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1.
Unlike many other mergers in developed countries, which might have been assessed and their effects estimated by antitrust
authorities before being granted antitrust immunity, the airline mergers that swept China’s airline industry in 2002 occurred
with no antitrust challenge. These mergers provide the opportunity to study important market power issues in China’s airline
markets. Given that increased concentration and multimarket contact are the main legacies of an airline merger, the effects
of mergers on these variables can raise the potential for the exercise of market power. However, an examination of the period
2002–2004 during which the Chinese airline mergers occurred shows that the resulting increased concentration and enhanced
multimarket contact did not have important consequences for airfares in Chinese city-pair markets. The presence of Hainan
Airlines appears to have played an important role in suppressing the airfares charged by China Eastern and China Southern. 相似文献
2.
This paper examines the price effects of generic drugs that are produced by brand-name drug firms and that are labeled, priced,
and marketed to compete against independent generics. The strategy of introducing such “pseudo-generics” – also known as “authorized
generics” – has raised some antitrust concerns. One defense of this strategy has been that the additional competition created
by pseudo-generics should lead to lower prices. This paper develops a simple model to show that pseudo-generics can be expected
to have exactly the opposite effect. It then examines empirical evidence on this point from the Canadian pharmaceutical market,
showing that there appears to be a positive relationship between drug prices and the share of generic sales made by the brand’s
own pseudo-generic. 相似文献
3.
This paper examines the welfare effects of physically interconnecting two (network) markets that were previously separated.
In each market a different set of capacity-constrained firms operate. Firms engage in a supergame and collude whenever it
is rational for them to do so.We find that, under certain parametric restrictions, interconnection of the two markets reduces
total welfare. The collusive horizon may extend from a single market to the overall integrated market. In such case, interconnection
can be viewed as “exporting” collusion, rather than competition.
相似文献
4.
Many industries consist of large firms that compete in multiple geographic markets. Such overlap, defined as multimarket contact (MMC), may facilitate tacit collusion and soften competition. We examine the effects of MMC on health insurance prices and quality using comprehensive data on the Medicare Advantage (MA) market from 2008 through 2015. Our identification strategy exploits two plausibly exogenous changes to MMC: (1) out-of-market mergers; and (2) policy-driven changes in the benchmark rates of other markets. Our results consistently support the mutual forbearance hypothesis, where we find that prices are significantly higher and high-quality plans less pervasive as MMC increases. 相似文献
5.
This paper analyses the effect of multimarket contact on firms’ behaviour. According to Bernheim and Whinston [1990], firms that meet in several markets for an infinite number of periods may find it profitable to redistribute market power among markets where they are operating. We present evidence supporting this prediction by using data from the Spanish hotel industry. Moreover, we also find that the omission of variables measuring multimarket contact creates a downward bias on the effect of concentration on prices. This result questions previous conclusions about the role of competition in industries where multimarket behaviour is expected. 相似文献
6.
On the relation between multimarket contact and service quality: Mutual forbearance or network coordination?
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Research summary : We reconsider the relationship between multimarket contact and product quality in the airline industry by arguing that multimarket contact has both a negative mutual forbearance effect on quality and a positive network coordination effect on quality. Multimarket contact increases the frequency of contact between firms, and this anticipated future interaction promotes cooperation. In network industries, especially small firms may want to cooperate in order to increase the attractiveness of the composite product. By using size as a moderating variable, we indeed find a consistent positive effect of multimarket contact on product quality for small airlines. We show that this effect can be attributed to network coordination and that this effect generally dominates the negative mutual forbearance effect in a recent period. Managerial summary : Firms with sales in multiple geographical markets likely encounter each other with mutual respect (i.e., live and let live) because aggressive behavior in one market may lead to retaliatory responses in other markets. Such responses weaken competitive pressures on price and quality. Insofar these firms sell complementary products, they may however also coordinate and improve their joint product offering, resulting in better quality for the consumer. This paper shows that this positive effect of cooperation may dominate the negative competition‐reducing effect, depending on the size distribution of firms. The reason is that small or nondominant firms have a stronger incentive to produce compatible products than large or dominant firms with already a strong position in the (global) market. Copyright © 2015 John Wiley & Sons, Ltd. 相似文献
7.
There is considerable controversy whether price spikes in energy markets represent demand shifts in the presence of inelastic
supply or strategic withholding by suppliers. This paper sets out a new method for distinguishing the two possible explanations,
namely, determining whether supply shifts to the left during periods of high demand. Such behavior would be inconsistent with
ordinary profit-maximization, that is, “business by usual methods.” This approach is applied to a period of unusually high
prices in the New York wholesale electricity market in 2001. There is evidence of strategic withholding for one brief period. 相似文献
8.
The objective of this study is to integrate both multimarket contact and strategic similarity in the analysis of entry decisions. We also analyze the role of the reciprocity of contacts, market concentration, and coordination mechanisms at moderating the relationship. Our hypotheses are tested through the analysis of entry behavior into new geographical markets in the Spanish savings bank market. Interestingly, our results offer an opportunity of conciliating conflicting evidence in both the multimarket–mutual forbearance and the heterogeneity–rivalry literatures and offer further support to the U‐inverted influence of multimarket contact on entry. Given the coordination assumption implicit in the theory and the possible presence of unobservable variables, we also offer a method to cope with the common‐actor problem. Copyright © 2006 John Wiley & Sons, Ltd. 相似文献
9.
The Welfare Losses From Price-Matching PolicIes 总被引:2,自引:0,他引:2
Several recent papers argue that price-matching policies raise equilibrium prices. We add to this literature by considering potential welfare losses, which have two sources: Harberger triangles from high prices and Posner rectangles from over-entry. We compare price-matching markets with entry to monopoly and price-matching markets without entry, and find that price matching with entry creates greater welfare losses than monopoly in markets with a low ratio of fixed to marginal cost. We illustrate this result using parameters from the US wholesale gasoline and air travel markets, and relate our model to price matching among NASDAQ market makers. 相似文献
10.
Antitrust and Vertical Integration in “New Economy” Industries with Application to Broadband Access 总被引:1,自引:0,他引:1
Bruce M. Owen 《Review of Industrial Organization》2011,38(4):363-386
Whether the firms that supply Internet hardware and software should face restrictions on the use of their property is an important
and controversial policy issue. Advocates of “net neutrality”—including President Obama and the current FCC majority—believe
that owners of broadband distribution systems (hardware used to distribute Internet and video services) and producers of certain
“must-have” video content should be subject to prophylactic regulation that transcends present-day antitrust law enforcement.
In the economic terms that are used in debates on competition policy, the concern is with vertical integration that may give
firms both the opportunity (through denial of access or price discrimination) and incentive (increased profit) to restrict
competition. This paper’s central point is that virtually every production process in the economy is vertically integrated,
and economics predicts changes in the extent of vertical integration—that is, changes in the boundaries of the firm—in response
to changes in relative prices, technology, or institutions. Both vertical integration and changes in the extent of vertical
integration are benign characteristics of efficient, dynamic, competitive markets. While there is no shortage of theoretical
models in which vertical integration may be harmful, most such models have restrictive assumptions and ambiguous welfare predictions—even
when market power is assumed to be present. Empirical evidence that vertical integration or vertical restraints are harmful
is weak, compared to evidence that vertical integration is beneficial—again, even in cases where market power appears to be
present. Thus, it is reasonable to conclude that prophylactic regulation is not necessary, and may well reduce welfare. Sound
policy is to wait for ex post evidence of harm to justify interventions in specific cases. Net neutrality, recently enacted
by the FCC but subject to judicial review, is an unfortunate idea. 相似文献
11.
Charles J. Thomas Robert D. Willig 《International Journal of Industrial Organization》2006,24(6):1157
It is conventional wisdom that the strategic linkage of markets that is enabled by multimarket contact typically increases the profitability of cooperation among rivals. We find to the contrary that a strong force against strategic linkage results from imperfect monitoring of adherence to cooperation. With such imperfections, strategically linking markets can lower payoffs by permitting the impact of adverse shocks in one market to spread to others. Consequently, players of repeated games on more than one front may find it strictly advantageous to avoid linking strategies on a front with clear monitoring to outcomes on a front with error-prone monitoring. One implication is that antitrust, competitive strategy, and foreign policy analyses have presumed too broadly that multimarket contact fosters cooperation. The game-theoretic equilibria characterized here shed light on why players such as firms and nations sometimes strategically link fronts in their rivalry, and sometimes take care to articulate that some fronts of particularly volatile conflicting interests will not trigger broader adverse moves against the rival. 相似文献
12.
In this study of firms’ entries into and exits from each other’s markets, we link research on multipoint competition to the emerging action‐oriented, dyadic approach to interfirm rivalry by specifying market interdependencies between pairs of firms that condition their potential for rivalry over time. Our dynamic analysis of competitive interactions between pairs of commuter airlines in California reveals the idiosyncratic and asymmetric market microstructures that characterize dyadic competitive relationships and helps explain why firms grapple vigorously with some of their competitors while being passive toward others. We show that there is an inverted U‐shaped relationship between firms’ rates of entry into and exit from each other’s markets and the level of multimarket contact in competitor dyads. We also show how this basic curvilinear effect varies from dyad to dyad as a function of relative levels of multimarket contact with competitors in other dyads and the relative sizes of competitors in a focal dyad. Copyright © 1999 John Wiley & Sons, Ltd. 相似文献
13.
Henrich R. Greve 《战略管理杂志》2008,29(3):229-249
Research on pricing, profits, and firm survival has shown that multimarket contact causes mutual forbearance against competition, but has not considered the consequences of imperfect observability of competitive moves. Here, predictions are developed to explain how mutual forbearance occurs—but sometimes fails—in markets with imperfect observability. Mutual forbearance means that firms do not seek to take market share from each other through price cuts or nonprice competition, and thus that sales grow at uniform rates. Firms defect from mutual forbearance, and hence have higher sales growth, if the potential rewards are high and the likelihood of being discovered is low. This theory is tested on a panel of firms operating in the Norwegian general insurance industry. The evidence suggests that sales growth is most rapid in firms that do not meet many multimarket competitors in a given market and firms that are economically troubled. Growing or highly concentrated markets have higher heterogeneity of growth rates. Copyright © 2007 John Wiley & Sons, Ltd. 相似文献
14.
Volodymyr Bilotkach 《Review of Industrial Organization》2011,38(1):95-115
This paper examines the relationship between multimarket contact (MMC) and the intensity of competition. We take advantage
of a recent merger, which altered the extent of MMC throughout the US airline industry, to understand the nature of MMC’s
impact on the airlines’ frequency of service. Evidence that non-price effects of MMC are a part of the longer-term industry
equilibrium is not robust. However, we observe that following the merger the market players started taking the degree of MMC
into account in making their frequency decisions in line with the ‘mutual forbearance’ hypothesis; however, the effect showed
signs of diminishing over time. Our results have implications for merger evaluation in industries where consolidation may
lead to a higher extent of multimarket contact. 相似文献
15.
This paper studies endogenous mergers of complements with mixed bundling, by allowing both for joint and separate consumption.
After merger, partner firms decrease the price of the bundled system. In addition, when markets for individual components
are sufficiently important, partner firms find it strategically advantageous to raise the prices of stand-alone products,
thus making substitute ‘mix-and-match’ composite products less attractive to consumers. Even though these effects favor the
profitability of mergers, merging is not always an equilibrium outcome. The reason is that outsiders respond by cutting their
prices to retain their market share, and mergers can be unprofitable when competition is intense. From a welfare analysis,
we observe that the number of mergers that are observed in equilibrium may be either excessive (when markets for individual
components are important) or suboptimal (when markets for individual components are less important). 相似文献
16.
Stephen K. Layson 《The Journal of industrial economics》1998,46(4):511-524
This paper analyzes the price, output, and welfare effects of third-degree price discrimination for a monopolist who sells in two interdependent markets. The case where the two goods sold by the monopolist are complements is analyzed as well as the more typical case where the two goods are substitutes. The economic effects of price discrimination are shown to depend on the type and strength of demand interdependence, the curvature of the demands and the slope of marginal cost. The circumstances under which price discrimination causes both market prices to either rise or fall are also analyzed. 相似文献
17.
We analyze the potential entry of a new product into a vertically differentiated market. Here the entry-deterrence strategies of the incumbent firm rely on “limit qualities.” The model assumes quality-dependent marginal production costs and considers sequential quality choices by an incumbent and an entrant. Entry-quality decisions and the entry-deterrence strategies are related to the fixed cost necessary for entry and to the degree of consumers’ taste for quality. We detail the conditions under which the incumbent increases its quality level to deter entry. Quality-dependent marginal production costs in the model entail the possibility of inferior-quality entry as well. Welfare is not necessarily improved when entry is encouraged rather than deterred. 相似文献
18.
19.
In several major deregulated electricity generation markets, the market operator uses an “automatic mitigation procedure” (AMP) to attempt to suppress the exercise of market power. A leading type of AMP compares the offer price from each generation unit with a recent historical average of accepted offer prices from that same unit during periods when there was no transmission-system congestion to impede competition. If one or more units' offer prices exceed the recent historical average by more than a specified margin, and if these offer prices raise the market-clearing price by more than a specified margin, the market operator replaces the offending offer prices with lower ones. In an experiment, we test an AMP of this type. We find that it keeps market prices close to marginal cost if generation owners have low market power in uncongested periods. However, with high market power in uncongested periods, a condition that may apply in many parts of the world, the generation owners are able to gradually raise the market price well above short-run marginal cost in spite of the AMP. We also test the effect of the AMP on the frequency with which high-variable-cost units are used, inefficiently, in place of low-variable-cost units. 相似文献
20.
W. Tom Whalen 《Review of Industrial Organization》2007,30(1):39-61
This paper estimates the effects of code-sharing, antitrust immunity, and Open Skies treaties on prices, output, and capacity
using an eleven-year panel of U.S.-Europe data. Code-sharing and immunized alliances are found to have significantly lower
prices than does traditional interline (multi-carrier) service, but the effects are smaller in magnitude than those found
in previous results that rely on cross-sectional data. Statistical tests that prices for immunized alliance service are equal
to online (single carrier) service often cannot be rejected, providing additional evidence that immunity grants allow immunized
carriers to internalize a double marginalization problem. Estimated output effects, consistent with the price effects, show
that alliances are associated with large increases in passenger volumes. Lastly, estimates suggest that capacity expansions
associated with “Open Skies” treaties are due entirely to expansion by immunized carriers on routes between their hubs.
I would like to thank the editor and an anonymous referee for their helpful comments. The views expressed in this paper do
not reflect those of the US Department of Justice. All errors are my own 相似文献