Market Investigations

In many economic sectors – the digital industries being first and foremost – the market power of dominant firms has been steadily increasing and is rarely challenged by competitors. Existing competition laws and regulations have been unable to make markets more contestable. The book argues that a new competition tool is needed: market investigations. This tool allows authorities to intervene in markets which do not function as they should, due to market features such as network effects, scale economies, switching costs, and behavioural biases. The book explains the role of market investigations, assesses their use in the few jurisdictions where they exist, and discusses how they should be designed. In so doing, it provides an invaluable and timely instrument to both practitioners and academics.

When to Be Agile: Ratings and Version Updates in Mobile Apps

Lean and agile models of product development organize the flexible capacity to rapidly update individual products in response to customer feedback. Although agile operations have been adopted across numerous industries, neither the benefits nor the factors explaining when firms choose to become agile are validated and understood. We study these questions using data on the development of mobile apps, which occurs through the dynamic release of new versions into the mobile app marketplace, and the apps’ customer ratings. We develop a structural model estimating the dependence of product versioning on (a) market feedback in the form of customer ratings against (b) project and work-based considerations, such as development timelines, scale economies, and operational constraints. In contrast to when they actually benefit from operational agility, firms become agile when launching riskier products (in terms of uncertainty in initial customer reception) and less agile when they are able to exploit scale economies from coordinating development over a portfolio of apps. Agile operations increase firm payoffs by margins of 20% to 80%, and interestingly, partial agility is often sufficient to capture the bulk of these returns. Finally, turning to a question of marketplace design, we study how the mobile app marketplace should design the display of ratings to incentivize quality (increasing app categories’ average user satisfaction rates by as much as 22%). This paper was accepted by Jayashankar Swaminathan, operations management.

Non-radial two-stage network DEA model to estimate returns to scale

Purpose As returns to scale (RTS) describes the long run connection of the changes of outputs relative to increases in the inputs, the purpose of this study is to answer the following questions: If the proportionate changes exist in the inputs, what is the rate of changes in outputs with respect to the inputs’ variations in the two-stage networks over the long term? How can the authors investigate quantitative RTS in the two-stage networks? In other words, the purpose of this research is to introduce a different approach to estimate the performance, RTS and scale economies (SE) in network structures. Design/methodology/approach This paper proposes a novel non-radial approach based on data envelopment analysis to analyze the performance and to investigate RTS and SE in two-stage processes. Findings The findings show that the range adjusted measure (RAM)/RTS approach can identify reference sets for overall systems and each stage. In addition, the models presented in this paper can classify decision-making units and determine the increasing/decreasing trends of RTS. Originality/value The majority of previous RTS studies have been examined in black-box structures and have been discussed in a radial framework. Therefore, in this study, RTS and SE in the two-stage networks are dealt with using an extended RAM approach. Actually, the efficiency and RTS for each stage and the overall model are calculated using the proposed technique.

Brazilian Municipal Expenditure and Scale Economies: Evidence from São Paulo

Advocates of municipal mergers usually claim that considerable economies of scale flow from council consolidations, which result in larger local government organizations. We examined whether scale economies are present in municipal outlays by investigating the expenditure of 644 São Paulo municipal areas using data over the period 2005 to 2017. We find evidence that considerable scale economies characterize municipal expenditure in São Paulo. However, given that population size and population density are positively correlated, it is critical to determine whether or not the influence of population on municipal expenditure arises because of disparities in density. We find that when São Paulo municipalities are decomposed into sub-categories based on different population densities, evidence in favour of scale economies persists. Thus, municipal mergers in the state of São Paulo may result in lower per capita expenditure.

Thailand

Thailand is our primary case of successful extensive development. The impressive volume of Thai-based automotive assembly and vehicle and parts exports, the largest in the ASEAN region, reflects a highly efficient assembly base, dominated by foreign assemblers and component producers and driven largely by growth of capital stock rather than by indigenous productivity. This trajectory has been the result of deliberate policy interventions, such as automotive FDI incentives, excise taxes and tariffs designed to promote scale economies, and cluster-related infrastructure. These policies have been formulated and implemented by relatively cohesive institutional networks motivated by broader economic concerns, especially foreign exchange problems. Yet those same factors have not resulted in intensive growth: a manufacturing complex based at least in part on domestic firms producing parts and components, providing intermediate and capital goods, improving processes, and participating in product design.

Incentive and Restrictive Mechanism of Knowledge Sharing in Basic Education Groups

As a kind of strategic alliance, basic education groups rely on the knowledge sharing and coordination among group members, in addition to the sharing of tangible assets, to promote education fairness and improve education quality. This paper aims to incentivize and restrict the knowledge sharing among group members. Firstly, the authors analyzed the economies of scale, economies of scope, and the economies of connection brought by the knowledge sharing among group members, and summarized the problems and challenges faced by knowledge sharing. Then, the evolution mechanism of the knowledge sharing among group members was studied from the perspective of game theory, and the suggestions were proposed to improve the incentive and restrictive mechanism of the knowledge sharing among group members. The research results shed a new light on the knowledge sharing in basic education groups.