Competition for imperfect consumers

This lecture provides a selective discussion of some issues in the economics of competition for imperfect consumers. Limited consumer awareness – about what deals are on offer, or about the consequences of purchasing decisions – is a central feature of many markets. Consumer imperfection can give rise to market power, but can also co-exist with strong rivalry between firms, and then is more for ‘consumer policy’ than competition policy. Two recent court cases illustrate some of the issues involved. The lecture then reviews a line of theoretical work on competition for imperfect consumers. The analysis highlights some policy tradeoffs, and a key theme is how patterns of consumer awareness matter for patterns of competition among firms.     

Competition in telecommunications

The author examines the impact of competition from both domestic and international perspectives. He provides a critique of the pro-competition argument, although a number of advantages of competition are also outlined. The advantages are discussed in relation to equipment and services. International trends towards competition are then described and the disadvantages of such trends are debated in relation to cross-subsidization, interconnection, the telecommunications manufacturing industry, and the market structure. Finally, competition in the international arena is discussed.     

全球化背景下的电信产业标准竞争

在经济全球化已成事实的大背景下,国家间在经济上的竞争主要表现为关键产业上的竞争,而产业竞争优势在经济全球化时代则主要表现为产业标准上的竞争。这是因为,经济的全球化要求国际化大分工,国际化分工衍生出的一个主要特性就是网络经济特性,而全球网络经济特性促使产业优势的发展路径从过去的资源优势、创新优势提升到标准优势。本研究认为,在当前产业竞争优势已从创新优势发展为标准优势的条件下,影响标准竞争的网络外部性的真正来源是标准的安装预期水平,而不是传统意义上的安装基础;安装预期在产业政策的推动下可以弥补标准竞争中的创新弱势。     

Price-Performance Competition and the Merger Guidelines

While analysis of competition among differentiatedproducts has evolved under the revisions to theMerger Guidelines since 1982, it remains adhoc. This paper argues that price and performancecompetition among differentiated products is the rulerather than the exception and proposes methods toexplicitly analyze both forms of competition. Themethods address price and performance competition indemand and supply, explicitly incorporatingcompetitive responses as called for by the 1992 Guidelines. Empirical implementation is discussed for a specificmarket.     

Competition and investment — A unified approach

Using a simple but general two-stage framework, this paper identifies the circumstances under which increasing competition leads to more cost-reducing investments. The framework can, for instance, capture increasing substitutability for different types of oligopoly models or changes from Cournot to Bertrand competition. The paper identifies four transmission mechanisms by which competition affects investment. For a firm with lower initial marginal costs (higher efficiency), a positive effect of competition on investment is more likely. Positive spillovers support a negative effect of competition on investment. The relation between competition and investment is not affected in an unambiguous way by the level of pre-existing competition.     

Asymmetric Price Effects of Competition

When price dispersion is prevalent, a relevant question is what happens to the whole distribution of equilibrium prices when the number of firms changes. Using data from the gasoline market in the Netherlands, we find, first, that markets with N competitors have price distributions that first‐order stochastically dominate the price distributions in markets with N+1 firms. Second, the effect of competition is stronger for the medium to upper percentiles of the price distribution. Finally, consumer gains from competition are larger for relatively well‐informed consumers. To account for these empirical patterns, we extend Varian's [1980] model by allowing for richer heterogeneity in consumer price information.     

Promotional Competition Between Supermarket Chains

This article measures promotional competition between two major supermarket chains in the United States. The approach does not rely upon quantity sales data and can be applied to any industry that features advertised sales. The results indicate that retailers do compete using promotions. A supermarket promotion in one week significantly increases the probability of a promotion for the same product at rival stores in the following week. Additionally, competitors seek to match or exceed the price cuts of their rivals when responding to promotions. Oligopolistic competition plays a significant role in determining the timing of sales and retail price variation.     

The Evolution of Competition Policy in Indonesia

This paper assesses the evolution of the new Indonesian competition law passed in 1999, and the creation of the Competition Commission. The first half of the paper traces the debate and process of deregulation and liberalization that preceded the introduction of the law. Whilst deregulation did lead to increased competition and efficiency, distortions to competition in the goods sector still persisted due to ad hoc and non transparent measures taken due to government interventions and vested interests. The services and infrastructure sectors were only partially liberalized. The second half of the paper evaluates the debate on competition law and assesses its introduction and implementation. In the brief period of implementation to date, the tension between a pro-competition and an anti-bigness interpretation of the Law is evident. The paper concludes that ambiguities in the law should be eliminated, that the competition agency focuses on advocacy and introducing transparent procedures rather than hastening towards concluding investigations, and that competition issues faced by independent regulatory agencies in the services and infrastructure sectors should be introduced carefully.     

Competition and structural change in Eastern Europe

Widely publicized reform programs for East Europe which emphasize rapid privatization are questioned on the grounds that structural changes to assure workable competition take precedence and will take years. A mix of deconcentrated state, cooperative, worker-owned, private, and foreignowned business can be workable. Import competition and antitrust legislation have auxiliary roles.     

陕西纺织工业竞争优势识别

本文建立了陕西纺织工业的竞争优劣势评价指标体系,并在此基础上运用层次分析和模糊综合评判的方法对陕西纺织工业三大类纺织品(产业用纺织品、装饰用纺织品、服饰用纺织品)从产品、质量和技术方面对其竞争优势进行识别和评价,以利于其制定能够发挥竞争优势的竞争战略。     

X-Inefficiency,Competition and Market Information

Whether competition forces firms toward efficient behaviour is an open question. We consider a duopoly with firms run by managers and affected by adverse selection on costs. In contrast to recent literature, we point out that, to have a genuine effect on firm X-inefficiency, competition must change managerial incentives. By introducing the availability of some signal on the rivals' behaviour we show that, if costs are correlated, the contractual use of that signal can render private managerial information uninfluential. This result stresses the informational role of the market and suggests scope for future work.     

Competition in business networks

Most of those who write about marketing or strategy appear to view competition as the overarching logic of business. Commentators have usually associated competition with improved economic efficiency and customer well-being: they have regarded it as “a good thing”, at least in the abstract or when it only affects others. In contrast to the widespread interest of other researchers and the preoccupations of managers with competition, researchers within the IMP tradition have devoted hardly any attention to the issue in over thirty years of research and the term occurs only infrequently in the IMP literature.     

Differentiation and Competition in HMO Markets

This paper examines how differentiation among Health Maintenance Organizations (HMOs) affects local market competition. Most markets for HMOs appear sufficiently unconcentrated; however, differences among HMOs may make competition less intense than the number of competitors would suggest. To investigate this possibility, we distinguish HMOs that serve only local markets from those that operate regional or national networks. We analyze how HMOs of one type affect the profitability of the other using an equilibrium model of entry and product choice. While the two types of HMOs have strong competitive effects within segments, the competitive effect of differentiated firms is negligible.     

网络竞争与网络产业改革

本文运用博弈分析,论证了在不触动网络垄断的情况下,网络产业的纵向结构分离或开放接入会产生内在的提高下游产品或服务价格的驱动力量,从而对近年来我国网络产业下游产品或服务的价格上涨给出了新的解释。建立有管理的竞争机制,允许绕道、开放用户选择权,是网络产业实现有效竞争并使竞争惠及最终用户的可行途径。     

Competition and Price Discrimination: Evidence from the Parking Garage Industry

We study the relationship between competition and price discrimination through an empirical examination of hourly price schedules in the parking garage industry. We find that the degree of price schedule curvature decreases with competition, implying a greater proportionate drop in low‐end prices than in high‐end prices when competition intensifies. Our findings suggest that competition constrains a firm's capacity to exercise price discrimination, confirming the classic textbook theory. We also offer possible explanations for our findings, including a search cost explanation, for which we find some support in the data.     

Softening Competition by Inducing Switching in Credit Markets

We show that competing banks relax overall competition by inducing borrowers to switch lenders. We illustrate our findings in a two-period model with adverse selection where banks strategically commit to disclosing borrower information. By doing this, they invite rivals to poach their first-period market. Disclosure of borrower information increases the rival's second-period profits. This dampens competition for serving the first-period market.     

Competition network structure and product market entry

This study proposes and tests a theory of the effects of competition network structure on product market entry. Competition networks are defined as the patterns of interdependence between rivals that emerge from direct competition. Studying networks based on competitive interdependence allows us to extend social network theory to new territory and to enhance our understanding of product market entry. We propose that the size, interconnectedness and diversity of competition networks influence subsequent product market entry in a systemic way. We test our hypotheses in a unique dataset drawn from the aircraft modification industry. Copyright © 2014 John Wiley & Sons, Ltd.     

Vulnerable Jobs and the Wage Effects of Import Competition

Do job characteristics modulate the relationship between import competition and workers’ wages? Using pooled cross‐sectional, linked employee‐establishment Census Bureau microdata and O*NET occupational characteristics, the paper models import competition and wages for more than 1.6 million individuals, grouped by job vulnerability defined by routineness, analytic complexity, and interpersonal interaction. Results show import competition is associated with wages that are: lower in routine and less complex jobs; higher in nonroutine and complex jobs; and higher for the highest and lowest levels of interpersonal interaction. This demonstrates the importance of accounting for occupational characteristics in understanding how trade and wages relate.     

美国本地电话的竞争政策及其启示

促进本地电话竞争是美国 1 996年颁布新的《通信法》的一个重要目标。本文将讨论美国促进本地电话竞争的政策目标和主要政策措施 ,分析美国本地电话竞争政策的实施效果 ,最后着重讨论美国本地电话竞争政策对我国的若干启示。     

Mortgage Brokers,Origination Fees,Price Transparency and Competition

This article examines the dynamics between mortgage broker competition, origination fees and price transparency. A reverse first‐price sealed‐bid auction model is used to motivate broker pricing behavior. Confirming the model predictions, our empirical analysis shows that increased mortgage brokerage competition at the Metropolitan Statistical Area level leads to lower fees. The findings are robust to different measures of fees as well as different measures of competition. We also provide evidence that broker competition reduces mortgage origination fees on retail (nonbrokered) loans as well. In addition, our results indicate that pricing complexity is an important determinant of fees, and increased broker competition is associated with a higher probability of a loan being priced with transparency. Our results suggest that mortgage brokers increase competition and lower fees in the mortgage market.