Equilibrium market share—a measure of competitive strength

If an oligopoly is modelled as a non-zero-sum game, then the market shares associated with an equilibrium solution can be interpreted as measuring the competitive strength of the firms. By comparing afirm's equilibrium market share with its actual market share, one can conclude whether the firm has positive or negative growth potential in terms of market share, which has some implications for its investment strategy.     

How Do Land Auction Formats Influence the Market Structure and Aggregate Surplus of Real Estate Development?

This article proposes a duopoly dynamic game theoretic model to investigate the market structure and aggregate surplus of real estate development when land is sold in a sealed‐bid first price auction vis‐à‐vis an open English auction. It relaxes the assumption of symmetric bidders. The land values have common value and private value components. We find that the sealed‐bid first price auction introduces competition in the real estate development market. The open English auction leads a monopoly market. State agencies are recommended to increase the aggregate surplus of real estate development by publishing past bidding information under the sealed‐bid first price auction and reducing information asymmetry between bidders.     

Joint bidding and horizontal subcontracting

This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the bidding stage. A bidding consortium affects the horizontal subcontracting market and, through backward induction, alters firms’ bids. Our findings challenge the current legal practice that consortia without efficiencies must pass the “no-solo-bidding test”, requiring that its members could not bid stand-alone. Our framework predicts that the formation of a temporary consortium, which has the feature that it dissolves after submitting a losing bid, benefits the procurer. The winning bid is more competitive with a temporary as compared to a structural consortium.     

Spectrum limits and competition in mobile markets: the role of licence fees

The paper discusses the impact of scarcity of frequency spectrum on the performance of the mobile telecommunications industry. An oligopoly model with endogenous sunk costs illustrates the trade off between ex ante extraction of oligopoly rents and market entry of firms. The determination of the licence fee through an auction provides scope for setting market structure endogenously: the higher the licence fee, the lower the number of firms sustained by the market. High licence fees may be a signal for post-entry collusion. Differences across national regulatory frameworks with respect to the conditions for allocation of spectrum licenses may induce problems of fair competition in an integrated market.     

Using relative profit incentives to prevent collusion

This paper describes a new economic method for preventing oligopoly collusion. The method eliminates incentives for collusion by making managerial compensation depend on relative profits rather than absolute profits. This alteration of managerial incentives sets up a zero-sum game among the firms in an industry, yielding the result that firms no longer have incentive to collude, either actually or tacitly, with regard to prices or outputs. The method also ameliorates the imperfectly competitive outcomes which can result from even noncooperative oligopoly interactions.     

Sourcing from the Enemy: Horizontal Subcontracting in Highway Procurement

I empirically consider the effect of horizontal subcontracting on firm bidding strategies in California highway construction auctions. Subcontractors are hired by prime contractors prior to the auction, and the subcontractor may also be a competitor in the primary auction. While horizontal subcontracting may improve productive efficiency, it softens the horizontal subcontractor's bid strategy, since winning the auction may entail losing subcontracting business. I find that while each additional competitor supplied by the firm is estimated to increase its bid by 1.4 per cent, the winning bid is uncorrelated with horizontal subcontracting. This points toward an efficiency motive for cross‐supply.     

Auction design and bidding strategy for the note issuance facility

Three auctioning methods are considered for the Note Issuance Facility. They are (i) the discriminatory auction where each winning bidder is paid his own interest rate bid, (ii) the stop-out-rate auction where all winners are paid the interest rate that clears the market, and (iii) the lowest-rejected-bid auction in which all winners are paid the lowest rejected interest rate bid. For each auctioning method, the bidder's optimal bidding strategy is derived and the note issuer's corresponding expected interest rate is obtained. The results under these three auctioning methods are then compared.     

The Effect of Bid Rigging on Prices: A Study of the Highway Construction Industry

This paper examines the effect of multimarket contact in afirst price sealed bid government procurement auction market. It investigates whether bidprices in the highway construction industry are related to conditions that favor the formation of a cartel.Repeated contacts among firms are found to have a significantly positive effect on the winning low bidwhich leads to higher profit. Further, rivalry among few firms tends to exacerbate the multimarket effect.The results in this study additionally support the recent theoretical predictions that collusion isbetter sustainable during economic downturns.     

Collusion in a price-quantity oligopoly

In the context of an infinitely repeated oligopoly game, we study collusion among firms that simultaneously choose prices and quantities. We compare a price cartel with a price-quota cartel and analyze when and why firms prefer the latter to the former. Output quota may be required to solve coordination and incentive problems when market demand is sufficiently elastic. If market demand is sufficiently inelastic, then the cartel faces a trade-off between increasing prices and the amount of costly overproduction. We find that a price cartel prices consistently below the monopoly price to mitigate excessive production. In this case, a quota arrangement allows firms to avoid overproduction and to sustain the monopoly price. From a policy perspective, our findings suggest that an overall price increase in conjunction with more stable prices and market shares is indicative of collusion in industries where production precedes sales and outputs are imperfectly observable.     

The Effects of Taxes and Advertising Restrictions on the Market Structure of the U.S. Cigarette Market

A dynamic oligopoly model of the cigarette industry is developed to study the effects of anti-smoking policies on the market structure of the U.S. cigarette industry. Firms are modeled as competing in price and advertising in a dynamic game. Two commonly used anti-smoking policies – advertising restrictions and tobacco tax increases – are evaluated using calibrated parameters. The simulation results show that in the long run both advertising restrictions and tax increases can successfully reduce the smoking rate. However, advertising restrictions reduce the smoking rate mainly in an indirect way through their impact on the concentration of the market, while tax increases reduce the smoking rate directly and have little effect on the concentration of the market. In addition, in the short run, advertising restrictions have a much smaller effect on reducing the smoking rate than tax increases.     

Securities auctions with pre-project information management

This paper analyzes securities auctions in which bidders have an option to acquire information after winning the right to develop a project. The payment consists of an up-front cash bid and a contingent security bid, which distorts investment and information acquisition relative to the first-best. We order securities in terms of their steepness: the payment of a steeper security is more sensitive to high project values. The agent’s incentives to acquire information that prevents either cost overruns (Type I errors) or false cancellations (Type II errors) decrease with the steepness of securities. The optimal limited-liability securities auction involves bidding debt that minimizes the distortions in the agent’s incentives to acquire performance-enhancing information. The model delivers implications on the practices commonly observed in oil lease auctions.     

The Effect of the Repsol-YPF Merger on the Argentine Gasoline Market

This paper presents alternative models of oligopoly behaviorfor the Argentine gasoline market and applies parametric estimations to analyze the effect that the Repsol-YPFmerger had on that market. Using monthly data for the different provinces of Argentina during 1998–2000,we make an evaluation of that effect. After performing a series of nested and non-nested hypothesis tests, weconclude that we cannot reject the hypothesis that the market was a Cournot oligopoly before the merger,and after that it became one with a price leader (Repsol-YPF). This implies an efficiency loss estimatedin more than $36 million per month.     

发电市场寡头竞争综述

讨论了寡头市场中常用的三个模型(Bertrand、Cournot和供应函数模型)在发电市场中的应用,而且比较系统地综述了寡头竞争理论与方法中的一些基本问题和研究状况,评述了相关文献,从几个方面提出寡头竞争理论研究的发展趋势.分析了各模型的特点及存在的问题,指出它们应用的局限性.     

Sustaining Collusion Via a Fuzzy Trigger

Probability theory is the standard economic representation of uncertainty, although it is not always an accurate one. Fuzzy logic is an alternative representation that does not require individual beliefs regarding the explicit functional form of uncertainty. This paper applies fuzzy logic to an oligopoly trigger pricing game. The fuzzy trigger pricing game reverses the standard cyclical price war prediction; collusion-sustaining price wars are most likely to occur during times of high demand. The fuzzy model also predicts that markets with relatively volatile prices are more likely to undergo collusion-sustaining price wars. The predictions are consistent with available empirical evidence.     

研发与市场结构:基于成本视角的分析

本文从成本入手，探讨了研发与市场结构的关系。通过对平均成本、固定成本及知识特性的综合分析，认为由于技术复杂度的不断提高及研发带来的规模经济，在多数产业研发会导致市场集中度逐渐提高。通过对研发沉没成本的分析表明，在专利保护与许可证制度下，当研发导致的沉没成本比较小时，厂商数量较多的竞争性市场的福利好于寡占或垄断市场，因为其研发速度更快；反之，寡占或垄断市场的福利更好，因为研发的沉没成本得到了节约。在理论分析的基础上，本文就如何通过优化市场结构，提升我国企业研发能力，应对经济全球化的挑战，提出了三点对策。     

携号转网政策对电信运营商合谋的影响研究

电信业是一个典型的寡头垄断产业,在运营过程中,电信运营商容易达成合谋,同时电信市场较高的转移成本为电信运营商合谋提供一定的基础。本文通过构建博弈模型,研究携号转网政策对电信运营商合谋的影响效应。研究得出：实施携号转网政策,通过有效降低消费者的转移成本,使得电信运营商坚持合谋的临界贴现因子提高,电信运营商将更难坚持合谋。该政策的实施效果随转移成本降低率的提高而增强,随电信运营商产品差异性的不断扩大而减弱。因此,携号转网政策的实施将在一定程度上降低电信运营商的合谋行为。     

Durable goods oligopoly

This paper models a durable-goods oligopoly as a differential game. Two cases are treated: sales, where firms cannot lease but must sell the good in question, and leasing, where firms do not sell but only rent. In the sales case, firms face increasing marginal cost of production and the good in question depreciates. For this case, a rational expectations feedback Nash equilibrium is constructed for which monopoly or oligopoly output is less than the efficient level. This gap between oligopoly and competitive output diminishes as the number of firms increases. When firms can only lease the good, the good is assumed not to depreciate and the monopoly level of steady state output is compared with the level of steady state output for a feedback equilibrium duopoly. For this case, the duopoly equilibrium has steady-state output that is less than the corresponding efficient level, but greater than the monopoly level. The leasing model is shown to be isomorphic to the adjustment-cost duopoly model of Driskill and McCafferty (Journal of Economic Theory, 49 (1989) 324–338).     

A sufficient statistics approach for welfare analysis of oligopolistic third‐degree price discrimination

This paper proposes a sufficient statistics approach to studying the welfare effects of third-degree price discrimination in differentiated oligopoly. Specifically, our sufficient conditions for price discrimination to increase or decrease social welfare simply entail a cross-market comparison of multiplications of such sufficient statistics as pass-through, conduct, and profit margin that are functions of first-order and second-order elasticities of the firm’s demand. Notably, these results are derived under a general class of market demand, and can be readily extended to accommodate heterogeneous firms. These features suggest that our approach has potential for conducting welfare analysis without a full specification of an oligopoly model.     

Bid Roundness Under Collusion in Japanese Procurement Auctions

We analyze the “roundness level” of bids—defined as the number of zeros at the end of the bid—in public procurement auctions for construction works in Okinawa Prefecture, Japan, where a bid-rigging case was filed. We hypothesize that bid rigging increases the roundness of bids through the bid coordination process. Specifically, winners choose round numbers to avoid any miscommunication when they announce their planned bids to other ring members, and losers prefer round numbers when they arbitrarily bid above the winning bid. We find that (1) there is a positive relationship between the roundness of a bid and its relative value as a fraction of the reserve price, (2) the roundness of bids is higher when collusion is active than when it is inactive, (3) among the ring bids, the roundness of the lowest bids is even higher than that of the other bids, and (4) bids by non-ring members are also round when collusion is active.     

Indirect Taxation in Vertical Oligopoly

This paper analyzes the effects of specific and ad valorem taxation in an industry with downstream and upstream oligopoly and endogenous entry in both layers. We find that it is typically more efficient to levy an ad valorem tax downstream than upstream, while it is immaterial on which layer a specific tax is levied. We also show that tax revenues should be raised only through ad valorem taxes. Furthermore, we provide conditions under which the introduction of an indirect tax improves welfare. From a total surplus perspective, excise taxes tend to appear in a less favorable light when the full vertical supply chain is considered compared to a partial analysis which only takes into account market power at one layer. Finally, we demonstrate that a tax tends to be shifted to a larger extent into the final consumer price in vertical oligopoly than in standard oligopoly.