competition between multiple asymmetric networks theory and applications this paper presents a tractable model of network competition with many firms elastic subscriber demand off net price discrimination call externalities and cost and market share asymmetries we characterize stability in expectations and equilibrium under firm and market level network effects the model is applied to simulate the effects of termination rates market maturity and retail pricing strategies we show that predictions based on duopoly models can be misleading in particular concerning the effects of termination rates

why is on net traffic cheaper than off net traffic access markup as a collusive device abstract mobile telephony networks typically overcharge each other for the termination of incoming calls leading to high prices for off net traffic the existing theory claims that this behavior reduces profits since high termination charges make firms set high marginal prices thus leading to lower subscription fees and reduced profits this paper bridges the gap between theory and reality by incorporating several assumptions in a model that reflects the reality of mobile telephony markets one of the key assumptions is the fact that subscribers tend to place their calls to a limited number of people consisting mostly of friends and relatives the existence of such calling clubs combined with switching costs supports high access fees at the equilibrium we also discuss the implications of our analysis for eu regulation

promoting network competition by regulating termination charges abstract this paper contributes to the policy debate about the optimal termination charge when penetration rates are explicitly taken into account although lowering termination charges towards cost leads to more efficient usage its impact on consumer surplus is ambiguous since it induces an increase in fixed subscription fee through the so called waterbed effect we show that a reduction in termination charge below cost has two opposing effects on consumer surplus it softens competition but also helps to internalize network externalities hence it can decrease or increase penetration depending on whether or not the first effect dominates the second we show that the first effect dominates the second when networks are weak substitutes or the penetration rate is high

bill and keep vs cost based access pricing revisited abstract we study network competition with two part tariffs and termination based price discrimination in the presence of call externalities we show that both the collusive and the welfare maximizing access charges fall below marginal cost moreover bill and keep arrangements are welfare improving compared with cost based access pricing

generating and sustaining backward linkages between maquiladoras and local suppliers in northern mexico abstract despite 25 years of growth mexico s in bond assembly or maquila operations use very little material inputs that are made in mexico mexican content is less than 2 of value added and those coming from the northern border region are even more miniscule some of the reasons for the paucity of local sourcing are reviewed with particular emphasis on corporate and plant purchasing arrangements mexican policies designed to support national suppliers are reviewed and the authors offer suggestions that stress the need for a regional focus that concentrates on fostering local technological capacities the study relies in part on surveys of plant managers and corporate purchasing officers

mobile termination network externalities and consumer expectations we re examine the literature on mobile termination in the presence of network externalities externalities arise when firms discriminate between on and o net calls or when subscription demand is elastic this literature predicts that profit decreases and consumer surplus increases when termination charges increase this is puzzling since in reality regulators are pushing termination rates down while being opposed to do so by network operators this puzzle is resolved when consumers expectations are assumed passive but required to be fulfilled in equilibrium as defined by katz and shapiro aer 1985 instead of being responsive to non equilibrium prices as assumed until now

on the optimality of the full cost pricing abstract this article is aimed at defining the full cost pricing as a leader follower game in two tier organizations i the upstream unit fixes the production capacity and uses it as a cost driver to compute the average cost ii the downstream unit operates on the market and chooses the output level on the basis of the average cost in the cournot oligopoly case the full cost pricing is compared with other pricing rules there exists a wide range of values of the fixed cost for which the full cost pricing dominates any other pricing rules in terms of gross profit

network competition and interconnection with heterogeneous subscribers abstract this paper analyses two way access pricing in a telecommunications market where consumers are heterogeneous in their demand for calls and firms are allowed to use non linear tariffs we first investigate how the presence of access charges affects the tariffs offered by firms in symmetric equilibrium next we show that under certain conditions each firm s profit is independent of the level of reciprocal access charge and therefore collusion using access charges is not sustainable this result suggests that efficient call allocations can be achieved under a minimal regulatory intervention i e recommending firms set access charges equal to call termination cost

using bill and keep interconnect arrangements to soften network competition abstract this paper demonstrates that low below marginal cost interconnect or access charges can be used to sustain high subscription prices under network competition with two part tariffs and price discrimination this result stands in contrast to other results in the literature suggesting that high interconnect charges can play a collusive role

distance constraints the limits of foreign lending in poor economies how far does mobility of multinational banks solve problems of financial development using a panel of 80 000 loans over 7 years i show that greater cultural and geographical distance between a foreign bank s headquarters and local branches leads it to further avoid lending to informationally difficult yet fundamentally sound firms requiring relational contracting greater distance also makes them less likely to bilaterally renegotiate and less successful at recovering defaults differences in bank size legal institutions risk preferences or unobserved borrower heterogeneity cannot explain these results these distance constraints can be large enough to permanently exclude certain sectors of the economy from financing by foreign banks

entry access pricing and welfare in the telecommunications industry abstract this paper investigates the effects of entry on welfare in the telecommunications industry equilibrium pricing parameters for monopoly and duopoly situations are determined where access charges are chosen non cooperatively welfare comparisons between alternative access pricing regimes are also performed

optimal access pricing for natural monopoly networks when costs are sunk and revenues are uncertain this paper studies optimal access pricing for natural monopoly networks with large sunk costs and uncertain revenues using techniques from the option pricing literature we show that the optimal access price corresponds to a risk free form of the efficiency component pricing rule ecpr that is where the opportunity cost is based on the risk free rate of return we also show that at levels of revenue above the optimal level that triggers entry the entrant should pay a premium above risk free ecpr that rewards the incumbent for relinquishing his rights to the risky cash flows at the higher revenue level

the role of incentives for opening monopoly markets comparing gte and boc cooperation with local entrants while the 1996 telecommunications act requires all incumbent local telephone companies to cooperate with local entrants section 271 of the act provides the bell companies but not gte additional incentives to cooperate using an original data set i compare the negotiations of at t as a local entrant with gte and with the bell companies in states where both operate my results suggest that the differential incentives matter the bells accommodate entry more than does gte as evidenced in quicker agreements less litigation and more favorable prices offered for network access consistent with this there is more entry into bell territories

private roads competition and incentives to adopt time based congestion tolling abstract this paper investigates whether time based congestion tolling is profitable for a private toll road operator when competing for traffic with another road despite the fact that congestion tolling boosts revenue by reducing congestion delay it can be unprofitable if it induces a private or public toll road rival to reduce its toll severely the size of the rival s response depends on the price elasticity of travel demand and on whether the rival also employs congestion tolling in a private duopoly adoption may be unilaterally profitable but parallel adoption unprofitable so that a prisoner s dilemma obtains

borrowing in foreign currency austrian households as carry traders household borrowing in a foreign currency is a widespread phenomenon in austria thirteen percent of austrian households report their housing loan to be denominated in foreign currency mostly swiss franc yet despite its importance peculiar character and acute policy concerns we know little about the attitudes and characteristics of the households involved in this type of carry trade we analyze a uniquely detailed financial wealth survey of 2556 austrian households to sketch a comprehensive profile of the attitudes and characteristics of the households involved we employ both univariate tests and multivariate multinomial logit models the survey data suggest that risk seeking affluent and married households are more likely to take a housing loan in a foreign currency financially literate or high income households are more likely to take a housing loan in general these findings partially assuage policy concerns about household default risk on foreign currency housing loans or household retirement security

modeling production externalities in the maquila industry in the past decade the maquiladora export industry surpassed both tourism and petroleum products to become the number one source of earned foreign exchange for mexico the continued growth of the maquila industry suggests that there may be significant production spillovers into the local environments dynamic modeling using stella provides a framework for quantifying the environmental impacts emanating from the growth of the maquila industry focusing on wastewater treatment consequences and resulting infrastructural policy considerations such detailed modeling of industrial infrastructural and ecological linkages has not yet been a feature of research on this region despite the potential for significant human health ramifications an environmental model is therefore developed for two focal urban communities nogales and mexicali facing potential wastewater treatment concerns due to the growth of nearby maquila factories in the former case the analysis revealed the inadequacy of the capacity planning for the treatment of effluent in the latter case conservative projections reveal that the system upgrades should be able to handle demands through 2020

intertemporal price cap regulation under uncertainty this paper examines the intertemporal price cap regulation of a firm that has market power under uncertainty the unconstrained firm waits longer before investing or adding to capacity and as a corollary enjoys higher prices over time than would be observed in an equivalent competitive industry in the certainty case the imposition of an inter temporal price cap can be used to realise the competitive market solution by contrast under uncertainty it cannot even if the price cap is optimally chosen under uncertainty the monopoly firm will generally a under invest and b impose quantity rationing on its customers

price regulation of access to telecommunications networks abstract without access of networks to each other competition in the telecommunications sector would hardly have spread so quickly such mutual access is necessary for carriers to provide ubiquitous service and enable endusers to call and be called by anybody without subscribing to a system wide monopolist one way access concerns bottleneck inputs provided by an incumbent network to entrants while two way access concerns the interconnection between networks whereas one way access regulation is exclusively driven by containment of market power two way access is additionally affected by collusion possibilities among the numerous pricing rules discussed none clearly dominates this article provides a roadmap vis a vis the competing policy objectives for access price regulation

the role of differentiation strategy in local telecommunication entry and market evolution 1999 2002 we examine the role of differentiation among competitive local exchange carriers clecs in nearly 1 200 u s cities in 1999 and 2002 before and after a valuation crash affecting communications firms we test and reject the null hypothesis of homogeneous competitors we also find strong evidence that differentiated clecs account for both potential market demand and the business strategies of competitors when making their entry decisions finally product heterogeneity in markets in 1999 helps predict how the structure of markets evolved through 2002 we conclude that the policy debate for local telecommunications regulation should account for differentiated behavior

network competition ii price discrimination our companion article developed a clear conceptual framework of negotiated or regulated interconnection agreements between rival operators and studied competition between interconnected networks under the assumption of nondiscriminatory pricing this article relaxes this assumption and allows networks to charge different prices for calls terminating on the subscriber s network and those terminating on a rivals network this creates a price differential between services that are identical for the consumer and generates network externalities despite network interconnection we show that in both the mature and entry phases of the industry the nature of competition is substantially affected by such price discrimination

bank lending to small businesses in latin america does bank origin matter recently foreign bank participation has increased significantly in developing countries fueling concerns that foreign banks might extend credit only to certain sectors leaving customers like small businesses unattended using bank level data for four latin american countries during the mid 1990s we investigate whether bank origin affects the share and growth of lending to small businesses while on average foreign banks seem to lend less to small businesses regression results reveal significant differences between small and large foreign banks in general we find that the latter surpass large domestic banks in their share and growth of lending to small businesses

foreign entry and bank competition abstract foreign entry and bank competition are modeled as the interaction between asymmetrically informed principals the entrant uses collateral as a screening device to contest the incumbent s informational advantage both better information ex ante and stronger legal protection ex post are shown to facilitate the entry of low cost outside competitors into credit markets the entrant s success in gaining borrowers of higher quality by offering cheaper loans increases with its efficiency cost advantage this paper accounts for evidence suggesting that foreign banks tend to lend more to large firms thereby neglecting small and medium enterprises the results also explain why this observed bias is stronger in emerging markets

foreign banks and foreign currency lending in emerging europe based on survey data from 193 banks in 20 countries we provide the first bank level analysis of the relationship between bank ownership bank funding and foreign currency fx lending across emerging europe our results contradict the widespread view that foreign banks have been driving fx lending to retail clients as a result of easier access to foreign wholesale funding our cross sectional analysis shows that foreign banks do lend more in fx to corporate clients but not to households moreover we find no evidence that wholesale funding had a strong causal effect on fx lending for either foreign or domestic banks panel estimations show that the foreign acquisition of a domestic bank does lead to faster growth in fx lending to households however this is driven by faster growth in household lending in general not by a shift towards fx lending

outsourcing vertical integration and price vs quantity competition abstract we show that standard conclusions about duopoly competition can be reversed when the production of key inputs is outsourced to a vertically integrated retail competitor with upstream market power under such outsourcing bertrand competition can produce higher prices higher industry profit lower consumer surplus and lower total surplus than cournot competition in addition to limiting the intensity of retail competition bertrand competition can limit the extent of wholesale competition by reducing the incentive of retail providers to produce key inputs themselves

how foreign participation and market concentration impact bank spreads evidence from latin america increasing foreign participation and high concentration levels characterize the recent evolution of banking sectors market structures in developing countries the authors analyze the impact of these factors on latin american bank spreads during the late 1990s their results suggest that foreign banks were able to charge lower spreads relative to domestic banks this was more so for de novo foreign banks than for those that entered through acquisitions the overall level of foreign bank participation seemed to influence spreads indirectly primarily through its effect on administrative costs bank concentration was positively and directly related to both higher spreads and costs

information and bank credit allocation abstract private information obtained by lenders leads to borrower capture to the extent that such information cannot be communicated credibly to outsiders we analyze how this capture affects the loan portfolio allocation of informed lenders first we show that banks charge higher interest rates and finance relatively less creditworthy borrowers in market segments with greater information asymmetries second when faced with greater competition from outside lenders banks reallocate credit toward more captured borrowers flight to captivity third if borrower quality and captivity are sufficiently correlated an increase in the competitiveness of uninformed lenders can worsen the informed lender s overall loan portfolio the model explains observed consequences of financial liberalizations

bertrand competition under network externalities abstract two firms engage in price competition to attract buyers located on a network the value of the good of either firm to any buyer depends on the number of neighbors on the network who adopt the same good when the size of externalities increases linearly with the number of adoptions we identify the set of pricing strategies that are consistent with an equilibrium in which one of the firms monopolizes the market the set includes marginal cost mc pricing as well as bipartition pricing which offers discounts to some buyers and charges markups to others we show that mc pricing fails to be an equilibrium under non linear externalities in a general network but identify conditions for an equilibrium with bipartition pricing to be robust against perturbations in the externalities from linearity the analysis is applied to platform competition in a two sided market under local and approximately linear externalities

a more complete conceptual framework for sme finance abstract we propose a more complete conceptual framework for analysis of sme credit availability issues in this framework lending technologies are the key conduit through which government policies and national financial structures affect credit availability we emphasize a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies these technologies in turn have important effects on sme credit availability financial structures include the presence of different financial institution types and the conditions under which they operate lending technologies include several transactions technologies plus relationship lending we argue that the framework implicit in most of the literature is oversimplified neglects key elements of the chain and often yields misleading conclusions a common oversimplification is the treatment of transactions technologies as a homogeneous group unsuitable for serving informationally opaque smes and a frequent misleading conclusion is that large institutions are disadvantaged in lending to opaque smes

regulation vertical integration and sabotage we consider the incentive of a dominant firm that supplies a necessary input to a bertrand competitive differentiated products downstream industry to 1 vertically integrate forward and 2 raise its downstream rivals costs through non price activities which we characterize generally as sabotage we examine these incentives both in the absence and presence of a regulatory constraint on the upstream price we find that while an incentive for vertical integration is present regardless of the existence of the regulatory constraint the incentive for sabotage emerges only in the presence of binding input price regulation welfare effects are also explored

asymmetric access price regulation in telecommunications markets abstract in liberalized telecommunications markets the incumbent typically enjoys several advantages over any entrant regulation in such asymmetric markets stimulates competition in the short and the long term if retail prices are low and the entrant s profits are high so that entry is encouraged i show that asymmetric access price regulation with a cost based access price for the incumbent and an access markup for the entrant is more successful than cost based access price regulation applied to incumbent and entrant this is a robust prediction with respect to the pricing strategies considered such asymmetric access price regulation is in accordance with european legislation

your network or mine the economics of routing rules in many markets including payment cards and telecommunications service providers operate networks that support customer transactions with each other when the two sides of a transaction belong to more than one network in common the question arises as to which network will carry the transaction we show that the answer depends on a combination of who has the formal authority to choose and the parties network subscription decisions our central finding is that granting formal authority to one side of the market can increase the extent to which transactions run over the network preferred by the other side of the market we also characterize competing networks equilibrium choices of routing rules and prices

termination fees revisited we reconsider the question of the optimal level of termination fees between communication networks in the context of heterogeneous usage and elastic participation the interaction between these two features yields new insights in our model i the profit maximizing reciprocal termination fee is above marginal cost ii the welfare maximizing termination fee is also above cost iii the welfare maximizing termination fee is below the profit maximizing one in the absence of termination based price discrimination but can be above it otherwise

who thinks about the competition managerial ability and strategic entry in us local telephone markets we examine us local telephone markets shortly after the telecommunications act of 1996 the data suggest that older experienced educated managers tend to enter markets with fewer competitors this motivates a structural econometric model based on behavioral game theory that allows heterogeneity in managers ability to correctly conjecture competitor behavior we find that manager characteristics are key determinants in managerial ability furthermore our estimate of ability predicts out of sample success counterfactuals provide insight into the industry s struggles despite substantial indirect subsidies it is only when the ability to correctly conjecture competitor behavior is high that firms enter empty markets

price competition with reduced consumer switching costs the case of wireless number portability in the cellular phone industry wireless number portability wnp is a telecommunication regulatory policy that requires cellular phone service providers to allow customers who switch service subscriptions to retain their original phone numbers the right to retain the number lowers the switching cost for a consumer thus the purpose of the policy is to induce more competition and facilitate the growth of new or small service providers in this paper we show that wnp drives market price downward as expected but with a surprising twistrather than helping the smaller firms grow the policy may accelerate the process of market concentration we find that the main contributing factor to this peculiarity is the discriminatory pricing scheme prevalent in the industrythat is a service provider charges a lower per minute fee for the calls initiated and received within the same network than for the calls connected across two networks under this pricing scheme a consumer who subscribes to a larger network would benefit more than if subscribing to a smaller network despite the relatively higher fixed access fee that the former may charge by lowering the barrier of switching wnp creates a market condition conducive for a larger network to gain market share we support our analysis with the empirical evidence gathered from hong kong where wnp was adopted in march 1999

tirole s industrial regulation and organization legacy in economics jean tirole was awarded the 2014 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of market power and regulation this paper provides an overview of some of that work and of his related contributions to game theory

the economics of networks a survey of the empirical literature network effects the increase in value of consuming a product if many other consumers use the same product are a feature of many markets and in particular of many high technology products this paper surveys the burgeoning empirical literature that has developed especially during the last years after theoretical work dominated the earlier years of research in this area newer research has combined theoretical models with empirical studies and applied work with direct implications for public policy marketing and company strategies furthermore insights from the study of social networks have been applied to analyse how consumers interact with each other the paper argues that a closer analysis of the network structure of consumer interaction promises fruitful future research avenues and advances in our understanding of how network effects operate copyright 2009 blackwell publishing ltd

welfare analysis of regulating mobile termination rates in the u k we develop a calibrated simulation model of the u k mobile telephony market and use it to analyze the effects of reducing mobile termination rates mtr s as recommended by the european commission we find that reducing mtr s is likely to increase both consumer surplus and networks profits depending on the strength of call externalities i e benefits to the recipient of a call social welfare may increase by as much as 1 billion to 4 6 billion per year we also use the model to estimate the welfare effects of the 2010 merger between orange and t mobile and find that the merger led to a substantial reduction in consumer surplus

the financial crisis and bank client relationships foreign ownership transparency and portfolio selection abstract using a unique dataset that matches banks with their client firms we investigate the differences between foreign and domestic banks in a developing country in particular we are interested in examining how foreign banks solve the information asymmetries that characterize lending relationships and whether those relationships have changed since the financial crisis of 2008 foreign banks are likely to limit their lending activity to larger firms or more transparent firms because they are at an informational disadvantage relative to domestic banks we find that foreign banks focus on relationships with foreign listed and larger firms in addition their portfolio is more heavily weighted towards firms in less competitive industries and exporting firms comparing outcomes for 2006 and 2009 we find that banks are more concerned with leverage in 2009 and have reduced the number of firms in their portfolio post crisis

two sided markets a progress report the paper provides a road map to the burgeoning literature on two sided markets and presents new results it identifies two sided markets with markets in which the structure and not only the level of prices charged by platforms matters the failure of the coase theorem is necessary but not sufficient for two sidedness the paper builds a model integrating usage and membership externalities that unifies two hitherto disparate strands of the literature emphasizing either form of externality and obtains new results on the mix of membership and usage charges when price setting or bargaining determine payments between end users

horizontal and vertical integration in securities trading and settlement this paper addresses a very european issue the consolidation of securities trading and settlement infrastructures in a two country model we analyze welfare implications of different types of consolidation we find that in our model full technical horizontal integration of settlement systems is better than vertical integration of exchanges and settlement systems but vertical integration is still better than no consolidation these findings have clear policy implications with regards to the highly fragmented european securities infrastructure

price and access charge discrimination in electricity distribution an application to the chilean case this paper presents and analyzes a model of electricity distribution in chile with three alternative regulatory pricing contract schemes for assigning a common capacity cost to final customers and competitive energy sellers the first scheme involves ramsey pricing while under the second and third schemes the monopoly chooses final prices and access charges subject either to a peak load physical cap or a total revenue price cap constraint in addition we consider circumstances in which the regulator does not know consumer demand the monopoly cannot price discriminate beyond a range defined by the marginal cost as a floor and the stand alone cost as a ceiling and access charges are set at the fully distributed cost allocation level currently in force the model is calibrated with chilean data and demonstrates that in terms of social welfare the fully distributed cost contract scheme currently in effect can be improved by discriminatory pricing complemented by certain of the analyzed constraints

network competition and entry deterrence we develop a model of logit demand that extends to a multi firm industry the traditional duopoly framework of network competition firstly we show that incumbents establish inefficiently the reciprocal access charge below cost when they compete in prices but they behave efficiently if they compete in utilities secondly we study how incumbents determine the industry wide access charge under the threat of entry we show that incumbents may accommodate all possible entrants only a group of them or may completely deter entry when entry deterrence is the preferred option incumbents distort the access charge upwards

competition and subsidies in the deregulated us local telephone industry the 1996 telecommunications act opened the monopolistic us local telephone industry to new entrants however substantial entry costs have prevented some markets from becoming competitive we study various subsidy policies designed to encourage entry we estimate a dynamic entry game using data on potential and actual entrants allowing for heterogeneous option values of waiting we find that subsidies to smaller markets are more cost effective in reducing monopoly markets but subsidies to only lower cost firms are less cost effective than a nondiscriminatory policy subsidies in only early periods reduce the option value of waiting and accelerate the arrival of competition

multinational banks and the global financial crisis weathering the perfect storm we use data on the 48 largest multinational banking groups to compare the lending of their 199 foreign subsidiaries during the great recession with lending by a benchmark group of 202 domestic banks contrary to earlier more contained crises parent banks were not a significant source of strength to their subsidiaries during the 2008 09 crisis as a result multinational bank subsidiaries had to slow down credit growth about twice as fast as domestic banks this was particularly the case for subsidiaries of banking groups that relied more on wholesale market funding domestic banks were better equipped to continue lending because of their greater use of deposits a relatively stable funding source during the crisis we conclude that while multinational banks may contribute to financial stability during local bouts of financial turmoil they also increase the risk of importing instability from abroad

market failures and public policy industrial organization studies the exercise and control of market power to this purpose it builds models that capture the essence of the situation the predictions of the model can then be tested econometrically and possibly in the lab or the field in the end the reasonableness of and robustness to modeling assumptions and the quality of empirical fit determine how confident economists are in making recommendations to public decision makers for intervention and to companies for the design of their business model industrial organization has a long tradition first theoretical with the work of french engineer economists antoine augustin cournot 1838 and jules dupuit 1844 then policy oriented with the enactment of the sherman act 1890 and subsequent legislation then descriptive with the studies of the harvard school structure conduct performance comforting and refining the antitrust drive and finally skeptical with the chicago school the chicago school correctly pointed out the lack of underlying theoretical doctrine and went on to cast doubt on the whole edifice it however did not develop an alternative antitrust doctrine perhaps because

lending by example direct and indirect effects of foreign banks in emerging markets using a novel dataset that allows us to trace the bank relationships of a sample of mostly unlisted firms we explore which borrowers are able to benefit from foreign bank presence in emerging markets our results suggest that the limits to financial integration are less tight than the static picture of firm bank relationships implies even though foreign banks are more likely to engage large and foreign owned firms after an acquisition a bank is 20 less likely to terminate a relationship with a firm if the acquirer is foreign rather than domestic most importantly within a credit market firms appear to have the same access to financial loans and ability to invest whether they borrow from a foreign bank or not while foreign banks benefit all firms by indirectly enhancing credit access

international network competition under national regulation we extend the workhorse model of network competition to international calls this model enables us to show that national regulatory authorities nras maximizing domestic welfare have incentives to increase termination rates above the social optimum to extract rent from international call termination excessive termination rates distort prices but transfer surplus from foreign to domestic consumers via intensified network competition the model can explain the regulation of termination rates through rate floors international network ownership and deregulation are alternatives to combat the incentives of nras to distort termination rates we identify conditions under which each of these policies increases aggregate welfare

demand and innovation in services the case of mobile communications abstract this paper aims to analyse the pricing strategies of mobile communications operators and examine the role of demand characteristics in the development of new tariff plans in so doing we depart from a traditional industrial organization approach to price discrimination and interpret new tariff plans as innovations in the spirit of schumpeter we look at competition in this sector as depending upon this form of innovation and we argue that given the specific features of the industry the development of new tariff plans is strongly related to the users characteristics and behaviour our main point is that in a context of uncertainty demand affects firms innovative strategies in two ways first by providing information on user behaviour and by increasing the capability of market segmentation and second by providing the incentives to innovate this argument is supported by an empirical analysis carried out on the basis of an original dataset which includes all the tariff plans on offer in the history of the italian market between 1992 and 2005 we find that both a firm s installed customer base and the level of market saturation play a role in shaping firms innovative pricing strategies in terms of the number and characteristics of the new tariff plans

network competition i overview and nondiscriminatory pricing we develop a model of unregulated competition between interconnected networks and analyze the mature and transition phases of the industry in this deregulated environ ment networks pay negotiated or regulated access charges to each other and com pete in prices for customers we show that a competitive equilibrium may fail to exist for large access charges or for large network substitutability and that freely negotiated access charges may prevent effective competition in the mature phase of the industry and erect barriers to entry in the transition toward competition last we examine the meaning and impact of policies such as the efficient component pricing rule

international telecom settlements gaming incentives carrier alliances and pareto superior reform liberalized countries that allow competition in international telecommunications favor traffic re routing practices as arbitrage against foreign monopolists this view is seriously incomplete monopolists allied with carriers in liberalized countries can use these practices to reduce termination payments to nonalliance carriers thereby harming also consumers in liberalized countries by gaming regulations that require equal termination rates at both ends and proportional return the monopolist s traffic is allocated among carriers in proportion to their shares of traffic to its country we also present a simple bilateral settlements reform that eliminates gaming incentives and other proportional return distortions yet benefits both countries

systems competition and network effects this paper discusses firm behavior market performance and the public and private institutions that arise in systems markets i e markets where consumers use compatible components together to generate benefits in such markets which include communications networks and hardware software networks popular products are inherently more valuable these network effects can drive corporate strategies and are critical in understanding innovation in many high technology markets the discussion here emphasizes the dynamics of consumer adoption decisions in the presence of network effects competition between incompatible systems and how suppliers choose which components are compatible and which are not

export oriented industrialization and regional development a case study of maquiladora production in yucatan mexico biles j j 2004 export oriented industrialization and regional development a case study of maquiladora production in yucatan mexico reg studies 38 519 534 this study provides a critical appraisal of export oriented industrialization eoi in the guise of maquiladora production as a regional development strategy in the case of yucatan mexico maquiladoras are export oriented assembly plants characterized by the labour intensive manufacture of imported components traditionally these firms have located along the us mexico border however during the past decade maquiladora production has spread to other regions of mexico perhaps the most dramatic shift in maquiladora location has been experienced by the state of yucatan where export oriented firms now account for one third of all manufacturing jobs and more than two thirds of all exports interregional input output analysis reveals that maquiladora production has had a positive impact on economic growth and distribution of income in both urban

foreign bank entry credit allocation and lending rates in emerging markets empirical evidence from poland abstract earlier studies have documented that foreign banks charge lower lending rates and interest spreads than domestic banks we hypothesize that this may stem from the superior efficiency of foreign entrants that they decide to pass onto borrowers performance hypothesis but could also reflect a different loan allocation with respect to borrower transparency loan maturity and currency portfolio composition hypothesis we are able to differentiate between the above hypotheses thanks to a novel dataset containing detailed bank specific information for the polish banking industry our findings demonstrate that banks differ significantly in terms of portfolio composition and we attest to the portfolio composition hypothesis by showing that having controlled for portfolio composition there are no differences in lending rates between banks

how do switching costs affect market concentration and prices in network industries i investigate the effects of switching costs on the market outcome in network industries using a dynamic duopoly model of price competition in the presence of an outside option i find that the role of switching costs depends on network effects and the outside option without a viable outside option high switching costs can neutralize the tendency towards high market concentration associated with network effects but with a viable outside option switching costs increase market concentration furthermore switching costs lower prices if network effects are modest and there exists a viable outside option but generally raise prices otherwise

the effect of foreign bank presence on firm entry and exit in transition economies abstract this study investigates the impact of foreign bank penetration on firm entry in central and eastern europe acquisition of domestic banks by foreign investors has lowered rates of firm creation decreased the average size of entrants and increased firm exit in industries with greater informational opacity while entry of greenfield foreign banks appears to have spurred firm creation and exit we modify the view in earlier studies that informational opacity equates with firm size defining opacity in terms of technological characteristics for a given industry we find the economic significance of foreign bank entry is larger for opaque industries than industries with large shares of small firms the study provides evidence of increased credit constraints for start ups in central and eastern europe which is consistent with the theoretical proposition that the presence of foreign banks exacerbates informational asymmetries

network competition with income effects i generalize the workhorse model of network competition to include income effects in demand empirical work has shown income effects to be positive and statistically significant income effects deliver theoretical results consistent with regulatory concern about excessive termination rates unregulated network operators competing in nondiscriminatory retail contracts negotiate termination rates above cost for any positive income effect this also holds when operators discriminate between on net and off net calls if networks are differentiated operators profit from increasing termination rates above cost under second degree price discrimination if a sufficient share of consumers prefer on net off net contracts and their subscription demand is relatively inelastic