nep-ind New Economics Papers
on Industrial Organization
Issue of 2018‒04‒23
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Heterogeneity in Conformism, Firm Selection, and Home Bias By Sergey Kichko; Pierre M. Picard
  2. Mail Stream as a Platform: Patterns of Recipients’ Reactions By Christian Jaag; Thomas Geissmann
  3. Excess Capacity and Effectiveness of Policy Interventions: Evidence from the cement industry By OKAZAKI Tetsuji; ONISHI Ken; WAKAMORI Naoki
  4. Measuring Market Power in Gasoline Retailing: A Market- or Station Phenomenon? By Nguyen-Ones, Mai; Steen, Frode

  1. By: Sergey Kichko ("National Research University Higher School of Economics, Russian Federation "); Pierre M. Picard (CREA, Université du Luxembourg)
    Abstract: This paper discusses the impact of conformism on product quality, firm selection, and trade patterns. It shows that when consumers have a higher degree of conformism and/or their distribution of conformism becomes more concentrated, the equilibrium average demand falls while product quality rises in a closed economy. In an international trade context, this strengthens the home consumption bias when consumers conform to the behavior of local people. The home bias is mitigated under globalization where individuals tend to conform to people worldwide. The paper also discusses the conditions under which conformism and conspicuousness are reconciled.
    Keywords: heterogeneity in conformism; product quality; firmheterogeneity; home bias
    JEL: L11 F12
    Date: 2018
  2. By: Christian Jaag; Thomas Geissmann
    Abstract: Letter volumes in advanced economies decreased significantly in the past decade, and postal operators are reconsidering their pricing strategies in light of the mail’s value compared to its electronic substitutes. This paper examines the interdependencies be-tween various types of mail in terms of the recipients’ reaction to their mail by means of an empirical analysis based on a Swiss data set of 2016. It shows that a balanced mail mix of advertisement and transactional mail significantly increases the probability of the recipient reacting positively to addressed advertisement (direct mail). For example, higher shares of non-advertisement as well as private mail in the recipients’ mailbox in-crease positive response rates to advertisement, thereby increasing the advertisers’ will-ingness to pay for postal services. Moreover, we find that females show a significantly lower odd of showing a positive reaction conditional on the mail mix than men do and that the odds of a firm using advertisement mail to attract customers being contacted are significantly higher for recipients with a positive mail mix. A similar finding holds for the odds of searching the internet for more information on advertised goods. Our find-ings suggest significant interdependencies between various types of mail which postal operators should take into account in their product development and pricing strategies.
    Keywords: Mailstream, Postal Sector, Platform, recipient's reaction, Direct Mail
    JEL: L43 L51
    Date: 2018–04
  3. By: OKAZAKI Tetsuji; ONISHI Ken; WAKAMORI Naoki
    Abstract: Excess production capacity has been a major concern in many countries, in particular, when an industry faces declining demand. Strategic interaction among firms might delay efficient scrappages of production capacity, and policy interventions that eliminate such strategic incentives may improve efficiency. This paper empirically studies the effectiveness of policy interventions in such environment, using plant-level data on the Japanese cement industry. Our estimation results show that a capacity coordination policy that forces firms to reduce their excessive production capacity simultaneously can effectively reduce excess capacity without distorting firms' scrappage decisions or increasing the market power of the firms.
    Date: 2018–03
  4. By: Nguyen-Ones, Mai (Dept. of Economics, Norwegian School of Economics and Business Administration); Steen, Frode (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Applying detailed consecutive daily micro data at the gasoline station level from Sweden we estimate a structural model to uncover the degree of competition in the gasoline retail market. We find that retailers do exercise market power, but despite the high upstream concentration, the market power is very limited on the downstream level. The degree of market power varies with both the distance to the nearest station and the local density of gasoline stations. A higher level of service tends to raise a seller’s market power; self-service stations have close to no market power. Contractual form and brand identity also seem to matter. We find a clear result: local station characteristics significantly affect the degree of market power. Our results indicate that local differences in station characteristics can more than offset the average market Power found for the whole market.
    Keywords: Gasoline markets; market Power; markup estimation; local market competition
    JEL: D22 L13 L25 L81
    Date: 2018–04–13

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