nep-ind New Economics Papers
on Industrial Organization
Issue of 2018‒06‒18
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Oligopoly Price Discrimination: The Role of Inventory Controls By James D. Dana Jr.; Kevin R. Williams
  2. Consumer Search and Retail Market Structure By Rhodes, Andrew; Zhou, Jidong
  3. Vertical integration and health control measures in the French young beef bull sector By Axelle Poizat; Sabine Duvaleix-Treguer; Florence Bonnet-Beaugrand
  4. Conquering the box office: Factors influencing success of international movies in Russia By Gaenssle, Sophia; Budzinski, Oliver; Astakhova, Daria

  1. By: James D. Dana Jr. (Northwestern University); Kevin R. Williams (Cowles Foundation, Yale University)
    Abstract: Inventory controls, used most notably by airlines, are sales limits assigned to individual prices. While typically viewed as a tool to manage demand uncertainty, we argue that inventory controls also facilitate intertemporal price discrimination. In our model, competing ?rms ?rst choose quantity and then choose prices in a series of advance-purchase markets. When demand becomes more inelastic over time, as in the airline and hotel markets, a monopolist can easily price discriminate; however, we show that oligopoly ?rms generally cannot. Inventory controls let ?rms set increasing prices regardless of whether or not demand is uncertain.
    Keywords: Capacity-pricing games, Intertemporal price discrimination, Oligopoly models, Inventory controls
    JEL: D21 D43 L13
    Date: 2018–06
  2. By: Rhodes, Andrew; Zhou, Jidong
    Abstract: A puzzling feature of many retail markets is the coexistence of large multiproduct firms and smaller firms with narrow product ranges. This paper provides a possible explanation for this puzzle, by studying how consumer search frictions influence the structure of retail markets. In our model single-product firms which supply different products can merge to form a multiproduct firm. Consumers wish to buy multiple products, and due to search frictions value the one-stop shopping convenience associated with a multiproduct firm. We find that when search frictions are relatively large all ?rms are multiproduct in equilibrium. However when search frictions are smaller the equilibrium market structure is asymmetric, with di¤erent retail formats coexisting. This allows firms to better segment the market, and as such typically leads to the weakest price competition. When search frictions are low this asymmetric market structure is also the worst for consumers. Moreover due to the endogeneity of market structure, a reduction in the search friction can increase market prices and harm consumers.
    Keywords: consumer search; multiproduct pricing; one-stop shopping; retail market structure; conglomerate merger
    JEL: D11 D43 D83 L13
    Date: 2018–06
  3. By: Axelle Poizat; Sabine Duvaleix-Treguer; Florence Bonnet-Beaugrand
    Abstract: The French young beef bull sector presents a complex organisation. The more animals are mixed and subjected to long transports, the more likely they will be to develop bovine respiratory disease (BRD). We aimed to understand the vertical integration patterns in the young beef bull sector and how they influence public health issues (BRD and antibiotic use). Transaction costs analyses revealed a diversity of vertical integration patterns, from spot market to vertical integration. The “health issues” parameter is involved in different categories of transaction costs (risk, uncertainty, quality). When vertical integration is strong (weak), the risk of BRD is low (high), which thus have an indirect effect on antibiotic use.
    Keywords: transaction costs, vertical integration, young beef bull sector, animal health control measures, reduction of antibiotics use
    JEL: D23 L14 Q13
    Date: 2018
  4. By: Gaenssle, Sophia; Budzinski, Oliver; Astakhova, Daria
    Abstract: This paper empirically examines various factors influencing box office success of international movies in Russia between 2012 and 2016. Three groups of success factors are distinguished: distribution related (e.g. budget, franchise), brand and star effects (e.g. top actors or directors), and information sources (e.g. critics and audience rating). We extend the literature by applying novel concepts such as Google-hits as indicator for electronic word of mouth. Moreover, we add novel region-specific variables like seasonality, time span between the world and local release, attendance of international stars at Russian movie premieres and title adaptation into the Russian language. The results indicate that budget, franchise, electronic word of mouth through the internet and audience ratings exert a significantly positive influence on Russian box office success. Whereas, we find no evidence of star effects in our sample and significantly negative effects for international critics, and, interestingly, the adaption of movie titles
    Keywords: motion picture economics,movies,entertainment,box office success,Russia
    JEL: L10 L82
    Date: 2018

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