MARKET STRUCTURE AND PRICING STRATEGY OF CHINA'S AUTOMOBILE INDUSTRY*

In this study, using market‐level data on quantities, prices' and automobile characteristics from 1995 to 2001, we conduct a market analysis of the Chinese automobile industry under imperfect competition. On the demand side, we apply a nested multinomial logit model to the national market share data in order to ascertain the demand features of China's automobile market. On the supply side, we assume Bertrand behavior to uncover the markups set by automobile manufacturers. Our empirical results suggest that some large automobile manufacturers set high markups, indicating their strong market power in China's automobile market. However, their declining markups in the late 1990's imply a reduction in market control by the major producers.     

Keeping it fresh: Strategic product redesigns and welfare

Product redesigns happen across virtually all types of products, yet there is little evidence on the market and welfare effects of redesigns. We develop a model of redesign decisions in a dynamic oligopoly model and use it to analyze redesign activity in the U.S. automobile market. We find automobile model redesigns are frequent despite an estimated average cost around $1 billion. Our estimates also suggest that redesigns lead to large increases in profits and welfare due to the strong preferences consumers have for redesigns. We show that welfare would be improved if redesign competition were reduced, allowing redesign activity to be more responsive to the planned obsolescence channel. The net effect of these changes would reduce total redesigns by roughly 10%, increasing total welfare by roughly 3%. The high valuation that consumers put on newly-designed models drives frequent redesigns and gives automobile manufacturers fairly substantial market power, with a 2-to-1 ratio of firm profits to consumer surplus.     

我国“三驾马车”与电力需求关系研究

基于投入产出理论，从整个社会需求与生产的联系入手，研究“三驾马车”与电力需求之间的关系，为剖析电力与经济的关系提供方法。首先构建了“三驾马车”拉动电力需求的数学模型，然后利用我国已公布的5张竞争型投入产出表编制了5张非竞争型投入产出表，在此基础上测算了我国“三驾马车”对电力需求的拉动作用及其变化情况。研究表明：在我国，“三驾马车”中的消费对电力需求的拉动作用最大，其次是投资，出口的拉动作用最小，2000年以来，消费的拉动作用在逐年下降，投资和出口的拉动作用在逐年上升。     

Elektroautos in einer von erneuerbaren Energien geprägten Energiewirtschaft

The German Federal Government wants to establish Germany as a leading market for electric mobility. Potential environmental benefits and changes in the economic framework conditions of the energy sector are described in this paper. In order to quantify the electricity split which is actually used for charging electric vehicles, two economic models for the energy sector, a model for the market penetration of electric vehicles, a vehicle model and an LCA model are brought together. Based on an assumed dynamic increase of electric vehicles to 12 million in 2030, an additional electricity demand of about 18 TWh is calculated. If the vehicles are charged directly after their last daily trip, the peak load increases by 12%—despite the small increase in electricity demand. First model calculations for the development of the European power generation system show that the direct impact on the construction of new power plants remains low even until 2030. An impact of electric mobility on CO₂ certificate prices can only be seen from 2025 onwards and is limited to an increase in certificate prices by a maximum of 8 % in 2030. An optimisation is possible with intelligent charging strategies: The peak load without demand side management can be reduced by 5 GW and about 600 GWh of additional wind energy can used which would otherwise have been throttled due to feed-in management—about 3.5 % of the total electricity demand of electric vehicles. On the other hand, demand side management leads to more coal power plants instead of gas power plants being used to meet the additional electricity demand. If additional renewable sources are installed along with demand side management, the electricity for electric vehicles is almost carbon free. This is also reflected in the life cycle balance of electric vehicles which also includes vehicle and battery production: With today’s average electricity split in Germany, the greenhouse gas emissions of electric vehicles are about comparable to vehicles with conventional combustion engines. However, the electricity split in 2030 or the use of additional renewable energy sources lead to a significant advantage in the greenhouse gas balance.     

Supply Adjustments to Demand Shocks in the Commercial Real Estate Market

This paper contributes a theoretical investigation of real estate supply adjustments in the commercial real estate market. Simple theoretical linkages between the goods market (the demand side) and the space market (the supply side) are developed and then used to explain the optimal supply decisions of space producers. Propositions relating to how space production decisions are made under conditions of demand certainty, demand uncertainty and free entry are derived from optimization models. Under demand certainty, the adjustment of space supply is shown to be affected by whether an exogenous shock is perceived as mild or disastrous. Under demand uncertainty, construction based on pent-up demand is shown to be suboptimal.     

Personnel Decisions,Wage Profiles and Investment in Firms

An investment model where firms mitigate adverse hold‐up effects using hiring and personnel policies is theoretically investigated and empirically scrutinized. While no evidence for the prediction of differing worker characteristics, other than gender, across firms is found, demand (firm) side factors are evident in the hiring process. Evidence on other personnel policies is consistent with theory, which predicts firms with high‐investment expenditures resist unions, utilize more temporary and shift‐time workers and conduct more multitask training. Wages in high‐investment firms are higher, more sensitive to unemployment and experience variables that exhibit greater effects than in low‐investment firms.     

The Impact of Recent Gas Market Developments on Long-Term Projections for Global Gas Supply

Production from unconventional resources, increases in upstream development costs and sluggish demand growth have significantly impacted the global natural gas market in the recent past; and will likely continue to do so during the next decade. Taking these developments into account, we provide a projection of global natural gas supply until 2030 applying the MAGELAN world gas model by the Institute of Energy Economics at the University of Cologne (EWI). Apart from presenting the results of this simulation, the focus of this paper is thereby on the effects of recent supply, midstream and demand side trends on future gas supply compared to earlier studies and projections. While lower demand growth generally leads to relatively less international gas trade, pipeline exports are affected more strongly than trade in liquefied natural gas. In terms of gas output, this volume effect is found to mainly affect high cost gas producers at the upper end of the supply curve. Exports of suppliers with lower production costs and abundant reserves actually benefit.     

Partial Ownership Arrangements and Collusion in the Automobile Industry

This paper develops a conjectural variation model that allows for partial ownership arrangements and foreign trade. This model is applied to the Japanese and US automobile industries. Although collusion is found to occur in the Japanese automobile industry, it is found to be more competitive than the US automobile industry. The effect imports have on firms' price–cost margins in both countries is also found to be different.     

物流需求多样性下的区域物流需求预测研究

在区域物流需求多样性的影响下,对于区域物流需求量的影响因素众多,传统的预测方法和模型对于不同产业结构的区域物流需求预测效果有限。对区域物流需求多样性的特征进行了分析,并在此基础上建立了多产业结构下的SVR预测模型,并利用四川省2000年至2010年实际数据对模型进行了预测和研究,预测的结果表明基于区域物流多样性的预测模型比之不考虑区域物流需求差别的预测更为准确。     

Due date assignment in repetitive projects

This paper demonstrates the significance of location-specific differences in manufacturing characteristics and in consumer demand for technology competitiveness. It looks, in particular, at the economic viability of emerging polymer composite automobile body technologies if produced in the United States (U.S.) versus if produced in the People's Republic of China (P.R.C.) The results show that polymer composite bodies, when produced locally for the local market, are competitive for significantly fewer cars in the P.R.C. (7%) than in the U.S. (29%). Despite consumer demand characteristics in the P.R.C. being more favorable for composites, differences in production characteristics between the two locations dominate the overall effect. These results suggest that in cases such as automobile bodies where markets and manufacturing location are tightly coupled, firms may need to put as much emphasis on understanding the impact of local production differences on technology competitiveness as in understanding local markets.     

Does food aid have disincentive effects on local production? A general equilibrium perspective on food aid in Ethiopia

This paper examined impacts of food aid on domestic food production employing a computable general equilibrium modelling technique and using data from Ethiopia. The simulation experiments have shown that food aid has unambiguous disincentive effects on domestic food production. The removal of food aid caused a modest increase in food prices but this stimulated food production. Employment and income generation effects of the latter outweighed the adverse effect of the former. Consequently, the removal of food aid led to improvements in aggregate household welfare. Contrary to some concerns in the food aid literature that any reduction in food aid would hurt the poor, the simulation experiments suggested that actually poor rural households and urban wage earners are the ones who benefit most in absence of food aid but entrepreneurs are more likely to encounter a marginal welfare decline. We have distinguished between in-kind food aid and cash equivalent transfers in order to isolate the disincentives that in-kind transfers would make to domestic production from those that are related to household purchasing power problem. The expansionary effect of removing food aid becomes significantly larger when it is accompanied by cash equivalent payments because the latter would provide demand side stimulus to agriculture while the removal of in-kind transfers would stimulate supply side, with the supply and demand side effects reinforcing each other. In our modelling framework, the only adverse effect would be a modest deterioration in the external current account, because the expansionary effects of food aid would cause imports to rise but exports to fall.     

The effect of advertising on the distribution-free newsboy problem

Advertising is very important for the newsboy problem because the shelf-life of the newsboy product is short and advertising may increase sales to avoid overstocking. In this paper, models to study the effect of advertising are developed for the distribution-free newsboy problem where only the mean and variance of the demand are known. As in Khouja and Robbins (2003), it is assumed that the mean demand is an increasing and concave function of advertising expenditure. Three cases are considered: (1) demand has constant variance, (2) demand has constant coefficient of variation, and (3) demand has an increasing coefficient of variation. This paper provides closed-form solutions or steps to solve the problem. Numerical results of the model are also compared with those from other papers. The effects of model parameters on optimal expenditure on advertising, optimal order quantity, and the lower bound on expected profit are derived or discussed.     

Urban Growth: A View from the Supply Side

Traditionally, models of urban growth have focused on demand factors. Housing has been the primary area of interest since it uses a great deal of land and thus is a major shaper of urban growth and structure. This emphasis on demand is sound in principle: consumer demand drives developer location and land using decisions, since developers' locational choices are derived from consumer preferences. This reasoning will pertain as long as developers can meet consumer preferences without difficulty. In actuality such preferences can only be met, within consumer budget constraints, by working within existing and often constraining institutional settings. This paper explores urban growth, from the supply side by examining residential developer location criteria as obtained from surveys. These behavioral findings are then used to obtain allocation functions for a simulation model. The allocation functions are based on the stated locational preferences of developers. The resulting simulation output is compared with actual growth in the Greater Vancouver Region of British Columbia for the period 1971–1975. The results are encouraging and point up areas where additional work is needed to better test the utility of the behavioral data in forecasting urban growth.     

Price disclosure by two-sided platforms

We consider two-sided platforms with the feature that some users on one or both sides of the market lack information about the price charged to participants on the other side of the market. With positive cross-group external effects, such lack of price information makes demand less elastic. A monopoly platform does not benefit from opaqueness and optimally reveals price information. By contrast, in a two-sided singlehoming duopoly, platforms benefit from opaqueness and, thus, do not have an incentive to disclose price information. In competitive bottleneck markets, results are more nuanced: if one side is fully informed (for exogenous reasons), platforms may decide to inform users on the other side either fully, partially or not at all, depending on the strength of cross-group external effects and the degree of horizontal differentiation.     

我国近中期原油资源配置研究

随着国民经济的持续、快速发展，交通运输、汽车等支柱产业迅速兴起，对石油产品的需求不断增长，使石油在我国能源消费构成中的比例逐年提高，而原油增长速度相对较低，导致国内石油的供求矛盾日益突出。为确保我国石油、石化工业长期稳定发展，亟须落实石油资源并优化资源配置。从近中期我国石油供需形势的分析预测入手，探讨了原油配置的区域优化问题。     

Simulating media platform mergers

The empirical analysis of media platforms economics has often neglected the multi-homing behaviour of advertisers. Assuming away the cross-substitutability and/or complementarity between the advertising slots of different platforms could damage the quality and the robustness of counterfactual analysis. To evaluate the consequence of such an abstraction, we compare the simulation results of hypothetical platform mergers when the demand on the advertising side is derived from a Translog cost model which allows for multi-homing, and when it is approximated by using a simple log-linear inverse demand model that ignores the differentiation among media platforms’ advertising slots. Ignoring the existence of substitutes or complements on the advertising side would result in overpredicting the losses of the viewers’ surplus and in underpredicting the gains in platforms’ revenues.     

Comparison Between Uniform Tariff and Progressive Consumption Tax in the Chinese Automobile Industry*

This paper studies the protectionist effect of a non-trade policy — a consumption tax — compared to that of a tariff on the Chinese automobile market. Our empirical findings suggest that both the consumption tax and the tariff can protect domestic automakers’ market shares, but they can only shift a small portion of demand from imported cars to domestic cars. This demand exclusion is caused by the weak substitution between imported cars and domestic cars, and it is the underlying reason for the welfare loss caused by both the tariff and the consumption tax. A change in the consumption tax favorable to domestic manufacturers is equivalent to an additional 28% tariff, beyond the explicit 25% tariff, in terms of its protective effect on domestic manufacturers’ market shares.     

Compatibility and competition in airlines demand side network effects

Network effects arising in air transport markets are usually viewed as resulting from the implications of joint production on the cost side. In this paper, we focus on network effects originating on the demand side. We consider a network that links three cities involving two direct and one indirect connection. Two carriers, with asymmetric traffic rights on this network compete sequentially: at the first stage, they choose their departure times; at the second, they set prices. We show that in order to compensate its network disadvantage the ‘weak’ carrier chooses its departure time as close as possible to its competitor's. This is in contrast to the usual maximum differentiation principle. The network effect intensifies price competition. Depending on the size of the market and on consumers valuation of waiting time, various subgame perfect equilibrium configurations are exhibited.     

Merger Simulation in the Presence of Large Choice Sets and Consumer Stockpiling: The Case of the Bottled Juice Industry

We simulate the price effects of several hypothetical mergers in the shelf-stable bottled juice industry. In doing so, we highlight the effects of consumer stockpiling on demand elasticity estimates and subsequent merger simulations. This task is complicated by a large number of choice alternatives within the bottled juice category. To address this challenge we employ a demand model based on the Distance Metric (DM) approach of Pinkse et al. (Econometrica 70:1111–1153, 2002). We find that merger simulations that do not account for consumer stockpiling behavior underestimate the permanent price changes that are likely to occur due to a merger.      

The effects of the business cycle on oligopoly coordination: Evidence from the U.S. rayon industry

Recent game-theoretic studies of the effects of the business cycle on oligopoly coordination predict that coordination is weakest when demand is high and expected future profit is lower. An empirical model that uses a conjectural elasticity term to measure the degree of coordination is developed to test for these two effects. The rayon industry of the 1930s is one that exhibited significantly non-competitive conduct that appears to have varied, in degree, with fluctuations in demand. Application of the empirical model to data from this industry produces results that support the predictions of recent theoretical models.