Residual demand estimation for market delineation: Complications and limitations

To shed some light on market delineation in an antitrust context, many economists are turning to estimates of residual demand elasticities. Recent papers have drawn attention to the importance of demand curve in market delineation and explained how they can be estimated. This paper shows that there are many complications and limitations of the approach. The relationship between the residual demand elasticity and the scope of the relevant market is complicated and depends on behavioral assumptions. The residual demand elasticity that can be estimated is not the one on which market delineation turns. The estimation of residual demand elasticities can be very difficult because of the complex dynamics of consumer behavior. Finally, residual demand estimators are likely to have a high variance because of instrument problems and this is likely to lead to widely varying estimates depending on specification choices.     

Input market definition under department of Justice Merger Guidelines

This paper applies the Justice Department's Merger Guidelines to define a relevant antitrust market for an input. An expression for the elasticity of the residual demand facing a monopoly supplier of a factor of production is derived. It is shown that proper input market definition depends on the elasticity of residual demand confronting the downstream input users, on the supply elasticity in the downstream market (which, in turn, depends on the rate of capital depreciation there), on the cost of the input as a percentage of downstream sales, and on the extent to which the monopolist is integrated downstream.     

Using the Hicks formula to evaluate an estimate of the elasticity of derived demand for toll-free numbers

Duffy-Deno & Parsons D-D & P (2012) estimated the coefficient for the price elasticity of demand for toll-free numbers (TFNs) at between −0.04 and −0.05. Here, the Hicks formula for derived demand is used to check the range of likely demand elasticity for TFNs given the special characteristics of this market. This approach suggests that the demand for TFNs is likely not more elastic than estimated by D-D & P. Therefore, the premise is sound for D-D & P's discussion of the public policy implications of highly inelastic demand for TFNs. The use of industry information for all four parameters of the Hicks formula to check a derived demand elasticity is the first of its kind in the published literature.     

Food safety recall effects across meat products and regions

Food safety is one of the key issues for the international meat market. As a major meat exporter, few things facing the U.S. meat industry in recent years have garnered more attention than food safety events and policies. The impacts of Food Safety Inspection Services (FSIS) recalls on United States consumer meat demand are estimated using monthly grocery-scanner data identifying effects across products, geographic regions, and recall type. Results suggest beef E. coli recalls significantly reduce the demand for recalled ground beef contemporaneously among most, but not all, regions in the United States. Evidence of heterogeneity in demand impacts across regions and products is provided for the first time. Domestic and international implications for policy makers, industry leaders, and researchers are discussed.     

A note on the excess entry theorem in spatial models with elastic demand

This paper revisits the excess entry theorem in spatial models according to Vickrey [Vickrey, W.S., 1964. Microstatics. Harcourt, Brace and World, New York] and Salop [Salop, S., 1979. Monopolistic competition with outside goods. Bell Journal of Economics 10, 141–156] while relaxing the assumption of inelastic demand. Using a demand function with a constant demand elasticity, we show that the number of firms that enter a market decreases with the degree of demand elasticity. We find that the excess entry theorem does only hold when the demand elasticity is sufficiently small. Otherwise, there is insufficient entry. In the limiting case of unit elastic demand, the market is monopolized. We broaden our results with a more general transportation cost function.     

基于BP神经网络的黑龙江省煤炭产业发展前景分析

运用BP神经网络模型对黑龙江省煤炭市场需求进行了预测,并采用生产收入弹性、需求收入弹性和需求生产弹性差值对黑龙江省煤炭产业发展前景进行了综合分析,分析结果表明,黑龙江省煤炭产业在未来几年具有良好的发展情景和广阔的市场需求。     

Estimating demand for cellular phone services in Japan

Since the 1990s, the telecommunications industry has changed dramatically with the wide diffusion of mobile telecommunications. In spite of this, the nature of the cellular phone market has not yet been explored sufficiently. This paper analyzes the demand for cellular phone services using data on the Japanese cellular phone market in the late 1990s. It finds that the market is highly product-differentiated and conventional network externalities are no longer decisive factors in choosing a mobile phone carrier. The evidence also shows that the demand for cellular phone services is quite price-elastic, with estimated elasticity from 1.30 to 2.43 in absolute value.     

农村劳动力转移与中国城市农民工市场的波动——兼论新《劳动法》对农民工市场的影响

中国城市具有二元劳动力市场结构,农民工市场属于第二劳动力市场。农民工市场的均衡模型表明,供需弹性的相对大小会影响农民工市场的自动调节,进而引起农民工市场的均衡与波动。以城市劳动力市场的构成以及城市农民工市场的波动情况为视角,中国农村劳动力向城市的转移可分为三个阶段。2003年以前城市农民工市场可以自动达到供求均衡,而2004年以后则交替出现＂民工荒＂和失业等劳动力市场的缺口,主要是由于农民工市场的供给和需求弹性的相对大小发生了变化。新《劳动法》增加了企业的用工成本,但尚无法确定其是否会改变供需弹性的相对大小,因而也无法确定是否引起了农民工市场的波动。短期内,政府可以通过影响供需弹性的相对大小来降低城市农民工市场的波动,长期而言,只有采取有力措施变城市二元劳动力市场为一元劳动力市场,才能从根本上解决我国农民工市场的波动问题。     

Demand for telecommunication services in developing countries

Living standards and economic growth in developing countries are invariably linked to the availability and use of telecom services. Effective policy decisions require the best estimates of the drivers of these services. In this paper, telecommunications demand is estimated in models for residential mainline and mobile telephone service for developing countries for the period 1996–2003. The paper tests for cross-price effects between mainline and mobile service and its findings have important policy implications. It finds residential monthly price elasticity to be insignificant for developing countries, but the connection elasticity is larger than generally found in the literature. Mobile monthly price elasticities are very large. A new and important empirical finding is that although wireline phones are substitutes in the mobile market, the contrary is not true—mobile phones are not substitutes in the wireline market, and in fact may be considered complements. This lack of symmetry has important implications for properly defining telecom markets. Universal service subsidies and competitive market initiatives should be reevaluated in light of the paper's elasticity estimates. Increased competition, income growth and enhanced education may be the ultimate universal service promoters.     

What determines the elasticity of industry demand?

This paper develops estimates of price elasticity of demand for a sample of U.S. food and tobacco manufacturing industries and tests a model explaining differences in interindustry elasticity. The empirical results are consistent with the hypothesis that demand elasticity is in part determined by the competitive behavior of firms in an industry. In particular, high advertising expenditures result in lower elasticities of demand. Other important variables influencing demand elasticity are industry concentration, the stage of production, the existence of protection from domestic and foreign entry, and the extent of new-product introduction in a particular market.     

军事工业需求探讨

在市场经济条件下，发展军事工业，必须首先分析军事工业的需求。本文阐述了军事工业需求的本质、特点，分析了军事工业需求与国家安全战略、经济发展的关系，并提出了政策建议。     

Demand for coffee in Sweden: The role of prices, preferences and market power

There is a widespread belief that consumer coffee prices are high relative to bean prices and that lower consumer prices would lead to substantial increases in bean exports from Third-World countries. This issue is evaluated by analysing how retail prices, preferences and market power influence coffee demand in Sweden. A demand function is estimated for the period 1968–2002 and used, together with information on import prices of coffee beans, to simulate an oligopoly model. This approach gives estimates of the maximum average degree of market power and shows how coffee demand would react to reductions in marginal cost to its minimum level. The maximum level of market power is found to be low, but it generates large spreads between consumer and bean prices because the price elasticity has low absolute values. Moreover, the impact of a price decrease would be small because long-run coffee demand is dominated by changes in the population structure in combination with different preferences across age groups. Hence, a change to perfect competition would only have a negligible effect on bean imports.     

An Empirical Analysis of the Potential for Market Power in California's Electricity Industry

Using historical cost data, we simulate the California electricity market after deregulation as a static Cournot market with a competitive fringe. Our model indicates that, under the pre-deregulation structure of generation ownership, there is potential for significant market power in high demand hours, particularly in the fall and early winter months when hydroelectric output is at its lowest level relative to demand. The results also show that two of the most important factors in determining the extent and severity of market power are the level of available hydroelectric production and the elasticity of demand.     

电力市场中的市场势力及其治理

电力市场中市场势力受供给和需求刚性、市场竞争政策和制度安排，以及输电堵塞等因素影响表现出特殊性。电力市场势力不仅受到主导企业市场份额的影响，还更多地受企业之间战略相互作用或博弈效应、市场需求弹性、竞争性边缘企业供给弹性、边缘企业的市场份额等因素的影响。这些因素与电力生产经营过程中的技术性结合在一起，使规制很难有效进行，在电力市场中产生了明显的市场势力结果。限制电力市场中市场势力的根本途径是设计特别的市场竞争政策和交易制度。     

电力视窗：宏观调控政策实施效果动态跟踪

由于电力生产、消费与国民经济发展情况具有同步性,所以电力经济数据对国民经济的宏观参数具有极高的参考作用。通过研究2003年以来第二产业与第三产业、重工业与轻工业以及黑色、有色和建材等行业的电力需求强度的变化,探讨宏观调控政策的实施效果。比较研究发现,2006年10月以前宏观调控政策实施效果较好,此后,由于国际市场价格的影响,黑色冶金、有色冶金等行业发展较快。     

Markup pricing in petroleum refining:: A multiproduct framework

This paper describes a structural model of markup pricing under joint production with quasi-fixed inputs of capital, labor, and inventories. The price–cost markups are functions of the inverse price elasticity of demand, an industry average conjectural variation elasticity, and the inventory to sales ratio. Our empirical findings suggest significant markups over marginal cost that differ considerably by product. This study also estimates the elasticities of markups with respect to supply and demand shocks.     

中国药品市场的需求实证分析

以经济学理论中的弹性理论为前提,在采用计量经济学方法研究药品需求量与人均可支配收入、人们的健康水平、药品价格等因素间的相关性的基础上,应用excel软件构建药品需求的线性需求函数模型以及对数线性需求函数模型。最终得出结论:随着人们生活水平的提高,药品需求量将显著上升,而药品价格的变化对药品需求影响较小。     

金融危机对山西用电需求的影响

以当前国际金融危机为背景,介绍了2008年山西省宏观经济情况,分析了三次产业、工业及重点行业2008年用电需求的变化,探求三者与宏观经济变化间的关系。结果表明：左右山西宏观经济的煤炭、化工、黑色和有色行业,同样也是影响全社会用电量变化的主导因素。跟踪重点行业的生产情况对提高山西省电力市场分析预测工作很有意义。     

Market Power and Technology

It is well known that market power depends on the price elasticity of demand and the intensity of competition. It is also well known that technology can influence market power through its effect on market structure. However, there is limited research on the direct link between market power and technology. In this paper, we investigate this relationship. We find that the monopoly price can be constrained to be identical to marginal cost under certain technological conditions. We also show how market power depends directly upon technology, holding constant demand conditions, market structure, and the degree of competition.     

The reverse Cellophane fallacy in market delineation

In the landmark Cellophane case, the Supreme Court erroneously concluded that du Pont did not have significant market power because the Court evaluated the elasticity of demand for Cellophane at the monopoly equilibrium, at which the elasticity was far higher than at the competitive equilibrium. The Court's error is commonly referred to as the Cellophane fallacy. This paper contends that there also is a reverse Cellophane fallacy. Markets delineated on the basis of prevailing demand elasticities are likely to be too small and the potential for the exercise of market power is likely to be overstated.