nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒10‒10
four papers chosen by

  1. The Limits of Price Discrimination By Dirk Bergemann; Benjamin Brooks; Stephen Morris
  2. Is the depressive effect of renewables on power prices contagious? A cross border econometric analysis By Sébastien Phan, Fabien Roques
  3. Optimal Product Variety in Radio Markets By Steven Berry; Alon Eizenberg; Joel Waldfogel
  4. E-business classification of selected retailers in South Africa By Janine Kruger; Miemie Struwig

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Benjamin Brooks (Dept. of Economics, Princeton University); Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: We analyze the welfare consequences of a monopolist having additional information about consumers' tastes, beyond the prior distribution; the additional information can be used to charge different prices to different segments of the market, i.e., carry out "third degree price discrimination." We show that the segmentation and pricing induced by the additional information can achieve every combination of consumer and producer surplus such that: (i) consumer surplus is non-negative, (ii) producer surplus is at least as high as profits under the uniform monopoly price, and (iii) total surplus does not exceed the surplus generated by efficient trade.
    Keywords: First degree price discrimination, Second degree price discrimination, Third degree price discrimination, Private information, Privacy, Bayes correlated equilibrium, Concavification
    JEL: C72 D82 D83
    Date: 2013–05
  2. By: Sébastien Phan, Fabien Roques
    Abstract: European power markets have become more integrated and the implementation of market coupling has reinforced the efficiency of cross-border trading. This paper investigates empirically the impact of renewables growth in Germany on German and French power price volatility. We find that renewables depress power prices on average and increase volatility not only domestically but also across borders. We also leverage market resiliency data to investigate the impact of increases in interconnection capacity. We find that power price volatility would decrease in France despite some contagion effects of volatility from German renewables production. Our findings have important policy implications as they demonstrate the need to coordinate cross-border support policies for renewables in order to mitigate the impact of volatility on power prices in coupled power markets.
    Keywords: capital; electricity market, renewables, market coupling, GARCH
    JEL: L1 L5 L94
    Date: 2015–09–28
  3. By: Steven Berry (Cowles Foundation, Yale University); Alon Eizenberg (= Dept. of Economics, Hebrew University of Jerusalem); Joel Waldfogel (Carlson School, University of Minnesota)
    Abstract: A vast theoretical literature shows that inefficient market structures may arise in free entry equilibria. Previous empirical work demonstrated that excessive entry may obtain in local radio markets. Our paper extends that literature by relaxing the assumption that stations are symmetric, allowing instead for endogenous station differentiation along both (observed) horizontal and (unobserved) vertical dimensions. We find that, in most broadcasting formats, a social planner who takes into account the welfare of market participants (stations and advertisers) would eliminate 50%-60% of the stations observed in equilibrium. In 80%-94.9% of markets that have high quality stations in the observed equilibrium, welfare could be unambiguously improved by converting one such station into low quality broadcasting. In contrast, it is never unambiguously welfare-enhancing to convert an observed low quality station into a high quality one. This suggests local over-provision of quality in the observed equilibrium, in addition to the finding of excessive entry.
    Keywords: Product differentiation, Excess entry, Radio
    JEL: L11 L13 L82
    Date: 2015–10
  4. By: Janine Kruger (Nelson Mandela Metropolitan University); Miemie Struwig (Nelson Mandela Metropolitan University)
    Abstract: Purpose of the study: To classify selected retailers according to the type of business and the e-business model stage used to adopt e-business strategies in order to create a competitive advantage.Research design and methodology: The study will be qualitative in nature as the homepage of each selected retailer’s internet site will be analysed in terms of content. The procedure used in content analysing the printed screen dumps involves making notes of the links and interesting information in the margin. The margin notes will be studied and grouped themes. As many themes as required will be included, as the number of themes can be reduced if necessary. A final list of themes will be compiled when no new themes have emerged, and all the notes and information have been accommodated in the themes. The different themes will be colour coded using a coloured highlighter pen for each theme in the transcripts. A final check of all text and links on the screen dumps and on the homepage will be done to ensure that the information not highlighted is not relevant. The finalised themes will be given to another researcher to confirm the themes. Trustworthiness of the research will be enhanced by triangulation. Inter-rater reliability will be performed in that another researcher will verify the categories and ensure that the data was indeed correct.Research findings: The findings showed that one retailer is classified as a brick-and-mortar, two as brick-and-click and one as an online business. The e-business strategies adopted by the four retailers ranged from limited online presence to e-commerce. Research limitations: Only four public companies operating in two industries have been investigated. Results may also differ if this study is replicated in a developed country. The adoption of a high level e-business strategy is limited in South Africa.Practical implications: Management of retailers should consider the various e-business strategies as it may assist in creating wealth for the shareholders. Retailers may also outsource some of the e-business strategy activities therefore reducing the cost of implementing such strategies. Contribution of paper: No paper could be found within the South African context that investigates the impact of e-business strategies on business performance. Additionally, no study could be found highlighting the importance of considering the extent of Internet usage for trading purposes to increase their visibility in the market place.
    Keywords: E-commerce, E-business, E-business model
    JEL: L81

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