Market concentration and competition in OECD mobile telecommunications markets

This study analyses the progress of market concentration in OECD member states’ mobile telecommunications markets and evaluates the relationship between market concentration and performance. Using annual panel data from 24 OECD member states for the 1998–2011 period, the study estimates regression equations for market concentration, mobile prices and profits. The empirical results indicate that the more concentrated the mobile market, the higher the prices and profits, providing support for the market power hypothesis. If this hypothesis holds, then market concentration can be a useful indicator of market performance. On the other hand, the applicability of the hypothesis is unclear for the second half of the sample period. The results provide evidence that regulatory policies influence the structure and performance of mobile markets.     

Trade Distorting Private Restraints and Market Access: Learning to Walk Before We Run

The absence of domestic competition laws in some nations, the weak enforcement of existing competition laws in other nations, and the inability of competition lawenforcement authorities to exchange confidential information, collectively permit the continued existence of private restraints which have the potential to seriously undermine the trade liberalization gains that have been achieved through successive rounds of GATT negotiations. This paper advocates a two-track approach to addressing this problem, by (i) pursuing practical results through increased bilateral cooperation and the promotion of minimum standards in the short to mid-term, while, at the same time, (ii) continuing to pursue a second track of attempting, over the mid to long-term, to achieve a multilateral dispute settlement mechanism, and perhaps even a multilateral code for private restraints which have an international dimension. In the authors' view, pursuit of the more modest initiatives contemplated by the first track should have a boot-strapping effect on the second track, in terms of substantially moving forward the time at which an international dispute settlement mechanism and an international competition law code for cross-border restraints may become politically possible, and ultimately, a reality. The paper further suggests that a multilateral framework for addressing anti-competitive restraints is preferable to (i) the piece-meal approach that is likely to develop in the absence of such a framework, and (ii) the use of negative-sum unilateral tools such as trade sanctions or the extra-territorial exercise of domestic competition laws.     

Prices and market structure: an empirical analysis of the supermarket industry in Chile

This article investigates empirically the relationship between market structure and consumer prices in the supermarket industry in Chile. A panel of monthly data from 16 cities in the period January 1998–September 2006 is used. We find that, the more concentrated the industry in a city, the higher the prices, while the participation of major national chains in cities tends to lower prices. In terms of magnitude, this latter effect prevails over the former. Moreover, the dominant local chain is found to behave differently depending on whether or not one of the national chains is present in the city. Finally, we find that prices rise when a national chain acquires another chain and both were previously in a city (inmerge) while if only one of the two was present (outmerge), prices fall.     

Market access and occupational upgrading: evidence from the 19th century American transportation network

This article investigates the extent to which county-level market access affects workers’ occupational upgrading and industrial sorting by exploiting the substantial spatial variation and rapid expansion of the United States’ transportation network coverage from 1870 to 1880. First, I find that individuals who enjoyed greater market access in 1880 were more likely to work in higher-paying occupations. Importantly, this result holds across all sectors of employment, for younger and older workers, and for migrants and non-migrants, suggesting that any market size effects on occupational upgrading were not specific to any one group. I also provide results showing that workers were more likely to switch industries within agriculture, but are less likely to do so from manufacturing or services. Finally, I find some evidence of changes to sectoral reallocation, principally away from agriculture, being associated with higher market access. My findings suggest that the expansion of the transportation network in played an important role in determining the type of work Americans performed in the nineteenth century.     

Market forces and competition in university systems: theoretical reflections and empirical evidence from Italy

This paper deals with the reforming processes in higher education (HE) from centralised systems towards more competitive ones. In particular, I discuss these issues referring to the Italian case, and the market‐like mechanisms introduced in it during 1990s and early 2000s. The focus of the paper is in analysing the effects of the increasing competition on teaching performance of universities. For this purpose, I develop a theoretical model, moving from the framework of yardstick competition (YC), to describe the functioning of a competition model based on comparing performance of institutions. Then, I apply this model using data from the Italian university system. The results suggest that an increasingly competitive environment effectively improves the universities’ performance, which is also influenced by other factors, namely the characteristics of the institutions themselves and of their students, and by the resources available. As the exploratory nature of the study, these findings must be validated through future research.     

Threshold effects in the regulation-innovation nexus: evidence from the telecommunications industry

Journal of Regulatory Economics - This study empirically tests the relationship between regulation and innovation in the telecommunications sector by deploying an efficient panel threshold model....     

The impact of incentive regulation on productivity in the US telecommunications industry: A stochastic frontier approach

This paper investigates whether the substitution of price cap regulation (PCR) and other forms of incentive regulation for traditional rate of return regulation (RRR) has had a measurable effect on productivity growth in the US telecommunications industry. A stochastic frontier approach is employed to compute the efficiency change, technological progress, and productivity growth for 25 LECs over the 1988-1998 time periods. By examining the relationship between the change in productivity growth and regulatory regime variables and other control variables, we find that PCR has a significant and positive effect, both in contemporaneous and lagged specifications.     

Competition,product line length,and firm survival: evidence from the US printer industry

Adjusting product line length is one major strategy that firms employ to sustain their market position in competitive environments. This study extends extant literature on product line length by adding empirical results on the relationship between competitive intensity and product line length, and by examining the performance of firms that follow the suggested product line strategies. The analysis of data on 1849 printer products introduced by 342 manufacturers from 1983 to 2002 shows an inverted U-shaped relationship between competitive intensity and product line length, and firms following this pattern have a significantly lower hazard ratio of exit. These results confirm those discussed in the previous literature and provide evidence of the positive impacts of following such product strategies on firm survival.     

Market efficiency and continuous information arrival: evidence from prediction markets

Two regularities in financial economics are that prices underreact to news events and that they display short term momentum. This article tests for the presence of these regularities in prediction markets offered by the betting exchange Betfair on the 2008 Ryder Cup Golf Competition. Betfair offered in play prediction markets on the individual match play pairings and on the Cup result, with trading being virtually continuous in all markets. Modelled probabilities of the Cup result were updated continuously using trades in the individual match play pairings. These probabilities were then compared with the probabilities of the Cup result implied by odds in that market. The odds in the market for the Cup result underreact to both good and bad news that is provided by changes in the odds in the markets for the individual pairings. Further, these modelled probabilities Granger cause changes in the probabilities of the Cup result implied by odds in the market on that outcome. In addition, economically and statistically significant evidence of momentum is found in the odds in the market on the Cup result.     

How natural disasters affect the evolution of grain markets: evidence from 18th-century China

Market is the foundation of modern society. However, how did market evolve? Previous research has explored the impacts of spatial distance and transportation conditions on market integration. This article argues that natural disasters also played a crucial role in the evolution of market integration in China, particularly in the grain market. When natural disasters occur, governments’ relief measures and merchants’ arbitrage activities will gradually promote interconnectivity among local grain markets. In this article, China’s major grain monthly price data set from 1746 to 1795 and the Chinese historical disaster records dataset from 1696 to 1795 are used to analyse the impact of natural disasters on grain market integration. The empirical results show that natural disasters have a significantly positive effect on the integration of the grain market. The findings continue to hold after controlling the traffic conditions, grain varieties and lag effect. This study proposes a new perspective for understanding the evolution of the grain market.     

Product quality and competition: evidence from the broadband industry

Access to high-quality broadband internet is important in many different respects such as in communication, education, commerce and information acquisition. We investigate the relationship between the number of broadband providers in an area and the quality of broadband service provided where download speed is used as a proxy for quality. We find that increased competition in an area positively affects the access to fast download speeds. This finding is robust to three different top download speeds tested. Additionally, a theoretical model is provided which shows that competition can decrease the profits associated with offering slow speeds; this gives an incentive for providers to offer higher speeds as a way to increase profits.     

Environmental disclosure and stock market liquidity: evidence from Arab MENA emerging markets

The objective of this study is to examine the impact of environmental disclosure levels on the stock market liquidity of Arab Middle Eastern and North African (MENA) companies. For that, a self-constructed disclosure index was applied to the annual reports for the years 2010, 2011 and 2012 and the bid-ask spread was used as a proxy for stock market liquidity. Results indicate that levels of environmental disclosure in MENA companies are quite low. In addition, using a sample of 276 firm-year observations, multivariate analysis shows that the higher the level of environmental disclosure provided in the annual reports, the lower the spread between the market bid and ask prices, thereby indicating an increase in stock market liquidity.     

Vertical integration,escalating commitment and technological performance: evidence from firms in the US computer industry

We set out in this study to analyse the impact on the technological performance of firms arising from their vertical integration, along with their escalating commitment to capital investment. Our findings reveal a positive relationship between vertical integration and the technological performance of such firms. A positive correlation is also found to exist between vertical integration and escalating commitment to capital investment; in other words, a firm's rising commitment to its capital investment may well strengthen the positive effects of vertical integration on the technological performance of the firm. More importantly, the interactive effects on technological performance will tend to differ, largely dependent on the type of vertical integration. The findings of this study also indicate that vertical integration can effectively neutralise the threat to exit barriers resulting from a firm's escalating commitment to its prior investment.     

Foreign investment regulation and firm productivity: Granular evidence from Indonesia

When regulating foreign direct investment (FDI), countries often face a trade-off between pursuing national policy interests and suffering efficiency losses due to FDI restrictions. We demonstrate the presence of this trade-off in the case of a protectionist FDI policy in Indonesia. Using a yearly census of Indonesian manufacturing firms from 2000 to 2015, we link product-level changes in binding FDI regulation due to major regulatory tightening to changes in firm-level productivity. Controlling for an extensive set of fixed effects as well as potential political economy drivers of regulation, we show that a tightening of the regulatory environment was successful in reducing foreign capital reliance among regulated firms, and led to increases in FDI among non-regulated firms producing the same product. Despite compensating increases in domestic capital, regulated firms experienced relative productivity losses. This points towards either a less efficient allocation of domestic capital or a general inferiority of domestic capital as compared to foreign investments.     

Food Prices and Market Structure in Sweden

This paper examines retail grocery price levels across a large panel of stores in Sweden. We explain price variation across stores by market structure variables to capture differences in competition intensity and a number of store– and region–specific factors. Most of the explained variation in prices can be attributed to store–specific factors such as size and chain affiliation. Overall, the relation between market structure variables and food prices is weak, and effects are small in percentage terms. Nevertheless, higher local concentration of stores, higher regional wholesaler concentration and a lower market share of large stores are all correlated with higher prices.
JEL classification : D 43; L 13; L 81     

Credit ratings and corporate disclosure behaviour: evidence from regulation fair disclosure in Korea

This article provides evidence that firms with high market expectations disclose more information to investors, utilizing the fair disclosure regulation in Korea to proxy for their disclosure choices. This finding is consistent with the argument that in order to retain their dominant positions, highly evaluated firms are more concerned about the market’s perception of them as providers of timely and detailed disclosure. We also find that the impact of market expectations on disclosure is more pronounced for chaebol firms. Combined with prior research on the relationship between firm performance and voluntary disclosure, we provide important implications for the determinants of corporate disclosure     

Infrastructure regulation and reallocations within industry: Theory and evidence from Indian firms

Many firms in developing countries adopt captive power generators to deal with expensive and unreliable supply of electricity. I present a model that combines upstream regulation with downstream heterogeneous firms in a monopolistic competition framework, where firms can pay a fixed cost to adopt this marginal cost-reducing device. The presence of captive power affects the market equilibrium by increasing the level of idiosyncratic productivity a firm needs to survive in the market and by re-allocating sales and profits towards the more productive, adopting firms. Additionally, the rate of adoption is shown to increase with the price of electricity, industries' electricity–intensity and with higher barriers to firm entry. The mechanisms I propose are present for a cross-section of Indian firms.     

Innovation,product development and market value: evidence from the biotechnology industryinnovation in biotechnology industry

The subject of the paper is financial valuation of firm's knowledge assets and returns to innovation in the biotechnology industry, where such assets appear to play key role in the commercial success of a product. The biotechnology industry is extremely research-intensive, and successful R&D drives profitability. Further, the pharmaceutical product development advances in a number of well-defined stages that allow relatively precise measurement of product development outcomes. The study reports recent biotechnology R&D statistics, and provides estimates of private returns to innovation and product development activity in the biotechnology industry. The conclusions indicate that the financial market recognizes the value of drugs in product development stage, as it expects the innovative knowledge embodied in drug development projects to become marketable products in the future.     

Testing for profitability and contestability in banking: evidence from Austria

The paper investigates the determinants of banking profitability and banking market conditions in Austria. We conduct a panel econometric analysis which allows for testing the hypotheses which have become the most prominent in the literature on bank profitability: the structure–conduct–performance hypothesis, the efficient‐structure hypothesis and the relative market‐power hypothesis. Further, we test whether Austrian banking markets are, on average, contestable. A newly compiled dataset covering more than 700 Austrian banks ranging over the period from 1995 to 2002 is used to carry out these econometric analyses. The empirical findings support the view that the Austrian banks do exert, on average, some local market power. However, the gains in terms of excess profits are rather minor as a result of low deterrence powers of the incumbent banks.