SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

Fumagalli, Chiara; Motta, Massimo.

We propose a simple theory of predatory pricing, based on scale economies and sequential buyers (or markets). The entrant (or prey) needs to reach a critical scale to be successful. The incumbent (or predator) is ready to make losses on earlier buyers so as to deprive the prey of the scale it needs, thus making monopoly profits on later buyers. Several extensions are considered, including markets where scale economies exist because of demand externalities or two-sided market effects, and where markets are characterised by common costs. Conditions under which predation may take place in actual cases are also discussed.

Competition In or For the Field: Which Is Better?

Palavras-chave: Anticompetitive Behaviour; Exclusion; Below-Cost Pricing; Antitrust; Financial Economics; K21; L12; L40.

Ano: 2010

URL: http://purl.umn.edu/59420

Engel, Eduardo M.R.A.; Fischer, Ronald; Galetovic, Alexander.

In many circumstances, a principal, who wants prices to be as low as possible, must contract with agents who would like to charge the monopoly price. This paper compares a Demsetz auction, which awards an exclusive contract to the agent bidding the lowest price (competition for the field) with having two agents provide the good under (imperfectly) competitive conditions (competition in the field). We obtain a simple sufficient condition showing unambiguously which option is best. The condition depends only on the shapes of the surplus function of the principal and the profit function of agents, and is independent of the particular duopoly game played ex post. We apply this condition to three canonical examples-procurement, royalty contracts and...

Depreciation erodes the Coase Conjecture

Palavras-chave: Demsetz auction; Double marginalization; Franchising; Joint vs. separate auctions; Monopoly; Procurement; Dealerships; Royalty contracts; Research Methods/ Statistical Methods; D44; L12; L92.

Ano: 2002

URL: http://purl.umn.edu/28406

Karp, Larry S..

If a durable good monopolist produces at constant marginal costs and the good depreciates, there exists a family of Strong Markov Perfect Equilibrium (SMPE) with an infinitesimal period of commitment. One member of this family entails instantaneous production of the level of stock produced in a competitive equilibrium; this is consistent with the Coase Conjecture. Other SMPE in the family entail steady state production at a stock level lower than in the competitive equilibrium. In these equilibria, there may be a jump to the steady state, or the steady state may be approached asymptotically. Monopoly profits are positive in these equilibria, and the Coase Conjecture fails. We contrast this result to other papers which use non-Markov strategies to construct...

Exclusive Dealing: The Interaction between Foreclosure and Investment Promotion

Palavras-chave: Coase Conjecture; Depreciation; Multiple Markov Equilibria; Industrial Organization; Research Methods/ Statistical Methods; D42; L12; Q39.

Ano: 1995

URL: http://purl.umn.edu/6115

Fumagalli, Chiara; Motta, Massimo; Ronde, Thomas.

This paper studies a model where exclusive dealing (ED) can both promote investment and foreclose a more efficient supplier. While investment promotion is usually regarded as a pro-competitive effect of ED, our paper shows that it may be the very reason why a contract that forecloses a more efficient supplier is signed. Absent the effect on investment, the contract would not be signed and foreclosure would not be a concern. For this reason, considering potential foreclosure and investment promotion in isolation and then summing them up may not be a suitable approach to assess the net effect of ED. The paper therefore invites a more cautious attitude towards accepting possible investment promotion arguments as a defence for ED.

Marketing via Friends: Strategic Diffusion of Information in Social Networks with Homophily

Palavras-chave: Monopolization Practices; Vertical Agreements; Financial Economics; L12; L40; L42.

Ano: 2009

URL: http://purl.umn.edu/56213

Chuhay, Roman.

The paper studies the impact of homophily on the optimal strategies of a monopolist, whose marketing campaign of new product relies on a word of mouth communication. Homophily is a tendency of people to interact more with those who are similar to them. In the model there are two types of consumers embedded into a social network, which differ in friendship preferences and desirable design of product. Consumers can learn about the product directly from an advertisement or from their neighbors. The monopolist chooses the product design and price to influence a pattern of communication among consumers. We find a number of results: (i) for low levels of homophily the product attractive to both types of consumers is preferred to specialized products; (ii) the...

Mentorship Alliance between South African Farmers: Implication for Sustainable Agriculture Sector Reform

Palavras-chave: Networks; Word of Mouth; Viral Marketing; Homophily; Diffusion; Social Networks; Random Graphs; Monopoly; Pricing Strategy; Product Design; Marketing; Advertisement; Environmental Economics and Policy; D21; D42; D60; D83; L11; L12.

Ano: 2010

URL: http://purl.umn.edu/96667

Femi, Olubode-Awosola; van Schalkwyk, Herman D..

South Africa's agricultural sector is characterized by a skewed participation of the population. There are vastly white commercial farmers and black subsistence farmers. This is attributed to the past government's intervention in the economy, which lead to exclusion of and discrimination against the blacks regarding access to land. The new government is committed to redressing this imbalance through agricultural reform and development strategies namely land, agrarian, trade and market reforms. One of the government's primary policy thrusts is to provide access to agricultural land for people not adequately represented in the agricultural sector. However, the government lacks sufficient resources to provide land and support services to the farmers been...

Optimal Timing of Cartel Formation Under Uncertainty

Palavras-chave: E6; O1; Q15; P0; L12; Agricultural and Food Policy; Farm Management.

Ano: 2006

URL: http://purl.umn.edu/25725

Cai, Xiaowei; Stiegert, Kyle W..

Understanding how business cartels form and expand is foundational for developing sound deterrence strategies. Past work (i.e. Connor, 2005) has relied on net present value (NPV) methods to evaluate the streams of costs and benefits of forming or joining a cartel. While NPV adequately measure the expected value of future streams of benefits and costs, higher moments of the distribution are also important in understanding agent behavior. Thus, in the presence of uncertainty about future streams and litigation costs, NPV may miss important dimensions that shape the issue. The decision to form or join a cartel is, at least, partially irreversible, because it exposes the firm or its involved managers to litigation on all previous returns and even after the...

Regional asymmetries in farm size

Palavras-chave: Cartel Joining Behavior; Real Options Theory; International Cartels; Industrial Organization; K21; L00; L12.

Ano: 2010

URL: http://purl.umn.edu/61301

Huettel, Silke; Margarian, Anne; von Schlippenbach, Vanessa.

This paper explores how the initial farm size structure affects the exit decision of farms inducing free land capacities, and the allocation of the newly available land resources to the remaining farms in a particular region. We model an agricultural market where large and small firms first decide whether to leave the market or not; in case of continuing in production the farms compete for getting access to additional land resources in a Vickrey auction. We find that larger farms allocate more additional quantity than small farms; the latter are more likely to leave the market. An empirical illustration gives further support and reveals the relation between farm size structure, farm exits and growth of the large.

Slotting Allowances and Buy-Back Clauses

Palavras-chave: Asymmetries; Land market; Capacity allocation; Vickrey auction; Agricultural and Food Policy; Farm Management; Land Economics/Use; L11; L12; Q12.

Ano: 2010

URL: http://purl.umn.edu/62046

Gabrielsen, Tommy Staahl.

In this paper we investigate some of the most frequent arguments for the use of slotting allowances. It has been claimed that slotting allowances can be profitability used to increase retail profits at the cost of increasing consumer prices. A second argument is that slotting allowances can be used by producers of new product to signal the demand potential of their products. We find that in perfect information setting slotting allowances will never arise in equilibrium. Moreover, we question whether slotting allowances can serve as a signalling device. We argue that buy-back clauses are far better instruments to signal profitability of new product launches in the grocery sector.

The iPhone goes downstream: mandatory universal distribution

Palavras-chave: Demand and Price Analysis; L12; L40.

Ano: 2005

URL: http://purl.umn.edu/24580

Karp, Larry S.; Perloff, Jeffrey M..

Apple’s original decision to market iPhones using a single downstream vendor prompted calls for mandatory universal distribution (MUD), whereby all downstream vendors would sell the iPhone under the same contract terms. The upstream monopoly may want either one or more downstream vendors, and, in either case, consumer welfare may be higher with either one or more firms. If the income elasticity of demand for the new good is greater than the income elasticity of the existing generic good, the MUD requirements leads to a higher equilibrium price for both the new good and the generic, and therefore lowers consumer welfare.

Tipo: Working Paper

Palavras-chave: Vertical restrictions; Mandatory universal distribution; New product oligopoly; Institutional and Behavioral Economics; L12; L13; L42.

Ano: 2011

URL: http://purl.umn.edu/123636

When Promoters Like Scalpers

Karp, Larry S.; Perloff, Jeffrey M..

If a monopoly supplies a perishable good, such as tickets to a performance, and is unable to price discriminate within a period, the monopoly may benefit from the potential entry of resellers. If the monopoly attempts to intertemporally price discriminate, the equilibrium in the game among buyers is indeterminate when the resellers are not allowed to enter, and the monopoly's problem is not well defined. An arbitrarily small amount of heterogeneity of information among the buyers leads to a unique equilibrium. We show how the potential entry of resellers alters this equilibrium.