nep-ind New Economics Papers
on Industrial Organization
Issue of 2018‒10‒08
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. EU Merger Control Database: 1990-2014 By Pauline Affeldt; Tomaso Duso; Florian Szücs
  2. Mergers and Investments in New Products By Jullien, Bruno; Lefouili, Yassine
  3. A new price test in geographic market definition – an application to german retail gasoline market By Bantle, Melissa; Muijs, Matthias
  4. Common holdings and strategic manager compensation: The case of an asymmetric triopoly By Neus, Werner; Stadler, Manfred
  5. Crowdfunding in a duopoly under asymmetric information By Miglo, Anton

  1. By: Pauline Affeldt; Tomaso Duso; Florian Szücs
    Date: 2018
  2. By: Jullien, Bruno; Lefouili, Yassine
    Abstract: We investigate the impact of a horizontal merger between two competitors on their incentives to develop new products. We show that a merger raises the incentives to innovate if and only if the merged entity's incremental gain from a second innovation is larger than the individual profit of an innovator when both firms innovate in the no-merger scenario. Applying this result to the Hotelling model, we find that a merger spurs innovation and can be beneficial to consumers if the degree of product differentiation is positive but not too high.
    Keywords: Merger Policy; Product Innovation; R&D Investments
    JEL: K21 L13 L40
    Date: 2018–08
  3. By: Bantle, Melissa (Helmut Schmidt University, Hamburg); Muijs, Matthias (University of Hohenheim)
    Abstract: Market delineation is a fundamental tool in modern antitrust analysis. However, the definition of re- levant markets can be very difficult in practice. This preliminary draft applies a new methodology combining a simple price correlation test with hierarchical clustering -a method known from machine learning- in order to analyze the competitive situation in the German retail gasoline market. Our analysis reveals two remarkable results: At first, there is a uniform pattern across stations of the same brand regarding their maximum daily prices which confirms the claim that prices are partly set centrally. But more importantly, price reactions are also influenced by regional or local market conditions as the price setting of gasoline stations is strongly affected by commuter routes.
    Keywords: market definition; gasoline market; price tests; competition; k-means clustering; hierarchical clustering
    JEL: D22 D40 D43 L10
    Date: 2018–08–29
  4. By: Neus, Werner; Stadler, Manfred
    Abstract: We study an asymmetric triopoly in a heterogeneous product market where quantity decisions are delegated to managers. The two biggest firms are commonly owned by shareholders such as index funds while the smallest firm is owned by independent shareholders. Under such a common holding owner structure, the owners have an incentive to coordinate when designing their manager compensation schemes. This coordination leads to a reallocation of production and induces a redistribution of pro profits. The trade volume in the market is reduced so that shareholder coordination is detrimental to consumer surplus as well as welfare.
    Keywords: common holdings,index funds,shareholder coordination,manager compensation
    JEL: G32 L22 M52
    Date: 2018
  5. By: Miglo, Anton
    Abstract: Traditionally crowdfunding has been used for funding very innovative projects. Recently, however, companies have begun using crowdfunding to finance more traditional products where they compete against other sellers of similar products. One of the major platforms Indiegogo launched several projects consistent with this trend. This paper offers a model of a duopoly where firms can use crowdfunding prior to direct sales. The model is based on asymmetric information between competitors regarding the demand for the product. It provides several implications that have not yet been tested. For example we find that high-demand firms can use crowdfunding to signal their quality.
    Keywords: crowdfunding, asymmetric information, reward-based crowdfunding, duopoly, signalling
    JEL: D43 D82 G32 L11 L13 L26 M13
    Date: 2018

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