Resale price maintenance and restrictions on dominant firm and industry-wide adoption

We consider a model in which firms use resale price maintenance (RPM) to dampen competition. We find that even though the motive for using RPM is thus anti-competitive, market forces may limit the overall adverse impact on consumers. Indeed, we find that when there are a large number of firms in the market, consumer welfare under a laissez-faire policy might be as high or almost as high as it would be under an alternative policy in which RPM is banned. Government interventions that put an upper limit on the extent of industry-wide adoption of RPM can have adverse welfare effects in the model. We further show that proposed guidelines in the United States and Europe may come close to minimizing welfare.     

The competition effects of industry-wide vertical price fixing in bilateral oligopoly

This paper examines the competition and welfare effects of vertical price fixing through industry-wide resale price maintenance (RPM) arrangements, such as those benefiting from exemption from a general prohibition against RPM. A bilateral oligopoly framework is employed incorporating differentiation between manufacturer products and between retailer services. Transactions between the stages involve prices being determined through bargaining. We do not find RPM to be universally undesirable. However where retailer power is strong, the social effects of RPM are likely to be adverse, since the practice can assist in coordinating final price levels and prevent socially desirable countervailing power arising.     

Resale Price Maintenance: An Economic Analysis of its Anticompetitive Potential

A decade ago, Leegin overruled Dr. Miles and subjected RPM to rule-of-reason treatment, under which the potential for anticompetitive conduct should be analyzed (rather than automatically assumed to be present). In its Leegin decision, the Supreme Court identified four ways in which RPM could be used to retard competition and consequently reduce consumer welfare: The first two involve the well-known concerns that RPM could be used to support either a manufacturer cartel or a dealer cartel; the last two involve unilateral conduct designed to foreclose entry or hinder smaller rivals. In this paper, we analyze these potentially harmful uses of RPM. We conclude that RPM does not pose a substantial anticompetitive threat.     

Online RPM and MFN Under Antitrust Law and Economics

The legal framing of a firm’s pricing strategy can determine whether it constitutes online resale price maintenance (RPM) or online most favored nation (MFN). Together, cases that involve online RPM and MFN can be viewed as a natural experiment of how antitrust economics and law may adapt to an online world. Thus far, legal theories that have been inconsistent with economic theories have dictated enforcement across jurisdictions, which has led to confusion that thwarts potentially efficient business practices. This paper distinguishes issues of online RPM from traditional RPM and online RPM from online MFN. We apply the economics learning to RPM and analyze the antitrust cases of online RPM and MFN to date in the United States, Europe, and Australia. Finally, we offer policy recommendations that reduce the confusion in current legal doctrine.     

<Emphasis Type="Italic">Leegin</Emphasis> and the Economics of Resale Price Maintenance

When the U.S. Supreme Court overturned its century-old precedent that treated resale price maintenance (RPM) as a per se violation of the antitrust laws, it signaled approval for the vertical restraint’s widespread use. But the increased use of RPM occurred under a pre-existing rule that permitted RPM as long as no formal agreement over price was reached. This paper documents not only the increased use of RPM post Leegin but also the importance of avoiding the appearance of agreements to control resale prices. The paper then discusses how plaintiffs, previously enamored of claims of RPM, are now recasting vertical RPM arrangements as ancillary to horizontal agreements among distributors that are made effective though enforcement by producers.     

Inducing Cooperation with a Carrot Instead of a Stick

The Supreme Court’s reasoning in Leegin turned on the insight that manufacturers may use resale price maintenance (RPM) for procompetitive purposes. This paper presents a model of manufacturer-retailer interactions that clarifies why, as a rule, retailers and manufacturers are joint beneficiaries of service-inducing RPM. The model identifies factors that determine how RPM-generated benefits are allocated between a manufacturer and its retailers. The paper then shows that manufacturers may use market share discounts (MSD) in lieu of RPM or other vertical restraints to induce retailer performance. The outcomes and efficiency effects that are achieved with RPM can be replicated and usually surpassed if manufacturers substitute MSD for RPM, thereby enabling a manufacturer to retain all incremental profit rather than conceding some of it to retailers.     

The influence of competition from informal firms on new product development

Research summary : Existing research describes a broad range of determinants of new product development (NPD), a fundamental competitive activity of firms. A considerable share of this work has occurred in the context of developed economies, raising a concern that some important determinants may remain unexamined. We suggest that one such determinant is competition from informal (unregistered) firms. Drawing from the attention‐based view, we investigate the effects of informal competition on NPD in a large sample of firms located across Eastern Europe and Central Asia. We examine not only the direct effect but also how this effect is moderated by characteristics of the competitive and institutional context. Managerial summary : The purpose of this research is to examine the relationship between competition from informal (unregistered) firms and new product development (NPD) by formal firms. We argue that NPD is an effective response to differentiate from informal firms, and our analyses of over 9,000 firms located in emerging economies across Eastern Europe and Central Asia indicate that NPD activities are more likely in formal firms who rate informal competition as a greater obstacle. The strength of this direct relationship depends on aspects of the competitive and institutional environment: it is weakened when levels of competition from other formal firms are higher, when alternative responses such as corruption are more available, and when managers are more optimistic about the regulatory environment. Copyright © 2016 John Wiley & Sons, Ltd.     

Competition network structure and product market entry

This study proposes and tests a theory of the effects of competition network structure on product market entry. Competition networks are defined as the patterns of interdependence between rivals that emerge from direct competition. Studying networks based on competitive interdependence allows us to extend social network theory to new territory and to enhance our understanding of product market entry. We propose that the size, interconnectedness and diversity of competition networks influence subsequent product market entry in a systemic way. We test our hypotheses in a unique dataset drawn from the aircraft modification industry. Copyright © 2014 John Wiley & Sons, Ltd.     

Mortgage Brokers,Origination Fees,Price Transparency and Competition

This article examines the dynamics between mortgage broker competition, origination fees and price transparency. A reverse first‐price sealed‐bid auction model is used to motivate broker pricing behavior. Confirming the model predictions, our empirical analysis shows that increased mortgage brokerage competition at the Metropolitan Statistical Area level leads to lower fees. The findings are robust to different measures of fees as well as different measures of competition. We also provide evidence that broker competition reduces mortgage origination fees on retail (nonbrokered) loans as well. In addition, our results indicate that pricing complexity is an important determinant of fees, and increased broker competition is associated with a higher probability of a loan being priced with transparency. Our results suggest that mortgage brokers increase competition and lower fees in the mortgage market.     

PRODUCT MARKET COMPETITION AND AGENCY COSTS*

We model the effects of competition on managerial efficiency and isolate the agency effect of competition, present only in firms subject to agency costs, from the direct pressure effect of competition, which is present in all firms. Using a unique set of Canadian data that surveys both firms and their employees, we then evaluate the empirical significance of these two effects. We find that competition has a significant direct pressure effect as well as a significant agency effect. Both effects increase the importance firms place on quality improvements and cost reductions as well as on contractual incentives and employee effort.     

Dominant designs,innovation shocks,and the follower's dilemma

A dominant design is thought to usher in a period of intense competition based on cost, causing an often‐fierce industry shakeout. We aim to challenge the foundations of the dominant design literature, and develop new insights about the evolution of competition. We argue that strategic repositioning and elevated exit rates are often observed long before the emergence of a dominant design, and that a key cause is the introduction of a particular product for which demand is unexpectedly high (an “innovation shock”). This introduction creates a dilemma for followers, which we suggest is resolved based on followers' comparative adjustment costs. We test implications of these ideas on data from the early U.S. auto industry, treating Ford's Model T as the innovation shock. Copyright © 2013 John Wiley & Sons, Ltd.     

Airline Market Power and Intertemporal Price Dispersion

This paper analyzes the empirical relationship between market structure and price dispersion in the airline markets connecting the U.K. and the Republic of Ireland. Price dispersion is measured by the Gini coefficient, calculated using fares posted on the Internet at specific days before takeoff. We control for passengers' heterogeneity in their purpose of travel, as well as for such peak periods as Christmas and Easter. Our finding of a negative correlation between competition and price dispersion suggests that competition is likely to hinder the airlines' ability to price discriminate, although this effect appears to be lessened in peak periods.     

An antitrust analysis of bundled loyalty discounts

Consider a monopolist in one market that faces competition in a second market. Bundled loyalty discounts, in which customers receive a price break on the monopoly good in exchange for making all purchases from the monopolist, have ambiguous welfare effects. Such discounts should not always be treated as a form of predatory pricing. In some settings, they act as tie-in sales. Existing tests for whether such discounts violate competition laws do not track changes in consumer surplus or total surplus. We apply a new test to an illustrative example based on SmithKline that assumes the “tied” market has homogeneous goods. If the tied market is characterized by Hotelling competition, bundling by the monopolist causes the rival firm to reduce its price. In numerical examples, we find that this can deter entry or induce exit.     

Revenue Sharing and Competitive Balance When Teams are not Wage Takers

Recent papers have enriched the conventional modeling of teams’ behavior through a game theoretic background at the competition level (introducing a contest success function). We take a step forward and consider contest on the talent market as well. Each team takes into account the fact that the price to be paid recruiting talent is a function that depends on both its own demand and the demands from the rival teams. For the two-team model, we show that the removal of the assumption that teams are price takers implies that the invariance proposition only survives if the price-function for talent is linear increasing. The extension to the n-team model shows that this result no longer holds; in fact, revenue sharing improves the competitive balance. More generally, an improvement in competitive balance is the most likely if one rules out the possibility of a very convex price-function. In addition revenue sharing can reduce the economic inefficiency of teams’ behavior, and so profits may increase.     

Competition‐driven repositioning

We study competition as an impetus for firms to reposition—to abandon their current positioning strategy and adopt a new one. We predict that as a strong firm moves closer, competition erodes the profitability of situated firms and prompts them to reposition. We expect this effect is pronounced the greater difference in competitive strength. However, we expect that countervailing forces exist such that the viability of alternative positions and the opportunity cost of abandoning a current position mitigate this effect. Evidence from a natural experiment in China's satellite television industry supports our hypotheses. This research adds to the existing literature on repositioning, which emphasizes the phenomenon as opportunity‐driven, and to the competitive interaction literature, which typically does not distinguish between noncounterattack strategies. Copyright © 2013 John Wiley & Sons, Ltd.     

快速成形技术在快速模具制造领域中的应用

快速成形技术是20世纪80年代中期发展起来的一种全新制造技术,它适合各种生产类型,特别是单体小批量的模具生产,而且能适应各种复杂的模具制造。从快速成形技术的概念出发,阐述了用快速成形技术直接、间接制造金属模具和非金属模具的原理、工艺和研究现状,指出了它的进一步发展和推广必将对制造业产生巨大的影响。     

Surviving the gales of creative destruction: the determinants of product turnover

Innovative industries are often characterized by rapid product turnover. Product longevity may be driven by both a product's position within a market as well as its position within a firm's larger product portfolio. However, we have little understanding of the relative importance of these factors in determining product turnover and how they interact as an industry evolves. Although researchers have invested substantial effort in analyzing firm survival and turnover, there are far fewer studies of the determinants of product survival and turnover. We use hazard rate models and count regression models to describe the behavior of firms and their products with a new and detailed database on the laser printer industry. We show, first, that competition and market structure variables have a large impact on both speeding product exit and delaying product entry. Second, there is some evidence that firms that have maintained a high market share for a number of years keep their products on the market longer than those with lower market share. Finally, firms with high innovative capacity tend to enter markets frequently, but withdraw their products at average rates. Firms with strong brands tend to introduce few products and withdraw their products slowly. With these findings, the paper links product entry and exit decisions to the broader literature on firm strategic and product management. Copyright © 2006 John Wiley & Sons, Ltd.     

Resale price maintenance for supply chains distributing products with demand uncertainty

This paper explores the economic roles of resale price maintenance (RPM) in supply chains for a specific product, when consumers have taste heterogeneity and the manufacturer faces demand uncertainty. Two transaction schemes within supply chains are compared: (1) RPM, and (2) decentralized pricing in a competitive market environment. With decentralized pricing, a manufacturer loses the incentive to produce a product in categories where the probability that the manufacturer fails to design the product as suitable to public tastes of consumers is high. However, RPM resolves the problem and induces the manufacturer to supply the good, bringing positive surplus to consumers.     

Challenges for Empirical Research on RPM

This article discusses the empirical challenges that researchers face when demonstrating the existence and effects of resale price maintenance (RPM). We outline three approaches for finding price effects of RPM and the corresponding hurdles in data and methodology. We show that the quantity test that was suggested by Posner (Univ Chic Law Rev 45(1):1–20, 1977; Univ Chic Law Rev 48:6–26, 1981) does not identify the change to welfare when demand-enhancing effects are considered generally. Finally, we present some solutions to the challenge of identifying welfare effects, and we suggest guidelines for future research.     

Raising Rivals' Costs Strategies via Emission Permits Markets

In the present paper we examine the effect of emissions permit price manipulation within an oligopolistic model. We examine the effect that positioning strategies in permits markets have on the degree of competition in the product market as well as on social welfare. The analysis is based on the concept of raising rivals' cost strategies. We find that competition in the product market can be lessened substantially. The welfare effect is ambiguous. If the leader expands its market share at the expense of a less efficient rival, or if it excludes a less efficient entrant, overall efficiency may increase despite the decrease in the industry's output. When efficiency decreases, or when consumers' protection is a policy priority, the initial distribution of permits can be used to control power in the permits market. Such interventions though, improve efficiency only when policy makers have substantial information on the technological structure of the industry, and thus, should be used with caution. Given the importance of information, sharing of information and coordination of actions between policy makers is very important.