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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.

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.

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.

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.

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.

Does significant market power or the presence of large rents affect optimal income taxation, calling for greater redistribution due to tainted gains? Or perhaps less because of an additional wedge that distorts labor effort? Do concerns about inequality have implications for antitrust, regulation, trade, and other policies that influence market power, which contributes to inequality? This article addresses these questions in a model with heterogeneous abilities and hence a concern for distribution, markups, multiple sectors, ownership that is a function of income, allowance for any share of profits to be recoveries of investments (including rent-seeking efforts), endogenous labor supply, and a nonlinear income tax. In this model, proportional markups with no profit dissipation have no effect on the economy, and a policy that reduces a nonproportional markup raises (lowers) welfare when it is higher (lower) than a weighted average of other markups. With proportional (partial or full) profit dissipation, proportional markups are equivalent to a downward shift of the distribution of abilities, and the welfare effect of correcting nonproportional markups associated with nonproportional profit dissipation now depends also on the degree of dissipation and how that is affected by the policy. In all cases, optimal policies maximize consumer plus producer surplus, without regard to a policy’s distributive effects on consumers and profits or how markups and income taxation distort labor effort.

With the boom of e-commerce, express delivery has been increasingly regarded as a bottleneck and key factor for achieving success. Additionally, whether to include such express delivery service or not is an important yet outstandingly unsolved problem for online retailers. In this regard, this paper uses a game-theoretic framework to investigate the channel structure, in which an offline retailer competes with an online retailer selling products to consumers through its partner express company. The consumers purchase from either an online or offline channel considering the delivery service as well as the inconvenience of shopping from physical stores. We consider three power structures: online retailer Stackelberg game, offline retailer Stackelberg game and Nash game. Under each power structure, we characterize the channel integration strategy for the online retailer. Interestingly, our results show that the online channel integration is not beneficial for the online retailer in most cases. Online retailers prefer to use express companies as intermediaries to avoid large logistics operations costs in the offline retailer Stackelberg game and Nash game. Only in the online retailer Stackelberg game, where the online retailer has the first-move advantage in the market, together with a moderate store-visiting inconvenience cost and a delivery service cost coefficient, will vertical integration improve the online channel’s profit. Dominant market power ensures sufficient profit to cover the logistics cost, and the moderate inconvenience cost and service cost coefficient promise a moderate logistics cost. Under this condition, the online retailer will choose the vertical integration strategy. We show in the extension that this strict condition can be relaxed when the online retailer owns a mixed channel. The online retailer with a mixed channel has more incentive to integrate than a pure online retailer does, as the mixed channel adds his power and helps to gain more market shares and profit. Our analysis generates managerial insights into the relationship between online retailers and express companies and provides a guide for implementing the vertical integration strategy in the online retailing industry.

Agricultural economists have a long history of emphasizing and analyzing the spatial dimension of agricultural and food markets. Despite a rich body of literature and important contributions to agricultural and spatial economics, one aspect is frequently disregarded: the oligopsonistic nature of agricultural markets due to spatial competition of neighboring buyers of farm products. This review presents the theoretical foundations of spatial pricing, competition, and location in terms of buyer power and discusses concepts that are relevant for agricultural markets. By providing a comprehensive overview of prior work, we highlight the multifaceted areas of applications to agricultural markets. Additionally, we discuss future research avenues for and challenges of the analysis of spatial competition in agricultural economics.

The paper considers the processes of platformatization of the economy and public government, which have become the last decade’s primary trend. Analysis of the digital markets in Russia, China, and Europe proved the dominance of the digital platforms of large technology companies. According to the authors, the concentration of market power in digital platforms threatens a competitive environment in digital markets. In this regard, the demand for antitrust regulation of their activities is justified. Another legal challenge arises concerning the trend of creating public services on the digital platforms of large technology companies. The paper analyzes China’s experience in the platformatization of legal proceedings, where the process of establishing online courts is conducted in close cooperation with the leading digital platforms of the PRC. In contrast to China, in Russia, the main focus is on combining public services, and information systems of various departments within a single platform to provide public services, with large technology companies acting as operators. Therefore, the authors conclude that it is necessary to strengthen legal mechanisms to protect citizens’ rights and interests during the digitization of public services – primarily citizens’ rights to data protection. The problems revealed demonstrate the necessity of a balanced approach to the legal regulation of digital platforms. While it is important to stimulate their development, it is necessary to limit the opportunities for violating the rights and interests of other participants in the digital environment.

PurposeThe purpose is to review the effects of employee participation (EP) in decision-making, ownership and profit on job quality, worker well-being and productivity, and derive policy recommendations from the findings.Design/methodology/approachThe authors summarise results of “declining labour power”, plus theoretical arguments and empirical evidence for the benefits of EP for job quality, satisfaction and productivity.FindingsWorker well-being and job satisfaction are ignored unless they contribute directly to profitability. EP is needed to remedy this situation when employers have market power and unions are weak. The result can be a rise in both productivity and well-being.Research limitations/implicationsThe chief issue here is that there are data limitations, particularly on the well-being effects of participation.Practical implicationsLots of encouraging examples in many countries need legislative help to multiply.Social implicationsIt is quite possible that there could be major implications for welfare and employment.Originality/valueThe authors make the case for public sector subsidies for employee buyouts and new cooperative start-ups, as well as legislation for works councils and profit sharing.

The burgeoning integration of distributed energy resources (DER) poses new challenges for the economic and safe operation of the electricity system. The current distribution-side policy is largely based on mandatory regulations and incentives, rather than the design of a competitive market mechanism to arouse DERs to freely compete in the retail market. To address this issue, we proposed a transactive retail market mechanism to attract the active participation of profit-driven DER retailers in a deregulated way. Considering the limited competitive property of the retail market, a bi-level DSO-dominated framework is constructed to simulate the virtual game between distribution system operator (DSO) and DER retailers. Specifically, the flexible interval pricing of retailers is modeled as a series of binary revenue constraints to influence the DSO's centralized economic dispatch decisions, where the time-varying distribution locational marginal price is adopted to settle energy activities at different locations over the time horizon. Due to the uncertain power flow path during the coordinated decision-making process, we proposed a general undirected second-order cone-based AC radial power flow model and provided sufficient conditions to ensure its exactness. Also, we applied a series of approximation and relaxation techniques to transform the bi-level mixed-integer quadratic framework with highly discrete induced domains into a solvable mixed-integer semidefinite programming problem. It is demonstrated in the case study that the proposed mechanism can not only improve market efficiency but also eliminate market power and the resulting market failures.

The aggregator, an emerging entity in the electricity market, gathers and creates market power for the small flexible resources, which traditionally contain distributed generation, electric storage, and flexible load. Recently, the exploding growth of information technology demand gives rise to the data centers, whose participation in demand response (DR) is becoming increasingly significant for its remarkable performance in spatiotemporal transfer characteristics compared to conventional facilities. The high-quality DR potential of data centers provides a new opportunity for the profit-seeking data center aggregators (DCAs) to optimize their bidding plans in the day-ahead electricity market. Therefore, this article targets the formulation of the optimal bidding strategy of demand response aggregators (DRAs) to achieve the maximization of the joint benefit of both DCA and data centers. A spatiotemporal transfer characteristics-based optimization strategy is formulated to obtain the electricity purchasing scheme and arrangement of data centers. Meanwhile, the Shapley value method is introduced to design the appropriate and equitable DR reward mechanism that each DCA should compensate its customers, which would serve as a guarantee to ensure data centers’ active participation in DR events and lay a solid foundation for the implementation of the DCA's optimal bidding strategy. Numerical tested results demonstrate the effectiveness of the proposed optimal bidding model and the benefit allocation mechanism, which profit both DRA and data centers when participating in DR programs while preserving their daily power demand.

This research uses the publicly available World Input-Output Database (WIOD) to investigate the relationship between an industry’s markup and its upstreamness, the industry’s position in the vertical chain of production; the research also identifies common attributes among high-markup industrial sectors: higher-markup industries display a higher level of capital compensation and a lower share of labour and other inputs in the value of output. Finally, it is found that upstream industries, those producing mostly raw materials and intermediate products enjoy higher market power than their downstream counterparts. This result could be among the first in the literature to find evidence of double marginalization at an industry level of aggregation. It also suggests that virtually all final product prices may incorporate substantial markups through their inputs.

This paper investigates the relationship between market power and urban housing development in a two-period, partial equilibrium model of a durable rental housing market with a fixed stock of homogeneous land, a convex housing construction technology, and no externalities. We contrast the planning solution and the monopoly solution. Since we employ social surplus analysis, the competitive equilibrium coincides with the planning solution. Thus, we contrast the competitive equilibrium and the monopoly solution. On a priori grounds, one expects less housing to be produced under monopoly than under competition. The monopolist can produce less housing by constructing housing at lower density, holding land off the market, or developing his land later. We show that the monopolist: (i) will never hold land off the market for both periods, (ii) may develop either a higher or lower proportion of her land in the first period than under competition, and (iii) in both periods will construct at lower density than under competition.

Business strategies play a vital role in a firm’s success but, if not properly executed, can lead to financial irregularities and mispricing, influencing the firm’s performance and leading to stock price crash risk. The present study examines the impact of a firm’s business strategy and market power on stock price crash risk. Following Miles and Snow’s (2003) model, we classify Chinese firms listed on the Shenzhen and Shanghai stock exchanges into defenders (conservative) and prospectors’ (aggressive) business strategies over a period of 2006–2019. We employed industry and year fixed effects regression to show that prospectors who follow aggressive strategies are more prone to stock price crash risk than defenders who follow conservative strategies. Additionally, we show that firms with high market power also contribute to increased stock price crash risk. Our results are also robust to alternative control variables and different statistical models like the two-stage least squares method.

We study security issuers’ decisions on whether to pool assets when facing counterparties endowed with market power, as is common in over-the-counter markets. Our analysis reveals how buyers’ market power may render the pooling of assets suboptimal — both privately and socially — in particular, when the potential gains from trade are large. Pooling assets then reduces the elasticity of trade volume in the relevant part of the payoff distribution, exacerbating the inefficient rationing associated with the exercise of buyers’ market power. Our analysis provides insight on the determinants of asset-backed securities issuance, including regulatory reforms affecting financial institutions’ liquidity.

In 2015, the China Insurance Regulatory Commission initiated a liberalization reform in the automobile insurance industry to grant insurers more discretion in policy design, underwriting, and ratemaking. The deregulation intended to increase competition and choices for the consumer, yet there was little scientific evidence on how the insurance market responded to the reform. This article examines the effectiveness of this deregulation reform in China. Leveraging a large industry dataset of more than 7 million automobile insurance policies from 63 major automobile insurers operating in China, we study policyholders’ switching behavior among insurance providers. To better understand the heterogeneity in the impact of deregulation on market performance and consumer choice, we further analyze the switching pattern among different types of insurers according to the insurer's size, the company’s business structure, the jurisdiction’s market power, and the customer’s risk type. Overall, the empirical results suggest that the reform has met its original goal, leading to higher market competition, and more diversified consumer choices. We further confirm that the average premium dropped significantly after the reform for all three jurisdictions implementing the reform, yet the insurers’ pricing strategy was risk type dependent, i.e., the average premium for the high-risk customers increased, while the average premium for the low-risk customers decreased substantially.

The research focuses on determining the effect of commercial bank’s market power on net interest margin and the moderating role of financial access. The study uses annual data of 33 commercial banks in Indonesia from 2012 to 2019 based on the category of State-Owned Commercial Banks and National Private Commercial Banks. The data is obtained from secondary data, using financial reports published by commercial banks. The data is analyzed using moderated regression analysis to estimate two models, basic model is used to estimate the effect of market power on net interest margin, while the interaction model is used to estimate the moderating effect of financial access. Market power was measured using the Lerner index of each bank. Financial access was measured by the number of branches and the availability of electronic banking channels such as mobile banking, internet banking, and digital branch. The results show that the increase in commercial bank’s market power significantly increases net interest margin. Other results also show that branch and mobile banking & internet banking significantly moderate the effect of market power on the net interest margin, while the digital branch is not significantly moderating the relationship between market power and net interest margin.

Emerging electricity reforms in the power market aims at removing the monopolistic oligopoly power market and promoting competition in the market by providing opportunities to more producers. This paper seeks to investigate various existing structures of the Power Market. Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL) facilitates transparent trading of electricity, a larger market spectrum and allows the participation of other players in the market. Market power is an indicator of an non-competitive market, that is increase in the market power will result in the degradation of competition. This research will help modify the current parameters (HHI Index and Concentration ratio) which are used for measuring the market power of the power markets. As there is always deviation in unconstrained cleared volume and actual cleared or scheduled volume, deviation arises due to the volume of electricity that could not be cleared because of congestion in the power exchange. The researchers have also examined the Indian Power market and analyzed different developed power markets of the world like the US Pennsylvania-New Jersey-Maryland Interconnection (PJM) and the Nordpool.

OBJECTIVES Self-insured employers cover more people than Medicare, Medicaid, or direct purchasers of private insurance.This study examined the ability of self-insured employers to negotiate hospital prices and the relationship between hospital prices and employer market power in the United States. STUDY DESIGN Repeated cross-section analysis of commercial claims. METHODS We used the US Census Bureau County Business Patterns data to estimate employer market power at the metropolitan statistical area (MSA)-year level and used the Truven Health MarketScan commercial claims to estimate mean hospital prices and price ratios at the MSA-year level (2010-2016). We calculated descriptive statistics for employer market power, mean hospitalization prices, and a case mix-adjusted price ratio measure during the study period and analyzed the 10 most concentrated labor markets. We estimated MSA-year-level ordinary least squares regressions of hospitalization price and the price ratio measure on employer market power. RESULTS Large self-insured employers had concentrated market power in very few MSAs in 2016. The mean value of our employer market power measure was 62 for 2016, compared with the mean value of 5410 for hospital market power in the United States. Regression analyses find a slight relationship: A 1-point increase in employer market power was associated with a $6.61 decrease in the hospitalization price (mean = $20,813), but this result becomes statistically insignificant once the models control for hospital wages. CONCLUSIONS Employer market power is low in most MSAs. Self-insured employers may consider building purchase alliances with state and local government employee groups to enhance their market power and lower negotiated prices for hospital services.

Монополизация и высокая концентрация капитала в руках цифровых гигантов вызывают обеспокоенность антимонопольных органов по всему миру. Цель статьи – выявить возможные источники рыночной власти цифровой платформы на примере компаний, владеющих магазинами мобильных приложений (Apple App Store и Google Play) и их взаимоотношений с разработчиками прикладного ПО и пользователями. В работе также анализируются возможные положительные и отрицательные эффекты поведения таких компании для разных групп стейкхолдеров. Результаты исследования показывают, что основные претензии к цифровым платформам в части нарушения антимонопольного законодательства весьма схожи и описываются рядом типичных моделей поведения платформ. Негативное влияние такого поведения на конкуренцию на связанных рынках необязательно обусловлено большим размером таких платформ или отсутствием у них альтернатив. На примере компании Apple, чьи мобильные телефоны занимают только около четверти рынка, выявлены иные источники рыночной власти платформы, не связанные с рыночной долей на рынке смартфонов. Полученные результаты могут быть использованы как для развития теоретико-методологических подходов к экономическому анализу деятельности платформ, так и для решения практических задач в антитрасте.

Price fluctuations at the producer and consumer levels determine the performance of the maize market in Gorontalo Province. This will affect the decisions and ability of the corn marketing agencies involved in responding to price changes. The slow response of marketing agencies to changes in maize prices indicates inefficient market conditions in terms of prices. In addition, differences in market power between marketing agencies indicate inefficiencies in marketing maize from an operational perspective. Therefore, this research was conducted with the aim of 1) analyzing market integration and transmission of maize prices between producers and consumers, 2) analyzing the distribution of marketing margins in the maize marketing channels in Gorontalo Province. The research data used is in the form of weekly price data at the producer and consumer levels for 148 weeks, from March 2016 to March 2019 and added data from direct interviews with the marketing actors involved, namely farmers as many as 30 people, while sampling of traders was carried out by snowball sampling technique. Data analysis used the Asymmetric Error Correction Model (AECM), marketing margin and farmer share for each channel. The results showed that the transmission of maize prices at the producer and consumer level is symmetrical in the long run indicating market integration. The smallest marketing margin and the largest farmer share are in Channel III, where marketing is done directly to an exporter. Corn marketing in Gorontalo Province shows price transmission and market integration as well as high farmer share value in each channel, so it can be concluded that marketing is efficient.

Financial inclusion (FI) is increasingly becoming a global policy priority because it enables access to financial services, such as savings, payments, risk management, and credit, to households and firms with a wide range of needs. However, to the best of our knowledge, no study has yet been undertaken on measures of FI and the nexus between FI and bank market structure in Africa. We used panel data from 17 African countries from 2004 to 2018 to measure FI and examine its nexus with bank market structure in these countries. We employed two-stage unsupervised machine learning to index FI: its dimensions in the first stage and overall FI in the second stage. Then, we employed an endogenous panel threshold model to examine bank market power and asset concentration impacts on FI. We found that bank market power enhances availability and accessibility dimensions but reduces the usage dimension. The impact of a higher regime market power on usage is worse than that of a lower regime market power. Asset concentration impacts on overall FI, availability, and usage are more pronounced under a lower regime concentration. The results imply that bank asset concentration and market power beyond thresholds are not desirable for promoting FI. The results also imply that scrutinizing potential sensitivity of the results to FI dimensions is vital.

The recent controversy on the intersection of competition law with the protection of privacy, following the emergence of big data and social media is a major challenge for competition authorities worldwide. Recent technological progress in data analytics may greatly facilitate the prediction of personality traits and attributes from even a few digital records of human behaviour. There are different perspectives globally as to the level of personal data protection and the role competition law may play in that context, hence the discussion of integrating such concerns in competition law enforcement may be premature for some jurisdictions. However, a market failure approach may provide common intellectual foundations for the assessment of harms associated with the exploitation of personal data, even when the specific legal system does not formally recognize a fundamental right to privacy. The paper presents a model of market failure based on a requirement provision in the acquisition of personal information from users of other products/services. We establish the economic harm from the market failure and the requirement using the traditional competition law toolbox and focusing more on situations in which the restriction on privacy may be analysed as a form of exploitation.

Licencing frameworks are embedded with sociotechnical imaginaries that limit the potential for networked technologies to make traditional media forms, like radio, more inclusive. We sought to refine and extend a platform, RootIO, which aims to enable diverse people to run small radio stations by using internet and mobile networks that avoid the costs of studios and specialist equipment. We situated design and refinement in the activities of groups that set up and ran four community stations in rural Romania and some Irish islands over three-years and found national regulations limited who articulated requirements. Activities in applying for, and complying with, licences shaped design priorities, embedded temporal demands, certain organisational structures and division of responsibilities, and assumptions about studios and professionalism. Indeed, small radio stations are subject to the same values as large media corporations that pursue market power. Regulatory frameworks are specific to nations and media form, yet our analysis illustrates that they impede designing platforms to widen inclusion by enacting broader sociotechnical imaginaries. We hope this reflection provokes discussion, in HCI and CSCW, about our responsibilities in engaging with the policies that shape possible futures.

Although channel integration is vital to manage multiple channels in harmony, most research focuses on direct and indirect channels. However, hotels increasingly engage with platforms – an interface bringing together a network of hotels and customers. Channels and platforms have distinct attributes – channels facilitate economies of scale, while platforms foster network effects, i.e., growing the number of hotels and customers for the benefit of both parties. Therefore, we question whether channel integration capabilities are relevant in platform contexts. Furthermore, because platforms have high market power which affects hotel profitability, research is required to explore the specialized platform integration capabilities for optimal hotel performance. Applying grounded theory, we identify five coordinating capabilities for hotels to align their operations with platforms and three learning capabilities for hotels to develop new knowledge to work with platforms. Our contribution is the explication of the similarities and differences between channel integration and platform integration: (i) one set of integration capabilities are similar across channels and platforms – they manifest similarly and serve similar objectives. However, in platform contexts (ii) some integration capabilities satisfy different objectives, (iii) some are wider in scope to achieve a broader set of objectives, and (iv) some are unique and attain new objectives.

To meet short-term earnings targets, firms often engage in real earnings management practices (REM) such as reducing advertising expenses and running sales promotions. Since these practices can hinder Chief Marketing Officers (CMOs) in building and maintaining market-based assets of firms, the authors hypothesize that firms with CMOs will be less likely to engage in REM. Using publicly available secondary data, the authors show that CMO presence decreases a firm’s propensity for REM and that the CMO’s ability and willingness to deter REM depend on CEO power and market power of the firm, respectively. The authors also conduct a survey of marketing personnel to extend the first study by examining marketing expenditures other than advertising (e.g., market research) and the firm’s revenue management actions (e.g., sales promotions). The authors find that CMO presence reduces the propensity for REM by cutting marketing expenditures but has no impact on REM through sales promotions.

E-commerce platform enterprises have typical bilateral market characteristics. The e-commerce platform provides real-time communication services for buyers and sellers. Different buyers and sellers form crossnetwork characteristics. The formulation and implementation of bilateral strategies affect both the merchants and consumers’ choice of platform and registration transactions. This impact will directly lead to the transaction value of the platform. Then, the article builds an econometric model and empirically analyses the impact of e-commerce platforms. The e-commerce chain is a complex structure that consists of logistics, information flow, and capital flow and connects suppliers, manufacturers, distributors, and users in the industry together. Blockchain technology can be used as a large-scale collaboration tool to adapt to supply chain management, the main factor that drives the market power of the enterprise. The research results show that the input costs of advertising, research and development, and employee training and the impact of long-term investment and taxation on market forces are quite different in different industries, both positive and negative, and subsidies, inventory, and state-owned holdings have a negative impact on the market power of companies in all industries. Finally, the competition strategy of e-commerce platform enterprises is summarized. On the basis of the conclusions of the theory and case study, the paper puts forward specific suggestions and countermeasures for the competition strategy of e-commerce platform enterprises in the bilateral network environment.

The use of digital technologies to aid the agronomic decision making of farmers characterizes modern agriculture. Digital farming is expected to enhance the market power of leading innovative firms in the seed industry, which is already having a high level of concentration. The merger of two leading innovative firms—Bayer and Monsanto—is to be seen in this context. This article examines the emerging anticompetitive considerations from the deal and the contribution of the Competition Commission of India in alleviating such considerations while approving the deal. It is found that threats were emerging in three areas—traits and seeds, nonselective herbicides, and digital farming platforms. To eliminate the anticompetitive effects of the deal, both the companies were required to divest their research and development intensive trait, seed, and nonselective herbicide businesses. They were also required to license the proprietary active ingredients of nonselective herbicides, if the use of their seeds was linked to the application of such herbicides, on fair, reasonable, and nondiscriminatory (FRAND) terms. They were also required to license the agronomic data, collected from India, and used in their digital platforms, to potential users on FRAND terms.

PurposeThis paper aims to understand the significant farm and market-level factors that incentivize the adoption and marketing of pulses influencing its supply response to changing demand.Design/methodology/approachThe authors first use a modified Nerlovian supply response model using secondary data to identify the major price and non-price factors influencing the supply of pigeon pea, black and green gram in the major pulses growing states in India. Second, using primary qualitative data the authors map the pulses value chain from farm to retail to identify the how proportional and fixed transaction costs (FCTs) influence market participation of pulses growers and limit the transmission of price and quality information.FindingsThe supply response model shows some positive influence of price on area allocation for pigeon pea and black gram and some negative effects of yield and price increase of competing crops on pigeon pea acreage. However, for the most part, the area of Kharif pulses is inelastic to prices in the long run. Irrigation, rainfall and yields in the lag year are shown to have a significant influence on area allocation for pulses. The market study reveals that low yields, low landholding size and geographical disadvantages of high agro-climatic risk and poor connectivity hinder market access of pulses farmers relative to other crops. Market power in favor of buyers and poor price and quality information is a disadvantage to sellers, influencing their ability to participate in markets.Research limitations/implicationsA quantitative study would be required to identify the magnitude of farm and market-level transaction costs.Originality/valueThis study helps to understand the supply response of pulses and gives suggestions to direct policy to rectify this.

Recent high-profile antitrust cases and policy proposals have put a spotlight on the relationship between firms’ access to big data and sustained competitive advantages in digital markets. In Europe, concerns about data-driven market power have led policymakers to propose far-reaching regulations of information technology (IT) in these markets. Despite the global policy relevance, the regulation of big data and its competitive effects has so far received little attention in information systems (IS) research. This article addresses this research gap by developing an overarching framework for future IS research on the role of IT for the regulation of data-driven market power. The proposed research framework builds upon a three-part analysis: First, we review the academic literature and show that there is extensive, although nuanced, empirical evidence for business value creation from big (user) data. Second, we draw on the resource-based view of the firm and recent policy reports to derive six facilitating factors that enable firms to establish market power based on sustained data-driven competitive advantages. Third, we characterize three regulatory approaches to govern market power and competition in data-driven digital markets: (i) empowering consumers, (ii) data openness, and (iii) limiting data scale. For each of these approaches, we highlight the key role of IT artifacts in mediating the effect of regulatory rules on actual practice.

The Danish farmer-owned cooperatives started back in the 1880s. The overall aim was to ensure farmers’ market power and market access in the marketing chain. Since then, cooperatives have emerged in most major agricultural and food industries. In certain industries, the market shares of cooperatives are large and dominant. In other sectors, market shares are smaller, and in some sectors, cooperative ownership has completely ceased. A number of prerequisites have been crucial for the significant development of the Danish farmer cooperative industry: A bottom-up approach has been important, so that farmers themselves have driven the development and have had strong incentives to strengthen the cooperative model. A certain level of social capital, a human cohesion, a certain level of education as well as a certain degree of trust and access to infrastructure have also been important factors. Today, the development and importance of cooperatives is recognized as a key driver behind the strong international competitiveness of the agricultural and food sectors in Denmark. The purpose of the article is thus to describe and analyze the development, the significance and the underlying drivers of the farmer-owned cooperatives. Based on literature studies, case studies and interviews, experiences are summarized and possible lessons are presented. Opportunities and barriers to transferring Danish cooperative experiences to other countries are analyzed and evaluated, and a number of recommendations are presented. Opportunities and barriers to transferring Danish cooperative experiences to other countries are analyzed and evaluated. The results in terms of market access etc. meet the needs of farmers in many less developed countries. However, a number of barriers are identified, and the cooperative model must be adapted to the specific circumstances in individual countries.

River water trade is a method for reallocating water among riparian states in an efficient and self-enforcing fashion. In this study, we investigate the functioning of river water markets when the upstream state has the ability to build dams. Using a two-agent model, we describe the implications that dam ownership can have on agent welfare as well as on social welfare. We introduce and discuss the concept of strategic storage in river sharing problems, which refers to the withholding of water by the upstream state exclusively for the purpose of trade. We investigate the conditions under which an agent would resort to such a behaviour. We show that having such strategic storage creates a welfare loss for the downstream agent and also results in the loss of social welfare. As an empirical illustration, we study the allocation of the Cauvery river water to agricultural users and municipal users located upstream and downstream of the Krishnaraja Sagar (KRS) dam respectively.

In this paper, we estimate price markups on a panel of Spanish manufacturing firms for the period 2000–2012 ​at a 3-digit sectoral level. Our results reveal that there is no evidence of large market power in the industries considered; however, in around 60% of these industries average markups either increased or remained stable over the crisis (2008–2012), despite the sharp fall in economic activity. We examine whether this result is related to the extremely tight financial conditions faced by Spanish corporations during the crisis. In this setting, firms may try to boost current profits by increasing markups –and possibly foregoing market share– to cover their financial commitments and fund their operations. We find a positive association between our measure of financial pressure and the estimated change in average markups between 2000-2007 and 2008–2012. This result suggests that those manufacturing industries more exposed to financial shocks by the end of the expansionary period tended to experience a larger increase in markups over the crisis.

The concept of peer-to-peer (P2P) trading, or transactive energy (TE), is gaining momentum as a future grid restructure. It has the potentials to utilize distributed energy resources (DERs), proactive demand side management (DSM), and the infusion in information and communication technologies (e.g., blockchain and Internet of Things (IoT)) for promoting the technical and economic efficiency of the system in its entirety. An efficient market framework is vital for the successful and sustainable implementation of such a concept. This article proposes a P2P energy trading framework enabled by blockchain. It consolidates bilateral contracts, an electronic-commerce platform, a double-auction Vickrey-Clarke-Groves (VCG) mechanism, and trading functionalities with the main grid. Through these multi-layer mechanisms, various trading preferences and attributes of electricity generation and/or consumption are accommodated. Meanwhile, the VCG mechanism eliminates any potential for market power exercise via incentivizing truthful bidding of participants. Different remedies are proposed to overcome the drawback of VCG, i.e., the lack of balanced-budget property. Accordingly, the proposed trading framework is described as multi-settlement and quasi-ideal. Case studies are conducted to analyze and evaluate the proposed trading framework and demonstrate the effectiveness of the proposed remedies in handling probable market deficiencies.

We aim to provide a tool for independent system operators to detect the collusion and identify the colluding firms by using day-ahead data. In this paper, an approach based on supervised machine learning is presented for collusion detection in electricity markets. The possible scenarios of the collusion among generation firms are firstly identified. Then, for each scenario and possible load demand, market equilibrium is computed. Market equilibrium points under different collusions and their peripheral points are used to train the collusion detection machine using supervised learning approaches such as classification and regression tree (CART) and support vector machine (SVM) algorithms. By applying the proposed approach to a four-firm and ten-generator test system, the accuracy of the proposed approach is evaluated and the efficiency of SVM and CART algorithms in collusion detection are compared with other supervised learning and statistical techniques.

State support remains a leading cause of tension in international commercial relations. Governments see trade distortions that look like they were caused by industrial subsidies, but lack data to illuminate that state support. In the 1980s, the Organisation for Economic Co‐operation and Development (OECD) developed an index that helped countries to see the overall incidence of agricultural subsidies, initially called the Producer Subsidy Equivalent (PSE) and the Consumer Subsidy Equivalent (CSE). Are there lessons for today in the PSE approach? I try to answer that question from the standpoint of economics: how did the PSE evolve, what is it, is the concept relevant to industrial subsidies? And of politics: how was OECD able to create the tool, and do present conditions permit something similar? The PSE was a response to a shared perception of crisis. It drew on well‐established concepts in the agricultural economics and trade literatures. And it works best in a context where market power is sufficiently diffuse that a price gap between domestic and world prices can be calculated. Only some of those conditions can be met when applying the approach to concentrated industries dominated by large firms that operate in multi‐country supply chains.

The study investigates how financial sector transparency moderates the influence of financial crises on bank market power across seventy-five economies between 2004 and 2014. Employing two-step dynamic system generalized method of moments the study shows that while public sector-led financial sector transparency reduces bank market power, private sector-led financial sector transparency promotes bank market power given that private sector-led transparency gives financial cost advantage to financially sound banks to solidify the market power and dominance. Similarly, while financial crises reduce the market power of banks implying that during financial crises banks lose their market power, financial sector transparency promotes the negative effect of financial crises on bank market power. This implies that during financial crises, financial sector transparency whether enforced through private or public sector, boosts the weakening effect of financial crises on bank market power. These findings imply that regulators can rely on financial transparency to tame bank market power to enhance banking competitiveness. The findings and results are consistent even when country, time and continental effects are controlled for.

The market for audit services has been the subject of extensive academic research since the 1970s. The prevailing view is that audit markets are characterized by tiers of suppliers (Big 4 versus non-Big 4, and industry specialists versus non-specialists) where the upper tier suppliers produce and sell a systematically higher level of assurance, while competition among suppliers within tiers is essentially perfect and a uniform price prevails within the submarkets. We discuss three papers that challenge this orthodoxy. These papers argue and find that the price of an audit is essentially unique to each (auditor, client) pair and that this price depends on both audit firm size and client size. Furthermore, audit firm size is linked with the firm's capital investments, which enhance auditor efficiency and market power. We conclude that audit markets are atomistic and that local market power is an important determinant of audit prices and audit fees.

PurposeThis paper analyzes the effects on local suppliers of the adoption of a modular platform, taking into account different supply-chain relations.Design/methodology/approachThe authors’ research follows an interpretive case study methodology based on a theoretical approach that seeks to validate the approach while making conclusions about the case study.FindingsThe traditional pyramidal structure of automotive supply chains has been altered by the consolidation of a much more complex structure, mostly in spatial and geographical terms. The authors find a strong hierarchy resulting from the reinforced market power of the carmaker under study and the respective fragile structural positioning of logistics companies and pre-assemblers. The increased versatility of the assembly plant, considered a consequence of its transition to modular platforms, finds a counterpart in the necessary re-configuration of certain supply relationships.Originality/valueThe main contribution of the paper is to connect the defining elements of supply-chain relations with those technical and organizational changes associated with the transition to modular platforms, as well as to analyze changes in the pyramidal structure of the supply chain, from both a spatial and relational perspective.

Yawning gaps in bargaining powers between transacting parties have always been a source of concern in commercial relations and the legal governance of such relations. In modern times, the likely implications of gaps in bargaining powers are not only palpable as it concerns the affairs of transacting parties with weaker bargaining powers, but also on the welfare of society, at large. That is particularly so in this milieu of pervasive oligopolistic market structures, organised commercial networks, digitisation, and big data. The imperative to guard against the use of contractually agreed remedial clauses to consolidate market power and as tools for wealth extraction is the concern of this article. To this end, this article makes a case for a recalibration of the rule against penalties in contract law.

Policymakers need to know if the structure of competition and the degree of banking market concentration change the incidence of financial crises. Previous studies have not always come to clear conclusions. We use a new dataset of 19 countries where we include capital adequacy and house price growth as factors affecting crisis incidence, and we find a positive role for bank concentration in reducing incidence. In addition, we look at New Industrial Economics indicators of market structure and find that increased market power also reduces crisis incidence. We conclude that attempts to increase competition in banking, although welcome for welfare reasons, should be accompanied by increases in capital standards.

Purpose of Review Supply-side shocks in concentrated energy markets provide opportunity for exercise of market power, especially in markets undergoing transition due to imperatives such as decarbonisation. In Australia, the recent linkage of international gas markets with the electricity market provides a useful example to review these dynamics. Recent Findings Using the intersections between gas and electricity markets in Australia, we explore how (1) supply constraints associated with commencement of Liquefied Natural Gas (LNG) exports, and (2) market concentration due to closure of old coal plant, contributed to effect a doubling of wholesale electricity prices. The recent Australian experience highlights the disproportionate impact of gas generation on electricity prices due to its price-setting role. The price impact of the tightened gas market on electricity prices has been significantly exacerbated through the exercise of market power, especially via the practise of ‘shadow pricing’. In the Australian case, the potential adverse intersectional impacts of LNG exports could have been substantially adverted with enforced domestic reservation of about 6% of LNG export volumes. Summary Competition issues and gaming opportunities, which have accompanied the increased market concentration that accompanied the withdrawal of capacity, have exacerbated the price impacts of the supply-side shock stemming from the evolving gas market.

We examine the case of a firm holding the option to make an uncertain and irreversible investment. The firm is decentralized and there is information asymmetry between the owner and the investment manager regarding the price of an input (e.g. a key equipment) that needs to be purchased by an outside supplier with market power. We show that the total loss attributed to the information asymmetry has two components: i) the loss in the decentralized firm itself and ii) a negative externality that the outside input supplier endures. We show that the latter is not just a part, but likely the main component of the total loss. Last, we prove that the negative externality is reduced when the principal uses an audit technology in parallel with the bonus-incentive mechanism.