nep-ind New Economics Papers
on Industrial Organization
Issue of 2017‒04‒02
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Collusion, Managerial incentives and antitrust fines. By Florence THEPOT; Jacques THEPOT
  2. Tariffs, Vertical Oligopoly, and Market Structure By ARA Tomohiro; Arghya GHOSH
  3. Mail Composition and Recipients’ Reaction to Direct Mail By Thomas Geissmann; Christian Jaag; Martin Maegli; Urs Trinkner
  4. Product Market Deregulation's Winners and Losers: US Railroads between 1981 and 2001 By Guido Friebel; Gerard McCullough; Laura Padilla

  1. By: Florence THEPOT (School of Law, University of Glasgow); Jacques THEPOT (LARGE Research Center, Université de Strasbourg)
    Abstract: Based on a duopoly price competition model, this paper argues that collusion on managerial incentive compensations may have the equivalent effects to collusion on prices. This paper also provides an analysis of the effect of different antitrust fines regimes in the context of a game between two companies each composed of two-level of decision making (the board of directors and the sales manager). The contribution of this paper is two-fold: it identifies" backstage arrangements" that may be used by companies in order to achieve monopoly pricing outcome without entering into explicit price-fixing practices. It also highlights the inefficiency of fining regimes based on sales when companies have a multi-layer decision-making structure
    Keywords: duopoly, antitrust law, governance. JEL classification : K21, L13, L41
    Date: 2017
  2. By: ARA Tomohiro; Arghya GHOSH
    Abstract: We study the impact of market thickness on the optimal tariff in vertical specialization. We show that, in the exogenous market structure where the extensive margin is fixed and only the intensive margin responds to trade policy, when the Home optimal tariff is higher, the thicker is the Home final-good market (relative to the Foreign intermediate-good market). In the endogenous market structure where both extensive and intensive margins respond to trade policy, this relationship is overturned and as the Home optimal tariff is higher, the thinner is the Home final-good market. We also show that our analysis has an advantage of separately deriving the impact of tariffs on the extensive and intensive margins of homogeneous goods.
    Date: 2017–03
  3. By: Thomas Geissmann; Christian Jaag; Martin Maegli; Urs Trinkner
    Abstract: This paper examines the relevance of interdependencies between various types of mail in analogy to other platform markets. It then empirically analyzes the interdependencies of various mail types based on a Swiss data set of 2016. It shows that a balanced mailmix increases the probability of the recipient reacting positively to addressed advertisement significantly. For example, a higher share of non-advertisement mail in the recipients’ mailbox increases response rates to direct advertisement, thereby increasing the advertisers’ willingness to pay for postal services. If so, postal services with a high share of advertisement mail might, in particular if they are not restricted by direct competition from competing deliverers, aim to reflect externalities between different mail types in their pricing. More explicitly, such postal services might want to increase the price of advertising mail and decrease the price of mail pieces that recipients like to receive in their mailbox.
    Keywords: Mailstream, Postal Sector, Platform, recipient's reaction, Direct Mail
    JEL: L43 L51
    Date: 2017–01
  4. By: Guido Friebel (Goethe University Frankfurt, CEPR and IZA); Gerard McCullough (University of Minnesota); Laura Padilla (Universidad Loyola Andalucía)
    Abstract: To properly account for labor effects of deregulation, one needs data sets that account for workers and firm heterogeneity. We investigate a comprehensive data set on US railroads. It contains detailed finance, output, employment and wage information for six different skill groups. We identify the effect of product market strategies and mergers on employment and earnings of workers. Railroads have downsized and they have restructured the composition of their human resources. The majority of employee groups have benefitted in terms of compensation. Low-skilled workers blue collars and administrative staff have been the main losers following deregulation, in terms of employment. The main winners are managers and locomotive drivers. The right-to-manage model we use has a good fit, except for executives, which indicates relevance of other types of personnel practices, for instance incentive contracts.
    Keywords: matched worker/firm data, downsizing, rent-sharing, panel data, right-to-manage model
    JEL: C23 J21 J30 L43
    Date: 2016–04

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