Bargaining vs. price competition in a market with quality uncertainty

Economics;Price Policy

Open Access to Telecommunications Infrastructure and Digital Services: Competition, Cooperation and Regulation

Open Access, defined as the non-discriminatory access to an upstream bottleneck resource, takes a central role in information and communications technology markets. This thesis investigates the competitive and cooperative interactions in these markets, where firms require access to an essential input resource. Theoretical analyses and experimental evaluations are employed to examine market outcomes under alternative regulatory institutions and voluntary access agreements

Trois essais en commerce international

Cette thèse se compose de trois essais de nature théorique et empirique qui abordent deux sujets principaux : l’estimation des fonctions de Produit National Brut et l’analyse des politiques stratégiques avec transmission de taux de change et production risquée. Le premier essai propose une approche novatrice dans l’analyse de l’impact des accords régionaux de commerce sur le commerce et s’applique à l’Accord de Libre-Échange (ALE) entre le Canada et les États-Unis de 1989, qui a été élargi au Mexique sous le nom d’Accord de Libre-Échange Nord-Américain (ALÉNA) en 1994. Grâce à un modèle économétrique intégrant la notion de changement structurel graduel aux fonctions de Produit National Brut pour le Canada et les États-Unis, nous montrons que suite à l’adoption des dits accords de libre-échange ces deux économies ont connu des sentiers d’ajustements différents s’expliquant notamment par leur différence de tailles. En effet, pour le Canada, l’impact de l’ALÉ a été anticipé et plus important, et s’est poursuivi jusqu’au début des années 1990. Cependant, pour les États-Unis, nous enregistrons un changement structurel plutôt brusque et qui serait survenu en 1995. Le deuxième essai est une contribution aux études empiriques réalisées à l’aide l’estimation des fonctions de Produit National Brut. En effet, il expose et teste de manière exhaustive les méthodes d’imposition des propriétés théoriques (convexité et concavité) dans le cadre de ces fonctions par le biais des deux formes fonctionnelles flexibles les plus utilisées dans cette littérature que sont la forme Translog et la forme Quadratique Normalisée Symétrique. Ainsi, nous comparons les deux formes fonctionnelles au regard de leurs performances en termes de violations propriétés, de robustesse dans l’estimation d’élasticités et de capacité prédictive lorsque les propriétés sont imposées à priori. À l’aide d’une application à partir des données économiques de la Suisse et nous obtenons des résultats compatibles avec les recherches antérieures mais ne pouvons conclure quant à la meilleure forme fonctionnelle. Dans le dernier essai, nous développons un modèle de politique stratégique pour l'industrie du sirop d'érable du Québec, qui contribue à 71% de la production mondiale. Nous analysons comment les choix stratégiques des gouvernements sont influencés par le canal de transmission du taux de change et l’incertitude sur la production dans le contexte d’une industrie verticalement reliée. La concurrence en aval est modélisée comme un duopole de Bertrand avec une entreprise canadienne qui exporte tout le sirop d'érable du Canada vers les États-Unis, où elle est en concurrence avec une entreprise américaine. En particulier, nous examinons deux cas selon que le prix du sirop brut au Canada est négocié entre le producteur et l’exportateur ou tout simplement fixé par le producteur. Nous supposons cependant que le prix de l’input est uniquement fixé par le producteur dans le pays importateur. Notre analyse montre que le gouvernement du pays exportateur devrait subventionner la production finale (les exportations) et le gouvernement étranger devrait subventionner la production locale quel que soit le cas choisi. Nous montrons aussi que lorsqu’il y a rationnement, le canal de transmission du taux de change est caractérisé par un effet de seuil qui est très différent des effets de seuil obtenus dans les modèles avec coûts d’étiquetage (menu costs models).This thesis consists of three essays in empirical and theoretical international trade analyzing two main subjects: estimation of Gross National product function and strategic policy in presence of exchange rate pass-through and production risk. The first essay offers an innovative approach for analysis the impact on trade of regional trade agreements (RTA) with application to the Free Trade Agreement (FTA) between Canada and the United States adopted in 1989, which was extended to Mexico as the North American Free Trade Agreement (NAFTA) in 1994. More precisely, we estimate a Translog Gross National Product function and test for endogenously determined structural change allowing for anticipated and lagged responses to regional trade agreements. We found that Canada embarked on a long transition path prior to the implementation of the Canada-US Trade Agreement, a result reminiscent of Magee’s (2008) results concerning RTAs’ trade creation effects. In contrast, the United States experienced an abrupt structural change a year after the North American Free Trade Agreement took effect. This reflects that smaller economies benefitting from larger changes in terms of trade are confronted to more complex adjustment processes than larger economies. In the second essay, we empirically investigate the implications of the choice of dates when imposing local restrictions to maintain convexity in output prices and concavity in factor endowments in the the estimation of a GNP function approximated by a Translog (TL) function. Using macroeconomic data for Switzerland, we compare the TL to a Symmetric Normalized Quadratic (SNQ) function on which global curvature restrictions can be imposed. When the functions are unrestricted for curvature, convexity in prices is violated more often than concavity in factor endowments. The number of points for which both curvature conditions hold is sensitive to the date at which local restrictions are imposed on the TL, but estimated TL elasticities are robust. Through searching for an appropriate date, the TL matched the SNQ’s ability to impose curvature conditions at all points. However, many TL and SNQ elasticities differ in sign and magnitude. The likelihood dominance criterion and in-sample forecasts comparisons favored the TL. Thus, choosing a functional form solely based on the possibility of imposing global curvature conditions is not advised. In the last essay, we develop a strategic policy model inspired by the maple syrup industry. The province of Quebec accounts for 71% of the world’s production. We analyze how strategic policy choices and exchange rate pass-through are influenced by vertical linkages and production shocks which are observed after input prices are determined and “planned production” decisions are made. Downstream competition is modeled as a Bertrand duopoly with a home firm exporting all of its production to the importing country which is also supplied by a domestic downstream firm. We specifically examine two cases depending on whether the input price is negotiated between the input producer and the downstream firm in the exporting country or simply fixed by the input producer. We always assume that the upstream firm sets the input price in the importing country. Our analysis shows that the exporting government should subsidize production/exports and the foreign government should subsidize local production whatever the case chosen. We also show that when there is rationing, the exchange rate pass-through is charaterized by a threshold effect that is quite unlike the sort of theshold effect described in models with menu costs

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.

Essays in Industrial Organization with Disaggregate Data

This dissertation presents several empirical and methodological results in industrial organization, with a focus on settings with microdata or lightly aggregated data. Chapter 1 estimates a model of search and price discrimination in the US home mortgage market, using microdata from two types of consumers to identify the model. Consumers who fail to recall the interest rate pay more for their mortgages, with most of the disparity explained by price discrimination. Chapter 2 estimates an equilibrium model of the US auto insurance market. Consumers face search and switching costs, which firms take into account in their pricing decisions. Counterintuitively, consumers may be harmed in aggregate by lower search costs. Chapter 3 considers the standard problem of estimating logit or mixed logit demand, but in disaggregate data where markets are too small for the market shares to reliably equal the choice probabilities. I adapt binomial regression to estimate a multinomial logit model and show that a version of the Salanié and Wolak (2019) linearization can be applied to binomial regression to approximate the mixed logit model.PHDEconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/162953/1/watsonco_1.pd

Multi-energy retail market simulation with autonomous intelligent agents

Tese de doutoramento. Engenharia Electrotécnica e de Computadores. 2005. Faculdade de Engenharia. Universidade do Port

Entry, investment and competition in telecommunications and media markets

This Ph.D. thesis builds on the new empirical industrial organization (NEIO) literature trying to use market data to determine fundamental market drivers such as demand parameters, entry and investment thresholds or the level and development of competition in the market. The thesis addresses two sectors: telecommunications (high-speed internet as well as fixed telephony) and media (newspaper sellers). It is divided in three articles 1) Geographic regulation and cooperative investment in next generation broadband networks A review of recent literature and practical cases This article reviews the theoretical and empirical literature on geographic regulation and co-investments in next generation broadband. Alternative telecom operators have continuously invested in their own infrastructure in recent years. After more than a decade since liberalisation, competitive conditions have substantially changed, especially in urban areas. European regulatory authorities have acknowledged this development by starting regional deregulation. Additionally, different forms of cooperative investments in next generation broadband have appeared on the market. The effects of such schemes on competition, investment and welfare crucially depend on the fine details of implementation. For instance, in the case of joint-ventures, it matters how investment costs are shared and how internal and external access prices are determined. In the case of long-term access agreements, it is essential to consider how access tariffs are structured, whether they can adapt to market developments ex-post and whether contracts are signed before or after the investment takes place. Generally, many of these agreements allow for some extent of risk sharing, offering the possibility to increase investment incentives when firms are not risk neutral. It is suggested that regulators consider introducing regulated co-investment agreements complementing current regulation or in some cases even substituting for it, in addition to considering geographically segmented access prices. 2) Entry and Competition in local Newspaper Retail Markets When two are enough This article estimates sustainable coverage and competitive effects of entry for Swiss newspaper sellers which sell composite goods, including a range of other products such as food and near-food items. It uses the applied entry threshold ratio methodology from Bresnahan and Reiss (1991), which allows estimation even when the range of products under examination is not exactly defined and when price and quantity data are not available. It is found that under monopoly pricing, single firm entry is sustainable in Communes with a market size of over 482 people (leaving 310 Swiss communes without a selling point). With duopoly prices, instead, a first firm would only be able to enter a market with a market size of 921 people (leaving another 263 Communes without coverage). There are therefore tangible benefits from above duopoly prices in monopoly regions. Thus, a clear and quantifiable trade-off between prices in monopoly regions and coverage exists. Moreover, it is found that a second entrant in this market strongly increases competition, while further entry doesn’t have significant additional competitive effects. From a welfare perspective, therefore, it can be stated that “two is enough” to ensure competition in this market. It is shown that this is not the case in some other retail markets, where entry by a third firm may still significantly affect competition. Finally, using these estimation results, it is shown that public policy, which consisted of having the Government controlled Swiss Post enter the newspaper sellers’ retail market, was not optimal as it was focused on urban areas where neither coverage nor competition could be enhanced, while risking competitive distortions. At the same time, it is shown that there are Communes in which such a Government policy may be welfare enhancing. 3) Competition and Market Strategies in the Swiss Fixed Telephony Market An estimation of Swisscom’s dynamic residual demand curve This article develops a market model based on a generalised version of the traditional “dominant firm – competitive fringe” model allowing the incumbent also more competitive conduct than that of a dominant firm. A system of simultaneous equations is developed and direct estimation of the incumbent’s residual demand function is performed by instrumenting the market price with incumbent-specific cost shifting variables as well as other variables. Unlike earlier papers that assess market power in this market, this paper also adjusts the market model to ensure a sufficient level of cointegration and avoid spurious regression results. This necessitates introducing intertemporal effects. While the incumbent’s conduct cannot be directly estimated using this framework, the concrete estimates show that residual demand is inelastic (long run price elasticity of residual demand of -0.12). Such a level of elasticity is, however, only compatible with a profit maximising incumbent in the case of largely competitive conduct (conduct parameter below 0.12 and therefore close to zero). It is therefore found that the Swiss incumbent acted to a great extent competitively in the fixed telephony retail market in the period under review (2004-2012) and that (partial) retail price caps in place can no longer be justified on the basis of a lack of competition