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Author: Zhuang Miao Publisher: ISBN: Category : Languages : en Pages :
Book Description
"This thesis studies how firms in an imperfectly competitive industry adjust their market strategies (such as prices, product quality, and exporting decisions) in response to varying market conditions. The first chapter develops a theoretical model on how firms decide on their product scope (the number of product varieties offered by the firms) in response to varying trade costs (such as transportation distances, exchange rate volatility, and tariff rates). The model predicts that firms export fewer varieties to destinations that are farther away from the home country, or that are subject to higher tariff rate or greater exchange rate volatility. The predictions of the model are tested by employing the Chinese firm-level data from the years 2001 and 2006. The second chapter is a theoretical model of an oligopoly producing vertically differentiated goods, where firms compete in quantities. I consider several alternative specifications of how set-up costs as well as variable costs differ across the chosen quality levels. The chapter focuses on the long run equilibrium, where the long run equilibrium number of firms is determined by the zero-profit condition implied by free entry and exit. The model determines conditions under which all firms produce both high-quality and low-quality variety and studies the effect of an expansion of market size on the quality levels and prices, and on the average price and average quality. An empirical test of a version of the model is carried out, using Chinese firm-level data. The third chapter studies a short-run duopoly model where firms may choose to specialize in different quality levels while competing in quantities rather than in prices. In stage one, firms choose their quality levels, and in stage two, they compete in quantities. The equilibrium prices of high-quality and low-quality goods emerge as outcome of the competition in quantities. This is in contrast to the mainstream literature on duopolies with vertical quality differentiation, which assume that firms set prices. The model is used to study how changes in income inequality affects the equilibrium qualities and prices." --
Author: Zhuang Miao Publisher: ISBN: Category : Languages : en Pages :
Book Description
"This thesis studies how firms in an imperfectly competitive industry adjust their market strategies (such as prices, product quality, and exporting decisions) in response to varying market conditions. The first chapter develops a theoretical model on how firms decide on their product scope (the number of product varieties offered by the firms) in response to varying trade costs (such as transportation distances, exchange rate volatility, and tariff rates). The model predicts that firms export fewer varieties to destinations that are farther away from the home country, or that are subject to higher tariff rate or greater exchange rate volatility. The predictions of the model are tested by employing the Chinese firm-level data from the years 2001 and 2006. The second chapter is a theoretical model of an oligopoly producing vertically differentiated goods, where firms compete in quantities. I consider several alternative specifications of how set-up costs as well as variable costs differ across the chosen quality levels. The chapter focuses on the long run equilibrium, where the long run equilibrium number of firms is determined by the zero-profit condition implied by free entry and exit. The model determines conditions under which all firms produce both high-quality and low-quality variety and studies the effect of an expansion of market size on the quality levels and prices, and on the average price and average quality. An empirical test of a version of the model is carried out, using Chinese firm-level data. The third chapter studies a short-run duopoly model where firms may choose to specialize in different quality levels while competing in quantities rather than in prices. In stage one, firms choose their quality levels, and in stage two, they compete in quantities. The equilibrium prices of high-quality and low-quality goods emerge as outcome of the competition in quantities. This is in contrast to the mainstream literature on duopolies with vertical quality differentiation, which assume that firms set prices. The model is used to study how changes in income inequality affects the equilibrium qualities and prices." --
Author: Muharrem Burak Onemli Publisher: ISBN: Category : Languages : en Pages :
Book Description
Mandatory network unbundling is one of the foremost topics in regulatory economics today. The concept has crucial importance in the deregulation of many previously regulated industries including telecommunications, gas, electricity and railroads. Moreover, the topic has emerged as one of the more prominent issues associated with the implementation of the 1996 Telecommunication Act in the United States. Upon initial examination, establishing the correct costing standards and/or determining the correct input prices would seem important for sending the correct price signals to the entrants for their efficient make-or-buy decisions. Sappington (AER, 2005) uses a standard Hotelling location model to show that input prices are irrelevant for an entrant's make or buy decision. In this first essay, we show that this result is closely related to the degree of product differentiation when firms are engaged in price competition. Specifically, it is shown that input prices are irrelevant when firms produce homogeneous products, but are relevant for make-or-buy decisions when the entrant and incumbent produce differentiated products. These results suggest that, in general, it is important for regulators to set correct prices in order to not distort the entrants' efficient make-or-buy decisions. The second essay investigates optimal access charges when the downstream markets are imperfectly competitive. Optimal access charges have been examined in the literature mainly under the condition where only the incumbent has market power. However, network industries tend to exhibit an oligopolistic market structure. Therefore, the optimal access charge under imperfect competition is an important consideration when regulators determine access charges. This essay investigates some general principles for setting optimal access charges when downstream markets are imperfectly competitive. One of the primary objectives of this essay is to show the importance of the break-even constraint when first-best access charges are not feasible. Specifically, we show that when the first-best access charges are not feasible, the imposition of the break-even constraint on only the upstream profit of the incumbent is superior to the case where break-even constraint applies to overall incumbent profit, where the latter is the most commonly used constraint in the access pricing literature. Bypass and its implications for optimal access charges and welfare are also explored. The third essay is empirical in nature and investigates two primary issues, both relating to unbundled network element (UNE) prices. First, as Crandall, Ingraham, and Singer (2004) suggested, we will empirically test the stepping stone hypothesis using a state-level data set that spans multiple years. To do this, we will explore the effect of UNE prices on facilities-based entry. Second, in light of those findings, we will investigate whether the form of regulation (e.g. price cap and rate of return regulation) endogenously affects the regulator's behavior with respect to competitive entry. Lehman and Weisman (2000) found evidence that regulators in price cap jurisdictions tend to set more liberal terms of entry in comparison with regulators in rate-of-return jurisdictions. This paper investigates whether their result is robust to various changes in modeling, including specification and econometric techniques.
Author: Timothy F. Bresnahan Publisher: University of Chicago Press ISBN: 0226074188 Category : Business & Economics Languages : en Pages : 508
Book Description
New goods are at the heart of economic progress. The eleven essays in this volume include historical treatments of new goods and their diffusion; practical exercises in measurement addressed to recent and ongoing innovations; and real-world methods of devising quantitative adjustments for quality change. The lead article in Part I contains a striking analysis of the history of light over two millenia. Other essays in Part I develop new price indexes for automobiles back to 1906; trace the role of the air conditioner in the development of the American south; and treat the germ theory of disease as an economic innovation. In Part II essays measure the economic impact of more recent innovations, including anti-ulcer drugs, new breakfast cereals, and computers. Part III explores methods and defects in the treatment of quality change in the official price data of the United States, Canada, and Japan. This pathbreaking volume will interest anyone who studies economic growth, productivity, and the American standard of living.
Author: Richard R. Nelson Publisher: Harvard University Press ISBN: 9780674041431 Category : Business & Economics Languages : en Pages : 456
Book Description
This book contains the most sustained and serious attack on mainstream, neoclassical economics in more than forty years. Nelson and Winter focus their critique on the basic question of how firms and industries change overtime. They marshal significant objections to the fundamental neoclassical assumptions of profit maximization and market equilibrium, which they find ineffective in the analysis of technological innovation and the dynamics of competition among firms. To replace these assumptions, they borrow from biology the concept of natural selection to construct a precise and detailed evolutionary theory of business behavior. They grant that films are motivated by profit and engage in search for ways of improving profits, but they do not consider them to be profit maximizing. Likewise, they emphasize the tendency for the more profitable firms to drive the less profitable ones out of business, but they do not focus their analysis on hypothetical states of industry equilibrium. The results of their new paradigm and analytical framework are impressive. Not only have they been able to develop more coherent and powerful models of competitive firm dynamics under conditions of growth and technological change, but their approach is compatible with findings in psychology and other social sciences. Finally, their work has important implications for welfare economics and for government policy toward industry.
Author: Zhuang Miao
Author: Zhuang Miao
Author: Muharrem Burak Onemli
Author: Mingxia Zhang
Author: Leslie Margaret Schenk
Author: Danielle A. P. Torres
Author: Timothy F. Bresnahan
Author: Joan Robinson
Author: 
Author: Frank Westermann
Author: Richard R. Nelson