nep-ind New Economics Papers
on Industrial Organization
Issue of 2020‒06‒08
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Competition and Public Information: A Note By Dirk Bergemann; Benjamin Brooks; Stephen Morris
  2. Negative Oil: Coronavirus, a "black swan" event for the industry? By Refk Selmi; Jamal Bouoiyour; Shawkat Hammoudeh
  3. Optimal Patent Policy for Pharmaceutical Industry By Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
  4. Airport Competition in Two-sided Markets By Xi Wan; Benteng Zou

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Benjamin Brooks (Dept. of Economics, University of Chicago); Stephen Morris (Dept. of Economics, MIT)
    Abstract: We study price discrimination in a market in which two ï¬ rms engage in Bertrand competition. Some consumers are contested by both ï¬ rms, and other consumers are “captive†to one of the ï¬ rms. The market can be divided into segments, which have different relative shares of captive and contested consumers. It is shown that the revenue-maximizing segmentation involves dividing the market into “nested†markets, where exactly one ï¬ rm may have captive consumers.
    Keywords: Price Competition, Bertrand Competition, Price Count, Price Quote, Information Structure, Bayes Correlated Equilibrium
    JEL: D41 D42 D43 D83
    Date: 2020–05
  2. By: Refk Selmi (ESC Pau); Jamal Bouoiyour (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour, ESC Pau); Shawkat Hammoudeh (Bennett S. LeBow College of Business - Department of Economics and International Business - Drexel University)
    Date: 2020–05–12
  3. By: Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
    Abstract: We show how characterizing optimal patent policy for the pharmaceutical industry only requires information about generic producers’ responses to changes in the effective duration and scope of new drug patents. To estimate these responses, we use data on Paragraph IV patent challenges, and two quasi-experimental approaches: one based on changes in patent laws and another on the allocation of patent applications to examiners. We find that extending effective patent duration increases generic entry via Paragraph IV patent challenges whereas broadening protection reduces it. Our results imply that pharmaceutical patents should be made shorter but broader.
    Keywords: patent policy, pharmaceuticals, generic entry, innovation, imitation, Business regulation and international economics, I18, K20, L13, O34, O31,
    Date: 2020
  4. By: Xi Wan (Nanjing Audit University, China); Benteng Zou (CREA, Université du Luxembourg)
    Abstract: This paper examines the importance of commercial revenue on optimal airport charges in Hotelling type duopoly airports under a two-sided market framework with two complementary services-concession and aeronautical operations. Each airport sets commercial and landing charges and serves a single airline. The airport- airline bundle competes for leisure and business passengers. The setting of landing charges under different regulatory regimes is investigated. We demonstrate that in the leisure travel market, which ignores schedule delay cost, the optimal landing fee is invariant to the regulatory scheme, and concession revenue is determined by an airports home market size. In the business travel market, the optimal landing charge is smaller if concession revenue is included in setting the landing fee than if it is not included. In the former case, increasing passenger volume does not guarantee increases in airports’ aeronautical revenue, and a negative impact may exist if the weight of concession profit out of total profit is small.
    Keywords: Airport competition; airport regulation; two-sided markets; landing fee; commercial charge.
    JEL: L93 D43 L13 C72
    Date: 2020

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