RECENT DEVELOPMENTS IN THE THEORY OF NATURAL MONOPOLY

Abstract. This paper examines two important recent developments in the theory of natural monopoly, or more generally the theory of market structure. The first is a series of papers, involving Baumol with various co-authors, investigating the theory of industry structure, whilst the second is particularly associated with the names of Shaked and Sutton, and the relationship they develop between product differentiation and industry structure. The paper surveys and to some extent contrasts these two new approaches.
Baumol et al. 's contribution is seen to be in the area of clarifying the concept of natural monopoly, refining the definitions of multiproduct costs, and developing a notion of social efficiency applicable to industries where economies of scale are important. Shaked and Sutton employ a new definition of natural monopoly unrelated to market size and utilize information about consumers'income distributions to develop their notion of vertical product differentiation and natural oligopoly.     

Shut the fridge door! HRM alignment,job redesign and energy performance

Anchored within the strategic HRM and alignment literature, and drawing on efficiency and legitimacy perspectives of organisational behaviour, we investigated a HRM intervention targeted at energy reduction goals in a large multinational retailer. The HRM intervention was focused on embedding the environmental and economic performance goals of the firm within the workplace through redesigning the job so that energy tasks were aligned with training and performance management systems, as well as organisational performance goals. Using a randomised control trial design, we tracked changes in energy behaviours and energy consumption in 769 retail stores (685 in the intervention condition, 84 in the control condition). The findings provide evidence that changing the alignment of HRM practices can influence both worker behaviour and organisational outcomes, including environmental outcomes. This work contributes to debates concerning the impact of HRM alignment on both the work and organisational performance context.     

Establishing the validity of cycle path capacity assumptions in the Highway Capacity Manual

Cycle mode share increase is widely desired, but highway design practitioners lack the numerical tools to deliver infrastructure, instead relying on design standards and intuition, with little literature basis. As a case in point, the US Highway Capacity Manual (which is well used internationally) has developed levels of service for cycle infrastructure that are, at their core, based on an assumption of noninteraction between multiple cyclists. This paper uses a modified implementation of the Social Force Model to test the validity of this assumption. Necessary changes such as the consideration of acceleration characteristics and minimum maintainable speed are included. The resulting model produces valid outcomes in keeping with established traffic flow properties, reflecting three-phase traffic flow theory and the ability for the stochastic elements in traffic flow to cause flow breakdown. The developed simulation indicates that there is a fundamental difference in outcome if cyclists are assumed to have a fixed speed versus one they can change given their surroundings. This difference in outcomes is found to exist within the range of literature design flow capacities for bicycle infrastructure and also yields emergent outcomes that align closely with those known behaviors of highway vehicles, which intuitively transfer to cyclists. These findings reinforce the standing need for large-scale empirical studies to determine the basic numerical and behavioral parameters for cyclists, upon which all design ultimately rests.     

Advertising Expenditure in the UK: 1982 Survey

This paper sets out the method of compilation of the UK official advertising statistics.     

Advertising Expenditure in the UK: 1981 Survey

This paper sets out the method of compilation of the UK official advertising statistics.     

Retailer power: recent developments and policy implications

It is common, but incorrect, to view retailing as a highly competitive activity. Unlike manufacturing, retailing has displayed a trend towards much higher concentration, reinforced by actions of retailers themselves, such as emphasis on own-label brands. This may introduce distortions arising from exercise of market power or may create countervailing power to that already enjoyed by manufacturers. Acknowledging increased market power within retailing raises new issues for competition authorities. We develop a consistent framework of analysis and use it to examine two issues: attitudes to retail mergers and exclusivity arrangements between retailers and their suppliers.     

Identifying and characterising price leadership in British supermarkets

Price leadership is a concept that lacks precision. We propose a deliberately narrow, falsifiable, definition then develop it, illustrate its feasibility and test it using the two leading British supermarket chains. We find both firms engaging in leading prices upward over a range of products, with the larger being initially more dominant but the smaller increasing leadership activity to take overall leadership over time. However, more price leadership events are price reductions than price increases, consistently led by the smaller firm. Nevertheless, the increases are of larger monetary amounts than the falls, so average basket price increases over time.