3,339 research outputs found

    Efficiency in decentralized oligopolistic markets

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    The paper analyzes quantity competition in economies in which a network describes the set of feasible trades. A model is presented in which the identity of buyers, of sellers, and of intermediaries is endogenously determined by the trade flows in the economy. The analysis first considers small economies, and provides sufficient conditions for equilibrium existence, a characterization of prices and flows, and some negative results relating welfare to network structure. The second and central part of the analysis considers behavior in large markets, and presents necessary and sufficient conditions on the network structure for equilibria to be approximately efficient when the number of players is large

    Micro-Founded Institutions and Macro-Founded Individuals: The Dual Nature of Profit

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    Starting from the observation that surplus-value is almost always due to the collective undertaking of non additively separable human capital investments, this paper introduces a theory of the institutional structure of production where groups are taken as units of analysis in a multi-level competition framework inspired by Marx’s critique of the ‘abstract man’. The main result is that monopoly profit is not the only meaningful notion of profit besides the value of individual contribution and, as a consequence, freeentry and competition do not necessarily wipe it outvalue, power, conflict, competition, social classes

    Cournot versus supply functions: what does the data tell us?

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    The liberalization of the electricity sector increases the need for realistic and robust models of the oligopolistic interaction of electricity firms. This paper compares the two most popular models: Cournot and the Supply Function Equilibrium (SFE), and tests which model describes the observed market data best. Using identical demand and supply specifications, both models are calibrated to the German electricity market by varying the contract cover of firms. Our results show that each model explains an identical fraction of the observed price variation. We therefore suggest using Cournot models for short term analysis, as more market details, such as network constraints, can be accommodated. As the SFE model is less sensitive to the choice of the calibration parameters, it might be more appropriate for long term analysis, such as the study of a merger.supply function equilibrium, Cournot competition, electricity markets

    Cournot Versus Supply Functions: What does the Data Tell us?

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    The liberalization of the electricity sector increases the need for realistic and robust models of the oligopolistic interaction of electricity firms. This paper compares the two most popular models: Cournot and the Supply Function Equilibrium (SFE), and tests which model describes the observed market data best. Using identical demand and supply specifications, both models are calibrated to the German electricity market by varying the contract cover of firms. Our results show that each model explains an identical fraction of the observed price variation. We therefore suggest using Cournot models for short term analysis, as more market details, such as network constraints, can be accommodated. As the SFE model is less sensitive to the choice of the calibration parameters, it might be more appropriate for long term analysis, such as the study of a merger.supply function equilibrium;Cournot competition;electricity markets

    Cournot versus Supply Functions: What Does the Data tell us?

    Get PDF
    The liberalization of the electricity sector increases the need for realistic and robust models of the oligopolistic interaction of electricity firms. This paper compares the two most popular models: Cournot and the Supply Function Equilibrium (SFE), and tests which model describes the observed market data best. Using identical demand and supply specifications, both models are calibrated to the German electricity market by varying the contract cover of firms. Our results show that each model explains an identical fraction of the observed price variation. We therefore suggest using Cournot models for short term analysis, as more market details, such as network constraints, can be accommodated. As the SFE model is less sensitive to the choice of the calibration parameters, it might be more appropriate for long term analysis, such as the study of a merger.supply function equilibrium;Cournot competition;electricity markets

    Licensing by a monopolist and unionized labor market

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    We show that a monopolist final goods producer may find it profitable to create competition by licensing its technology if the input market is imperfectly competitive. With a centralized union, we show that licensing by a monopolist is profitable under both uniform and discriminatory wage settings by the union. However, the incentive for licensing is higher under the former situation. We also show that licensing by the monopolist is profitable under both quantity and price competition, and the incentive for licensing is higher under price competition than under quantity competition. Our qualitative results hold even with decentralized unions. --Licensing,Labor union,Price competition,Quantity competition

    Industry Trade-Balance and Domestic Merger Policy: Some Empirical Evidence from the U.S.

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    The literature on antitrust in an open-economy setting is inconclusive with respect to the role played by trade-balance on the tenor of domestic merger policy. Using a panel data set composed of US merger reviews by industrial sector over the 1997-2001 period, I empirically test the impact of sectoral trade balance on the level of antitrust scrutiny. The results suggest that larger trade balances lead to more vigorous antitrust scrutiny; thus, ‘strategic’ merger policy does not appear evident, and consumer-surplus appears to guide US merger policy even under the lure of international competitive gains. ZUSAMMENFASSUNG - (Empirische Evidenz ĂŒber den Zusammenhang von Leistungsbilanz und Fusionspolitik in den U.S.A.) Die "anti-trust"-Literatur bezogen auf eine offene Volkswirtschaft sagt wenig dazu aus, welche Rolle die Leistungsbilanz fĂŒr die Fusionspolitik eines Landes spielt. In diesem Papier wird anhand von Paneldaten, in denen die Berichte der Fusionskontrolle in unterschiedlichen Industrien der U.S.A. ĂŒber einen Zeitraum von 1997-2001 zusammengestellt sind, empirisch getestet, welchen Effekt die Leistungsbilanzen - nach Industriezweigen unterteilt - auf das Niveau der "antitrust"- Kontrolle haben. Die Ergebnisse der Tests deuten an, dass mit grĂ¶ĂŸerem Leistungsbilanzgewicht auch eine strengere "anti-trust"-Kontrolle einhergeht. Folglich ist eine "strategische" Fusionspolitik der U.S.A. nicht zu erkennen. Stattdessen scheint die US-amerikanische Fusionspolitik stark vom Verbrauchernutzen geleitet zu sein, trotz der Verheißung internationaler Wettbewerbsvorteile.Merger Policy, International Effects, Open Economy

    Building subnational debt markets in developing and transition economies : a framework for analysis, policy reform, and assistance strategy

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    Subnational debt markets can be a powerful force in a country's development. Through delegated monitoring by financial intermediaries and through debt placed directly with investors, subnational debt markets account for about 5 percent of GDP in Argentina and Brazil. But they remain embryonic in most developing and transition economies. To resolve a potential clash between the increased financing needs of subnational entities and the limited development of domestic subnational debt markets, it is critical to support the orderly, efficient emergence of such debt markets. As a framework for policy reform, the following steps (mirroring typical weaknesses) are prerequisites for developing a country's subnational debt market: reducing moral hazard, improving market transparency, strengthening market governance, establishing a level playing field, and developing local capacity for accounting, budgeting, and financial management. In countries where the government shows a clear commitment to market development, says the author, the World Bank should support the framework needed for policy-based operations that establish hard budget constraints. In doing so, the Bank should concentrate on 1) supporting national and local capacity building in those areas essential for developing a subnational debt market; and 2) financing specific subnational projects with strictly nonrecourse loans. At the same time, the Bank should offer a variety of lending and guarantee instruments that encourage private financing for investments by subnational entities-including, for example, equity participation in (or lines of credit or partial credit guarantees to) financial intermediaries specializing in subnational investment finance or in funds for financing local infrastructure.Municipal Financial Management,Banks&Banking Reform,Payment Systems&Infrastructure,Public Sector Economics&Finance,Economic Theory&Research,Strategic Debt Management,Banks&Banking Reform,National Governance,Public Sector Economics&Finance,Economic Theory&Research
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