nep-ind New Economics Papers
on Industrial Organization
Issue of 2016‒06‒25
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Monopolistic Competition Without Apology By Jacques-Francois Thisse; Philip Ushchev
  2. Entry under an information-gathering monopoly By Alex Barrachina
  3. Patents: A Means to Innovation or Strategic Ends? By Jiri Schwarz; Martin Stepanek
  4. Prices and Competition. Evidence from a Social Program By Emilio Aguirre; Pablo Blanchard; Fernando Borraz; Joaquín Saldain
  5. Small, young, and exporters: New evidence on the determinants of firm growth By M. Grazzi; D. Moschella
  6. Integration and Efficiency of European Electricity Markets: Evidence from Spot Prices By Klaus Gugler; Adhurim Haxhimusa; Mario Liebensteiner

  1. By: Jacques-Francois Thisse; Philip Ushchev (National Research University Higher School of Economics)
    Abstract: We provide a selective survey of what has been accomplished under the heading of monopolistic competition in industrial organization and other economic elds. Among other things, we argue that monopolistic competition is a market structure in its own right, which encompasses a much broader set-up than the celebrated constant elasticity of substitution (CES) model. Although oligopolistic and monopolistic competition compete for adherents within the economics profession, we show that this dichotomy is, to a large extend, unwarranted.
    Keywords: monopolistic competition, oligopoly, product dierentiation, the negligibility hypothesis
    JEL: D43 L11 L13
    Date: 2016
    URL: http://d.repec.org/n?u=RePEc:hig:wpaper:141/ec/2016&r=ind
  2. By: Alex Barrachina (Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: The effects of information-gathering activities on a basic entry model with asymmetric information are analyzed. In the basic entry game, an incumbent monopoly faces potential entry by one firm without knowing with certainty whether this potential entrant is weak or strong. If the entrant decides to enter, the monopoly must compete with him and decide whether to accommodate or to fight. To include information-gathering activities, it is considered that the monopoly has access to an Intelligence System (IS) of a certain precision (exogenous and common knowledge) that generates a noisy signal about the entrant's type. When the monopoly believes that the entrant is weak, the probability of market entry increases only for the relatively inaccurate precision of the IS and decreases for relatively accurate precision. If the monopoly is not sure about the entrant’s level of strength or considers him to be strong, the information-gathering activities either have no effect on market entry or decrease the probability of entry. Not only do these results suggest that to inform the entrant credibly about information-gathering activities can be considered as a monopoly’s entry deterrence strategy, but they also provide give an idea about when to allow or not allow monopoly’s information-gathering activities.
    Keywords: Entry Deterrence, Information-Gathering, Asymmetric Information, Credible Communication
    JEL: C72 D82 L10 L12
    Date: 2016
    URL: http://d.repec.org/n?u=RePEc:jau:wpaper:2016/09&r=ind
  3. By: Jiri Schwarz (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic; Czech National Bank, Na Prikope 28, 115 03 Prague 1, Czech Republic); Martin Stepanek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)
    Abstract: This paper utilizes a data set of over 208,000 U.S. patents applied for between 1975 and 2010 to study development of strategic patenting over time and across industries. With received citations as a measure of patent social value, we use data envelopment analysis to estimate firm-level relative importance of strategic versus protective patenting. Our novel identification strategy reveals there was an almost universal drop in patent social value in the second half of the 1990s, signaling a shift towards the strategic use of patents. But the development of patenting strategies continued even after 2000 with semiconductor companies increasing their focus on patent value relative to companies from other industries. On average, aerospace and software companies preferred the production of valuable patents, but patenting strategies can differ vastly even among companies operating within one industry. The results confirm our expectations regarding the focus of aerospace companies on socially valuable patents.
    Keywords: Patents, patent value, strategic patenting, intellectual property rights
    JEL: D23 K11 O32 O34
    Date: 2016–04
    URL: http://d.repec.org/n?u=RePEc:fau:wpaper:wp2016_08&r=ind
  4. By: Emilio Aguirre (Ministerio de Desarrollo Social (Uruguay)); Pablo Blanchard (Ministerio de Desarrollo Social (Uruguay)); Fernando Borraz (Banco Central del Uruguay); Joaquín Saldain (Banco Central del Uruguay)
    Abstract: We use a micro-price dataset to analyze the impact on prices of a social program in Uruguay that allow the beneficiaries to purchase food, beverages and cleaning items exclusively in certain small retailers. We find that the beneficiaries pay significantly higher prices in relation to prices in other retailers. We find this result for the whole country with the exception of areas with the highest retailer density in the capital city, Montevideo.
    Keywords: market structure, market power, prices, social program; estructura de mercado, poder de mercado, precios, programa social
    JEL: D4 I3 L1
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:bku:doctra:2015002&r=ind
  5. By: M. Grazzi; D. Moschella
    Abstract: This work investigates how the export status of the firm influences the patterns of growth at different age classes. We address this research question resorting to a novel set of data that links together the universe of Italian firms and detailed data on export transactions. We find that the positive relationship between export status and growth declines with firm age. Further, we also find that, even when accounting for the role of age, the negative size-growth relationship does not disappear, contrary to some recent evidence. These results, which are robust to a series of controls, suggest for a positive signaling role of the export status which is stronger for young exporters or born globals. Exploiting the product-country level dimension of the customs data we also provide, for the first time, evidence on differences in exchange rates pass through between young and experienced exporters. In particular, we find that early exporters appear to be well equipped to face exchange rates variations as their exports decrease less following a currency appreciation.
    JEL: D22 F14 L11 L21 L25
    Date: 2016–06
    URL: http://d.repec.org/n?u=RePEc:bol:bodewp:wp1068&r=ind
  6. By: Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Adhurim Haxhimusa (Research Institute for Regulatory Economics, Vienna University of Economics and Business); Mario Liebensteiner (Department of Economics, Vienna University of Economics and Business)
    Abstract: This paper seeks to investigate the current state of market integration among European electricity day-ahead spot prices. We provide reasoning that market integration brings about benefits, such as lower average prices and increased welfare from allocative efficiency. Yet, price convergence leads to higher prices in the low-price market and to lower prices in the high-price market, which creates winners and losers and thus makes the political implementation of market integration cumbersome. In our empirical analysis, we utilize a large sample of hourly spot prices of 25 European markets for the period 01.01.2010–30.06.2015 and combine it with other relevant data such as interconnector capacities and the existence of market coupling. Firstly, empirical results from cointegration analysis indicate that market integration increased from 2010 to 2012 but then declined until 2015, most likely due to increased feed-in from intermittent renewables. Secondly, we empirically assess the speed of adjustment from price shocks and reach the conclusion that the resulting efficiency of integration is rather modest. In general, our findings suggest that integration among European electricity markets has a large potential for improvements from additional capacity investments and further promotion of market coupling.
    Keywords: Market integration, Spot Price, Convergence, Internal Market, Electricity
    JEL: F15 L81 L98 Q48
    Date: 2016–06
    URL: http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp226&r=ind

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