Review of Industrial Organization

http://link.springer.com/journal/11151

List of Papers (Total 26)

Airline Partnerships, Antitrust Immunity, and Joint Ventures: What We Know and What I Think We Would Like to Know

This paper offers an overview of the state of research on airline partnerships and related issues: antitrust immunity, and joint ventures. While at a high level the potential pro- and anti-competitive effects of various forms of airline partnerships are well understood; a number of important gaps in our knowledge remain. For instance, academic research has yet to develop a clear...

Introduction to the Special Issue on “The Intersection Between Industrial Organization and Healthcare Economics”

This article introduces the special issue on the intersection between industrial organization and healthcare economics. This intersection has received increasing research interest, growing from 2% of the industrial-organization literature in 1991 to 6% in 2016. We describe the nine included articles, which cover a range of healthcare markets that include hospital services...

Recent Developments at DG Competition: 2016/2017

The Directorate General for Competition at the European Commission enforces competition law in the areas of antitrust, merger control, and state aids. This year’s article provides first a general presentation of the role of the Chief Competition Economist’s team and surveys the main achievements of the Directorate General for Competition over 2016/2017. The article then reviews...

A Comparison of the Wholesale Model and the Agency Model in Differentiated Markets

We compare the wholesale model and the agency model that characterise a vertical relation in a bilateral duopoly framework. Results suggest that the agency model may be regarded as an example of retailer power resale price maintenance and provide an economic view of why restraints of this kind should be evaluated under the rule of reason. While competition is more likely to be...

Optimal Product Placement

We model a market, such as an online software market, in which an intermediary connects sellers and buyers by displaying sellers’ products. With two vertically-differentiated products, an intermediary can place either: (1) one product, not necessarily the better one, on the first page, and the other hidden on the second page; or (2) both products on the first page. We show that...

IP-for-IP or Cash-for-IP? R&D Competition and the Market for Technology

We analyze how firms might benefit from trading restrictions in the market for technology. We show that restricting trade to reciprocal exchange (“IP-for-IP” barter instead of cash transactions), as in cross-licensing agreements, alters the allocation of R&D resources and reduces overinvestment in R&D. The tighter are the trading restrictions, the higher are the costs that are...

Exclusionary Conduct of Dominant Firms, R&D Competition, and Innovation

This article evaluates the innovation consequences of antitrust enforcement against the exclusionary conduct of dominant firms through a Nash equilibrium model of research and development (R&D) competition to create new products. In the two-firm model, whether one firm regards the other’s R&D investment as a strategic complement or substitute turns on an increasing differences...

Areeda–Turner in Two-Sided Markets

We extend the Areeda–Turner rule to two-sided markets. We show that a two-sided monopolist may find it short-run profit-maximizing to charge a price below marginal cost on one side of the market. Hence showing that the price is below marginal cost on one side of a two-sided market cannot be considered a sign of predation. We then argue for a two-sided Areeda–Turner rule that...

Rethinking Antitrust in the Presence of Transaction Costs: Coasian Implications

This article analyzes how transaction costs influence the ability to charge nonlinear prices and how market structure and industry behavior affect those transaction costs. The failure to recognize that nonlinear pricing produces a different equilibrium than linear pricing together with a recognition that the pricing mechanism can be altered by conduct under antitrust review...

How Does Ranking Affect User Choice in Online Search?

This paper investigates whether a search engine’s ordering of algorithmic results has an important effect on website traffic. A website’s ranking on a search engine results page is positively correlated with the clicks that it receives. This could result from the search engine’s accurately predicting the websites relevance to users. Or it could result from users merely clicking...

Firm Size and Growth Rate Variance: The Effects of Data Truncation

This paper discusses the effects of the existence of natural and/or exogenously imposed thresholds in firm size distributions on estimations of the relation between firm size and the variance in firm growth rates. We argue that these estimations are upwardly biased whenever the threshold operates on the same proxy that is used to calculate the growth rates. We show the potential...

China’s Antimonopoly Law 2008: An Overview

This article outlines the economic, legal, and political background, general features, main provisions, and enforcement mechanisms of China’s Antimonopoly Law 2008 and describes some early developments in its application.

Antitrust and Vertical Integration in “New Economy” Industries with Application to Broadband Access

Whether the firms that supply Internet hardware and software should face restrictions on the use of their property is an important and controversial policy issue. Advocates of “net neutrality”—including President Obama and the current FCC majority—believe that owners of broadband distribution systems (hardware used to distribute Internet and video services) and producers of...

Multimarket Contact and Intensity of Competition: Evidence from an Airline Merger

This paper examines the relationship between multimarket contact (MMC) and the intensity of competition. We take advantage of a recent merger, which altered the extent of MMC throughout the US airline industry, to understand the nature of MMC’s impact on the airlines’ frequency of service. Evidence that non-price effects of MMC are a part of the longer-term industry equilibrium...

Does Big Drive Out Small?

This paper measures the impact of the entry of large supermarkets on incumbents of various sizes. Contrary to the conventional notion that big stores drive small rivals out of the market, data from Tokyo in the 1990s show that large supermarkets’ entry induces the exit of existing large and medium-size competitors, but improves the survival rate of small supermarkets. These...

The Year in Review: Economics at the Antitrust Division, 2009–2010

This paper covers the activities of the Economic Analysis Group of the Antitrust Division, U.S. Department of Justice, during 2009–2010. It describes the economic analysis undertaken by EAG in several important investigations and other activities as an advocate for competition.

Efficiency in Second-Price Auctions: A New Look at Old Data

Experiments on second-price sealed-bid private value auctions have established that subjects typically bid more than their value, despite the fact that value bidding is a dominant strategy in such auctions. Moreover, the laboratory evidence shows that subjects do not learn to bid their values as they gain more experience. In the present paper, we re-examine the second-price...

Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination

We study the puzzle that sellers often employ diverse strategies in terms of carrying multiple brands and holding periodic sales. These two selling tools can be substitute instruments to induce consumer self selection and implement price discrimination. We analyze the factors that affect a seller’s choice between the two pricing instruments and show how different combinations of...

European Antitrust Policy 1957–2004: An Analysis of Commission Decisions

This paper provides a survey of  European antitrust law enforcement since its foundation in the Treaty of Rome of 1957 up to and including 2004. We present a complete overview and statistical analysis of all 538 formal Commission decisions under Articles 81, 82, and 86 of the European Community Treaty. We report a range of summary statistics concerning report route, investigation...

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