nep-ind New Economics Papers
on Industrial Organization
Issue of 2018‒01‒15
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Dynamic Pricing with Search Frictions By Daniel Garcia
  2. Vertical Foreclosure and Multi-Segment Competition By Jullien, Bruno; Reisinger, Markus; Rey, Patrick
  3. The organizational design of high-tech startups and product innovation By Grimpe, Christoph; Murmann, Martin; Sofka, Wolfgang
  4. Stock Market Overvaluation, Moon Shots, and Corporate Innovation By Ming Dong; David Hirshleifer; Siew Hong Teoh
  5. Market Power and Instrument Choice in Climate Policy By Mbéa Bell; Sylvain Dessy

  1. By: Daniel Garcia
    Abstract: We study markets for perishable goods with search frictions. Sellers have a single unit of a good and post prices in every period. Buyers engage in costly search to observe prices and match values. In equilibrium trade starts endogenously and the volume of trade increases over time. Under mild conditions, prices decrease at increasing rates over time. We derive the gains from trade in equilibrium as well as their distribution, and fully characterize the equilibrium for a class of demand functions in markets with evenly matched buyers and sellers. We finally discuss implications for market design, including cancellation policies.
    Keywords: consumer search, dynamic pricing, sharing economy
    JEL: D11 D83 L13
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_6765&r=ind
  2. By: Jullien, Bruno; Reisinger, Markus; Rey, Patrick
    Abstract: This paper analyzes a supplier's incentives to foreclose downstream entry when entrants have stronger positions in different market segments, thus bringing added value as well as competition. We first consider the case where wholesale contracts take the form of linear tariffs, and characterize the conditions under which the competition-intensifying effect dominates, thereby leading to foreclosure. We then show that foreclosure can still occur with non-linear tari¤s, even coupled with additional provisions such as resale price maintenance.
    Keywords: Foreclosure; Vertical Contracting; Customer Segments; Downstream Competition
    JEL: D43 K21 L12 L42
    Date: 2017–12–15
    URL: http://d.repec.org/n?u=RePEc:tse:wpaper:32305&r=ind
  3. By: Grimpe, Christoph; Murmann, Martin (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Sofka, Wolfgang
    Abstract: "We investigate whether appointing a middle management level affects startups' innovation performance. Additional hierarchical levels are often suspected to restrict innovative activities. However, founders' capacities for information processing and resource allocation are usually strongly limited while, at the same time, R&D decisions are among the most consequential choices of startups. We argue that middle management is positively related to introducing product innovations because it improves the success rates from recombining existing knowledge as well as managing R&D personnel. In addition, we suggest that the effectiveness of these mechanisms depends on the riskiness of a startup's business opportunity. Based on a sample of German high-tech startups, we find support for our conjectures." (Author's abstract, IAB-Doku) ((en))
    JEL: L26 M13 M12 M51 L22 L23 J21
    URL: http://d.repec.org/n?u=RePEc:iab:iabdpa:201801&r=ind
  4. By: Ming Dong; David Hirshleifer; Siew Hong Teoh
    Abstract: We test how market overvaluation affects corporate innovative activities and success. Estimated stock overvaluation is very strongly associated with R&D spending, innovative output, and measures of innovative novelty, originality, and scope. R&D is much more sensitive than capital investment to overvaluation. The effects of misvaluation on R&D come more from a non-equity channel than via equity issuance. The sensitivity of R&D and innovative output to misvaluation is greater among growth, overvalued, and high turnover firms. This evidence suggests that market overvaluation may have social value by increasing innovative output and by encouraging firm to engage in ‘moon shots.’
    JEL: D22 D23 G14 G3 G31 G32 O32
    Date: 2017–12
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:24142&r=ind
  5. By: Mbéa Bell; Sylvain Dessy
    Abstract: This paper compares a clean energy standard (CES) and a carbon tax (CT), using theory and quantitative experiments. A two-stage duopolistic competition in the electricity sector between a polluting plant and its non-polluting rival anchors the model underlying these experiments. The CT induces both plants to contribute to clean electricity, whereas the CES only incentivizes the non-polluting plant. Ultimately, what matters for the ranking of these instruments is the size of the pre-existing competitive gap between the two rival plants. When this gap is sufficiently small, the CES becomes the more cost-effective instrument, irrespective of the pre-specified emissions reduction target.
    Keywords: Electricity, Cost-effectiveness, Duopoly, Innovation, Quantitative analysis.
    JEL: H20 H32 L13 L51
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:lvl:crrecr:1704&r=ind

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