Questions tagged [industrial-organisation]
Industrial organization is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the perfectly competitive model, complications such as transaction costs, limited information, and barriers to entry of new firms that may be associated with imperfect competition.
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Is the S-curve applicable to the development of the electronics industry?
There are a lot of biological, social, economic and technological phenomena described by the S-curve.
For example a dam building. There is an obvious limitation in the number of convenient places to ...
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Dynamic price competition with capacity constraints
I have a dynamic price (Bertrand) competition with 2 players with the same capacity constraints. Grim trigger strategy is to set monopoly price at t=0 or if the monopoly price was set by both players ...
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Can There Be a Dominant Strategy If Both Firms Choose to Match the Lowest Price in the Market in a Bertrand Model of Competition?
In a Bertrand duopoly model where firms choose to price match ie match the lowest price in the market, any price p∈[c,Pm] (where c is cost and Pm is the monopoly price) can be a Nash. Hence, there are ...
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Why does the Rocket Internet purposefully avoid the market of China?
I am studying a very interesting entrepreneurial case: Rocket Internet, and one thing that confuses me is that they do business outside the U.S.A. and China.
“We identify and build proven Internet ...
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What is max here, and how did they derive the first order condition from it?
Hello. Someone sent this on a discord server that I am on, and I couldn't make heads or tails of this. I found the book it is from on studocu; solutions to Cabral's Industrial Organisations, 2nd Ed. ...
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Measuring Degree of Product Differentiation/Market Segmentation
In context of Hotelling location model, if firms are located at end points (maximal differentiation), then, except the customer(s) at the centre, all others have a strictly preferred seller.
Suppose ...
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How to control for prices when they are endogenously set by hospitals?
Basically, I want to see how changes in hospital prices for a certain procedure can be used to predict quality of treatment. Problem is in my sample, the private hospitals are price makers so any ...
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How to calculate the maximizing number of firms in a Cournot competition?
I am trying to figure out the answer to the following two questions with given context:
'In a scenario in which there exist multiple identical firms with a large supply of products available, each ...
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How do we choose appropriate moment conditions for GMM estimation?
In certain conditions, especially with just-identified models, the appropriate moment conditions are in some sense obvious. This is the case, for instance, when we recover parameters from the linear ...
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What does this notation mean?
I am following an IO paper and, at some point, a function $h(\cdot)\in \mathbb{R}^2_+$ is defined as
$$h(t) = \cases{\mathbb{1}(t=k)*|\mathbb{N}(0,1)|\\\mathbb{1}(t<k)*|\mathbb{N}(0,1)|}$$ where $k\...
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Modelling common incentives and strategic manipulation
There are many situations in the markets when small or larger portions of traders collude and make a strategy manipulation through communication, even they have heterogeneous endowments and ...
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Why does negative derivative of AC with respect to q imply Economies of scale (Monopoly)
In the following Industrial organization exercise form Church and Ware chapter 4 exercise 2
(preliminary info: C(q) = cost function; f = fixed costs; c = marginal costs; q= quantity of goods produced)...
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Data on collective bargaining - trade union density at regional/sector level
Do you know any open-access dataset on collective bargaining coverage and/or trade union density at regional and/or sector level in European countries?
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Two-sided market framework
I have a very basic question about the elasticity of demand/participation in the two-sided market framework, as created by Weyl (2010) and described by Jullien, Pavan, and Rysman (2021). Using the ...
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Which industries are widely agreed upon to require central regulation on a national basis, regardless of economic or political system?
For example, the most straightforward cases of widely accepted centrally controlled regulation on a national basis would be the nuclear power generation and nuclear fuel supply industries. Where every ...
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Salop (1979) model for labor markets
Can the Salop (1979) model also be applied to labor markets or is there any reason why it should not be?
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Is there a descriptive / axiomatic approach to barriers to entry? If so, who are the most prominent authors?
I have been trying to understand what makes something a barrier to entry in precise terms. I ideally would like some kind of "theory of barriers to entry." Not just examples, which are easy ...
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How is market share of a firm calculated *in practice*?
As stated in the title: How is the market share of a firm calculated in practice?
By emphasizing "in practice", I'm most interested in the market share figures that show up in companies' ...
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Sequential and simultaneous price competition
Frims 1 (leader) and 2 (follower) compete in price with product differentiation
• Find the equilibrium price, quantity and profit when they choose price simultaneously and sequentially.
q1=100-10p1+...
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Bertrand competition with homogenous good and Hotelling's spatial model
Q. There are a 1000 costumers uniformly distributed on [0,3]. Each wants to buy 1 ice-cream. There are two firms which produce ice-cream costlessly and firm i charges p_i. Consumer's effective price ...
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Interpreting cross-partial derivatives
Consider a duopoly setting. Firm $1$ has the following profit equation:
$\pi_1(q_1,q_2,v_1)=(a+v_1-q_1-\gamma q_2)q_1 .$
Where $a>0$ is a utility parameter, $q_i\geq0$ is the quantity and $v_i\geq0$...
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What does "endogeneity of the industry structure" means?
Dong,2019,page 899 documented that:
We estimate Export Market Leniency Laws as the weighted average of the passage of leniency
programs in all other countries, excluding the country in which the firm ...
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Selection of functional form for utility function in theoretical model
I am starting to work on an IO model and I am puzzled in front of the choice of the appropriate utility function. Since the concept of utility is so abstract, and one cannot directly refer to ...
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Bibliography on Industrial Policy
I'm looking for an introduction to Industrial Policy, at the advanced undergraduate level, beginning graduate level.
I've tried the google scholar, and unfortunately all the results I read were just ...
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Drug pricing, amount of sales and R&D costs
I've recently learned about Zolgensma drug that is currently priced at \$2.1 million (read more here)
Since the biggest factor in price is probably R&D costs I wonder why won't they decrease the ...
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Profit-maximization for a monopoly
Between two countries, Richland and Poorland, with a strict ban on cross-border sales agreed with the Poorlandian government. The respective demand functions for both countries are:
$Q_{poor} = 10 - ...
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Airline competition and econometrics
If I wish to understand the competitive constraints of airline A on airline B, what sort of econometric relationship should I investigate ?. Immediately what comes to mind is to look at the impact of ...
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How would a firm increase price in such a scenario?
I have the following question: If a firm with a lower marginal cost wants to increase prices in a homogenous goods industry in which demand is perfectly inelastic and supply is in excess, what should ...
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Does a competitive advantage lead to abnormal profit? [closed]
Given that organisational capital is specific and difficult to replicate it is considered a competitive advantage (see e.g. here)
According to Wang (2014)
competitive advantage is obtained when an ...
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Does the formation of a firm imply the creation of organisational capital?
According to Ronald Coase (The Nature of the Firm, 1937) firms are created because this reduces transaction costs compared to market transactions. Transactions are internalised because of the ...
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Two part tariff-income effects
I understand that a monopolist optimally sets a two-part tariff by pricing at marginal cost and then extracting CS as a lump sum fee. However, wouldn't the lump sum fee induce a decrease in consumer ...
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Binary-continuous choice model in empirical consumer choices
There are quite a lot empirical research based on discrete choice models, in which the consumer selects one of J alternative goods to maximize her indirect utility. The key assumption of these models ...
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Why do different product-markets record different rates of return if the assumption of competitive markets hold?
I'm a new economics student, and have become fascinated by the field of Industrial Organization. To that end, I'm reading through the Carlton and Perloff Modern Industrial Organization text book. In ...
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How to graph a monopoly that does not exhibit the properties of a contestable market?
This question is not a homework question. I am taking a course in industrial organization, and the textbook/professor have given an illustration of a monopoly that is a contestable market. However, I ...
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Sequential price setting SPNE
Firms A and B are in an oligopoly. They both face the linear market demand curve $X=A-\alpha P$, where $X$ is total market demand, and $P$ is price. Assume constant marginal costs $C_{A}$ and $C_{B}$, ...
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Prices set by firms are the same in a Salop circle. But why?
Trying to calculate the prices charged by each firm, I don't understand why the solution argues that all firms set the same price. If I use the assumption that they are the same, I can figure out the ...
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What is the latest thinking on the economic calculation problem? [closed]
Eric Posner and Glen Weyl write in the epilogue of Radical Markets (2018) that they “remain confident that for at least a few generations markets – Radical Markets, that is – will remain the best ...
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Quasi-concavity of profit function
I'm doing a simple exercise from my textbook: suppose the revenue function is $R(p)=p^{1-\epsilon}$ with $\epsilon > 0$. Suppose the cost function is convex. Show that the profit function is quasi-...
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Who is working right now? (coronoavirus)
Is there any research, graphs, or any formal (non-opinion) information on where I can get information on what people are working right now? I want to know, who is still collecting a paycheck.
I am a ...
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Statistical distribution of firms by revenue in competitive market
I would like to produce a simple distribution of competitive market firms based on their revenues. I know the number of firms in the market n, the total market ...
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Definition of covered market
I do Industrial Organization course, and I've seen the phrase "market is covered" several times in my lecture slides, however, I'm struggling to find the formal definition of "covered market" and the ...
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What happens to consumer surplus and profits as firms get more information in Hotelling's duopoly model?
In the Duopoly on the line [0,1] with customers uniformly distributed, with firm A on the 0 side and firm B on 1's side, we know that if the firms have no information about the customer, there will be ...
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Interpretation of $\frac{\partial }{\partial p_1}Q_1(p_1, p_2)/\frac{\partial}{\partial p_2} Q_1(p_1, p_2)$
I am interested in an economic interpretation for the ratio of partial derivatives of a demand function $Q_1(p_1, p_2)$, which is
\begin{equation}
t=\frac{\frac{\partial}{\partial p_1}Q_1(p_1, p_2)}{\...
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Economic Profit and the Return on Invested Capital
In my finance classes, I always learned that the a firm earning an "economic profit" is one for which its return on invested capital (ROIC) is greater than it's opportunity cost of capital (usually ...
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Quasi concavity of utility function
I am looking for a method to prove that the following function is quasi-concave in $\alpha$ (or find conditions under which it is true):
$ \pi=F(-k)(f(0)^2-f(h(1-\alpha))^2)+ \frac{1}{2}-\frac{1}{2}...
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Books friendly to self-studying Industrial Organization
I'm currently an undergraduate freshman looking for resources to self-read Industrial Organization. I've read Varian's undergraduate book cover-to-cover and have a decent understanding of basic game ...
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How to go from demand elasticities to a demand function? (merger simulation)
I am reading this paper: https://econpapers.repec.org/article/oupjleorg/v_3a10_3ay_3a1994_3ai_3a2_3ap_3a407-26.htm (Werden and Froeb 1994) about merger simulation.
The paper is above my level, so I'...
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Are there examples of strategies where a combination of third degree pricing and two-part tariffs are used together?
Of course, I am only interested in instances where the combination of the two strategies ultimately lead to higher profits than if the monopolistic firm had used only one.
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Has contest theory ever been used to design real-world contests?
Contest theory, very much like auction theory, studies how people act in a contest and the properties of such a competition. There is a large literature that investigates different aspects of the ...
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Sequential Price Competition for Perfect Complements
There are two goods, $1$ and $2$ produced by two firms at zero marginal costs. The goods are perfect complements. The demand for each goods is: $Q_1=Q_2=a-(p_1+p_2)$. The prices are set sequentially, ...
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