Slotting Allowances and Manufacturers' Retail Sales Effort

A manufacturer's incentives to undertake noncontractible investments depend on the profit margin on her sales to the retailer, and slotting allowances can facilitate such incentives by increasing unit wholesale prices. At first glance it is tempting to conclude that slotting allowances should be particularly prevalent for product categories where the manufacturer's scope for undertaking noncontractible sales effort is relatively large. At odds with this, the Federal Trade Commission (FTC) among other organizations, reports that slotting allowances are more commonly used for product categories where the scope for noncontractible effort by the manufacturer is presumably relatively small. To scrutinize this puzzle we set up a simple model with one manufacturer and one retailer, where the manufacturer undertakes noncontractible demand‐enhancing investments. The predictions from the model are consistent with market observations.     

Mergers and partial ownership

We compare the profitability of a merger between two firms in which one firm fully acquires another and the profitability of a partial ownership arrangement in which the acquiring firm, although owning less than 100% of the acquired firm, is nevertheless able to obtain corporate control over all pricing decisions. We find that joint profit can be higher in the latter case because it may result in a greater dampening of competition with respect to an outside competitor when the partial ownership arrangement is publicly observable. We also derive comparative statics on the prices of the acquiring firm, the acquired firm, and the outside firm and use them to explain puzzling features of the pay-TV markets in Norway and Sweden.     

Cooperative and Non-Cooperative R&D Policy in an Economic Union

What are the consequences of decentralized R&;D policies within an economic union? Do non-cooperative policies generate too high R&;D subsidies? To address such questions, we construct a simple model where firms invest in quality-improving R&;D. With goods produced in different countries within an economic union, we compare non-cooperative and cooperative R&;D policies. We show that non-cooperative policies imply too small R&;D subsidies for horizontally differentiated goods and too high subsidies for close substitutes. Furthermore, small countries have less incentive to subsidize R&;D than large countries, resulting in an unwarranted vertical product differentiation between goods produced in different countries.     

The Broadband Access Market: Competition,Uniform Pricing and Geographical Coverage

In this paper we analyze the market for broadband access. A key feature of this market is that it is considerably more expensive to connect consumers in rural locations than in urban locations. We show that while competition increases welfare compared to monopoly when prices are free to differ across locations, the opposite may be true if there is a requirement of uniform pricing across locations. Furthermore, we show that given uniform pricing, the regulator may increase consumer surplus as well as profit by requiring a higher regional coverage than the market outcome.     

Medium-term EU integration impacts on Norwegian agriculture: A partial equilibrium analysis

The paper analyses and discusses possible impacts on Norwegian agriculture of an EU membership based on the regionalized agricultural sector model CAPRI. Norwegian agriculture is characterized by a small-scale farming structure and high levels of support. Previous analyses have shown that Norwegian agriculture is expected to undergo dramatic changes because of EU membership in terms of farm income, production and structural change. Our study indicates that a substantial share of the agricultural production can be maintained at the national level. Milk and crop production may remain largely unaffected, while meat production decreases in the range of 10-20% compared to a reference run without membership. However, a reduction in total farm income by about 40% indicates that structural adjustments will follow EU accession. The results are discussed in view of the pattern of adjustments observed in Finland and Austria after EU accession in 1995. The need for the dairy industry to take advantage of the improved market access is stressed. Attention is also called to some strengths and limitations of the CAPRI model to analyse large-scale policy changes and to identify model improvements as an area of future research.     

Possible suboptimal diffusions of technological innovations in clustered scale-free networks

Many inter-firm networks take a skewed power-law- or scale-free distribution in which one or a few central actors are connected to numerous peripheral actors. Research argues that central actors can act as early adopters and catalysts for the adoption of technological innovations, but studies are inconclusive regarding central actors’ de facto role in this matter. Peripheral actors in scale-free networks tend to cluster, which implies that they are structurally embedded and mutually dependent. A major thesis in this paper is that clustered peripheral actors in scale-free networks may restrict central actors’ propensity to adopt innovations, and as a result impede their diffusion. The paper discusses which implications this may have for stakeholders in the private and public sector domain and practitioners of strategic management.     

PRODUCT FUNCTIONALITY,COMPETITION, AND MULTIPURCHASING

The more functionalities a good offers, the greater is its perceived quality. Equilibrium prices in standard spatial competition models depend solely on quality differences. We assume that new functionalities are more appreciated the closer a product is to a consumer's ideal variety. Prices are then increasing in functionality levels. Furthermore, we endogenize whether consumers buy only one of two varieties (single‐purchase) or both (multipurchase). Under multipurchase, there might be a hump‐shaped relationship between equilibrium prices and functionality levels. Therefore, it could be optimal for each supplier to sacrifice sales and set prices so high that multipurchase is eliminated.     

Interfirm resource integration in destination contexts

ABSTRACT

In a co-producing tourism destination context, interdependent firms providing the destination product need to coordinate their relationships to achieve resource integration. We focus on two key dimensions of resource integration: (1) interfirm resource complementarity and (2) adaptation of activity structures. Survey data from tourism firms at Norwegian mountain destinations show that both resource complementarity and adaptation of activity structures are a function of trust, authority-based governance, and interfirm learning. Trust and learning have overall stronger effects on resource integration than authority-based governance, in particular on the development of resource complementarity. Authority-based governance has a significant effect on the adaptation of activity structures and a borderline significant effect on resource complementarity.     

Market Efficiency and Price Discovery in Cocoa Markets

ABSTRACT

This paper tests the efficiency and price discovery mechanism in the cocoa cash and futures markets over the period March 1981–August 2009. The results indicate that the price discovery is done in the cash market and spreads to the futures markets and that the futures price can be seen as an unbiased predictor of future cash prices. There is no sign of a risk premium in the futures price. Since the cash behaves like a random walk we cannot reject market efficiency.     

Globalization versus Protectionism: Consequences for Long–Term Growth and Welfare in the South

This paper develops an endogenous growth model with two intrinsically symmetric regions, the North and the South. The analysis shows that globalization tends to increase long–term economic growth, but the South may become deindustrialized and suffer a welfare loss. I none the less find that protectionism need not reverse international inequalities: on the contrary, owing to locational hysteresis the South may lageven further behind. However, with continued globalization welfare in the South will unambiguously increase.
JEL Classification Numbers: F12, F13, F15.