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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6
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1answer
266 views

Labour markets and supply-side policies: too much stress put on the WS push factors?

In reading several macro textbooks, it seems that most of the supply-side policies tend to be focused on the labour supply side (wage setting curve), instead on the firm/labour demand side(price ...
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1answer
38 views

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 ...
5
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2answers
59 views

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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1answer
22 views

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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2answers
50 views

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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1answer
77 views

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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1answer
74 views

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 ...
7
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1answer
668 views

How successful will OPEC's predatory dumping strategy be?

Since the fracking industry in the US has started to grow rapidly, I have heard increasing reports that OPEC is attempting some form of predatory dumping in the hopes of making the fracking industry ...
0
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1answer
102 views

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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1answer
61 views

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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0answers
24 views

Questions about merger simulation with logit demand

I'm trying to learn how to do merger simulation with logit demand. I think I get the concept of it and most of the math, but I'm struggling to put everything together and see how you would actually ...
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2answers
56 views

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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0answers
28 views

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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2answers
122 views

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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1answer
26 views

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 ...
3
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1answer
60 views

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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1answer
69 views

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 ...
4
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3answers
199 views

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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0answers
29 views

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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1answer
20 views

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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0answers
29 views

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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1answer
45 views

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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2answers
233 views

Bertrand Duopoly Equilibrium for Discrete Prices

There are two identical firms, $1$ and $2$, with zero marginal costs. They produce homogenous product, which is demanded by a unit mass of identical consumers, each of which has inelastic unit demand ...
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0answers
36 views

The world's largest companies

There are several criteria (or key figures) to list the world's "largest" companies, giving quite different lists: revenue (in \$) profit (in \$) assets (in \$) market capitalization (in \$) number ...
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0answers
26 views

Industrial Economics Help

I am wondering if I have found q for all 3 firms correctly before I move on. I feel like I am doing something completely wrong, but can't seem to figure out what I truly need to do. (Sorry for the ...
0
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1answer
44 views

Industrial Economics

I am currently struggling trying to find the short-run equilibrium price, output per firm, and profit per firm if $190$ firms supply the market. I am given $p=102-1/2Q$ and $C(q)=5q-6q^2+3q^3$. ...
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0answers
54 views

Are there any studies, academic papers or articles that defy “common” knowledge", i.e that patents give an incentive for R&D to private business?

In Economic Growth and particularly dynamic optimization. My professor taught us that an intertemporal allocation is a dynamic optimum(Pareto Optimum) only if(necessary condition) at any given ...
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1answer
184 views

Stackelberg Oligopoly 3 firms [closed]

Imagine that there are 3 firms in a monopolistic market, F1, F2 and F3. Firms 1 and 2 are incumbent firms and act simultaneously whereas Firm 3 observes the actions of both firms before deciding ...
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1answer
89 views

Help with Monopolistic Competition Proof, Prove Love for Variety

I need some help with a proof. Assume η = 2 and there are just two goods. Verify that the following utility function exhibits Love for Variety tastes, show that: u(λa + [1 − λ]b, λb + [1 − λ]...
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2answers
2k views

Stackelberg with 3 firms

I'm currently trying to solve the following problem: Stackelberg with 3 firms Imagine there are three firms on a monopolistically competitive market. The marginal cost of produc- tion in each ...
3
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1answer
73 views

Understanding agents selecting among markets

Let's say an entrepreneur can choose between starting a business in a competitive market with zero economic profit, and starting a business in a market that is not perfectly competitive with positive ...
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0answers
88 views

Tourist Natives Model

Every night, all 60 inhabitants of a tiny village visit one of the village’s taverns (not necessarily the same tavern) and an average of 75 strangers do the same. Both the villagers and the strangers ...
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4answers
13k views

Nash equilibrium of a Bertrand game with different marginal costs

Consider the following game of Bertrand (price competition): There are two players, $1$ and $2$. Each has a publicly known marginal cost, $c_i$. A strategy is a price, $p_i\in\mathbb{R}$. Player $i$'...
3
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0answers
21 views

Are modern conglomerate mergers better or worse for economic competition?

Modern conglomerate mergers differ from those from decades ago as, even though they takeover smaller companies, they have a more narrow focus on related business and, in order to be successful, have ...
9
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1answer
87 views

Competition and welfare - empirical evidence

Consider the following claims: less competitive markets deliver worse outcomes for consumers, less competitive markets deliver lower social welfare, less competitive markets deliver higher prices/...
3
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1answer
119 views

3rd Degree Price Discrimination

I came across a True/False question in my economics problem set: Is the following statement true or false? "A monopolist can practice third-degree price discrimination in the two markets it ...
1
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1answer
29 views

What is an Economic Sector?

I am of the understanding that an Economy is broken down as follows: Traditional; Command; Market; Mixed. Each Economy being made up of Sectors, which in turn, are made up of Industries. Simply put,...
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0answers
39 views

What is the difference between personal consumption expenditure price and PCE quantity?

What is the difference between these two things? How is PCE price different from PCE quantity? Also, I am confused about the difference between PCE quantity and measure of real output. For example, ...
1
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1answer
54 views

Calculating Market Concentration without sales data

I want to calculate market concentration (HHI and C4) but I don't have sales data. Is it accurate to use the share of establishments of each firm as a proxy for market power? Could you list some ...
2
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1answer
469 views

Mixed Cournot/Bertrand Duopoly [closed]

I am learning basic Oligopoly models. I know that : In Cournot model firms set output - output is the strategic variable. In Bertrand model firms set prices - price is the strategic variable. ...
6
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2answers
47 views

Literature on the effects of third-party certification on industrial dynamics?

Is there any comprehensive theoretical studies on how third-party certification adoption may affect industrial performance/dynamics of an industry?
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2answers
205 views

Solving a Cournot Equilibrium, the case of Q=q1+q2, Q(q1,q2)=q1+q2

I am struggling with the differentiating between when to use $ Q=q_1+q_2$ and $Q(q_1,q_2)=q_1+q_2$ For a 2 player cournot game, given $$ P=a-bQ, with \ MC's \ c_1 \neq c_2 $$ I find the ...
2
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1answer
159 views

Articles about the economics of non-compete contracts

Today I read in a non-scientific article that Amazon requires some physical workers to sign non-compete agreements. I used to think that the idea behind allowing non-compete clauses in contracts is to ...
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1answer
89 views

Where can I look up a companies Herfindahl index?

Where can I find Herfindahl indexes on companies (current or past)? Are there any published lists put out by a research institution?
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1answer
153 views

Intuition behind a cournot duopoly nash equilibrium producing a higher output than a monopoly?

I am just wondering if someone could explain the descriptive, not mathematical intuition behind why a cournot equilibrium for a duopoly produces a higher level of output than a monopolist but lower ...
3
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0answers
71 views

Firm Dynamic Optimization Problem

A firm has received an order at time $0$ for $M$ units of product to be delivered by time $T$. It seeks a production schedule for filling this order at minimum cost. Let $x(t)$ denote inventory ...
3
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1answer
222 views

Math in Melitz and Ottaviano (2008)

I am reading Melitz and Ottaviano (2008), but I find it hard to understand some math in the model. The preference is given by : , which implies a demand function: Then the paper says the "inverse ...
2
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1answer
150 views

Clarification about demand elasticity and monopoly

I am having a difficulty understanding certain things about elasticity and would like to clarify them. What I understand. Elasticity is the percent change in quantity due to a percent change in price,...
2
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1answer
30 views

Market Power and Prices in the US

I'm trying to get a measure of market power in the US. Here's what I'd be interested in, ranked from best (what I'm really after) to worst (stuff that kind of hints at my measure, but isn't really it. ...
0
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1answer
42 views

Capital mobility across industries and equalization of profit rates

What are some restrictions to the competitive restoration of proportionality across industries in regards to capital mobility? What is generally impeding the free flow of capital from less profitable ...