Mergers, Entry, and Consumer Welfare

2020 ◽  
Author(s):  
Peter Caradonna ◽  
Nathan Miller ◽  
Gloria Sheu
Keyword(s):  
Consumer Welfare

The Micro and Macro of Managerial Beliefs

2020 ◽  
Author(s):  
Jose Maria Barrero
Keyword(s):  
Rational Expectations ◽  
Asset Price ◽  
Heterogeneous Firms ◽  
Adjustment Costs ◽  
Consumer Welfare ◽  
Sales Growth ◽  
Firm Level ◽  
Managerial Decisions ◽  
Managerial Beliefs ◽  
Growth Volatility

This paper studies how biases in managerial beliefs affect managerial decisions, firm performance, and the macroeconomy. Using a new survey of US managers I establish three facts. (1) Managers are not over-optimistic: sales growth forecasts on average do not exceed realizations. (2) Managers are overprecise (overconfident): they underestimate future sales growth volatility. (3) Managers overextrapolate: their forecasts are too optimistic after positive shocks and too pessimistic after negative shocks. To quantify the implications of these facts, I estimate a dynamic general equilibrium model in which managers of heterogeneous firms use a subjective beliefs process to make forward-looking hiring decisions. Overprecision and overextrapolation lead managers to overreact to firm-level shocks and overspend on adjustment costs, destroying 2.1 percent of the typical firm’s value. Pervasive overreaction leads to excess volatility and reallocation, lowering consumer welfare by 0.5 to 2.3 percent relative to the rational expectations equilibrium. These findings suggest overreaction may amplify asset-price and business cycle fluctuations.

The Consumer Welfare Cost of Cable 'Build-out' Rules

2005 ◽  
Author(s):  
George S. Ford ◽  
Thomas M. Koutsky ◽  
Lawrence J. Spiwak
Keyword(s):  
Consumer Welfare ◽  
Welfare Cost

scholarly journals Optimal Incentives for Patent Challenges in the Pharmaceutical Industry

2021 ◽  
Author(s):  
Enrico Böhme ◽  
Jonas Severin Frank ◽  
Wolfgang Kerber
Keyword(s):  
Pharmaceutical Industry ◽  
Market Entry ◽  
Consumer Welfare ◽  
Antitrust Law ◽  
Patent Litigation ◽  
Weak Patents ◽  
Optimal Incentives

AbstractIn this paper, we show that a provision in antitrust law to allow patent settlements with a later market entry of generics than the date that is expected under patent litigation can increase consumer welfare. We introduce a policy parameter for determining the optimal additional period for collusion that would incentivize the challenging of weak patents and maximize consumer welfare. While in principle, later market entry leads to higher profits and lower consumer welfare, this can be more than compensated for if more patents are challenged as a result.

Interrelationship Among Competition, Diversification and Liquidity Creation: Evidence from Indian Banks

2021 ◽  
Vol 15 (2) ◽  
pp. 183-204
Author(s):  
Pankaj Sinha ◽  
Naina Grover
Keyword(s):  
Inverse Relationship ◽  
Consumer Welfare ◽  
Adverse Impact ◽  
Public And Private ◽  
Jel Codes ◽  
Trade Off ◽  
Private Banks ◽  
Indian Banks ◽  
The Impact

This study analyses the impact of competition on liquidity creation by banks and investigates the dynamics between diversification, liquidity creation and competition for banks operating in India during the period from 2005 to 2018. Using the broad and narrow measures of liquidity creation, an inverse relationship is determined between liquidity creation and competition. The study also indicates a trade-off between pro-competitive policies to improve consumer welfare and the liquidity-destroying effects of competition, and it highlights how diversification affects liquidity creation. Highly diversified banks in India create less liquidity compared with less-diversified banks, both public and private. The liquidity-destroying effects of competition is intensified among highly diversified private banks, which suggest that diversification has not moderated the adverse impact of competition. JEL Codes: G01, G18, G21, G28

Theory in closer contact with industrial life: American institutional economists on competition theory and policy

2021 ◽  
pp. 1-18
Author(s):  
Matthew T. Panhans ◽  
Reinhard Schumacher
Keyword(s):  
20Th Century ◽  
Competition Policy ◽  
Self Regulation ◽  
Consumer Welfare ◽  
Antitrust Enforcement ◽  
Mainstream Economic ◽  
Competition Theory ◽  
One Stage ◽  
Wide Range ◽  
Experimental Attitude

Abstract This paper investigates the views on competition theory and policy of the American institutional economists during the first half of the 20th century. These perspectives contrasted with those of contemporary neoclassical and later mainstream economic approaches. We identify three distinct dimensions to an institutionalist perspective on competition. First, institutionalist approaches focused on describing industry details, so as to bring theory into closer contact with reality. Second, institutionalists emphasized that while competition was sometimes beneficial, it could also be disruptive. Third, institutionalists had a broad view of the objectives of competition policy that extended beyond effects on consumer welfare. Consequently, institutionalists advocated for a wide range of policies to enhance competition, including industrial self-regulation, broad stakeholder representation within corporations, and direct governmental regulations. Their experimental attitude implied that policy would always be evolving, and antitrust enforcement might be only one stage in the development toward a regime of industrial regulation.

Die europäische Agrarpolitik vor dem Hintergrund der Osterweiterung

2003 ◽  
Vol 52 (1) ◽  
Author(s):  
Reimar von Alvensleben ◽  
Bernhard Brümmer ◽  
Ulrich Koester ◽  
Klaus Frohberg
Keyword(s):  
Agricultural Policy ◽  
Consumer Welfare ◽  
World Market ◽  
Market Mechanism ◽  
Niche Markets ◽  
Member States ◽  
Regional Food ◽  
Direct Payments ◽  
The Impact ◽  
The Eu

AbstractReimar von Alvensleben asks in his article whether the “Agrarwende” in Germany could be a model for Europe. He argues that the new agricultural policy (the so-called “Agrarwende”), which has been proclaimed and implemented after the German BSE crisis 2000/2001, adds new problems to the already existing problems of the Common Agricultural Policy (CAP). The strategy of improving international competitiveness of German agriculture by promoting the niche markets for organic food, animal-friendly produced food and regional food is unrealistic and thus neglecting the problem of improving the competitiveness of 85−90% of German agriculture. The criterion of ecological efficiency (How to achieve ecological goals at lowest costs?) is totally neglected in agricultural environmental policy. The strategy of implementing environmental and animal welfare standards by the market mechanism will not lead to reasonable results because of perception distortions of the consumers. As a consequence of distorted perception of food risks by politicians, cost of risk prevention are too high and/or safety and health standards in other less spectaculous areas are too low. For these reasons he concludes that the “Agrarwende” in Germany cannot be regarded as a model for Europe, especially not for Eastern Europe.Bernhard Brümmer and Ulrich Koester write in their paper that the Eastern Enlargement of the EU will have significant implications for governance of the CAP. The evolution of the CAP has led to a permanent increase in the intensity of regulation, although the rate of external protection has declined. Past experience - mainly revealed by the European Court of Auditors - has evidenced many irregularities and even fraud as a by-product of the CAP. Governance problems are due to badly designed policies, which demand control of even individual farms and give the member countries, administrative regions (which are supposed to implement the policies on the local scale) and the individual farms themselves incentives to breach the rules. In their view governance problems will certainly increase in the enlarged EU. The new member countries have a weaker administrative capacity and are subject to more corruption than the present EU countries. Adequate policy reaction should lead to fundamental changes of the CAP.Klaus Frohberg argues that in its Mid Term Review the EU-commission proposes a change in the most important instruments of the CAP. Direct payments and intervention prices belong to this group. In his paper the impact of these changes is discussed. Direct payments shall become decoupled from production and be summarised into a single payment to farmers. In addition, the right of these transfers shall be made tradable independent of a simultaneous exchange of land. With regard to the intervention prices they shall be reduced as to approach world market levels. Assuming that the Member States will confirm the proposals the CAP is expected to improve considerably. Allocation and transfer efficiency will increase, consumer welfare will go slightly up, taxpayers will be little if at all affected and the EU can defend its position in the negotiations of the ongoing WTO round. These advantages accrue to the current as well as to the new Member States. In spite of the improvements the CAP still needs to be enhanced in some areas such as the market organisation of sugar and milk.

scholarly journals Effects of Country of Origin Labeling in the U.S. Meat Industry with Imperfectly Competitive Processors

2009 ◽  
Vol 38 (3) ◽  
pp. 406-417 ◽  
Author(s):  
Chanjin Chung ◽  
Tong Zhang ◽  
Derrell S. Peel
Keyword(s):  
Price Elasticity ◽  
Country Of Origin ◽  
Import Price ◽  
Consumer Welfare ◽  
Domestic Demand ◽  
Meat Industry ◽  
Equilibrium Displacement Model ◽  
Country Of Origin Labeling ◽  
Imperfectly Competitive ◽  
The U.S

The study examines the impacts of implementing mandatory country of origin labeling (COOL) on producer and consumer welfare in the U.S. meat industry. The equilibrium displacement model developed in this study includes twenty-nine equations representing retail-, processing-, and farm-level equilibrium conditions for the beef, pork, and chicken industries. Unlike previous studies, the model allows trade between domestic- and foreign-origin products and considers the imperfectly competitive market structure of meat processers. Empirical results show that without a significant increase in domestic meat demand, producers are not expected to benefit from the mandatory COOL implementation. Results of a sensitivity analysis indicate that consumers tend to bear more COOL costs than producers, as the own-price elasticity becomes more inelastic, and that producers’ benefits increase as the elasticity of domestic demand becomes more elastic with respect to the price of imported products. The existence of market power in upstream and downstream markets of processors negatively affects both consumer and producer surplus. One implication of our findings is that U.S. beef and pork producers’ promotion and advertising programs would be successful in expanding domestic demand when the programs make the own-price elasticity of domestic demand more inelastic and the cross-price elasticity of domestic demand more elastic with respect to import price.

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