nep-ind New Economics Papers
on Industrial Organization
Issue of 2023‒10‒30
seven papers chosen by
Kwang Soo Cheong, Johns Hopkins University

  1. Is Producer Surplus a Surplus to the Producer? By Wenli Cheng
  2. Production of Green Goods is Concentrated in High-tech Industries By Kuosmanen, Natalia; Pajarinen, Mika
  3. The Impact of R&D tax incentives: Results from the OECD microBeRD+ project By OECD
  4. They Are Among Us: Pricing Behavior of Algorithms in the Field By Fourberg, Niklas; Marques Magalhaes, Katrin; Wiewiorra, Lukas
  5. Airbnb, Hotels, and Localized Competition By Maximilian Schaefer; Kevin Ducbao Tran
  6. Mergers and acquisitions in telecommunications market: a simultaneous equations approach to study Structure, Conduct and Performance By Kargas, Antonios; Argyroulis, Vasileios; Varoutas, Dimitrios
  7. Green Goods in Finland’s Manufacturing By Kuosmanen, Natalia; Pajarinen, Mika

  1. By: Wenli Cheng (Department of Economics, Monash University)
    Abstract: This paper clarifies the concept of producer surplus in the short-run and the long-run contexts. It shows that in the short run, producer surplus is the sum of economic profit (or loss) to the firm and quasi-rent which goes to owners of fixed factors. In the long run, producer surplus is rent, which goes to owners of specialised factors of production. In either case, producer surplus is not necessarily a surplus to the producer which is commonly understood to be the firm.
    Keywords: Producer surplus, profit, rent
    JEL: F40
    Date: 2023–10
  2. By: Kuosmanen, Natalia; Pajarinen, Mika
    Abstract: Abstract The production of green goods in Finland’s manufacturing is concentrated within high-tech industries, particularly in the manufacturing of computer, electronic and optical products, as well as electrical equipment. Many firms tend to maintain a consistent portfolio of green products over time. Active expansion of green product portfolios is more common among large and multi-product firms. Furthermore, there is a positive correlation between labor productivity and production of green products. Although the production of green goods constitutes a relatively modest share of Finland’s overall manufacturing output, its role is steadily increasing over time.
    Keywords: Environmental goods, Green products, Firm renewal, Manufacturing industries
    JEL: C23 L60 O44 Q54 Q55 Q56
    Date: 2023–10–07
  3. By: OECD
    Abstract: This document reports on the final output of the OECD microBeRD+ project. Drawing on the outcomes of previous work, this study presents new evidence on the impact of business R&D support policies – tax incentives and direct forms of support – on business R&D investment (R&D input additionality) and the innovation and economic performance of firms (R&D output additionality). The report also provides an exploratory analysis of R&D spillovers.
    JEL: H25 O38 L25
    Date: 2023–10–09
  4. By: Fourberg, Niklas; Marques Magalhaes, Katrin; Wiewiorra, Lukas
    Abstract: We analyze pricing patterns and price level effects of algorithms in the market segments for OTC-antiallergics and -painkillers in Germany. Based on a novel hourly dataset which spans over four months and contains over 10 million single observations, we produce the following results. First, price levels are substantially higher for antiallergics compared to the segment of painkillers, which seems to be reflective of a lower price elasticity for antiallergics. Second, we find evidence that this exploitation of demand characteristics is heterogeneous with respect to the pricing technology. Retailers with a more advanced pricing technology establish even higher price premiums for antiallergics than retailers with a less advanced technology. Third, retailers with more advanced pricing technology post lower prices which contradicts previous findings from simulations but are in line with empirical findings if many firms compete in a market. Lastly, our data suggests that pricing algorithms takeweb-traffic of retailers' online-shops as demand side feedback into account when choosing prices. Our results stress the importance of a careful policy approach towards pricing algorithms and highlights new areas of risks when multiple players employ the same pricing technology.
    Keywords: Algorithmic pricing, Collusion, Artificial intelligence
    JEL: C13 D83 L13 L41
    Date: 2023
  5. By: Maximilian Schaefer (Institut Mines-Télécom Business School, Department of Law, Economics and Finance, 9 rue Charles Fourrier, 91000 Evry, France); Kevin Ducbao Tran (University of Bristol, School of Economics, 12 Priory Road, Bristol BS8 1TU, United Kingdom)
    Abstract: We analyze competition between hotels and Airbnb listings as well as the effect of Airbnb on consumer welfare, hotel profits, and Airbnb host surplus. For this purpose, we use granular daily-level data from Paris for the year 2017. We estimate a random coefficient logit model of demand. We extend prior research by accounting for the localized nature of competition within districts of the city. Our results suggest that demand is segmented by district as well as accommodation type. Based on these demand estimates, we estimate separate supply-side models for hotels and Airbnb, to account for differences in price setting we observe in the data. Using the estimated models, we assess how Airbnb affects hotel profits and consumer welfare and how much Airbnb hosts value the platform. Our simulations imply that Airbnb increases average consumer surplus and decreases hotel profits substantially. Airbnb hosts seem to value the platform moderately.
    Keywords: hotel industry; short-term rentals; localized competition; consumer welfare; sharing economy; peer-to-peer markets; Airbnb
    JEL: D4 D6 L1 Z38
    Date: 2023–09
  6. By: Kargas, Antonios; Argyroulis, Vasileios; Varoutas, Dimitrios
    Abstract: Paper aims to enrich readers understanding on Greek Telecommunication Industry, and more specifically on strategic decisions related with mergers and acquisitions. Even though mergers and acquisitions have long been studied in international level, the effects on market structure, on firms' conduct and, on their performance, remains an interesting topic. Current research contributes to the analysis of Greek telecommunication market, considering its current form, after a series of mergers and acquisitions that took place in previous years. An Industrial Organization's approach was adopted, namely the Structure - Conduct - Performance (SCP) framework. A SCP model, based on quantitative data, is developed for the major three telecom operators, while a two-stages least square regression analysis is conducted. By using a simultaneous equations model with lagged-dependent variables, the relationship between structure, conduct and performance is discussed. Results indicate that entry barriers exist in the market, as part of firms' conduct, shaping market's existing structure and affecting performance. Mergers and acquisitions is expected to keep playing a significant role in Greek telecommunications market since it acts as a reliable strategic option that ensures viability.
    Keywords: Structure – Conduct – Performance, Simultaneous equations approach, Mergers and Acquisitions, Strategic Management, Greek Telecommunications Industry
    Date: 2023
  7. By: Kuosmanen, Natalia; Pajarinen, Mika
    Abstract: Abstract This report examines the production of green goods in Finland’s manufacturing sector. Our findings reveal a notable concentration of green products to high-tech industries. While most firms maintain their green product portfolios stable over time, multi-product firms tend to expand their green product portfolios more actively. Large firms stand out with active management of their green goods portfolios, discontinuing some green products while introducing new ones. Additionally, we examine firm characteristics that associate with firms’ engagement in the production of green goods. We find a positive correlation between production of green products and factors such as labor productivity, product diversity, and multi-industry operations.
    Keywords: Environmental goods, Green products, Firm renewal, Manufacturing industries
    JEL: C23 L60 O44 Q54 Q55 Q56
    Date: 2023–10–07

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