scholarly journals The Welfare Effects of Use-or-Lose Provisions in Markets with Dominant Firms

2013 ◽  
Vol 5 (1) ◽  
pp. 175-193 ◽  
Author(s):  
Ian Gale ◽  
Daniel P O'Brien
Keyword(s):  
Wireless Communications ◽  
Welfare Effects ◽  
Productive Capacity ◽  
Dominant Firm ◽  
Aggregate Output ◽  
Stated Objective ◽  
Total Surplus ◽  
Dominant Firms ◽  
Limit Capacity

A use-or-lose provision requires that firms employ a certain minimum fraction of their productive capacity. Variants have been used by regulators in the airline and wireless communications industries, among others. A typical stated objective is to limit capacity hoarding, thereby increasing aggregate output and welfare. When the dominant firm is more efficient than fringe firms, we find that imposing a use-or-lose provision induces the dominant firm to acquire capacity from the fringe, which causes aggregate output to fall. When the dominant firm is less efficient than the fringe, aggregate output rises. In both cases, total surplus may rise or fall. (JEL D43, K21, L13, L93)

scholarly journals Braucht Deutschland einen Kapazitätsmarkt für eine sichere Stromversorgung?

2013 ◽  
Vol 62 (3) ◽  
Author(s):  
Justus Haucap
Keyword(s):  
Electricity Market ◽  
Market Failure ◽  
Low Cost ◽  
Dominant Firm ◽  
Elasticity Of Demand ◽  
Capacity Market ◽  
Dominant Firms ◽  
Short Run ◽  
Wholesale Electricity Market ◽  
Strategic Reserve

AbstractThis paper argues against the rapid implementation of capacity mechanisms in Germany. There is no systematic, non-temporary market failure in the German wholesale electricity market which could justify such a Government intervention. Neither the low elasticity of demand nor debatable public good characteristics nor the potentially missing acceptance of price spikes can support the idea of that the energy only market may fail to guarantee reliability of supply. In addition, there are currently no resilient signs of any shortage of supply. In contrast, the German wholesale electricity market is still characterized by over-capacities. The worldwide experience with capacity mechanisms also demonstrates most of all that no capacity market design is ever stable, but subject to change in often quite short intervals. Potential low-cost options to safeguard security of supply include a strategic reserve against generation failures. In addition, the Federal Cartel Office should correct its position that dominant firms must not offer electricity at a price above the short-run marginal cost. Such a prescription forecloses the market and chokes off investment and would in most other cases be regarded as an anticompetitive foreclosure strategy of a dominant firm.

The Welfare Effects of Bundling in Multichannel Television Markets

2012 ◽  
Vol 102 (2) ◽  
pp. 643-685 ◽  
Author(s):  
Gregory S Crawford ◽  
Ali Yurukoglu
Keyword(s):  
Welfare Effects ◽  
Total Surplus ◽  
Consumer Benefits ◽  
Short Run ◽  
Using Data ◽  
A La Carte

We measure how the bundling of television channels affects short-run welfare. We estimate an industry model of viewership, demand, pricing, bundling, and input-market bargaining using data on ratings, purchases, prices, bundles, and input costs. We conduct simulations of à la carte policies that require distributors to offer individual channels for sale to consumers. We estimate that negotiated input costs rise by 103.0 percent under à la carte. These higher input costs offset consumer benefits from purchasing individual channels. Mean consumer and total surplus change by an estimated —5.4 to 0.2 percent and —1.7 to 6.0 percent, respectively. (JEL D12, L11, L51, L82, M31)

scholarly journals Operating under the radar in spheres of influence: Taking advantage of industry leaders’ market domains

2018 ◽  
Vol 18 (2) ◽  
pp. 275-300 ◽  
Author(s):  
Jaime Gómez ◽  
Raquel Orcos ◽  
Sergio Palomas
Keyword(s):  
Banking Sector ◽  
Retail Banking ◽  
The Other ◽  
Dominant Firm ◽  
Similar Treatment ◽  
Fast Growing ◽  
Spheres Of Influence ◽  
Market Dominance ◽  
Dominant Firms ◽  
Industry Leader

Industry leaders enact mutual forbearance by establishing spheres of influence where the dominant industry leader is bestowed market dominance in exchange for similar treatment in the spheres of the other industry leaders. Because of this, spheres of influence are markets with lower rivalry levels. Accordingly, non-dominant firms operating within them benefit from their favorable competitive conditions. The extent to which a non-dominant firm benefits from its location in spheres of influence varies according to the competitive tension perceived by the industry leader that dominates the sphere. Large and fast-growing non-dominant firms will generate competition tension. Consequently, the industry leader of the sphere could direct its hostility toward them, reducing the potential returns that they may obtain from operating in spheres of influence. Our analyses in the Spanish retail banking sector show that non-dominant firms operating under the radar of industry leaders benefit more from their presence within spheres of influence.

Political Representation in Concentrated Industries: Revisiting the “Olsonian Hypothesis”

2003 ◽  
Vol 5 (3) ◽  
pp. 261-286 ◽  
Author(s):  
David M. Hart
Keyword(s):  
Political Theory ◽  
Information Flow ◽  
Political Representation ◽  
Political Process ◽  
Threat Perception ◽  
The Political ◽  
Dominant Firm ◽  
Dominant Firms ◽  
America Online ◽  
Longitudinal Case Studies

This paper considers whether highly concentrated industries are better represented in the political process, as Olson's Logic of Collective Action suggests, and, if they are, whether this is so for the reasons that the Logic claims. It begins with a review and critique of the quantitative literature that has largely tried and failed to substantiate Olson's view. The bulk of the paper consists of five longitudinal case studies of firms that dominate or have dominated industries: IBM, Intel, Microsoft, America Online, and Cisco. The cases suggest that there is merit to the Olsonian view, but that alone it does not constitute an adequate political theory of the concentrated industry or the dominant firm. Additional variables drawn from organizational and institutional theory need to be incorporated into such a theory, including variables that bear on the allocation of attention, threat perception, and information flow within dominant firms.

4 Abuse of Dominance

2012 ◽  
Author(s):  
Geradin Damien ◽  
Layne-Farrar Anne ◽  
Petit Nicolas
Keyword(s):  
Price Discrimination ◽  
Relevant Market ◽  
Dominant Firm ◽  
Dominant Position ◽  
Dominant Firms ◽  
Economic Tools ◽  
Firm Conduct ◽  
Abuse Of Dominance ◽  
Article 102 Tfeu

This chapter focuses on Article 102 TFEU, which prohibits dominant firms from abusing their dominant position. Two elements need to be present for Article 102 to apply to a given firm conduct: (i) that firm must be dominant on one or several markets and (ii) it must have abused that dominant position. The first step in the assessment of dominance is to define the relevant market(s). Once such markets have been defined, various economic tools can be used to determine the extent to which one or several firms are dominant on them. For Article 102 to apply, it must be demonstrated that the dominant firm has committed one or several abuses on the market(s) in question. Article 102 prohibits two main categories of abuses: exclusionary abuses (Art 102(b) and (d)) and exploitative abuses (Art 102(a)). Article 102 also prohibits certain forms of price discrimination.

scholarly journals Domestic Debt Sustainability and Private Sector in Nigeria: Implications on Employment.

2018 ◽  
pp. 842-848
Author(s):  
Abiola John Asaleye ◽  
Adenike Omowumi Oladipo ◽  
Barnabas Olusegun Obasaju
Keyword(s):  
Private Sector ◽  
Foreign Debt ◽  
Negative Relationship ◽  
Private Investment ◽  
Productive Capacity ◽  
Debt Sustainability ◽  
Aggregate Output ◽  
Long Run ◽  
Domestic Debt ◽  
A Chain

A strand of literature supported sourcing of fund internally via debt relative to foreign debt. The principal and interest on such internal debt is a reinvestment into the economy which would frequently have a chain investment effects. This study investigates the domestic debt sustainability level, crowding out effect and its implication on employment in Nigeria. Through the application of Maastricht Treaty Indicators, it was revealed that the domestic debt level in Nigeria is not sustainable. The long-run equation, using employment as the dependent variable showed that there is a negative relationship with domestic debt, employment, aggregate output and credit to private. The correlation analysis shows that aggregate output has a negative relationship with employment and credit to the private sector. The findings were in line with previous studies that emphasised the need for broad-based growth in Nigeria. The implications of the result showed that the gradual increase in domestic debt in Nigeria has a crowding-effect on the private investment which had resulted in negative implications on employment generation through the private sector. Hence, the study recommended the need for a proper channel of investment through domestic debt with the aim to increase the productive capacity of the economy, Among others.

scholarly journals Domestic Debt Sustainability and Private Sector in Nigeria: Implications on Employment

2019 ◽  
pp. 1144-1150
Author(s):  
Abiola John Asaleye ◽  
Adenike Omowumi Oladipo ◽  
Barnabas Olusegun Obasaju
Keyword(s):  
Private Sector ◽  
Foreign Debt ◽  
Negative Relationship ◽  
Private Investment ◽  
Productive Capacity ◽  
Debt Sustainability ◽  
Aggregate Output ◽  
Long Run ◽  
Domestic Debt ◽  
A Chain

A strand of literature supported sourcing of fund internally via debt relative to foreign debt. The principal and interest on such internal debt is a reinvestment into the economy which would frequently have a chain investment effects. This study investigates the domestic debt sustainability level, crowding out effect and its implication on employment in Nigeria. Through the application of Maastricht Treaty Indicators, it was revealed that the domestic debt level in Nigeria is not sustainable. The long-run equation, using employment as the dependent variable showed that there is a negative relationship with domestic debt, employment, aggregate output and credit to private. The correlation analysis shows that aggregate output has a negative relationship with employment and credit to the private sector. The findings were in line with previous studies that emphasised the need for broad-based growth in Nigeria. The implications of the result showed that the gradual increase in domestic debt in Nigeria has a crowding-effect on the private investment which had resulted in negative implications on employment generation through the private sector. Hence, the study recommended the need for a proper channel of investment through domestic debt with the aim to increase the productive capacity of the economy, Among others.

Sign in / Sign up

Export Citation Format

Share Document