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on Network Economics |
| By: | Sergio Currarni (Department of Economics, University Of Venice Cà Foscari); Francesco Feri (University of Innsbruck) |
| Abstract: | We study the incentives of oligopolistic firms to share private information on demand parameters. Differently from previous studies, we consider bilateral sharing agreements, by which firms commit at the ex-ante stage to truthfully share information. We show that if signals are i.i.d., then pairwise stable networks of sharing agreements are either empty or made of fully connected components of increasing size. When linking is costly, non complete components may emerge, and components with larger size are less densly connected than components with smaller size. When signals have different variances, incomplete and irregular network can be stable, with firms observing high variance signals acting as "critical nodes". Finally, when signals are correlated, the empty network may not be pairwise stable when the number of firms and/or correlation are large enough. |
| Keywords: | Information sharing, oligopoly, networks, Bayesian equilibrium |
| JEL: | D43 D82 D85 L13 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2008_16&r=net |
| By: | Nikolaos Georgantzis (Universitat Jaume I); Carlos Gutiérrez-Hita (Universidad de Alicante) |
| Abstract: | We present a model in which the consumers' capacity to access a service provided on a network depends negatively on the price charged by the network owner per capacity unit. Several scenarios concerning the structure of the downstream service provision market are studied. First, a monopolist operates in both the network and the service provision stage. Second, we assume duopolistic competition between the network owner and the entrant. Third, we allow for endogenous differentiation of the services provided by the two competitors. Generally speaking, the duopolistic structure does not necessarily enhance consumer surplus. Furthermore, competition in the service provision market may reduce social welfare, either due to excessive differentiation or due to a low network density. |
| Keywords: | telecommunications markets, regulation, endogenous consumption. |
| JEL: | D43 L13 L51 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2008-01&r=net |
| By: | Christos Genakos (Selwyn College, University of Cambridge & Centre for Economic Performance, London School of Economics); Tommaso Valletti (Faculty of Economics, University of Romza "Tor Vergata") |
| Abstract: | This paper examines the impact of regulatory intervention to cut termination rates of calls from fixed lines to mobile phones. Under quite general conditions of competition, theory suggests that lower termination charges will result in higher prices for mobile subscribers, a phenomenon known as the “waterbed” effect. The waterbed effect has long been hypothesized as a feature of many two-sided markets and especially the mobile telephony industry. Using a uniquely constructed panel of mobile operators’ prices and profit margins across more than twenty countries over six years, we document empirically the existence and magnitude of this effect. Our results suggest that the waterbed effect is strong, but not full. We also provide evidence that both competition and market saturation, but most importantly their interaction, affect the overall impact of the waterbed effect on prices. |
| Date: | 2008–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:110&r=net |
| By: | Elad Harison; Heli Koski |
| Abstract: | ABSTRACT : The primary findings of our study suggest that software firms that adopt the OSS-based business model are notably less productive than companies that merely offer proprietary software solutions. Our estimation results further show that the OSS business model adopters have not become notably less productive after beginning to supply OSS. Therefore, its seems that not the use of the OSS business model as such has reduced the OSS firms’ labour productivity but the firms that employed the OSS business model during the sampled years were, on average, of lower labour productivity type. Though the OSS business model use has not substantially improved the performance of software firms, we find that the OSS business model adopters strategically using the source code made available by the OSS community as part of their new software products, have performed better in terms of labour productivity than other adopters of the OSS business model. |
| Date: | 2008–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1135&r=net |
| By: | Alberto ZAZZARO (Universita' Politecnica delle Marche, Dipartimento di Economia); David BARTOLINI ([n.a.]) |
| Abstract: | A well-established result of the theory of antitrust policy is that it might be optimal to tolerate some degree of collusion among firms if the Authority in charge is constrained by limited resources and imperfect information. However, few doubts are cast on the common opinion by which stricter enforcement of antitrust laws definitely makes market structure more competitive and prices lower. In this paper we challenge this presumption of effectiveness and show that the introduction of a positive (expected) antitrust fine may drive firms from partial cartels to a monopolistic cartel. Moreover, introducing uncertainty on market demand, we show that the social optimal competition policy can call for a finite or even zero antitrust penalty even if there are no enforcement costs. We first show our results in a Cournot industry with five symmetric firms and equilibrium binding agreements. Then we extend the analysis to the case of n symmetric firms and a generic rule of coalition formation. Finally, we consider the case of asymmetric firms and show that our results still hold for an industry populated by one Stackelberg leader and two followers. |
| Keywords: | antitrust policy, coalition formation, collusive cartels |
| JEL: | C70 L40 L41 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:325&r=net |