Search

Companies such as Google and Facebook are not merely conglomerates of Internet-based services which just so happen to process personal data. They should instead be conceptualized as ‘data ecosystems’ and treated as such. Data ecosystems are companies which collect and monetize personal data through a network of widely diverging internet-based services, for the overarching purpose of targeted advertising. Contrasted with traditional conglomerates, a data ecosystem is unique since all of its different branches are interconnected through a single shared resource: personal data. Consequently, this ecosystem structure grants strong sources of market power. Network effects of personal data, throughout the entire ecosystem, lead to services being constantly updated and personalized with increasing accuracy, while simultaneously enhancing the monetization strategy of targeted advertising. Meanwhile, data ecosystems’ reach across the Internet means that consumers cannot realistically choose not to participate, nor find suitable competitors for each service. Finally, data ecosystems have strong incentives to expand into additional markets: conglomerate mergers are an essential strategy to reinforce their sources of market power. Data ecosystems enjoy a unique form of market power which has been seriously underestimated in the past. A new approach that fully appreciates their unique structure and market power is therefore required.

Companies such as Google and Facebook are not merely conglomerates of Internet-based services which just so happen to process personal data. They should instead be conceptualized as ‘data ecosystems’ and treated as such. Data ecosystems are companies which collect and monetize personal data through a network of widely diverging internet-based services, for the overarching purpose of targeted advertising. Contrasted with traditional conglomerates, a data ecosystem is unique since all of its different branches are interconnected through a single shared resource: personal data. Consequently, this ecosystem structure grants strong sources of market power. Network effects of personal data, throughout the entire ecosystem, lead to services being constantly updated and personalized with increasing accuracy, while simultaneously enhancing the monetization strategy of targeted advertising. Meanwhile, data ecosystems’ reach across the Internet means that consumers cannot realistically choose not to participate, nor find suitable competitors for each service. Finally, data ecosystems have strong incentives to expand into additional markets: conglomerate mergers are an essential strategy to reinforce their sources of market power. Data ecosystems enjoy a unique form of market power which has been seriously underestimated in the past. A new approach that fully appreciates their unique structure and market power is therefore required.

This paper provides a behavioural and welfare analysis of an intermediary in biodiversity offset markets. These markets are characterised by high information requirements and transaction costs, threatening economic efficiency and even biodiversity outcomes. Specialised intermediaries facilitate trading by providing information and brokering services. By buying, holding and selling offset credits from storage, the intermediary can decrease both financial and ecological risks in the market. As a drawback, the intermediary may exploit market power upstream or downstream due to ecological features of the offset market. Intermediaries decrease the trading parties’ transaction costs by offering specialised information, reduce uncertainty, and decrease the costs of offsetting by increasing liquidity in the market and offering certain offset credits. When the intermediary has market power, selling and buying prices deviate from the competitive equilibrium. This welfare loss may be lower than the loss from transaction costs and trade ratios in decentralised trade, even in the case of the intermediary having both monopoly and monopsony power. The intermediary is the most useful when trade ratios are high and when the intermediary stores mature credits, which eliminates ecological uncertainty and thereby offers cost savings for developers, and may result in a higher level of biodiversity.

While economic theories indicate that market power by downstream firms can potentially counteract market power upstream, antitrust policy is opaque as to whether to incorporate countervailing market power in merger analyses. We use detailed national claims data from the health care sector to evaluate whether countervailing insurer power does indeed limit hospitals' exercise of market power. We estimate willingness-to-pay models to evaluate hospital market power across analysis areas. We find that countervailing market power is important: a typical hospital merger would raise hospital prices 4.3% at the 25th percentile of insurer concentration but only 0.97% at the 75th percentile of insurer concentration.

Objective:To assess the relationship between market concentration and diversity, as indicators of market structure, and the healthiness of food and beverage sales across Europe.Design:Market share (MS) data per country were used to calculate market concentration, assessed by the four-firm concentration ratio and market diversity, and by the number of companies with ≥1 % MS and the number of companies uniquely present in one European country. The healthiness of food sales was assessed by applying the NOVA classification (level of processing). Simple and multiple linear regressions were performed to assess the relationship between market concentration, diversity and the healthiness of food and beverage sales.Setting:The European single market.Participants:The twenty-seven European single market member states for which Euromonitor sales data were available at the most fine-grained Euromonitor packaged food and non-alcoholic beverage product subcategory level.Results:Increased market concentration with a country and a product category fixed effect significantly predicted increased sales of ultra-processed packaged food products. There was insufficient data variability in the level of processing of non-alcoholic beverage product categories to formulate conclusions for non-alcoholic beverages. Increased market diversity in turn significantly predicted reduced country-level sales of ultra-processed products.Conclusions:The results indicated a relationship between market structure and the healthiness of packed food products sold on the European market. However, more research with detailed nutritional data is warranted to document and quantify this interaction.

This study assesses the impact of the development of financial technology (FinTech) on the market power of traditional banks. We analyze the relationship between FinTech companies and traditional banks based on the barriers-to-entry theory, and verify the resulting hypothesis by using panel data from 155 Chinese commercial banks from 2013–2018. The benchmark results show that FinTech has a significant U-shaped effect on the market power of banks. Furthermore, the U-shaped effects remain robust when we focus on the technology and business innovation channels that affect banks. These effects vary across banks with different ownership structures and business segments. Specifically, municipal commercial banks are more likely to be influenced by business innovation than by technological innovation. By contrast, state-owned banks have advantages in using technological innovation to reacquire market power through loan services. Private banks, meanwhile, struggle to acquire any market power under intense competition from FinTech companies. Given that the FinTech may enable some banks overly dominate the banking industry at certain development stages, regulators and practitioners need to prevent monopoly-related problems and promote the digital transformation of small and medium-sized banks. First published online 30 August 2022

The liberalization of electricity markets has been dominated by conditions of oligopoly and market power, as shown in numerous studies in empirical literature on the supply side. However, regulators have used statistical measurements to monitor the extent of market power, making little reference to founded theoretical approaches. This paper provides a new contribution to the literature on the electricity market by presenting a theoretical and empirical model to construct competitive equilibrium, and estimating market power on both the supply and demand side of the day-ahead electricity market. We implement an accurate measurement of the welfare loss associated with non-competitive market conditions, based on ex-ante demand and supply behavior.This model provides a useful analytical tool for regulators and policy-makers in order to implement pro-competitive regulation. We perform an empirical simulation to show the effects of non-competitive equilibria on the Italian hourly markets over the period 2013–2014. In an ideal competitive market, prices would be lower than historical prices by about 2–5% and quantities would be higher by about 0.5–1%.

We study anticompetitive horizontal mergers in a dynamic model with noisy collusion. At each instant, firms either privately choose output levels or merge to form a monopoly, trading off the benefits of avoiding price wars against the costs of merging. The potential to merge decreases pre-merger collusion, as punishments effected by price wars are weakened. We thus extend the result of Davidson and Deneckere [Davidson C, Deneckere R (1984) Horizontal mergers and collusive behavior. Internat. J. Indust. Organ. 2(2):117–132.], who analyzed the weakening of punishments post-merger, demonstrating that pre-merger collusion is weakened, in a fully stochastic model. Thus, although anticompetitive mergers harm competition ex post, the implication is that barriers and costs of merging due to regulation should be reduced to promote competition exante. This paper was accepted by Tomasz Piskorski, finance.

We study the transaction prices and sales times of a new type of real-estate agent, the “internet agents”, who operate mainly online. Competing on the same Dutch online listing platform, these internet agents charge a low fee up front and leave the viewings to the sellers. Using a nation-wide dataset of residential real-estate transactions, we find robust evidence that sellers who use internet agents obtain higher prices and sell faster but they are also more likely to switch to a traditional agent or fail to sell than sellers who use traditional agents. These results are consistent with a model in which sellers learn over time about their skills and where good sellers benefit from and sort at internet agents. Some of our findings also support the view that real-estate agents have market power.

Pod izrazom temeljni instituti in standardi konkurenčnega so mišljeni (ekonomski) koncepti, ki so dejanska podstat pravil varstva konkurence. Teh institutov in standardov v samih normativnih pravnih aktih načeloma ni mogoče zaslediti, saj niso predmet neposrednega pravnega urejanja. Med temeljenje institute in standarde konkurenčnega prava teorija med drugim uvršča tržno moč, blaginjo potrošnikov (korist potrošnikov) in skupno (družbeno) blaginjo. Čeprav so slednji dejanska podstat konkurenčnega prava in jih prek ciljev konkurenčnopravne politike pri svoji normodajni aktivnosti zasledujejo tudi zakonodajalci, v normativnih pravnih aktih niso vsebovani. Kljub temu da konkurenčno pravo dejansko temelji na teh ekonomskih konceptih, jih sodišča pri svojem odločanju v zahtevnih zadevah skoraj da ne uporabljajo. Slovenska sodišča pri tem niso izjema, saj je uporabo temeljnih institutov in standardov v odločitvah slovenskih sodišč od leta 2004 mogoče zaslediti le v peščici javno objavljenih odločitev. Pri tem se njihova uporaba velikokrat konča zgolj z omembo ali njihovo nepopolno aplikacijo v obrazložitvi. Predmetno magistrsko diplomsko delo najprej obravnava cilje evropskega konkurenčnega prava. Temu sledi definiranje nekaterih temeljnih institutov in standardov konkurenčnega prava. Nadalje sta opisani dve vrsti prepovedanih konkurenčnih ravnanj. Nazadnje je predstavljena še krajša analiza uporabe temeljnih institutov in standardov konkurenčnega prava s strani slovenskih sodišč. The term “fundamental concepts and standards of competition law” refers to the economic principles that serve as the underlying basis for competition rules. These concepts and standards are generally not explicitly regulated in legal acts. However, legal theory recognizes market power, consumer welfare (consumer benefit), and social welfare, among others, as the fundamental concepts and standards of competition law. While these concepts and standards are the essence of competition law and are pursued by legislators through competition law policy objectives, they are not specifically outlined in legislative acts. Despite their foundational role in competition law, courts often have limited application of these concepts in complex cases. The Slovenian courts are no exception, as they have only referenced or incompletely applied the fundamental concepts and standards in a few decisions since 2004. This thesis first discusses the objectives of European competition law, followed by the definition of key concepts and standards of competition law. It then provides a brief overview of two types of prohibited competition practices. Finally, it presents a short analysis of the Slovenian courts' application of the fundamental concepts and standards.

There are two opposing welfare effects of market power in a model with monopolistic competition, loan defaults and moral hazard. The loss of output produced if firms set a higher mark-up over marginal costs confronts with some gain due to higher expected profits and the reduction of defaults. Such tradeoff results in an optimal level of market power that decreases with the efficiency of liquidation following default on a loan. If moral hazard is pervasive, credit rationing cuts down the default rates and mitigates the welfare cost of financial frictions. The authors thank Banco de España for financial support through the project. Política monetaria en economías con fricciones financieras y bancarias. Miguel Casares and Jose E. Galdon-Sanchez also acknowledge financial support from Spanish State Research Agency through project PID2021-127119NB-I00 and by “ERDF A way of making Europe”. Luca G. Deidda also acknowledges the financial support by the Italian Ministero dell’Università (Grant No. 20157NH5TP), Fondazione di Sardegna, Università di Sassari (Una tantum 2019), and RAS (Grant No. RASSR89213).

Theory predicts that horizontal acquisitions can effectively increase incumbent firms’ market power in concentrated industries with high product similarity. Using a novel measure for industry product similarity, we show that in such industries firms’ propensity to make horizontal acquisitions is greater and that the acquisitions result in more positive announcement returns for the acquirer and rival firms and in a larger premium paid for the target. Also, the deals harm dependent customer and supplier firms and they are more likely to be challenged by antitrust authorities. Overall, by emphasizing the importance of product similarity, our results help explain mixed empirical findings on whether horizontal acquisitions are used to reduce competition intensity.

PurposeThis paper investigates the relationship between market power and efficiency for Indian banks in order to test the validity of the quiet life hypothesis (QLH) during 2005–2019.Design/methodology/approachFirst, the bank-level DEA efficiency scores and three measures of the Lerner index: traditional, efficiency-adjusted, stochastic are estimated. Then, efficiency scores are regressed on Lerner indices plus a set of banking and economic control variables.FindingsRobust evidence against the QLH is obtained. Moreover, the conventional Lerner index suggests that market power of Indian banks, as well as of the different bank groups, increased during the study period, due to a greater reduction in costs compared to that of the price of banking services. The efficiency scores also declined for the banking system as a whole, and for all bank groups except new private banks.Originality/valueThis is the first study testing the QLH for the different categories of Indian banks and also provides robust inferences by using both stochastic and non-stochastic measures of market power.

Through repeated interactions, firms today refine their understanding of individual users’ preferences adaptively for personalization. In this paper, we use a continuous-time bandit model to analyze firms that recommend content to multihoming consumers, a representative setting for strategic learning of consumer preferences to maximize lifetime value. In both monopoly and duopoly settings, we compare a forward-looking recommendation algorithm that balances exploration and exploitation to a myopic algorithm that only maximizes the quality of the next recommendation. Our analysis shows that, compared with a monopoly, firms competing for users’ attention focus more on exploitation than exploration. When users are impatient, competition decreases the return from developing a forward-looking algorithm. In contrast, development of a forward-looking algorithm may hurt users under monopoly but always benefits users under competition. Competing firms’ decisions to invest in a forward-looking algorithm can create a prisoner’s dilemma. Our results have implications for artificial intelligence adoption and for policy makers on the effect of market power on innovation and consumer welfare. This paper was accepted by Dmitri Kuksov, marketing. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.4722 .

Are U.S. digital markets advancing, or threatening, the American economy? There is keen interest in the answer to this question. Sweeping changes have disrupted society courtesy of the Information Revolution, presenting great opportunities in radically transformed economic markets but also great challenges in adapting to new and different forms of organization. Great hope accompanies the former, much concern attends the latter. Now important discussions are engaging as to the impacts of market power, where competitive forces – beneficial in discovering new efficiencies and promoting Consumer Welfare – may be thwarted. Antitrust laws and other elements of competition policy are being re-examined. This paper attempts to inform the answers to these questions by examining industrial concentration in the information economy and its impact on U.S. market competition; vertical integration in digital platforms; forces driving innovation in business models and product markets; and the use of competition policy tools in high tech markets. These latter include broadband access and mobile phone industries, which have attracted attention as specific examples of areas where the U.S. has is seen by some as lagging rival economies due to insufficient antitrust enforcement.

Companies such as Google and Facebook are not merely conglomerates of Internet-based services which just so happen to process personal data. They should instead be conceptualized as ‘data ecosystems’ and treated as such. Data ecosystems are companies which collect and monetize personal data through a network of widely diverging internet-based services, for the overarching purpose of targeted advertising. Contrasted with traditional conglomerates, a data ecosystem is unique since all of its different branches are interconnected through a single shared resource: personal data. Consequently, this ecosystem structure grants strong sources of market power. Network effects of personal data, throughout the entire ecosystem, lead to services being constantly updated and personalized with increasing accuracy, while simultaneously enhancing the monetization strategy of targeted advertising. Meanwhile, data ecosystems’ reach across the Internet means that consumers cannot realistically choose not to participate, nor find suitable competitors for each service. Finally, data ecosystems have strong incentives to expand into additional markets: conglomerate mergers are an essential strategy to reinforce their sources of market power. Data ecosystems enjoy a unique form of market power which has been seriously underestimated in the past. A new approach that fully appreciates their unique structure and market power is therefore required.

Purpose: The study aims to analyze the effects that task environment and firm’s market power exerts on Brazilian firm’s competitive position, during the period of 2012 to 2017, which encompasses the effects of the 2008 crisis. Design/methodology/approach: We used Partial Least Squares path modeling when estimating the effects of competitive environment and market power on a firm’s competitive position, considering the effects of time. The size of firm was used as a weighting factor. The sample is comprised by manufacturing industry Brazilian publicly traded firms, active in the period 2012 to 2017. Findings: The capacity of firms to achieve and sustain a favorable competitive position is directly dependent on the degree of market power they own. Under a reactive managerial point of view, managers should make strategic choices that allow the firm to stay close to consumers, to maintain and reinforce market power, avoiding reductions in market share. Under a proactive managerial point of view, managers should take advantage of market power by building barriers that would make it difficult for competitors to have access to consumers. Originality/value: This research brings two original contributions. The first one is the identification of the determining factors of the competitive position of Brazilian firms, during the period after the 2008 financial crisis. The second one is the proposition and test of a structural equations model to estimate the effects of market power and task environment on firm’s competitive position. RESUMO Objetivo: Este estudo tem por objetivo analisar os efeitos que o ambiente competitivo e o poder de mercado da firma exercem na posição competitiva de firmas, no período de 2012 a 2017, que abarca os efeitos da crise de 2008. Desenho/metodologia/abordagem: Os parâmetros do modelo estrutural foram estimados por meio de modelagem de caminhos com mínimos quadrados parciais. O tamanho da firma foi utilizado como fator de ponderação. A amostra é composta por firmas brasileiras de capital aberto, atuantes na indústria manufatureira e ativas no período de 2012 a 2017. Resultados: A capacidade das firmas de alcançar e sustentar uma posição competitiva favorável é dependente do seu poder de mercado. Sob uma perspectiva gerencial reativa, gestores devem fazer escolhas estratégicas que permitam à firma se manter próxima aos consumidores, e manter e reforçar o seu poder de mercado, evitando reduções em sua participação de mercado. Sob uma perspectiva gerencial proativa, os gestores devem tirar vantagem do poder de mercado, com o estabelecimento de barreiras que dificultem o acesso dos concorrentes aos consumidores. Originalidade/valor: Esta pesquisa apresenta duas contribuições originais. A primeira delas é a identificação dos fatores determinantes da posição competitiva de firmas brasileiras, durante o período após a crise financeira de 2008. A segunda é a proposição e o teste de um modelo de equações estruturais, com o objetivo de estimar os efeitos do poder de mercado e do ambiente competitivo, na posição competitiva da firma.

It has been argued that Asia's remarkable economic achievements of the past 50 years build on institutional arrangements very different from the West, notably the central role of business groups (BGs). As Asian economies move from extensive to intensive growth, we enquire whether the business group organsational format will be as effective going forward. We argue that the ubiquity of BGs has been associated with the accretion of major market power, as well as overall concentration. Our empirical work, drawing on a sample of more than 9000 Asian firms, finds that while BGs are more innovative than non-affiliates, this is unsurprising given their access to additional resources. However, when we look at innovation at the country level, we find that the wider consequences of BGs on innovation may be negative.

Several models posit a positive cross-sectional correlation between markups and firm size, which, among others, characterizes misallocation, factor shares, and gains from trade. Yet, taking labor market power into account in markup estimation, we show that larger firms have lower markups. This correlation turns positive only after conditioning on wage markdowns, suggesting interactions between product and labor market power. Our findings are robust to common criticism (e.g., price bias) and hold across 19 European countries. We discuss the resulting implications and highlight studying input and output market power within an integrated framework as an important next step for future research.

This chapter presents a discussion on the optimal federalism. Federalism refers to a hierarchical structure of government in which each person is, simultaneously, a citizen of more than one government. A federalist structure adds considerable depth and complexity to normative public sector theory because of its layered jurisdictions. In particular, government intervention is still justified by the breakdown of the technical and market assumptions underlying a well-functioning competitive market system to address problems such as externalities, decreasing cost production, private information, and market power. In addition, the goal of government intervention remains the social welfare maximization, which translates into the pursuit of efficiency and equity. A federalist structure of governments significantly complicates both the theory and the application of public sector decision rules. The complications lie at the heart of a federalist system—that is, more than one government has jurisdiction over any one person. Given the layered structure, it is all too easy to envision potential inconsistencies and incompatibilities arising if each government simply tries to follow the single-government decision rules of public sector theory.

A fundamental characteristic of energy markets is their vulnerability to the presence of market power, which is that one or more suppliers can influence market prices. This vulnerability is related to a number of factors: low price sensitivity of demand, inflexibility of supply, limited abilities to store energy, and restricted capacities of the transportation network. These characteristics are discussed in Sect. 9.3. First, Sect. 9.2 discusses the general conditions and welfare consequences of the presence of firms using market power. Afterwards, Sect. 9.4 discusses how the presence and use of market power in energy markets can be monitored. Finally, Sect. 9.5 discusses a number of regulatory options to address the market failure of market power.

Given the natural monopoly properties and higher levels of connectivity of large airports, workable airport competition may not be possible, requiring regulation. This simple rule becomes more complicated, when looking also at the product range of airports, difference in consumer preferences and their price elasticity or competition from other transportation modes like high-speed rail on short-haul routes, thereby also affecting the catchment area. Control of access to aviation-related services, like ground handling, can also matter. Private versus public ownership of airports complicates the picture, as do airport capacity constraint. Transaction costs and opportunistic behaviour can also lead to regulation. After covering the literature concerning airport regulation, the chapter goes on to look at a number of actual cases involving market power and its regulation. It also looks at airports charging behaviour and price discrimination, depending on the level of congestion at an airport. A number of studies of airport competition and its implications for regulation are summarized, especially for the UK, the Netherlands [Schiphol] and Australia. The studies commissioned by the ACI, which suggest that airports should be just subject to competition law and regulation should be the exception are also discussed.

The article calculates the indicators of competition and market power of firms in the banking sector of the Russian Federation. These indicators, based on empirical data, show that this industry is characterized by a significant degree of concentration, high market power of a number of firms, which does not contribute to the effective operation of the market and makes it necessary to carry out reforms. В статье рассчитаны показатели конкуренции и рыночной власти фирм в банковском секторе Российской Федерации. Данные показатели на основе эмпирических данных показывают, что данной отрасли присуща существенная степень концентрации, высокая рыночная власть ряда фирм, что не способствует эффективной деятельности рынка и делает необходимым проведение реформ.

This paper develops a model in which a handful of dominant banks mutually engage in head-to-head rivalry while acting as loan-quantity-setting leaders vis-à-vis numerous fringe banks. Under the most likely calibration of parameters governing behavior of the two groups, we find that increases in capital requirements substantially reduce equilibrium loan volumes and raise the market retail loan rate, while increases in tax rates tend to raise the market loan rate but not in a way that significantly alters aggregate lending. Key parameters influencing outcomes in alternative calibrations are the number of dominant banks and the market loan demand elasticity.

This comment addresses the opinion of the Advocate General (AG) of the European Court of Justice on the pending case European Super League versus UEFA/FIFA. It takes a critical perspective on selected aspects of the opinion's reasoning from a (sports) economics perspective. Highlighting the special characteristics of sports markets, the assessment of the AG Opinion raises questions such as (i) the (lack of) empirical evidence that the incumbent pursues and/or meets the legitimate objectives while the latter is still used as justifying reasons for anticompetitive conduct and arrangements (section III), (ii) the prohibitive entry barriers raised by the non-existence of a transparent and non-discriminatory authorization system preventing open competition for championships formats and organization by objective and effect (section IV), and (iii) the difficult search for a convincing theory of harm justifying the brutal enforcement of single-homing by the incumbent (section V).

Industry concentration and markups in the US have been rising over the last 3- 4 decades. However, the causes remain largely unknown. This paper uses machine learning on regulatory documents to construct a novel dataset on compliance costs to examine the effect of regulations on market power. The dataset is comprehensive and consists of all significant regulations at the 6-digit NAICS level from 1970-2018. We find that regulatory costs have increased by $1 trillion during this period. We document that an increase in regulatory costs results in lower (higher) sales, employment, markups, and profitability for small (large) firms. Regulation driven increase in concentration is associated with lower elasticity of entry with respect to Tobin's Q, lower productivity and investment after the late 1990s. We estimate that increased regulations can explain 31-37% of the rise in market power. Finally, we uncover the political economy of rulemaking. While large firms are opposed to regulations in general, they push for the passage of regulations that have an adverse impact on small firms.

We analytically characterize the aggregate productivity loss from allocative distortions in a setting that accounts for the sectoral linkages of production. We show that the effects of distortions and the role of sectoral linkages depend crucially on how substitutable inputs are. We find that the productivity loss is smaller if input substitutability is low. Moreover, with low input substitutability, sectoral linkages do not systematically amplify the effects of distortions. In addition, the impact of the sectors that supply intermediate inputs becomes smaller. We quantify these effects in the context of the distortions caused by market power, using industry-level data for 35 countries. With our benchmark calibration, which accounts for low input substitutability, the median aggregate productivity loss from industry-level markups is 1.3%. To assume instead unit elasticities of substitution (i.e., to use a Cobb-Douglas production function) would lead to overestimating the productivity loss by a factor of 1.8. Sectoral linkages do amplify the cost of markups, but the amplification factor is considerably weaker than with unit elasticities.

Doutoramento em Economia Boas práticas de regulação antitruste e de concorrência exigem, como qualquer política econômica, bons modelos e evidências empíricas. Os modelos ajudam a colocar problemas em perspetiva, descobrir mecanismos e produzir previsões sobre a economia. Além de testar as previsões do modelo, a evidência empírica fornece elementos necessários para avaliar a política e superar distorções. Nesse sentido, esta tese é guiada pelo desejo de contribuir para a política de concorrência no Brasil em questões relacionadas às interações entre o poder de mercado das empresas, os mercados de trabalho, a desigualdade e o papel das autoridades antitruste. Nosso trabalho adota inicialmente uma abordagem macroeconômica e teórica, revelando mecanismos pelos quais o poder de mercado afeta a desigualdade de renda em países em desenvolvimento como o Brasil. Em seguida, a tese se propõe avaliar como o trabalho do CADE, a autoridade antitruste brasileira, tem sido capaz (ou incapaz) de lidar com as distorções concorrenciais legais (concentração) e ilegais (conluio), nos mercados de fatores (trabalho) e de produtos, e, por consequência, com suas consequências na distribuição de renda. Nos últimos anos, o papel do antitruste na distribuição de renda tem se destacado. Desde a década de 1980, o markup preço/custo marginal aumentou significativamente em algumas economias desenvolvidas, em especial nos Estados Unidos, juntamente com a percentual do PIB incorporado aos lucros das empresas. Já a participação da renda do trabalho no PIB tem caído. Vários trabalhos empíricos e teóricos (De Loecker et al., 2020; Edmond et al., 2018; Colciago and Mechelli, 2020) sugerem que o agravamento da desigualdade de renda nos Estados Unidos é resultado da falta de concorrência nos mercados. O relativo enfraquecimento da regulação antitruste seria uma das causas desse processo. Baker and Salop (2015), por exemplo, argumentam que a política antitruste dos EUA deveria ser reformulada para fazer mais, deixando de considerar como orientadores apenas a eficiência econômica ou os excedentes do consumidor. Para os autores o antitruste deveria também priorizar casos que beneficiem a classe média e os desfavorecidos, tomando decisões com critérios que foquem os consumidores mais pobres. No entanto, o poder de mercado e, em particular, a desigualdade e os baixos salários não se limitam aos Estados Unidos e ao mundo desenvolvido. De facto, as evidências sugerem que a falta de concorrência em mercados essenciais em países como o Brasil é um problema ainda mais premente. Como afirma o Crane (2015), nos países em desenvolvimento, a riqueza e a renda estão mais concentradas no topo; os mercados de ações são pouco desenvolvidos; os mercados de trabalho têm baixos níveis de concorrência; e os sindicatos são, em geral, mais fracos. No Brasil, os 10% mais ricos recebem quase 60% da renda agregada anual do país, enquanto nos Estados Unidos essa proporção é de 45%, e na Suécia, 30% (World Inequality Database1). Além disso, o país tem adotado, ao longo dos anos, estratégias de crescimento baseadas em políticas de substituição de importações, com impacto negativo nos níveis de competição dos mercados. Essas políticas geraram certa industrialização e crescimento econômico, mas a ampla presença do governo, planejando ou atuando diretamente nos mercados, distorceu os incentivos, principalmente pelo controle de preços e fomento à formação de oligopólios em setores industriais estratégicos. De acordo com Fiuza (2001), esse conjunto de políticas governamentais teve o papel de estabelecer mercados incontestáveis e tornar as posições de mercado mais rígidas e estáveis. Em uma lista de países em desenvolvimento, classificados por seus níveis de markups preço/custo médios, produzida por De Loecker and Eeckhout (2020), o Brasil está entre os três primeiros, junto com Peru e Colômbia, com um rácio preço-custo de 1,61. Além disso, esse índice variou muito pouco nas últimas décadas, período em que houve uma reestruturação e fortalecimento do sistema antitruste brasileiro. Da mesma forma, apesar de um declínio no índice de Gini calculado a partir de pesquisas domiciliares na primeira década dos anos 2000, estudos recentes mostram que, quando se dados de renda obtidos em outras fontes de informação (como o imposto de renda, que capta com mais eficiência rendas de capital), a desigualdade permanece estável (De Souza, 2018). A relação causal entre desigualdade e poder de mercado não deve ser estabelecida de forma anedótica, apenas por meio de fatos estilizados. Portanto, nosso primeiro capítulo (“Poder de mercado e desigualdade: um modelo para a economia brasileira”) visa identificar teoricamente os mecanismos pelos quais o poder de mercado afeta a desigualdade em um país em desenvolvimento. Para tanto, primeiro motivamos nosso modelo empiricamente, estimando a associação entre desigualdade e markups (usando uma abordagem Panel VAR com dados dos estados brasileiros). Embora nossos resultados não possam ser considerados evidências causais em sentido estrito (não há estratégia de quase-experimento ou estrutura de variáveis instrumentais), a evidência estatisticamente robusta, relacionando positivamente um choque de markup à desigualdade, orientou o desenvolvimento do nosso modelo. Em seguida, construímos um modelo dinâmico de equilíbrio geral e o calibramos para reproduzir a economia brasileira. Esse modelo é baseado na estrutura tradicional do Real Business Cycle, mas possui um conjunto de fricções úteis para mimetizar a distribuição da renda e da riqueza brasileira (entre três quantis de renda/população - 50% inferior, 49% médio e 1% superior). Nosso modelo é razoavelmente diferente de outros que tentam simular relações de poder de mercado e desigualdade para a economia dos EUA. Primeiro, é computacionalmente mais leve, pois não há uma estrutura completa de agentes heterogêneos, mas uma versão estendida do modelo tradicional de dois agentes. Além disso, é mais adequado lidar com a economia brasileira, pois, além da heterogeneidade na participação no mercado de ativos, há também a heterogeneidade na qualificação da mão de obra e na elasticidade da oferta de trabalho. Outra característica essencial do modelo é o comportamento oligopolista (produto) e oligopsonístico (lado do fator) endógeno das empresas. Juntos, essas especificidades permitem reproduzir a resposta do Gini a um choque momentâneo no markup, identificada empiricamente. Além disso, o modelo contribui para política de concorrência ao descrever como o comportamento oligopsonístico afeta o funcionamento do mercado de trabalho e a dinâmica da desigualdade. As repercussões do poder de mercado sobre a desigualdade de renda e salários, mecanismo destacado no modelo do primeiro capítulo da tese, é um aspeto ainda ausente na literatura e na prática antitruste em países em desenvolvimento como o Brasil. Nosso segundo capítulo (“Poder de Mercado, Salários e Desigualdade: evidências do Brasil”) buscou preencher parcialmente essa lacuna. A primeira parte do capítulo permanece em nível agregado/macro, analisando dados entre mercados/setores. Com acesso a uma base que combinada dados de empregador-empregado no Brasil, primeiro caracterizamos a evolução temporal da concentração do mercado de trabalho local (HHI municipal do emprego). Em seguida, construímos um modelo de efeito fixo com variáveis instrumentais para verificar a associação entre concentração do mercado de trabalho local, desigualdade de renda e salários. Por fim, na última parte do segundo capítulo, estudamos um mercado específico para avaliar o efeito de processos de fusão e aquisição sobre mercado de trabalho (como nosso modelo revela, os salários são um mecanismo fundamental que conecta o poder de mercado à desigualdade). Uma abordagem de diferença-em-diferenças (DiD) foi implementada para verificar se uma transação de fusão e aquisição impactou os ganhos dos trabalhadores no setor bancário brasileiro. Durante décadas, prevaleceu entre a comunidade antitruste a visão de que o mercado de trabalho não era uma preocupação para a política de concorrência porque era inerentemente competitivo. As evidências neste trabalho vão contra essa noção. Os resultados do capítulo mostram que existe uma ligação potencialmente danosa entre poder de mercado e salários, gerando um efeito regressivo sobre a desigualdade de renda. O último capítulo da tese (“Comportamento pós-cartel: avaliando os efeitos da política antitruste no mercado brasileiro de combustíveis”) tem um perfil puramente de avaliação política e foca na capacidade das autoridades antitruste brasileiras de reestabelecer um mercado competitivo no setor de combustíveis. Os gastos com transporte, nos quais os preços dos combustíveis sâo muito relevantes, representam uma parcela de 18% do orçamento das famílias brasileiras (superior aos gastos com alimentação), segundo a mais recente Pesquisa de Orçamentos Familiares (POF-IBGE 2017-2018). Portanto, o impacto distributivo dos esquemas de fixação de preços é considerável. Um estudo do CADE (Conselho Administrativo de Defesa Econômica) estimou que um cartel de combustíveis de Brasília, esquema que conseguiu elevar os preços em pouco mais de 8%, causou, em um ano, cerca de US$ 75 milhões em prejuízos aos consumidores. Os artigos que avaliam os efeitos da ação antitruste sobre esquemas de cartel geralmente buscam apenas quantificar o impacto sobre os preços, com métodos como regressões antes e depois, diferença-em-diferenças ou abordagens de controle sintético. No entanto, essas metodologias têm algumas desvantagens, principalmente, a exigência de estabelecer uma data exógena ou um evento inovador com base em suposições que podem não ser precisas. Além disso não capturam uma dinâmica pós-cartel que considere uma possível reemergência da conduta ilegal. Para superar essas fragilidades observadas em outros estudos, aplicamos duas metodologias, Structural Break Analysis (Bai and Perron Test) e Markov Switching Regressions, a quatro casos de cartéis identificados no mercado brasileiro de combustíveis (Brasília, Belo Horizonte, São Luís e Londrina), buscando analisar a eficácia das políticas de concorrência. Como teste comparativo entre os procedimentos MSR e Bai Perron, nosso trabalho mostra que o primeiro foi mais sensível às transições entre regimes, sem perder quebras, e exibiu resultados mais precisos. Do ponto de vista da avaliação da política antitruste, nossos achados indicam uma baixa capacidade das autoridades antitruste para extinguir definitivamente práticas de fixação de preços nos mercados-alvo. This thesis examines the relationships between firms’ market power, labor markets, inequality, and competition regulation in order to inform Brazilian antitrust practice with knowledge and evidence. To do this, we utilized both theoretical and empirical approaches to identify the processes that potentially link the competition policy efficiency to inequality. Our research demonstrates that market power as a whole, and notably in labor markets, can alter not just the economic efficiency but also the distribution of income, which should be a matter of public policy concern (if government utility gives any weights to distribution). The significance of antitrust in income distribution has been emphasized in recent years, particularly in papers focusing on the US economy and other developing countries. But market power, inequality and low wages seems to be an even bigger problem in countries like Brazil, where wealth and income are more concentrated at the top, where labor markets are less competitive (because of industrial policies that try to create national champion firms), and where unions are generally weaker. Identifying some of the mechanisms by which market power affects inequality in a developing country is the objective of our first chapter (“Market Power and Inequality: a model of the Brazilian economy”). We constructed and calibrated a dynamic general equilibrium model to replicate the Brazilian economy. It was capable of mimicking Gini’s response to a markup shock, reproducing the short-run dynamic identified empirically in a pVAR model (implemented with sub-national data from Brazil). The model also showed how oligopsonistic behavior affects the outcomes of the labor market and how that affects the level and dynamics of inequality The effects of market power on income inequality and wages were examined in our second chapter (“Market Power, Wages, and Inequality: evidence from Brazil”). Using a matched employer-employee database from Brazil, the first section of this chapter characterizes the temporal evolution of the local labor markets concentration (municipality employment HHI) and then, with a fixed-effect model with instrumental variables, estimates the relationship between the local labor market concentration, income inequality, and wages. In the second section, a Difference-in-Difference (DiD) setup was conducted to determine if a merger and acquisition transaction affected the earnings of banking industry employees in Brazil. The chapter’s findings suggest that there may be a negative relationship between market power, wages, and inequality. The final chapter (“Post-Cartel Behavior: assessing the effects of antitrust policy on Brazilian fuel market”) evaluates the ability of the Brazilian antitrust authority (CADE) to restore free competition to cartel-affected Brazilian fuel markets. To this end, we applied Structural Break Analysis (Bai and Perron Test) and Markov Switching Regressions to four cases in the Brazilian fuel market (Brasilia, Belo Horizonte, S˜ao Lu´ıs, and Londrina), identifying market dynamics before and after CADE’s anti-collusion actions. Our findings indicate that antitrust authorities have a limited capacity to eradicate price-fixing practices in targeted markets. This has direct implications for CADE’s anti-collusion strategy. It is possible that the fines and criminal penalties imposed on scheme participants are insufficient to deter illegal conduct (especially because they come after years of litigation in court). The case of Braslia, on the other hand, appears to be exemplary of how strong preventive measures coupled with structural ones, aimed at market reorganization, are expected to have lasting effects on price-fixing behavior info:eu-repo/semantics/publishedVersion

This paper develops a theory of oligopoly and markups in general equilibrium. Firms compete in a network of product market rivalries that emerges endogenously out of the characteristics of the products and services they supply. My model embeds a novel, highly tractable and scalable demand system (GHL) that can be estimated for the universe of public corporations in the USA, using publicly-available data. Using the model, I compute firm-level markups and decompose them into: 1) a new measure of firm productivity that accounts for product quality; 2) a metric of network centrality, which captures the extent of competition from substitute products. I estimate that, in 2019, public corporations produced consumer surplus in excess of 10 US$ trillions (against $3 trillions of profits). Oligopoly lowers total surplus by 11.5% and depresses consumer surplus by 31%. My analysis also suggests that both numbers were significantly lower in the mid-90s (7.9% and 21.5%, respectively). These results should be interpreted with care due to data limitations.

We build a framework to understand the effects of regulatory interventions in credit markets, such as caps on interest rates. We focus on the credit card market, in which we observe US consumers borrowing at high and very dispersed interest rates despite receiving many credit card offers. Our framework includes two main features to account for these patterns: the endogenous effort of examining offers and product differentiation. Our calibration suggests that most borrowers examine few of the offers they receive, and thereby forego cards with low interest rates and high non-price benefits. The calibrated model implies that interest-rate caps reduce credit supply and significantly curb lenders’ market power, thereby increasing consumer surplus. Moderate caps may yield larger gains in consumer surplus than tighter ones.

This paper contributes to the literature on firms’ export pricing by assessing whether and to what extent firms take into account the expected future evolution of the exchange rates while setting their prices. Using French micro-level trade data, our empirical analysis reveals that by adjusting their export prices, firms partly absorb information about future exchange rate variations. The extent to which individual exporters absorb future exchange rate fluctuations is found to depend on their market power, in accordance with theoretical dynamic demand-side models encompassing mechanisms creating an inter-temporal relationship between current market shares and future profits. The analysis also shows that the strength of such expectation-related mechanism is considerably reduced with greater future exchange rate uncertainty, in line with an interpretation of pricing-to-market as an investment decision under uncertainty. In a comparative perspective our results are shown to drive asymmetric responses across destinations of aggregate bilateral export flows to expected exchange rate movements.

In 2014, Washington State used a lottery system to allocate licenses to firms in the newly legalized retail cannabis industry, generating random variation in how many stores entrepreneurs were able to own. We observe highly detailed data on all subsequent industry transactions, including prices, wholesale costs, markups, and product assortments. We find that entrepreneurs who are randomly allocated more store licenses ultimately earn substantially higher per store profits than do single-store firms, suggesting that the returns to scale in the mom-and-pop retail sector are quite large. Despite these firms having greater market power, this increase in profits does not come at the expense of consumers. Rather, retailers in multi-store chains ultimately charge significantly lower prices and margins and offer greater product variety. This gap in prices is not initially present but grows substantially over time, as does the difference in assortment size and profits between stores in multi-store chains and stores operating alone. Using the full history of outcomes, we track the evolution of firms in this new market and show that multi-store retailers use an initial advantage in offering larger assortments to position themselves as the low-price, large-assortment retail option and attract a larger but more price-sensitive set of customers. These results have implications for the study of retail concentration and mergers, countervailing buyer power, and consumer search. Our results suggest that policies to help entrepreneurs expand in retail may have large benefits to both firms and consumers.

This paper investigates empirically the effect of market power on dynamic pricing in the presence of inventories. Our setting is the auto retail industry; we analyze how automotive dealerships adjust prices to inventory levels under varying degrees of market power. We first establish that inventory fluctuations create scarcity rents for cars that are in short supply. We then show that dealers’ ability to adjust prices in response to inventory depends on their market power, that is, the quantity of substitute inventory in their selling area. Specifically, we show that the slope of the price–inventory relationship (higher inventory lowers prices) is significantly steeper when dealers find themselves in a situation of high rather than low market power. A dealership with high market power moving from a situation of inventory shortage to a median inventory level lowers transaction prices by about 0.57% ceteris paribus, corresponding to 32.5% of dealers’ average per-vehicle profit margin or $145.6 on the average car. Conversely, when competition is more intense, moving from inventory shortage to a median inventory level lowers transaction prices by about 0.35% ceteris paribus, corresponding to 20.2% of dealers’ average per-vehicle profit margin or $90.9. To our knowledge, we are the first to empirically show that market power affects firms’ ability to dynamically price. This paper was accepted by Juanjuan Zhang, marketing.

In this paper, I empirically study the effect of chain affiliation on product variety and price in the movie theater industry. Using longitudinal data on Korean movie theaters, I find that movie variety in a theater increases by 3.2-5.5 percent after the theater joins a chain. Admission price, however, does not change after chain affiliation, implying that consumers benefit from the organizational form change. These results are consistent with the growing dominance of chain-affiliated theaters in recent decades. The results also suggest that the regulatory authorities should carefully examine the trade-off between increase in market power and efficiency gains when evaluating the implications of chain affiliation.

We study the optimal design of a central bank digital currency (CBDC) in an environment where agents sort into cash, CBDC and bank deposits according to their preferences over anonymity and security; and where network effects make the convenience of payment instruments dependent on the number of their users. CBDC can be designed with attributes similar to cash or deposits, and can be interest-bearing: a CBDC that closely competes with deposits depresses bank credit and output, while a cash-like CBDC may lead to the disappearance of cash. Then, the optimal CBDC design trades off bank intermediation against the social value of maintaining diverse payment instruments. When network effects matter, an interest-bearing CBDC alleviates the central bank's tradeoff.

This paper analyzes the relation between the announcement discount and the post-merger valuation of merger and acquisition transactions (MA and proposes that the two are linked by the implications of the information asymmetry hypothesis of Myers and Majluf (1984). We track the information asymmetry, value, and synergies of M&As over a three-year post-merger window. The analysis demonstrates that the announcement discount is proportional to the rise in information inequality around the announcement date (not the pre-merger information asymmetry). The announcement discount is also positively related to the post-merge gains which grow in tandem with the gradual decline in information asymmetry and improvements in internal capital market efficiencies, market power, and access to capital markets. Collectively, our findings suggest that M&As instigate a temporary spike in information inequality that results in temporary loss in shareholders' wealth. Over time, synergies materialize, information inequality fades away, and value improves. Our results are robust to several variations in specifications and assumptions including Heckman two-stage self-selection model. Our proposition suggests that management and outside investors should not be swayed by initial market reaction to deal announcements because the true gains of M&As materialize in the long-run. Nevertheless, management should disclose adequate information about future synergies to mitigate the market's initial negative reaction.

This paper studies the short- and long-run eects of large rms on economic development. We use evidence from one of the largest multinationals of the 20th Century: The United Fruit Company (UFCo). The rm was given a large land concession in Costa Rica ---one of the so-called "Banana Republics"--- from 1899 to 1984. Using administrative census data with census-block geo-references from 1973 to 2011, we implement a geographic regression discontinuity (RD) design that exploits a quasi-random assignment of land. We nd that the rm had a positive and persistent eect on living standards. Regions within the UFCo were 29% less likely to be poor than nearby counterfactual locations in 1973, with only 56% of the gap closing over the following four decades. Company documents explain that a key concern at the time was to attract and maintain a sizable workforce, which induced the rm to invest heavily in local amenities that likely account for our result. We then build a dynamic spatial model in which a rm's labor market power within a region depends on how mobile workers are across locations and run counterfactual exercises. The model is consistent with observable spatial frictions and the RD estimates, and shows that the firm increased aggregate welfare by 2.9%. This eect is increasing in worker mobility: If workers were half as mobile, the rm would have decreased aggregate welfare by 6%. The model also shows that a local monopsonist compensates workers mostly through local amenities keeping wages low, and leads to higher welfare levels than a counterfactual with perfectly competitive labor markets in all regions, if we assume amenities increase local productivity.

This study investigates the relationship between profitability and market power in the banking sector using data from the financial reports of the banks that operated in Serbia and Montenegro, covering the period from the first quarter of 2010 to the last quarter of 2019. In order to investigate this relationship, determinants of bank profitability are split between internal and external. As the external determinants, selected ratios of concentration were calculated and used in order to measure market power. The total of sixteen panel regression models were applied, eight for each country. The results indicate that variations of return on assets and return on equity in Serbia can be explained by the variations of the ratios of concentration. On the other hand, results of the panel regression model applied for the banking sector of Montenegro does not give enough argument to support such explanation, and bank profitability can be explained by bank efficiency to some extent.

The article addresses the role market definition can play for EU competition practice in the platform economy. The focus is on intermediaries that bring together two (or more) groups of users whose decisions are interdependent and which therefore are commonly referred to as “two-sided platforms”. We address challenges to market definition that accompany these cross-group network effects, assess current practice in a number of cases with the European Commission and Member States’ competition authorities, and provide guidance on how prac-tice is to be adapted to properly account for the economic forces shaping markets with two-sided platforms. Owing to the complementarities of services provided to the user groups the platforms cater to, the question arises whether and when a single market can be defined that encompasses both sides. We advocate a multi-markets approach that takes account of cross-market linkages, acknowledges the existence of zero-price markets, and properly accounts for the homing behaviour of market participants.

COVID-19 has led to social isolation and a subsequent increase in online shopping has been observed. The present study is based on theory of reasoned action and focused on 371 Peruvian consumers, it seeks to evaluate the current effect of the website quality, customer satisfaction, and customer trust in online repurchases. The current study is cross-sectional and uses an online survey with 22 questions that evaluated consumers repurchase intentions. A technical SEM-PLS analysis was used. It was found that website quality had a positive influence on customer satisfaction, website quality positively influenced customer trust, customer satisfaction had a positive influence on customer trust, customer satisfaction had a positive influence on online repurchase intention, and customer trust had a positive influence on online repurchase intention. The model explained 20.6% of online repurchase intention behavior. Outcomes of the bootstrapping test were used to evaluate if path coefficients are significant. The outcomes can help companies to develop strategic plans to increase online purchasing. The novelty is based on using the partial least squares structural equation modeling (SEM-PLS) technique.

The objective of this study was to analyse the impact of positive externalities of international tourism demand on increasing the market power (MP) of an extra virgin olive oil (EVOO) wholesaler in Croatia. In the context of this paper, the MP measures how close the wholesaler can set the actual price of EVOO to the maximum the retailer wants to pay. Our hypothesis explained how the additional demand of tourist consumers for EVOO could stimulate and increase the MP of the wholesalers. Here, it was important to remember that the EVOO market signals relatively asymmetric quality information about products that varies in certain ranges. The selected time-series span the weekly period from 2017 to 2019. We used the Toda- Yamamoto approaches of causality in the relationship between the EVOO price gap and tourism overnights, as well as the autoregressive distributed lag model (ARDL) bounds test for cointegration. For larger EVOO bottles (0.75 and 1 l), there is unidirectional causality flowing from tourism consumption, which we presume originates from the tourism demand variable, to MP. There is a relevant bidirectional causality in the case of the 0.25 l bottle. Tourism in a purchased bottle of 0.5 l does not manifest any side-effect impact on MP. This pioneering study has investigated the relationship between the MP of EVOO wholesalers in Croatia and tourist demand. An inventive view has been adopted with regard to the theoretical concept of measuring MP, but also due to the steps towards the use of ARDL bound testing.

In this paper, we examine the influence of investment of corporate capital, which we capture through heterogeneous company information technology utilization, on labor demand and labor income share. We find that increased investment in information technology by enterprises is associated with a general decrease in the proportion of labor income and the demand for labor. We also find that if the market power of enterprises in the industry is greater, the increase in investment of enterprise information technology capital is even less conducive to the willingness of enterprises to hire workers. Our results have implications for guidance towards corporate (information technology) investment decision-making.

Strategic interaction among firms may hinder the reduction of excess capacity in a declining industry. Policy interventions that attempt to reduce excess capacity may increase efficiencyby accelerating the capital adjustment butmaydecrease efficiency by increasing the market power of firms and/or by distorting firms' divestment decisions. We study capacity coordination policies—forcing firms to reduce their capacity simultaneously—applied to the Japanese cement industry. Estimation results suggest that these interventions did not increase market power because reduction in capacity resulted in higher utilization of the remaining plants, and did not distort firms' scrappage decisions.

This study provides empirical evidence for the relation between perishability in vertically coordinated supply chains and the market power exercised over smallholders in Nepal. Using survey data from small‐scale farms of tomatoes, ginger, high‐yielding variety paddy seeds, and lentils, we demonstrate how varying levels of perishability affect the degree of market power exercised by contractors and in cooperative farming. We show how much value‐added is diverted from farmers, compared to the benchmark set by the least perishable good. Results indicate that more perishable crops are subject to a greater degree of market power. A subsequent scenario analysis reveals that the redistributive effects of market power based on crop perishability are substantial: smallholders’ farm profitability increase by 18% as crop perishability is reduced by 50%. We conclude by discussing policy measures to reduce power imbalances due to crop perishability.

We examine the effects of real-time pricing on welfare and consumer surplus in electricity markets. We model consumers on real-time pricing who purchase electricity on the wholesale market. A second group of consumers contracts with retailers and pays time-invariant retail prices. Electricity generating firms compete in supply functions. Increasing the number of consumers on real-time pricing increases welfare and consumer surplus of both types of consumers. Yet, risk averse consumers on traditional time-invariant retail prices are always better off. Collectively, our results point to a public good nature of demand response in power markets when consumers are risk averse.

The political news media play an important role in the successful working of democratic societies. In order to fulfill this role, a sufficient level of journalistic quality is required. Most Western societies rely on the market as means to assure this level of quality. This implies regulation of the media sector by competition law, which may take different attitudes towards market power. While it is undisputed that some aspects of competition between political news media firms yield beneficial social outcomes, empirical findings regarding the impact of changes in market power are less straightforward. In the present analysis, I aim to understand whether an increase in market power may lead to an increase in journalistic quality. To this end,I formally model a demand function for media outlets based on the empirically justified assumption that preferences for journalistic quality systematically differ among consumers according to their education. I refer to this finding as consumption capital in a wide sense. Using a model of monopolistic competition, I find that, if consumption capital is sufficiently high, an increase in market power is associated with an increase in journalistic quality.

Purpose This study aims to show the relationship between competition, financial stability and ownership structure of banks in the Middle East and North African (MENA) countries. Design/methodology/approach This study uses the generalized method of moments (GMM) estimators to generate research results. This study uses an unbalanced panel dynamic data set. It covers the period 2011 to 2017 in MENA banks. Findings This study implies that there is a significant and positive relationship between market power and the financial stability of banks in MENA countries. It explains a competitive market focus on credit risk, which turns them risky. From the bank’s ownership view, Islamic banks are in a less risky position which means Islamic banks are more stable than other ownership structures. On the other hand, government specialized institute displays their poor financial stability and risky from other ownership structures. Unfortunately, there is no significant impact of ownership structure on competition unless Islamic banks prove that they (Islamic banks) perform better in market power. Practical implications The empirical findings of this study suggest that MENA banks should improve the process of managing and monitoring the non-performing loan (loan segment business). It reduces the level of credit risk, which leads to achieving more profit. It also recommends that loan quality should improve immediately in this region for declining financial disruption. Based on the ownership structure, policymakers and stakeholders should adjust their risk and financial stability. Notably, the stakeholders can focus on Islamic banks in this region as this type of ownership structure showing superiority over other ownership structures. Originality/value This study is based on the latest data set and produced outcomes by using a GMM estimator. It also uses multiple measures of competition and risk variables to get robust results. Moreover, to the best of the knowledge, this study is the pioneer to examine the competition, risk (financial stability) and ownership structure of banks in the MENA countries.

The macroeconomic data of the last fifty years have overturned at least two of Kaldor’s famous stylized growth facts: constant interest rates, and a constant labor share. At the same time, the research of Piketty and others has introduced several new and surprising facts: an increase in the financial wealth-to-output ratio in the US, an increase in measured Tobin’s Q, and a divergence between the marginal and average returns on capital. In this paper, we argue that these trends can be explained by an increase in market power and pure profits in the US economy—that is, the emergence of a non-zero-rent economy—along with forces that have led to a persistent long-term decline in real interest rates. We make three parsimonious modifications to the standard neoclassical model to explain these trends. Using recent estimates of the increase in markups and the decrease in real interest rates, we show that our model can quantitatively match these new stylized macroeconomic facts.