Over the last 30 years, researchers have disputed the mixed evidence of the effect of the minimum wage on teenage employment in the U.S. Whenever the minimum wage has positive or no effects on employment, they appeal to monopsony models to explain their results. However, very few of these studies have empirically tested whether their results are due to monopsonistic characteristics in the labor markets. In this paper, I estimate the effects of the minimum wage for the U.S. under concentrated labor markets and low-mobility jobs (two variables that measure monopsony), identify heterogeneous effects among different scenarios derived from the monopsony model, and provide a plausible explanation of the mixed results about the minimum wage effects in the literature. My main findings indicate that minimum wages have an elasticity to teenage employment of -0.418 under perfect competition, which is, as expected, much higher than the usual results in the literature. If the monopsony variable is one standard deviation higher than the baseline, it implies a positive change in elasticity between of 0.05. The minimum wage has a positive insignificant effect between 0.04 and 0.29 under full monopsonistic labor markets. The results are consistent among different specifications and controlling for possible external shocks to the monopsony and omitted variables.
{"title":"Minimum Wages in Monopsonistic Labor Markets","authors":"Luis Felipe Munguia Corella","doi":"10.2139/ssrn.3543643","DOIUrl":"https://doi.org/10.2139/ssrn.3543643","url":null,"abstract":"Over the last 30 years, researchers have disputed the mixed evidence of the effect of the minimum wage on teenage employment in the U.S. Whenever the minimum wage has positive or no effects on employment, they appeal to monopsony models to explain their results. However, very few of these studies have empirically tested whether their results are due to monopsonistic characteristics in the labor markets. In this paper, I estimate the effects of the minimum wage for the U.S. under concentrated labor markets and low-mobility jobs (two variables that measure monopsony), identify heterogeneous effects among different scenarios derived from the monopsony model, and provide a plausible explanation of the mixed results about the minimum wage effects in the literature. My main findings indicate that minimum wages have an elasticity to teenage employment of -0.418 under perfect competition, which is, as expected, much higher than the usual results in the literature. If the monopsony variable is one standard deviation higher than the baseline, it implies a positive change in elasticity between of 0.05. The minimum wage has a positive insignificant effect between 0.04 and 0.29 under full monopsonistic labor markets. The results are consistent among different specifications and controlling for possible external shocks to the monopsony and omitted variables.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"84 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90759849","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
When releasing a new version of a durable product, a firm aims to attract new customers as well as persuade its existing customer base to upgrade. This is commonly achieved through a rollover strategy, which comprises the price of the new product as well as the decision to discontinue the sale of the existing product (solo rollover ) or to sell the existing product at a discounted price (dual rollover ). In this paper, we argue that the timing of the new product release is an important — but commonly overlooked — third lever in the design of a successful rollover strategy. The release timing influences the consumers’ perception of obsolescence, by which an existing product is considered obsolete merely by reference to a new product. This reinforces the upgrading behavior of existing customers, but it also necessitates deep discounts of the existing product to keep its sale viable in a dual rollover. We analyze the impact of the release timing on solo and dual rollovers in markets composed of naive and sophisticated consumers. We show that in both markets, the endogenization of the release time enables the firm to induce sufficiently large parts of its existing customer base to upgrade so that a solo rollover is optimal in commonly encountered market settings. We also characterize the resulting market segmentation, and we offer managerial as well as policy advice.
{"title":"Designing Digital Rollovers: Managing Perceived Obsolescence through Release Times","authors":"E. Koca, T. Valletti, W. Wiesemann","doi":"10.2139/ssrn.3543050","DOIUrl":"https://doi.org/10.2139/ssrn.3543050","url":null,"abstract":"When releasing a new version of a durable product, a firm aims to attract new customers as well as persuade its existing customer base to upgrade. This is commonly achieved through a rollover strategy, which comprises the price of the new product as well as the decision to discontinue the sale of the existing product (solo rollover ) or to sell the existing product at a discounted price (dual rollover ). In this paper, we argue that the timing of the new product release is an important — but commonly overlooked — third lever in the design of a successful rollover strategy. The release timing influences the consumers’ perception of obsolescence, by which an existing product is considered obsolete merely by reference to a new product. This reinforces the upgrading behavior of existing customers, but it also necessitates deep discounts of the existing product to keep its sale viable in a dual rollover. We analyze the impact of the release timing on solo and dual rollovers in markets composed of naive and sophisticated consumers. We show that in both markets, the endogenization of the release time enables the firm to induce sufficiently large parts of its existing customer base to upgrade so that a solo rollover is optimal in commonly encountered market settings. We also characterize the resulting market segmentation, and we offer managerial as well as policy advice.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"96 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81080161","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
M. Ambrosius, Jonas Egerer, Veronika Grimm, A. H. van der Weijde
Due to ongoing efforts for decarbonization, electricity markets worldwide are undergoing fundamental transitions, which result in increased uncertainty for all market participants. Against this background, we investigate the impact of risk aversion on investment and market operation in markets with different congestion pricing regimes and multi-level decision making. We develop a stochastic multi-level equilibrium model with risk-averse agents, which includes investment in transmission and generation capacity, market operation, and redispatch. The model can incorporate perfect, as well as imperfect locational price signals and different upper-level expectations about lower-level risk aversion. We apply our model to a stylized two-node example and compare the effects of risk aversion in a system with zonal and nodal pricing, respectively. Our results show that the effect of risk aversion is more pronounced in a market with nodal pricing, compared to a market with imperfect locational price signals. Furthermore, transmission planners that are ignorant about risk aversion of generation companies can induce substantial additional costs, especially in a nodal pricing market.
{"title":"Risk Aversion in Multilevel Electricity Market Models With Different Congestion Pricing Regimes","authors":"M. Ambrosius, Jonas Egerer, Veronika Grimm, A. H. van der Weijde","doi":"10.2139/ssrn.3541599","DOIUrl":"https://doi.org/10.2139/ssrn.3541599","url":null,"abstract":"Due to ongoing efforts for decarbonization, electricity markets worldwide are undergoing fundamental transitions, which result in increased uncertainty for all market participants. Against this background, we investigate the impact of risk aversion on investment and market operation in markets with different congestion pricing regimes and multi-level decision making. We develop a stochastic multi-level equilibrium model with risk-averse agents, which includes investment in transmission and generation capacity, market operation, and redispatch. The model can incorporate perfect, as well as imperfect locational price signals and different upper-level expectations about lower-level risk aversion. \u0000 \u0000We apply our model to a stylized two-node example and compare the effects of risk aversion in a system with zonal and nodal pricing, respectively. Our results show that the effect of risk aversion is more pronounced in a market with nodal pricing, compared to a market with imperfect locational price signals. Furthermore, transmission planners that are ignorant about risk aversion of generation companies can induce substantial additional costs, especially in a nodal pricing market.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"13 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80035564","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Previous studies on horizontal outsourcing between competing duopolists emphasize cost factors such as economies of scale and/or variable cost advantages in Cournot markets as potential explanations. This paper studies horizontal outsourcing when two competing firms engage in Bertrand competition, and highlights the important role of sole sourcing commitment. We adopt the framework of a duopolistic multi-stage game that comprises of an incumbent and an entrant. The incumbent has the technology know-how to make a key component in-house, and the entrant, who is a rival of the incumbent in the downstream market, can source the component either from the incumbent or from a supplier that does not participate in the end product market. We find that if the entrant commits to sole sourcing, horizontal outsourcing can occur when the incumbent has a component cost advantage or even a small cost disadvantage over the alternative supplier. Specifically, if the component cost gap is small, horizontal outsourcing may soften downstream market competition and benefit both firms at the expense of inducing higher prices for the consumers. If the incumbent has a significant cost advantage, horizontal outsourcing may lead to increased downstream price competition by expanding the total supply of end products. Without sole sourcing commitment, horizontal outsourcing occurs only if the incumbent has a cost advantage, and it always strengthens downstream price competition and benefits the consumers. In contrast, when the firms engage in downstream Cournot competition, sole sourcing commitment has no impact on the adoption of horizontal outsourcing, and the entrant sources from her rival only when the incumbent enjoys a significant component cost advantage. Finally, we also study various model extensions to confirm the robustness of our main results to key model assumptions.
{"title":"Horizontal Outsourcing and Price Competition: The Role of Sole Sourcing Commitment","authors":"Qiaohai Hu, Panos Kouvelis, Guang Xiao, Xiaomeng Guo","doi":"10.2139/ssrn.3636366","DOIUrl":"https://doi.org/10.2139/ssrn.3636366","url":null,"abstract":"Previous studies on horizontal outsourcing between competing duopolists emphasize cost factors such as economies of scale and/or variable cost advantages in Cournot markets as potential explanations. This paper studies horizontal outsourcing when two competing firms engage in Bertrand competition, and highlights the important role of sole sourcing commitment. We adopt the framework of a duopolistic multi-stage game that comprises of an incumbent and an entrant. The incumbent has the technology know-how to make a key component in-house, and the entrant, who is a rival of the incumbent in the downstream market, can source the component either from the incumbent or from a supplier that does not participate in the end product market. We find that if the entrant commits to sole sourcing, horizontal outsourcing can occur when the incumbent has a component cost advantage or even a small cost disadvantage over the alternative supplier. Specifically, if the component cost gap is small, horizontal outsourcing may soften downstream market competition and benefit both firms at the expense of inducing higher prices for the consumers. If the incumbent has a significant cost advantage, horizontal outsourcing may lead to increased downstream price competition by expanding the total supply of end products. Without sole sourcing commitment, horizontal outsourcing occurs only if the incumbent has a cost advantage, and it always strengthens downstream price competition and benefits the consumers. In contrast, when the firms engage in downstream Cournot competition, sole sourcing commitment has no impact on the adoption of horizontal outsourcing, and the entrant sources from her rival only when the incumbent enjoys a significant component cost advantage. Finally, we also study various model extensions to confirm the robustness of our main results to key model assumptions.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"21 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89705899","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider an upstream firm U that supplies a key input to two symmetric downstream firms, A and B, that sell differentiated products. U negotiates bilaterally with A and B over a linear input price, and A and B set output prices. We assume Nash-in-Nash bargaining for input prices, and Bertrand competition for output prices. We compare two models. The simultaneous pricing model assumes that each price is determined holding all other prices constant (e.g., Crawford et al., 2018). The sequential pricing model assumes that input prices are determined first, and then output prices are determined given the input prices (e.g., Rey and Vergé, 2019). We compare the equilibria of the two models as well as their predictions for the effects of a vertical merger of U and A. For simplicity, we assume linear demand and no production costs. We show that input prices are lower, and hence the double marginalization problem is smaller, in the sequential pricing model than in the simultaneous pricing model. In both models, a merger of U and A leads to an input price increase to B (raising rival's cost) but the price increase is small in the simultaneous pricing model, while it can be very substantial in the sequential pricing model. We also show that, in the simultaneous pricing model, the merger leads to an output price reduction for both A and B, while in the sequential pricing model it leads to an increase in the output price of B (and also in the output price of A if the two products are relatively close substitutes). We then show that the bargaining model with simultaneous pricing actually produces merger effects that are similar to the effects obtained using a sequential pricing model without bargaining where U sets input prices by making take-it-or-leave-it offers to A and B.
{"title":"Vertical Mergers and Bargaining Models: Simultaneous Versus Sequential Pricing","authors":"Serge Moresi","doi":"10.2139/ssrn.3541099","DOIUrl":"https://doi.org/10.2139/ssrn.3541099","url":null,"abstract":"We consider an upstream firm U that supplies a key input to two symmetric downstream firms, A and B, that sell differentiated products. U negotiates bilaterally with A and B over a linear input price, and A and B set output prices. We assume Nash-in-Nash bargaining for input prices, and Bertrand competition for output prices. We compare two models. The simultaneous pricing model assumes that each price is determined holding all other prices constant (e.g., Crawford et al., 2018). The sequential pricing model assumes that input prices are determined first, and then output prices are determined given the input prices (e.g., Rey and Vergé, 2019). We compare the equilibria of the two models as well as their predictions for the effects of a vertical merger of U and A. For simplicity, we assume linear demand and no production costs. We show that input prices are lower, and hence the double marginalization problem is smaller, in the sequential pricing model than in the simultaneous pricing model. In both models, a merger of U and A leads to an input price increase to B (raising rival's cost) but the price increase is small in the simultaneous pricing model, while it can be very substantial in the sequential pricing model. We also show that, in the simultaneous pricing model, the merger leads to an output price reduction for both A and B, while in the sequential pricing model it leads to an increase in the output price of B (and also in the output price of A if the two products are relatively close substitutes). We then show that the bargaining model with simultaneous pricing actually produces merger effects that are similar to the effects obtained using a sequential pricing model without bargaining where U sets input prices by making take-it-or-leave-it offers to A and B.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"43 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90211972","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analytically study a value chain consisting of three independent parties: a manufacturer, a retailer, and a sales agent. Either the manufacturer or the retailer may compensate the sales agent, and a variety of supply contracts may be used between the manufacturer and the retailer: price‐only, buyback, and channel rebate. We first compare the efficiency of different supply contracts under either compensation scheme, and then compare the two compensation schemes when executed with the best performing supply contract for the parameter range. Under manufacturer compensation, we find that the price‐only contract may perform well in encouraging sales effort and it can dominate the distribution channel coordinating contracts in certain parameter (production and sales effort costs) range. Under retailer compensation, we find that, within the value chain, the buyback contract performs better in quantity coordination and the channel rebate contract performs better in sales effort coordination. Interestingly, our results show that an appropriate supply contract in support of a salesforce compensation scheme helps mitigate the inefficiency brought by the asymmetric sales effort information, and can lead to value chain first best for a wide range of parameters. When this is not the case, manufacturer compensation executed via the price‐only contract dominates for stable demand markets and retailer compensation executed via channel rebate contract dominates when the market’s uncertain outcomes are distinct.
{"title":"Who Should Compensate the Sales Agent in a Distribution Channel?","authors":"Panos Kouvelis, Duo Shi","doi":"10.2139/ssrn.3539740","DOIUrl":"https://doi.org/10.2139/ssrn.3539740","url":null,"abstract":"We analytically study a value chain consisting of three independent parties: a manufacturer, a retailer, and a sales agent. Either the manufacturer or the retailer may compensate the sales agent, and a variety of supply contracts may be used between the manufacturer and the retailer: price‐only, buyback, and channel rebate. We first compare the efficiency of different supply contracts under either compensation scheme, and then compare the two compensation schemes when executed with the best performing supply contract for the parameter range. Under manufacturer compensation, we find that the price‐only contract may perform well in encouraging sales effort and it can dominate the distribution channel coordinating contracts in certain parameter (production and sales effort costs) range. Under retailer compensation, we find that, within the value chain, the buyback contract performs better in quantity coordination and the channel rebate contract performs better in sales effort coordination. Interestingly, our results show that an appropriate supply contract in support of a salesforce compensation scheme helps mitigate the inefficiency brought by the asymmetric sales effort information, and can lead to value chain first best for a wide range of parameters. When this is not the case, manufacturer compensation executed via the price‐only contract dominates for stable demand markets and retailer compensation executed via channel rebate contract dominates when the market’s uncertain outcomes are distinct.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81798941","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Insider dealing involves the monopolistic enjoyment, by corporate insiders, of private rents from property rights locked up in the unpublished price-sensitive corporate information. This article examines the Zambian legal, regulatory and institutional framework for public distribution of securities so as to determine whether or not is provides adequate incentives for effective public distribution of private rents from non-public material corporate information. The article argues that the limiting of civil recovery to director-insider-dealing, the non-distribution of disgorged funds to injured investors, and the poor institutional enforcement capacity of the Zambian SEC, are likely to compromise the effective distribution of private rents from unpublished price-sensitive corporate information between corporate insiders and outsiders. The article has demonstrated that, in Zambia, public distribution of private rents from non-public material corporate information could be enhanced by: i) extending civil recovery to other forms of insider dealing than director-insider-dealing; ii) enhancing the institutional enforcement capacity of the Zambian SEC; iii) distributing disgorged funds to investors who suffer pecuniary loss as a result of insider dealing.
{"title":"New Frontiers of Insider Dealing Regulation in Zambia — Towards a Level Playing Field","authors":"Lennox Trivedi Samamba","doi":"10.2139/ssrn.3538753","DOIUrl":"https://doi.org/10.2139/ssrn.3538753","url":null,"abstract":"Insider dealing involves the monopolistic enjoyment, by corporate insiders, of private rents from property rights locked up in the unpublished price-sensitive corporate information. This article examines the Zambian legal, regulatory and institutional framework for public distribution of securities so as to determine whether or not is provides adequate incentives for effective public distribution of private rents from non-public material corporate information. The article argues that the limiting of civil recovery to director-insider-dealing, the non-distribution of disgorged funds to injured investors, and the poor institutional enforcement capacity of the Zambian SEC, are likely to compromise the effective distribution of private rents from unpublished price-sensitive corporate information between corporate insiders and outsiders. The article has demonstrated that, in Zambia, public distribution of private rents from non-public material corporate information could be enhanced by: i) extending civil recovery to other forms of insider dealing than director-insider-dealing; ii) enhancing the institutional enforcement capacity of the Zambian SEC; iii) distributing disgorged funds to investors who suffer pecuniary loss as a result of insider dealing.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80104450","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the role of exclusive content provision in two-sided markets where both sides are allowed to join multiple platforms. We consider a model of duopolistic two-sided platform market with a monopolistic multi-product (content) firm on one side, and consumers on the other. The model demonstrates that the monopolistic content provider uses exclusivity as strategic commitment to balance the two opposite effects on its bargaining power: the positive effect caused by increase in multi-homing consumers and the negative effect caused by restriction of distribution channels.
{"title":"Exclusive Content in Two-Sided Markets","authors":"A. Ishihara, Ryoko Oki","doi":"10.2139/SSRN.2941972","DOIUrl":"https://doi.org/10.2139/SSRN.2941972","url":null,"abstract":"This study investigates the role of exclusive content provision in two-sided markets where both sides are allowed to join multiple platforms. We consider a model of duopolistic two-sided platform market with a monopolistic multi-product (content) firm on one side, and consumers on the other. The model demonstrates that the monopolistic content provider uses exclusivity as strategic commitment to balance the two opposite effects on its bargaining power: the positive effect caused by increase in multi-homing consumers and the negative effect caused by restriction of distribution channels.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"100 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88229506","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A monopolist sells over an infinite number of periods a durable good (available at different quality levels) to customers who differ in their preference for quality. The firm is able in each period to exercise second-degree price discrimination to new customers, i.e., to offer a menu of choices. We study the case where it cannot commit to future menus. We show that the static Mussa-Rosen equilibrium, where all trade takes place in the initial period and the monopolist obtains its full-commitment profits, is always a Markov-Perfect equilibrium of this game. However we also show that there exists another MPE with strongly Coasian features in which market coverage is progressive and profits are below their full commitment level, vanishing in the limit when the minimum time between two different offers becomes infinitesimal.
{"title":"Vertically Differentiated Durable Goods Monopoly: Coexistence of Contrasting Markov-Perfect Equilibria","authors":"D. Laussel, Ngo van Long, J. Resende","doi":"10.2139/ssrn.3532364","DOIUrl":"https://doi.org/10.2139/ssrn.3532364","url":null,"abstract":"A monopolist sells over an infinite number of periods a durable good (available at different quality levels) to customers who differ in their preference for quality. The firm is able in each period to exercise second-degree price discrimination to new customers, i.e., to offer a menu of choices. We study the case where it cannot commit to future menus. We show that the static Mussa-Rosen equilibrium, where all trade takes place in the initial period and the monopolist obtains its full-commitment profits, is always a Markov-Perfect equilibrium of this game. However we also show that there exists another MPE with strongly Coasian features in which market coverage is progressive and profits are below their full commitment level, vanishing in the limit when the minimum time between two different offers becomes infinitesimal.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"36 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82292746","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Boussemart et al. (2009, 2010, 2018) propose to identify a global α-returns to scale that allows to minimise the inefficiency of the production set. This paper extends this notion to the concept of specific α-returns to scale. In such case, it is possible to identify the impact of each input component on each output component.
{"title":"Specific α-Returns to Scale","authors":"W. Briec, P. Ravelojaona","doi":"10.2139/ssrn.3530552","DOIUrl":"https://doi.org/10.2139/ssrn.3530552","url":null,"abstract":"Boussemart et al. (2009, 2010, 2018) propose to identify a global α-returns to scale that allows to minimise the inefficiency of the production set. This paper extends this notion to the concept of specific α-returns to scale. In such case, it is possible to identify the impact of each input component on each output component.","PeriodicalId":18516,"journal":{"name":"Microeconomics: Production","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73216966","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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