Search results for "competition."
showing 10 items of 1367 documents
Competition and innovation with selective exit: an inverted-U shape relationship?
2017
This paper extends the approach of the inverted-U relationship between competition and innovation at the industry level introduced by Aghion and coauthors. We use data of Spanish manufacturing firms from the Survey of Business Strategies (ESEE) spanning 1990–2006, as well as external information on patents from the European Patent Office and US Patent Office. Instead of an inverted-U shape, we obtain an unambiguous positive relationship between competition and patents. To explain this positive relationship, we modify their theoretical model to introduce the possibility of inefficient firms facing the threat of exit when competition intensifies. The modified model may explain both a positive…
Competition with targeted product design: Price, variety, and welfare
2018
Abstract We consider the price and welfare effects of competition in targeted product design, in the context of the Salop circle model. Changes in product design lead to demand rotations that set the stage for our analysis. With an exogenous number of firms, we show that the degree of targeted product design tends to increase with the number of firms. Moreover, under reasonable conditions, price-increasing competition takes place, for intermediate levels of the number of firms. This effect is associated with the possibility of lower consumer welfare. With endogenous firm entry, an interesting insight from our analysis is that in some situations an increase in market size or a technological …
Competitive Pressure and Innovation at the Firm Level
2015
This paper provides empirical evidence on the relationship between market competitive pressure and firms' innovation using panel data of Spanish manufacturing firms for 1990–2006. We depart from standard measures of competition, and construct variables capturing the fundamentals of competitive pressure (product substitutability, market size and entry costs) to test the theoretical predictions of Vives [2008, The Journal of Industrial Economics] for free entry. Our results line up favourably with these predictions. We obtain that greater product substitutability and higher costs of entry lead to more process innovation but less product innovation, whereas market enlargement spurs both produc…
Regulation of Investments in Infrastructure: The Interplay between Strategic Behaviors and Initial Endowments
2012
This paper explores the dynamic properties of price-based policies in a model of competition between two jurisdictions. Jurisdictions invest over time in infrastructure to increase the quality of the environment, a global public good. They are identical in all respects but one: initial stocks of infrastructure. This is a dynamic type of heterogeneity that disappears in the long run. Therefore, at the steady state, usual intuitions from static settings apply: identical jurisdictions inefficiently underinvest, calling for public subsidies. In the short run, however, counterintuitive properties are established: (i) the evolution of capital stocks can be nonmonotonic and (ii) one jurisdiction c…
Multiproduct trading with a common agent under complete information: Existence and characterization of Nash equilibrium
2014
This paper focuses on oligopolistic markets in which indivisible goods are sold by multiproduct firms to a continuum of homogeneous buyers, with measure normalized to one, who have preferences over bundles of products. Our analysis contributes to the literature on private, delegated agency games with complete information, extending the insights by Chiesa and Denicolò (2009) to multiproduct markets with indivisibilities and where the agent's preferences need not be monotone. By analyzing a kind of extended contract schedules -mixed bundling prices- that discriminate on exclusivity, the paper shows that efficient equilibria always exist in such settings. There may also exist inefficient equil…
Trade Associations: Why Not Cartels?
2021
First published: 30 September 2020 The relevance of special interests lobbying in modern democracies can hardly be questioned. But if large trade associations can overcome the free riding problem and form effective lobbies, why do they not also threaten market competition by forming equally effective cartels? We argue that the key to understanding the difference lies in supply elasticity. The group discipline which works in the case of lobbying can be effective in sustaining a cartel only if increasing output is sufficiently costly ‐ otherwise the incentive to deviate is too great. The theory helps organizing a number of stylized facts within a common framework. This article has been accept…
On the social value of publicly disclosed information and environmental regulation
2018
Abstract This paper presents an analysis of environmental policy in imperfectly competitive market with publicly disclosed and privately-held information about costs. We examine the potential asymmetry-reducing role of disclosure and its impact on setting environmental taxes. From a policy perspective, our findings show that disclosure with verifiable reports, is a valuable public good, provides greater transparency in the market, and is generally efficiency enhancing. Results suggest that access to publicly disclosed information enables the fine-tuning of the tax rules towards specific environmental circumstances and improves the ability of the regulator to levy firm-specific environmental…
Alternative pricing regimes in interurban passenger transport with externalities and modal competition
2009
Abstract We develop an interurban passenger transport model with modal competition, where modes are perceived as differentiated products, and capture all major externalities. Our objective is to establish whether alternative regulatory regimes, which may involve road tolls, may lead to a traffic allocation, user welfare, and total welfare that may be closer to the social optimum. An empirical application to interurban Spanish travel is undertaken. We find that the private regime yields the lowest total welfare level: 12.6% below the social optimum level. Optimum pricing requires a toll on car transport of 5.1 cents of per passenger-km, and a price decrease of all other modes, relative to th…
European Integration and the Disembedding of Labour Market Regulation: Transnational Labour Relations at theEuropeanCentralBank Construction Site
2013
European integration through mutual recognition has facilitated the growth of a pan-European labour supply system in which transnational subcontractors ‘post’ workers from low-wage areas to higher wage areas. This allows employers to create spaces of exception in which the national industrial relations system of the country where work occurs does not fully apply. Drawing on interviews with managers, workers, unionists and works councillors at the European Central Bank construction site in Frankfurt, Germany, this article shows how transnational subcontracting allows employers to access, and create competition between, sovereign regulatory regimes. It concludes that high-cost, high-collectiv…
Multi-product firms and product variety
2008
The goal of this paper is to study the role of multi-product firms in the market provision of product variety. The analysis is conducted using the spokes model of non-localized competition proposed by Chen and Riordan (2007). Firstly, we show that multi-product firms are at a competitive disadvantage vis-a-vis single-product firms and can only emerge if economies of scope are sufficiently strong. Secondly, under duopoly product variety may be higher or lower with respect to both the first best and the monopolistically competitive equilibrium. However, within a relevant range of parameter values duopolists drastically restrict their product range in order to relax price competition, and as a…