nep-ind New Economics Papers
on Industrial Organization
Issue of 2019‒12‒02
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Antitrust and Economic History: The Historic Failure of the Chicago School of Antitrust By Mark Glick
  2. Market Structure and Organizational Form By Zhou, Haiwen
  3. Data Markets in Making: The Role of Technology Giants By Koski, Heli; Pantzar, Mika
  4. Output and Welfare Implications of Oligopolistic Third-Degree Price Discrimination By Takanori Adachi; Michal Fabinger
  5. Spatial Differentiation and Market Power in Input Procurement: Evidence from the Corn Market By Jung, Jinho; Sasmero, Juan; Siebert, Ralph

  1. By: Mark Glick (University of Utah)
    Abstract: This paper presents an historical analysis of the antitrust laws. Its central contention is that the history of antitrust can only be understood in light of U.S. economic history and the succession of dominant economic policy regimes that punctuated that history. The antitrust laws and a subset of other related policies have historically focused on the negative consequences resulting from the rise, expansion, and dominance of big business. Antitrust specifically uses competition as its tool to address these problems. The paper traces the evolution of the emergence, growth and expansion of big business over six economic eras: the Gilded Age, the Progressive Era, the New Deal, the post-World War II Era, the 1970s, and the era of neoliberalism. It considers three policy regimes: laissez-faire during the Gilded Age and the Progressive Era, the New Deal, policy regime from the Depression through the early 1970s, and the neoliberal policy regime that dominates today and includes the Chicago School of antitrust. The principal conclusion of the paper is that the activist antitrust policies associated with the New Deal that existed from the late 1930s to the 1960s resulted in far stronger economic performance than have the policies of the Chicago School that have dominated antitrust policy since the 1980s.
    Keywords: New Brandeis School, Antitrust economics, Antitrust law, Neoliberal Economic Theory, Chicago School Economics, History of Antitrust law
    Date: 2019–04
    URL: http://d.repec.org/n?u=RePEc:thk:wpaper:95&r=all
  2. By: Zhou, Haiwen
    Abstract: This paper studies the determinants of a firm’s organizational form in the context of an imperfectly competitive industry. There are two kinds of organizational forms: the multi-divisional form (M-form) and the unitary form (U-form). An M-form firm suffers from ignorance of demand externalities among different products and double marginalization is eliminated. In contrast, in a U-form firm, demand externalities are taken into consideration and double marginalization exists. A firm’s optimal choice of organizational form depends on the market structure.
    Keywords: Organizational form, market structure, oligopoly, multi-divisional form, unitary form
    JEL: D43 L13 L23
    Date: 2019–11–08
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:96882&r=all
  3. By: Koski, Heli; Pantzar, Mika
    Abstract: Abstract This paper focuses on the role of large technology companies’ entry and expansion to the data-intensive market areas via their technological development and strategic acquisitions of companies. We analyze the evolvement of personal data related innovation in various data-intensive domains. We find that the ideas related to personal data are increasingly protected by patents. The growth in the numbers of personal data related patents was relatively modest from 2005 to the early 2010s, but it has intensified since 2011. Large technology companies’ entry to various new market areas is reflected in an exponential increase in patent applications particularly in the artificial intelligence domain. Furthermore, we find that the number of artificial intelligence/data analytics companies acquired by the data giants has escalated during the 2010s. Patent and acquisition data further echo technology giants’ intentions to expand their activities into the financial and personal health services. Overall, the data show the data giants’ buyouts are frequently targeted to companies active in the markets outside their core business. Our analysis illustrates how the divergencies in the data giants’ innovation activities and strategic acquisitions have led them to each conquer their specific areas of dominance in the global markets for data.
    Keywords: Data economy, Innovation, Patents, Acquisitions, Technology giants
    JEL: G34 L12 L25 O33
    Date: 2019–11–19
    URL: http://d.repec.org/n?u=RePEc:rif:wpaper:72&r=all
  4. By: Takanori Adachi; Michal Fabinger
    Abstract: Using estimable concepts, this paper provides sufficient conditions for third-degree price discrimination to raise or lower aggregate output, social welfare, and consumer surplus under differentiated oligopoly when all discriminatory markets are open even without price discrimination. Specifically, we permit general demand functions and cost differences across separate markets, and show that our sufficient conditions entail a cross-market comparison of multiplications of two or three of the following key endogenous variables with economic interpretation:pass-through value,market power index, and markup value. Notably, our results based on these "sufficient statistics" can readily be extended to allow heterogeneous firms, suggesting that they would be used as a building block for empirical study of third-degree price discrimination and welfare.
    Date: 2019–10
    URL: http://d.repec.org/n?u=RePEc:tcr:wpaper:e139&r=all
  5. By: Jung, Jinho; Sasmero, Juan; Siebert, Ralph
    Abstract: We estimate the degree of spatial differentiation among downstream firms that buy corn from upstream farmers and examine whether such differentiation confers market power upon buyers, defined as the ability to pay a price for corn that is below its marginal value product. We estimate a structural model of spatial competition using corn procurement data from the U.S. State of Indiana over 2004-2014. We adopt a strategy that allows us to estimate firmlevel structural parameters while using aggregate data. Our results return a transportation cost of 0.12 cents per bushel per mile (5% of the corn price under average distance traveled), which provides evidence of spatial differentiation among buyers. The estimated average markdown is $0.80 per bushel (16% of average corn price in the sample), of which $0.35 is explained by spatial differentiation and the rest by the fact that firms operated under binding capacity constraints. We also find that corn prices paid to farmers at the mill gate are independent of distance between the plant and the farm, indicating that firms do not engage spatial price discrimination. Finally, we evaluate the effect of a hypothetical merger on input markets and farm surplus. A merger between nearby ethanol producers eases competition and increases markdowns by $0.14 or 20% and triggers a sizable reduction in farm surplus. In contrast, a merger between distant procurers has little effect on competition and markdowns.
    Keywords: Industrial Organization
    Date: 2019
    URL: http://d.repec.org/n?u=RePEc:ags:assa20:296669&r=all

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