Industrial Organization Commons^™

Independent Agencies, Political Interference And Firm Investment Evidence From The European Union, Carlo Cambini, Laura Rondi

Carlo Cambini

This paper studies the impact of the inception of Independent Regulatory Agencies (IRAs) on the investment decisions of a sample of European publicly traded regulated firms. We investigate the impact of governments’ political influence on corporate investment and control for residual state ownership. We account for the measurement error in formal independence of IRAs by exploiting cross-country heterogeneity in the quality of political, financial and social institutions. Our results show that regulatory independence has a positive impact on firm investment, but, notwithstanding the presence of IRAs, political interference in the regulatory functions persists and is detrimental to firms’ investment.

Customer-Focused Competitive Effects Analysis And The Role Of Transportation Costs, David A. Weiskopf, Robert C. Bourke

David A Weiskopf

No abstract provided.

Drilling In The Drought: The Industrial Organization Of Groundwater, Ujjayant N. Chakravorty, E. Somanathan

Ujjayant Chakravorty

China and India together produce about half the world's rice and a third of the world's wheat, but production in both countries is heavily dependent on depleting groundwater resources. A large proportion of farmers buy and sell groundwater - the trading facilitated by small farm sizes and fragments land holdings. The economics of groundwater, when farm sizes are small, is little understood. This paper develops a simple, spatial model of the industrial organization of groundwater markets appropriate for smallholder agriculture. We show that if water is abundant, then equilibrium with free entry results in Bertrand competition, with water sellers charging …

The Cost Of Antitrust Law To Malaysia’S Financial Services Sector, Bryane Michael, Mark Williams, Susila Munisamy

Bryane Michael (bryane.michael@stcatz.ox.ac.uk)

Judging by only economic incentives, Malaysian financial institutions (particularly banks) should completely ignore the Competition Act. The data show that Malaysian banks probably benefit from anticompetitive behaviour. Political and family connections likely facilitate such behaviour. Given that the Malaysian Competition Commission will likely lack the resources to investigate and sanction anti-competitive behaviour in Malaysia’s banking industry – the banks’ best response to the Act probably consists of ignoring it. Maximum fines of 10 million ringgit and revenue-tied penalties of only 10% of worldwide revenue mean that banks still have strong incentives to engage in anticompetitive behaviour and to pay any …

Cartel Detection And Collusion Screening: An Empirical Analysis Of The London Metal Exchange, Danilo Samà

Dr. Danilo Samà

Cartel detection and collusion screening: an empirical analysis of the London Metal Exchange
Author:Dr Danilo Samà (LUISS “Guido Carli” University, Law & Economics LAB)
Abstract:In order to fight collusive behaviors, the best scenario for competition authorities would be the possibility to analyze detailed information on firms’ costs and prices, being the price-cost margin a robust indicator of market power. However, information on firms’ costs is rarely available. In this context, a fascinating technique to detect data manipulation and rigged prices is offered by an odd phenomenon called Benford’s law, otherwise known as First-digit law, which has been successfully …

Essays On Economic Analysis Of Competition Law: Theory And Practice (Ph.D. Dissertation Defence), Dr. Danilo Samà

Dr. Danilo Samà

Essays on economic analysis of competition law: theory and practice
Author:Dr Danilo Samà (LUISS “Guido Carli” University, Law & Economics LAB)
Abstract:The Ph.D. dissertation, submitted to LUISS “Guido Carli” University of Rome in fulfillment of the requirements for the Degree of Doctor of Philosophy in Economic Analysis of Competition Law (XXV cicle), is the result of a scientific research in the field of the economic analysis of competition law developed through academic experiences at the Erasmus Rotterdam University in the Netherlands, the Ghent University in Belgium, the University of Hamburg in Germany and the Toulouse School of Economics in …

Essays On Economic Analysis Of Competition Law: Theory And Practice, Danilo Samà

Dr. Danilo Samà

Essays on economic analysis of competition law: theory and practice
Author:Dr Danilo Samà (LUISS “Guido Carli” University, Law & Economics LAB)
Abstract:The Ph.D. dissertation, submitted to LUISS “Guido Carli” University of Rome in fulfillment of the requirements for the Degree of Doctor of Philosophy in Economic Analysis of Competition Law (XXV cicle), is the result of a scientific research in the field of the economic analysis of competition law developed through academic experiences at the Erasmus Rotterdam University in the Netherlands, the Ghent University in Belgium, the University of Hamburg in Germany and the Toulouse School of Economics …

Five Facts About Value-Added Exports And Implications For Macroeconomics And Trade Research, Robert C. Johnson

Dartmouth Scholarship

Due to the rise of global supply chains, gross exports do not accurately measure the amount of value added exchanged between countries. I highlight five facts about differences between gross and value-added exports. These differences are large and growing over time, currently around 25 percent, and manufacturing trade looks more important, relative to services, in gross than value-added terms. These differences are also heterogenous across countries and bilateral partners, and changing unevenly across countries and partners over time. Taking these differences into account enables researchers to obtain better quantitative answers to important macroeconomic and trade questions. I discuss how the …

Informality And Development, Rafael La Porta, Andrei Shleifer

Dartmouth Scholarship

In developing countries, informal firms account for up to half of economic activity. They provide livelihood for billions of people. Yet their role in economic development remains controversial with some viewing informality as pent-up potential and others viewing informality as a parasitic organizational form that hinders economic growth. In this paper, we assess these perspectives. We argue that the evidence is most consistent with dual models, in which informality arises out of poverty and the informal and formal sectors are very different. It seems that informal firms have low productivity and produce low- quality products; and, consequently, they do not …

The Industrialisation Challenge For Africa: Towards A Commodities Based Industrialisation Path, Mike Morris, Judith Fessehaie

Journal of African Trade

Since the turn of the millennium many African economies have been reintegrated into the world economy on a positive note and experienced substantial economic growth. This growth has primarily been concentrated in commodity exports. The central question facing African economies is how to use economic growth to foster industrialisation and thereby facilitate general development. This paper discusses the extent to which developing backward and forward linkages to the commodity sectors can contribute to its industrialisation project, in light of the past de-industrialisation process and recent trends in global commodity markets. It then reviews the theoretical criticism to resource-based industrialisation and …

Intermediate Inputs And External Economies, Haiwen Zhou

Economics Faculty Publications

Is the degree of external economies (at the industry level) higher than the degree of internal increasing returns (at the firm level)? If so, what is the exact source of this difference? In the general equilibrium model in which firms producing final goods choose the degree of specialization of their technologies, external economies arise from the usage of intermediate inputs and the existence of internal increasing returns. It is frequently assumed that increasing returns are absent at the firm level while present at the industry level. In this model, the existence of increasing returns at the firm level is necessary …

Three Essays On Cross-Border Mergers And Acquisitions, Derrick T. Jenniges

Theses and Dissertations--Economics

This dissertation consists of three essays on cross-border mergers and acquisitions (M&As). The first essay studies horizontal and vertical investments between Organization for Economic Cooperation and Development (OECD) countries, while the second essay examines how investment patterns vary by country development. The third essay estimates the effect of merger policy reform on cross-border M&A activity in Europe.

The first essay tests how well theories of horizontal and vertical foreign direct investment (FDI) explain observed patterns of cross-border M&As in OECD countries. Horizontal investment occurs when multinational firms produce in foreign countries to serve the foreign market, whereas vertical investment occurs …

Consumer Welfare In Competition And Intellectual Property Law, Herbert J. Hovenkamp

All Faculty Scholarship

Whether antitrust policy should pursue a goal of "general welfare" or "consumer welfare" has been debated for decades. The academic debate is much more varied than the case law, however, which has consistently adopted consumer welfare as a goal, almost never condemning a practice found to produce an actual output reduction or price increase simply because productive efficiency gains accruing to producers exceeded consumer losses.

While some practices such as mergers might produce greater gains in productive efficiency than losses in consumer welfare, identifying such situations would be extraordinarily difficult. First, these efficiencies would have to be "transaction specific," meaning …

Robert Bork And Vertical Integration: Leverage, Foreclosure, And Efficiency, Herbert J. Hovenkamp

All Faculty Scholarship

Robert H. Bork wrote his fist article about vertical integration and antitrust policy in 1954, a year after he graduated from the University of Chicago Law School. He noted a recent increase in antitrust attacks on vertical integration and disagreed with those who believed that these attacks were a novelty. At the time, judicial hostility toward vertical integration was rampant. But Bork overstated his case about the period prior to the 1930s. Through the 1920s judicial attitudes toward vertical integration were more benign than Bork suggested. This position was largely consistent with the pre-Depression economics literature, which emphasized production cost …

Grading Standards And Education Quality, Raphael Boleslavsky, Christopher Cotton

Raphael Boleslavsky

We consider a game in which schools compete to place graduates by investing in education quality and by choosing grading policies. In equilibrium, schools strategically adopt grading policies that do not perfectly reveal graduate ability to evaluators (including employers and graduate schools). We compare equilibrium outcomes when schools grade strategically to equilibrium outcomes when evaluators perfectly observe graduate ability. With strategic grading, grades are less informative, and evaluators rely less on grades and more on a school's quality when assessing graduates. Consequently, under strategic grading, schools have greater incentive to invest in quality, and this can improve evaluator welfare.

The Hidden Costs Of Free Goods: Implications For Antitrust Enforcement, Michal Gal, Daniel Rubinfeld

Michal Gal

Today a growing number of goods and services are provided in the marketplace free of charge; indeed, free or the appearance of free, have become part of our ecosystem. More often than not, free goods and services provide real benefits to consumers and are clearly pro-competitive. Yet free goods may also create significant costs. We show that despite the fact that the consumer does not pay a direct price, there are indirect prices that reflect the opportunity cost associated with the consumption of free goods. These indirect costs can be overt or covert, in the same market in which the …

Better Product At Same Cost: Leader Innovation Vs Generic Product Improvement, David J. Balan, George Deltas

David J. Balan

We develop parametric model in which a high-quality dominant firm faces a low-quality competitive fringe. We show that in this model, an increase in the dominant firm's product quality increases total welfare and consumer surplus. An increase in fringe firm quality has an ambiguous effect on total welfare, but always increases consumer surplus. Moreover, an increase in fringe quality always leads to a bigger increase in consumer surplus than does an increase in dominant firm quality, but the analogous comparison for total welfare is ambiguous. Finally, we show that an increase in dominant firm quality always increases total welfare by …

Technology Licensing In A Differentiated Oligopoly, Aniruddha Bagchi, Arijit Mukherjee

Aniruddha Bagchi

Second Chance Offers In Auctions, Aniruddha Bagchi, Brett Katzman, Timothy Mathews

Aniruddha Bagchi

An Industrial Policy For Europe, Mario Pianta

Mario Pianta

Una Politica Industriale Per L’Europa, Mario Pianta, Matteo Lucchese

Mario Pianta

When Does A Platform Create Value By Limiting Choice?, Ramon Casadesus-Masanell, Hanna Halaburda

Hanna Halaburda