Ownership and control in a competitive industry

We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a noncontrolling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se. --differentiated products,separation of ownership and control,private benefits of control

Ownership and Control in a Competitive Industry

We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a noncontrolling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se.Differentiated products; separation of ownership and control; private benefits of control

Ownership and Control in a Competitive Industry

We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a non-controlling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se.differentiated products, separation of ownership and control, private benefits of control

Ownership and control in a competitive industry

We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a noncontrolling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se. --differentiated products,separation of ownership and control,private benefits of control

Antitrust

This is a survey of the economic principles that underlie antitrust law and how those principles relate to competition policy. We address four core subject areas: market power, collusion, mergers between competitors, and monopolization. In each area, we select the most relevant portions of current economic knowledge and use that knowledge to critically assess central features of antitrust policy. Our objective is to foster the improvement of legal regimes and also to identify topics where further analytical and empirical exploration would be useful.

Ownership and control in a competitive industry

We study a differentiated product market in which an investor initially owns a controlling stake in one of two competing firms and may acquire a non-controlling or a controlling stake in a competitor, either directly using her own assets, or indirectly via the controlled firm. While industry profits are maximized within a symmetric two product monopoly, the investor attains this only in exceptional cases. Instead, she sometimes acquires a noncontrolling stake. Or she invests asymmetrically rather than pursuing a full takeover if she acquires a controlling one. Generally, she invests indirectly if she only wants to affect the product market outcome, and directly if acquiring shares is profitable per se

Essays on Dynamic Pricing

In empirical marketing literature, it is well documented that most of the frequently consumed packaged good categories are governed by inertia that is the phenomenon of consumers often repeat-purchasing the same brand on successive purchase occasions. Under such inertial behavior, market-level demand becomes to be correlated over time, i.e., if the demand of a brand is high in a given week, it is likely to remain high in the ensuing weeks. The pricing implication of such inertia is, for instance, a current retail price cut for a brand not only increase its demand in the current week, but also increase its demand in the ensuing weeks (given that there is no price response from the competitors). Therefore, pricing decisions become dynamic under inertial demand. Even though the phenomenon of inertia has been widely documented at the empirical choice domain, the pricing implications of such inertia have been mostly limited to the analytical area. Therefore, the objective of my dissertation work is to fill this gap in the dynamic empirical pricing domain. Normative analytical models of oligopolistic pricing account for the fact that in such inertial markets, competing manufacturers have, on the one hand, an incentive to price low in order to invest in building consumer demand for the future, but, on the other hand, an incentive to price high in order to harvest the reduced price-sensitivity of its existing inertial customers. In Essay 1 of this dissertation, I estimate a structural econometric model of oligopolistic pricing and, on that basis, explicitly disentangle the relative impacts of the two opposing, i.e., investing versus harvesting, incentives on the pricing decisions of cola manufacturers. From our analysis, we find that the net impact of the harvesting and investing incentives in our data is that the equilibrium prices of both brands are lower than those in the absence of inertia (by 4.6% and 3.1% of costs, for Coke and Pepsi, respectively). Over the past decade, the marketing literature has been enriched by the development of structural econometric models of prices in the distribution channel (Kadiyali, Chintagunta and Vilcassim (2000), Sudhir (2001), Villas-Boas and Zhao (2005), Villas-Boas (2007), Che, Sudhir and Seetharaman (2007), Draganska, Klapper and Villas-Boas (2010)). These models, which derive the wholesale pricing incentives for brand manufacturers, together with the retail pricing incentives for retailers, have typically ignored the existence of inertial demand. In Essay 2 of this dissertation, I advance the literature by developing a structural econometric model of prices in the distribution channel in the presence of inertial demand. From our analysis, we find that the net impact of the harvesting and investing incentives in our data is that the channel profit margin of Coke is lower by 3c, while the channel profit of Pepsi is the same as, the corresponding margin in the absence of inertia. We also find the retailer effectively free rides on the manufacturers\u27 efforts by taking a lion\u27s share of the additional profits that accrue to the channel from the existence of inertial demand

Simulation of electricity markets using agent-based computational learning

The purpose of this research is to conduct an analysis of how agent-based computational learning may contribute to a better understanding of pricing policies and strategic management of plant portfolio in electricity markets. The contributions of this thesis are methodological and theoretical with applications in policy analysis for electricity markets. At a policy level, this thesis applies agent-based simulation to the analysis of the impact of market design on the players' strategies and on the industry's performance as a whole. This represents the first detailed study of the New Electricity Trading Arrangements (NETA) in the England and Wales (E&W) electricity market, giving insights into the implications of NETA before its introduction. Further, this thesis addresses the issue of dominant position abuse by individual players in electricity markets. The context is a real application to the E&W electricity market as part of a Competition Commission Inquiry. The research contributions are in the areas of both market power and market design policy issues. At a methodological level, this thesis presents two contributions: the Finite Automata Dynamic Game (FADG) and the Plant Trading Game. The FADG models learning and adaptation in N-player extensive form games of incomplete information, where co-evolutionary automata learn and adapt together. The plant trading game is a large coordination game, simulating how players optimally learn and adapt in order to trade electricity plants. At a theoretical level, this thesis presents three contributions. First, it develops a stylised model for conduct-evaluation in electricity markets, which is applied to the analysis of market power abuse and regulatory policy. Second, it studies plant trading within the context of a Cournot game. Third, it shows that, in an FADG, best response is a necessary but not a sufficient condition for rational behaviour