nep-ind New Economics Papers
on Industrial Organization
Issue of 2016‒03‒10
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. On Noncooperative Oligopoly Equilibrium in the Multiple Leader-Follower Game By Ludovic Alexandre Julien
  2. "Competition Among Insurers and Consumer Welfare" By Matthew N. White
  3. Competition and corporate control in partial ownership acquisitions By Stühmeier, Torben
  4. Firm Entry and Macroeconomic Dynamics: A State-level Analysis By Gourio, Francois; Messer, Todd; Siemer, Michael
  5. Patents and the global diffusion of new drugs By Iain Cockburn; Jean O. Lanjouw; Mark Schankerman

  1. By: Ludovic Alexandre Julien
    Abstract: In this paper, we provide new proofs of existence and uniqueness of a Stackelberg market equilibrium for a multiple leader-follower noncooperative oligopoly model in which heterogeneous firms compete on quantities. To this end, we consider a two-step game of perfect and complete information in which many leaders interact strategically with many followers. The Stackelberg market equilibrium constitutes a pure strategy subgame perfect Nash equilibrium of this game. The existence (and uniqueness) problem is complexified in this framework since strategic interactions occur within each partial game but also between both partial games through sequential decisions. Then, to prove existence, we notably provide a new procedure to determine (the conditions under which) the optimal behavior of the followers (may be written) as functions of the leaders'strategy profile only. Some examples outline our procedure and discuss our assumptions.
    Keywords: Best response functions, existence, uniqueness.
    JEL: D43 L13
    Date: 2016
  2. By: Matthew N. White (Department of Economics, University of Delaware)
    Abstract: This article presents a model to analyze consumer welfare, price, and competition in a three-way market among consumers, medical providers, and insurers. While insurers compete with each other for customers, they also act as collective bargaining agents on behalf of consumers in determining the equilibrium price of health care with providers. The entry of an additional insurer thus has contradictory effects on welfare, reducing premiums through competition but increasing price through reduced bargaining power of incumbent insurers. Moreover, the more favorable contracts allow consumers to purchase care more often, shifting out the demand curve for care and increasing price.
    Keywords: Medical insurance, consumer welfare, insurer competition, bargaining
    JEL: D43 I11 L13
    Date: 2016
  3. By: Stühmeier, Torben
    Abstract: Competition authorities have a growing interest in assessing the effects of partial ownership arrangements. We show that the effects of such agreements on competition and welfare depend on the intensity of competition in the market and on the firms' governance structure. When assessing the effects of partial ownership, competition policy has to consider both the financial interest and level of control of the acquiring firm in the target firm.
    Keywords: corporate control,merger,partial acquisition
    JEL: L11 L13 L41
    Date: 2016
  4. By: Gourio, Francois (Federal Reserve Bank of Chicago); Messer, Todd (Federal Reserve Bank of Chicago); Siemer, Michael (Board of the Governors of the Federal Reserve System)
    Abstract: Using an annual panel of U.S. states over the period 1982-2014, we estimate the response of macroeconomic variables to a shock to the number of new firms (startups). We find that these shocks have significant effects that persist for many years on real gross domestic product, productivity and population. This is consistent with simple models of firm dynamics where a “missing generation” of firms affects productivity persistently.
    Keywords: Business cycles; Firms entry; Firms dynamics; Gross Domestic Product; macroeconomics; productivity; population
    JEL: E31 E32 L1 L16
    Date: 2016–01–31
  5. By: Iain Cockburn; Jean O. Lanjouw; Mark Schankerman
    Abstract: Analysis of the timing of launches of 642 new drugs in 76 countries during 1983-2002 shows that patent and price regulation regimes strongly affect how quickly new drugs become commercially available in different countries. Price regulation delays launch, while longer and more extensive patent rights accelerate it. Health policy institutions and economic and demographic factors that make markets more profitable also speed up diffusion. The estimated effects are generally robust to controlling for endogeneity of policy regimes with country fixed effects and instrumental variables. The results highlight the important role of policy choices in driving the diffusion of new innovations.
    JEL: I18 L11 L51 L65 O31 O33 O34
    Date: 2016

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