Regulation and Incentives in European Aviation

We study the effect of liberalization on costs and competition in the European airline industry. We construct and estimate a model that includes demand, capacity, and cost equations. The latter accounts for inefficiency and cost-reducing effort. We show that failure to account for the choice of effort would lead to biased estimates of efficiency and competition in the industry. We also find that the last European Union package of deregulatory measures has led to significant efficiency improvements and has fostered competition.Publicad

The effects of airline alliances: What do the aggregate data say?

We consider an empirical model of worldwide airline alliances that we apply to a large set of companies for the period 1995-2000. Using observations at the companies level, we estimate a cost, capacity, and demand system that accounts for cross-price elasticities. From the estimates, we shed light on the fact that many airlines involved in the same alliances are potential substitutes. We also test for the effects of alliances on airlines’ fares and suggest that airlines inside alliances cut prices by 5% on average compared to airlines outside alliances. Finally, we construct price-cost margins for each airlines and suggest that current pricing habits are not uniform and vary from one alliance to another.alliances, airline, cross-price elasticities, Nash behavior

Liberalización y competencia en los mercados aéreos europeos

Publicad

Productivity Differences in the Airline Industry: Partial Deregulation versus Short Run Protection

This paper specifies and estimates a production function for the airline industry, identifying firms' network characteristics and efficiency as the main determinants of their productivity. The application of this analysis to the European market shows that productivity differences among flag carriers could explain the governments' different views about deregulation at the beginning of the eighties. The introduction of liberal bilateral agreements by some European governments has given their flag carriers incentives to start adjusting their structure in anticipation of future liberalization in the European market while other European flag carriers have delayed this adjustment.Financial support from the Generalitat Valenciana (GV-3140/95) is gratefully acknowledgedPublicad

Liberalización y Competencia en el Sector Eléctrico

Publicad

El problema de la garantía de suministro en los mercados liberalizados de electricidad

Publicad

Multimarket Contact in Pharmaceutical Markets

The purpose of this paper is to analyze the effect of multimarket contact on the behavior of pharmaceutical firms controlling for different levels of regulatory constraints using IMS MIDAS database. Theoretically, firms that meet in several markets are expected to be capable of sustaining implicitly more profitable out- comes, even if perfect monitoring is not possible. Firms may find it profitable to redistribute their market power among markets where they are operating. We present evidence for nine OECD countries with different degrees of regulation and show that regulation affects the importance of economic forces on firms' price setting behavior. Furthermore, our results confirms the presence of the predictions of the multimarket theory for more market friendly countries (U.S. and Canada) and less regulated ones (U.K., Germany, Netherlands), in contrast, for highly regulated countries (Japan, France, Italy and Spain) the results are less clear with some countries beingPharmaceutical prices, Multimarket Contact, Regulation

Multimarket contact in pharmaceutical markets

We analyze the effect of multimarket contact on the pricing behavior of pharmaceutical firms controlling for different levels of regulatory constraints using the IMS MIDAS database for the industry. Theoretically, under product differentiation, firms may find it profitable to allocate their market power among markets where they are operating, specifically from more collusive to more competitive ones. We present evidence for nine OECD countries suggesting the existence of a multimarket effect for more market friendly countries (U.S. and Canada) and less regulated ones (U.K., Germany, Netherlands), while the results are more unstable for highly regulated countries with some countries being consistent with the theory (France) while others contradicting it (Japan, Italy and Spain). A key result indicates that in the latter countries, price constraints are so intense, that there is little room for allocating market power. Thus equilibrium prices are expected in general to be lower in regulated countries.Pharmaceutical prices, Multimarket Contact, Regulation

Market Power and Multimarket Contact: Some Evidence from the Spanish Hotel Industry

This is the accepted version of the following article: Fernández, N. and Marín, P. L. (1998), Market Power and Multimarket Contact: Some Evidence from the Spanish Hotel Industry. The Journal of Industrial Economics, 46(3),301–315, which has been published in final form at: http://dx.doi.org/10.1111/1467-6451.00073This paper analyses the effect of multimarket contact on firms' behaviour. According to Bernheim and Whinston [1990], firms that meet in several markets for an infinite number of periods may find it profitable to redistribute market power among markets where they are operating. We present evidence supporting this prediction by using data from the Spanish hotel industry. Moreover, we also find that the omission of variables measuring multimarket contact creates a downward bias on the effect of concentration on prices. This result questions previous conclusions about the role of competition in industries where multimarket behaviour is expected.Pedro L. Marín gratefully acknowledges financial support from Generalitat Valenciana (GV-3140/95)Publicad

Exclusive Contracts and Market Power: Evidence from Ocean Shipping

This is the accepted version of the following article: Marín, P. L. and Sicotte, R. (2003), Exclusive Contracts And Market Power: Evidence From Ocean Shipping. The Journal of Industrial Economics, 51(2), 193–214, which has been published in final form at: http://dx.doi.org/10.1111/1467-6451.00198There is a substantial theoretical literature on the potential effects of loyalty contracts, but relatively little empirical work. We employ the event study methodology to examine the competitive effects of exclusionary contracts in the ocean shipping industry, where they were the subject of an extended legal and political struggle. We find that some of the most important events in this conflict caused significant changes in shipping firms' stock returns, indicating exclusive contracts increased their profits. We then examine the effect of these events on net exporting industries' stock returns, and provide evidence that these contracts contributed to carriers' market power.The research was supported by Spanish MCYT project SEC1999-1236-C02-02 and the Newcomen Society.Publicad