Toward measuring monopoly power

Some implications of Hyde and Perloff's paper on whether monopoly power can be measured are considered. It is concluded that measuring monopoly power requires a long-run view, with a focus on the implications of product differentiation, and a reliance on accounting data.     

Refunds and returns in a vertically differentiated industry

Firms frequently offer refunds, both when physical products are returned and when service contracts are terminated prematurely. We show how refunds act as a “metering device” when consumers learn about their personal valuation while experimenting with the product or service. Our theory predicts that low-quality firms offer inefficiently strict terms for refunds, while high-quality firms offer inefficiently generous terms. This may help to explain the observed variety in contractual terms.     

The incentives for cost reduction in a differentiated industry

This paper investigates how the incentives for cost reduction in a differentiated industry depend upon the degree of product substitutability. When goods are imperfect substitutes, both Cournot and Bertrand competition result in underinvestment in the sense that a social planner would be willing to pay more for a given cost reduction than a profit-maximizing firm. Overinvestment may occur when the goods are sufficiently close substitutes. Similarly, Cournot competition provides a stronger incentive to innovate than Bertrand competition if the degree of substitutability is low, and a weaker incentive if this degree is high.     

Reflections on Learner's index of monopoly power

Lerner's index of monopoly power is considered in light of four axioms or principles the index should exhibit. The index is then defined for various types of market, involving externality, dynamics, increasing returns to scale, multiproduction, price discrimination and non-zero cross-elasticities of demand. The role of monopoly profit as opposed to non-competitive distortions becomes more important with greater generality. A supplementary index is defined to measure rents to technology.     

Industrial product adoption in a technology push industry

Studies of the industrial adoption of innovatious have frequently concluded that managerial attitudes are a crucial determinant of adoption behavior. However, these studies have usually offered hypotheses rather than rigorous tests. Equally important, these studies have not specified the characteristics of those managers whose attitudes exert a particularly strong influence on the firm's adoption policy.     

Sunk costs,contestability and airline monopoly power

This paper examines the effects of sunk costs and potential competition on pricing behavior in monopoly airline markets. We find little evidence to support the proposition from contestable markets theory that the level of sunk costs influences pricing by monopolists. Rather, the results support the view, consistent with numerous game theoretic oligopoly models, that the costs and the price-cutting reputation of potential entrants influence incumbent behavior. These results suggest that contestability theory may not be robust. Even in the markets characterized by increasing returns to scale, the perfectly contestable market may not be a useful welfare standard.I am grateful to Richard Levin, Merton J. Peck, Sharon Oster, Paul MacAvoy, Dan Kaplan, Michael Levine, David Sappington, Andrea Shepard, and Diana Strassman for their advice. Participants at numerous workshops also made useful comments. Steven Davis, Tadas Osmolshis, and Maeve O'Higgins provided help with the data and technical assistance. I acknowledge financial support from Yale University and the Eno Foundation for Transportation. The usual disclaimer, of course, applies.     

Coordinating supplier involvement in product development projects: a differentiated coordination typology

Supplier involvement in product development has been a widely discussed theme in recent years. Sometimes, one 'best method' for involvement, derived from studies of one particular industrial context, has been suggested. In this article, however, various forms for coordinating such involvement are distinguished, based on a study of six different product development projects. Three main approaches are formulated and discussed: project integration coordination, disconnected sub-project coordination, and ad hoc coordination. Based on the empirical study and the literature, the drivers of different types of supplier coordination are discussed. Several managerial implications are suggested related to the need to differentiate inter-organizational coordination, not only from project to project but also throughout a project. The importance of taking into account short-term, project-based drivers as well as long-term strategic objectives of supplier coordination is also discussed.     

电力工业从垄断到竞争的结构演变

介绍了与经济思潮的交替更迭相适应,在规制(垄断)与竞争的选择上,西方发达国家的经济政策经历了从强调市场失败与规制到强调规制失败与放松规制再到强调再规制的历史演变,以及与经济生活中规制(垄断)与竞争政策交替更迭的过程相适应,电力工业结构正在经历类似的演变过程。受这种规律的启发,在当今电力工业引入竞争的改革后,很可能在今后再出现强化垄断(规制)的改革。     

Preemptive rent seeking and the social cost of monopoly power

Monopoly power evokes rent seeking aimed at supplanting an incumbent monopolist as well as preemptive rent seeking by incumbents concerned with deterring entry of potential competitors. Using an illustrative example where preemptive rent seeking takes the form of excess capacity, this note makes the point that the relation between the value of resources expended in the two types of rent-seeking activity determines whether exposure of an incumbent monopolist to the discipline of potential competition reduces the social cost of monopoly power.     

绿色设计在工业产品设计中的应用

随着人类生存环境的不断恶化,资源可持续发展的重要性逐渐被人们所认识,引发了绿色设计和人性化设计等设计思潮。从3个方面对绿色设计在工业设计中的应用进行了认识分析,指出绿色设计融入工业设计是工业设计发展的必然趋势,它会使工业设计更加符合人类消费心理的需求,符合社会发展的需求,使工业设计理论更为科学实用。     

Expert labour as a differentiated category: power,knowledge and organisation

The idea of ‘expert labour’ as a category uniting many kinds of knowledge‐based work has long been of interest. At the same time, existing models often do not differentiate between the many forms of ‘new’ expertise in the main business and technological groups. These tend to be consolidated in single categories of ‘entrepreneurial’, ‘organisational’ or ‘commercial’ professions. This paper built on Reed's seminal account of the expert division of labour. It used his analytic dimensions of power, knowledge and organisation to develop a new framework comparing clusters of expert labour in professional services, business services and knowledge work. It offered a more detailed classification and a comparative view that throws fresh light on key debates around new professionalism and emergent technologically defined occupations.     

On commodity taxation in vertically differentiated markets

We examine the impact of commodity taxation on vertically differentiated product markets when entry is allowed. We show that an ad valorem tax may have a dramatic effect on market structure by inducing the entry of a large number of firms in what was previously a natural monopoly. The producers of high quality products reduce market share after an increase in their unit production cost, leaving more room for lower quality products. While within a given market structure aggregate quality decreases monotonically with the tax rate, quality jumps upwards at tax rates that cause a change in market structure.     

MIPS:让产品渗入产业链

德州仪器CEO理查德·谭普顿于2005年9月8日公布了TI下一代数字视频的创新技术DaVinci,承诺将为所有的系统工程师提供一个前所未有的平台。就在三个月后,TI推出了达芬奇系列数字视频处理器TMS320DM6443与TMS320DM6446。同时,TI对达芬奇技术的定义却不仅仅局限为高度集成的单片集成系统(SoC),而是赋予它更为广阔的含义,其中包括了优化的应用软件、开发工具、     

On two-part tariff competition in a homogeneous product duopoly

We explore aspects of two-part tariff competition between duopolists providing a homogeneous service when consumers differ with respect to their usage levels. Competition in only one price component (the fee or the rate) may allow both firms to enjoy positive profits if the other price component has been set at levels different enough between firms. Fixing one price component alters the nature of competition, indirectly introducing an element of product differentiation. Endogenous market segmentation emerges, with the heavier users choosing the lower rate firm and the lighter users choosing the lower fee firm. When no price component can be negative, competition becomes softer, profits tend to be higher but there is also a disadvantage for the firm that starts with a higher fee than that of its rival.     

The optimal regulation of a risky monopoly

We study the potential conflict between cost minimization and investment in prevention for a risky venture. A natural monopoly is regulated i) for economic purposes; ii) because it can cause losses of substantial size to third parties (the environment or people). The regulator observes the production cost without being able to distinguish the initial type (an adverse selection parameter) from the effort (a moral hazard variable). In addition, the investment in prevention is non observable (another moral hazard variable) and the monopoly is protected by limited liability. We fully characterize the optimal regulation in this context of asymmetric information plus limited liability. We show that incentives to reduce cost and to invest in safety are always compatible. But, in some cases, higher rents have to be given up by the regulator.     

Supplier involvement in new product development in the food industry

Purchasing and supplier involvement as one possible explanatory factor of product development success has been gathering growing attention from both managers and researchers. This paper presents the results of a Dutch benchmark study into supplier involvement in product development, and discusses the topic more specifically in the context of the food industry. Regarding supplier involvement, this industry has not been studied intensively, although its specific characteristics make continuous development of new products imperative and the amount of outsourcing of production and development has increased substantially. The benchmark was conducted by means of an existing framework which has not yet been applied to the food industry. The food company in the benchmark study performs consistently better than companies from other industries. At the same time, the results of a similar case study carried out at a Scandinavian food company show contradictory results. By comparing the Dutch and the Scandinavian case, we illustrate that our analytical framework can explain these different results in terms of the underlying processes and pre-conditions, thereby validating its application to the food industry.     

New product development process and time-to-market in the generic pharmaceutical industry

Generic pharmaceutical companies tend to improve their market position by being first in the market when a patent on an original product elapses. The time-to-market of new products is an important source of their comparative advantages. In our study we investigate the organizational and managerial factors lying behind time-to-market in four generic pharmaceutical companies in Central and Eastern Europe. Our research also supports some results found in other studies on the lead-time of new product development. However, we find some factors specific to generic pharmaceutical companies. Our findings are incorporated into a diagnostic model of new product development in generic pharmaceutical companies, which is an important practical result of our research.     

A shift to external alliances for product development in the pharmaceutical industry

For a number of years, pharmaceutical companies have been departing from a tradition of strict vertical integration, looking to external sources for at least some of their novel technology and products. The aim of this study was to determine whether (1) this is a long term, industry-wide trend, or (2) merely a temporary or local response to acquire the technical capabilities of the biotechnology revolution of the 1970's, after which, with the new generation of technology in-house, they will revert to primarily in-house innovation. Analysis of secondary data on a representative sample of the fifteen largest drug companies in the United States, the United Kingdom, Germany and Switzerland indicated that between 1977 and 1987, these pharmaceutical companies increased their external R&D alliances nearly six-fold on average. A large and growing proportion of pharmaceutical companies' R&D alliances are formed with biotechnology firms which have proprietary technology, due to financial and innovative pressures. Far from being temporary, this resort to external sources of technology in the pharmaceutical industry follows the trends of the wider industrial world towards functional specialization. Thus, biotechnology companies are increasingly taking on the role of suppliers of innovation.     

Best new product development and management practices in the Korean high-tech industry

This paper investigates critical factors affecting the likelihood of new product success and effective new product development (NPD) models for Korean high-tech firms. Empirical results suggest that successful projects differ from unsuccessful projects in project environment, skills and resources, project leadership, strategic fit, efficient NPD process, and effective product-positioning strategies.This study confirmed that efficient and effective new product development and management were important determinants of high-tech firms' competitive advantage. Furthermore, the findings of this study raised questions about some commonly held beliefs when compared with Western studies focusing on high-tech industries.     

Innovation in product architecture—A study of the Chinese automobile industry

The purpose of this paper is to put forward the hypothesis that a transformation from closed integral architecture to quasi-open modular architecture contributes to the achievement of a low-cost competitive strategy by Chinese carmakers. The question, “What is quasi-open architecture in Chinese industry?” is addressed in the theoretical section, followed by the Geely case in the passenger car sector. Two perspectives form the basis of the analysis: that of the carmaker and that of its relationship with suppliers. The findings offer an insight into the competitive strategy of firms in emerging economies and some valuable observations concerning the “catching up” trajectory of Chinese firms.