Entry Solicitation and Deterrence in R&D Competition with Spillovers

The purpose of this note is to examine incumbent behaviour and patterns of entry under R&D competition with spillovers. We find that, in addition to blockading, deterring and accommodating entry, the incumbent may also solicit entry. Entry solicitation occurs when the incumbent strategically alters its R&D commitment in order to take advantage of the spillover generated by the entrant's subsequent R&D investment. Although our results are placed in the context of R&D with spillovers, they are applicable to a wider class of models involving positive externalities, particularly network externalities.
JEL Classification Numbers: L12, O31.     

Lifetime Employment Contract and Strategic Entry Deterrence: Cournot and Bertrand

This paper is based on a two-stage model of an incumbent firm and a potential entrant, and studies both quantity-setting competition and price-setting competition. We consider a lifetime-employment-contract policy as a strategic commitment that generates kinks in the reaction curve. Furthermore, demand functions are classified into two cases in terms of the strategic relevance between both firms. Therefore, we examine the following four cases: 'quantity-setting competition with strategic substitutes', 'quantity-setting competition with strategic complements', 'price-setting competition with strategic substitutes' and 'price-setting competition with strategic complements'. The purpose of this paper is to analyse entry deterrence in the four cases and to show the effectiveness of the lifetime-employment-contract policy as a result of its analyses.     

Airline Schedule Competition and the Entry Route Choices of Low‐Cost Carriers

This study investigates the entry route choices of low‐cost carriers (LCCs). A LCC considers whether to enter a spoke route or a rim route of a major carrier's hub‐spoke network. Under a Cournot schedule competition model, we demonstrate that rim entry is more profitable for LCCs if connecting passengers' hub‐through additional travel time cost is large, and spoke entry is more profitable if this time cost is small. Welfare analysis shows that rim entry is socially preferable when the time cost is large and that spoke entry is socially preferable when the time cost is small. In a certain range of time costs, however, LCCs choose spoke entry even though it is not socially preferable.     

Exclusion via Non‐Exclusive Contracts

We establish that non‐linear vertical contracts can allow an incumbent to exclude an upstream rival in a setting that does not rely on the exclusivity of the incumbent's contracts with downstream firms or any limits on distribution channels available to the incumbent or rival. The optimal contract we describe is a three‐part quantity discounting contract that involves the payment of an allowance to a downstream distributor and a marginal wholesale price below the incumbent's marginal cost for sufficiently large quantities. The optimal contract is robust to allowing parties to renegotiate contracts in case of entry.     

Strategic Reaction of Vertically Integrated Firms to Downstream Entry: Deterrence or Accommodation

The purpose of this paper is to analyze strategic behavior of vertically integrated firms when there is downstream entry, taking into account the balance between competition in the market and competition for the market. This analysis can serve to explain diverse distributional structures, including the coexistence of vertically integrated firms and independent retailers. And it shows that the relative efficiency of downstream entrants and the level of competition among incumbents are two major factors in determining equilibrium configuration.     

加入WTO对铁路企业的影响

世界贸易包括货物贸易、服务贸易和技术贸易(知识产权)三方面内容。我国加入WTO以后,铁路将分三阶段开放货运市场。第一阶段,加入之际,允许外资参股中外合营铁路货运企业,外资比例不超过49％。第二阶段,加入WTO满3年后,允许外资在铁路货运公司中控股。第三阶段,加入WTO满6年后,允许设立外商独资的铁路货运公司,同时承诺开放与铁路货运有关的仓储和货运代理业务。这样铁路企业不     

Exporting and Productivity: The Effects of Multi‐Product and Multi‐Market Export Entry

Empirical studies on the micro‐level effects of exporting on productivity pay usually little attention to the potentially heterogeneous effects of the different modes of export market entry. We show that multi‐product export entry is associated with higher post‐entry productivity compared to other firms. This can imply significant benefits from experimentation with different products. Our analysis is based on detailed export data from full population of firms in Estonia, disaggregated for each firm by export markets and individual products.     

A "Tragedy of the Clubs": Excess Entry in Exclusive Coalitions

We model club formation as a noncooperative game of coalition formation and surplus division. We show how social norms and individual rationality sustain a particular type of collective inefficiency, namely, excessive entry in the joint production and exploitation of an excludable good. We term this phenomenon the "tragedy of the clubs." The tragedy of the clubs is a pervasive equilibrium phenomenon.     

Competition and Privatisation Policies in a Differentiated Mixed Oligopoly: The Pay‐off‐interdependence Approach

I revisit the relationship between competition and privatisation policies in a mixed oligopoly with differentiated goods, following the pay‐off‐interdependence approach in the fashion of Matsumura and Okamura. We find that although the intensity of market competition increases with the degree of importance of each firm's relative performance, the optimal degree of privatisation can decrease in a differentiated goods mixed oligopoly in both the increasing marginal costs case and the constant marginal costs case. Further, given the degree of importance of each firm's relative performance and the number of private firms, we find that the optimal degree of privatisation can decrease as the degree of product differentiation declines. Finally, by considering an alternative‐pay‐off model in both cases, we compare the optimal degree of privatisation of the public firm.     

Competition Between Networks: A Study of the Market for Yellow Pages

This paper estimates the importance of network effects in the market for Yellow Pages. I estimate three simultaneous equations: consumer demand for usage of a directory, advertiser demand for advertising and a publisher's first-order condition (derived from profit-maximizing behaviour). Estimation shows that advertisers value consumer usage and that consumers value advertising, implying a network effect. I find that internalizing network effects would significantly increase surplus. As an application, I consider whether the market benefits from monopoly (which takes advantage of network effects) or oligopoly (which reduces market power). I find that a more competitive market is preferable.     

Entry and Competition in the Postal Market: Foundations for the Construction of Entry Scenarios*

This paper presents a model of entry and imperfect competition, which is inspired by the product differentiation literature and incorporates facts pertaining to the postal sector. There are two operators: incumbent and potential entrant. The entrant offers only one of the products (commercial mail) with a specific technology and delivers only to part of the addressees (located in low cost areas). Its degree of coverage is viewed as a quality attribute; it affects demand and hence market share. The incumbent faces a USO while the entrant is an unregulated profit maximizing firm. To illustrate the potential applications of our approach, we provide some numerical simulations of entry scenarios.     

Competition Among Italian Junior‐Secondary Schools: A Variance‐Decomposition Empirical Analysis

The public economic theory emphasizes the potential role of competition in fostering the performance of educational systems. The rationale for pro‐competitive policies in education (i.e. vouchers, charter schools, tax deductions) is that schools can improve their quality responding to ‘pressures’ from nearby competitors. The objective of this paper is to analyze the potential relationship between (i) competition among schools and (ii) students’ achievement in Italy. While previous studies used OECD‐Pisa data for this purpose, here a new dataset about Italian schools has been employed: about 19,000 students in 150 schools constitute the sample. The reference framework is the idea that the presence of more schools in a certain area, and/or the proportion of students enrolled in private schools, should raise the performance of schools operating in that area through a ‘competition effect’. A multilevel strategy, which allows separating between‐areas variance in achievement scores, is employed. The findings support the view that competition has an impact, albeit little, on students’ achievement, and such competitive pressure is due to the number of schools, no matter if public or private.     

自主创新:产业壁垒弱化中的战略——以奇瑞汽车公司经验为例

过高的进入壁垒曾使得汽车自主创新高不可攀,但随着汽车产业环境和产业自身特性的变化,进入壁垒正逐渐弱化。在壁垒弱化的趋势中,采取创新战略进入汽车自主创新领域就成为产业发展的新机遇,奇瑞即是成功的典范。     

进入壁垒、生产能力扩张与证券审计市场的竞争

本文从产业组织的视角,利用2001～2005年我国A股审计市场的面板数据,分析了进入壁垒、生产能力扩张这两种竞争因素对我国证券审计市场竞争的影响。结果表明,2000年后证券审计市场政策性进入壁垒提高后,短期内证券审计市场价格竞争有所削弱。但在长期,外生的需求增长导致各事务所生产能力快速扩张,使得市场竞争加剧。从整个研究时期看,进入壁垒提高带来的减缓竞争效应仍大于生产能力扩张带来的竞争效应。     

Hotelling–Downs Competition with Free Entry When Voters Have an Option to Contest

Osborne shows that for almost all distributions of voters’ preferences, a pure strategy Nash equilibrium does not exist in the classical Hotelling–Downs model of electoral competition with free entry. We show that equilibrium is generically possible if in addition one allows voters an option to announce their candidacy to compete side‐by‐side with office‐seeking players. The model studied in this paper renders Osborne and the celebrated citizen‐candidate model à la Osborne and Slivinski as two extreme cases. We characterize the equilibrium set with two central questions: (i) can there be equilibria where only voters contest? and (ii) are equilibria with contesting office‐seeking players possible? We also show that in our general setting, extremists are typically voter‐candidates so that in every two‐party contest, office‐seeking politicians stay out of competition.     

Inter‐Jurisdictional Competition for Firms*

Regions inhabited with an immobile population of disabled and able individuals compete to attract mobile firms that provide jobs. The redistributive goal of regional governments is to support the disabled, who cannot work. Able individuals may work, be involuntary unemployed because of frictions in the labor market, or choose to be voluntary unemployed. Labor force participation decisions depend on regional redistributive policies. Both the size of workforce and tax on firms affect profits and therefore, firms’ location decisions. Allowing regions to engage in tax competition may be efficient. If regions cannot tax firms, they compete by implementing inefficient redistributive policies.     

Competition and Competition Policy in the Trans‐Tasman Air Travel Market

New data on air fares offered on 29 trans‐Tasman and domestic New Zealand routes are analysed to test whether competition between traditional or ‘legacy’ airlines still matters for pricing in the new air travel regime characterised by internet booking systems and competition from low cost carriers. It is found that market structure does indeed still matter. Air fares are significantly lower on those domestic New Zealand routes where Air New Zealand faces competition from Qantas. In addition, on the trans‐Tasman routes, the new entrants Virgin (Pacific) Blue and Emirates have put competitive pressure on Air New Zealand and Qantas, but such pressure would not be sufficient to compensate for loss of independent competition between the larger incumbents.     

The Oecd Model Tax Treaty: Tax Competition And Two‐Way Capital Flows*

Model tax treaties do not require tax rate coordination, but do require that either credits or exemptions be applied to repatriated earnings. This contradicts recent models with a single capital exporter where deductions are most efficient. I incorporate the fact that capital flows are typically bilateral. With symmetric countries, credits by both is the unique and efficient treaty equilibrium. This equilibrium weakly dominates the nontreaty equilibrium. With asymmetric countries, the treaty need not offer improvements without tax harmonization. With harmonization, it is always possible to reach efficient capital allocations while increasing both countries' welfares only if neither uses deductions.     

地方政府竞争模式选择:制度竞争胜于资源竞争

地方政府竞争模式各不相同,该文把其概括为资源模式和制度模式。在资源竞争模式下,注重对生产要素的争夺和占有、强调对产业竞争力的培养;而在制度竞争模式下,不断进行制度创新并降低制度成本,减少"制度腐败",促进地方政府间相互信任。因此,地方政府竞争模式必须由资源模式向制度模式转变。     

Measuring Labour Services: Quality‐Adjusting the Entry and Exit of Workers

Many statistical agencies use the sum of hours worked when measuring labour services. This implies that all workers provide work of equal quality. Various indices for adjusting for labour quality have been employed in a large body of literature. However, this literature has not yet addressed the issue of how to quality‐adjust the impact of workers entering and exiting the labour market. We outline a theoretical framework for dealing with quality adjustment of labour services caused by workers entering and exiting employment. To illustrate the theoretical framework, we use the case of Norway in the period 1997–2013. The impact on labour services due to our quality adjustment of net entry is found to be cyclical. While the adjustment for the quality of net entry amounts to about −0.3 percentage points annually during expansions, it is offset by about the same magnitude during contractions.