nep-ind New Economics Papers
on Industrial Organization
Issue of 2017‒03‒19
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Government-Leading Welfare-Improving Collusion By Haraguchi, Junichi; Matsumura, Toshihiro
  2. Complementarity and Bargaining Power By Bonnet, Céline; Bouamra-Mechemache, Zohra; Richards, Timothy
  3. Competition and physician behaviour: Does the competitive environment the propensity to issue sickness certificates? By Brekke, Kurt R.; Holmås, Tor Helge; Monstad, Karin; Straume, Odd Rune
  4. Cost Pass-Through in the Swedish Coffee Market By Durevall, Dick
  5. The impact of road infrastructure investment on incumbent firms in Korea By Alexander C. Lembcke; Carlo Menon

  1. By: Haraguchi, Junichi; Matsumura, Toshihiro
    Abstract: We discuss government-leading welfare-improving collusion in a mixed duopoly. We formulate an infinitely repeated game in which a welfare-maximizing firm and a profit-maximizing firm coexist. The government proposes welfare-improving collusion and this is sustainable if both firms have incentives to follow it. We compare two competition structures-Cournot and Bertrand-in this long-run context. We find that Cournot competition yields greater welfare when the discount factor is sufficiently large, whereas Bertrand competition is better when the discount factor is small.
    Keywords: repeated game, public collusion, Cournot-Bertrand welfare comparison
    JEL: L13 L41
    Date: 2017–03–15
  2. By: Bonnet, Céline; Bouamra-Mechemache, Zohra; Richards, Timothy
    Abstract: Bargaining power in vertical channels depends critically on the "disagreement profit" or the opportunity cost to each player should negotiations fail. In a multiproduct context, disagreement profit depends on the degree of substitutability among the products offered by the downstream retailer. Horn and Wolinsky (1988) use this fact to argue for the clear importance of complementarity relationships on bargaining power. We develop an empirical framework that is able to estimate the effect of retail complementarity on bargaining power, and margins earned by manufacturers and retailers in the French soft drink industry. We show that complementarity increases the strength of retailers' bargaining position, so their share of the total margin increases by almost 28% relative to the no-complementarity case.
    Keywords: Bargaining power, complementary goods, Nash-in-Nash equilibrium, retailing, soft drinks, vertical relationships
    JEL: D43 L13 M31
    Date: 2017–03
  3. By: Brekke, Kurt R. (Dept. of Economics, Norwegian School of Economics and Business Administration); Holmås, Tor Helge (Uni Research Rokkan Centre); Monstad, Karin (Uni Research Rokkan Centre); Straume, Odd Rune (University of Minho)
    Abstract: Competition among physicians is widespread, but compelling empirical evidence on the impact on service provision is limited, mainly due to lack of exogenous variation in the degree of competition. In this paper we exploit that many GPs, in addition to own practice, work in local emergency centres, where the matching of patients to GPs is random. This allows us to observe the same GP in two different competitive environments; with competition (own practice) and without competition (emergency centre). Using rich administrative patient-level data from Norway for 2006-14, which allow us to estimate high-dimensional fi…xed-effect models to control for time-invariant patient and GP heterogeneity, we …nd that GPs with a fee-for-service (…fixed salary) contract are 11 (8) percentage points more likely to certify sick leave at own practice than at the emergency centre. Thus, competition has a positive impact on GPs’sick listing that is reinforced by …nancial incentives.
    Keywords: Physicians; Competition; Sickness certification
    JEL: I11 I18 L13
    Date: 2017–02–12
  4. By: Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Cost pass-through to retail prices shows how changes in marginal costs are allocated between producers and consumers, and it is therefore closely related to market structure and competition. This paper uses Swedish data on coffee products at the barcode level to evaluate pass-through from the cost of green coffee beans, the main marginal cost, to the retail price of roasted and ground coffee. First long-run cost pass-through is estimated for each product, and then regression is used to analyse how pass-through varies across market shares, retailer-owned brands and other product characteristics. A general result is that pass-through is roughly complete for products with large market shares, while those with small market shares have low pass-through rates. There is no evidence that retailer-owned brands have higher pass-through than brand-name products with similar market shares, which would be the case if retailer-owned brands avoided double marginalization through vertical integration. Thus, although there is not perfect competition in the Swedish coffee market, a large part of it appears to be highly competitive.
    Keywords: Coffee market; Market power; Pass-through; Market shares
    JEL: L11 L13 L89
    Date: 2017–03
  5. By: Alexander C. Lembcke; Carlo Menon
    Abstract: This paper develops an indicator that combines the area that residents can reach within a certain time of travel with population density to create a proxy for “accessibility”, i.e. access to employment and consumption opportunities. Using a large scale firm level dataset, with nearly one million firm year observations over 14 years, the paper quantifies the link between firm-level outcomes and the change in accessibility in Korea due to the expansion of the network of major roads. The results suggest that the most productive firms benefited in terms of employment, output, and productivity, as accessibility improved. For the majority of incumbent firms, improved accessibility leaves most balance sheet variables broadly unaffected, but is associated with a decrease in fixed assets. The estimates also suggest that there was little job displacement, with the exception of service sectors where employment increased in response to improved local accessibility and declined for long distance accessibility.
    Keywords: accessibility, capital, employment, firm-level data, highways, productivity, roads
    JEL: L23 R12 R32 R40
    Date: 2017–03–17

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