nep-ind New Economics Papers
on Industrial Organization
Issue of 2020‒12‒07
five papers chosen by

  1. Multiproduct Firms and Discrete Choice Models of Demand: Existence and Uniqueness of the Bertrand-Nash Equilibrium By Thomas Favory
  2. Use and Abuse of Antidumping by Global Cartels By Gnutzmann-Mkrtchyan, Arevik; Hoffstadt, Martin
  3. Visa Acquiring Plaid: A Tartan over a Killer Acquisition? Reflections on the risks of harming competition through the acquisition of startups within digital ecosystems By Frédéric Marty; Thierry Warin
  4. Common ownership in the US pharmaceutical industry: A network analysis By Albert Banal-Estañol; Melissa Newham; Jo Seldeslachts
  5. Competition in Retail Banking Services in Latin America By World Bank

  1. By: Thomas Favory (Economics Discipline, Business School, University of Western Australia)
    Abstract: This paper proves the existence and uniqueness of Bertrand-Nash equilibrium in oligopolies, where each firm may sell multiple substitutes of the same good. Bertrand competition emerges as a limit case when the number of products per firm increases if the consumers’ willingness to pay for products follow a sufficiently slim-tailed distribution. In opposition, the double exponential distribution is not slim enough, and firms conserve monopolistic power even for an arbitrarily large number of products per firm. Moreover, the double exponential distribution provides closed-form solutions that relate to discrete choice theory. First, a duality with representative consumers helps recover multinomial logit (MNL) demand functions and constant elasticity of substitution (CES) utility functions. Second, the game in which firms sequentially set the quality, then the price of their products, has a unique equilibrium.
    Keywords: Multiproduct firms, Price competition, Oligopoly, Discrete choice, Product differentiation
    JEL: D21 D43 L12 L13
    Date: 2020
  2. By: Gnutzmann-Mkrtchyan, Arevik; Hoffstadt, Martin
    Abstract: Antidumping creates opportunities for abuse to stifle market competition. Whether cartels actually abuse trade policy for anticompetitive purposes remains an open question in the literature. To address this gap, we construct a novel dataset that matches cartel investigations with trade data at the product level. We then estimate the world import price and quantity effects of antidumping in cartel products. We find that the use of antidumping in cartel industries helps to maintain higher world import prices and lower quantities during cartel periods, and to induce the establishment of a cartel. The effect is present both for antidumping cases that result in duties and cases that are withdrawn by the petitioning industry.
    Keywords: tcartels; collusion; antitrust; antidumping; trade policy
    JEL: F14 F15 L41
    Date: 2020–11
  3. By: Frédéric Marty; Thierry Warin
    Abstract: The applicability of the notion of killer acquisition to digital platforms has long been debated. The case of the proceedings brought by the U.S. DoJ against Visa is even more interesting insofar as it makes it possible to illustrate and discuss its different facets ranging from the notion of competition suppression to that of consolidation and extension of the dominant position. The complaint analysis also makes it possible to question inter-digital ecosystem competition and shed light on the issues related to the monitoring of acquisitions undertaken by dominant companies in the sector.
    Keywords: Mergers Control,Killer Acquisitions,Digital Ecosystems,Foreclosure,Damage to Innovation,
    JEL: L12 L25 L41 L86
    Date: 2020–11–26
  4. By: Albert Banal-Estañol; Melissa Newham; Jo Seldeslachts
    Abstract: We investigate patterns in common ownership networks between firms that are active in the US pharmaceutical industry for the period 2004-2014. Our main findings are that "brand firms" -i.e. firms that have R&D capabilities and launch new drugs- exhibit relatively dense common ownership networks with each other that further increase significantly in density over time, whereas the network of "generic firms" -i.e. firms that primarily specialize in developing and launching generic drugs- is much sparser and stays that way over the span of our sample. Finally, when considering the common ownership links between brands firms, on the one hand, and generic firms, on the other, we find that brand firms have become more connected to generic firms over time. We discuss the potential antitrust implications of these findings.
    Keywords: common ownership networks, pharmaceutical companies, competition, innovation
    JEL: G23 K21 L11 L41 L65
    Date: 2020–10
  5. By: World Bank
    Keywords: Public Sector Development - Regulatory Regimes Finance and Financial Sector Development - Banks & Banking Reform Finance and Financial Sector Development - Financial Regulation & Supervision Private Sector Development - Competitiveness and Competition Policy
    Date: 2020–09

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