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Author: Artak Meloyan Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This dissertation consists of two chapters that try to examine the structural behaviour of firms with market power in two contexts: implicit collusion and merger. In the first chapter, we examine the implicit collusion in the U.S. corn seed market where several firms dominate the market and try to grasp consumer welfare. In these types of markets, firms can implicitly divide the market among each other and in each of these submarkets gain market power by offering different products than their competitors. Thus, the implicit collusion can potentially increase their market power. We show the difference in SPNE of implicit collusion between duopoly and oligopoly and examine whether or not there is evidence of implicit collusion in setting prices or product lines in the case of oligopoly. Results indicate that there is significant collusion in not only price setting stage, but also in product line choosing stage. The second chapter evaluates the impact of mergers on market prices through two different channels: efficiency gain vs. market concentration. We develop a theoretical model for firm's merger behavior, derive the equilibrium market prices both before and after the merger and decompose the total price change into two components: those due to the efficiency gain and those due to the market concentration. Then we apply the model to the case of a merger in mayonnaise market in 2015 to conduct empirical analyses using price-quantity data in the U.S. mayo market from 2013 to 2017. Results show a negative relationship between efficiency gain and market prices and positive relationship between market concentration and market prices. However, the efficiency gain effect outweighs the market concentration effect in the mayonnaise industry which leads to price decrease as a result of the merger.
Author: Artak Meloyan Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This dissertation consists of two chapters that try to examine the structural behaviour of firms with market power in two contexts: implicit collusion and merger. In the first chapter, we examine the implicit collusion in the U.S. corn seed market where several firms dominate the market and try to grasp consumer welfare. In these types of markets, firms can implicitly divide the market among each other and in each of these submarkets gain market power by offering different products than their competitors. Thus, the implicit collusion can potentially increase their market power. We show the difference in SPNE of implicit collusion between duopoly and oligopoly and examine whether or not there is evidence of implicit collusion in setting prices or product lines in the case of oligopoly. Results indicate that there is significant collusion in not only price setting stage, but also in product line choosing stage. The second chapter evaluates the impact of mergers on market prices through two different channels: efficiency gain vs. market concentration. We develop a theoretical model for firm's merger behavior, derive the equilibrium market prices both before and after the merger and decompose the total price change into two components: those due to the efficiency gain and those due to the market concentration. Then we apply the model to the case of a merger in mayonnaise market in 2015 to conduct empirical analyses using price-quantity data in the U.S. mayo market from 2013 to 2017. Results show a negative relationship between efficiency gain and market prices and positive relationship between market concentration and market prices. However, the efficiency gain effect outweighs the market concentration effect in the mayonnaise industry which leads to price decrease as a result of the merger.
Author: Jie Feng (Ph.D.) Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
My dissertation makes empirical and theoretical contributions to exploring firms' optimal strategy when demand uncertainty exists in correlated markets and information signals during the decision process. With the application to the U.S. soybean seed market, I illustrate methods to evaluate the leveraged market power within the soybean seed market and correlated herbicide market under the technology improvement and climate change. The first chapter studies firms' pricing strategies when demand changes in the correlated market. The demand change is patent expiration in my situation. Firms holding multiple patents may face similar antitrust challenges as multi-product monopolists do. I first build a theoretical model to elaborate on the impact of demand change under different scenarios where patents are valid, expired, or partially expired. Then I generate the theoretical hypothesis to empirically test the firm's pricing strategy before and after the patent expiration using the U.S. soybean market data. The empirical analysis found evidence consistent with the theoretical predictions. The price of the patented soybean seeds increased after the patent on a complementary pesticide product expired. On the contrary, the price of the patented seed decreased when the patent of a substitute seed technology expired. In both cases, the change in seed price is greater when the seed demand is more inelastic. I also found evidence that firms' vertical structure matters and evidence of geographical heterogeneity. The second chapter takes the angle of individual farmers' decision process and examines how their agronomic practices would be affected by technology advancement, climate change, and their interactions. In my case, the specific agronomic decision is economic optimal soybean seed density. Agronomic research finds that economically optimal seeding rates have likely increased for many U.S. farmers because of genetic improvements, including new genetically engineered traits. At the same time, the soybean seeds experienced a decreasing trend in seeding rates with the introduction of herbicide-tolerant traits. To understand its underlying mechanism, I first derive a per acre demand model for soybean seeds to reveal the underlying structural relationship of the seeding rates with the relative seed price, the technology, and other factors. Then I classify all the factors into the market factors, such as the seeds' market prices, technology factors, including the GE HT traits, information factors, and efficiency factors. I empirically test their effects on the expected seeding density using the U.S. soybean data from 1996 to 2017. I also examine the heterogeneity of the impacts across different regions, between conventional and HT seed adopters and heterogeneous farmers on different seeding density quantiles. My third chapter describes firms' optimal strategy under different vertical structures where the complementary market has demand uncertainty. When innovation in essential products ties with the demand of its complementary market, the complementary market variation and information induced consumers' beliefs could determine consumers' demand for essential products. This chapter proposes a theoretical model to analyze firms' optimal pricing strategies when complementary demand uncertainty and imperfect substitutes both exist. The theoretical model suggests that the new cost-saving product's equilibrium price and market structure depend on the expected loss value of the technology, the influence of the complementary market, the cost-saving ratio between the old and the new technology, and the market structure of the essential product. I also calibrate the model using the U.S. soybean data and recover the estimated value of the expected cost and the cost-saving ratio of the HT soybean farmers from 1996 to 2017 and illustrate the possible data to obtain for further empirical exploration.
Author: Gastón Illanes Publisher: ISBN: Category : Languages : en Pages : 151
Book Description
This thesis studies consumer behavior and strategic interactions between firms in markets that were actively designed by governments. In such settings, government intervention is frequent, firms are often constrained in their actions, and consumer behavior may depart from what is predicted by the standard set of assumptions. The chapters of this thesis study how the current set of regulations is affecting market outcomes in different settings and what can be done to improve them. Chapter 1 studies the Chilean pension system, where workers' mandatory contributions are administered by private companies. This market exhibits fee dispersion and low switching rates, which could be explained by firm differentiation or by switching costs. Using a novel combination of revealed preference inequalities and latent variable integration techniques, I find evidence of large switching costs, and that if these costs did not exist prices would fall to around one-half of currently observed levels. Chapter 2 is a pre-cursor to Chapter 1, studying what would be learned from estimating demand in this market using a more standard set of techniques. I find that ignoring switching costs, individual-level heterogeneity, and endogeneity will lead to implausible demand estimates. These results are the key motivation for the use of the more sophisticated methods used in Chapter 1. Finally, Chapter 3, written with Sarah Moshary, studies the privatization of liquor sales in Washington state. It focuses on a natural experiment induced by privatization, which creates exogenous variation in the number of elegible licensees in local liquor markets, generated by a licensure threshold requirement on store size: only stores larger than 10,000 square feet are allowed to sell liquor. We find that this regulation does not alter the total number of liquor outlets within each market. Instead, it shifts the composition of stores. Also, we find that in markets with an additional potential entrant the product mix is shifted towards cheaper products. This confirms concerns that competition in liquor markets leads to greater availability of cheap alcohol, and suggests that regulation has an effect in limiting the availability of those types of products.
Author: Haimeng Zhang Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Firms are key participants in the market. Compared to individual consumers, firms, particularly those with significant market power, are often seen by economists as more resourceful to overcome information frictions, more likely to retain past information and less susceptible to bounded rationality. As a result, firms are capable of acting as sophisticated strategic players. Under the assumption of being driven by a clearly defined profit motive, firms may behave strategically when interacting with other market participants, including consumers, other firms and governments. Understanding firms' strategic behaviors is a critical step in assessing market efficiency, analyzing the wellbeing of consumers, and designing or evaluating government policies. This dissertation consists of three essays that analyze firms' strategic behaviors in different settings. Chapter 1 studies firms' strategic interactions in government organized spectrum auctions. In these ascending-bid auctions, firms as bidders are able to communicate their private information with one another using jump bidding as signals. The signals are credible since bidders with lower private information incur a higher ex ante cost for choosing a jump bid with any given size. This prevents the bidders with lower private information from mimicking those with higher private information. In equilibrium, the signaling model predicts lower expected revenue to the seller, in this case the government, than in the "open exit" model in which jump bidding is not allowed. Using data from a spectrum auction held by the Federal Communications Commission in the United States, the mean valuation estimated using the signaling model is higher compared to that of the open exit model. This implies that if bidders are indeed using jump bids as signals, ignoring it leads to estimates of the mean values that are biased downwards. This result is consistent with the prediction of the theoretical model that bidders pay lower prices with jump bidding than in an open exit auction. I estimate that if jump bidding was prohibited, the government could have had 8% higher revenues from the auction. In Chapter 2, my coauthors and I evaluate a government policy that subsidizes the agricultural equipment rental markets in India. We observe that private rental firms favor farmers located in dense areas and demanding higher machine-hours because equipment needs to be moved in space. Using our own census of 40,000 farmers, we document that costly delays and price dispersion in rentals are ubiquitous, and that small-scale farmers are rationed out by private rental firms. This rationing could be detrimental to aggregate productivity if small farmers have the highest marginal return to capital. A government subsidized first-come-first-served dispatch system grants small-scale farmers timely access to equipment at the expense of travel time. In a calibrated model of frictional rental services, optimal queueing and service dispatch we show that, while the constrained efficient allocation prioritizes large-holder farmers, small-scale farmers in dense areas are valuable because they help maximize capacity utilization. Through counterfactuals, we show that when the induced increase in subsidized equipment supply is high enough, service finding rates for small-farmers increase relative to large-holders farmers even when providers prioritize large-scale. In Chapter 3, I offer an alternative explanation to the existing theories on why firms make the strategic decision to carry out planned obsolescence. Planned obsolescence refers to the practice of firms choosing durability levels for their products below the cost-efficient ones. Motivated by the Phoebus cartel, whose reason for engaging in planned obsolescence cannot be explained by existing theories, I introduce a new theory that centers on an important concept from behavioral economics: present-biased preferences. I construct a theoretical model which demonstrates ...
Author: Gerard Debreu Publisher: Springer Science & Business Media ISBN: 3662046237 Category : Business & Economics Languages : en Pages : 363
Book Description
Back in the good old days on the fourth floor of the Altbau of Bonn's Ju ridicum, Werner Hildenbrand put an end to a debate about a festschrift in honor of an economist on the occasion of his turning 60 with a laconic: "Much too early." Remembering his position five years ago, we did not dare to think about one for him. But now he has turned 65. If consulted, he would most likely still answer: "Much too early." However, he has to take his official re tirement, and we believe that this is the right moment for such an endeavor. No doubt Werner Hildenbrand will not really retire. As professor emeritus, free from the constraints of a rigid teaching schedule and the burden of com mittee meetings, he will be able to indulge his passions. We expect him to pursue, with undiminished enthusiasm, his research, travel, golfing, the arts, and culinary pleasures - escaping real retirement.
Author: Artak Meloyan
Author: Artak Meloyan
Author: Leslie Margaret Schenk
Author: Jie Feng (Ph.D.)
Author: Phillip Swagel
Author: Gastón Illanes
Author: Woosik Chu
Author: Sihong Zhang
Author: Haimeng Zhang
Author: Jeffrey Robert Church
Author: Gerard Debreu