Tag: Bureau of Economics

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Because of its unique institutional and regulatory features, the generic drug industry provides a useful laboratory for understanding how competition evolves within a market. We exploit these features to estimate certain structural relationships in this industry, including the...
This paper examines the welfare effects of third degree price discrimination by an intermediate good monopolist selling to downstream firms with bargaining power. One of the downstream firms (the "chain store") may have a greater ability than rivals to integrate backward into the...
We use the experimental method to compare second-price auctions to "verifiable" multilateral negotiations in which the sole buyer can credibly reveal to sellers the best price offer it currently holds. We find that transaction prices are lower in verifiable multilateral negotiations...
This paper provides a broad brush treatment of the empirical economics literature regarding the effects of mergers and acquisitions. Much of the literature has direct or indirect implications for competition policy. Of most direct interest to those concerned with merger-related...
This paper analyzes the effects of antidumping and countervailing duty cases initiated from 1990 to 1997 that ended in withdrawn petitions without a suspension agreement or voluntary export restraint. Monthly import data are used to estimate the price and quantity effects of the...
Previous research on collusion in procurement markets uses static mechanism design theory to address the limitations on collusive activity imposed by asymmetric information, but in most instances it does not address how to enforce the proposed mechanisms. This paper uses repeated...
This paper shows that an upstream monopolist that sells to competing downstream firms can profitably use exclusive contracts to deter entry even where scale economies are absent. By offering downstream firms a discount if they sign an exclusive contract covering later periods, the...
Most analysis of market power assumes that managers act as perfect agents for the shareholders. This paper relaxes this assumption. When managers of a multiproduct firm must exert unobservalbe effort to improve product quality, there will be a tension between the optimal incentive...
Theory argues that R&D intensity and acquisition activity may be either directly or inversely related. However, empirically we know relatively little about which firms are responsible for acquisition activity in high-technology industries. Using a panel of 217 U.S. electronic and...
It is well known that product differentiation increases both prices and profits, other things equal. What is less well understood is how the distribution of consumer preferences affects firms’ incentives to differentiate their products. This paper focuses on the incentive of firms to...
In three recent hospital merger cases, the courts concluded that the merged hospital would be unable to increase price profitably because of competition from distant hospitals.
When punitive damage awards create publicity, this could affect the behavior of uncompensated victims, which has implications for the optimal punitive damage multiplier. A new adjusted multiplier is derived that incorporates publicity into the analytical framework. Assuming that all...
Recent analyses of entry deterrence strategies have required an incumbent's post-entry output or pricing strategy to be profit maximizing. However, most papers have continued to assume that either an incumbent can commit not to exit after entry or that exit is never optimal. When...
We compare a seller's agency regime, in which agents give sellers information about buyers' willingness to pay, with a buyer's agency regime, in which agents keep buyers' information confidential. Aggregate gains from trade can be higher under either agency regime. Aggregate gains...
I analyze the innovation incentives under monopoly and duopoly provision of horizontally differentiated products purchased via bilateral negotiations, integrating the market structure and innovation literature with the holdup literature. I show that competition can improve local...
This paper estimates price-marginal cost mark-ups for Canadian manufacturing industries during the 1970s in order to assess the impact of import competition on domestic market power. The results are mixed. Based on the analysis, there is no consistent evidence that imports had a...
Electric power is the latest -- and largest -- industry in which advances in technology have made extensive regulation obsolete. In particular, it is now possible for customers (e.g., residential consumers and businesses) to select their own electric power supplier, while the...
We compare the well-known first-price auction with a common but previously unexamined exchange process that we term "multilateral negotiations." In multilateral negotiations, a buyer solicits price offers for a homogeneous product from sellers with heterogeneous costs, and then plays...
This report presents the results of a nationwide survey of rent-to-own customers. The survey found that most rent-to-own merchandise is ultimately purchased by the customer, most customers are satisfied with their rent-to-own transactions, and most customers are treated well if they...
Recent theoretical work on retail pricing dynamics suggests that retailers frequently change prices of specific items, even when their costs are unchanged. We extend this theory to explain which particular retail items will be subject to periodic temporary reductions. We then make...

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