RETAILER LOCATIONS, LOCAL SUPPLY AND PRICE POLICIES

Two retailers operate in a monopsonistic, oligopolistic environment. They have to buy from spatially dispersed suppliers and use uniform pricing downstream. We characterize prices and location in the two-stage location-then-price game under two different pricing policies in the upstream market: uniform pricing and spatial price discrimination. We analyze how local supply conditions affect equilibrium locations and profits. We show that if retailers can choose a price policy initially they commit to uniform pricing in the upstream market.Spatial Competition; Intermediation; Uniform Pricing

Service provision on a network with endogenous consumption capacity

We present a model in which the consumers' capacity to access a service provided on a network depends negatively on the price charged by the network owner per capacity unit. Several scenarios concerning the structure of the downstream service provision market are studied. First, a monopolist operates in both the network and the service provision stage. Second, we assume duopolistic competition between the network owner and the entrant. Third, we allow for endogenous differentiation of the services provided by the two competitors. Generally speaking, the duopolistic structure does not necessarily enhance consumer surplus. Furthermore, competition in the service provision market may reduce social welfare, either due to excessive differentiation or due to a low network density.telecommunications markets, regulation, endogenous consumption.

A note on collusion sustainability with optimal punishments and detection lags

In this note we characterize optimal punishments with detection lags when the market consists of n oligopolistic firms. We extend a previous note by Colombo and Labrecciosa (2006) [Colombo, L., and Labrecciosa, P., 2006. Optimal punishments with detection lags. Economic Letters 92, 198-201] to show how in the presence of detection lags optimal punish- ments fail to restore cooperation also in markets with a low number of firms.optimal punishments, detection lags, collusion sustainability

Strategic Behavior and Collusion: An Application to the Spanish Electricity Market

The paper has two major contributions to the theory of repeated games. First, we build a supergame oligopoly model where firms compete in supply functions, we show how collusion sustainability is affected by the presence of a convex cost function, the magnitude of both the slope of demand market, and the number of rivals. Then, we compare the results with those of the traditional Cournot reversion under the same structural characteristics. We find how depending on the number of firms and the slope of the linear demand, collusion sustainability is easier under supply function than under Cournot competition. The conclusions of the models are simulated with data from the Spanish wholesale electricity market to predict lower bounds of the discount factors

Renewable sources, technology mix, and competiton in liberalized electricity markets: the case of Spain

Este artículo trata el problema de cómo la competencia oligopolística es afectada por el desarrollo de las tecnologías que utilizan energías renovables dentro del marco de reducción de emisiones de CO2 y seguridad en el mercado eléctrico. En un modelo oligopolístico donde las empresas poseen plantas que utilizan recursos tanto renovables como no renovables, mostramos que los precios en el mercado mayorista decrecen a medida que las tecnologías que utilizan recursos renovables incrementan su eficiencia, hecho que también depende de la subvención fijada por el regulador. Sin embargo, encontramos que un subsidio excesivo puede distorsionar la competencia cuando la madurez tecnológica de los recursos renovables es lo suficientemente alta comparada con el coste de los recursos no renovables. Por último, contrastamos las predicciones del modelo utilizando datos del mercado eléctrico español. The paper addresses the question of how oligopolistic competition is affected by the development of renewable source technologies within the new framework of electricity supply security and reduction of emissions of CO2. In an oligopoly model where firms own renewable as well as non-renewable source technologies, we show that wholesale prices tend to decline the larger the efficiency achieved by renewable technologies depending also on the feed-in-tariff fixed by regulators. We found however that a high subsidy can distort competition when technical maturity of renewables is large as compared with the costs incurred by fossil sources. Finally, we test the predictions of the model using data from the Spanish electricity market.electricity technology mix, renewable energy sources, technical maturity, feed-in tariffs. mix tecnológico eléctrico, recursos energéticos renovables, madurez tecnológica, subvenciones

Learning and Applying Cooperative Solutions: A Classroom Experiment on Transportation Games

In a trade experiment, groups of students were taught how to bargain over a pie generated in a transportation game. Data collection and detailed group reports of the bargaining process allowed us to identify the type of bargaining followed and its correspondence with cooperative game theory concepts. Explicit coalitions were rather scarce (17%), although coalition stability was implied by 47.8% of the agreements. Efficiency was achieved in the vast majority (82%) of cases, whereas in 34.8% of the agreements, students used a lexicographic ordering of multiple solutions before choosing among them. Regarding the bargaining procedure, in 40% of the agreements, quantities traded were decided before profit sharing rules were negotiated, whereas in 16% of the cases they were simultaneously agreed upon. Our findings suggest that bargaining procedures often do not imply explicit coalitions. Moreover, efficiency can be achieved even in the absence of bargaining processes

A note on bargaining power and managerial delegation in multimarket oligopolies

In a two-stage delegation game model with Nash bargaining between a manager and an owner, an equivalence result is found between this game and Fershtman and Judd's strategic delegation game (Fershtman and Judd, 1987). Interestingly, although both games are equivalent in terms of profits under certain conditions, managers obtain greater rewards in the bargaining game. This results in a redistribution of profits between owners and managers.A. Ciarreta thanks the Spanish Ministry of Economy and Competitiveness (ECO2012-35820) and the Basque Government (DEUI, IT-313-07) for their financial support. J. García acknowledges funding from project ECO2010-15332 of the Spanish Ministry of Science and Innovation and from the ERDF. Carlos Gutiérrez-Hita acknowledges support from the Spanish Ministry of Science and Technology (through research project MTM2011-23205), and the Basque Government (through research project IT-313-07)

Supply function competition in a mixed electric power market

In this paper, we present a mixed oligopoly model where electric power generators compete in supply functions in a liberalized market. A former monopolist, the state‐owned generator, is assumed to be (partially) privatized. First, we obtain that there is a relationship between privatization and the number of electric power generators concerning the level of consumer surplus and total welfare. Indeed, a fully state‐owned generator is socially optimal, lowering private generators' profits and enhancing consumer surplus; that is, if the degree of privatization decreases, consumer surplus increases compensating the damage imposed on generators' profits. Second, as the number of generators increases, full privatization may provide similar levels of consumer surplus and social welfare than those observed in a mixed oligopoly. Moreover, it is also obtained that price‐cost margins increase as marginal cost increases. Overall, our results suggest that the state‐owned generator should be privatized when entry barriers are low enough, and competitiveness is enhanced. Otherwise, a state‐owned generator may protect consumers, enhancing consumer surplus.Financial support under the projects PGC2018‐097965‐B‐I00 (MCIU/AEI/FEDER, UE), ECO2015‐67901‐P and ECO2016‐77200‐P (MINECO/FEDER, UE) is gratefully acknowledged

On supply function competition in a mixed oligopoly

In this paper we present a mixed duopoly model of supply function competition under uncertainty with product differentiation. We find that, regardless the nature of product heterogeneity, the best response of the private firm always arises as strategic complement. Contrary to this, state-owned firm's best response arises either as strategic complement or substitute depending on the product heterogeneity. As a result of the ex post realization of the demand uncertainty, different equilibria are reached