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on Industrial Competition |
| By: | Albert Banal-Estañol; Jo Seldeslachts |
| Abstract: | This paper proposes an explanation as to why some mergers fail, based on the interaction between the pre-merger gathering of information and the postmerger integration processes. Rational managers acting in the interest of shareholders may still lead their firms into unsuccessfully integrated companies. Firms may agree to merge and may abstain from putting forth integration efforts, counting on the partners to adapt. We explain why mergers among partners with closer corporate cultures can have a lower success rate and why failures should be more frequent during economic booms, consistent with the empirical evidence. Our setup is a global game (integration process) in which players decide whether to participate (merger decision). We show that private signals need to be noisy enough in order to ensure equilibrium uniqueness. <br> <br> <i>ZUSAMMENFASSUNG - (Gescheiterte Fusionen) <br> In dieser Arbeit wird eine Erklärung vorgestellt für das Scheitern von Fusionen. Sie beruht auf einem Modell, das das Verhalten der fusionierenden Firmen vor der Fusion, wenn Erkundungen über den Partner eingeholt werden, und nach der Fusion, wenn sich die Unternehmensteile integrieren müssen, in den Mittelpunkt stellt. Manager können nach diesem Modell durch rationales Verhalten die fusionierte Firma in Verluste und schlechte Aktienwerte führen, obwohl sie eigentlich das Interesse der Aktionäre im Blick haben. Die Firmen stimmen einer Fusion zu, halten sich aber beim Voranbringen der Integrationsbemühungen zurück, da sie darauf zählen, dass sich die Partner anpassen. Wir erklären, warum Fusionen zwischen Partnern mit ähnlichen Unternehmenskulturen eine geringere Erfolgsrate haben können und warum Misserfolge häufiger während eines wirtschaftlichen Booms auftreten. Dies ist konsistent mit empirischen Ergebnissen. Unser Ausgangspunkt ist ein globales Spiel, in dem der Integrationsprozess dargestellt wird und die Spieler entscheiden, ob sie sich am Spiel beteiligen, d.h. der Fusion zustimmen. Wir zeigen, dass ein eindeutiges Gleichgewicht nur garantiert werden kann, wenn die privaten Informationen der fusionierenden Firmen, die dem Fusionspartner nicht bekannt sind, genügend unpräzise sind.</i> |
| Keywords: | mergers, synergies, information, uncertainty, organizational culture. |
| JEL: | D74 D82 L20 M14 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:wzb:wzebiv:spii2005-09&r=com |
| By: | Fabrizio Cesaroni; Paola Giuri |
| Abstract: | Two opposite models are currently operating in the modern economy, the strong intellectual property rights (IPR) model, and the open source/open science model. They have traditionally been applied to alternative institutional contexts. The strong IPR model has been associated to the business environment, while the open science model has been associated to the academic or research system. More recently, a strengthening of the IPR system has occurred in the public research system, and open science models have been adopted in private sectors like the open source software. This paper discusses these different models and their implications on the innovative activity of firms and economies, and the market dynamics. One of the main benefits deriving from a strong IPR system is that it encourages the entry of new technology-based firms and the commercialisation of technologies in markets for technologies. At the same time, an increased patent protection is also associated to potential costs, such as those arising from a excessive fragmentation of property rights, an abuse of patent protection for strategic reasons (sleeping and blocking patents), and an increase in litigation costs. |
| Keywords: | Intellectual Property Rights, Patents, Patent Policy, Open Science, Open Source Software, Technology Commercialisation and Diffusion |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2005/10&r=com |
| By: | Shantanu Dutta (University of Southern California); Mark Bergen (University of Minnesota); Daniel Levy (Emory University); Robert Venable (Robert W. Baird, Co.) |
| Abstract: | We use a unique store-level data set to directly measure menu costs and to study the price change process at a large U.S. drugstore chain. We compare and contrast the magnitude of these measures with similar measures from 4 large U.S. supermarket chains. We find that (1) the actual magnitude of menu costs as a share of revenues, (2) menu costs per price change, (3) the frequent use of promotional pricing, and (4) the use of weekly pricing rules, are similar across both retail formats. Given that the main common features of these two types of retail formats are that (i) they both use posted prices, and (ii) both are multiproduct retailers selling a large number of products, our findings suggest that the magnitude of the menu cost components we measure, and the price change practices we document, may be generalizable across retail formats with these two features. |
| Keywords: | Menu Cost, Posted Prices, Multiproduct Retailer, Price Rigidity, Sticky Prices, Cost of Price Adjustment, Time Dependent Pricing |
| JEL: | E31 E12 |
| Date: | 2005–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0505007&r=com |
| By: | Joseph A. Clougherty |
| Abstract: | The domestic airline merger phenomenon of the late 1980s and early 1990s sparked a great deal of Industrial Organization (IO) literature; yet, that literature neglected non-US domestic mergers and potential for international competitive gains. Using an International Business perspective to complement an IO analysis, I argue that factoring international competitive incentives helps explain domestic airline merger activity. A Cournot model of airline competition illustrates that domestic mergers, via enhanced domestic networks and reduced domestic competition, generate international competitive gains. Further, empirical tests - using a structural-equations approach on panel data covering international city-pair market segments - support domestic mergers improving international competitiveness. <br> <br> <i>ZUSAMMENFASSUNG - (Was die inländischen Fluglinien in 20 Ländern zur Fusion getrieben hat. Eine integrierte industrieökonomische und betriebswirtschaftliche Analyse des internationalen Wettbewerbs) <br> In der Industrieökonomik hat das Phänomen von Fusionen inländischer Fluggesellschaften in den späten 1980er und frühen 1990er Jahren viel wissenschaftliche Literatur angeregt. Die einschlägigen Forschungsarbeiten behandeln jedoch ausschließlich inländische Fusionen in den U.S.A. und lassen damit den Aspekt des internationalen Wettbewerbs außer Acht. In dieser Untersuchung, die die industrieökonomische Analyse um die Perspektive der internationalen Betriebswirtschaft ergänzt, wird gezeigt, dass die Anreize des internationalen Wettbewerb in das Erklärungsmodell für nationale Fusionen von Fluglinien integriert werden können. Anhand eines Cournot-Modells des Wettbewerbs zwischen Fluggesellschaften kann dargelegt werden, wie Fusionen zu einem erweiterten inländischen Netz an Flugverbindungen und verminderten Konkurrenzdruck im Inland führen und so die Position der fusionierten Fluglinie im internationalen Wettbewerb stärken. Dieses Ergebnis wird von empirischen Tests, die eine Struckturvergleichsmethode für Paneldaten über einen internationalen Städtevergleich der Marktsegmente verwenden, gestützt.</i> |
| Keywords: | airline-mergers, imperfect-competition, international-determinants |
| JEL: | L13 F14 L93 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:wzb:wzebiv:spii2005-06&r=com |
| By: | Luc Aucremanne (National Bank of Belgium, Research Department); Martine Druant (National Bank of Belgium, Research Department) |
| Abstract: | This paper reports the results of an ad hoc survey on price-setting behaviour conducted in February 2004 among 2,000 Belgian firms. The reported results clearly deviate from a situation of perfect competition and show that firms have some market power. Pricing-to-market is applied by a majority of industrial firms. Prices are rather sticky. The average duration between two consecutive price reviews is 10 months, whereas it amounts to 13 months between two consecutive price changes. Most firms adopt time-dependent price-reviewing under normal circumstances. However, when specific events occur, the majority will adopt a state-dependent behaviour. Evidence is found in favour of both nominal (mainly implicit and explicit contracts) and real rigidities (including flat marginal costs and counter-cyclical movements in desired mark-ups). The survey results point to a non-negligible degree of non-optimal price-setting. |
| Keywords: | price-setting behaviour, price rigidity, nominal rigidity, real rigidity, survey, time-dependent pricing, state-dependent pricing, pricing-to-market |
| JEL: | D40 E31 L11 |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:200503-1&r=com |
| By: | Ronald M. Harstad (Department of Economics, University of Missouri-Columbia) |
| Abstract: | Potential bidders respond to a seller's choice of auction mechanism for a common-value or affiliated-values asset by endogenous decisions whether to incur a participation cost (and observe a private signal), or forego competing. Privately informed participants decide whether to incur a bid-preparation cost and pay an entry fee, or cease competing. Auction rules and information flows are quite general; participation decisions may be simultaneous or sequential. The resulting revenue identity for any auction mechanism implies that optimal auctions are allocatively efficient; a nontrivial reserve price is revenue-inferior for any common-value auction. Characterization of optimal auctions is otherwise contentless, in that any auction that sells without reserve is within the setting of one continuous parameter of an optimal auction; seller's surplus-extracting tools are now substitutes, not complements. Revenue comparisons from the exogenous-bidders literature are upheld in a half-space of parameters, overturned in a half-space. Many econometric studies of auction markets are seen to be flawed in their identifcation of the number of bidders. |
| Keywords: | optimal auctions, endegenous bidder participation, affiliated-values, common-value auctions, surplus-extracting devices |
| JEL: | D44 D82 C72 |
| Date: | 2005–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:0504&r=com |
| By: | Arthur Zillante (ICES, George Mason University) |
| Abstract: | The baseball card industry provides a case study of survival in a declining industry. The case study shows how manufacturers have varied their strategic behavior in response to changes that have occurred within the industry in the last 20 years. This is in stark contrast to most of the existing theoretical literature on behavior in declining industries, which assumes that behavior remains constant throughout the decline phase of an industry. |
| Keywords: | Declining industry, case study, baseball cards |
| JEL: | L |
| Date: | 2005–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0505004&r=com |
| By: | Machiel Mulder; Victoria Shestalova; Marc Lijesen |
| Abstract: | The Dutch Minister of Economic Affairs has proposed to replace the currently implemented structure of legal unbundling of the energy distribution industry by ownership unbundling. In this study we analyse costs and benefits of this proposal, compared to the current situation, and to two alternative options that strengthen legal unbundling. We identify four mutually-related categories of benefits: better performance of networks, more efficient regulation, improved effectiveness of competition, and benefits of privatisation; and three categories of costs: one-off transaction costs, loss of economies of scope and the risk of less investment in generation. The analysis highlights that the benefits depend on the future development in small-scale generation and on allocation of the management of transmission networks. Mainly because of the uncertainty about the future role of small-scale generation and the uncertainty about the magnitude of the one-off transaction costs related to cross-border leases, the net welfare effect of ownership unbundling at the distribution level is ambiguous. We identify an alternative route for achieving some of the benefits considered. |
| Keywords: | network industries, electricity market, industrial organisation, unbundling, regulation |
| JEL: | L51 Q40 Q48 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:docmnt:84&r=com |
| By: | Catherine Locatelli (LEPII - Laboratoire d'économie de la production et de l'intégration internationale - http://www.upmf-grenoble.fr/lepii/ - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II) |
| Abstract: | Russia is the world's leading gas producer. But reforming the gas industry is currently one of the major challenges facing the Russian energy industry in order to pursue its development. Since 1991, the terms of the debate have scarcely changed: what level of deregulation is required, or can be introduced, in the gas industry? The reform project, actually discussed, is quite limited. This aim is to favour the development of competition on the Russian domestic market by creation of new producers. But it maintains the production-transport integration of Gazprom, the actual gas monopoly. Also, Gazprom will retain the monopoly on exports. So, the first stage of the reform, will only be the setting-up of a transparent and non-discriminatory transportation network for Gazprom, with regulated prices, and the creation of an unregulated market alongside a regulated market. But the issue of the reform begs a number of questions on the extent to which it will be accepted by the various actors involved at different levels. |
| Keywords: | russie;reforme;industrie gaziere;déréglementation;gas industry;deregulation;russia |
| Date: | 2004–03–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00001308_v1&r=com |
| By: | Manjira Datta (W. P. Carey School of Business Department of Economics); Leonard Mirman (University of Virginia) |
| Abstract: | This paper analyzes the effect of market power in a model with dynamic and biological externalities. When several countries harvest fish in international waters the evolution of fish population is affected by their joint action, thus, generating a biological and a dynamic externality. If there is trade in fish, the market-clearing prices depend on the harvesting and consumption decision made in every country. Therefore, market-clearing prices generate another type of interdependence. The planners' make their policy decision by taking account of various externalities.We find a subgame perfect Cournot-Nash equilibrium and the conditions under which it may be efficient. We also study the role of different externalities in generating inefficiency. |
| JEL: | C73 D51 D90 F12 |
| URL: | http://d.repec.org/n?u=RePEc:asu:wpaper:2132842&r=com |
| By: | Dairo Estrada |
| Abstract: | Este trabajo examina los efectos de las fusiones en el sistema bancario sobre la eficiencia del sistema y los precios. Se encuentra que los bancos que han atravesado procesos de fusiones pueden experimentar mejoras en los indices de eficiencia en beneficios. Estas mejoras en eficiencia fueron superiores para aquellos bancos que presentaban rankings de eficiencia más bajos antes de la fusión. Adicionalmente,los efectos sobre cambios en los precios resultaron no reflejar comportamientos colusivos por parte de los bancos en el mercado de depósitos. |
| Keywords: | Bancos, |
| JEL: | L11 |
| Date: | 2005–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000070:000953&r=com |
| By: | Ana María SANDOVAL |
| Abstract: | Durante los últimos años, el sector de Energía y Gas ha venido ganando cada vez más importancia tanto a nivel nacional como internacional. En Colombia, la creciente conciencia de la necesidad por contar con una matriz energética eficiente ha motivado diversas reformas estructurales y regulatorias, que se han reflejado en el desarrollo de programas y planes nacionales para la racionalización del uso de energía eléctrica y la masificación del uso del gas. Este proceso de transformación y expansión del sector, que adquirió real dinamismo y profundización a principios de la década de 1990 con las reformas introducidas por la Constitución de 1991, ha conducido a diversos avances en materia de estructura normativa y regulatoria, así como en infraestructura de transporte y distribución, y ha dado lugar al desarrollo de unos sectores más dinámicos y eficientes, en donde la participación privada es cada vez más fuerte. En este sentido, ha permitido dar los primeros pasos hacia la consolidación de un sector realmente competitivo, con un claro potencial para expandir sus operaciones a la totalidad de la población nacional e incursionar en mercados externos. Hoy en día, uno de los objetivos centrales de la política sectorial, tanto a nivel nacional como regional, consiste en el desarrollo de una interconexión energética entre Colombia y sus países vecinos. En particular, el establecimiento de intercambios comerciales constantes de energía eléctrica y Gas entre los países de la zona es un proceso que ya ha dado los primeros pasos y adquiere cada vez más dinamismo y atención, tanto por parte de los gobiernos como de los agentes privados involucrados en el sector. Sin embargo, a pesar del interés por llevar a cabo la interconexión energética internacional, evidente en los diversos avances en matera regulatoria y operativa que se han realizado en este sentido, existen aun diversas trabas al comercio, las cuales dificultan la integración y imitan los beneficios potenciales que esta podría generar para los países involucrados. A lo largo de este documento se busca realizar un recuento global de la evolución del sector de Energía y Gas en Colombia durante las últimas décadas, describir su situación actual y plantear los retos y oportunidades que enfrenta en el futuro. Para ello, se analizará la evolución estructural y operativa de los subsectores de Energía y Gas en Colombia, haciendo énfasis en las diferentes etapas de la historia de planeación y regulación y su impacto sobre el desarrollo de las diferentes actividades económicas involucradas. Así mismo, se examinará la situación actual de integración sectorial a nivel regional, identificando las fortalezas y beneficios potenciales, así como los puntos débiles, sobre los cuales aún debe trabajarse para lograr una real y ficiente integración. Por último, se plantean algunas estrategias, tanto de corte político y normativo como operativo, que podrían conducir a la consolidación de un sector de Energía y Gas cada vez más competitivo, con capacidad para expandir sus operaciones a nivel nacional e internacional de manera eficiente, equitativa y sostenible. |
| Keywords: | energia |
| Date: | 2004–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:col:000107:000858&r=com |
| By: | Zenaida María ACOSTA DE VALENCIA |
| Abstract: | Este estudio pretende ilustrar el proceso de liberalización de los servicios de telecomunicaciones que ha emprendido Colombia y su incidencia sobre los acuerdos de integración que en la actualidad adelanta el país. En este sentido, comprende cinco secciones de las cuales la primera es esta introducción, en la segunda se hace un análisis del panorama mundial, en la tercera se analizan los cambios en la regulación nacional y su impacto sobre algunas variables, en la cuarta sección se mira el sector desde la perspectiva multilateral y bajo la óptica de un Acuerdo de Libre Comercio con Estados Unidos y finalmente se presentan las conclusiones. |
| Keywords: | telecomunicaciones |
| Date: | 2004–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:col:000107:000753&r=com |
| By: | Zenaida ACOSTA DE VALENCIA |
| Abstract: | Este informe trata fundamentalmente la importancia de los servicios de transporte en el desarrollo del comercio exterior del país haciendo referencia a cada uno de los modos de transporte, su incidencia, su nivel de competencia y las barreras que aún persisten. El documento está dividido 5 partes, de las cuáles la primera es esta introducción, la segunda, es una breve exposición sobre la tendencia y evolución de los servicios de transporte en el mundo. En la tercera parte se hace alusión a la organización y estructura de los servicios de transporte en Colombia, el nivel de competencia de cada uno de los modos y el tipo de regulación conveniente. La cuarta parte se refiere a los servicios de transporte en el marco de los Acuerdos de Libre Comercio. |
| Keywords: | servicio de transporte |
| Date: | 2004–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:col:000107:000756&r=com |
| By: | Ricardo Arguello |
| Abstract: | Los procesos de integración económica han puesto en evidencia que la separación tradicionalmente hecha entre las políticas comercial y de competencia no solo es ficticia, sino que mantenerla es simplemente contradictorio con la realidad de la economía internacional. En la medida en que los mercados domésticos se han abierto al comercio internacional, se ha considerado que las políticas de competencia pueden hacerse redundantes ya que la competencia extranjera tiende a garantizar que dichos mercados tienen un nivel adecuado de contestabilidad. Aca se discute la relacion general entre sector agrícola y política de competencia, en un contexto de relativa liberalización comercial. |
| Keywords: | Sector agricola |
| JEL: | F13 |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:000116:000970&r=com |