Leniency Programs for Multimarket Firms: The Effect of Amnesty Plus on Cartel Formation

We examine the effect of the Amnesty Plus policy on firms' incentives to engage in cartel activities. Amnesty Plus is a proactive antitrust enforcement strategy aimed at attracting amnesty applications by encouraging firms already convicted in one market to report collusive agreements in other markets. It has been heavily advertised that Amnesty Plus weakens cartel stability. We show to the contrary that Amnesty Plus does not always have this desirable effect. Only under specific conditions, Amnesty Plus deters a cartel which would have been sustainable under an antitrust policy without Amnesty Plus. Otherwise, Amnesty Plus is either neutral or even stabilizes a cartel. We also show that firms can exploit their multimarket contact to reduce the effectiveness of the Amnesty Plus policy.Amnesty Plus; Leniency Program; Multimarket Contact; Antitrust Policy

The Political Economy of Quality Measurement: A Case Study of the U.S. Slaughter Cattle Market

As agricultural products move from being economic commodities to quality-differentiated goods, price dispersion within specific markets increases and implicit subsidies from high quality producers to low quality producers are removed. This paper examines how these distributional effects can influence patterns of support and opposition to changes in marketing arrangements. The simple model developed is calibrated using data from the U.S. slaughter cattle market. Estimates of the economic impact on producers of measuring quality more accurately are found to be similar in size to previous estimates of market power price suppression in the market.quality, captive supplies, cattle, asymmetric information

Market structure and competition: an empirical analysis of the U.S. airline industry

This thesis studies degree of competitiveness in the airline industry inferred by investigation of market structure. Chapter 2 documents empirical evidence that endogenous sunk costs investments in advertising and in expanding route network play a crucial role in determining equilibrium market structure and, that the industry is a natural oligopoly. In chapter 3 we perform an empirical analysis of market structure beyond the bounds approach, to explain firm numbers and market share asymmetry for city pair markets. In addition, splitting firms into two types, leaders and non-leaders, it is proposed evidence that nature of competition depends on presence of leader airlines. In particular, there is evidence consistent with learning; that is, non-leaders infer profitability of routes from the number and identity of leaders. Chapter 4 proposes two econometric models of entry to analyze market sharing agreements

The political economy of quality measurement: a case study of the USA slaughter cattle market

As agricultural products move from being economic commodities to qualitydifferentiated goods, price dispersion within specific markets increases and implicit subsidies from high quality producers to low quality producers are removed. The present paper examines how these distributional effects can influence patterns of support and opposition to changes in marketing arrangements. The simple model developed is calibrated using data from the USA slaughter cattle market. Estimates of the impact on prices of measuring quality more accurately are found to be similar in size to previous estimates of market power price suppression in the market.Livestock Production/Industries,

Three Essays on Competition and Cooperation in R and D Alliances

In this dissertation, I investigate the interplay between competition and cooperation in R&D alliances. The alliance literature on this issue has emphasized that product market rivalry (i.e., market overlap) between partnering firms aggravates cooperation hazards by increasing the private benefits from opportunism. However, drawing on the multimarket competition literature, I maintain that market overlap between alliance partners can rather curb opportunism by partners because the multimarket contact between them might increase the expected costs of opportunistic behaviors by enabling broad retaliation against such behaviors across the shared markets. Based on this argument, I theorize and corroborate that the mutual forbearance from opportunism that multimarket contact generates not only promotes the formation of R&D collaborations in Essay 1, but also substitutes for hierarchical governance structures in R&D alliances in Essay 2. In Essay 3, I also extend the prior literature on competitive aspects of R&D collaborations that has been mainly interested in knowledge protection concerns in alliances between direct rivals. I join the alliance literature with the agglomeration literature to argue and show that geographic co-location between an allying firm’s partner and the major rivals of the allying firm introduces potential indirect paths of knowledge leakage to rivals, making the allying firm more likely to employ defense mechanisms such as using equity structures and reducing task interdependence

Networks of Relations

We model networks of relational (or implicit) contracts, exploring how sanctioning power and equilibrium conditions change under different network configurations and information transmission technologies. In our model, relations are the links, and the value of the network lies in its ability to enforce cooperative agreements that could not be sustained if agents had no access to other network members’ sanctioning power and information. We identify conditions for network stability and in-network information transmission as well as conditions under which stable subnetworks inhibit more valuable larger networks.Networks; Relational Contracts; Indirect Multimarket Contact; Social Capital.

The Impact of Competition on Bank Orientation and Specialization

How do banks react to increased interbank competition?Recent banking theory offers conflicting predictions about the impact of competition on bank orientation í L H WKH choice of relationship based versus transactional banking í DQG EDQN LQGXVWU\ specialization.We empirically investigate the impact of interbank competition on bank branch orientation and specialization.We employ a unique data set containing detailed information on bank-firm relationships and industry classification.We find that bank branches facing stiff local competition engage relatively more in relationship-based lending but specialize somewhat less in a particular industry.Our results illustrate that competition and relationships are not necessarily inimical.competition;banks;bank lending