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on Industrial Organization |
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Issue of 2006‒04‒22
nine papers chosen by |
| By: | Duarte Brito (Universidade Nova de Lisboa); João Gata (Autoridade da Concorrência and Universidade de Aveiro and UECE/ISEG-UTL) |
| Abstract: | We compare different notions of stability in three firm merger games. We discuss some of their shortcomings and introduce an alternative notion of stability which overcomes them. The paper concludes with an illustrative example. |
| Keywords: | endogenous mergers, stability, core. |
| JEL: | L13 L41 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:pca:wpaper:10&r=ind |
| By: | Joseph Francois (Erasmus Universiteit Rotterdam); Henrik Horn (IIES, Stockholm) |
| Abstract: | We examine antitrust rules in a two county general equilibrium trade model, contrasting national and multilateral (cooperative) determination of competition policy, exploring the properties of the policy equilibrium. It is not imperfect competition, but variation in competitive stance between sectors that matters for trading partners. Beggar-thy-neighbor competition policies relate to countries' comparative advantages, and hurt the factor intensively used, or specific to, the imperfectly competitive sector. They also create a competitive advantage for export firms. FDI can be pro-competitive in this context, reducing the scope for beggar-thy-neighbor policies and reducing the gains from a multilateral competition agreement. |
| Keywords: | antitrust; competition policy; merger policy; trade and imperfect competition; FDI |
| JEL: | L4 F12 F3 |
| Date: | 2006–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20060006&r=ind |
| By: | Tomas J. Philipson; Richard A. Posner |
| Abstract: | Despite the conceptual differences between for-profit and non-profit firms stressed in conventional economic analyses of the non-profit sector, U.S. antitrust law generally does not distinguish between these two organizational forms. This paper argues that the same incentives to restrain trade exist in the non-profit sector as in the for-profit sector. Altruistic firms benefit from exploiting market power, just as non-altruistic ones do, even when they would price below cost without regard to competition. Therefore, promoting competition is socially valuable regardless of the particular objectives of producers, and the fact that antitrust law does not distinguish between the two sectors is efficient. |
| JEL: | K2 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12132&r=ind |
| By: | Arnoud W.A. Boot (Faculty of Economics & Econometrics, Universiteit van Amsterdam); Matej Marinc (University of Ljubljana) |
| Abstract: | We assess the influence of competition and capital regulation on the stability of the banking system. We particularly ask two questions: i) how does capital regulation affect (endogenous) entry; and ii) how do (exogenous) changes in the competitive environment affect bank monitoring choices and the effectiveness of capital regulation? Our approach deviates from the extant literature in that it recognizes the fixed costs associated with banks' monitoring technologies. These costs make market share and scale important for the banks' cost structures. Our most striking result is that increasing (costly) capital requirements can lead to more entry into banking, essentially by reducing the competitive strength of lower quality banks. We also show that competition improves the monitoring incentives of better quality banks and deteriorates the incentives of lower quality banks; and that precisely for those lower quality banks competition typically compromises the effectiveness of capital requirements. We generalize the analysis along a few dimensions, including an analysis of the effects of asymmetric competition, e.g. one country that opens up its banking system for competitors but not vice versa. |
| Keywords: | Banking; Capital regulation; Competition |
| JEL: | G21 L13 L50 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20060015&r=ind |
| By: | Verónica Durán-Carbó; Charles ReVelle; Daniel Serra |
| Abstract: | In this paper we present a model that studies firm mergers in a spatial setting. A new model is formulated that addresses the issue of finding the number of branches that have to be eliminated by a firm after merging with another one, in order to maximize profits. The model is then applied to an example of bank mergers in the city of Barcelona. Finally, a variant of the formulation that introduces competition is presented together with some conclusions. |
| Keywords: | Mergers, facility location, spatial competition |
| JEL: | C61 J80 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:960&r=ind |
| By: | Yong-Hwan Noh; GianCarlo Moschini (Center for Agricultural and Rural Development (CARD)) |
| Abstract: | We analyze the entry of a new product into a vertically differentiated market in which an entrant and an incumbent compete in prices. Here the entry-deterrence strategies of the incumbent firm rely on "limit qualities." With a sequential choice of quality, a quality-dependent marginal production cost, and a fixed entry cost, we relate the entry-quality decision and the entry-deterrence strategies to the level of entry cost and the degree of consumer heterogeneity. Quality-dependent marginal production costs in the model entail the possibility of inferior-quality entry as well as an incumbent's aggressive entry-deterrence strategies of increasing its quality level toward potential entry. Welfare evaluation confirms that social welfare is not necessarily improved when entry is encouraged rather than deterred. |
| Keywords: | entry deterrence; quality choice; vertical product differentiation. |
| JEL: | C72 D43 L13 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:05-wp403&r=ind |
| By: | John M. Crespi; Stephan Marette (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)) |
| Abstract: | This paper empirically explores the link between quality and concentration in a cross-section of manufactured goods. Using concentration data and product quality indicators, an ordered probit estimation explores the impact of concentration on quality that is defined as an index of quality characteristics. The results demonstrate that market concentration and quality are positively correlated across different industries. When industry concentration increases, the likelihood of the product being higher quality increases and the likelihood of observing a lower quality decreases. |
| Keywords: | concentration, market structure, ordered probit, product differentiation, product quality. |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:06-wp420&r=ind |
| By: | Philippe Gagnepain (Universidad Carlos III de Madrid); Pedro Pereira (Autoridade da Concorrência) |
| Keywords: | Mobile Telephony, Entry, Competition, Efficiency, Empirical Analysis |
| JEL: | L13 L43 L93 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:pca:wpaper:05&r=ind |
| By: | Christian Gollier (Université de Toulouse and Cesifo); Mark Ivaldi (Université de Toulouse and EHESS) |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:pca:wpaper:07&r=ind |