Regulation and the Development of Competition in the U.K. Gas Supply Industry

When the U.K. gas supply industry was privatised, it retained its monopoly vertically integrated structure. We discuss the forces which led to the deregulation of the U.K. gas supply industry. Important factors in the process include a number of critical reports by the regulatory authorities, the growth of alternative gas supplies including the development of the spot-market, and the success of independents in gaining market share in markets opened up to competition. We also present surveys of gas users and independent gas suppliers and find that price advantage has been the critical factor in the increase in market share gained by the independent gas suppliers.     

Protection, promotion and cooperation in the European semiconductor industry

EC Member States' national champion policies of the 1970s were not successful in developing firms that led in their home markets, and the corresponding EC policies of the 1980s (many of which encouraged inter-European strategic alliances) were not successful in developing firms that led in the European market. Using strategies that involve world-wide cooperation, European firms are beginning to carve out secure places for themselves in what is now a world market. Joint ventures have been critical in bringing European firms up to world performance levels, but extra-European as well as intra-European cooperation has been essential.     

The Integration of Mortgage Markets and Capital Markets

In this paper, we develop a model to predict the impact of deregulation in the form of relaxing interest rate control on the integration between the mortgage credit market and the general credit market. The model is tested through the examination of the long-term Granger-like equilibrium relationship between mortgage interest rates and general interest rates in the pre-1980 regulated vs. the post-1980 deregulated periods. It is shown that the level of regulation, in the form of targeting general interest rate levels, contributes to the segmentation of the mortgage market from the capital market. To test this model, we compare the relationship between mortgage interest rates and general interest rates around 1980 where major control on interest rate levels in capital markets was lifted. Using Engle and Granger's procedure to overcome the estimation problem from nonstationarity in the interest rate series, we are able to find that the two interest rates were cointegrated after 1980 but not before. More importantly, it appears that the two markets were already integrated before the full development of the secondary mortgage markets between 1984 and 1987. Therefore, we conclude that the bulk of the integration between the mortgage and capital markets was completed as a result of the removal of interest rate controls around 1980, in contrast with previous studies that find integration occurred during the mid-1980s primarily as a result of the rapid development of the secondary mortgage markets.     

市场结构与横向产品差别化的相互关系分析

产品差别化对市场结构的形成有很大的作用,经典的豪特林模型只得出了产品差别最小化和最大化原则,由此模型得到的市场结构为完全竞争市场和寡头垄断市场,但垄断竞争市场却无法得到。文章在豪特林模型的基础上构造出统一框架,不但分析产品最大和最小差别情况,而且提出中间程度差别化的分析模型。得出所时应的三种市场结构。尤其是中间程度的差别化对应的垄断竞争市场。对这三种市场结构进行社会福利分析,得出在消费者不同质时,相对于完全竞争市场,垄断竞争市场是相对较好的选择。     

董事市场供给会影响董事会独立性吗——基于中国上市公司的实证分析

独立董事选择过程的不可观测性使得独立董事的选择机制一直被忽视,独立董事的来源在很大程度上决定了其作用的有效性。以揭开独立董事选择机制的"黑箱"为目的,通过构造董事市场供给指数的方式,我们发现,市场供给对董事会独立性产生重要影响。本地市场供给对非国有和竞争行业的公司董事会独立性的影响显著大于国有和垄断行业的公司,中心市场的辐射效应却与此相反,即辐射效应对国有、垄断和大规模的公司董事会独立性影响更大;在剔除强制性需求之后,市场供给对董事会独立性自主性需求的影响与总需求的影响基本一致。本文首次揭开了独立董事的选聘"黑箱",并为解决董事会内生性提供了新方法。     

Price asymmetries and the path dependence of market power: Evidence from the U.S. airline industry

This paper uncovers price asymmetries across oligopolistic and monopolistic markets that are seemingly identical in structure but different in competitive history. This is done by identifying “quiet life” markets that have not (yet) experienced a change in structure, and “non-quiet life” markets that have been disrupted by firm entry and/or exit. Using a long panel dataset from the U.S. airline industry, we find that quiet life duopolies price significantly higher than duopolies that come about by entry in monopoly, and that quiet life monopolies price significantly lower than monopolies that come about by exit in duopoly. We show that the path towards a particular market structure matters for the determination of prices and explore several mechanisms that likely explain the price asymmetries, including engagement in anticompetitive behaviour, adjustment behaviour to market structure changes, and the cost heterogeneity of competing firms.     

Dynamic Credit Rationing in the Home Mortgage Market

In this study a model of dynamic credit rationing in the home mortgage market by a profit-maximizing financial institution is developed.
In the 1960s and 1970s it was widely believed that credit rationing was very important in the mortgage market. The recent deregulation and innovation in financial markets is belived to have resulted in a significant weakening of these availability effects. For the model developed it is shown that deposit diversification, such as the introduction of money market accounts in 1978, would tend to reduce the amount of any dynamic credit rationing that was occurring.     

Same as it ever was: the search for evidence of increasing hypercompetition

Some strategy scholars and practitioners contend that markets have become increasingly hypercompetitive in recent years. We examine this contention by analyzing industry and business performance patterns in a broad sample of firms drawn from the Compustat Industry Segment database for the 1978–97 period. We find little support for the argument that markets have become more hypercompetitive. From the late 1970s to the late‐1980s we observe decreased performance and market stability, consistent with increasing hypercompetition contentions. From the late 1980s to the mid‐1990s, however, trends reverse and performance and market stability increase. For strategy research, our results suggest that hypercompetitive perspectives are important but no more so now than they were in recent years. For practice, our results suggest that managers today face markets no more dynamic and opportunities to gain and sustain competitive advantage no more challenging than in the past. Accordingly, they should continue developing a portfolio of skills to manage businesses whether conditions are increasingly stable or unstable. Copyright © 2002 John Wiley & Sons, Ltd.     

论自然垄断与自然垄断产业的政府规制

本文就自然垄断与政府规制的几个有关理论问题提出了一些见解。关于自然垄断特性的认识，指出了传统理论认识的局限性，在范围经济和规模经济的基础上对自然垄断的特性进行了分析和论证；对于自然垄断产业的政府规制，在对自然垄断状态深入分析的基础上，提出了应当根据自然垄断的强度和可维持性的状况来决定政府规制政策的设计；在自然垄断与经济效率关系的问题上，强调了人们所忽视的自然垄断对于经济效率的正面影响；对中国自然垄断产业规制改革的认识，提出作为转轨经济条件下的国家，中国自然垄断产业的规制改革，应是一个放松规制与强化规制同步进行的制度变迁的过程。     

Telecommunication in the US: From Regulation to Competition (Almost)

Alfred E. Kahn was an observer and practitioner of telecommunications regulation as technology changed the industry from a natural monopoly to a platform-based oligopoly among telephone, cable, satellite, and wireless carriers. Regulation and legislation were slow to recognize these changes, and large welfare losses occurred, some of which could have been avoided if regulators, legislators and economists had followed Fred’s economic advice: Prices must be informed by costs; the relevant costs are actual incremental costs; costs and prices are an outcome of a Schumpeterian competitive process, not the starting point; excluding firms from markets is fundamentally anticompetitive; a reliance on imperfect markets subject to antitrust law is preferable to necessarily imperfect regulation; and a regulatory transition to deregulation entails propensities to micromanage the process to generate preferred outcomes, visible competitors, and expedient price reductions.     

Prices and Departures in European Domestic Aviation Markets

Using data on 172 domestic city-pair markets in eight European countries, weinvestigate the effect of the market structure on airlines choices of departuresand prices. We find that flag carriers have a higher number of departures thanother airlines and that it is more likely that flag carriers are monopolists. At thesame time flag carriers do not have a higher ticket price than other airlines. Theinfluence of market power, measured with the Herfindahl index, does not havea significant effect on ticket prices, but a significant effect on the number ofdepartures: decreased market concentration and an increased number of airlinesresults in increased aggregate frequencies. Comparing the predicted ticket prices,at sample mean, between monopoly and non-monopoly routes we can reject thehypothesis of differences in equilibrium price. However, the predicted aggregatenumber of departures, calculated at sample mean, is significantly higher at non-monopoly routes compared with monopoly routes.     

Market choice,entry regulation,and joint production: Market access and market service in motor carrier markets

In this paper I develop and estimate a model explaining firm decisions to serve markets. Firms choose to serve multiple markets within a set of markets, but serve only one set of markets at a time. Entry regulation restricts access to markets and may result in firms not serving particular markets or sets of markets. The empirical analysis suggests that Interstate Commerce Commission entry regulation, despite partial deregulation in 1980, continues to affect firm decisions to serve markets and that the effects vary across markets and may cause a firm to serve an entirely different set of markets.     

Alfred E. Kahn, 1917–2010

Our introduction to this compendium reviews Alfred Kahn’s academic and policy interests, his activities as a regulator and advisor to governments and companies, and the interactions between these aspects of his life as an economist. Although best known for his research on the economics of regulation and his application of microeconomic principles in his role as a regulator and advisor, Kahn’s academic research portfolio was much more diverse. He wrote about patent policy, economic development, antitrust policy, and other topics, in addition to his work on regulation and deregulation. Even before becoming a regulator he was actively involved in applying economic principles to regulatory problems as an advisor and consultant. In all of his work Kahn recognized that markets were imperfect, but that policies aimed at improving market performance often made things worse. His experience as a regulator and consultant strengthened his recognition that the costs of imperfect regulation had to be carefully balanced against the costs of imperfect markets. One had to search for the best that could be done in an imperfect world. Kahn was particularly fascinated by the challenges of designing and implementing policies to govern the transition from regulated monopoly or oligopoly to an industry that would ultimately rely primarily on competitive markets to govern firm behavior and performance. Fred Kahn was an extraordinary man who is missed greatly by his many friends and colleagues representing a wide range of political orientations and approaches to economic and public policy analysis.     

分类适度管制：放松管制背景下的我国政府管制结构重构

伴随着西方放松管制改革的浪潮,国内学术界也开始呼吁放松管制,但目前我国的政府管制面对的主要是行政垄断问题以及管制结构的不合理。因此,我国政府管制改革,不是“放松管制”的问题,而是管制结构重构的问题：一方面要消灭原来计划体制的管理体制、管理办法和管理方式,消除行政垄断,另一方面要转变管制重点实行分类管制,即根据垄断性产业的业务进行划分实施放松管制的政策;根据不同产业以及同一产业不同时期实施放松管制政策。     

Decomposing Pioneer Survival: Implications for the Order‐of‐Entry Effect

In contrast to previous studies of pioneer survival that directly compare the survival of market pioneers with later entrants, this paper proposes that a market pioneer, as the first entrant, operates under two distinctly different survival processes, one during the initial monopoly period and another during the later competition period. The two processes of market pioneers need to be separately estimated and compared with the survival process of later entrants. This paper demonstrates a method for decomposing the pioneer's survival and empirically shows how researchers can compare the pioneer survival in two periods with that of later entrants and identify period‐specific advantages of pioneering. Our empirical analysis using data collected from two different types of industries—a low‐tech (i.e., newspaper) industry and several high‐tech industries—reveals several interesting new findings that illustrate the advantages of decomposing pioneer survival. For example, this paper shows that when treating first‐mover survival as a single process, one can only find an oversimplified pattern showing that first movers have a survival chance equal to that of second movers in the newspaper industry, but a lower one than the second movers in high‐tech industries. However, when analyzing the first‐mover's survival as a sequence of monopoly and competition processes, new insights emerge. In the newspaper industry, the pioneers can have survival advantages in both the monopoly and the competition periods relative to the second movers, and there is a significant survival advantage for those second entrants who delay market entry until the first entrant exits. In contrast, the overall pioneer survival disadvantage identified in the high‐tech industries when treating the survival as a single process comes from the survival disadvantage in the competition period but not in the monopoly period. Furthermore, our empirical analyses using data from two types of industries reveal completely different patterns with regard to the pioneer survival advantage, which suggests that being first can benefit pioneers in both two‐market periods in low‐tech industries but can be extremely risky for pioneers to gain any survival advantages in both two‐market periods in high‐tech industries because the former markets have relatively low market and technology uncertainties, and organizational change is less important; whereas the latter industries have significantly high market and technology uncertainties, technological advances emerge frequently, and firms are required to adapt themselves quickly to a fast‐changing environment.     

The Welfare Losses From Price-Matching PolicIes

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.     

Testing for market power in the U.S. motor carrier industry

During the 1980's, researchers noted a trend towards increased concentration in the general freight, less-than-truckload (LTL) portion of the U.S. motor carrier industry. The purpose of this study is to employ new empirical industrial organization techniques to determine whether the more concentrated, post-1980, LTL industry exerted monopoly pricing behavior and to compare the nature of pricing behavior before and after regulation reform. The results suggest that the trend toward increased industry concentration does not imply anti-competitive performance. Also, the results indicate the presence of regulation-induced market power several years prior to regulation reform in 1980.     

Alfred E. Kahn: Regulator and Language Maven

Alfred Kahn’s enduring legacy will be his influence on how economists think about the regulation of natural monopoly. But although the substance of his ideas mattered far more than their style, his influence would not have been nearly as great had it not been for his almost slavish devotion to clear language. His career supports the proposition that most of the heavy lifting in economics relies on just a few basic principles that can be stated in plain English. In this essay, I describe how Kahn’s mastery of those principles made him such an effective regulator, but I also note that events since the 1978 deregulation of the airline industry suggest that he and others at the Civil Aeronautics Board failed to appreciate the extent of unexploited economies of scale in the industry.     

Deregulation trends and policies in France

Although the debates challenging monopoly in telecommunications, and promoting deregulation as the alternative, have become the classic method of analysing the industry, deregulation trends in France cannot be approached so simply. This report focuses on some of the features of the French monopoly, and presents a hypothesis on the direction deregulation could take in France.