nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒11‒21
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. On dynamic standards for energy efficiency in differentiated duopoly By Peter Michaelis; Thomas Ziesemer
  2. Vertical Integration, Knowledge Disclosure and Decreasing Rival's Cost By Chrysovalantou Miliou; Emmanuel Petrakis
  3. On the private and social desirability of mixed bundling in complementary markets with cost savings By C. Halmenschlager; A. Mantovani
  4. Does one more or one less mobile operator affect prices? A comprehensive ex-post evaluation of entries and mergers in European mobile telecommunication markets By Gergely Csorba; Zoltan Papai
  5. Enhancing Competitiveness, Purchasing Power and Employment by Increasing Competition in France By Antoine Goujard
  7. Estimating the Economic Effects of Deregulation: Evidence from the Turkish Airline Industry By Tamer Cetin; Kadir Y. Eryigit

  1. By: Peter Michaelis (University of Augsburg, Department of Economics); Thomas Ziesemer (University of Augsburg, Department of Economics)
    Abstract: We consider a two-periods-model of differentiated duopoly. Firms produce an en-ergy consuming household durable differentiated by its energy efficiency. Consumers differ by the weight they apply to their future energy costs when deciding which product to buy. In line with the Japanese Top Runner Program, the regulator introduces a minimum efficiency standard in period t=2 which is fixed according to the efficiency of the product supplied by the high efficiency firm in t=1. We show that in t=1 both firms supply lower efficiency products and the high efficiency firm gains in market share and profits. In t=2 these effects are reversed. Calculated over both periods, total energy consumption does not change. Although there is no ecological effect, total welfare increases because price competition becomes tighter and the cost savings accruing to the consumers exceed the firms’ losses in profits.
    Keywords: energy efficiency standards, product differentiation, duopoly, regulation
    JEL: L13 Q48 Q58
    Date: 2015–11
  2. By: Chrysovalantou Miliou (Department of Economics, Universidad Carlos III de Madrid, Calle Madrid 126, Getafe (Madrid)); Emmanuel Petrakis (Department of Economics, University of Crete, Greece)
    Abstract: We study vertical integration taking into account the fact that, by facilitating the exchange of information within the integrated firm, it allows its upstream unit to disclose to the non-integrated downstream customer-rival the knowledge that it acquires regarding its downstream partner's innovation. We show that a vertically integrated firm chooses to disclose its knowledge to its downstream rival. Knowledge disclosure intensifies downstream competition but, at the same time, expands the size of the downstream market. We also show that, due to knowledge disclosure, vertical integration increases firms' innovation incentives, consumer and total welfare, and decreases, instead of raises, the rival's cost.
    Keywords: vertical integration; R&D investments; market foreclosure; knowledge disclosure
    JEL: L13 L22 L42
    Date: 2015–11–17
  3. By: C. Halmenschlager; A. Mantovani
    Abstract: The aim of this paper is to study both the private and the social desirability of a mixed bundling strategy that generates a cost savings effect. We confirm that mixed bundling is the dominant strategy for multiproduct firms, although it may give rise to a prisoner’s dilemma. Moreover, we show that mixed bundling may maximise social welfare, provided that cost savings are sufficiently high. Finally, we highlight the parametric regions where the social and the private interests coincide, and those where they do not. The recent evolution of broadband telecommunications services provides an ideal framework to apply our theoretical predictions.
    JEL: D43 L13 L41
    Date: 2015–11
  4. By: Gergely Csorba (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Zoltan Papai (Infrapont Economic Consulting)
    Abstract: This paper estimates the impact of entries and mergers on the price of mobile voice services in a panel database of 27 European Member States between 2003 and 2010. Our difference-in-differences econometric methodology exploits the variance in different structural changes between countries to separate the respective effects. Our results show that the effect of entry crucially depends on the number of active operators and the type of entrant, and not controlling for these differences might lead to misleading conclusions. We find no robust evidence that entry has a price-decreasing effect on markets with originally 2 operators. However, the entry of a 4th operator does have a price-decreasing effect, but with different dynamics concerning the entrant's type. When we separate entry effects for the subsequent years, we show that the significant price-decreasing effects for local operators entering occur only in the first year after entry, while the price-decreasing effects for multinational entries are significantly larger on the long-run. Last, we find no price-increasing effects of 5-to-4 mergers, but a long run price-increasing effect of a 4-to-3 merger.
    Keywords: ex-post evaluation; mobile telecommunications; entry; merger; difference-in-differences estimations
    JEL: L11 L49 L59 L96
    Date: 2015–08
  5. By: Antoine Goujard
    Abstract: Over the past decade, France has substantially eased the burden of anti-competitive regulations and effectively enforced competition law against anti-competitive practices. Various sectors have been opened up more widely to competition, and the powers of the Competition Authority have been strengthened. However, the administrative procedures involved in starting a business remain lengthy, and the number of regulations and rules is substantial, while their potential impact on competition is not fully taken into account when they are drawn up and implemented. Recent streamlining initiatives are welcome but remain limited. Meanwhile, the territorial fragmentation of public procurement procedures, which could decline following ongoing reforms, impairs their efficiency and entry and operating requirements appear to go beyond consumer protection in several regulated professions, such as in legal services and health care. In the retail sector, recent reforms have significantly relaxed negotiating conditions between suppliers and retailers, and Sunday trading is intended to be partly liberalised. However, the ban on resale below cost has not been challenged, nor the tight rules controlling commercial zoning. Individual shops that contract with superstore chains cannot change chain easily. Of the network industries, it is in the telecommunications sector that competition has made the most progress, and there is room for further improvements in transport and energy. This Working Paper relates to the 2015 OECD Economic Survey of France ( y-france.htm).
    Keywords: productivity, France, growth, competition, regulation
    JEL: L1 L3 L4 L5 L8 L9 O43
    Date: 2015–11–19
  6. By: Shastitko, Andrey E.; Golovanova, Svetlana V.
    Abstract: This paper demonstrates that even established and verified facts of agreements among producers are not a sufficient condition for cartel identification and, as a consequence, prosecution of agreement participants. Such requires looking at institutional details and the wider context of these and similar appearances or occurrences of documents and actions when qualifying the actions of market participants and their effects. This paper discusses a recent antitrust case brought against Russian manufacturers of large diameter pipes (LDPs) that examined supposedly abusive practices by these firms that were contrary to the law on the Protection of Competition, which prohibits market division. The case under consideration illustrates the importance of investigating institutional details when qualifying the actions of market participants and their effects. An analysis of the materials in this case using modern economic theory indicates that the presence of collusion is inconsistent with the active participation of the main consumer of LDPs in that agreement. The chosen format for the cooperation between pipe manufacturing companies and OJSC Gazprom, namely indicative planning, may be explained from the perspective of reducing contract risk in an environment characterized by large-scale private investments.
    Abstract: Эта статья демонстрирует, что даже установленные и проверенные факты соглашений между производителями не являются достаточным условием для идентификации картеля и, как следствие, судебного преследования участников соглашения. Это требует внимания к институциональным деталям и в более широком контексте этих и подобных выступлений или вхождений документов и действий при квалификации действий участников рынка и их последствий. Эта статья обсуждает недавнее антимонопольное дело, возбужденное против российских производителей труб большого диаметра (ТБД), о якобы имевших место злоупотреблений этими фирмами, противоречащих закону о защите конкуренции, который запрещает передел рынка. Рассматриваемый случай иллюстрирует важность исследования институциональных детали при квалификации действий участников рынка и их последствий. Анализ материалов в этом случае с помощью современной экономической теории показывает, что наличие сговора несовместимо с активным участием главного потребителя ПРМ в этом соглашении. Выбранный формат для сотрудничества между производственными компаниями и ОАО Газпром, а именно индикативного планирования, могут быть объяснены с точки зрения снижения риска контракта в среде, характеризующейся крупномасштабными частными инвестициями.
    Keywords: collusion,antitrust policy,credible commitments,indicative planning,contract risk
    JEL: K21 B52
    Date: 2014–02–07
  7. By: Tamer Cetin (Yildiz Technical University); Kadir Y. Eryigit (Uludag University)
    Abstract: This paper mainly studies the effect of deregulation on prices and quantity. For this aim, we employ cointegration methodology with structural breaks to empirically investigate the simultaneous relationship between deregulation, ticket prices, and the number of passengers in the Turkish airline industry. The findings confirm that deregulation increases quantity and decreases prices through accessibility to air transport service and actual competition, respectively. Also, structural breaks suggest that deregulation of prices and entry into the market has remarkable effect on the change in ticket prices and the number of passengers.
    Keywords: Deregulation, Airlines, Cointegration, Structural Breaks.
    JEL: L43 L93 C22
    Date: 2015–11

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