nep-ind New Economics Papers
on Industrial Organization
Issue of 2019‒02‒11
eight papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Horizontal product differentiation with limited attentive consumers By Saur, Marc P.; Schlatterer, Markus G.; Schmitt, Stefanie Yvonne
  2. On the equivalence of Stackelberg equilibrium and static equilibrium of symmetric multi-players zero-sum game By Tanaka, Yasuhito
  3. Stackelberg type dynamic symmetric three-players zero-sum game with a leader and two followers By Tanaka, Yasuhito
  4. Organizing Competition for the Market By Iossa, Elisabetta; Rey, Patrick; Waterson, Michael
  5. Cheap talk, monitoring and collusion By David Spector
  6. The Impact of Compatibility on Innovation in Markets with Network Effects By Steven Bond-Smith
  7. Norwegian export of farmed salmon − trade costs and market concentration By Asche, Frank; Gaasland, Ivar; Straume, Hans-Martin; Vårdal, Erling
  8. Quantitative Study of Tea Industry in India: Market , Pricing and Organization By Marjit, Sugata; Kar, Saibal; Das, Nimai

  1. By: Saur, Marc P.; Schlatterer, Markus G.; Schmitt, Stefanie Yvonne
    Abstract: We analyze the effects of consumers' limited attention on welfare in a model of horizontal product differentiation. We present a novel approach of modeling limited attention: an attention radius. Each consumer only notices goods that are within her attention radius, i.e., goods that are sufficiently similar to her preferred version of the good. Limited attention induces firms to differentiate their products in a way that is beneficial to consumers. In addition, prices may be lower under limited than under full attention. Consumer surplus and welfare are not maximized under full attention but increase for some degree of limited attention.
    Keywords: Attention,Horizontal Product Differentiation,Hotelling,Price Discrimination
    JEL: D43 D91 L13
    Date: 2019
    URL: http://d.repec.org/n?u=RePEc:zbw:bamber:143&r=all
  2. By: Tanaka, Yasuhito
    Abstract: We study a Stackelberg type symmetric dynamic multi-players zero-sum game. One player is the leader and other players are followers. All players have symmetric payoff functions. The game is a two-stages game. In the first stage the leader determines the value of its strategic variable. In the second stage the followers determine the values of their strategic variables given the value of the leader's strategic variable. On the other hand, in the static game all players simultaneously determine the values of their strategic variables. We show that if and only if the game is fully symmetric, the Stackelberg equilibrium and the static equilibrium are equivalent.
    Keywords: Stackelberg equilibrium, static equilibrium, multi-players zero-sum game
    JEL: C72
    Date: 2019–02–02
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:91897&r=all
  3. By: Tanaka, Yasuhito
    Abstract: We study a Stackelberg type symmetric dynamic three-players zero-sum game. One player is the leader and two players are followers. All players have symmetric payoff functions. The game is a two-stages game. In the first stage the leader determines the value of its strategic variable. In the second stage the followers determine the values of their strategic variables given the value of the leader's strategic variable. On the other hand, in the static game all players simultaneously determine the values of their strategic variables. We show that if and only if the game is fully symmetric, the Stackelberg equilibrium and the static equilibrium are equivalent.
    Keywords: zero-sum game, Stackelberg equilibrium, leader and follower
    JEL: C72
    Date: 2019–02–03
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:91934&r=all
  4. By: Iossa, Elisabetta; Rey, Patrick; Waterson, Michael
    Abstract: The paper studies competition for the market in a setting where incumbents (and, to a lesser extent, neighboring incumbents) benefi t from a cost advantage. The paper fi rst compares the outcome of staggered and synchronous tenders, before drawing the implications for market design. We find that the timing of tenders should depend on the likelihood of monopolization. When monopolization is expected, synchronous tendering is preferable, as it strengthens the pressure that entrants exercise on the monopolist. When instead other fi rms remain active, staggered tendering is preferable, as it maximizes the competitive pressure that comes from the other firms.
    Keywords: Dynamic procurement; incumbency advantage; local monopoly; competition; asymmetric auctions; synchronous contracts; staggered contracts
    JEL: D44 H40 H57 L43 L51 R48
    Date: 2019–01
    URL: http://d.repec.org/n?u=RePEc:tse:wpaper:33261&r=all
  5. By: David Spector (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - EHESS - École des hautes études en sciences sociales - INRA - Institut National de la Recherche Agronomique - ENS Paris - École normale supérieure - Paris, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Many collusive agreements involve the exchange of self-reported sales data between competitors, which use them to monitor compliance with a target market share allocation. Such communication may facilitate collusion even if it is unverifiable cheap talk and the underlying information becomes publicly available with a delay. The exchange of sales information may allow firms to implement incentive-compatible market share reallocation mechanisms after unexpected swings, limiting the recourse to price wars. Such communication may allow firms to earn profits that could not be earned in any collusive, symmetric pure-strategy equilibrium without communication.
    Date: 2019–01
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01983037&r=all
  6. By: Steven Bond-Smith (Bankwest Curtin Economic Centre, Curtin University)
    Abstract: This article analyses the relationship between compatibility and innovation in markets with network effects using a model of competition with endogenous R&D, commercialization and compatibility. Incumbent acquisition of an innovation or profit from entry provides entrepreneurs with an incentive for developing technological improvements. Entrepreneurs receive greater returns for the innovation if larger incumbents offer compatibility with their installed base. As a result, entrepreneurs must innovate strategically to pre-empt an incompatibility response from incumbents. Similarly, small incumbents also bid strategically to block entry or rival acquisition if it also avoids an incompatibility response from a larger incumbent. A credible threat of incompatibility reduces the entrepreneur?s reserve to sell an innovation, but can also increase offers to acquire the innovation from smaller incumbents attempting to avoid incompatibility. This leads to a complex relationship between the strength of network effects, innovation incentives, the entrepreneur?s ambition for improvement and potentially disrupting the compatibility regime. For weak to moderate network effects entrepreneurs are likely to target more substantial, but improbable innovations such that their network is sufficiently attractive for incumbents to offer compatibility. For a small range of sufficiently strong network effects, entrepreneurs target incremental innovations to avoid the incumbent threatening incompatibility.
    Keywords: network effects, innovation, compatibility
    JEL: L15 L26 L50 O31
    Date: 2018–12
    URL: http://d.repec.org/n?u=RePEc:ozl:bcecwp:wp1805&r=all
  7. By: Asche, Frank (Institute for Sustainable Food Systems and School of Forestry Resources and Conservation, University); Gaasland, Ivar (Department of Economics, BI Norwegian Business School); Straume, Hans-Martin (* Department of Economics, BI Norwegian Business School); Vårdal, Erling (University of Bergen, Department of Economics)
    Abstract: While variation in unit value most commonly has been associated with quality in the trade literature, observed differences in prices between markets might also be explained by variation in market concentration and the degree of competition. Using transaction data on Norwegian exports of salmon, we introduce a Herfindahl index as a measure of competition in a standard gravity model. We find that competition typically is weaker in small and distant markets that due to high trade costs are served by relatively few firms. We argue that the anti-competitive impact of trade costs may explain price differentiation between markets even for homogeneous products.
    Keywords: Gravity; Trade costs; Market concentration; Salmon
    JEL: C13 F14 Q22
    Date: 2018–12–03
    URL: http://d.repec.org/n?u=RePEc:hhs:bergec:2018_011&r=all
  8. By: Marjit, Sugata; Kar, Saibal; Das, Nimai
    Abstract: The study describes various aspects of the quantitative features of Indian tea industry based on secondary data from Tea Statistics for different years as published by the Tea Board of India, and primary survey in major tea producing regions of South and North India, namely in West Bengal, Assam and Tamil Nadu. The paper is organized in the following way: first part gives an overview of the quantitative study of Indian tea industry at national and inter-national levels based on predictions of observed patterns for selected variables. The variables are critical for the growth of tea industry in India. The second part of the study discusses the basic findings from field survey of big growers, small growers and bought-leaf factories from North and South Indian tea producing regions. Several of the predictions and decompositions obtained in this study are both novel and robust and directly amenable to policy instruments.
    Keywords: Indian tea industry, Quantitative analysis, Trade and marketing
    JEL: L11 Q11
    Date: 2018
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:91433&r=all

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