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on Industrial Organization |
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Issue of 2016‒07‒16
five papers chosen by |
| By: | Budzinski, Oliver; Kretschmer, Jürgen-Peter |
| Abstract: | Standard analysis of mergers in oligopolies along the lines of the popular Farrell-Shapiro-Framework (FSF) relies regarding its policy conclusions sensitively on the assumption that rational agents will only propose privately profitable mergers. If this assumption held, a positive external effect of a proposed merger would represent a sufficient condition to allow the merger. However, the empirical picture on mergers and acquisitions reveals a significant share of unprofitable mergers and economic theory, moreover, demonstrates that privately unprofitable mergers can be the result of rational action. Therefore, we drop this restrictive assumption and allow for unprofitable mergers to occur. This exerts a considerable impact on merger policy conclusions: while several insights of the original analysis are corroborated (f.i. efficiency defence), a positive external effect does not represent a sufficient condition for the allowance of a merger anymore. Applying such a rule would cause a considerable amount of false decisions. |
| Keywords: | mergers & acquisitions,oligopoly theory,horizontal merger policy,profitability of mergers,antitrust |
| JEL: | L13 L41 K21 D43 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuiedp:96&r=ind |
| By: | Alicia Blum-Ross; Sonia Livingstone |
| JEL: | L91 L96 |
| Date: | 2016–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:67045&r=ind |
| By: | Budzinski, Oliver; Müller-Kock, Anika |
| Abstract: | Recent allegations from participants of the FIA Formula One World Championship (F1) suggest that the promoter of F1 (possibly together with the sports association) violates European competition law in two ways. First, it alleged-ly abuses its market power by deducting an inappropriate high share from the rev-enues of the collective sale of media rights in order to boost the profits of its pri-vate equity parent company (vertical allocation of media revenue). Second, it alleg-edly forms a cartel with selected top teams at the detriment of smaller teams by providing both unjustified extra payments to these teams and enforcing a heavily biased horizontal allocation of media revenues, benefitting the cartel teams. Pro-fessional sports championships typically receive common revenue, for instance, from trademark rights and marketing, but often also from the sale of broadcasting and other media rights. This common revenue needs to be allocated in two ways: (i) vertical allocation between the sports authority and the participants, and (ii) hor-izontal allocation among the participants. Different professional sports champion-ships employ vastly differing schemes for both types of allocation. In this paper, we present an empirical assessment whether the current antitrust allegations against F1 may be valid. We employ concentration measures from empirical economics, like the Hirshman-Herfindahl-Index (HHI), the concentration ratio and the standard de-viation in order to assess different allocation schemes from different commercial sports. With the help of these indices we show that the allocation scheme em-ployed in F1 considerably differs from such used in other professional sports championships. We find the empirical picture to be consistent with an anticompetitive interpretation of F1 media revenue structures and policies. We conclude that there is merit in starting an in-depth antitrust investigation of Formula One motor racing, which would also represent an opportunity for the European Commission to cor-rect earlier mistakes. |
| Keywords: | competition,antitrust,abuse of market power,sports economics,formula one motor racing,sports business,media revenue,football |
| JEL: | K21 L12 L40 L83 Z20 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuiedp:102&r=ind |
| By: | Madalina Cristina TOCAN (Faculty of Economics, Ecological University of Bucharest) |
| Abstract: | The terms "Entrepreneurship" and "Entrepreneur" became increasingly used worldwide because the entrepreneurship tends to be associated with the economic development and well-being of a nation. Entrepreneurship is a powerful driver of economic growth and job creation: it creates new companies and jobs, opens up new markets, and nurtures new skills and capabilities. According to EU Entrepreneurship Action Plan 2020 “Entrepreneurship makes economies more competitive and innovative and is crucial in achieving the objectives of several European sectorial policies” 'The objective of this paper is to present an analysis of the Romanian entrepreneurial ecosystem and the factors which influence it. Development of the present paper has been carried out through the analysis of the Romanian entrepreneurial business environment, using data supplied by the Global Entrepreneurship Monitor 2014, European Commission and Ernst & Young study “Entrepreneurs Talk”. |
| Keywords: | Entrepreneurship, skills and capabilities, entrepreneurial system |
| JEL: | L26 L31 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:eub:wp2015:2015-03&r=ind |
| By: | Juan Rosellón (Division of Economics, CIDE); Eric Zenón (Centro del Cambio Global y la Sustentabilidad en el Sureste, CCGSS) |
| Abstract: | This paper addresses electricity transmission planning under the new industry and institutional structure of the Mexican electricity market, which has engaged in a deep reform process after decades of a state-owned vertically-integrated non-competitive closed industry. Under this new structure, characterized by a nodal pricing system and an independent system operator (ISO), we analyze welfare-optimal network expansion with two modeling strategies. In a first model, we propose the use of an incentive price-cap mechanism to promote the expansion of Mexico networks. In a second model, we study centrally-planned grid expansion in Mexico by an ISO within a power-flow model. We carry out comparisons of these models which provide us with hints to evaluate the actual transmission planning process proposed by Mexican authorities (Prodesen). We obtain: 1) the Prodesen plan appears to be a convergent welfare optimal planning process, and 2) incentive regulation in Mexico could further help to implement such an optical process. |
| Keywords: | Electricity market reform, vertical and horizontal disintegration, transmission planning, nodal prices, Mexico. |
| JEL: | L51 L91 L94 Q40 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:emc:wpaper:dte598&r=ind |