Testing for Monopoly Power when Products are Differentiated in Quality

This paper proposes a reduced form approach toempirically identify the presence of monopoly power in oligopolies characterized by vertical product di erentia-tion. In a fairly general model I derive the reduced form pricing equation under the hypothesis that rms collude by maximizing their joint pro t. A central comparative statics result states that a product's price depends only on its own quality and not on the quality ofits competitors. I propose simple tests implied by this result, requiring data only on the prices and the physical characteristics of the products. The tests are applied to the market for spreadsheets inthe US (1986-1991) and to the market for `engine variants' in the 1990 French car market. The empirical results are promising, but also indicate the need for further generalizations of the model.

Localized Competition, Multimarket Operation and Collusive Behavior

This paper studies collusive behavior in a repeated oligopoly model with localized competition, also reinterpreted as a model of multimarket operation. Private information about the rivals' past actions naturally arises from these product market structures. The resulting communication problems imply that firms should not adopt strategies with too severe punishments. Infinite grim punishments may be too severe, for large discount factors. The standard stick-and-carrot punishments from the perfect public information model are always too severe, for all discount factors. Modified stick-and-carrot punishments can still be used, though for a smaller range of discount factors than the standard stick-and-carrot punishments.

Motieven voor het selectieve en exclusieve distributiesysteem in de Europese autosector

De laatste decennia werd de distributie van auto’s beheerst door een systeem van selectiviteit en exclusiviteit. De Europese Commissie probeerde het systeem recent te liberaliseren door de combinatie van selectiviteit en exclusiviteit te verbieden. Dit artikel onderzoekt het belang van het voormalige distributiesysteem voor de autoconstructeurs, en de effecten van de recente hervormingspogingen. In tegenstelling tot vorig onderzoek ligt de klemtoon in dit artikel op de impact van het systeem op de winstgevendheid van de sector. Eerst stellen we ons de vraag of de potentiële anticompetitieve effecten voor het selectieve en exclusieve distributiesysteem als hoofdmotieven moeten worden beschouwd, dan wel of het eerder onbedoelde neveneffecten zijn. We besluiten dat het wellicht eerder om onbedoelde – maar niet onbelangrijke – neveneffecten gaat. Zo creëert het systeem wel de mogelijkheid tot een strategie van internationale prijsdiscriminatie, maar dit heeft de winstgevendheid van de sector slechts in verwaarloosbare mate beïnvloed. Nadien stellen we ons de vraag welke dan wel de hoofdmotieven kunnen zijn voor de pogingen van de sector om aan het voormalige distributiesysteem vast te houden. We onderscheiden in grote lijnen twee mogelijke alternatieve motieven: het stimuleren van een optimale dienstverlening door de dealers, en het afschermen van de markt ten koste van nieuwe constructeurs of auto-onderdelenproducenten. De analyse steunt zich in sterke mate op het intensieve en uiterst boeiende onderzoek gedurende de laatste twee decennia in de industriële economie en de marketing.

How Competitive is the Dutch Coffee market?

World coffee bean prices have shown large fluctuations during the past years. Consumer prices for roasted coffee, in contrast, have varied considerably less. This article investigates whether the weak relationship between coffee bean and consumer prices can be explained by a lack of competition on the Dutch coffee market

Evaluating market consolidation in mobile communications

We study the dual relationship between market structure and prices and between market structure and investment in mobile telecommunications. Using a uniquely constructed panel of mobile operators' prices and accounting information across 33 OECD countries between 2002 and 2014, we document that more concentrated markets lead to higher end user prices. Furthermore, they also lead to higher investment per mobile operator, though the impact on total investment is not conclusive. Our findings are not only relevant for the current consolidation wave in the telecommunications industry. More generally, they stress that competition and regulatory authorities should take seriously the potential trade-off between market power effects and efficiency gains stemming from agreements between firms

Intra- and Inter-Channel Competition in Local-Service Sectors

Although economically very important, local-service sectors have received little attention in the extensive literature on competitive interactions. Detailed data gathering in these sectors is hard, not only because of the multitude of local players, but also because key service dimensions are hard to quantify. Using empirical entry models, we show how to infer information on these sectors’ degree of intra- and inter-channel competition from the observed entry decisions in different local markets. The approach also controls for relevant socio-demographic characteristics of the trading area that may affect performance. We apply the proposed empirical entry model to the video-rental market. Additional entries of video stores are found to significantly increase the level of intra-channel competition. Unlike the predictions of many normative economic models, we find this increase to be larger when the entry occurs in a duopoly than in a monopoly, a pattern consistent with recent experimental research on collusive behavior in oligopolies. We also find evidence of inter-channel cannibalization from the upstream channel (movie theatres), but not from the downstream channel (premium cable). Finally, various socio-demographic characteristics of the trading zone, such as income and household size, are found to also have a significant impact on store performance

On the Schoenberg Transformations in Data Analysis: Theory and Illustrations

The class of Schoenberg transformations, embedding Euclidean distances into higher dimensional Euclidean spaces, is presented, and derived from theorems on positive definite and conditionally negative definite matrices. Original results on the arc lengths, angles and curvature of the transformations are proposed, and visualized on artificial data sets by classical multidimensional scaling. A simple distance-based discriminant algorithm illustrates the theory, intimately connected to the Gaussian kernels of Machine Learning