new product introduction and incumbent response strategies their interrelationship and the role of multimarket contact in this article the author studies the determinants of both new product introduction and incumbent response strategies in a single integrated framework building on previous research in strategic

sticks and carrots two incentive mechanisms supporting intra group cooperation abstract in this note we introduce two distinct incentive mechanisms that support dynamic intra group cooperation in the context of prisoner s dilemma payoffs rewards for cooperating and punishments for defection where the rewarding or punishing party may be outside the relationship

umbrella branding with imperfect observability and moral hazard abstract in a framework of repeated purchase experience goods with seller s moral hazard and imperfect monitoring umbrella branding may improve the terms of the implicit contract between seller and buyers whereby the seller invests in quality and buyers pay a high price in some cases umbrella branding leads to a softer punishment of product failure which increases the seller s value in other cases umbrella branding leads to a harsher punishment of product failure which allows for a reputational equilibrium that would otherwise be impossible on the negative side under umbrella branding one bad signal may kill two revenue streams not one combining costs and benefits i determine the set of parameter values such that umbrella branding is an optimal strategy

the role of multilateral institutions in international trade cooperation the world trade organization wfo lacks the power to directly enforce agreements it is therefore important to understand what role the wto can play to facilitate international cooperation and whether a multilateral institution can offer distinct advantages over a web of bilateral agreements this paper examines two potential benefits of a multilateral trade institution first verifying violations of the agreements and informing third parties thus facilitating multilateral reputation mechanisms second promoting multilateral trade negotiations rather than a web of bilateral negotiations the model suggests that a multilateral approach is particularly important when there are strong imbalances in bilateral trading relationships

collusion in multiproduct oligopoly games under a finite horizon applying recent results on finitely repeated games to oligopoly theory the author finds that there exists a class of finite horizon output games in which collusion can be achieved as a subgame perfect equilibrium trigger strategies prevent defection from the cooperative outcome by credibly threatening that the defector will be forced to exit the industry for the case of a multiproduct oligopoly it is shown that collusion in one market can be enforced by the threat of punishment in a second market if someone defects even though the two markets are structurally independent the firms make them strategically interdependent through their strategies copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

collusive intra industry trade this paper examines the phenomenon of intraindustry trade under the condition of firm collusion it is shown that with homogeneous goods no collusive intraindustry trade can occur but if the products are differentiated firms will achieve their joint monopoly profits by exporting to each other s market thus the observation of the occurrence of intraindustry trade does not necessarily mean the absence of collusion the paper further studies the properties of such collusive trade despite the fact that the firms are joint monopolists collusive two way trade is still welfare superior to autarky for the world collusive intraindustry trade is also more sustainable if the firms production costs are more similar

entry exit and performance in airline markets abstract data from the airline industry indicate that 1 entry generally is not induced by price levels substantially above the norm 2 entry reduces fares and increases output and exit increases fares and reduces output and 3 incumbents cut price and maintain output in response to entry and survivors increase both price and output in response to exit these findings cast doubt on the ability of entry to prevent or reverse price increases from anticompetitive mergers

credible collusion in spatially separated markets in an infinitely repeated game sellers employ a trigger strategy of mutual forbearance from invasion of each other s markets stabilized against invasion by the threat of bertrand pricing contrary to conventional static models this article shows stability for a wide range of transportation costs and present value parameters and that increases in transportation costs tend to destabilize the collusive agreement

laboratory evidence on the effectiveness of corporate leniency programs the number of cartels detected in the united states and in europe has increased considerably since the introduction of corporate leniency programs in antitrust legislation it cannot however be ruled out that this apparent success results in part from increased cartel activity we explore the effects of corporate leniency programs on pricing and cartel activity by use of an experiment we find that in the lab i fewer cartels are established when a leniency program is in place and ii cartels that do exist are less successful in charging prices above the static nash equilibrium price and have lower survival rates

diversification multi market contact and profitability this paper analyses the relationships between diversification multi market contact and industry profitability it focuses on the link between diversification and multi market contact to show that when diversification establishes or increases the extent to which firms meet in more than one market the effect of such multi market contact is to increase the possibility that collusion emerges as an evolutionary stable strategy as a result multi market contact may increase the potential for tacit collusion and so lead to higher profitability the effects of diversification and multi market contact on the price cost margin and the rate of return to capital are estimated using a specially constructed new database for uk manufacturing industry in 1979 this database provides information on the diversification and multi market contact of 418 firms across 134 manufacturing industries thus linking firm and industry level data the results show a clear positive effect of multi market contact on industry profitability

incomplete contracts and strategic ambiguity why are observed contracts so often incomplete in the sense that they leave contracting parties obligations vague or unspecified traditional answers to this question invoke transaction costs or bounded rationality in contrast the authors argue that such incompleteness is often an essential feature of a well designed contract specifically once some aspects of performance are unverifiable it is often optimal to leave other verifiable aspects of performance unspecified the authors explore the conditions under which this occurs and investigate the structure of optimal contracts when these conditions are satisfied copyright 1998 by american economic association

international antitrust enforcement and multimarket contact this article analyzes cartel formation and international antitrust enforcement when multinational firms operate in several jurisdictions with local antitrust authorities we are concerned with how the sustainability of collusion in one local market is affected by the existence of collusion in other markets when they are linked by a negative demand relationship the interdependence of cartel stability across markets leads to potential externalities in antitrust enforcement across jurisdictions local antitrust enforcement equilibrium enforcement may exhibit a nonmonotonicity in the degree of market integration we compare it with globally optimal antitrust enforcement policy and discuss the role of international antitrust coordination

competitive advantage and collusive optima cost differences may often be important in real oligopolies if side payments are impossible the standard cartel objective total industry profits lacks plausibility when costs differ this essay considers plausible alternatives four different technologies for effecting collusion which are essentially identical when costs are equal define sets of possible profits axiomatic bargaining models are used to select unconstrained optima from among these possibilities simple functional forms are employed low cost firms with large shares in cournot equilibrium may have little to gain from collusion if collusion is effective low cost firms will have relatively low estimated conjectural variations

trade policy with increasing returns and imperfect competition contradictory results from competing assumptions abstract a number of recent papers derive different results about the effects of trade and industrial policy on imperfectly competitive industries this paper sets out a single model within which policy under different market structures can be examined we consider the four types of market structure generated by oligopoly versus free entry and segmented markets versus integrated markets we conclude that the effects of policy are greater when markets are segmented than when they are integrated and that if transport costs are small policy is more potent when the number of firms is fixed than when there is free entry

protecting intellectual property rights are small firms handicapped this paper studies the determinants of patent suits and settlements during 1978 99 by linking information from the u s patent office the federal courts and industry sources we find that litigation risk is much higher for patents that are owned by individuals and firms with small patent portfolios patentees with a large portfolio of patents to trade or other characteristics that facilitate cooperative resolution of disputes are much less likely to prosecute infringement suits however postsuit outcomes do not depend on these characteristics these findings show that small patentees are at a significant disadvantage in protecting their patent rights because their greater litigation risk is not offset by more rapid resolution of their suits our empirical estimates of the heterogeneity in litigation risk can help in developing private patent litigation insurance to mitigate the adverse affects of high enforcement costs

resale and collusion in a dynamic market for semidurable goods the paper studies the incentives to form collusive agreements when goods can be traded in second hand markets it will be shown that such incentives crucially depend on the rate of depreciation of the durable good and on consumer heterogeneity the main contribution of the paper shows that an active second hand market may strengthen the incentives to collude as do policies that affect the functioning of the second hand market e g leasing policy and buy back it will also be argued that the oligopoly incentives to adopt strategies that strengthen collusion often differ from the monopoly incentives to increase profits

trade costs and multimarket collusion contrary to conventional wisdom this article argues that trade liberalization may facilitate collusion and reduce welfare with the help of a duopoly model in which firms interact repeatedly in multiple markets we first show that if trade costs i e tariffs transport costs and discount factors are not too high efficient cartel agreements necessitate the cross hauling of goods as that entails lower deviation incentives in this setting we then demonstrate that reciprocal trade liberalization always raises total output when trade costs are within a range whose lower bound exceeds a threshold level but may reduce total output and thus be pro collusive when trade costs are below that threshold level

multi market collusion with territorial allocation abstract we develop a supergame model of collusion between price setting oligopolists located in different markets separated by trade costs the firms produce a homogeneous good and sustain collusion based on territorial allocation of markets we first show in a much more general framework than some earlier literature that a reduction in trade costs can paradoxically increase the sustainability of collusion then we prove a new paradox in which the scope for collusion may be enhanced by an increase in the number of firms the paper thus highlights several hitherto unknown theoretical implications of collusion under price competition

the spillover effect of antitrust enforcement we address the question of how the threat of antitrust enforcement spills over from one industrial submarket to another we build a formal model describing the technology through which an initial antitrust indictment can reveal evidence of additional infractions in the same industry our approach is organized around the belief that the flow of information on antitrust violations is closely linked to commodity flows as it turns out our method proves able to explain the differential response of highway construction cartels in various states to recent changes in the severity of antitrust sanctions

cartel contract duration empirical evidence from inter war international cartels a formal cartel organization sets up a multilateral relationship between firms in a given industry while standard contracting literature has studied bilateral monopoly relationships in detail there are horizontal relationships like cartels that also have contractual aspects to shed light on how these contracts work this paper takes a sample of legal formal cartel contracts and examines their structure and durability borrowing from industrial organization theories and transaction cost theories the empirical model tests for the importance of demand uncertainty and cartel organizational characteristics in determining cartel contract duration the results show that the more uncertain the environment within which the cartel operates the shorter the expected cartel duration other industry structure characteristics and cartel organization variables included in the empirical model have a much weaker influence on duration copyright 2005 oxford university press

intergenerational mobility in norway 1865 2011 there are large differences in intergenerational mobility between countries little is known however about how persistent such differences are and how they evolve over time this paper constructs a data set of 835 537 linked father son pairs from census records and documents a substantial increase in intergenerational occupational mobility in norway between 1865 and 2011 the increase is most pronounced in non farm occupations the findings show that long run mobility developments previously described for the us and uk are not necessarily representative for other countries and that high mobility in a given country today need not reflect high mobility before industrialization

economic integration as competitive discipline this paper reexamines the standard notion that economic integration will promote competition using an illustrative model it is shown that integration will indeed enhance competition if the foreign firm is the low cost producer but if the foreign firm is the high cost producer integration will retard competition if the initial tariff level is low the results of this paper suggest that trade liberalization does not always provide competitive discipline competition policy must still be actively enforced even when economies are becoming increasingly open copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

economic integration and the sustainability of multimarket collusion abstract we examine the impact of and links between two types of economic integration on the stability of multimarket collusion when firms interact in quantities in segmented markets 1 multilateral trade liberalization captured by a reduction of trade costs across all markets and 2 preferential trade liberalization captured by an expansion in the size of individual markets while holding the level of external trade costs tariffs constant in general collusive stability is non monotonically related to economic integration in the case of multilateral liberalization the effect depends on the initial level of trade costs and the extent of liberalization however on the average the complete elimination of trade costs is pro competitive when these costs are sufficiently high initially in the case of regional integration the effect of liberalization is pro competitive when external trade barriers are sufficiently high but anti competitive when these barriers are sufficiently low

foreign direct investment location strategies in the tire industry we analyze the nature of international competition among multinational firms in the tire industry using the frameworks of the theories of oligopolistic reaction and foreign direct investment we find that the firms investment patterns are related to the number and identities of competitors host country characteristics and foreign experience global tire companies from several nations demonstrate oligopolistic reaction behavior

global cartels leniency programs and international antitrust cooperation in this paper we analyze cartel formation and self reporting incentives when firms operate in several geographical markets and face antitrust enforcement in different jurisdictions we are concerned with the effectiveness of leniency programs and the benefits of international antitrust cooperation between agencies when international antitrust prosecution is uncoordinated multi market contact allows firms to reduce the amount of self reporting in equilibrium and sustain cartels more effectively we then discuss the effects of information sharing among antitrust authorities as a function of how much and which type of information is exchanged we show that extensive information sharing might have an adverse effect on self reporting by cartel members

on the stability of multimarket collusion in price setting supergames abstract in this paper we examine how trade liberalization affects collusive stability in the context of multimarket interactions the model we consider is a segmented markets duopoly with differentiated goods in which price setting firms pool their incentive constraints across markets to sustain their most collusive outcome we find that when goods are very close substitutes and trade costs are sufficiently high a marginal reduction in trade costs facilitates collusion exactly the opposite is true if for any given degree of product substitutability trade costs are sufficiently low we also study the dependence of multimarket collusion on product differentiation

do states free ride in antitrust enforcement i introduction recent research has examined the role of state governments in the united states in antitrust enforcement over the past 20 years what has not been explored is the extent to which states make strategic decisions on their involvement in antitrust litigation in particular while most state antitrust cases involve purely local matters a significant number of these concern more than one state states then need to decide whether to invest in leading an investigation or letting other states take the lead and participating in some lesser role which includes simply signing on to a settlement we view the decision by a state to delay entry into antitrust litigation to be a type of free tiding behavior 1 in this paper we analyze this issue of free riding by states in antitrust activity ii previous literature one of the defining characteristics of a pure public good is the nonexcludability of the benefits from its consumption as benefits can be received by individuals without having to pay for the goods this nonexcludability creates the possibility for a free rider problem as a consequence of this free tiding behavior the private market cannot exact a price for this good and this may mean the private market will provide a suboptimal amount of the good free riders are usually used as justification for government intervention into the private market to allocate these so called public goods in order to correct the market failure while this behavior would seem rational it is not easily observed so the extent of free riding is not generally known researchers have employed experimental game evidence to measure the extent of free riding with results ranging from none to an extreme amount factors found in this literature that appear to decrease the degree of free riding behavior under certain conditions include smaller group size isaac walker and thomas 1984 experience through repeated game play fischbacher and gachter 2010 pregame communication among participants and an ability to exclude players from the group or other sanctions delmas and keller 2005 while the free rider problem and the experimental evidence have focused on private market decision makers it is straightforward to extend these behaviors to self interested governments one possibility is that governments reduce the amount of certain appropriations as a result of private contributions becker and linsday 1994 find a considerable degree of government free riding behavior in the context of appropriations to public higher education institutions an alternative source of free riding does not involve the private sector but is between government activities particularly those with significant spillover effects lee 1988 considers the issue of free riding among countries in their efforts devoted to fighting terrorism more recently sav 2010 finds a similar impact chati and kehoe 2007 provide a theoretical discussion of what they call a free rider problem among members of a monetary union in their fiscal and regulatory policies caused by an inability of the monetary authority to commit to their policies sigman 2002 finds that water pollution control is affected by the degree of spillovers crossing international borders somewhat closer to the focus of this paper konisky and woods 2010 investigate whether u s states free tide in environmental regulatory actions their results are somewhat mixed while they report some impact in reducing state enforcement of the clean air act in their counties adjacent to international borders they do not find this pattern in counties bordering other u s states a recent theoretical paper by choi and gerlach 2012 raises the concern that national antitrust enforcement in a global economy with multi market contact among exporters may be suboptimal due to free riding on the antitrust activity of other countries however no empirical evidence is provided

collusion at the extensive margin abstract we augment the multi market collusion model of bernheim and whinston 1990 by allowing for firm entry into and exit from individual markets we show that this gives rise to a new mechanism by which a cartel can sustain a collusive agreement collusion at the extensive margin whereby firms collude by avoiding entry into each other s markets or territories we characterise parameter values that sustain this type of collusion and identify the assumptions where this collusion is more likely to hold than its intensive margin counterpart specifically it is demonstrated that where duopoly competition is fierce collusion at the extensive margin is always sustainable finally we provide a theoretic foundation for the use of a proportional response enforcement mechanism

sustainable collusion on separate markets in a cournot duopoly where firms incur a fixed cost for serving each market collusion is easier to sustain with production quotas if the fixed cost is small enough and with market sharing agreements if it is large enough

hedonic prices for fish tuna prices in hawaii over the past two decades the marketing of fish has recognized the importance of quality yet empirical analysis of market transactions could give us little insight into the value of different qualities of fish because market data are typically aggregated we exploit a dataset on the auction price of tuna sold in hawaii to estimate a hedonic model the model provides empirical estimates of price increments due to species quality of the fish such as size or fat content method of handling and market conditions the empirical results are also used to estimate price flexibilities for landings in hawaii

absentee bidders and the declining price anomaly in wine auctions the anomaly is concerned with the observation that in multiple item auctions of identical objects prices tend to decline over time i show that in the case of wine auctions which have been analyzed frequently the anomaly is likely to be caused by the fact that most bids are entered by absentees who use nonoptimal bidding strategies therefore wine auctions can hardly be used to illustrate the standard multiple object auction model

cartel stability and tariff policy abstract in this paper we investigate the effect that tariff policy has on the ability of firms to collude in oligopolistic industries we find that small tariff rates lead to an industry structure more conducive to collusive behavior while large tariff rates weaken cartels there exists a critical tariff rate which has no effect on the cartel s stability this critical value is found to be a decreasing function of n the number of firms in the industry and n d n the proportion of firms that are domestic

multi market collusion with demand linkages and antitrust enforcement this paper analyzes dynamic cartel formation and antitrust enforcement when firms operate in demand related markets we show that cartel prosecution can have a knock on effect bringing down a cartel in one market reduces profits and cartel stability and leads to the break up of the cartel in the adjacent market cartel prosecution can also have a waterbed effect disrupting a cartel increases cartel stability in the adjacent market and induces cartel formation in previously competitive markets we discuss the impact of dynamic cartel formation on consumer surplus explore antitrust spillovers the optimal scope of antitrust interventions and cartel formation with local firms

taxing education in ramsey s tradition abstract assuming a two period model with endogenous choices of labour education and saving it is shown to be second best efficient to deviate from ramsey s rule and to distort qualified labour less than nonqualified labour furthermore if the earnings function displays constant elasticity the choice of education should not be distorted with the necessary qualifications the results extend to the case when taxpayers are heterogeneous and when the planner trades off efficiency against equity

leniency programs for multimarket firms the effect of amnesty plus on cartel formation we examine the effect of amnesty plus on dynamic cartel formation in a multimarket setting the amnesty plus program has been adopted as part of the us corporate leniency policy in 1999 and is now vigorously advertised as one of the most compelling tools in generating successful cartel investigations amnesty plus is aimed at attracting amnesty applications by encouraging firms convicted in one market to report their collusive agreements in other markets we show that amnesty plus has two opposite effects on firms ability and incentives to collude which are both increasing in the fine reduction granted first amnesty plus can reduce the deterrence of cartel activities by making it easier for firms to sustain multimarket collusion through strategies involving self reporting after a first cartel detection second it can reduce the expected duration of cartels or delay their formation by increasing firms incentives to self report after a first cartel detection

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

internal cartel stability with time dependent detection probabilities abstract to account for the illegal nature of price fixing agreements per period detection probabilities that can vary over time are introduced in a dynamic oligopoly the resulting iccs for internal cartel stability indicate that for discount factors up to 10 per period detection probabilities of 5 are needed to reduce the number of cartel members by 50 for the special case of stationary supergames with constant per period detection probabilities p elegant rules emerge internal cartel stability requires the discount factor to increase with 100 p 1 p percent while a fixed fine of 100 1 p p percent of incremental cartel profits is required for making the icc always binding

trade negotiations domestic policies and the most favored nation clause this paper illustrates how restricting trade instruments to non discrimination links trade agreements to non trade agreements and under certain conditions helps governments further lower tariffs and or domestic standards policies these conditions are i governments objective functions are sufficiently concave with respect to domestic standards policies ii domestic standards are sufficiently valued and iii policies are strategic complements these can then be used as a rationale for restricting safeguard measures to non discrimination ce texte montre comment le fait de restreindre les instruments de politique commerciale a la seule poursuite de liens commerciaux libres de discrimination relie accords commerciaux et non commerciaux et a certaines conditions aide les gouvernements a reduire encore davantage les tarifs douaniers et ou les normes politiques nationales ces conditions sont que i les fonctions objectives soient suffisamment concaves par rapport aux normes politiques nationales ii les normes nationales soient suffisamment valorisees et iii les politiques soient des complements strategiques ces arguments fournissent le rationale pour limiter les mesures de protection a la seule non discrimination

multilateral contracting and the employment relationship this paper studies the structure of the employment relationship in organizations it investigates the trade off firms face between making commitments to their workforce as a whole multilateral relational contracts and making more limited commitments to individuals or smaller groups of employees bilateral relational contracts multilateral contracts bind the firm more strongly to implicit commitments improving motivation but are difficult to adjust in response to changes in the environment bilateral contracts make workforce changes easier to implement the framework helps to explain the use of relative performance evaluation why firms rely on temporary employees and the adoption of two tier workforces

sealed bid auction of netherlands mussels statistical analysis this article presents an econometric analysis of the many data on the sealed bid auction that sells mussels in yerseke town the netherlands the goals of this analysis are obtaining insight into the important factors that determine the price of these mussels and quantifying the performance of an individual purchase manager besides a case study the article is a general study on the role of auctions in supply chains and on hedonic price factors

strategic leniency and cartel enforcement the cornerstone of cartel enforcement in the united states and elsewhere is a commitment to the lenient prosecution of early confessors a burgeoning game theoretical literature is ambiguous regarding the impacts of leniency i develop a theoretical model of cartel behavior that provides empirical predictions and moment conditions and apply the model to the complete set of indictments and information reports issued over a 20 year span statistical tests are consistent with the notion that leniency enhances deterrence and detection capabilities the results have implications for market efficiency and enforcement efforts against cartels and other forms of organized crime jel d43 l12 l13 k21 in 1993 the department of justice doj introduced a new leniency program with the intent of destabilizing existing cartels and deterring new cartels the program commits the doj to the lenient prosecution of early confessors in particular it guarantees complete amnesty from federal prosecution to the first confessor from each cartel provided that an investigation into the confes sor s cartel is not already underway it also offers discretionary penalty reductions to conspirators who confess when an investigation is already ongoing the new leniency program has become the cornerstone of cartel enforcement efforts in the united states e g scott d hammond 2004 and recently has inspired antitrust authorities in australia canada the european union japan south korea and elsewhere to introduce similar programs oecd 2002 2003 this paper tests the efficacy of the new leniency program the results have implications for market efficiency and enforcement efforts against cartels and other forms of organized crime a burgeoning game theoretical literature is ambiguous regarding the impacts of leniency a common finding is that leniency may destabilize cartels because conspirators can simultane

overcoming incentive constraints by linking decisions consider a bayesian collective decision problem in which the preferences of agents are private information we provide a general demonstration that the utility costs associated with incentive constraints become negligible when the decision problem is linked with a large number of independent copies of itself this is established by defining a mechanism in which agents must budget their representations of preferences so that the frequency of preferences across problems mirrors the underlying distribution of preferences and then arguing that agents incentives are to satisfy their budget by being as truthful as possible we also show that all equilibria of the linking mechanisms converge to the target utility levels the mechanisms do not require transferable utility or interpersonal comparisons of utility and are immune to manipulations by coalitions

judo economics reconsidered capacity limitation entry and collusion abstract the capacity investment by a new firm into an established market is explored in a repeated price game if the entrant expects collusion to prevail upon entry it may not practice judo economics but instead choose to install enough capacity to serve the entire market this occurs when collusion involves optimal punishment paths if instead collusion is based upon the static nash equilibrium punishment and the incumbent has excess capacity and the entrant is at a cost disadvantage the entrant will strategically limit its capacity so as to restrain the incumbent s price response to entry

conspiracy at the pump abstract on the basis of evidence of price fixing in may 2006 the canadian competition bureau targeted retail gasoline outlets in some local markets in the province of quebec in june 2008 criminal charges were filed against many individuals and companies operating in those local markets we employ a differences in differences approach to determine whether the public announcement of the antitrust investigation triggered a reaction in one of the targeted markets we find that the price of gasoline in the targeted market fell by 1 75 cents per liter after the public announcement of the investigation we also briefly discuss how well the stiglerian theory of collusion performs in this real world conspiracy

leniency policies and illegal transactions abstract we study the consequences of leniency reduced legal sanctions for wrongdoers who spontaneously self report to law enforcers on sequential bilateral illegal transactions such as corruption manager auditor collusion or drug deals it is known that leniency helps deterring illegal relationships sustained by repeated interaction here we find that when not properly designed leniency may simultaneously provide an effective governance mechanism for occasional sequential illegal transactions that would not be feasible in its absence

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

trends in aggregate concentration in the united states i assemble two rarely used data sets to measure aggregate concentration in the u s in the 1980s and 1990s despite the merger waves of those decades aggregate concentration declined in the 1980s and the early 1990s but rose modestly in the late 1990s the levels at the end of the decade were at or below the levels of the late 1980s or early 1990s the average size of firm and the relative importance of larger size classes of firms increased however gini coefficients for employment and payroll shares of companies showed moderate but steady increases from 1988 through 1999

optimal pricing and product planning for new multiattribute products based on conjoint analysis in the conjoint analysis by applying the trade off approach to the rank orders data of preference among pairs of attributes i e profiles obtained from consumers utility value for each level of each attribute is estimated while the trade off approach makes few cognitive demands on the respondent and is simple to follow it is both time consuming and tedious moreover it is conducive to respondents losing their place in the table or developing some stylized pattern just to get the job done most importantly however the task is unrealistic wreak alternatives do not present themselves for evaluation on a trade off approach basis in this paper we discuss the optimal pricing and product planning for new multiattribute products based on the utility values of attribute levels measured by the conjoint analysis in this case the full profiles approach is applied to the rank order data of preference among full profiles obtained from consumers

the impact of leniency and whistle blowing programs on cartels antitrust authorities have set up leniency programs for cartel members that denounce their collusive agreements these programs help prosecute participants and can thereby deter collusion we compare the impact of reduced fines and positive rewards and argue that rewarding individuals including firm employees can deter collusion in a more effective way we discuss possible adverse effects of whistle blowing programs on firms behavior and particularly on turnover incentives to innovate and cooperation we also explore explanations for the puzzling fact that managers keep incriminating evidence and argue reward programs actually provide additional incentives for keeping such evidence

cartel overcharges an empirical analysis abstract using 406 overcharge estimates the study analyzes the impact of cartel characteristics and the market environment on the magnitude of overcharges attained by cartels in different geographic markets and during six antitrust law regimes starting from the 18th century the median overcharge achieved by cartels is 20 percent of selling price as predicted by cartel theory market structure is an important determinant of the overcharge level markets where cartels have high market shares tend to have higher overcharges the number of cartel participants and the size inequality among them are inversely related to the overcharge level international cartels impose higher overcharges than domestic cartels overcharges attained in the us and european markets tend to be lower than overcharges achieved in the asian markets and the rest of the world results on the impact of changes in the antitrust law environment over time on the size of cartel overcharges are mixed however there is some evidence indicating that the lowest overcharges are associated with the latest antitrust law period

trade flows in a spatial oligopoly gravity fits well but what does it explain large distance and border effects on trade flows in some industries may result from the collusive division of geographic markets in the brazilian cement industry traditional gravity equations fit the data well yet limited regional flows are due to firms strategic behaviour thanks to a unique institutional setting and an unusually rich data set i directly control for trade costs which despite their importance cannot account for the observed segmentation of local markets at current prices the paper highlights how collusive behaviour can magnify the effects of distance as firms use geography to coordinate on higher prices and less cross hauling les effets de grande distance et de frontieres sur les flux de commerce dans certaines industries peuvent etre le resultat d une division collusive des marches geographiques dans l industrie bresilienne du ciment les equations de gravite s ajustent bien aux donnees mais les flux regionaux limites entre regions sont attribuables au comportement strategique des firmes gr ce a un contexte institutionnel unique et a une base de donnees inhabituelles l auteur a pu prendre en compte directement les couts du commerce qui malgre leur importance ne peuvent pas expliquer la segmentation observee des marches locaux aux prix courants le memoire met en lumiere comment le comportement de collusion peut magnifier les effets de distance a proportion que les firmes utilisent la geographie pour assurer une coordination fondee sur des prix plus eleves et moins de transport transfrontalier

reply on comment to small firms and the merger mania research on performance differences between small and large firms is booming it emerges relatively separated from the mainstream industrial organization literature inspired by levy s comment on an earlier paper we try to bridge the gap between the two areas especially we screen non cooperative game theoretical models for predictions on performance differences most of them forecast higher profits for larger firms but there exist also some models which predict the opposite for very specific circumstances

symmetric research joint ventures cooperative substitutes and complements we introduce the concepts of cooperative substitutes and complements and use them to explain when all firms in a research joint venture will choose equal levels of r d we show that the second order conditions for a symmetric optimum take a particularly simple form ruling out both excessive cooperative substitutability and excessive cooperative complementarity and nesting conditions already derived in the literature finally we apply our results to the comparison between cooperative and non cooperative r d and show in an important special case that asymmetric outcomes are only optimal for a very limited range of parameter values

strategic tariffs and endogenous market structures trade and industrial policies under imperfect competition abstract this paper examines strategic tariff policy tariff induced entry and endogenous market structures in a developing country setting it improves on recent theoretical treatments of optimal trade policy under imperfect competition by allowing for forward looking import substituting investment induced by an anticipated time consistent tariff policy it shows that the optimum tariff is robust across a subset of market structures and cost and demand specifications however it will usually involve insufficient or excessive entry by domestic firms and consequently industrial policy of various kinds is a necessary supplement to strategic tariff policy

commitment in utility regulation a model of reputation and policy applications abstract this paper builds a dynamic model of utility regulation where a government cannot commit to a time inconsistent policy of not expropriating investment by allowing the government s type to change over time i explore how reputation concerns may generate partial commitment restricting attention to equilibria that are strongly renegotiation proof i show that there is a unique perfect bayesian equilibrium this contains episodes of investment and good behaviour followed by periods of expropriation and non investment i then apply the model to consider how the power of the incentive scheme and decentralization may influence the properties of this equilibrium in the case of the power of incentives the model suggests that price caps may worsen commitment in developing countries but not in developed ones similarly the model suggests that decentralisation is likely to have a significant effect on commitment but that this effect will depend on the general ability of the government to commit overall we conclude that the effect of such policies on commitment will be different across countries depending on the institutional environment

forward and backward intergenerational goods why is social security good for the environment this paper studies the ability of nonmarket institutions to invest optimally in forward intergenerational goods figs such as education and the environment when agents are selfish or exhibit paternalistic altruism we show that backward intergenerational goods bigs such as social security play a crucial role in sustaining investment in figs without them investment is inefficiently low but with them optimal investment is possible we also show that making the provision of bigs mandatory crowds out the voluntary provision of figs and that population aging can increase investment in figs

the structure of competition how competition between one s rivals influences imitative market entry this paper investigates how the pattern of encounters between a firm s competitors affects the firm s inclination to follow its competitors into a new market we theorize that direct encounters between a firm s rivals lead to a herding effect making imitative market entry more likely past mutual forbearance between a firm s competitors resulting from asymmetric multimarket competition further strengthens this herding effect by enhancing the firm s expectations of market attractiveness in contrast aggressive past rivalry between the competitors resulting from symmetric multimarket contact dampens these expectations producing a competition effect that makes herding less probable we test our idea in two distinct contexts the chinese pharmaceutical industry and the taiwanese computer hardware industry and find consistent support in both settings we discuss how our analysis of what we call the structure of competition can be extended to research on other forms of firm behavior

on interdependent supergames multimarket contact concavity and collusion abstract following bernheim and whinston 1990 this paper addresses the effects of multimarket contact on firms ability to collude real world imperfections tend to make firms objective function strictly concave and market supergames interdependent firms payoffs in each market depend on how they are doing in others then multimarket contact always facilitates collusion it may even make collusion sustainable in all markets when otherwise it would not be sustainable in any the effects of conglomeration are discussed multigame contact is shown to facilitate cooperation in supergames other than oligopolies as long as agents objective function is submodular in material payoffs journal of economic literature classification numbers c72 d43 l13 l21

repeated games and the reciprocal dumping model of trade abstract a repeated game version of the basic brander and krugman 1983 model is analyzed in the brander krugman model rivalry among oligopolistic firms gives rise to international trade it is now shown that no trade which is welfare reducing when transportation costs are negligible is a strong nash equilibrium of the supergame the threat strategies that support no trade the discount rate and the crucial role of transportation costs are discussed extending the branderkrugman analysis in a natural way

analysis and forecasting of demand during promotions for perishable items this study examines promotions for perishable products in a retail environment we analyze the impact of relative price discounts on product sales during a promotion and shed light on how to build models to forecast promotional demand for perishable products preliminary analyses based on regression models and a large dataset from a retailer do not reveal conclusive evidence for the presence of threshold and or saturation levels for price discounts for perishable products a potential explanation comes from the observation that although products like desserts on average allow 1 5 weeks time to consume their sales during promotions on average are equal to 14 weeks of regular sales this suggests that the success of a promotion is not so much determined by the restriction to stockpile due to the short time to consume but by the emergence of substitution effects consumers switching between different products of the same category we develop and test different models to forecast the demand during a promotion including a moving average forecast and several regression models within the class of regression models we find that modeling threshold and saturation effects leads to worse forecasting performance than modeling price reductions linearly or quadratically the largest improvements in forecast accuracy are gained by distinguishing between routine and non routine product categories routine categories with routine demand processes and a large number of observations perform best when applying a regression based on direct observations of the product category whilst non routine categories benefit from a regression which also uses observations from other product categories

concentration in the european electricity industry the internal market as solution abstract this article offers an analysis of the present competitive and regulatory framework of the european electricity sector and the results achieved with the liberalisation process considering the reactions of incumbents to the liberalisation the focus in this work is mainly on the problem of market concentration in the sector the new trends toward the creation of national champions as well as recent mergers between gas suppliers and electricity producers raise serious concerns about abuses of market power and risk of future collusion in particular the strategic linkage of existing markets and the expansion into new ones are analyzed in the light of the multimarket contact theory considering investment in interconnection among member states the internal market issue is investigated as a solution to the risks coming from liberalisation

multimarket contact economies of scope and firm performance we integrate the efficiency and competitive effects of product market scope choice into a comprehensive model of economic performance and empirically test the model in the context of the u s airli

effective response to rfqs and supplier development a supplier s perspective abstract considering multiple attributes while evaluating request for quotes rfqs responses from suppliers is gaining significant importance in industrial procurement while price has traditionally been the most important factor in evaluating rfq responses incorporation of non price attributes such as quality and delivery performance is becoming essential and critical research on multi attribute rfqs has received significant attention in an auction format with models addressing issues relating to auction mechanism design winner determination and auction dynamics primarily from a buyer s perspective there have been few approaches if any that have investigated the issue of response to multi attribute rfqs from a supplier s perspective which is the focus of this paper such an approach will assist a supplier in effectively responding to rfqs thereby maximizing the likelihood of winning future contracts it also indirectly assists in supplier development and helps foster competition among suppliers which benefits both the buyers and the suppliers we develop mathematical models that address this important issue and demonstrate their usefulness through an illustrative dataset

multimarket contact competition and pricing in banking abstract in this paper we assess the impact of multimarket contact of banks on their market power by means of a simultaneous equation model in which the divergence of price from marginal cost is a function of multimarket linkages the model is estimated using aggregate data from the italian regions for the years 1997 2009 our results show that multimarket contact is positively and significantly correlated to the market power index and is also connected to both home and non home market concentration the evidence is robust to changes in model specification and multimarket contact measures and supports the idea that firms which have a greater amount of contact are more likely to collude

price discrimination or uniform pricing which colludes more abstract conventional wisdom attributes different economic outcomes of uniform pricing and price discrimination to the heterogeneity in market conditions or market participants such as differences in demand elasticity or production costs we offer a new explanation for the observed differences that relates to behavioral aspects rather than demand or supply side effects in particular in a symmetric bertrand duopoly laboratory experiment for which theory predicts no differences between the two pricing regimes we find that tacit price collusion is systematically higher under price discrimination than under uniform pricing

adjustment costs and the sequencing of trade liberalisation a common feature of trade agreements between countries is that the integration of markets proceeds in stages this paper examin es conceptually the role played by adjustment costs in determining the best way to structure an agreement between two countries when there are multiple sectors to be liberalised adjustment costs to liberalisatio n of industries might influence the timing of liberalisatio n with the analysis bearing similarity to why tariff reductions tend to be phased in over time when two industries have no spillover eff ects trade agreements with sequential liberalisation will be less costly to sustain however if the liberalisation of one in dustry influences permanently the flow of benefits from liberalising the other industry simultaneous liberalisation may be easier to sustain

intergenerational occupational mobility in greatbritain and the united states since 1850 comment american economic review 2013 103 5 2021 2040 http dx doi org 10 1257 aer 103 5 2021 intergenerational occupational mobility in great britain and the united states since 1850 comment by michael hout and avery m guest in intergenerational occupational mobility in britain and the united states since 1850 jason long and joseph p ferrie 2013 introduce valuable data on men s intergenerational occupational mobility in the united states and britain for men employed in 1880 or 1881 and compare patterns with those for the same coun tries for men employed in the early 1970s long and ferrie advance three major substantive conclusions i occupational mobility was greater in the united states than in britain in the 1880s this result is consistent as they note with contemporary and current images of an expanding open america and a rigid class conscious victorian england their study is the first to address this issue with such broadly repre sentative data ii the united states became increasingly stratified over the ensuing 90 years decreasing social mobility this contradicts previous research that con cluded that the strength of the intergenerational correlation in the united states either remained constant hauser et al 1975 guest landale and mccann 1989 or fluctuated without a consistent trend upward or downward grusky and fukumoto 1989 at least until the 1960s other research indicated a significant decline in american stratification from 1962 to 1985 featherman and hauser 1978 hout 1984 1988 diprete and grusky 1990 iii britain and the united states were similarly stratified in the 1970s this accords with previous research that used the same original data sources but a broader age range encompassing all men 25 64 years old kerckhoff campbell and winfield laird 1985 yamaguchi 1987 erikson and goldthorpe 1992 xie 1992 goodman and hout 1998 long and ferrie make no direct comparisons between the british mobility patterns in 1881 and 1972 we are motivated to comment by our reanalyses of the published version of long and ferrie s dataset and some other tables that differ in some particulars hout sociology department university of california berkeley 410 barrows hall berkeley ca 94720 1980 e mail mikehout berkeley edu guest university of washington e mail averyguest gmail com go to http dx doi org 10 1257 aer 103 5 2021 to visit the article page for additional materials and author disclosure statement s

the declining price anomaly in dutch dutch rose auctions in symmetric independent private value auctions of a single object with risk neutral bidders the english second price auction has strategic simplicity it is optimal for bidders to reveal their valuation of the object and make bids accordingly in that case the auction is won by the person with the highest valuation who pays a price equal to the second highest valuation in a dutch first price auction this simplicity vanishes here winning bidders have to pay their bid to make a profit they shade their bids and bid below their valuation of the object somewhat loosely one may state that an english auction is truth revealing whereas a dutch auction requires strategic behavior the simple structure of the one unit english auction vanishes if two identical objects are auctioned sequentially now in the first round it is optimal for bidders to shade their bids to account for the option value of participating in the subsequent second round robert j weber 1983 bidders with a higher valuation also have a higher option value therefore they shade their bids in the first round by a greater amount than do bidders with a lower valuation as the auction proceeds the number of bidders decreases over the sequence of auctions the number of objects decreases as well the first fact has a negative effect on the competition for an object and the second has a positive effect both effects cancel out and prices follow a martingale as a result all gains to waiting are arbitraged away and the expected prices in both rounds are the same the latter result also holds for sequential auctions of more than two objects and does not depend on whether the auction is english or dutch this neat theoretical result is not supported by empirical research which usually finds price declines orley ashenfelter 1989 found a mild price decrease in sequential auctions of identical units of wine mcafee and daniel vincent 1993 also present empirical evidence on sequential wine auctions they found that on average the second unit of wine was sold at a price 1 4 percent lower than the price of the first unit victor ginsburgh 1998 uses data from wine auctions in which the auctioneer acted as an agent for bidders who were not present at the auction he found price declines but apparently the absent bidders entered bids that did not fit with the theory empirical studies by ashenfelter and david genesove 1992 see also jean jacques laffont 1997 and alan beggs and kathryn graddy 1997 concern heterogeneous objects they also detected price declines because of the contradiction between theory and empirical studies the declining price phenomenon is regarded to be an anomaly

intergenerational occupational mobility in great britain and the united states since 1850 abstract the us tolerates more inequality than europe and believes its economic mobility is greater than europe s though they had roughly equal rates of intergenerational occupational mobility in the late twentieth century we extend this comparison into the nineteenth century using 10 000 nationally representative british and us fathers and sons the us was more mobile than britain through 1900 so in the experience of those who created the us welfare state in the 1930s the us had indeed been exceptional the us mobility lead over britain was erased by the 1950s as us mobility fell from its nineteenth century levels jel j62 n31 n32 n33 n34

optimal corporate leniency programs this study characterizes the corporate leniency policy that minimizes the frequency with which collusion occurs though it can be optimal to provide only partial leniency plausible sufficient conditions are provided whereby the antitrust authority should waive all penalties for the first firm to come forward it is also shown that restrictions should be placed on when amnesty is awarded though it can be optimal to award amnesty even when the antitrust authority is very likely to win the case without insider testimony