Licensing, externalities, and competition

dissertn: Th. doc

The effect of privately managed terminals on the technical efficiency of the Spanish port system

This paper analyzes the effects of privately managed terminals on the technical efficiency of Spanish ports for the period 2002–2018. Technical efficiency has been measured by both parametric and non-parametric methods. Port terminals are specialized infrastructures dedicated to container, solid and liquid bulk, non-containerized and passenger traffic. We show that the privately managed terminals improve Spanish ports technical efficiency regardless the approach followed. Besides, this increase in efficiency is the largest for solid bulk privately managed terminals followed by non-containerized general cargo, containers and liquid bulk terminals as compared to passenger ones. Also, large ports are more efficient independently of the approach. In addition, ports located in islands and those close to oil refineries are more efficient when using the non-parametric approaches. Finally, the reform introduced in 2003 had a significant negative impact on efficiency under the parametric approach

Equilibrium distribution systems under retailers' strategic behavior

This paper investigates what are the equilibrium distribution systems in a successive duopoly when retailers hold the power to choose the number of products they wish to market. Since they both can be multi-product sellers, the number of possible channel structures considered is larger than in previous work. Then, we study whether the resulting distribution systems obtained in earlier papers still remain. In particular, whether there are incentives to adopt exclusive distribution agreements, whether a manufacturer is foreclosed from the market and, essentially, whether there exists, at equilibrium, enough inter and intra-brand competition. The analysis shows that provided low brand asymmetry, it is sufficient that retailers hold the power to choose the number of products they wish to distribute to obtain endogenously both inter and intra-brand competition; both retailers become multi-product sellers. However, as the profitability of brands diverges sufficiently, only the most profitable brand will be distributed by both retailers thus only arising intra-brand competition at equilibrium. Neither the exclusive distribution system nor a common distribution system analized in the previous literature appears at equilibrium

R&D network formation with myopic and farsighted firms

We study the formation of R&D networks when firms can be either myopic or farsighted. Stability leads to R&D networks consisting of either asymmetric components or nearly symmetric components. Farsighted firms have in average more collaborations but myopic firms can be central for spreading the innovation. We introduce yes-firms that form links subject to the constraint of non-negative profits. Yes-firms stabilize R&D networks that maximize social welfare. Finally, the evolution of R&D networks shows that nearly symmetric R&D networks will be rapidly dismantled, socially optimal R&D networks will persist many periods, while asymmetric R&D networks will persist foreve

Optimal Know-how Transfers in Licensing Contracts

This paper studies optimal licensing contracts in the presence of moral hazard associated with costly provision of know-how by the licensor. In our setting, the target market is defined as the fraction of consumers that have a positive valuation for the product that is licensed. It is shown that, no matter how thin the target market is, know-how transfer always takes place. Consistent with actual practice, the optimal licensing contract includes a royalty on sales to attenuate the moral hazard problem. However, full know-how transfer will not occur for low enough maximum willingness to pay and high enough convexity of know-how cost. Finally, it is also shown that the effective (inclusive of the royalty) marginal cost exceeds the one when know-how transfer does not occur thus showing a potential malfunction of know-how transfer specially if the recipient is a developing country

Strategic investments and multinational firms under oligopoly.

We have developed a simple oligopoly model in which foreign direct investment (FDI) decisions are determined in an endogenous fashion. There is a host oligopoly facing competition from a foreign oligopoly in the form of either foreign investment or exports. Then, we propose a multi-stage game to stress the role played by the interactions among foreign rival firms¿ decisions, and we identify some of the determinants of a switch from an exporting strategy to an FDI strategy. A delay in the investment is more likely found for big enough country-specific fixed costs and low values of the oligopoly profitability. Our model provides a theoretical basis which leads to predictions in line with previous empirical studies

Market power in railway operations under different vertical structures

This paper theoretically and quantitatively investigates the effects of structural reforms - separation between infrastructure operations and train operations and the introduction of competition - on the degree of market power downstream, as measured by the Lerner index, by explicitly considering economies of scale at the infrastructure level and regulated access fees. We find that vertical separation reduces the degree of market power when there is a monopoly downstream. Besides, under vertical separation, the Lerner index under duopoly downstream exceeds that under monopoly when economies of scale are large enough. This follows from incomplete pass-through of access fees to prices. Our quantitative analysis indicates that, compared to separation, the Lerner index is higher and consumer surplus and social welfare are also higher in the case of a vertically integrated monopoly. With competition downstream, an integrated structure yields decreases in the integrated operator's degree of market power and modest gains in terms of consumer surplus and social welfare for low degrees of product differentiation compared to separation. Larger economies of scale result in lower rail prices and access fees, which enhance consumer surplus and industry profits although the Lerner indices go up

Competition enhancing measures and scope economies: A welfare appraisal

En este trabajo se examinan los cambios en el bienestar social derivados de la introducción de mayor competencia en mercados tecnológicamente relacionados. Se desarrolla un modelo con dos mercados donde en cada uno de ellos opera un duopolio de producto diferenciado formado por una empresa multiproducto y una empresa uniproducto. En este contexto se consideran dos medidas que potencian, a priori, la competencia: la separación de la empresa multiproducto en dos empresas uniproducto y, alternativamente, la entrada de empresas uniproducto en uno de los mercados. Los resultados indican que mayor competencia podría llevar a una reducción del bienestar social. Este modelo, por tanto, destaca la relevancia del tipo y magnitud de las economías de alcance, la forma de introducir mayor competencia y el grado de diferenciación de producto en los análisis de bienestar

Product quality and distribution channels

We introduce strategic behaviour in assigning a certain distribution channel to a product of a particular quality. We propose a variety of models to analyze and study some of the determinants of the choice of distribution channels. Taking the Gabszewicz and Thisse's (1979) model as a benchmark, we first study whether there exist strategic incentives for delegation of sales in a vertically differentiated duopoly. Secondly, product quality is associated with a particular distribution channel. Finally, the model is extended to account for multi-quality production. The resulting equilibria of every game depend on the relative market profitability, the degree of vertical differentiation (i.e. the relative marginal utility of income for quality and the non-buying option), and hence on the intensity of inter-quality and intra-quality competition. In all of the games analyzed, delegation appears as an equilibrium action. In the first game it is a dominant action for both manufacturers. In the second game, at least one of the manufacturers delegates sales. Whether it is one or both crucially depends on market profitability for each quality and the intensity of inter-quality competition. In the third of the games, the single-product manufacturer delegates sales at equilibrium whereas the multi-product manufacturer delegates only one of the qualities. The multi-product manufacturer employs wholesale prices together with the decision of not delegating both qualities to optimally combine the trade-off between the intensity of intra-quality competition and intra-firm competition

Duopoly price communication

We investigate the role of price communication in imperfect information environments by setting up a dynamic differentiated duopoly where actions are not observable and where firms decide, before pricing, whether to communicate their choices to the rivals. When firms play simultaneously in the pricing stages, communication across them is a dominant strategy allowing firms to coordinate prices, thus reducing competition. However, when communication takes place within pricing stages, this meaning that firms are given the opportunity to choose roles, the above firms coordination in prices is mitigated. This is because of the existence of a second mover advantage effect. Communication by the leader acts as a pre-commitment device to a price umbrella that the follower will undercut. As a result, we end up with a more competitive situation although price levels will not go down to those without communication