nep-ind New Economics Papers
on Industrial Organization
Issue of 2021‒11‒15
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The Impact of Private Label Introduction on Assortment, Prices, and Profits of Retailers By Meilin Ma; Ralph Siebert
  2. Relational Contracts and Trust in a High-Tech Industry By Giacomo Calzolari; Leonardo Felli; Johannes Koenen; Giancarlo Spagnolo; Konrad O. Stahl
  3. Effects of Vertical Integration on Internet Service Providers' Zero-rating Choice By Saruta, Fuyuki
  4. Airline Delay Propagation: A Simple Method for Measuring Its Extent and Determinants By Jan K. Brueckner; Achim I. Czerny; Alberto A. Gaggero
  5. Merger Review Regimes in the ASEAN Region and Case Analysis of Grab-Uber Merger By Jang, Yungshin; Kang, Gu Sang

  1. By: Meilin Ma; Ralph Siebert
    Abstract: We study how the introduction of private-label brands (PLs) affects retailers’ prices, demand, and profits, explicitly accounting for assortment adjustments of national brands (NBs) in retail stores. Using a detailed dataset on the U.S. beef market, we find that, when PLs are added to the low-priced market segment, stores reposition NBs to further differentiate them from the PL and remove NBs from the same market segment. However, if PLs are introduced into the high-priced segment, NBs are not repositioned or removed from the same segment; this way, the store can compete with other stores in product variety. PL introduction and PL-driven assortment changes of NBs impose a small effect on NB prices. In contrast, PLs strongly cannibalize NB demand, and the assortment changes help steer consumers toward PLs, which imposes large negative effects on NB demands and increases store-level profits.
    Keywords: prices and demand of national brands, private label, retailer assortment decisions
    JEL: D22 L66 L81
    Date: 2021
  2. By: Giacomo Calzolari; Leonardo Felli; Johannes Koenen; Giancarlo Spagnolo; Konrad O. Stahl
    Abstract: We study how informal buyer-supplier relationships in the German automotive industry affect procurement. Using unique data from a survey focusing on these, we show that more trust, the belief that the trading partner acts to maintain the mutual relationship, is associated with both higher quality of the automotive parts and more competition among suppliers. Yet both effects hold only for parts involving unsophisticated technology, not when technology is sophisticated. We rationalize these findings within a relational contracting model that critically focuses on changes in the bargaining power, due to differences in the costs of switching suppliers.
    Keywords: relational contracts, hold-up, buyer-supplier contracts, bargaining power
    JEL: D86 L14 L62 O34
    Date: 2021
  3. By: Saruta, Fuyuki
    Abstract: This study investigates the effects of vertical integration between an Internet service provider (ISP) and a content provider (CP) on the ISP's zero-rating choice and social welfare. We develop a simple model where a monopolistic ISP delivers content from two CPs to a representative consumer. The ISP can offer zero-rating contracts to one or two CPs, allowing the consumer to use zero-rated content without consuming monthly data usage. We investigate how the integration between the ISP and a CP impacts the ISP's zero-rating choice and social welfare. Our findings are as follows. First, the vertically integrated ISP may zero-rate the unaffiliated CP exclusively when the CPs' profitability is low and the ISP's operating cost is high. Second, the integration decreases the total surplus when the CP's profitability is sufficiently low; otherwise, it improves the total surplus. Our results indicate that a vertical integration and zero-rating could be both welfare-enhancing and reducing.
    Keywords: Mobile Internet; Zero-rating; Sponsored data; Net neutrality; Vertical integration
    JEL: D21 L11 L96
    Date: 2021–10–23
  4. By: Jan K. Brueckner; Achim I. Czerny; Alberto A. Gaggero
    Abstract: This paper offers a simple approach for identifying propagated departure delays and measuring their contribution to arrival delays. Under our approach, a propagated departure delay occurs when the arrival delay of the inbound flight exceeds the subsequent flight’s ground buffer. The size (or frequency) of such propagated delays relative to the size (or frequency) of arrival delays then measures the contribution of propagated delays to late arrivals. This approach differs from earlier attempts to quantify the contribution of delay propagation since it focuses on an individual flight and its immediate predecessor, without attempting to trace the sources of delay propagation back through the entire sequence of prior flights. The paper’s empirical results show that the contribution of propagated departure delays to arrival delays depends on several key determinants.
    JEL: L93 R41
    Date: 2021
    Abstract: In 2018, the largest yet cross-border M&A deal between digital platforms in Southeast Asia was reached, namely the Grab-Uber M&A case. The local digital platform Grab consolidated the regional operations of San Francisco, California-based Uber, a development which had significant effects on competition and consumer welfares in the Southeast Asia digital market. The competition authorities in the region independently initiated their investigation and started to deliberate the merger case to determine the anti-competitive effects on their domestic market, and to decide whether this transaction should be restricted or approved. Even though the two merging and merged firms completed their transactions, each authority applied different logic and imposed different remedies in deciding the case. Authorities in some member states such as Singapore and the Philippines decided that the Grab-Uber merger was anti-competitive, while others such as Indonesia and Viet Nam considered the merger not anti-competitive. Upon this backdrop, this article reviews the competition policies and laws of four major ASEAN countries – Indonesia, Singapore, Viet Nam, and the Philippines – from institutional and legal perspectives, focusing on M&A review regimes. Then, we briefly introduce how these com-petition authorities decided on the Grab-Uber merger case, also analyzing the competition effects of the case on the ride-hailing market in the countries. Based on the analysis results, we propose overseas competition policies for Korea.
    Keywords: ASEAN; Grab-Uber; merger; M&A; Southeast Asia; Indonesia; Singapore; Viet Nam; the Philippines
    Date: 2021–09–03

This nep-ind issue is ©2021 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.