Customer poaching with differentiated products and switching costs.

We consider a dynamic two-period model where two firms offer products that are differentiated a la Hotelling. Consumers purchase products in a first period, and in a second period consumers are locked-in to their first-period choice of producer with a switching cost. In the second period firms are able to price discriminate based on consumers purcase history from period 1. We show that i) firms will approach their rival's customers by low prices in the second period (customer poaching) and that ineffcient switching will occur, ii) second-period prices are dependent on first-period market shares, a result in contrast to some of the received literature. Finally, iii) with high enough switching costs first-period prices is below the level in a static setting, and more so the higher the switching costs and the more differentiated the products are.Oligopoly and Other Imperfect Markets; Production; Pricing; and Market Structure; Size Distribution of Firms

Slotting Allowances and Buy-Back Clauses

In this paper we investigate some of the most frequent arguments for the use of slotting allowances. It has been claimed that slotting allowances can be profitability used to increase retail profits at the cost of increasing consumer prices. A second argument is that slotting allowances can be used by producers of new product to signal the demand potential of their products. We find that in perfect information setting slotting allowances will never arise in equilibrium. Moreover, we question whether slotting allowances can serve as a signalling device. We argue that buy-back clauses are far better instruments to signal profitability of new product launches in the grocery sector.Demand and Price Analysis, L12, L40,

Why is on-net traffic cheaper than off-net traffic? Access markup as a collusive device and a barrier to entry

Received literature have shown that if competing networks are restricted to linear and uniform pricing, high access charges can facilitate collusion; a result that breaks down if we allow for non-linear and discriminatory pricing, however. In this paper we add unbalanced calling pattern to the model and show that this may restore the use of high access charges. High access charges may make the firms collude on high prices. Moreover, when allowing for entry, we show that incumbents can profitably charge high access prices as a device to deter or soften entrants.Two-way access; non-linear pricing; competition; entry.

Consumer Heterogeneity and Pricing in a Duopoly with Switching Costs

It is well-known that switching costs may facilitate monopoly pricing in a market with price competition between two suppliers of a homogenous good, provided the switching cost is above some critical level. We show that introducing consumer heterogeneity tends to increase the critical switching cost and thereby reduce the stability of the collusive outcome. A testable implication is that widespread price discrimination should go hand in hand with efforts to create switching costs.

Fuchsian analysis of S^2xS^1 and S^3 Gowdy spacetimes

The Gowdy spacetimes are vacuum solutions of Einstein's equations with two commuting Killing vectors having compact spacelike orbits with T^3, S^2xS^1 or S^3 topology. In the case of T^3 topology, Kichenassamy and Rendall have found a family of singular solutions which are asymptotically velocity dominated by construction. In the case when the velocity is between zero and one, the solutions depend on the maximal number of free functions. We consider the similar case with S^2xS^1 or S^3 topology, where the main complication is the presence of symmetry axes. We use Fuchsian techniques to show the existence of singular solutions similar to the T^3 case. We first solve the analytic case and then generalise to the smooth case by approximating smooth data with a sequence of analytic data. However, for the metric to be smooth at the axes, the velocity must be 1 or 3 there, which is outside the range where the constructed solutions depend on the full number of free functions. A plausible explanation is that in general a spiky feature may develop at the axis, a situation which is unsuitable for a direct treatment by Fuchsian methods

The opportunism problem revisited : the case of retailer sales effort

We study a setting where the opportunism or commitment problem identified by Hart and Tirole (1990) may arise. An upstream monopolist may sell its product to two differentiated downstream retailers. Contract unobservability induces the manufacturer and each retailer to free-ride on margins earned by rival retailers, resulting in low transfer prices and low overall profit. O’Brien and Shaffer (1992) proposed a solution to this problem involving squeezing retail margins by using maximum RPM and high transfer prices. We show that when retail demand depends in any degree on retail sales effort, this equilibrium breaks down, and the opportunism problem reappears with full force. We show that no type of own-sale contracts or combination of own-sale restraints will solve the problem if sales effort matters. Moreover we show that certain horizontal commitments, as for example industry-wide minimum RPM, may restore the fully integrated outcome, but only in special cases

National pricing with local quality competition

We study the incentives of national retail chains to adopt national (uniform) prices across local markets that differ in size and competition intensity. In addition to price, the chains may also compete along a quality dimension, and quality is always set locally. We show that absent quality competition, the chains will never use national pricing. However, if quality competition is sufficiently strong there exist equilibria where at least one of the chains adopts national pricing. We also identify cases in which national pricing benefits (harms) all consumers, even in markets where such a pricing strategy leads to higher (lower) prices.Fundação para a Ciência e Tecnologia (FCT

Merger control in retail markets with national pricing

We analyze theoretically the efficiency of structural remedies in merger control in retail markets and show that this crucially depends on the retail chains´pricing policy. Whereas a retail merger can be perfectly remedied by divestiture of stores under local pricing, such remedies are not only less effective, but might even be counterproductive, if the chains set national prices. Paradoxically, such remedies might be even more counterproductive if the chains also compete locally along non-price dimensions such as quality. Our analysis suggests that antitrust authorities should be very cautious when reviewing structural remedies in retail markets with national pricing

National pricing with local quality competition

We study the incentives of national retail chains to adopt national (uniform) prices across local markets that differ in size and competition intensity. In addition to price, the chains may also compete along a quality dimension, and quality is always set locally. We show that absent quality competition, the chains will never use national pricing. However, if quality competition is sufficiently strong there exist equilibria where at least one of the chains adopts national pricing. We also identify cases in which national pricing benefits (harms) all consumers, even in markets where such a pricing strategy leads to higher (lower) prices.publishedVersio

Diabetes mellitus, type 2

Studentarbeid i sykepleie (bachelorgrad) - Høgskolen i Bodø, 201