nep-mic New Economics Papers
on Microeconomics
Issue of 2005‒05‒29
eleven papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Supply Function Equilibrium in a Constrained Transmission System By Robert Wilson
  3. Strategic Privatization and Regulation Policy in Mixed Markets By Denis, CLAUDE; Jean, HINDRIKS
  4. Oligopolistic Competition as a Common Agency Game By Claude, D’ASPREMONT; Rodolphe, DOS SANTOS FERREIRA
  5. Multiple Lending and Constrained Efficiency in the Credit Market By Andrea, ATTAR; Eloisa, CAMPIONI; Gwenaël, PIASER
  6. Efficient collusion in optimal auctions By Dequiedt, V.
  7. Start-ups, firm growth and the consolidation of the French biotech industry By Avenel, E.; Corolleur, F.; Gauthier, C.; Rieu, C.
  8. Spaced Out Monopolies: Theory and Empirics of Alternating Product Releases By Arthur Zillante
  9. Competition in Two-Sided Markets By Mark Armstrong
  10. Regulation, Competition and Liberalization By Mark Armstrong; David Sappington

  1. By: Robert Wilson
    Date: 2005–05–21
  2. By: Juan-José Ganuza; José S. Penalva Zuasti (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: This paper studies the relationship between the auctioneer's provision of information and the level of competition in private value auctions. We use a general notion of informativeness which allows us to compare the efficient with the (privately) optimal amount of information provided by the auctioneer. We show that it is not optimal for the auctionner to provide the efficient level of information. We also look at the effect of competition as parameterized by the number of participants in the auction. We find that both the optimal and the efficient level of information increase with the number of participants in the auction, and both converge when the number of bidders goes to infinity.
    Keywords: Auctions, competition, private values, optimal and efficient provision of information.
    JEL: D44 D82 D83
    Date: 2005–02
  3. By: Denis, CLAUDE; Jean, HINDRIKS
    Abstract: In this paper we consider mixed oligopoly markets for differentiated goods where private and public firms compete either in prices or quantities. We then study the welfare effect of privatization interpreted as partial strategic delegation of the public firm to a private manager with profit concern. It is shown that partial privatization improves welfare with quantity competion when goods are subsitutes, and with price competition when goods are complements. However full privatization (complete delegation to private manager) can never be optimal. It is also shown that the public firm can make more profit than the private firm in equilibrium, and that this possibility is more likely under quantity competition. Turning to market regulation policy, we find : (i) that public and private firms should be taxed the same; and (ii) that price regulation is better than quantity regulation.
    Date: 2005–01–25
    Abstract: In applying the common agency framework to the context of an oligopolistic industry, we want to go beyond the classical dichotomy between Cournot and Bertrand competition. We define two games, the oligopolistic game and the corresponding concept of oligopolistic equilibrium, and an associated auxiliary game that can be interpreted as a common agency game and that has the same set of equilibria. The parameterization of the set of (potential) equilibria in terms of competitive thoughness is derived from the first order conditions of the auxiliary game. The enforceability of monopolistic competition, of price and quantity competition, and of collusion is examined in this framework. We then describe the (reduced) set of equilibria one would obtain, first in the non-intrinsic case and then in the case where a global approach would be adopted instead of partial equilibrium approach. Finally, we illustrate the use of the concept of oligopolistic equilibrium and of the corresponding parameterization by referring to the standard case of symmetric quadratic utility.
    Date: 2005–02–17
  5. By: Andrea, ATTAR; Eloisa, CAMPIONI; Gwenaël, PIASER
    Abstract: In this paper we present a model of credit market with several homogeneous lenders competing to finance an investment project. Contracts are non-exclusive, hence the borrower can accept whatever subset of the offered loans. We use the model to discuss efficiency issues in competitive economies with asymmetric information and non-exclusive agreements. We characterize the equilibria of this common agency game with moral hazard and show that they all belong to the constrained Pareto frontier
    Keywords: Common Agency; Moral Hazard; Parto Efficiency; Second Best
    JEL: D43 D61 L13
    Date: 2005–03–15
  6. By: Dequiedt, V.
    Abstract: In a first part, we provide a general approach to mechanism design subject to collusion. It is modeled as a Stackelberg game between the designer and a third-party which organizes collusion among the buyers. In this multi-principal context, the standard "Revelation principle" can be replaced by a "Collusion-proofness Principle" if, and only if, the collusion technology satisfies a transitivity condition. In a second part, we apply this approach to collusion in a private value auction where bidders' types are independent and study the optimal response of the seller to different threats of collusion between the buyers. We show that collusion in the optimal auction is efficient when the third-party can implement monetary transfers as well as when it can implement monetary transfers and reallocations of the goods.
    JEL: D44 D82 L41
    Date: 2004
  7. By: Avenel, E.; Corolleur, F.; Gauthier, C.; Rieu, C.
    Abstract: Based on an original dataset, we analyze empirically the determinants of firm growth in the French biotech industry during two periods, 1996-1999 and 1999-2002. We have two main results. First, Gibrat's law is violated. The growth of annual turnover is influenced by teh initial size of the firm. The effect is non-linear, negative for small firms. Second, location has a significant impact on growth. We use different sets of dummies to characterize location and different measures of firm growth. As a whole, our results point at Marseilles (and its region) and Nanterre (but not Paris and Evry) as favorable places for the growth of firms between 1999 and 2002. For the 1996-1999, the favorable places are Strasbourg (and Alsace) and Rhône-Alpes (Lyon/Grenoble). Our analysis thus suggests that the changes in the (notably legal) environment of French biotech firms that took place in 1999 had a drastic effect of the comparative advantages of locations for biotech firms.
    JEL: L25 L65 R30
    Date: 2005
  8. By: Arthur Zillante (ICES, George Mason University)
    Abstract: An oft-neglected pattern of behavior occurs when firms time the release of their products so that they are not released on the same date. The practice is potentially collusive, so there may be legitimate antitrust concerns. This paper presents a model of this behavior, the alternating periods monopoly (APM). A comparison of the APM with other sustainable methods of collusion shows the conditions under which the APM is preferred. I develop an empirical test to detect the APM, and use data from the baseball card industry to investigate the possible use of an APM.
    Keywords: Noncooperative strategies, alternating periods monopoly, duration analysis
    JEL: L
    Date: 2005–05–24
  9. By: Mark Armstrong (University College London)
    Abstract: There are many examples of markets involving two groups of agents who need to interact via 'platforms', and where one group's benefit from joining a platform depends on the number of agents from the other group who join the same platform. This paper presents theoretical models for three variants of such markets: a monopoly platform; a model of competing platforms where each agent must choose to join a single platform; and a model of 'competing bottlenecks', where one group wishes to join all platforms. The main determinants of equilibrium prices are (i) the relative sizes of the cross-group externalities, (ii) whether fees are levied on a lump-sum or per-transaction basis, and (iii) whether a group joins just one platform or joins all platforms.
    Keywords: Two-sided markets, network externalities, supermarkets, advertising
    JEL: L
    Date: 2005–05–25
  10. By: Mark Armstrong (University College London); David Sappington (University of Florida)
    Abstract: In many countries throughout the world, regulators are struggling to determine whether and how to introduce competition into regulated industries. This essay examines the complexities involved in the liberalization process. While stressing the importance of case-specific analyses, this essay distinguishes liberalization policies that generally are pro-competitive from corresponding anti-competitive liberalization policies
    Keywords: Competition, Regulation, Liberalization
    JEL: L
    Date: 2005–05–26
  11. By: Olga Alonso-Villar (Dpto. de Economia Aplicada. Universidad de Vigo)
    Abstract: There is no doubt that people like to migrate to large cities because they can acquire a wider range of products and jobs, but also because they can exchange information and ideas in an easier way. In this respect, we will attempt to explain the formation of metropolitan areas through a general equilibrium model in which concentration emerges not only from the interaction between increasing returns to scale at the rm level, transport costs and the mobility of labor, but also from human capital externalities. Our aim is to underline the role of human capital as a factor that fosters both the agglomeration of the economic activity and cities' growth. The paper shows that there is new scope for government activities.
    Keywords: Monopolistic Competition; Agglomeration; Human Capital; Education

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