Mergers in durable-goods industries: A re-examination of market power and welfare effects

2016 ◽  
Vol 70 (4) ◽  
pp. 677-692
Author(s):  
Ari D. Gerstle ◽  
Michael Waldman
Keyword(s):  
Market Power ◽  
Durable Goods ◽  
Welfare Effects

scholarly journals Dynamic Durable Goods Monopoly and Market Power

Games ◽  
2020 ◽  
Vol 11 (2) ◽  
pp. 22
Author(s):  
Basak Altan
Keyword(s):  
Market Power ◽  
Discrete Time ◽  
Durable Goods ◽  
Infinite Horizon ◽  
Monopoly Power ◽  
Durable Good ◽  
Durable Goods Monopoly ◽  
Markov Perfect

We analyze a vertically differentiated market for an imperfectly durable good served by a monopolist in an infinite-horizon, discrete-time game. Our goal is to identify the Markov perfect stationary equilibria where the seller can maintain his monopoly power. We establish that the set of parameters supporting a monopoly outcome is larger when the seller offers different quality versions of the same product. Hence, our results suggest that, when the innate durability of a product is high, the seller should offer different quality versions of the product.

8. The economics of agreements, collusion, and parallel conduct

2019 ◽  
pp. 180-191
Author(s):  
Sandra Marco Colino
Keyword(s):  
Market Power ◽  
Welfare Effects ◽  
Vertical Restraints ◽  
Oligopoly Markets ◽  
Firm Conduct

A group of firms can act together and damage the market and produce unwelcome welfare effects. This is known as a ‘cartel’ or ‘cartelization’. However, multi-firm conduct is often a more difficult phenomenon to analyse and identify than single firm or monopoly behaviour. This chapter discusses horizontal restraints, vertical agreements, and vertical restraints. Horizontal agreements may raise concerns that competition is being harmed, but collusion may be difficult to detect. The problems of policing horizontal conduct may be exacerbated in oligopoly markets, where there are few competitors which frequently mimic each other’s conduct without necessarily coordinating. Cartel arrangements may be difficult to put in place, but may have long-term success. Vertical agreements are less likely to raise competitive concern, unless they are linked to the exercise of market power, or contribute to the exclusion of competitors from a market.

scholarly journals Competition, Monopoly Maintenance, and Consumer Switching Costs

2010 ◽  
Vol 2 (1) ◽  
pp. 230-255 ◽  
Author(s):  
Hodaka Morita ◽  
Michael Waldman
Keyword(s):  
Market Power ◽  
Durable Goods ◽  
Switching Costs ◽  
Consumer Welfare ◽  
Consumer Switching Costs ◽  
Consumer Switching ◽  
Significant Attention

Significant attention has been paid to why a durable goods producer with little or no market power would monopolize the maintenance market for its own product. This paper investigates an explanation for the practice based on consumer switching costs and the decision concerning maintaining versus replacing used units. In our explanation, if the maintenance market is not monopolized, consumers sometimes maintain used units that are more efficiently replaced. In turn, monopolizing the maintenance market avoids this inefficiency. In contrast to most previous explanations for the practice, in our explanation, the practice increases both social and consumer welfare. (JEL D42, D43, D82, K21, L12, L42)

scholarly journals Zone Pricing in Retail Oligopoly

2019 ◽  
Vol 11 (1) ◽  
pp. 124-156 ◽  
Author(s):  
Brian Adams ◽  
Kevin R. Williams
Keyword(s):  
Market Power ◽  
Price Discrimination ◽  
Consumer Surplus ◽  
Welfare Effects ◽  
Rural Markets ◽  
Home Improvement ◽  
Home Depot ◽  
Zone Pricing

We quantify the welfare effects of zone pricing, or setting common prices across distinct markets, in retail oligopoly. Although monopolists can only increase profits by price discriminating, this need not be true when firms face competition. With novel data covering the retail home-improvement industry, we find that Home Depot would benefit from finer pricing but that Lowe’s would prefer coarser pricing. Zone pricing softens competition in markets where firms compete, but it shields consumers from higher prices in rural markets, where firms might otherwise exercise market power. Overall, zone pricing produces higher consumer surplus than finer price discrimination does. (JEL D43, L13, L81, M31, R32)

scholarly journals Sequential Markets, Market Power, and Arbitrage

2016 ◽  
Vol 106 (7) ◽  
pp. 1921-1957 ◽  
Author(s):  
Koichiro Ito ◽  
Mar Reguant
Keyword(s):  
Market Power ◽  
Electricity Market ◽  
Imperfect Competition ◽  
Strategic Behavior ◽  
Structural Model ◽  
Firm Behavior ◽  
Welfare Effects ◽  
Price Premium ◽  
Model Predictions ◽  
Price Differences

We develop a framework to characterize strategic behavior in sequential markets under imperfect competition and restricted entry in arbitrage. Our theory predicts that these two elements can generate a systematic price premium. We test the model predictions using microdata from the Iberian electricity market. We show that the observed price differences and firm behavior are consistent with the model. Finally, we quantify the welfare effects of arbitrage using a structural model. In the presence of market power, we show that full arbitrage is not necessarily welfare-enhancing, reducing consumer costs but increasing deadweight loss. (JEL D42, D43, L12, L13, L94, Q41)

The size of trading blocs Market power and world welfare effects

1996 ◽  
Vol 40 (3-4) ◽  
pp. 411-437 ◽  
Author(s):  
Eric W. Bond ◽  
Constantinos Syropoulos
Keyword(s):  
Market Power ◽  
Welfare Effects ◽  
Trading Blocs

Testing Market Power and Welfare Effects in the US Catfish Industry

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Giap V. Nguyen ◽  
Curtis M. Jolly ◽  
Thong T. Nguyen
Keyword(s):  
Market Power ◽  
Welfare Effects ◽  
Microeconomic Theory ◽  
Negative Effects ◽  
Competitive Game ◽  
The Us ◽  
Conjectural Variations ◽  
Supply Flexibility

AbstractAn empirical specification of the conjectural variations model, which conforms to microeconomic theory, is estimated for the US catfish industry. We find the existence of market power exerted by US catfish processors. Processors force the price paid to catfish growers down by 52.88 cent per pound of live catfish, which costs US catfish growers about $300 million a year. US catfish growers can deter the negative effects of processors’ market power by increasing their farm supply flexibility. Further studies are needed to address the dynamics and competitive game strategies in the US catfish industry.

International Real Estate Review

2019 ◽  
Vol 22 (3) ◽  
pp. 307-331
Author(s):  
Siu Kei Wong ◽  
◽  
Ling Li ◽  
Paavo Monkkonen ◽  
◽  
...  
Keyword(s):  
Real Estate ◽  
Market Power ◽  
Durable Goods ◽  
Research Work ◽  
Housing Markets ◽  
Housing Development ◽  
Repeat Sales ◽  
Inclusionary Housing ◽  
Growing Body

The profiteering developer is a common figure in debates over housing policy. Governments increasingly use developer profits to justify policies like inclusionary housing. Yet we actually understand little about the competitiveness of housing development. One unresolved question is whether developers use market power to profit when selling new units, especially in highly concentrated markets. We use the case of Hong Kong, where the five largest developers build almost two-thirds of new housing units, to address this question. Using a repeat-sales approach, we find that new condominiums sell at a discount, not a premium. We attribute this lack of market power to the resalable feature of durable goods ¡V the discount is larger when more re-sellers are located nearby ¡V as well as the need for liquidation ¡V the discount is larger when developers have to sell more units simultaneously. Our results suggest that the first-hand market, even in a highly concentrated market, is competitive. They add to a growing body of research work on the role of new housing in affordability, and invite further study of competitiveness in different kinds of housing markets.

Market power and welfare effects in DC power flow electricity models with thermal line losses

2005 ◽  
Vol 40 (3-4) ◽  
pp. 529-542 ◽  
Author(s):  
Rastislav Ivanic ◽  
Paul V. Preckel ◽  
Zuwei Yu
Keyword(s):  
Market Power ◽  
Power Flow ◽  
Welfare Effects ◽  
Dc Power ◽  
Thermal Line
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