nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒11‒07
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Merger Policy in a Quantitative Model of International Trade By Holger Breinlich; Volker Nocke; Nicolas Schutz
  2. Electricity market integration and the impact of unilateral policy reforms By Grossi, Luigi; Heim, Sven; Hüschelrath, Kai; Waterson, Michael

  1. By: Holger Breinlich; Volker Nocke; Nicolas Schutz
    Abstract: In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is too tough or too lenient from the viewpoint of the foreign country. Calibrating the model to match industry-level data in the U.S. and Canada, we show that at present levels of trade costs merger policy is too tough in the vast majority of sectors. We also quantify the resulting externalities and study the impact of different regimes of coordinating merger policies at varying levels of trade costs.
    Keywords: Mergers and Acquisitions, Merger Policy, Trade Policy, Oligopoly, International Trade
    JEL: F12 F13 L13 L44
    Date: 2015–10
  2. By: Grossi, Luigi; Heim, Sven; Hüschelrath, Kai; Waterson, Michael
    Abstract: The harmonization and integration of separate national energy markets to an interconnected internal European market is a top priority of the European Commission. However, as energy policy largely remains subject to national sovereignty, a higher degree of integration can cause unilateral national policies to harm interconnected markets. We investigate the impact of two distinct national reforms in Germany - the phase-out of nuclear power plants after the Fukushima incident and the expansion of renewables promoted by fixed feed-in tariffs and unlimited priority feed-in - on neighbouring countries. We find that the phase-out triggered price increases of up to 19 percent in neighbouring countries whilst the renewable energy support schemes caused a price decrease of up to 0.17 percent for each percent of additional generation from German renewables. We also apply a novel approach to estimate the degree of market integration and find large differences between neighbouring countries in a range from 14 percent to 99 percent. Our findings point up the need for increased efforts to harmonize national energy policies, but also the need to consider the impact of unilateral environmental measures on other countries' supplies in the context of a partially integrated and partly unilateral system.
    Keywords: Energy,Electricity,Market Integration,Nuclear Phase-Out,Renewables
    JEL: L51 L94 Q41 Q48 Q54
    Date: 2015

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