keywords: buyer power; retail competition; antitrust policy
    JEL: L1 L4
    Date: 2015–07–06
  2. By: Ryoma Kitamura (Graduate School of Economics, Kwansei Gakuin University); Tetsuya Shinkai (School of Economics, Kwansei Gakuin University)
    Abstract: We consider a duopoly model in which …rms with di¤erent costs supply two vertically di¤erentiated products in the same market. We show that the e¢ cient …rm produces more of the high-quality good and the ine¢ cient one produces more of the low-quality good in equilibrium. We also …nd that a change in the quality superiority of goods and relative cost e¢ ciency ratios leads to cannibalization from one good to the other and characterize graphically the product line strategies of …rms through the two ratios.
    Keywords: Multi-product …rm; Duopoly; Cannibalization; Vertical product di¤erentiation
    JEL: D21 D43 L13 L15
    Date: 2015–08
  3. By: Heim, Sven; Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: The duration of merger proceedings held by competition authorities is an important determinant of the efficiency of the entire merger control process. We use a dataset of 2953 Phase I and 92 Phase II investigations completed by the European Commission (EC) between 1999 and 2008 to examine the key determinants of their duration. Differentiating between authority- and caserelated drivers, we find that while the duration of Phase I investigations largely depends on the type of decision and use of simplified procedure, the duration of Phase II investigations is driven by factors such as industry knowledge, the duration of the preceding Phase I investigation, the origin of the notifying firm or the number of identified relevant markets. We also provide evidence that the significant increase in average duration identified after the 2004 merger regulation reform does not imply a decrease in administrative efficiency, as the probability of indepth investigations was correspondingly reduced.
    Keywords: competition policy,ex-post evaluation,merger control,European Union
    JEL: K21 L41
    Date: 2015
  4. By: Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: In June 2008, the European Commission (EC) was enabled to introduce a settlement procedure that aims at promoting the procedural efficiency of cartel enforcement in the European Union (EU). We use a data set consisting of 84 cartels decided by the EC from 2000 to 2014 to empirically investigate the impact of the EU settlement procedure on the duration of cartel investigations. Separating the enforcement process into two consecutive stages, we find that the introduction of the settlement procedure is followed by a substantial shortening of the second stage - reaching from the statement of objections (SO) to the decision - while it leaves the duration of the first stage from the beginning of the case to the SO unaffected. Subsequent to a discussion of further evaluation approaches we conclude that the EU Settlement Procedure has increased procedural efficiency of cartel enforcement in the European Union substantially.
    Keywords: competition policy,cartels,settlements,ex-post evaluation,European Union
    JEL: K21 L41
    Date: 2015
  5. By: Dürr, Niklas S.; Heim, Sven; Hüschelrath, Kai
    Abstract: We provide an empirical assessment of the German interurban bus industry two years after its deregulation in January 2013. In addition to a general description of key developments of the industry, we use a unique route-level price data set to study both competitive interaction in general and the potential price effects of a recently announced merger of the two largest players in the market in particular. We find that route-level average prices, inter alia, do not only depend on the number of competitors but especially on the composition of firms operating on a particular route. Although our empirical results suggest short-term price increases on certain route types post-merger, it remains an open question whether the merger should be classified as anticompetitive.
    Keywords: deregulation,competition,merger,interurban bus services,Germany
    JEL: L11 L41 L92 K21 K23
    Date: 2015

This nep-ind issue is ©2015 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.