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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116 views

Cournot game with 2 firms

I have given 2 firms in a market with constant marginal costs and no fixed costs market demand has $D(p)$ The firms play a Cournot game I'm supposed to Calculate the equilibrium quantity for each ...
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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. ...
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472 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. ...
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25 views

Setting prices in mobile telephony

Can someone please explain or provide some useful link on factors affecting setting prices of mobile telephony services?
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186 views

Find Variable Cost per Unit

I am trying to do this problem, and I am not getting the answer. I need to find the fixed cost of system 1, and system 2. I know that the fixed cost will be the y-intercept of the equation. Fixed ...
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1answer
46 views

Does a competitive advantage lead to abnormal profit?

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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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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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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673 views

Cobb-Douglas production function with continuum of goods

I'm trying to derive the solution to a final producer with unit elasticity of substitution and a continuum of inputs (of measure $x$). She minimizes input costs, given an output of $q$. $$ \min_{\{y(...
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31 views

Is there a standard way of classifying industries into primary, secondary, and tertiary?

For example, does any government (or academic) have a mapping from industry to sector. For example, mining is primary industry, and retail is tertiary, and so on...
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48 views

Estimating Demand for Goods with n Choices

I have a data set containing n observations (rows) of mobile applications. The dependent variable is the number of installations -- the variable is categorical (with more than 2 categories). Therefore ...
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238 views

STATA: Estimation of Own-Price and Cross-Price Elasticities for Logit, Nested Logit, and BLP Models

I am working with some data on automobile sales and characteristics in a small country. It is an unbalanced panel dataset taken over 6 years and over 5 market segments. I am trying to construct some ...
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Symmetric Nash Equilibrium in Stahl (1996)

Let $F(p)$ denote the distribution of prices in a market, $\pi(p, F)$ are profits choosing $p$ given distribution $F$. $E\pi(p,F)$ is defined to be $$ E \pi(p, F) = R(p) \psi(p, F)$$ where $R(p) = p ...
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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 ...
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1answer
55 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 ...
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1answer
28 views

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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1answer
76 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 ...
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92 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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1answer
126 views

When a demand function is split, how do we algebraically change function

For example, in tacit collusion for a Bertrand situation, demand would be split between the two colluding firms. How would the reflect upon the demand function? For example D = 100 - 2Q, and for ...
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1answer
32 views

Developmental studies and industrial policy for the highly developed countries - research trends?

Developmental studies usually is field of reasearch whose object is developing countries and industrial policy studies similarly are attributed to the developing countries or the things of the past. ...
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1answer
41 views

:History: Industry threatening to leave if social change takes effect

With growing inequalities and salary gap, left-wing politicians are asking for social reforms in some countries (I am thinking of France). Social reform include: equal pay for women, maternity leave,...
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1answer
52 views

Directed search with privately informed buyers and capacities

My question seems to be a basic one and there should be a rather well-known reference in the (IO or labor) search literature. I will upvote (and comment on) any relevant answer and I will accept an ...
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1answer
27 views

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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1answer
62 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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1answer
27 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 ...
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1answer
116 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 ...
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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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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
165 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 ...
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1answer
95 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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1answer
135 views

Cournot model with piecewise inverse demand

Do you know if there exist results for Cournot oligopoly (or duopoly) when the inverse demand is a piecewise continuous? Something of this type $P(Q) = \alpha-\beta Q$ (if $0\leq Q<Q'$) $P(Q) = ...
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42 views

Quality Provision Game

A seller owns a single unit of an invisible good. It is worth $v(s)$ to a buyer, where $s ∈ R^+$ is the quality of the good. The function $v(·)$ is strictly increasing and strictly concave with $v(0) =...
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223 views

Short-run price competition with capacity contraints

I am doing an undergrad course in Industrial Organization and at the end of the chapter on Short-run price competition (Bertrand and Cournot models mainly), there is a question with which I'm ...
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1answer
762 views

University course references for Market Structure/Industrial Organization

Are there any books that are used in University-level courses that contain a detailed analysis of market structure ( Perfect competition , Monopoly and so on)?
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200 views

Market structure and price setting: Imperfect competition in the final good sector

I'm looking at an economy with two sectors. The intermediate good is produced under perfect competition and Cobb-Douglas production. There is a fixed-cost for producers to enter the final market. ...
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1answer
64 views

Manufacturing economics book?

I am interested in manufacturing economics - suppose I have to built an engine, I would like to learn a systematic approach to break down what the costs of building an engine would be and how I could ...
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1answer
206 views

Kimball (1995) Specification of Final Good Production

Kimball (1995) defines production of the final good ($Y$) with intermediate goods $y_l$ in his equation (1) as $$ 1 = \int_0^1 G\left(\frac{y_l}{Y}\right) dl $$ with $G(1) = 1$, $G'(x) > 0$ and $...
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18 views

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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0answers
32 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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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 ...
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103 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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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, ...
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1answer
341 views

Collusion, deviation from equilibrium

Two firms can produce either low (L), medium (M) or high (H) quantity. The payoff matrix is given by: What is the outcome of this game if firms play only once? Suppose the game is played for infinite ...
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85 views

Price discrimination

If I have 3 consumers who I want to sell package 1, 2 and 3 to respectively. Meaning consumer 1 I would like to sell package 1 to, consumer 2 I would like to sell package 2 to and so on. The packages ...
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21 views

Microeconomics and management science of professional open source companies?

Are there research (and stories more broadly) about professional open source companies? To what types of products their are appropriate, what licensing schemes to choose? How to managed patents and IP?...
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173 views

How to solve model with a final good (in a perfect competition), and intermediate goods (monopolistic competition)?

Let's imagine there's only one final good produced by one firm, in a perfect competition market. In the intermediate market, we have $N$ goods which are produced and used as factor inputs for the ...
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382 views

How to compute Social Welfare in this model?

The first part of this scientific article analyzes reward-based crowdfunding. The assumptions are: Seller is a monopolist Unit mass of consumers Unit demand Two periods Individuals are identified by $...
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83 views

Menu-pricing with three consumer groups

I want to analyze the following setting: An entrepreneur (with monopoly power) sells a product in two periods. In period 1 there are two consumer groups (denoted by 1 and 2) and in period 2 there is ...
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22 views

Is there a simple way to write a model with firms/sectors with different demand elasticities?

I would like to write down a model where there are firms with different demand elasticities: For some firm's total profits increase and decrease a lot with increases and decreases in demand for their ...
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1answer
52 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 $C_{B}$, ...