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on Industrial Organization |
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Issue of 2010‒01‒16
six papers chosen by |
| 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- and post-merger processes. We argue that failure may stem from informational asymmetries arising from the pre-merger period, and problems of cooperation and coordination within recently merged firms. We show that a partner may optimally agree to merge and abstain from putting forth any post-merger effort, counting on the other partner to make the necessary efforts. If both follow the same course of action, the merger goes ahead but fails. Our unique equilibrium allows us to make predictions on which mergers are more likely to fail. |
| Keywords: | Mergers, Synergies, Asymmetric Information, Complementarities |
| JEL: | D82 G34 L20 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1192&r=ind |
| By: | Cerasi, Vittoria; Chizzolini, Barbara; Ivaldi, Marc |
| Abstract: | This paper analyses the relation between competition and concentration in the banking sector. The empirical answer is given by testing a monopolistic competition model of bank branching behaviour on individual bank data at county level (départements and provinces) in France and Italy. We propose a measure of the degree of competiveness in each local market that is function also of market structure indicators. We then use the econometric model to evaluate the impact of horizontal mergers among incumbent banks on competition and discuss when, depending on the pre-merger structure of the market and geographic distribution of branches, the merger is anti-competitive. The paper has implications for competition policy as it suggests an applied tool to evaluate the potential anti-competitive impact of mergers. |
| JEL: | G21 L13 L59 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:21614&r=ind |
| By: | Che, Xiaogang; Yang, Yibai |
| Abstract: | This note gives a short proof that both fixed-fee and royalty licensing under patent protection can always create higher R&D investment. |
| Keywords: | R&D investment; Patent protection; Licensing |
| JEL: | O38 O34 O32 |
| Date: | 2009–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:19438&r=ind |
| By: | Ángel L. López (IESE Business School); Patrick Rey (Toulouse School of Economics (IDEI and GREMAQ)) |
| Abstract: | This article analyzes competition between two asymmetric networks, an incumbent and a new entrant. Networks compete in non-linear tariffs and may charge different prices for on-net and off-net calls. Departing from cost-based access pricing allows the incumbent to foreclose the market in a profitable way. If the incumbent benefits from customer inertia, then it has an incentive to insist in the highest possible access markup even if access charges are reciprocal and even in the absence of actual switching costs. If instead the entrant benefits from customer activism, then foreclosure is profitable only when switching costs are large enough. |
| Keywords: | Access Pricing, Entry Deterrence, Interconnection, Network Competition, Two-way Access |
| JEL: | L41 L51 L96 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2009.99&r=ind |
| By: | Roberto Álvarez; Rodrigo Fuentes.; Rodrigo Fuentes. |
| Abstract: | Using a rich dataset of Chilean exporters, we analyze several issues related to the relationship between entry into export markets and product quality. We find that every year a large number of new exporting relationships are initiated, but the survival rate of these entries is very low and declines over time. Using unit values as a proxy for product quality, our estimations show that entry is generally associated with higher product quality. This higher product quality, however, tends to reduce over time and eventually disappears three years after entry. To better identify this effect, we explore whether there are systematic differences across sectors. As expected, for sectors in which quality differentiation may be important, our findings reveal that reference-price and differentiated products show a higher price in the year of entry and it takes longer to converge to the incumbent prices. These results hold after controlling for potential sample selection bias. |
| Keywords: | Unit-value exports, product quality, price dynamics. |
| JEL: | F14 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:doctra:367&r=ind |
| By: | Jessica C. Stahl |
| Abstract: | This paper estimates a dynamic oligopoly model in order to separately identify the demand-side and cost-side advantages of consolidation in the broadcast television industry. I exploit an exogenous change in regulation that led to significant industry consolidation. Using revenue and ownership data for broadcast stations over the past ten years, I estimate the effect of ownership changes on revenue. I recover costs by examining patterns in ownership changes that are left unexplained by revenue estimation. I model firms' purchasing decisions as a dynamic game, and estimate the game using a two-step estimation method recently developed by Bajari, Benkard & Levin (2007). This is the first paper to estimate a model of merger activity in a dynamic, strategic setting. I find that there are both revenue and cost advantages to consolidation, but they operate through different mechanisms. Access to a wider audience enables firms to increase per-station advertising revenue, while simply owning more stations enables firms to reduce per-station operating costs. A firm's ability to realize these benefits is affected by its stations' network affiliations, locations and viewers. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2009-48&r=ind |