Oligopolies Part I
Total Page:16
File Type:pdf, Size:1020Kb
Load more
Recommended publications
-
1. Introduction and Concentration Measures
Industrial Organization Introduction Matilde Machado Download slides from: http://www.eco.uc3m.es/~mmachado/ 1 Syllabus of the course 1. Introduction 1. Concentration Measures [Tirole 5.5; Cabral 2.3; Clarke pp 2.1.1, 2.1.2, Shy 8.1] 2. Monopoly and Price Discrimination 1. Perfect Competition versus Monopoly 2. Price Discrimination [Tirole 3.1, 3.2, 3.3.] 3. Other Marketing Strategies [Shy ch. 14] 4. Multiproduct Monopoly [Tirole 1.1.2] Industrial Organization - Matilde Machado Introduction 2 1 Syllabus of the course 3. Oligopoly 1. The Cournot Model [Cabral, Luis 3.2., Tirole 5.4] 2. The Bertrand Model [Cabral, Luis 3.3, Tirole 5.1-5.2] 3. Price competition with capacity constraints [Cabral, Luis 3.4, Tirole 5.3] 4. Entry, Spence-Dixit Model –if time allows [Tirole 8.1-8.2.2.1 (except 8.1.3), Church y Ware 13.3] 5. Tacit Colusion: Repeated Games [Tirole 6.3] Industrial Organization - Matilde Machado Introduction 3 Syllabus of the course 4. Product Differentiation 1. Definitions [Cabral, Luis 8.4] 2. The Hotelling Model – the linear city [Tirole 7.1.1] 5. Basic notes for empirical work 6. When the costs depend on the client’s type: The Rothschild & Stiglitz Model of Adverse Selection and Empirical Testing Industrial Organization - Matilde Machado Introduction 4 2 Bibliography: Luis Cabral “Economía Industrial” McGraw-Hill 1997. There is an english version http://luiscabral.org/iio/about_book/ Jeffrey Church and Roger Ware “Industrial Organization: A Strategic Approach” McGraw-Hill, 2000. Roger Clarke “Industrial Economics” Blackwell 1999. Oz Shy “Industrial Organization: Theory and Practice” The MIT Press 1996 Jean Tirole “The Theory of Industrial Organization” The MIT Press 1990. -
Measures of Competition and Concentration in the Banking Industry: a Review of the Literature
Measures of Competition and Concentration in the Banking Industry: a Review of the Literature Jacob A. Bikker and Katharina Haaf Central Bank of the Netherlands 1. Introduction Abstract: Measures of concentration and The deregulation of financial services in the European Union, the competition are of vital importance for establishment of the Economic and Monetary Union (EMU) and welfare-related public policy toward the development of information technology are expected to market structure and conduct in the banking industry. Theoretical contribute to dramatic changes in European banking markets characteristics of market concentration over the coming years, with vast implications for competition measures are discussed and illustrated and concentration in the banking and financial sector. The recent with numerical examples. Various wave of mergers in the European banking industry can be seen as structural and non-structural measures of competition are presented and their a result of these developments. This process of consolidation applications have been discussed. In may affect competition, particularly on local retail markets, and structural approaches, the market enhances concentration, whereas the size of new global players structure is described by concentration may cause concerns about financial stability. ratios, based on the oligopoly theory or the structure-conduct-performance paradigm. To assess the implications of these developments, it is necessary to investigate the impact of consolidation on the market structure and the performance of banks. Measures of concentration and competition are essential for welfare-related public policy toward the banking market. In recent years, however, only a limited number of empirical studies have investigated competition and concentration in European banking markets. -
Working Paper Series
Working Paper Series Maria Chiara Cavalleri, Alice Eliet, Concentration, market power and Peter McAdam, Filippos Petroulakis, Ana Soares, Isabel Vansteenkiste dynamism in the euro area Discussion Papers No 2253 / March 2019 Disclaimer: This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. Discussion papers Discussion papers are research-based papers on policy relevant topics. They are singled out from standard Working Papers in that they offer a broader and more balanced perspective. While being partly based on original research, they place the analysis in the wider context of the literature on the topic. They also consider explicitly the policy perspective, with a view to develop a number of key policy messages. Their format offers the advantage that alternative analyses and perspectives can be combined, including theoretical and empirical work. Discussion papers are written in a style that is more broadly accessible compared to standard Working Papers. They are light on formulas and regression tables, at least in the main text. The selection and distribution of discussion papers are subject to the approval of the Director General of the Directorate General Research. ECB Working Paper Series No 2253 / March 2019 1 Abstract We examine the degree of market power in the big four countries of the euro area using macro and firm micro data. We focus on three main indicators of market power in and across countries: namely, the concentration ratios, the markup and the degree of economic dynamism. -
Benefits of Competition and Indicators of Market Power
COUNCIL OF ECONOMIC ADVISERS ISSUE BRIEF APRIL 2016 BENEFITS OF COMPETITION AND INDICATORS OF MARKET POWER Introduction sanction anticompetitive behavior, and help define the contours of antitrust law through court decisions. These This issue brief describes the ways in which competition measures not only have immediate effects on the between firms can benefit consumers, workers, behavior that is challenged but also may help deter entrepreneurs, small businesses and the economy more anticompetitive abuses in the future. generally, and also describes how these benefits can be lost when competition is impaired by firms’ actions or Promoting competition extends beyond enforcement of government policies. Several indicators suggest that antitrust laws, it is also about a range of other pro- competition may be decreasing in many economic competitive policies. Several U.S. departments and sectors, including the decades-long decline in new agencies are actively using their authority to advance business formation and increases in industry-specific pro-competition and pro-consumer policies and measures of concentration. Recent data also show that regulations. For example, in several cases the Federal returns may have risen for the most profitable firms. To Aviation Administration (FAA) of the Department of the extent that profit rates exceed firms’ cost of capital— Transportation (DOT) has sought to provide competitive which may be suggested by the rising spread on the airline carriers with greater access to take-off and return to invested capital relative to Treasury bonds— landing slots at capacity constrained “slot-controlled” they may reflect economic rents, which are returns to airports. The Federal Communications Commission the factors of production in excess of what would be (FCC), in its most recent design of a spectrum auction, necessary to keep them in operation. -
Market Concentration in the Banking Sector: Evidence from Albania
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Tushaj, Arjan Working Paper Market concentration in the banking sector: Evidence from Albania BERG Working Paper Series on Government and Growth, No. 73 Provided in Cooperation with: Bamberg Economic Research Group, Bamberg University Suggested Citation: Tushaj, Arjan (2010) : Market concentration in the banking sector: Evidence from Albania, BERG Working Paper Series on Government and Growth, No. 73, ISBN 978-3-931052-81-2, Bamberg University, Bamberg Economic Research Group on Government and Growth (BERG), Bamberg This Version is available at: http://hdl.handle.net/10419/38826 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Market concentration in the banking sector: Evidence from Albania Arjan Tushaj Working Paper No. -
Market Structure: Oligopoly (Imperfect Competition)
Market Structure: Oligopoly (Imperfect Competition) I. Characteristics of Imperfectly Competitive Industries A. Monopolistic Competition • large number of potential buyers and sellers • differentiated product (every firm produces a different product) • buyers and sellers are small relative to the market • no barriers to entry or exit B. Oligopoly • large number of potential buyers but only a few sellers • homogenous or differentiated product • buyers are small relative to the market but sellers are large • barriers to entry C. What is product differentiation? • Product differentiation occurs when firms sell similar but not identical products. • Examples? • Two kinds of product differentiation. • Real product differentiation = actual differences exist between the goods produced by different firms. • Imaginary product differentiation = no actual differences but consumer believe there are and act as if there were differences between the goods produced by different firms. • Impact of product differentiation on firm demand. Recall that a perfectly competitive firm is a price taker with demand that is perfectly elastic. A price taker cannot raise its price without losing all of its quantity demanded. If that firm can differentiate its product then it will no longer be a price taker. Rather, it can now raise its price and not lose all of its quantity demanded, although it will still lose some. Thus, product differentiation causes a firm’s demand to become larger and less elastic. • Relationship between firm demand and market demand. Firms have more competitors than does the entire market because they have both the competitors from other goods that the market has plus the competition from other firms within the same market. -
Market Structure and Concentration Ratio: Evidence of It Companies in Hungary
Forum Scientiae Oeconomia • Volume 7 (2019) • No. 3 MARKET STRUCTURE AND CONCENTRATION RATIO: EVIDENCE OF IT COMPANIES IN HUNGARY JUDIT OLÁH, JÓZSEF POPP, DOMICIÁN MÁTÉ, YUSMAR ARDHI HIDAYAT ABSTRACT DOI: 10.23762/FSO_VOL7_NO3_1 The high numbers of Information Technology (IT) companies in Hungary may correlate with their market share. The num- ber of existing companies may create a market structure and high levels of concentration. Therefore the purpose of this JUDIT OLÁH research is to analyse the market structure and concentra- e-mail: [email protected] tion of IT companies in Hungary. Data used in this research University of Debrecen, is secondary data, and the tools of analysis used are the Debrecen, Hungary Hirschman-Herfindahl Index (HHI) and Concentration Ratio (CR). The results suggest that the type of market structure JÓZSEF Popp of IT companies in Hungary can be categorised as an oli- e-mail: [email protected] gopoly with low concentration. It follows that there is no lead- Szent István University, ing company on the IT market. Here the findings indicate that Gödöllő, Hungary telecommunication providers are deemed to be leaders in the IT industry in Hungary. In the oligopoly market, the strat- DoMICIÁN MÁTÉ1 egy of a telecommunication provider would influence other e-mail: [email protected] competitors to set the price and differentiate their services. In addition, the government may stimulate the development of YUSMAR ARDHI HIDAYAT IT companies by imposing a differentiated tax. e-mail: [email protected] University of Debrecen, KEY WORDS Debrecen, Hungary Information technology companies, market structure, con- centration ratio, and oligopoly. -
Market Power in a Transitioning Electric Industry
F L O R I D A P U B L I C S E R V I C E C O M M I S S I O N Market Power in a Transitioning Electric Industry PREPARED BY: Division of Policy Analysis & Intergovernmental Liaison March 2001 Market Power in a Transitioning Electric Industry I. Introduction In the utility industry, exclusive monopoly franchise rights have been granted to electric utilities and regulation has taken the place of competition to control price and ensure quality of service. In a competitive environment where market forces dominate and the regulatory oversight is removed or significantly diminished, a concern is that a single entity may gain too much control within the market and hinder the development of the marketplace. This may result in noncompetitive prices, inferior services, and slow development of new products and services. The concentration of market power, calculated as market share, is an indicator of the ability of a market participant to manipulate prices. Market power can be used to prevent new suppliers from entering the market or to eliminate existing competitors, not through the provision of superior products at lower costs, but through manipulation of the market. Firms with market power have the ability to extract excess profits from customers. Some of the means that are employed include: a) predatory pricing -- lowering prices to eliminate competitors with the anticipation of subsequently rising prices; b) cross subsidies -- shifting costs to captive customers with relatively inelastic demand to lower prices to those customers with elastic demand; c) tie-in arrangements -- a sale in which the buyer, in order to get the item desired, must also purchase another item(s); d) engaging in joint ventures that exclude competitors; and e) controlling access to markets through delivery channels -- limiting access between suppliers and customers in the transmission grid. -
Measuring Concentration of the Banking Market of the Republic of Croatia
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Galetić, Fran; Obradović, Tena Conference Paper Measuring Concentration of the Banking Market of the Republic of Croatia Provided in Cooperation with: Governance Research and Development Centre (CIRU), Zagreb Suggested Citation: Galetić, Fran; Obradović, Tena (2018) : Measuring Concentration of the Banking Market of the Republic of Croatia, In: Tipurić, Darko Labaš, Davor (Ed.): 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change. April 13th - 14th, 2018, Dubrovnik, Croatia, Governance Research and Development Centre (CIRU), Zagreb, pp. 598-625 This Version is available at: http://hdl.handle.net/10419/180014 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. -
Guide for Horizontal Merger Review
Guide for Horizontal Merger Review 1 Ministry of Justice Administrative Council for Economic Defense GUIDE FOR HORIZONTAL MERGER REVIEW Administrative Council for Economic Defense SEPN 515 Conjunto D, Lote 4, Ed. Carlos Taurisano Cep: 70770-504 – Brasília/DF www.cade.gov.br 2 INSTITUTIONAL PRESENTATION Interim President of Brazil Michel Miguel Elias Temer Lulia Ministry of Justice and Citizenship Alexandre de Moraes CADE Interim President Márcio de Oliveira Júnior CADE Commissioners Gilvandro Vasconcelos Coelho de Araújo Alexandre Cordeiro Macedo João Paulo de Resende Paulo Burnier da Silveira Cristiane Alkmin Junqueira Schmidt CADE Superintendent General Eduardo Frade Rodrigues CADE Attorney General Victor Santos Rufino CADE Chief Economist Guilherme Mendes Resende 3 EDITORIAL INFORMATION Coordination Márcio de Oliveira Júnior Luiz Alberto Esteves Simone Maciel Cuiabano Eduardo Frade Rodrigues Editing Ricardo Medeiros de Castro Renata Patriota de Albuquerque Proofreading Simone Maciel Cuiabano Gerson Carvalho Bênia Marcela Mattiuzzo Juliana Rafaela Sara Sales D’Araújo Collaboration Kenys Menezes Machado Mário Sérgio Rocha Gordilho Júnior Cristiane Landerdahl de Albuquerque Daniel Costa Rebello Graphic Designing Communications Unit of CADE Translation Arianne Mesquita Rodrigues Ariel Daltrozo Menezes Bruna Queiroz Assunção Editing and Proofreading (English) Bruna Queiroz Assunção 4 CONTENT 1 INTRODUCTION ........................................................................................................... 7 2 REVIEW ...................................................................................................................... -
Market Structure and Power
MARKET STRUCTURE AND POWER Chapter 13.1 Market Structure ¨ Market structure: establishes the overall environment within which each firm operates. ¤ Number and size distribution of buyers and sellers ¤ Type of product for sale n Whether firms in the same industry produce standardized products or differentiated products n Differentiated products are less substitutable ¤ Barriers to entry n These reflect any increased costs that new firms must incur relative to existing firms when entering a particular market n High costs deter entry ¤ Whether any asymmetry of information exists between buyer and sellers Market Structure vs Market Power ¨ Market structure affects market power ¤ Market power refers to the firms ability to restrict output (or quality and thereby raise the price) n will dictate to some extent how firms behave Market Structure vs. Market Power Degree of Market Power 0% ……………………………………..100% Perfect Monopolistic Oligopoly Monopoly Competition Competition No. sellers Many Many Few One Individual firm Tiny Small Large 100% mkt. share Type of product H D H or D H Barriers to entry None None Substantial Complete Consumer info. Perfect Slight Perfect or Perfect or Imperfect Imperfect Imperfect H=Homogenous D=Differentiated Measuring Market Concentration ¨ Market concentration: reflects the number and size distribution of firms in an industry ¤ E.g. perfect competition has a large number of firms with small market shares ¤ Want to capture this structure with a statistics ¨ Two measures of market concentration ¤ Concentration ratio ¤ -
Concentration Ratios, Strategy and Performance : the Case of the Norwegian Telecommunication Industry
UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN BOOKSTACKS CENTRAL CIRCULATION BOOKSTACKS re- The person charging this material is return to sponsible for its renewal or its borrowed the library from which it was stamped before the Latest Date on or minimum below You may be charged a book. fee of $75.00 for each lost unarming of book, are reasons Theft, mutilation, and may result In dismissal from for disciplinary action and £ ££?cXu. TELEPHONE CENTER, 333-8400 AT URBANArCHAMPAION UNIVERSITY Of IlllNCMS UBHARV JUL 2 8 1998 new due date below When renewing by phone, write previous due date. 330 B385 STX l^li 1255 C8P^-^ L Cop BEBR^ FACULTY WORKING PAPER NO. 1255 Concentration Ratios, Strategy and Performance: The Case of the Norwegian Telecommunication Industry Kjell Grtfnhaug Tor Fredriksen College of Commerce and Business Administration Bureau of Economic and Business Research University of Illinois. Urbana-Champaign BEBR FACULTY WORKING PAPER NO. 1255 College of Commerce and Business Administration University of Illinois at Urbana-Champaign May 1986 Concentration Ratios, Strategy and Performance: The Case of the Norwegian Telecommunication Industry Kjell Gr^nhaug, Visiting Professor Department of Business Administration Tor Fredriksen 5035 Bergen-Sandviken The authors wish to acknowledge the helpful comments of Einar Hope, Walter Primeaux and Arne Selvik. Digitized by the Internet Archive in 2011 with funding from University of Illinois Urbana-Champaign http://www.archive.org/details/concentrationrat1255gr CONCENTRATION RATIOS, STRATEGY AND PERFORMANCE: THE CASE OF THE NORWEGIAN TELECOMMUNICATION INDUSTRY ABSTRACT This article explores how changes in industry in structure reflects changes in performance and strategy. Industry structure is captured by applying concentration ratios modified for imports and exports.