The traditional analysis of the location choice by a monopoly has been developed thinking of static monopolies, namely monopolies selling non-durable goods. At the same time, the spatial approach has been widely used in applications to the choice of product design. In a spatial context, the question is if monopoly power leads to the plant location which minimizes transport costs. In terms of product characteristics the question is whether a monopoly will produce the variety which maximizes the social welfare—I do not treat here the case of multiplant and multiproduct monopoly. The definition of product specification by way of spatial models, following Hotelling (1931), is usually one of horizontal differentiation, where the consumers do not unanimously rank the different specifications of a good footnote .
Au cours des années récentes le nombre et l'importance des fusions ou acquisitions d'entreprises se sont considérablement accrus dans les pays européens. Quels en sont les objectifs ? Quelles en sont les conséquences pour l'entreprise, la croissance et l'emploi ? Cet article s'efforce de répondre, autant que faire se peut, à ces questions, les données pertinentes n'étant pas toujours disponibles. Il s'attache d'abord à donner un bilan chiffré des évolutions récentes, ce qui permet de souligner la spécificité des transformations en cours par rapport aux décennies passées. Il en étudie ensuite les fondements en recherchant les motivations qui inspirent les regroupements d'entreprises par acquisitions ou par fusions. Celles-ci permettraient de substituer des équipes dynamiques à une direction inefficiente, pour le plus grand profit des actionnaires, et de réaliser des économies d'échelle potentielles, notamment en matière de recherche et développement. Elles serviraient aussi à rationaliser la gestion. L'analyse de nombreux cas particuliers, ainsi qu'un survol des études existantes, montre que l'entité issue de la fusion n'est pas toujours jugée par le marché plus rentable que les entreprises préexistantes à l'opération ; que les regroupements peuvent être défensifs, par exemple pour maintenir une position dominante dans la perspective d'une intensification de la concurrence — plutôt que destinée à améliorer la productivité ; que les directions des firmes acheteuses ne sont pas toujours plus performantes que celles des firmes achetées, etc. Parce que l'étude générale ne permet pas vraiment de trancher entre visions optimistes et pessimistes des conséquences des fusions d'entreprises, on examine enfin le cas de secteurs particuliers (sidérurgie et chimie) et celui d'un pays nouvellement membre de la CE (l'Espagne). La complexité des organisations industrielles comme celle des structures de marché n'autorisent pas encore l'élaboration d'une théorie générale du phénomène.
The present note shows that "innocuous" Minimum Quality Standards, namely standards that are below the lowest quality level observed in the market, may have effects on equilibrium outcomes. In particular this is true in a duopoly where one high quality firm invests in R&D to lower its cost of quality improvements. A Standard that is below, but close to, the lowest quality observed in the market reduces the incentive to invest by the quality leading firm.
In a duopoly where two firms' products are differentiated both, horizontally and vertically, introduction of a quality standard affects equilibrium quality levels of both firms. The effects, furthermore, depend upon consumers being or not perfectly informed about qualities. Qualities are strategic substitutes and under perfect information only non-innocuous standards, i.e. above the lowest quality in an unregulated equilibrium, change the equilibrium. However, the average quality in the market may go down due to the standard, because the high quality firm will lower its own quality, and total consumers welfare may decrease. Under uncertainty, even innocuous standards, below the lowest unregulated equilibrium quality, may alter the equilibrium quality choices.
In this paper we show that in a bargaining situation the seller may not necessarily want to fully exploit communication possibilities. In the standard two-period bargaining model with one-sided incomplete information, the seller, who owns an indivisible good, makes oers which the buyer can either accept or reject. We ask whether the seller can prot from manipulating the communication mechanism by sending offers that reach the buyer with probability less than one (noisy communication). Noisy communication is a way to improve the seller's second period beliefs about the buyer's willingness to pay for the good and is therefore a way to "buy" commitment. We study the case of a discrete distribution of buyer's types and show that there exist equilibria with noisy communication when there are at least three different types of buyers.
We study the differences in the impact of trade restrictions on the level of imports (e.g. 200,000 automobiles per years) and restrictions defined in terms of market shares (e.g. 10% of the market). We argue that if domestic firms enjoy some market power proportional trade restrictions have a stronger anticompetitive effect than volume restrictions, and therefore lead to higher equilibrium prices and lower social welfeare. In the case of Cournot competition and constant marginal costs, with proportional import restraints the equilibrium price sticks to the autarchic level, independently of the market share reserved for foreign firms. As a consequence, enlarging the share of imports does not increase consumers surplus and negatively affects the profits of domestic firms, thus lowering social welfare.
The paper analyzes the question of which cost characteristics are exhibited by the rms that exit an oligopolistic market when costs are asymmetric and firms can credibly be forced out by the remaining competitors. The main results are: (i) if reentry is impossible (due to the presence of large sunk costs), then the firm with the highest marginal cost function dtays in; if reentry is costless then the firm with the highest average cost exits. Consequenty sunk costs not only affect the number of firms in an industry, but they also enter the determination of the type of rms that resist predation.
This paper is about technology choices in a differentiated oligopoly. The main questions are: whether the position in the product space affects the choice of technology, how changes in fixed costs affect price outcomes, the strategic responses to policy interventions. The industry is an oligopoly where a central firm is competing with two peripheral (or marginal) ones. The former is shown to be more ready than the latter to adopt a technology with low marginal costs and high fixed costs (Increasing Returns to Scale) rather than one with the opposite pattern (Constant Returns to Scale). The fixed cost in the IRS affects the technology configuration and hence output prices. For instance, a lower fixed cost may trigger lower prices and it is neutral only for given technologies. A price-cap may forestall a change in technologies; nondiscriminatory ad-valorem tax and taxes on variable input, or discriminatory unit taxes can also affect the technology pattern and deliver important effects on prices.
Are multiple‐lender loans rescheduled more or less often than single‐lender loans? Do multiple lenders react efficiently to new information? Our analysis emphasizes the role of the precision of information: lenders trade off benefits from immediate foreclosure against expected benefits of waiting for other lenders to act, given the likelihood that other lenders' information is more precise. We analyse a Bayesian game where signals distributed to lenders may differ in precision and content. Equilibria display excessive liquidation or excessive rescheduling, depending on the likelihood of information. Outcomes are nevertheless second‐best, given the constraint that private information cannot be merged.
Abstract We study the effects of entry on price in an industry. This assessment is usually carried out under the implicit assumption of "technological inertia": incumbents cannot change their technologies in response to entry. We remove this assumption by modeling a game where, before quantity competition, firms choose technologies. We identify parameter configurations where, after entry, the incumbent(s) changes technology. This leads either to a higher price after entry or to a "dampening effect" on price reduction. This effect is shown to be relevant when evaluating the welfare gains from measures intended to foster competition by increasing the number of competitors. The converse proposition could be stated for evaluating the social costs of mergers.
In markets where product quality is important, more than one characteristic is usually necessary to define product quality and the amelioration of the goods characteristics is usually costly. Then, properties of production technologies, in particular if they exhibit economies or diseconomies of scope in producing quality along several dimensions, should matter for the industry configuration at equilibrium. To date, however, the literature has neglected the issue. We analyze a duopoly model where two characteristics can be used to vertically differentiate the products. Our results are that the existence of economies of scope (resp. diseconomies of scope) leads to the emergence of a quality leader in all dimensions (resp. to a different quality leader in each characteristic).
