Search results for "Econometric"
showing 10 items of 3780 documents
Strictly convex variable cost does not imply U-shaped average cost
2016
Abstract We show that strictly convex variable costs do not imply U-shaped average costs and provide a sufficient condition for U-shaped average costs. As an application we study endogenous entry when firms have market power and they have decreasing average cost but increasing marginal cost.
Trading activities, productivity and markups: Evidence for Spanish manufacturing
2019
This work analyses the firms’ internationalization strategies of importing intermediates and exporting output, and the potential rewards of these activities in terms of total factor productivity (TFP), as a proxy for marginal costs, and markups. It further deepens into the study of the relationship between internationalization strategies and markups by disentangling whether it operates through affecting firms’ marginal costs and/or firms’ prices. The panel database employed in this paper is the Spanish Survey on Business Strategies (ESEE) for the period 2006- 2014. Results in the paper distinguish between SMEs and large firms and indicate that there is high persistence in the performance of…
The calculation of shadow prices for industrial wastes using distance functions: An analysis for Spanish ceramic pavements firms
2001
Abstract This paper deals with the calculation of shadow prices for two industrial wastes generated on their production processes by 18 firms belonging to the Spanish ceramic pavements industry. These prices are then used to calculate an extended productivity index which takes into consideration wastes going with the production of marketable goods. We follow the methodological approach first proposed by Fare et al. (The Review of Economics and Statistics 75 (1993)). A negative correlation is found between absolute shadow prices and wastes production intensity, reflecting a greater marginal cost of eliminating wastes for those firms using less contaminant production processes. Differences be…
Drastic innovation reduces firms’ incentives to create divisions
2020
I study a game in which two firms create independent divisions, then they choose whether to do R&D so as to reduce their divisions’ marginal costs, and then the divisions compete in the market. I provide necessary and sufficient conditions under which the game has an equilibrium in pure strategies, and I show that the game has an equilibrium only if each firm threatens that if the rival creates more divisions it will use R&D to foreclose the market. The case we find in the literature, in which firms flood the market with their divisions, should happen only in industries with low returns to R&D.
Endogenous timing with infinitely many firms
2008
Abstract A model with constant marginal costs is considered where firms choose first a period for production and then the amount to produce when competing in the market according to the resulting timing decisions. Multiple equilibria arise allowing for infinitely many industry output configurations encompassing one limit-output dominant firm and the Cournot equilibrium with free entry as extreme cases. At each of these equilibria a firm produces a positive amount only if this firm commits to produce at period one. Both Stackelberg and Cournot-like outcomes are sustainable as equilibria however. When the number of leaders is given, production at subsequent periods is always prevented, and in…
Growth and sustainability of agricultural systems: the case of Sicilian wine-growing farms
2016
International audience; The Sicilian wine-growing sector is characterised by the presence on the one hand of many small enterprises that limit their activity to the first stage of the supply chain (field production) and on the other of few enterprises that adopt a strategy of total vertical integration, from the production to the sale of wine. The first group of enterprises operates in a competitive market and in many cases with marginal revenues that are lower than marginal costs, leading entrepreneurs to abandon the activity of grape production. The second group operates in an oligopolistic market and it is able to compete in an international market. Findings reveal that competitive advan…
Les followers ont-ils vraiment de l'importance dans le modèle de Stackelberg?
2011
In this paper, we consider a T-stage linear model of Stackelberg oligopoly. First, we show geometrically and analytically that under the two conditions of linear market demand and identical constant marginal costs, the T-stage Stackelberg model reduces to a model where T oligopolies exploit residual demand sequentially. At any stage, leaders behave as if followers did not matter. Second, we study social welfare and convergence toward competitive equilibrium. Especially, we consider the velocity of convergence as the number of firms increases. The convergence is faster when reallocating firms from the most to the less populated cohort until equalizing the size of all cohorts.
Stackelberg equilibrium with multiple firms and setup costs
2017
Abstract I provide conditions that guarantee that a Stackelberg game with a setup cost and an integer number of identical leaders and followers has an equilibrium in pure strategies. The main feature of the game is that when the marginal follower leaves the market the price jumps up, so that a leader’s payoff is neither continuous nor quasiconcave. To show existence I check that a leader’s value function satisfies the following single crossing condition: When the other leaders produce more the leader never accommodates entry of more followers. If demand is strictly logconcave, and if marginal costs are both non decreasing and not flatter than average costs, then a Stackelberg equilibrium ex…
Equilibrium mergers in a composite good industry with efficiencies
2014
This paper studies equilibrium merging behavior in composite good industries. Component producers face the option to either merge with a similar component producer (horizontal merger) or a complementary one (complementary merger) of a composite good. Focusing only on strategic reasons, complementary mergers arise at equilibrium only when composite goods are very differentiated while horizontal mergers otherwise. Next, when efficiencies are considered, the level of marginal cost saving required for a horizontal merger in a composite industry to result in a non- increase in the upward price pressure index (UPPI) is greater as compared with the one in a regular industry. This result can be use…
Skill Biased Technical Change and Misallocation: A Unified Framework
2019
Due to strict reliance on competitive labor markets, standard approaches which measure skill biased technical change (SBTC) conflate labor market distortions which prevent firms from choosing the efficient ratio between skilled and unskilled labor and `true' SBTC. This contrasts with recent evidence on decoupling between wages and productivity. To overcome this limitation, we present a unified framework to estimate SBTC which accounts for factor accumulation (FA) effects, and quantifies the discrepancy (i.e., relative misallocation) between the wage ratio (skilled to unskilled) and the marginal rate of technical substitution (MRTS). The suggested methodology takes advantage of recent develo…