retail competition in electricity markets abstract the introduction of competition into retail electricity supply gave rise to great expectations however to date its performance has proven less than stellar owing primarily to the theoretical concepts underpinning this reform which draw heavily on the austrian school neither consumers decision processes nor this sector s technical paradigm were adequately accounted for leading to an uncorrect estimation of the expected impact of opening to competition short and medium term prospects for the evolution of retail markets must be reconsidered from the perspective of greater stability not a generalization of competition but rather a persistent segmentation between active and inactive clients not a large and rapid diffusion of radical innovations in commercialisation with the potential for undermining the incumbents positions

the competitive effects of partial equity interests and joint ventures abstract antitrust authorities should consider the trade off between enhanced efficiency and reduced competition in cases of partial ownership this paper examines the competitive effects side of that trade off in the context of a modified cournot model we show that in markets where entry is difficult partial ownership arrangements could result in less output and higher prices than otherwise even if the ownership shares are relatively small these effects arise solely because these arrangements link the fortunes of actual or potential competitors producing a positive correlation among their profits in this sense the effects are purely structural they arise not because of increased opportunities for collusion or changes in the concentration of control but because the linking of profits reduces each firm s incentive to compete since these links internalize free rider problems associated with policing collusion and investing in entry deterrence however they could also enhance cartel stability and profitability

competitive effect of cross shareholdings in all pay auctions with complete information abstract this paper investigates the competitive effect of cross shareholdings in winner take all all pay auctions with two asymmetric bidders we show that cross shareholdings may paradoxically create a pro competitive effect and elicit more effort than a standard contest without cross ownership this observation runs in contrast to the anti competitive effect that cross shareholdings usually create in standard oligopolistic settings such as cournot or bertrand competitions both bidding costs and the sizes of cross shares affect the resultant total effort non monotonically neither a cross share nor a higher bidding cost necessarily decreases effort supply a complete account of equilibrium bidding behaviors is provided and the necessary and sufficient conditions under which cross shareholdings lead to higher or lower levels of overall effort are identified however the pro competitive effect comes at a loss of efficiency

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

technological regimes and schumpeterian patterns of innovation this paper proposes that the specific pattern of innovative activities in an industry can be explained as the outcome of different technological learning regimes a technological regime is defined by the particular combination of technological opportunities appropriability of innovations cumulativeness of technical advances and properties of the knowledge base building upon the distinction between schumpeter mark i and schumpeter mark ii industries this paper provides empirical estimates of the relationships between indicators of the schumpeterian patterns of innovation concentration of innovative activities stability in the hierarchy of innovators and importance of new innovators and indicators of the variables defining technological regimes

regulated and unregulated nordic retail prices nordic residential electricity consumers can now choose among a number of contracts and suppliers a large number of households have continued to purchase electricity from the incumbent supplier at default contract terms in this paper we compare the situation for such passive customers danish default prices are regulated whereas default prices in the other countries are unregulated systematic price differences exist among the nordic countries however as wholesale prices sometimes differ the gross margin is a more relevant indicator regulated gross margins are lower in denmark than in sweden but higher than in norway and finland because of market design norwegian default contracts are competitive whereas swedish contracts provide the retailer with some market power we interpret the low finnish margins as a result of municipal retailers continuing traditional pricing from the monopoly period danish margins are higher than the competitive norwegian margins but are earned from a much lower level of consumption the annually margins earned per consumer are very close in the two countries which indicates that the danish regulation is achieving its objective of approaching competitive prices

bertrand competition when firms hold passive ownership stakes in one another abstract we show that the bertrand oligopoly model with cost asymmetries may admit multiple nash equilibria when firms hold passive ownership stakes in each other the equilibrium price may be as high as the monopoly price of the most efficient firm

integration of multiple national markets for electricity the case of norway and sweden during the second part of the 1990s the nordic denmark finland norway and sweden countries have created a unique multinational market for electricity this paper aims to analyse the degree of integration of the different national markets that constitute the nordic electricity market in particular the norwegian and swedish wholesale and retail electricity markets are analysed the results suggest that the wholesale markets are well integrated thus prices differ significantly only during periods with unusually high or low supply of hydropower however the retail markets are not integrated to the same degree thus retail prices and trade margins differ significantly differences in the national electricity market legislation seem to be a key factor behind these differences

cross shareholdings and competition in a rent seeking contest abstract we consider a tullock rent seeking contest with two firms and two investors each investor owns a majority share in one firm and a silent minority cross shareholding in the other firm we measure competition by either firms aggregate efforts or rent dissipation we show that aggregate efforts are smaller in our contest than in the benchmark case without cross shareholdings next we provide the necessary and sufficient conditions such that equilibrium rent dissipation in our contest is larger than in the benchmark case rent dissipation is larger under cross shareholdings if and only if one firm is much more efficient than the other firm and the cross shareholding in the more efficient firm is sufficiently smaller than the cross shareholding in the less efficient firm

entry deterrence in markets with consumer switching costs in many markets consumers have transaction or learning switching costs between functionally undifferentiated brands new entry into such markets may be deterred either by large customer bases and or large switching costs which deny customers to an entrant or by small customer bases and or small switching costs which mean an incumbent will respond aggressively to an entrant an incumbent threatened by entry may therefore price either lower or higher than otherwise a firm with the right to enter early may make less profits over time than an otherwise identical firm that is unable to enter the market until later

divesting ownership in a rival we examine the consumer welfare effect of a firm s partial ownership of a competitor and compare the implications of alternative forms of divestiture we identify conditions under which turning voting shares into non voting shares is preferable to selling the shares to the firm s current shareholders an option frequently chosen we also show that selling the voting shares to a large independent shareholder is preferable to selling them to small shareholders we provide additional theoretical results and apply them to the divestiture of portugal telecom s holdings in ptm

vertical cross shareholding theory and experimental evidence abstract this paper analyzes vertical cross shareholding that is the mutual holding of a minority of shares between vertically related firms first we explore the issue in a game theoretic model and show that cross shareholding is sufficient to obtain efficient outcomes we then test the model s predictions in an experiment theory predicts the seller decisions accurately but the buyer decisions only to a small extent buyers are more likely to agree on cross shareholding than sellers in an attempt to avoid the winner s curse cross shareholding occurs more frequently than predicted and it increases the likelihood of trade

dynamic oligopoly with partial cooperation and antitrust threshold correspondance corresponding author tel 39 011 6705753 fax 39 011 6705783 merlone ugo

horizontal integration in the dutch financial sector in this paper the consequences of cross shareholding in an n firm industry are analyzed our attention focuses on the case where firms have silent interests in each other these interests can be direct or indirect we analyze the effects of cross shareholding on the price cost margins in a cournot and a bertrand setting in all cases competition is reduced due to shareholding interlocks as an empirical example the dutch financial sector is used comparing the case of shareholding with the case of no shareholding the price cost margins are found to be up to 2 higher in a bertrand market and at least 8 higher in a cournot market c 2000 elsevier science b v all rights reserved jel classification g20 l13 l41

how should public pension plans invest how public pension plan assets should be invested is an important but unsettled question alicia h munnell and mauricio soto 2007 find that the share of state and local s l plan assets held in equities has grown over time largely in parallel with private sector practices from an average of about 40 percent in the late 1980s to about 70 percent in 2007 this exposure led to a loss of an estimated 1 trillion dollars following the decline of the stock market from october 2007 to october 2008 munnell kelly haverstick and jean pierre aubry 2008 nevertheless some observers endorse the standard practice of investing heavily in higher yielding but riskier equities reasoning that the higher average returns will reduce future required tax receipts and also help to reduce underfunding over time others advocate a more conservative approach that reduces the volatility of funding levels and the likelihood of severe shortfalls during economic downturns when government resources are already constrained e g lawrence n bader and jeremy gold 2007 the accounting rules for public pensions create a perverse incentive to invest in stocks since projected liabilities are discounted at the expected return on assets rather than at a rate that reflects the generally lower risk of liabilities investing the assets in the stock market leads to

effect of partial cross ownership on supply chain performance abstract partial cross ownership pco in a dyad supply chain refers to a situation where each firm holds a portion of its partner s shares we study this topic in push and pull supply chains and prove that neither the supply chain s nor any member s profit changes with the percentage of the leader s shares the follower holds however while the profits of the chain and the leader increase with the percentage of the follower s shares held by the leader the follower s profit does not necessarily increase or decrease as a result both partners can always achieve a win win by setting a proper price for transferring the follower s shares to the leader moreover the equilibrium wholesale price may be greater than the retail price in the push chain but less than the marginal production cost in the pull chain contradicting the usual results found in the literature we also derive a necessary and sufficient condition on the structure of pco allowing a pull chain to perform better than a push one this extends cachon 2004 s result that a pull chain always performs better than a push one without pco finally pco can coordinate a chain if and only if each one holds half of the other s shares

common ownership market power and innovation abstract i examine the effects of overlapping ownership on market power when there are external effects across firms this is done in an oligopoly model with cost reducing innovation with technological spillovers where firms have an overlapping ownership structure based largely on lopez and vives 2019 the model allows for cournot competition with homogeneous product and for bertrand with differentiated products as well as for strategic effects of r d investment it derives positive testable implications and normative results to inform policy

quantifying the coordinated effects of partial horizontal acquisitions abstract recent years have witnessed an increased interest by competition agencies in assessing the competitive effects of partial acquisitions we propose an empirical structural methodology which can deal with settings involving all types of owners and ownership rights to quantify the coordinated effects of partial horizontal acquisitions on differentiated products industries by evaluating the impact of such acquisitions on the minimum discount factors for which coordination can be sustained we also provide an empirical application of the methodology to several acquisitions in the wet shaving industry that give rise to cross and common ownership structures the results are as follows i the incentives to coordinate of the firms that the acquiring party is pre acquisition able to influence are non decreasing with any acquisition ii the incentives to coordinate of the acquired firm are non decreasing with acquisitions involving full or partial both financial and corporate control rights but non increasing with acquisitions involving full or partial solely financial rights and iii the incentives to coordinate of the remaining firms in the industry are non increasing with any acquisition this implies that the coordinated effects of partial horizontal acquisitions are in general ambiguous which illustrates the importance of an empirical structural methodology

modern theories of entrepreneurial behavior a comparison and appraisal this paper compares and appraises three principal contemporary theories of entrepreneurial decision making neoclassical austrian and behavioral we employ theory appraisal criteria made available in fritz machlup s 1967 celebrated article on alternative theories of the firm the paper considers theories that treat sequences of behavior by which individual entrepreneurs reach decisions on two levels the discovery of profit opportunities and their exploitation we also consider how each theory characterizes the entrepreneur s decision making process by contrast with the posited behavior of other economic agents austrian theory is suited to explaining novel adventurous behavior at the discovery stage the algorithm for opportunity exploitation in both the neoclassical and austrian approaches is a single repertoire optimization rule neoclassical theory is situated in frictionless atomistic walrasian markets and emphasizes mathematical tractability austrian and behavioral theories conceive entrepreneurial acts taking place in market processes understood as complex institutional phenomena there are strong theoretical complementarities between austrian and behavioral approaches both approaches value descriptive accuracy though the behavioralists place more weight on operational tractability austrians and behavioralists share an interest in heuristics they emphasize the role of prior micro level knowledge at the discovery stage therefore more collaborative research in future between austrians and behavioralists should prove fruitful

shareholding in the keiretsu japan s financial groups largest debtholders in keiretsu member companies hold more stock if the companies have high debt to equity ratios or have weaker collateral greater prospects of growth or unique aspects all are factors associated with the agency problems of debt that stockholding by a debtholder can help to resolve the stockholding also induces greater borrowing by these same companies ceteris paribus copyright 1993 by mit press

measuring unilateral effects in partial horizontal acquisitions recent years have witnessed an increased interest by competition agencies in assessing the competitive effects of partial acquisitions we propose an empirical structural methodology to examine quantitatively the unilateral impact of partial horizontal acquisitions the acquisitions may be direct or indirect and may or may not correspond to control the proposed methodology simulates the effects on prices market shares firm profits and consumer welfare it can deal with differentiated product industries and nest full mergers as a special case we provide an empirical application to several acquisitions in the wet shaving industry

optimal auctions with asymmetric financial externalities abstract this paper studies optimal auction design with asymmetric linear financial externalities among bidders when the matrix that relates bidders payoffs to their payments is nonsingular the payment related component in the design objective must equal a unique linear combination of its counterparts in bidder s payoffs if all multipliers of the linear combination are nonnegative a modified myerson procedure is discovered for deriving the optimal design if any multiplier is negative an arbitrarily high value can be achieved for design objective by setting proper fixed transfers to bidders when the matrix is singular the unbounded optimum result typically prevails we applied our method to auctions with cross shareholdings and charity auctions for revenue maximizing and efficient designs

free markets and fettered consumers are consumers sufficiently self interested and self reliant so that privatized markets deliver the efficiency and welfare gains they promise why are consumers uncomfortable in markets and in some case sufficiently opposed to market solutions to prevent their implementation what can be done to prepare consumers so that they function satisfactorily in markets and understand the advantages of market based resource allocation this paper examines the foundations of consumer behavior and attitudes in markets and proposes a program of scientific research to determine how consumers cope in privatized markets and the implications for market design of the limits of self reliance

the regulation of privatized monopolies in the united kingdom this article examines the experience in the united kingdom with the regulation of privatized monopolies its conclusions are 1 that there are significant differences between rpi x or price cap and u s rate of return regulation which provides greater scope for bargaining in the former system 2 that u k regulators have taken seriously their duty to promote competition but that the existing economic literature is of limited help in this task 3 that price regulation is likely to be more effective where technology is changing slowly and or where technology is changing rapidly and 4 that the case for rpi x price cap rather than rate of return regulation is strongest in telecommunications gas supply and electricity supply and least strong in gas and electricity transmission grids

when is it rational for firms to acquire silent interests in rivals abstract the cartelizing effects of firms shareholding in rivals have been well established theoretically yet empirical instances of such are rate to nonexistent it is argued here that if the stock market is efficient in the sense that share prices reflect post share trading product market equilibria then acquiring shares in rivals is not subgame perfect for cournot oligopolies but is subgame perfect for some bertrand oligopolies acquiring a silent interest in a rival is an example of the fat cat ploy that the stock market is not a cartel maker is consistent with cournot having wide empirical application but not with bertrand

passive cross holding as a strategic entry deterrence this paper builds a duopoly model to study the strategic effects of cross holding on entry deterrence we show that in equilibrium the incumbent optimally chooses strictly positive cross holdings in each other to deter entry for the potential entrant

the empirical analysis of fiscal illusion this paper examines the empirical analysis of the five main hypotheses subsumed under the generic term fiscal illusion after placing these hypotheses within a common theoretical framework the paper attempts to evaluate empirical research into the revenue complexity hypothesis the revenue elasticity hypothesis the flypaper effect renter illusion and debt illusion

innovation in services the purpose of this article is to lay the foundations of a theory that can be used to interpret innovation processes in the service sector the hypothesis underpinning this article is based on lancaster s definition of the product in both manufacturing and services as a set of service characteristics the article follows the example of those who have sought to apply lancaster s work to technological phenomena various modes of innovation in the service sectors are highlighted and illustrated