THE WELFARE EFFECTS OF UPSTREAM MERGERS IN THE PRESENCE OF DOWNSTREAM ENTRY BARRIERS*

We examine the incentives for upstream firms to consolidate horizontally and the impact of this process on industry performance, when there are downstream entry barriers and firms negotiate bilaterally. In the short run, consumers are not worse off with upstream mergers, since consolidation only results in a redistribution of industry rents. In the long run, consumers are better off after upstream mergers, since they induce more entry into that segment. When social welfare is evaluated, a limit on upstream consolidation may prevent excessive entry; but upstream entry can be sometimes insufficient, if the retailers' intrinsic bargaining power is excessive.     

The Size of Strategic Alliances and the Role Played by Managers

Journal of Industry, Competition and Trade - The vast empirical literature on strategic alliances has often overlooked their theoretical foundations. We pose a hypothesis: do small and medium...     

Spontaneous duodenal fistula due to hepatic hydatid cyst

Connunication of a hepatic hydatid cyst to the duodenum appears to be extremely rare. This is the first case described in the imaging literature of hepatic echinococcosis fistulized to the duodenum studied by computed tomography.     

Permit markets, market power, and the trade-off between efficiency and revenue raising

This paper focuses on an emissions permit market dominated by one firm and with a government concerned about social efficiency and permits revenue. In this setting, it is shown that the dominant firm's market power reduces the opportunities for the government to raise non-distortionary revenue from permits without loss of consumer surplus. Since the government's objectives are thus hampered in auctioning permits, the dominant firm should be excluded from the auction. Specifically, the regulator should sell permits directly, through bilateral negotiation, to the dominant firm, and auction off the remaining permits to the fringe firms.     

An integrated approach based-structural modeling for risk prioritization in supply network management

Supply networks are complex and suffer always from various risks. An effective supply chain management requires suitable strategies to mitigate them. In previous literature, there has been a range of research into risk in firms but little in supply networks. This can be explained due to the huge number of risk variables and their direct and indirect interrelations that may suffer all supply chain partners (firms). Therefore, for better risk mitigation, a risk prioritization step is vital. To this end, the purpose of this paper is to propose a new integrated approach based on two structural modeling tools. Firstly, interpretive structural modeling has been used to present a hierarchical model showing the interrelationships between the risk sources. Secondly, MICMAC analysis has been used to quantify and classify the risk variables based on their mutual influence and dependence. The objective is to ascertain the key risk variables and theirs relationships. These prioritized risk variables provide a useful tool to supply network managers to focus on those key variables that are most essential for effective risk management strategies. A real case study in food industry is provided in order to illustrate the application of the proposed approach. The findings may be useful to the practitioners in risk management and may also interest academicians, since the method used here can be applied in other areas of industrial management as well.     

On contract duration of royalty licensing contracts

This paper explores how the choice of royalties and contract duration can be a device to mitigate opportunistic behavior in the presence of asymmetric information. It presents a model where an upstream patent holder with no production capabilities licenses a product innovation, by means of royalty-only contracts, to several downstream firms that produce and market the new product. In a two-period signaling model, the profitability of short-term and long-term contracts is compared, given that the licensees’ costs may be inferred by observation of their output levels. For a sufficiently large difference in production costs, the patentee introduces a series of short-term contracts, rather than a long-term contract for the entire expected lifetime of the innovation. In such a sequence of contracts, both high- and low-cost firms pay the same royalty rate (which is not higher than that of long-term contracts) and reveal their costs in the first licensing period. Thereafter, royalties are smaller (than in the first period) for high-cost firms but larger for low-cost producers so as to increase expected total output and licensing income. Overall, royalties are not time-decreasing, in expected terms, as information evolves from incomplete to complete. This strategy is typically welfare-improving.     

Does Having an Ethical Brand Matter? The Influence of Consumer Perceived Ethicality on Trust, Affect and Loyalty

The recent rise in ethical consumerism has seen increasing numbers of corporate brands project a socially responsible and ethical image. But does having a corporate brand that is perceived to be ethical have any influence on outcome variables of interest for its product brands? This study analyzes the relationship between perceived ethicality at a corporate level, and brand trust, brand affect and brand loyalty at a product level. A theoretical framework with hypothesized relationships is developed and tested in order to answer the research question. Data have been collected for 45 product categories in the fast moving consumer goods sector using a panel of 4,027 Spanish consumers. The proposed relationships are tested using structural equations modeling. The results suggest there is a positive relationship between perceived ethicality of a brand and both brand trust and brand affect. Brand affect also positively influences brand trust. Further, brand trust and brand affect both show a positive relation with brand loyalty. The managerial and academic implications of the results are discussed.     

Screening and signalling for technology licensing: a comparison

This article studies, in an adverse selection set‐up, how a patentee licenses a new technology in a two‐period context where the licensee has private information on its marginal cost of production. Two different ways of licensing are considered: the patentee offers, in the first period, either a menu of contracts that screens the different types of licensee or a single contract that obliges the licensee to signal its true type. Of these two contracts, the better for the patentee depends on the probability of the innovation gives rise to a low marginal cost and the difference between the high and low cost. Findings explain, to some degree, the variety of licensing contracts observed in practice (some including only a fixed fee, and others including both a royalty and a fixed fee). This variety may be rationalised by the use of different devices (signalling or screening) aimed at alleviating the effects of opportunism. A welfare comparison of the two means for extracting hidden information from the licensee is also made.     

Do bad borrowers hurt good borrowers? A model of biased banking competition

Portuguese Economic Journal - This paper explores a two-bank model in which, first, one bank correctly estimates the probability of low-quality loan repayment while the other overestimates it, and...