Barriers to Entry

Entry of firms into a market is an important economic mechanism that influences industry dynamics and contributes to allocative and dynamic efficiency. However, there are barriers that can prevent companies from entering a market, hampering the competitive process. Therefore, it is clear that barriers to entry are an important issue in competition policy. In this report, we studied a number of 37 different barriers with a special focus on the possible size effect of the barrier, the sustainability of the barrier, the way it can be measured and the relation with other barriers to entry.

Rational Regulatory Policy for the Digital Economy: Theory and EU Policy Options

Telecommunications is a key element of the ICT sector which has been shaped by strong innovation dynamics since the 1990s. Market dynamics in selected OECD telecommunications markets are analyzed. We present new ideas about efficient regulation, emphasizing the need to adopt a broader international perspective. Analytical innovations also include the discussion of an adequately-modified Hitch-Sweezy oligopoly model. Moreover, we suggest differentiated two-part tariffs as an ideal welfare-maximizing approach in both wholesale and end-product markets. From a theoretical point-of-view, the need to avoid regulatory uncertainty is also emphasized. Theoretical progress is contrasted with regulations in the EU and the US. The EU offers a broad range of different regulatory approaches where the link between framework regulation and national regulation is rather complex. The internationalization of telecommunications requires a broader cooperation among regulators in the OECD.Digital Economy, Regulatory Policy, European Union

Sales Growth of New Pharmaceuticals Across the Globe: The Role of Regulatory Regimes

Prior marketing literature has overlooked the role of regulatory regimes in explaining international sales growth of new products. This paper addresses this gap in the context of new pharmaceuticals (15 new molecules in 34 countries) and sheds light on the effect regulatory regimes have on new drug sales across the globe. Based on a time-varying coefficient model, we find that differences in regulation substantially contribute to cross-country variation in sales. One of the regulatory constraints investigated, i.e. manufacturer price controls, has a positive effect on drug sales. The other forms of regulation such as restrictions of physician prescription budgets and the prohibition of direct-to-consumer advertising tend to hurt sales. The effect of manufacturer price controls is similar for newly launched and mature drugs. In contrast, regulations on physician prescription budget and direct-to-consumer advertising have a differential effect for newly launched and mature drugs. While the former hurts mature drugs more, the latter has a larger effect on newly launched drugs. In addition to these regulatory effects, we find that national culture, economic wealth, introduction timing, lagged sales and competition, also affect drug sales. Our findings may be used as input by managers for international launch and sales decisions. They may also be used by public policy administrators to compare drug sales in their country to other countries and to assess the role of regulatory regimes therein.economics;regulation;culture;drug;international new product growth;penalized splines;pharmaceutical;timevarying effects

National Authority for Health: France

Provides an overview of France's National Authority for Health, which defines best-care standards and assesses the benefit and effectiveness of new technologies for inclusion on benefits lists. Examines its use of comparative effectiveness research

Licensing radical product innovations to speed up the diffusion

Inventors can commercialize innovative products by themselves and simultaneously license the technology to other firms. The licensee may cannibalize sales of the licensor, but this can be compensated by gains from royalties. We show in this paper how licenses can be used strategically to speed up the new product diffusion process in two instances of markets: (i) a market with strong Intellectual Property Rights (IPR), and (ii) a market with weak IPR holder and pirate rivals. The main findings suggest that licensing is a beneficial strategy for a licensor in the context of strong IPR, because licensor benefits from the royalties, the advertising investment and positive word-of-mouth effects by licensees. We compare this result with a weak IPR context, where piracy speeds up the product diffusion but this does not compensate IPR holder for the sales loss effect who is willing to license to get some royalties. However, pirates do not generally find interesting the licensing agreement. We present a comparative statics analysis based on numerical simulation.Product diffusion models, Licensing, Optimal control and differential games

Designing an effective climate-policy mix: accounting for instrument synergy

We assess evidence from theoretical-modelling, empirical and experimental studieson how interactions between instruments of climate policy affect overall emissionsreduction. Such interactions take the form of negative, zero or positive synergisticeffects. The considered instruments comprise performance and technical standards,carbon pricing, adoption subsidies, innovation support, and information provision.Based on the findings, we formulate climate-policy packages that avoid negativeand employ positive synergies, and compare their strengths and weaknesses onother criteria. We note that the international context of climate policy has beenneglected in assessments of policy mixes, and argue that transparency andharmonization of national policies may be key to a politically feasible path to meetglobal emissio

Designing an effective climate-policy mix: accounting for instrument synergy

We assess evidence from theoretical-modelling, empirical and experimental studies on how interactions between instruments of climate policy affect overall emissions reduction. Such interactions take the form of negative, zero or positive synergistic effects. The considered instruments comprise performance and technical standards, carbon pricing, adoption subsidies, innovation support, and information provision. Based on the findings, we formulate climate-policy packages that avoid negative and employ positive synergies, and compare their strengths and weaknesses on other criteria. We note that the international context of climate policy has been neglected in assessments of policy mixes, and argue that transparency and harmonization of national policies may be key to a politically feasible path to meet global emission targets. This suggests limiting the complexity of climate-policy packages

The Effects of Imbalanced Competition on Demonstration Strategies

This paper analyzes the effect of competition on product demonstration decisions. Pre-purchase product demonstration enables marketers to differentiate products that are ex-post differentiated but are judged according to perceived fit, rather than actual fit, due to pre-purchase consumer uncertainty. Imbalanced competition accompanied by fit uncertainty motivates the follower to offer demonstrations to avoid a price war. This paper explores the conditions that lead the leader to retaliate. In addition to effects on quantity, competition may increase the quality of demonstrations offered by the leader. We analyze a business case, showing that competition may increase the demonstration intensity and that the leading manufacturer’s response to changes in competition is stronger than the responses of the followers. Our research has the potential to aid mangers in formulating demonstration strategies and in responding to competitors’ demonstration efforts.Imbalanced competition, product demonstration, differentiation, test-drive, price war, Political Economy, Production Economics,

The use of product scarcity in marketing

Purpose: as a frequently observed business phenomenon, the use of product scarcity to improve a product’s market performance has received increasing attention from both academics and practitioners. The resulting literature has covered a wide variety of issues based on various theories, using different research methods, in a diverse range of settings. However, this diversity also makes it difficult to grasp the core themes and findings, and to see the outstanding knowledge gaps. This paper reviews previous studies on the use of product scarcity in marketing, and identifies new directions for future research. Design/methodology/approach: a systematic review was conducted to identify and analyse 66 research papers published in business and management journals between 1970 and 2017. Findings: we examined the underlying theories of scarcity-based marketing, and developed a conceptual framework that describes the key factors of product scarcity and how they influence both consumers and the market. We also highlighted some key achievements in modelling the processes involved in using product scarcity in marketing. Originality/value: our analysis of the identified papers suggests that there are substantial gaps in our knowledge of this field, which opens up new paths for future research. For future research, we identified three directions aimed at: addressing the practical needs of firms in understanding product scarcity; guiding the implementation of scarcity-based strategies; and measuring, monitoring, and predicting the level of product scarcity and its impacts during implementation