nep-mic New Economics Papers
on Microeconomics
Issue of 2005‒09‒02
six papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior
  1. Unexploited Connections Between Intra- and Inter-temporal Allocation By Thomas F. Crossley; Hamish W. Low
  2. Fusiones y adquisiciones en mercados con empresas públicas y privadas By Germán Coloma
  3. Tying and entry deterrence in vertically differentiated markets By Eugen Kovac
  4. Between-Firm Redistribution of Profit in Competitive Industries: Why Labor Market Policies May Not Work By Galina Vereshchagina
  5. Perfectly Competitive Innovation By Michele Boldrin; David K Levine
  6. Iterative elimination of weakly dominated strategies in binary voting agendas with sequential voting By Hummel, Patrick
  1. By: Thomas F. Crossley; Hamish W. Low
    Abstract: This paper shows that a power utility specification of preferences over total expenditure (ie. CRRA preferences) implies that intratemporal demands are in the PIGL/PIGLOG class. This class generates (at most) rank two demand systems and we can test the validity of power utility on cross-section data. Further, if we maintain the assumption of power utility, and within period preferences are not homothetic, then the intertemporal preference parameter is identified by the curvature of Engel curves. Under the power utility assumption, neither Euler equation estimation nor structural consumption function estimation is necessary to identify the power parameter. In our empirical work, we use demand data to estimate the power utility parameter and to test the assumption of the power utility representation. We .nd estimates of the power parameter larger than obtained from Euler equation estimation, but we reject the power specification of within period utility.
    Keywords: elasticity of intertemporal substitution, Euler equation estimation, demand systems
    JEL: D91 E21 D12
    Date: 2005–08
    URL: http://d.repec.org/n?u=RePEc:cam:camdae:0537&r=mic
  2. By: Germán Coloma
    Abstract: This paper develops an oligopoly model with firms that may potentially be public or private, and solves it for different cases in which the number and ownership of those firms vary. The results are then compared in terms of total surplus and consumer surplus, and this comparison produces implications for the antitrust appraisal of possible mergers and acquisitions. It follows that certain types of mergers are unambiguously favorable or unfavorable from the point of view of their contribution to both total and consumer surplus, while others may be convenient in one of those dimensions but inconvenient in the other dimension.
    JEL: D43 L33 L44
    Date: 2005–08
    URL: http://d.repec.org/n?u=RePEc:cem:doctra:299&r=mic
  3. By: Eugen Kovac
    Abstract: This paper analyzes tying and bundling as an entry deterrence tool. It shows that a multi-product firm can defend its monopoly position in one market via tying even when it does not have market power in another market. This is shown on a model with two complementary goods, each of which is vertically differentiated and in which consumers’ preferences for the goods are positively correlated. Some possible ways of defending against entry deterrence, and implications for competition policy, are discussed.
    Keywords: Industrial organization, vertical differentiation, anti-trust policy, entry deterrence, foreclosure, tying, bundling.
    JEL: L11 L12 L13 L41
    Date: 2005–08
    URL: http://d.repec.org/n?u=RePEc:cer:papers:wp266&r=mic
  4. By: Galina Vereshchagina
    Abstract: Empirical studies document differences in firms' response to the introduction of various labor market policies. In particular, large and mature firms tend to participate more actively in targeted employment subsidy programs (under which firms receive subsidies for hiring disadvantaged workers). This paper offers an explanation for this phenomenon and argues that it might have important consequences for policy making. Namely, such behavior of firms may indicate that large and mature firms benefit from the introduction of a new subsidy program, while small and young firms incur indirect costs. In this case, the policy implicitly redistributes profit from young to mature firms and may discourage startups if the entry into the industry is competitive. The resulting decrease in the number of operating firms is likely to have a significant impact on the policy's outcomes. These effects become more pronounced as heterogeneity between young and mature firms increases.
    Date: 2005–06
    URL: http://d.repec.org/n?u=RePEc:cer:papers:wp268&r=mic
  5. By: Michele Boldrin; David K Levine
    Date: 2005–08–28
    URL: http://d.repec.org/n?u=RePEc:cla:levarc:618897000000000954&r=mic
  6. By: Hummel, Patrick
    Keywords: perfect information games, extensive games, backward induction, weakly dominated strategies, iterative elimination of weakly dominated strategies, binary voting agendas, sequential voting
    Date: 2005–08
    URL: http://d.repec.org/n?u=RePEc:clt:sswopa:1236&r=mic
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