Search results for "market power"
showing 10 items of 38 documents
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…
Trade credit and determinants of profitability in Europe. The case of the agri-food industry
2018
Abstract The objective of this paper is to analyse the effect that trade credit has on the determinants of profitability during the crisis period in Europe. We use panel data for a total of 24,177 European agri-food companies from 2010 to 2014. Among our main contributions, we highlight that we isolate the sector effect and study the country effect by separating the different policies and customs with respect to the granting of trade credit. The results confirm, in general, that trade credit affects profitability depending on the country and the characteristics of size, specificity, market power or reputation.
Cost and profit efficiency in the Spanish banking sector (1985–1996): a non-parametric approach
2003
The aim of this article is to analyse the efficiency in costs and in profits of the Spanish banking sector (SBS) in the period 1985–1996 using a non-parametric approach. The results obtained show the existence of profit efficiency levels well below those corresponding to cost efficiency, alternative profit efficiency being below standard profit efficiency. These results imply the existence of market power in the setting of prices and/or the existence of differences in the quality of bank output reflected in the differences in prices. With regard to the immediate future, of full economic and monetary integration, the reduction of profit levels associated with higher competitive pressure may …
Congestion management rules and trading strategies in the Spanish electricity market
2009
Abstract This paper analyses the economic incentives embodied in the rules governing the resolution of transmission constraints in the Spanish wholesale electricity market and the way these incentives may have influenced on the trading behaviour of both the generators and the demand side. The evidence obtained is consistent with them responding to these incentives. In particular, buyers would respond to the way congestion costs are billed to them by abandoning the daily market in favour of the intraday market as far as possible. Additionally, some strategic generators may have been prompted the system operator to require them to inject electricity into the system to solve network congestion…
Stackelberg Equilibrium with Many Leaders and Followers. The Case of Setup Costs
2016
I provide conditions that guarantee that a Stackelberg game with a setup cost and an integer number of 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 exists. Besides showi…
Emission Taxes, Feed-in Subsidies and the Investment in a Clean Technology by a Polluting Monopoly
2019
The paper studies the use of emission taxes and feed-in subsidies for the regulation of a monopoly that can produce the same good with a technology that employs a polluting input and a clean technology. The second-best tax and subsidy are calculated solving a two-stage policy game between the regulator and the monopoly with the regulator acting as the leader of the game. We find that the second-best tax rate is the Pigouvian tax. The tax implements the efficient level of the dirty output but does not affect the total output. On the other hand, the subsidy leads to the monopoly to reduce the dirty output but also to increase the total output. This increase in total output may yield a larger …
An ACE Wholesale Electricity Market Framework with Bilateral Trading
2011
In this paper, an agent-based simulation model for a hybrid power market structure is presented. A bilateral transaction mechanism is combined with a uniform-pricing auction settlement in order to isolate the impact of medium-term bilateral contracts on market power and spot prices in a competitive wholesale market setting. First we describe the negotiation method for bilateral trading of energy and then introduce a new approach for bidding in the DA market based on the load duration curve. We find that, despite the conventional concerns, the foreclosure effect produced by the bilateral agreement between a generation and a retail business will not necessarily lead to higher prices, and will…
What Drives the Microfinance Lending Rate?
2012
Is the microfinance institution (MFI) able to charge unduly high lending rates and obtain a profitability incompatible with perfect competition? We use a global panel data set of MFIs. The Panzar and Rosse revenue test in static and dynamic versions is employed, together with analyses of price (the lending rate) and return on assets. We control for microfinance specific variables such as average loan and institutional background variables, and also perform estimations in sub-samples of ownership types, regulation, and founder type. We find that the average MFI does not enjoy monopoly market power in its market, but cannot reject that perfect competition or monopolistic competition are bette…
Mixture and Distribution of Different Water Qualities: An Experiment on Alternative Scenarios Concerning Vertical Structure in a Complex Market
2001
We set up a model of water management, which is inspired by the possibility of mixing water of different qualities. Water is supplied to two types of consumers with different preferences for water quality and quantity. A distributional knot may exist which optimally distributes the supplied water in the downstream market. Different scenarios compare experimentally the advantages of a centralized versus a decentralized resource management. We conducted experiments with 14 markets in three different settings, labelled as "upstream monopoly", "upstream duopoly" and "duopoly-monopsony". We find that a two-product monopoly performs better than the duopoly regarding social welfare and volatility …
Price discrimination and market power in export markets: The case of the ceramic tile industry.
2005
This paper combines the pricing-to-market equation and the residual demand elasticity equation to measure the extent of competition in the export markets of ceramic tiles, which has been dominated by Italian and Spanish producers since the late eighties. The findings show that the tile exporters enjoyed substantial market power over the period 1988-1998, and limited evidence that the export market has become more competitive over time.