Abstracts of published and forthcoming articles
·
"Competition and the Relative Productivity of Large and Small Firms", Applied Economics, vol. 43 (2011), pp. 3253-3264.
Abstract: Using a comprehensive dataset on the
incidence of price-fixing across British manufacturing industries in the 1950s,
I compare collusive and competitive industries and find evidence of a negative
relationship between collusion and the labour productivity of larger firms
relative to smaller firms. In particular, collusion is associated with a
reduction or even a reversal of the productivity gap between larger and smaller
firms. This result is robust to controlling for the potential endogeneity of collusion.
- "Downstream Merger and
Welfare in a Bilateral Oligopoly", International Journal of
Industrial Organization, vol. 28 (2010), pp. 230-243.
Abstract: I analyse the effects of a downstream
merger in a differentiated oligopoly when there is bargaining between
downstream firms and upstream agents (firms or unions). Bargaining outcomes can
be observable or unobservable by rivals. When competition is in quantities,
upstream agents are independent and bargaining is over a uniform input price, a
merger between downstream firms may raise consumer surplus and overall welfare.
However, when competition is in prices or
the upstream agents are not independent or
bargaining is over a two-part tariff or
bargaining covers both the input price and the level of output, the standard
welfare results are restored: a downstream merger always reduces consumer
surplus and overall welfare.
- "Asymmetric Multiproduct Firms, Profitability and Welfare", Bulletin of Economic Research, vol. 61 (2009), pp. 139-150.
Abstract: In a differentiated multiproduct Cournot duopoly with linear demand, industry profit usually
falls (even though concentration rises) when the distribution of products
across firms becomes more asymmetric, if the products are not very
differentiated or the total number of products is large. Consumer surplus and
overall welfare always fall as the degree of asymmetry increases. These results
contrast with the conventional wisdom on the effects of firm heterogeneity and
the links between concentration and industry profits.
·
"The
Effect of Competition on Wages and Productivity: Evidence from the
Abstract: This paper examines the impact of
competition on wages and productivity using a panel data set of
- "Downstream Competition,
Bargaining and Welfare", Journal of Economics and Management
Strategy, vol. 17 (2008), pp. 247-270.
Abstract: I analyse the effects of downstream
competition when there is bargaining between downstream firms and upstream
agents (firms or unions). When bargaining is over a uniform input price, a
decrease in the intensity of competition (or a merger) between downstream firms
may raise consumer surplus and overall welfare. When bargaining is over a
two-part tariff, a decrease in the intensity of competition reduces downstream
profits and upstream utility and raises consumer surplus and overall welfare.
In both cases, standard welfare results of oligopoly theory can be reversed:
less competition can be unprofitable for firms and/or beneficial for consumers
and society as a whole.
·
"Piecemeal
Multilateral Environmental Policy Reforms under Asymmetric
Oligopoly" (with
Abstract: We develop a
general two-country model with oligopolistic interdependence in which a fixed number of firms make their output and emission decisions
simultaneously. In this framework, we examine the effect of multilateral
reforms of emission taxes on global emission levels. We find that in the
presence of sufficient asymmetry in pollution intensities between the two
countries, a proportional
multilateral increase in emission tax rates can increase global emission levels.
However, a multilateral equal
increase of emission tax rates unambiguously reduces global emission levels. We
also consider the case of free entry and exit of firms, and find a rule of
multilateral reforms which unambiguously lowers total emission levels.
·
"Price
Competition, Innovation and Profitability: Theory and UK Evidence", in
S. W. Salant and M. C. Levenstein,
eds, Cartels,
Edward Elgar, 2007.
Abstract: This paper
examines the effect of price competition on innovation, market structure and
profitability in R&D-intensive industries. The theoretical predictions are
tested using UK data on the evolution of competition, concentration,
innovations counts and profitability over 1952-1977. The econometric results
suggest that the introduction of restrictive practices legislation in the UK
had no significant effect on the number of innovations commercialized in
previously cartelized R&D-intensive industries, while it caused a
significant rise in concentration in these industries. In the short run
profitability decreased, but in the long run it was restored through the rise
in concentration.
·
"In
Which Industries is Collusion More Likely? Evidence from the UK", Journal
of Industrial Economics, vol. 51 (2003), pp. 45-74.
Abstract: I examine the factors facilitating or
hindering collusion using a comprehensive data set on the incidence of
price-fixing across UK manufacturing industries in the 1950s. The econometric
results suggest that collusion is more likely the higher the degree of capital
intensity and less likely in advertising-intensive than in low-advertising
industries. There is also some evidence of a non-monotonic relationship between
market growth and the likelihood of collusion. There is no clear link between
concentration and the incidence of collusion.
·
"Comparing
Bertrand and Cournot Equilibria
in a Differentiated Duopoly with Product R&D",
Abstract: This paper compares Bertrand and Cournot equilibria in a
differentiated duopoly with substitute goods and product R&D. I find that
R&D expenditure, prices and firms’ net profits are always higher under
quantity competition than under price competition. Furthermore, output,
consumer surplus and total welfare are higher in the Bertrand equilibrium than
in the Cournot equilibrium if either R&D spillovers are weak or products are sufficiently
differentiated. If R&D spillovers are strong and
products are not too differentiated, then output,
consumer surplus and total welfare are lower in the Bertrand case than in the Cournot case. Thus a key finding of the paper is that there
are circumstances where quantity competition can be more beneficial than price
competition both for consumers and for firms.
·
"Quality
Heterogeneity and Welfare", Economics Letters, vol. 78
(2003), pp. 1-7.
Abstract: In a differentiated product oligopoly with
linear demand, an increase in the degree of quality heterogeneity across firms
increases both aggregate profit and consumer surplus. This result is robust to
whether firms set prices or quantities.
·
"Cartel
Stability with Multiproduct Firms",
Abstract: I examine the implications of the presence
of multiproduct firms for cartel stability in a horizontally differentiated
market. Under quantity competition, an increase in the number of varieties
produced by each firm, for any given number of firms, increases the critical
discount factor above which collusion is sustainable by trigger strategies, and
thus makes collusion less likely. This is also the case under price
competition, except for a special case where the number of firms is small and
the products are close substitutes. These results may help explain apparent inconsistencies
between theoretical predictions and empirical evidence on the effect of market
structure and product differentiation on the likelihood of collusion.
·
"Price
Competition and Market Structure: the Impact of Cartel Policy on Concentration in
the UK", Journal of Industrial Economics, vol. 48 (2000),
pp. 1-26.
Abstract: This paper examines the impact of firms'
conduct on market structure. It studies the evolution of concentration in UK
manufacturing following the abolition of cartels using a theoretical framework
based on Sutton's theory of market structure and a panel data set of four-digit
industries over 1958-1977. The econometric results suggest that the intensity
of price competition has a positive effect on concentration in exogenous sunk
cost industries as well as in advertising-intensive and R&D-intensive
industries. The concentration-market size relationship, while negative in
exogenous sunk cost industries, breaks down in industries with high advertising
or R&D intensity.
·
"Price
and Non-Price Competition with Endogenous Market Structure", Journal
of Economics and Management Strategy, vol. 9 (2000), pp. 53-83.
Abstract: This paper examines the impact of the
intensity of short-run price competition and other exogenous variables that affect
gross profit margins, such as the degree of product differentiation and the
consumers' responsiveness to quality, on market structure and advertising or
R&D expenditure. A key result is that more intense short-run competition
can lead to lower concentration in industries with high advertising or R&D
intensity, unlike exogenous sunk cost industries. Also, price competition has a
negative effect on advertising or R&D expenditure. A case study is also
presented which is consistent with the theoretical results of the paper.
·
"Price
Competition, Non-Price Competition and Market Structure: Theory and Evidence
from the UK", Economica, vol. 67
(2000), pp. 437-456.
Abstract: This paper examines the impact of price
competition on advertising/R&D expenditure and market structure. A general
theoretical result is derived, which restricts the space of possible outcomes
regarding the behaviour of concentration and advertising/R&D expenditure
following an intensification of price competition. The theory is tested using UK
data on the evolution of competition, concentration and advertising over
1954-1977. The econometric results suggest that the introduction of restrictive
practices legislation in the UK caused a rise in concentration in previously
cartelised high-advertising manufacturing industries and probably also a fall
in advertising intensity.
·
"Cartel
Stability in Advertising-intensive and R&D-intensive Industries", Economics
Letters, vol. 62 (1999), pp. 121-129.
Abstract: Collusive pricing by firms producing a vertically
differentiated product is less likely the larger the "quality"
difference between them, because, as one firm increases its investment in
product quality or brand image, a low-spending rival is increasingly unlikely
to adhere to a collusive arrangement. This result is robust to whether firms
set prices or quantities and may explain the low occurrence of collusive
pricing in advertising-intensive and R&D-intensive industries.
·
"Innovation,
Firm Size and Market Structure: Schumpeterian Hypotheses and Some New
Themes", OECD Economic Studies, no. 27 (1997).
Abstract: This paper surveys the empirical
literature on the links between innovation, market structure and firm size. The
review shows that there is little evidence in support of the Schumpeterian hypothesis
that market power and large firms stimulate innovations. However, positive
linkages between concentration/size and innovative activity can occur when
certain conditions are met, including high sunk costs per individual project,
economies of scale and scope in the production of innovations, financial
constraints, and difficulties in appropriating innovation rents. Recent
empirical work suggests that R&D intensity and market structure are jointly
determined by technology, the characteristics of demand, the institutional
framework, strategic interaction and chance.
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