Self-organizing marketplaces

Dynamics of retail firms in marketplaces are analyzed, assuming that firms compete under monopolistic competition within a marketplace as well as between marketplaces and consumers are uniformly distributed over space. The number, size, and location of marketplaces or edge cities are analytically obtained. Furthermore, extending the model to a two-dimensional space, Christaller–Lösch system of hexagonal market areas is analytically derived.     

CONJECTURAL VARIATIONS AND LOCATION THEORY

ABSTRACT. Imperfectly competitive markets, such as those involving spatial separation of producers and consumers are characterized by interactions between competing firms. Actions call forth reactions and the possible reactions form an important part of the information set that should be used to determine the initial actions. One method for dealing with this is the 'conjectoral variation' approach. Despite some shortcomings this methodology sheds considerable light on decision-making in the space economy. Equally importantly, it sheds light on more general microeconomies modelled as spatial analogs. This paper shows that conjectural variations and the nature of competition between rival firms do indeed 'matter' in location choice and more generally in product design. In particular, we shall be concerned with showing how the conjectured responses of rival firms affect their desire to agglomerate.     

Existence of equilibrium configurations of competitive firms on an infinite two-dimensional space

This paper analytically examines the existence of equilibrium configurations of competitive firms on an infinite two-dimensional space. It is shown that the Löschian configuration (a regular-hexagonal lattice) and a square lattice are in global equilibrium; the Löschian configuration is in the strongest global equilibrium among the regular lattices (in this sense, spatial competition leads to the social optimum); and the so-called back-to-back configuration is not in equilibrium. These results are in marked contrast to those obtained from a one-dimensional model, implying that spatial equilibrium configurations in a two-dimensional space should not be inferred only from one-dimensional models frequently employed in spatial economics.     

Trip Chaining: Who Wins Who Loses?

This paper studies how trip chaining (combining commuting and shopping or commuting and child care) affects market competition: in particular, pricing and the equilibrium number of firms as well as welfare. We use a monopolistic competition framework, where firms sell differentiated products as well as offering differentiated jobs to households, who are all located at some distance from the firms. The symmetric equilibriums with and without the option of trip chaining are compared. We show analytically that introducing the trip chaining option reduces the profit margin of the firms in the short run, but increases welfare. The welfare gains are, however, smaller than the transport cost savings. In the free-entry long-run equilibrium, the number of firms decreases but welfare is higher. A numerical illustration gives orders of magnitude of the different effects.     

Multi-store competition: Market segmentation or interlacing?

This paper develops a model for multi-store competition between firms. Using the fact that different firms have different outlets and produce horizontally differentiated goods, we obtain a pure strategy equilibrium where firms choose a different location for each outlet and firms' locations are interlaced. The location decisions of multi-store firms are completely independent of each other. Firms choose locations that minimize transportation costs of consumers. Moreover, generically, the subgame perfect equilibrium is unique and when the firms have an equal number of outlets, prices are independent of the number of outlets.     

‘ALL EYES ON ME’: The (In)Formal Barriers to Market Trade in Europe

Studies of marketplaces in the global North have often conceptualized markets as important public spaces of social encounter and conviviality where visitors, regardless of race, age, class or gender, feel they have an equal right to be. Yet comparatively little has been written about how inclusive European marketplaces are for the traders who (want to) work there. In this article we argue that the common conception of marketplaces as accessible to everyone, and as vehicles of socioeconomic mobility, is oversimplistic and romanticized. We draw on empirical data from marketplaces in four European countries to focus on the more or less informal ways in which markets are regulated by managers and traders themselves, and on the exclusionary and inclusionary effects of this process that may ultimately determine traders’ access to and success in these markets. This article not only challenges dominant conceptions of marketplaces as accessible and inclusive, but also addresses prevalent stereotypes about economic practices in the global North and assumptions about the ways in which these differ from practices in the global South.     

Acquisition of skills, labor subsidies, and agglomeration of firms

The paper develops an analytically solvable model of new economic geography in which agglomeration of firms is caused by workers' investment in the acquisition of skills. Skilled workers earn high wages and have a large demand for goods. Since firms are attracted towards the demand, they locate at proximity of skilled workers. More workers invest in the acquisition of skills when more firms ask for these skills. Consequently, partial or full agglomeration of firms may be the location equilibrium. We also show that a reduction in transport costs increases the regional governments' incentives to subsidize the acquisition of skills.     

Lobbying and tax competition in an oligopolistic industry: a reverse home-market effect

This paper studies tax competition between two asymmetrical countries for an oligopolistic industry with many firms. Each government sets its tax rate strategically to maximize the weighted sum of residents’ welfare and political contributions by owners of firms. It is shown that if the governments care deeply about contributions and trade costs are low, the small country attracts a more than proportionate share of firms by setting a lower tax rate. The well-known home-market effect, which states that countries with a larger market attract a more-than-proportionate share of firms, may be reversed as a result of tax competition by politically interested governments.     

Product Market Competition,Skill Shortages and Productivity: Evidence from Canadian Manufacturing Firms

In this paper, we estimate the impacts of product market competition and skill shortages on the productivity level performance of Canadian manufacturing firms. We use firms perceptions of their competitive environment from the Statistics Canada 1999 Survey of Innovation to measure product market competition and skill shortages. We argue in the paper that such perceptions are important for productivity level performance. After controlling for other factors, we find that product market competition has a positive impact on the performance of medium-sized and large-sized firms, and that skill shortages have a negative impact on the performance of small-sized and medium-sized firms.Jel Classification: L0, O0     

Entry and Technological Performance in New Technology Domains: Technological Opportunities,Technology Competition and Technological Relatedness

Entry and success in new technology domains (NTDs) is essential for firms' long‐term performance. We argue that firms' choices to enter NTDs and their subsequent performance in these domains are not only governed by firm‐level factors but also by environmental characteristics. Entry is encouraged by the richness of opportunities for technology development, while technology competition by incumbent firms discourages entry and render entries that do take place less successful. Firms are expected to be positioned heterogeneously to recognize and capitalize on technological opportunities, depending on the presence of a related technology base. We find qualified support for these conjectures in a longitudinal analysis of entry and technological performance in NTDs by 176 R&D intensive firms. While opportunity rich technology environments attract entries by firms even if these NTDs are distal from firms' existing technologies, firms require related technological expertise in order to exploit technological opportunities post‐entry.     

Beyond symbolic and substantive: Strategic disclosure of corporate environmental information in China

Under increasing regulatory pressure to disclose environmental impacts, corporate environmental information disclosure (EID) is becoming more prevalent. However, the motives for EID and disclosure approaches (i.e., symbolic or substantive) remain controversial. Using a sample of data for 742 listed manufacturing firms in China across 3 years, we provide evidence to show that the level of EID is significantly positively associated with a firm's advertising intensity and that firms in moderately competitive industries have a higher propensity for adopting an EID‐based differentiated strategy than firms in stronger or weaker competitive industries. We also find that firms that are more sensitive to environmental issues strategically understate their environmental impact when directly facing consumers. Our results suggest that the implementation of corporate EID is strategic and that firms have strong market motives, even under regulatory pressure to demonstrate legitimacy. We discuss this study's contributions to research on EID theory and implications for strategic EID management.     

What inventories tell us about aggregate fluctuations—A tractable approach to (S,s) policies

We estimate a DSGE model with (S,s) inventory policies. We find that (i) taking inventories into account can significantly improve the empirical fit of DSGE models in matching the standard business-cycle moments (in addition to explaining inventory fluctuations); (ii) (S,s) inventory policies can significantly amplify aggregate output fluctuations, in contrast to the findings of the recent general-equilibrium inventory literature; and (iii) aggregate demand shocks become more important than technology shocks in explaining the business cycle once inventories are incorporated into the model. An independent contribution of our paper is that we develop a solution method for analytically solving (S,s) inventory policies in general equilibrium models with heterogeneous firms and a large aggregate state space, and we illustrate how standard log-linearization methods can be used to solve various versions of our inventory model, generate impulse response functions, and estimate the model׳s deep structural parameters.     

管理者激励机制、内部竞争与兼并效应分析

参与兼并企业作为子企业存在于兼并所形成的新企业时,新企业的所有者可能对子企业管理者设置与内部所有子企业利润都相关的激励机制,文章即对这种情形建立了两阶段博弈模型考察横向兼并效应问题。结果表明,当少于市场企业数目50％的企业进行兼并时,新企业所有者将确定导致内部竞争的管理者激励机制,社会福利将会增加;此时,兼并活动对参与兼并企业是有利的,对未参与兼并企业是不利的,从而部分地消除了“兼并悖论”。     

The China effect: Evidence from data at firm level in Thailand

This study investigates how competition with Chinese imports affects firms in Thailand. Using World Bank data on Thailand and United Nations trade data from 2003 to 2006, the empirical results show that there is no significant impact of Chinese import competition on employment, wages, or labor income share. However, further checks show that for firms with lower productivity, the impact on employment and labor income share is more likely to be negative. The impact of Chinese import competition on profit margins is significantly positive. Considering the impact on labor income share and profit margins, we conclude that because of Chinese import competition, income distribution possibly goes in disfavor of labor. Our study shows that the impact of Chinese import competition on the skilled labor ratio is positive and significant. This result suggests that Thai firms are on the path to skill upgrading as a result of Chinese import competition, which is helpful for Thailand’s long-run economic growth. As firms with low productivity are more likely to be negatively affected by Chinese import competition, improving productivity is still an efficient way to counter such competition.     

Spatial Cournot competition and economic welfare: a note

We investigated welfare implications in location-quantity models in a symmetric linear city. We found that when firms are not agglomerated in equilibrium, increasing the distance between firms raises (reduces) producer surplus and social welfare (consumer surplus). Moreover, central agglomeration is always optimal for consumers among symmetric locations, but not necessarily for producers. Central agglomeration can be inefficient even if it is the unique equilibrium outcome. In short, the firms are more likely to agglomerate or locate closer than what welfare maximizers would dictate, whereas they locate farther apart than what consumer surplus maximizers would recommend.     

An existence theorem for Cournot–Walras equilibria in a monopolistically competitive economy

We establish an existence theorem for Cournot–Walras equilibria in a monopolistically competitive economy. Instead of the traditional approach which depends on Kakutani’s fixed point theorem, we employ the theories of aggregative games and best reply potential games. We show that, if there exists a representative consumer, under some conditions on preferences and production technologies, the profit maximization game is a (pseudo) best reply potential game. Hence, the existence of the equilibria is proved independently of the well known convex-valued assumption on the best responses. Although our assumptions result in the additive separability on a utility function of a representative consumer, the existence of increasing returns and indivisible productions can be allowed. In our model, it is shown that the game played by firms exhibits strategic substitutes whether the products of firms are substitutes or complements, and this plays an important role for the existence of the equilibria.     

Incomplete regulation, market competition and collusion

Regulators often do not regulate all firms competing in a given sector. Due to product substitutability, unregulated competitors have incentives to bribe regulated firms to have them overstate their costs and produce less, thereby softening competition. The best collusion-proof contract entails distortions both for inefficient and efficient regulated firms (distortion ‘at the top’). But a contract inducing active collusion may do better by allowing the regulator to ‘team up’ with the regulated firm to indirectly tax its competitor. The best such contract is characterized. It is such that the unregulated firm pays the regulated one to have it truthfully reveals its inefficiency. We finally compare those contracts.     

The financial investment decision of non-financial firms in China

This paper constructs a portfolio model to analyze the determinants of the financial investment decision of non-financial firms in China. Unlike the literature assuming that financial investments are riskless, our model allows risks in both fixed and financial investments. We show that this extension provides an analytically similar but economically different model from the literature. In particular, it is relative risk and risk-adjusted return gap, not pure risk and simple return gap that enter into firms’ financial investment decision model. Using firm-level panel data of 1902 firms listed in Chinese stock market over the period from 2006 to 2016 with semi-annual frequency, we find that the ratio of fixed investment risk over total risk dominates financial investment decisions of non-financial firms. However, rates of risk-adjusted return gap between financial and fixed investments play no role in Chinese firms’ financial investment decisions, which is in stark contrast to the results using a model assuming riskless financial investments. The baseline findings are robust to alternative measures of financialization and investment risk and different firm sizes, ownership structures and time periods.     

Privatisation or Competition?

Market competition is essential for any economy to be efficient. In order to develop competition in a transition economy, it is conventionally thought that privatisation should take place first. This wisdom has been challenged by the Chinese reform experience of the last two decades, which modified the incentive structure of state enterprises and created markets and market competition in the absence of large scale privatisation. China's experience, however, raises the question of whether its chosen type of reform is sufficient to promote competition in a market dominated by public firms. To answer this, we need to know what kind of markets were created – regional markets closed to trade or unified markets with easy access – and whether or not improved incentives for state firms have led to competition. This paper investigates these questions on the basis of a survey of both theory and empirical evidence; and finds that the Chinese reform policies did succeed in stimulating competition among state firms.     

Electronic marketplace definition and classification: literature review and clarifications

The definitions and classifications of any new phenomenon build a strong foundation for further research. Although research on electronic marketplaces (EMs) has proliferated in recent years, related definitions and classifications are still confusing and misleading. The purpose of this paper is to perform a review of the EM literature, and to clarify and explain published information about electronic marketplaces. For EM definitions, we emphasise (1) the difference between EMs as governance structures and as business models, and (2) EMs at different levels of centralisation. For EM classifications, we summarise nine of the most commonly mentioned classifications, and examine the differences and correlations among them. By doing so, potential confusion and common misunderstanding about the different EM definitions and classifications are clarified.