New Economics Papers
on Industrial Organization
Issue of 2005‒11‒12
thirteen papers chosen by
  1. A new way to measure competition By Boone,J.
  2. Structural remedies in merger regulation in a Cournot framework By Medvedev,A.
  3. Dynamic regulation and entry in telecommunications markets : a policy framework By Bijl,P.W.J. de; Peitz,M.
  4. Effects of leniency programs on cartel stability By Motchenkova,E.
  5. Dominance and monopolization By Canoy,M.; Rey,P.; Damme,E. van
  6. Merger simulation analysis : an academic perspective By Damme,E. van; Pinkse,J.
  7. Merger without costs advantage By Huck,S.; Konrad,K.A.; Muller,W.
  8. Takeover waves : triggers, performance and motives By Martynova,M.; Renneboog,L.
  9. Local Competition and Impact of Entry by a Dominant Retailer By Ting Zhu; Vishal Singh; Anthony J. Dukes
  10. Price Responses to Market Entry With and Without Endogenous Product Choice By Helge Sanner
  11. Cournot competition in spatial markets. By Andrea Cosnita
  12. The pricing behaviour of firms in the euro area - new survey evidence By Silvia Fabiani; Claudia Kwapil; Martine Druant; Ignacio Hernando; Bettina Landau; Claire Loupias; Fernando Martins; Thomas Y. Mathä; Roberto Sabbatini; Harald Stahl; Ad C. J. Stokman
  13. The price setting behaviour of spanish firms - evidence from survey data By Luis J. Álvarez; Ignacio Hernando
  1. By: Boone,J. (TILEC (Tilburg Law and Economics Center))
    Keywords: competition;measurement;profit;firms
    JEL: D43 L13
    Date: 2004
    URL: http://d.repec.org/n?u=RePEc:dgr:kubtil:200404&r=ind
  2. By: Medvedev,A. (TILEC (Tilburg Law and Economics Center))
    JEL: D43 K21 L51
    Date: 2004
    URL: http://d.repec.org/n?u=RePEc:dgr:kubtil:200406&r=ind
  3. By: Bijl,P.W.J. de; Peitz,M. (TILEC (Tilburg Law and Economics Center))
    Date: 2004
    URL: http://d.repec.org/n?u=RePEc:dgr:kubtil:200410&r=ind
  4. By: Motchenkova,E. (TILEC (Tilburg Law and Economics Center))
    Date: 2004
    URL: http://d.repec.org/n?u=RePEc:dgr:kubtil:200420&r=ind
  5. By: Canoy,M.; Rey,P.; Damme,E. van (TILEC (Tilburg Law and Economics Center))
    Date: 2004
    URL: http://d.repec.org/n?u=RePEc:dgr:kubtil:200422&r=ind
  6. By: Damme,E. van; Pinkse,J. (TILEC (Tilburg Law and Economics Center))
    Date: 2005
    URL: http://d.repec.org/n?u=RePEc:dgr:kubtil:200513&r=ind
  7. By: Huck,S.; Konrad,K.A.; Muller,W. (TILEC (Tilburg Law and Economics Center))
    Date: 2005
    URL: http://d.repec.org/n?u=RePEc:dgr:kubtil:200519&r=ind
  8. By: Martynova,M.; Renneboog,L. (TILEC (Tilburg Law and Economics Center))
    Date: 2005
    URL: http://d.repec.org/n?u=RePEc:dgr:kubtil:200529&r=ind
  9. By: Ting Zhu (Carnegie Mellon University); Vishal Singh (Carnegie Mellon University); Anthony J. Dukes (School of Economics and Management, University of Aarhus)
    Abstract: This paper analyzes the competition between two spatially differentiated multi-product retailers who encounter entry from a dominant discount retailer. Our primary objective is to determine how entry affects the pricing and relative profits of the incumbent stores and the role played by the location of the entrant. The new entrant has partial overlap in product assortment with the incumbents and is assumed to have lower procurement costs for the common goods. Consumers are heterogeneous in their location, economic status (shopping costs and valuations), as well as purchase basket or the types of products demanded. Results show that in the post entry equilibrium, the prices for the products not offered by the discounter are higher than the pre entry prices. More interestingly, contrary to the conventional wisdom we find that the store that is closer to the new entrant is better off compared to the incumbent located further away. The intuition for these results is that the discounter with its low price draws away the poor consumers – the price sensitive segment – out of the market for the items it carries. This in turn softens price competition between the incumbents for these items. Furthermore, the new entrant’s unique product offering attracts more consumers to visit the location it occupies, which introduces positive demand externalities to the neighboring retailer, leading to an increase in sales for the non-competing products. We provide empirical evidence for our results and discuss implications for retailers facing competition from large discount stores.
    Keywords: entry; retail competition; agglomeration
    JEL: L13 L81 M31
    Date: 2005–05
    URL: http://d.repec.org/n?u=RePEc:kud:kuieci:2005-05&r=ind
  10. By: Helge Sanner
    Abstract: Textbook wisdom says that competition yields lower prices and higher consumer surplus than monopoly. We show in two versions of a simple location-product differentiation model with and without endogenous choice of products that these two results have to be qualified. In both models, more than half of the reasonable parameter values lead to higher prices with duopoly than with monopoly. If the product characteristics are exogenous to the firms, consumers may even be be better off with monopoly in average.
    Keywords: Product differentiation; Hotelling; Price and Welfare Effects of Market Entry
    JEL: L12 L13 L41 D43
    Date: 2005–11
    URL: http://d.repec.org/n?u=RePEc:pot:vwldis:81&r=ind
  11. By: Andrea Cosnita (EUREQua)
    Abstract: We study location equilibria for Cournot oligopolies selling complementary goods. For a single-store triopoly, we prove that the circular market also yields partial diamentrical dispersion besides total agglomeration. We turn to multi-plant duopolies and in contrast to other contributions on the topic, we allow firms to sell more than one product. We confirm the intuition that total agglomeration of outlets is always an equilibrium, whatever the market shape. However, the circular case also exhibits intra-firm agglomeration and inter-firm equal distance dispersion. This is a pattern never before obtained, entirely due to the assumption of intra-firm product complementarity.
    Keywords: Complementary products, multi-store competition, spatial Cournot model.
    JEL: D43 L13 R32
    Date: 2005–10
    URL: http://d.repec.org/n?u=RePEc:mse:wpsorb:v05061&r=ind
  12. By: Silvia Fabiani (Corresponding author: Banca d'Italia, Rome, Italy); Claudia Kwapil (Corresponding author: Oesterreichische Nationalbank, Vienna, Austria); Martine Druant (Banque Nationale de Belgique, Brussels, Belgium); Ignacio Hernando (Banco de España, Madrid, Spain); Bettina Landau (European Central Bank, Kaiserstrasse 29, Frankfurt am Main, Germany.); Claire Loupias (Banque de France, Paris, France); Fernando Martins (Banco de Portugal, Lisbon, Portugal); Thomas Y. Mathä (Banque centrale du Luxembourg); Roberto Sabbatini (Banca d’Italia, Rome, Italy); Harald Stahl (Deutsche Bundesbank, Wilhelm-Epstein-Strasse 14, Frankfurt am Main, Germany.); Ad C. J. Stokman (De Nederlandsche Bank, Amsterdam)
    Abstract: This study investigates the pricing behaviour of firms in the euro area on the basis of surveys conducted by nine Eurosystem national central banks, covering more than 11,000 firms. The results, robust across countries, show that firms operate in monopolistically competitive markets, where prices are mostly set following markup rules and where price discrimination is common. Around one-third of firms follow mainly time-dependent pricing rules while twothirds allow for elements of state-dependence. The majority of firms take into account past and expected economic developments in their pricing decisions. Price stickiness is mainly driven by customer relationships – explicit and implicit contracts – and coordination failure. Firms adjust prices asymmetrically in response to shocks: while cost shocks have a greater impact when prices have to be raised than when they have to be reduced, reductions in demand are more likely to induce a price change than increases in demand.
    Keywords: Price setting; nominal rigidity; real rigidity; inflation persistence; survey data.
    JEL: E30 D40
    Date: 2005–10
    URL: http://d.repec.org/n?u=RePEc:ecb:ecbwps:20050535&r=ind
  13. By: Luis J. Álvarez (Banco de España, Alcalá 48, 28014 Madrid, Spain); Ignacio Hernando (Banco de España, Alcalá 48, 28014 Madrid, Spain)
    Abstract: This paper reports the results of a survey carried out by the Banco de España on a sample of around 2000 Spanish firms to deepen the understanding of firms’ price setting behaviour. The main findings may be summarised as follows. Most Spanish firms are price setters that use predominantly state-dependent rules or a combination of time- and statedependent rules when reviewing their prices. Changes in costs are the main factor underlying price increases, whereas changes in market conditions (demand and competitors’ prices) are the main driving forces of price decreases. The degree of price flexibility is directly related to the share of energy inputs over total costs and to the intensity of competition, whereas it is inversely linked to the labour share. The three theories of price stickiness that receive the highest empirical support are implicit contracts, coordination failure and explicit contracts.
    Keywords: Price setting; price stickiness; survey data.
    JEL: D40 E31
    Date: 2005–10
    URL: http://d.repec.org/n?u=RePEc:ecb:ecbwps:20050538&r=ind
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