Market Power

In this thesis, I have examined whether the current approach to competition policy is suitable for the distinct characteristics of the digital economy. It is particularly difficult to define the relevant market and rely on market share test as a proxy for market power in the digital economy mainly because of its dynamic nature. As the market boundaries shift so rapidly in dynamic markets, having a static perspective when defining the relevant market might fall short when assessing competitive constraints that an undertaking may face in the near future. In this regard, this thesis calls for a change in the traditional assessment of market power, and it proposes to replace the relevant market/market share paradigm with a more economic effects-based method, such as estimating the elasticity of residual demand. By doing so, competition authorities can assess competitive constraints from a broader perspective without necessarily being limited to a particular relevant market or any formalistic structure.

In order to identify the most suitable way to assess market power in the digital economy, this thesis is structured as follows. Chapter II explains what digital economy is, how it emerged, and what makes it different from the rest of the economy by identifying its distinguishing characteristics. After providing an overview of the digital economy, Chapter III gives more theoretical insight to the concept of market power. First, it explains the importance of market power within the social market economy. In the second part, it introduces various definitions of market power as provided by different institutions and scholars, describing the defining characteristics of these definitions afterwards. Having explained the concept of market power, Chapter IV focuses on how market power is assessed. By doing so, it explains not only the traditional indirect assessment of market power, but also the direct assessment of the latter. After clarifying what the digital economy is, as well as the concept of market power and how it is assessed, Chapter V evaluates the suitability of current understanding of market power in the digital economy. Then it explains what the challenges of assessing market power in the digital economy are when applying conventional techniques. In the light of these findings, it finally suggests a blueprint of how to assess market power in the digital economy. Lastly, Chapter VI provides the summary of findings and the final conclusion.

It is nowadays a common place to say that the sharing economy is not really about sharing but about making profits and benefiting a few much more than others. A movement that takes the best of the technologies of sharing economy platforms but orients it to benefiting all, platform cooperativism, is on the rise. Nonetheless, it is far from being popular and nothing indicates that it will. This paper investigates the reasons why dominant platforms remain dominant and proposes a policy that aims at curtailing their dominance, fostering platform cooperativism and maximizing the beneficial societal effects that can be derived from exploiting the data generated in platforms. The paper is structured as follows. Section 1 reviews current definitions of the sharing economy, points out their contributions and limitations and offers a novel and more accurate definition. Section 2 briefly introduces platform cooperativism to show why it can be a tool to fix many of the problems of the sharing economy. Section 3 explains and discusses market power mechanisms specific to the sharing economy that help dominant platforms to remain dominant. Some already existing and proposed solutions to counter these market power mechanisms such as reputation passports, a market for personal data and antitrust remedies are evaluated. Section 4 presents a general policy proposal based on making data a common in the sharing economy using reciprocity licenses. Section 5 offers some clarifications regarding the proposal and sketches some of its shortcomings and open questions that arise from it.

This article investigates the markup pricing behaviour of U.S. exporters of agricultural products. Agricultural products studied are feed, flour, frozen potatoes, frozen orange juice, five categories of beef, five categories of pork, and two categories of chicken. The popular pricing-to-market (PTM) approach of Krugman (1987) is used to examine market power and imperfect competition for the markets under study. The

This paper develops a simple model of monopoly platform pricing accounting for two pertinent features of matching markets. 1) The trading process is characterized by search and matching frictions implying limits to positive cross-side network effects and the presence of own-side congestion. 2)Matched agents bargain over the division of the match surplus depending on the qualitative characteristics of both parties.

Why do small-business groups in developed countries exist? Research has shown the strong economic impact of business groups throughout the world but remains heavily focused on large-business groups and on emerging economies. Theoretical approaches to explain the existence of highly diversified business groups range from market power to the resource-based view and include market failure, transaction costs, agency theory, and cultural embeddedness. These approaches, however, are not very appropriate to explain the existence of small to medium-size firms in developed countries. What we know is that these smaller groups exist and that they are largely the outcome of related diversification.

In this article, we estimate the degree of market power held by AT&T in the interstate long-distance market in the postdivestiture period. Our approach makes use of the dominant firm/competitive fringe model to impose the structure needed both to obtain estimates of the relevant structural parameters and to translate these parameters into an estimate of AT&T's residual demand elasticity and associated Lerner index. Because of the continued presence of regulation and other considerations, however, a direct estimation of the residual demand elasticity is not feasible. Consequently, we take a more indirect approach that combines estimation of the elasticity of fringe firm supply, market demand estimation, and extant market share data to generate estimates of the desired elasticity. The resulting estimates strongly support the conclusion that AT&T lacks significant market power in the postdivestiture long-distance market. * The authors would like to thank John Jackson, Michael Ward, Sam Peltzman, an unnamed editor, and the anonymous referees for valuable insights and comments on earlier versions of this article. We retain sole responsibility for any remaining errors.

This paper proposes an empirical methodology for studying various (implicit or explicit) collusive behaviors on two strategic variables, which are price and advertising, in a differentiated market dominated by a duopoly. In addition to Nash or Stackelberg behaviors, we consider collusion on both variables, collusion on one variable and competition on the other, etc. Using data on the Coca-Cola and Pepsi-Cola markets from 1968 to 1986, full information maximum likelihood estimation of cost and demand functions are obtained allowing for various collusive behaviors. The collusive hypothesis is not rejected, and the best form of collusive behavior is selected via nonnested testing procedures. Using the best model, Lerner indices are computed for both duopolists to provide summa y measures of market power. Finally, our approach is contrasted with the conjectural variation approach and is shown to give superior results. 1. INTRODUCTION An important trend of the recent applied industrial organization literature is to use a structural econometric approach for evaluating market power in various industries. See Bresnahan (1989) and Geroski (1988) for recent surveys. The methodology involves a specification of demand and cost functions and hypotheses about the strategic interac-Preliminary versions of this paper were presented at the European and North American Meetings of the Econometric Society in Bologna, August 1988, and New York, December, 1988, and at the European Economic Association Meeting in Augsburg, August 1989. The authors are grateful to an anonymous referee for useful comments. Initial work was done while the authors were at the California Institute of Technology. They thank L. Donnelly for efficient typing. The views expressed in this paper do not represent those of Bellcore or any of its owners.

This article examines the implications of the escalation in institutional inves power and heterogeneity for two dominant theories of corporate governanceagency theory and stakeholder theory. From this analysis, a new view of the agency relationship between institutional investors and their portfolio firms emerges, which recognizes the institutions’ market power, complex role as financial intermediaries, and possible involvement in simultaneous and opposing agency contracts. We also conclude that stakeholder theorists should reconsider these newly empowered shareholders’moral standing in relation to their portfolio firms, and they should reexamine the identities and goals of these modern investors. To that end, we demonstrate that a novel, intragroup application of Mitchell, Agle, and Wood’s stakeholder framework to heterogeneous institutional investors illuminates their varying levels of stakeholder salience.

Analysis of market power in electricity markets is relevant for understanding the competitive development of the industry's restructuring and liberalization process. Because the existing literature lacks adequate consideration of line transmission congestion, this paper sets forth a new approach to measuring market power in the Italian Power Exchange (IPEX) by explicitly taking into account transmission line congestion. We construct the residual demand curve to disentangle the measure of unilateral market power from congestion rent for the main Italian generators during the period of April 2004 to December 2007. In Italy, this was a period of stable transmission network structure. Following the approach of Wolak (2003, 2009), we measure the unilateral market power with the Lerner Index (LI) computed as the inverse of the residual demand elasticity. In conclusion, the correct modeling of the residual demand curve including transmission congestions allows us to compute the zonal LI and therefore more accurately measure the market power when congestion occurs. Our results show that various generators exercise market power in only some zones, which provides us with a deeper understanding of the IPEX and better support for designing appropriate market surveillance and competition regulation.

We investigate the practice of carriers that charge higher fares for¯ights leaving from their hub. We analyze this phenomenon by relating fares to distance, using the main leg of intercontinental¯ights for scaling purposes. Our results indicate that the practice of a mark up on ights originating from or going to hubs is not typical for the US situation. At least some European carriers charge signi®cant premiums for direct¯ights from their hubs. We ®nd that at least part of these premiums can be attributed to market power. Policy measures should be aimed at reduction of market power and consumer protection. Furthermore, the existence of hub premiums should be taken into account in regional hub policies. q

Over the last 20+ years, multinational corporations (MNCs) have been confronted with accusations of abuse of market power and unfair and unethical business conduct especially as it relates to their overseas operations and supply chain management. These accusations include, among others, worker exploitation in terms of unfairly low wages, excessive work hours, and unsafe work environment; pollution and contamination of air, ground water and land resources; and, undermining the ability of natural government to protect the well-being of their citizens. MNCs have responded to these accusations by creating voluntary codes of conduct which commit them to specific standards for addressing these issues. These codes are created at both the industry-wide and the individual company level. Unfortunately, these codes have generated little credibility and public trust because their compliance claims cannot be independently verified, and they lack transparency and full public disclosure. In this article, we present a case study of the voluntary code of conduct by Mattel, Inc., the world's largest toy company. The code, called the Global Manufacturing Principles (GMP), confronts the general criticism leveled against voluntary codes of conduct by (a) creating detailed standards of compliance, (b) independent external monitoring of the company's compliance with its code of conduct, and (c) making full, and uncensored public disclosure of the audit findings and company's response in terms of remedial action. We present a detailed account of how Mattel's voluntary code of conduct was created, implemented, and ultimately abandoned over 9 years. We provide an evaluative analysis of the company's GMP compliance throughout its life span, which suggests a bellshaped curve, where early top management commitments were met with pockets of resistance from operational groups, who were concerned about balancing GMP compliance efforts with traditional performance criteria. The early stage response from Mattel's top management was quick and supported with the requisite resources. As a result, the compliance process accelerated, becoming increasingly more robust and effective. The success of code compliance and increased transparency in public disclosure energized field managers with a sense of professional satisfaction and publicly recognized accomplishments. The decline in GMP compliance was equally steep. When all the easily attainable targets had been reached at the company-operated plants, addressing vendor plants' compliance presented a new set of challenges, which taxed corporate resources and management commitment. It would seem that value-based and ethicsoriented considerations, i.e., doing the right thing for the right reason, were no longer the driving force for Mattel's management. Mattel did not see any economic benefit from its proactive stance, when competitors did not seem to suffer adverse consequences for not following suit. The final contributing factor to the code's abandonment was a widely publicized series of product recalls which absorbed top management's attention.

This paper interprets private label marketirzg as a retazler instrument for overcoming the double-marginalization problem inherent in the distribution of well-knozvn manufacturer brands. Retailers with some degree of market power carry private label substitutes for popular national brands in order to capture more profit from the vertical structures they share with brand manufacturers. The net effect of private label marketing is to improve the performance of distribution channels. After presenting a formal model and deriving analytical results, the paper gathers some empirical evidence that supports these results.

This study addresses two issues relating to the pricing behaviour of European airlines: 1) whether an airline's dominant position at the origin airport, at the route and the city-pair level affects the airlines' market power; 2) whether fares follow a monotonic time path consistent with the pursuing of an inter-temporal price discrimination strategy. Our estimates reveal that enjoying a dominant position within a route is conducive to higher fares. On the contrary, dominance within a city-pair does not seem to facilitate the exercise of market power. We find robust support to the assumption that fares follow a monotonic time path. [JEL Classification: L11, L13, L93] Questo studio affronta due aspetti riguardanti le strategie di prezzo delle compagnie aeree europee: 1) se la posizione dominante di una compagnia su l'aeroporto d'origine, sulla rotta e sul mercato influenza il potere di mercato delle compagnie stesse; 2) se le tariffe seguano un profilo temporale monotonico in linea con una strategia di discriminazione di prezzo inter-temporale. Troviamo che il godere di una posizione dominante sulla rotta sembrerebbe condurre a tariffe più elevate, mentre non si registra lo stesso effetto per quanto riguarda la dominanza di un mercato. L'evidenza empirica supporta l'ipotesi che le tariffe seguono un profilo temporale monotonico.

The Herfindahl-Hirschman index (HHI) is a well known concentration measure, which is both widely used and widely criticized. The main shortcoming of the HHI is its sensitivity for the relevant market definition, in terms of both geographical boundaries and in terms of product homogeneity. In this paper we develop an adjusted version of the HHI that accounts for close substitutes. We test the adjusted HHI empirically for civil aviation, using airfare data. Our results suggest that the adjusted index generates better results than the traditional indicator.

Öz Yoğunlaşma, bir endüstrideki kaynak ve faaliyetler toplamının büyük çoğunluğunun bu toplama sahip olan veya kontrol eden birimlerin çok azı tarafından sahiplenilmesi veya yönetilmesidir. Endüstrideki yoğunlaşmayı ölçen endekslerin amacı da bu ekonomik büyüklüklerin, endüstrideki firmalar arasında nasıl dağıldığını ölçerek endüstride rekabetin ne düzeyde olduğunu belirleyip, endüstrinin yapısı hakkında bilgi vermektir. Gıda ve içecek maddeleri yaşamsal öneme sahiptir ve ertelenemez bir ihtiyaç olmaları nedeniyle de arzının devamlılığı zorunludur. Dolayısıyla içecek sektörü ülke ekonomileri için stratejik düzeyde önemli bir sektördür. Bu çalışmanın amacı, diğer sektörlerden yapısal olarak farklı olan ve insan sağlığı için önemli bir yere sahip olan içecek sektörünü piyasa yapısı ve yoğunlaşma düzeyi açısından incelemektir. Çalışmada, İstanbul Sanayi Odası'nın yayınladığı ilk 1000 sanayi kuruluşu içerisinde yer alan içecek sanayi kuruluşları ele alınmış olup, firmalara ait 2006-2016 dönemlerine ait yıllık net satış rakamları kullanılmıştır. Yapılan analiz sonucunda elde edilen k-firma Yoğunlaşma, Herfindahl-Hirschman, Entropi, Hall-Tideman ve Rosenbluth ve Kapsamlı Yoğunlaşma Endeksleri değerlerine göre, Türkiye içecek sektörünün oligopolistik bir yapıya sahip olduğu görülmüştür. Abstract Concentration is the domination or management of the vast majority of total resources and activities in an industry by very few of the units that own or control this total. The aim of the indexes that measure concentration in the industry is to measure how these economic magnitudes are distributed among firms in the industry and to determine the level of competition in the industry and to inform about the structure of the industry. As food and beverages have a vital need and the continuity of their supply is a must. Therefore, the beverage sector is an important sector at a strategic level for the countries' economies. The aim of this study is to examine the beverage industry, which is structurally different from other sectors and has an important place in human health, in terms of market structure and concentration level. In the study, beverage industrial enterprises included in the first 1000 industrial enterprises published by the Istanbul Chamber of Industry were addressed and annual net sales figures for the period 2006-2016 belonging to the firms were used. As a result of the analysis conducted, according to concentration indexes values, it has been seen that Turkish beverage sector has an oligopolistic structure.

a b s t r a c t This research seeks to further the understanding of the relationship between Wal-Mart and its suppliers. 1988-1994 demonstrates Wal-Mart's market power in relation to manufacturers [Bloom PN, Perry, VG. Retailer power and supplier welfare: the case of Wal-Mart. Journal of Retailing 2001; 77( 3): 379-396.

The South African banking industry is a key contributor to economic growth and the concentrated nature of the industry, with four dominant banks, required further interrogation to determine if in fact concentration and by default competition, was a material inhibitor to economic development, or if it impacted negatively on the social welfare of our citizens.
The highly regulated nature of banking is not accommodated by traditional mathematical models such as the popular Herfindahl-Hirschman Index and the paper looks at what policy makers and regulators must consider before targeting the banking industry as a catalyst for change.

This paper deals with the issue of mergers in the retailing sector. It provides an empirical application to the Portuguese food retailing market. The likely e¤ects of a possible merger are analyzed ex-ante. The novelty of the paper lies in the inclusion of downstream and upstream market power e¤ects to the retailers. The e¤ects of additional concentration on prices are estimated, as well as the price reduction insiders are likely to obtain (for a limited set of producers) via an improved bargaining position. The …nal e¤ect on prices depends on how these cost reductions are re ‡ected on insiders' prices -the pass through rate. For realistic values of this rate we …nd that the merger in question will most likely increase consumer prices and, therefore, should not be allowed given the national legislation.

I analyze the competitive conditions prevailing in Islamic and conventional global banking markets, and investigate the possible differences in profitability between these markets, using a sample of banks across 13 countries during 2000-2006. The results suggest that Islamic banks allocate a greater share of their assets to financing activities compared to conventional banks, and they are also better capitalized. Different computed measures of competition indicate that Islamic banking is less competitive compared to conventional banking. A second-stage analysis shows that profitability significantly increases with market power, but this does not warrant higher profitability levels for Islamic banks. JEL Classification Numbers: D4; G21; L1; N25

Over the last 20+ years, multinational corporations (MNCs) have been confronted with accusations of abuse of market power and unfair and unethical business conduct especially as it relates to their overseas operations and supply chain management. These accusations include, among others, worker exploitation in terms of unfairly low wages, excessive work hours, and unsafe work environment; pollution and contamination of air, ground water and land resources; and, undermining the ability of natural government to protect the well-being of their citizens. MNCs have responded to these accusations by creating voluntary codes of conduct which commit them to specific standards for addressing these issues. These codes are created at both the industry-wide and the individual company level. Unfortunately, these codes have generated little credibility and public trust because their compliance claims cannot be independently verified, and they lack transparency and full public disclosure. In this article, we present a case study of the voluntary code of conduct by Mattel, Inc., the world’s largest toy company. The code, called the Global Manufacturing Principles (GMP), confronts the general criticism leveled against voluntary codes of conduct by (a) creating detailed standards of compliance, (b) independent external monitoring of the company’s compliance with its code of conduct, and (c) making full, and uncensored public disclosure of the audit findings and company’s response in terms of remedial action. We present a detailed account of how Mattel’s voluntary code of conduct was created, implemented, and ultimately abandoned over 9 years. We provide an evaluative analysis of the company’s GMP compliance throughout its life span, which suggests a bell-shaped curve, where early top management commitments were met with pockets of resistance from operational groups, who were concerned about balancing GMP compliance efforts with traditional performance criteria. The early stage response from Mattel’s top management was quick and supported with the requisite resources. As a result, the compliance process accelerated, becoming increasingly more robust and effective. The success of code compliance and increased transparency in public disclosure energized field managers with a sense of professional satisfaction and publicly recognized accomplishments. The decline in GMP compliance was equally steep. When all the easily attainable targets had been reached at the company-operated plants, addressing vendor plants’ compliance presented a new set of challenges, which taxed corporate resources and management commitment. It would seem that value-based and ethics-oriented considerations, i.e., doing the right thing for the right reason, were no longer the driving force for Mattel’s management. Mattel did not see any economic benefit from its proactive stance, when competitors did not seem to suffer adverse consequences for not following suit. The final contributing factor to the code’s abandonment was a widely publicized series of product recalls which absorbed top management’s attention.

The paper analyzes the cooperative determination of the interchange fee by member banks in a payment card association. The interchange fee is the "access charge" paid by the merchants' banks, the acquirers, to cardholders' banks, the issuers. The paper develops a framework in which banks and merchants may have market power and consumers and merchants decide rationally on whether to buy or accept a payment card. After drawing the welfare implications of a cooperative determination of the interchange fee, the paper provides a detailed description of the factors impacting merchant resistance, compares cooperative and for-profit business models, and makes a first cut in the analysis of system competition.

Structural change in the agricultural sector as well as in the whole agricultural value chain is an ongoing dynamic process and affords a number of diverse phenomena. The EU Strategy for Biofuels (2006) and the Biomass action plan (2005) set a clear signal that the EU wishes to establish and to support the bio energy-industry. The perceivable aim of the

Mobile money is a relatively new phenomenon that allows banking services to be accessed through a cellular device. It has become a significant tool for poor and rural populations in developing countries to gain access to financial services. As the service is in its infancy, understanding the environmental factors that influence the growth of mobile money is an expanding area of research in academic and practitioner literature. These environmental issues relate to the socio-economic factors, market conditions and regulations that enable mobile money services to grow. By utilizing the economic theory of regulation to create a framework to comparatively analyse the impact that market forces have on regulatory outcomes and mobile money growth, two hypotheses are derived and tested.

This paper argues that certain regulations are not as determinant as identified in the literature, and that certain market and socio-economic conditions have a significant impact on mobile money growth. Specifically, this paper estimates that agent network regulations predict a 7.7% higher mobile money account rate, while consumer protection regulations predict a 10.7% decrease in accounts. Further estimates show that MNO concentration can explain 4% of the mobile money accounts amongst the country sample and financial accounts can explain 5% of the mobile money accounts. In addition, this paper posits that the market forces of competition and concentration within telecommunications and banking industries influence the regulatory outcomes of mobile money regulations. MNO competition reduces the industry’s regulatory influence of consumer protection regulations while banking competition increases the agent network regulation. MNO concentration increases the industry’s influence of e-money legislation and banking concentration decreases it.

Frontier profit efficiency is examined for Spanish savings banks over 1986-1991, a period in which the Spanish banking industry has seen considerable deregulation. In Spain, the standard assumption that firms operate in a perfectly competitive output market is unlikely to be met. Thus we use an alternative profit function specification which allows for market power in the output market. Profit efficiency is determined using the thick frontier approach, and estimated using both altemative and standard profit function specifications to illustrate the effect of different assumptions regarding the competitiveness of the output market. Estimation of the alternative profit function suggests that the profit inefficiency of Spanish savings banks, which averaged 28%, fell by forty percent between 1986 to 1991. The standard profit function, which we believe yields less reliable results, generated greater average inefficiency. There was no significant shift-up or down-in the profit frontier itself.

Contract farming is a form of vertical coordination largely aimed at correcting the market failure associated with spot markets that arise due to imperfect information. However the impact of contract farming on the welfare of smallholder farmers in Kenya is not well understood. While some authors have argued that contact farming improves access to ready markets by smallholder farmers, other studies have suggested that contract farming lowers the incomes of smallholder farmers because the contractors wield greater market power over the farmers. Consequently, it is seen as a blessing by some and a necessary evil by others. This study uses a propensity score matching technique to shed light on the impact of contract farming on smallholder farmers. The study also examines the conditioners of participation in contract farming. It uses data collected from 180 smallholder poultry farmers stratified by participation in contract production. The study finds that, on average, contracted farmers earned more net revenue per bird compared to the independent farmers, by approximately 27 percent, and as such participating in contract farming could improve the welfare of these small holder poultry farmers. This finding suggests that getting smallholder commercial poultry farmers to participate in contract farming can help improve their welfare through increasing the net revenues from these birds and thereof incomes.

In its investigation into Google's search practices, Google Search, the Commission alleges that Google abuses its dominant position on the web search market by giving systematic favourable treatment to its " comparison shopping product " (namely, " Google Shopping ") in its general search results pages. This Article analyses whether the conduct in question in Google Search can be an abuse under Article 102TFEU (prohibiting the abuse of a dominant position in the EU) and, if so, under what conditions. This Article proceeds by first providing a positive assessment of the application of Article 102TFEU and the relevant case law to the issues involved in Google Search on the assumption that the Commission may seek to place the facts under an existing category of abuse. Three categories of abuse are analysed to this end: refusal to deal (including the essential facilities doctrine), discrimination, and tying. The article then proceeds to a normative assessment of the circumstances under which Article 102TFEU should be applied in Google Search under a principled conceptualisation of " abuse, " one which requires exploitation, exclusion, and a lack of an increase in efficiency. The Article finds that the facts in Google Search do not meet the requirements of the existing law to be found abusive unless the established frameworks for the types of abuse examined are unjustifiably disrupted. It also finds that under the principled conceptualisation of abuse adopted in this Article, the facts in Google Search do not represent the type of conduct that should be found abusive either.

Playing computer games online is a fast growing, billion dollar industry which has received little academic attention. The industry exhibits a number of interesting economic features. The industry structure is determined by creative destruction as in [Aghion, P., Howitt, P. 1992. A model of growth through creative destruction, Econometrica, 60(2), 323-351], with game makers experiencing market power within a genre until the game is superceded. Furthermore, the attractiveness of playing a game online depends on the existence of opponents (positive network externalities) while technical and reputational problems eventually arise (negative network externalities). We model the choice of two-part tariffs by a monopolist under creative destruction and network externalities and derive conditions for the multiple equilibria which currently exist in the industry.

Traditional concerns about concentration in product markets have centered on the social loss associated with the mispricing that occurs when market power is exercised. This paper focuses on a potentially greater loss from market power-a reduction in cost efficiency brought about by the lack of market discipline in concentrated markets. We employ data from the commercial banking industry, which produces very homogeneous products in multiple markets with differing degrees of market concentration. We find the estimated efficiency cost of concentration to be several times larger than the social loss from mispricing as traditionally measured by the welfare triangle.

This paper examines the economic impact of the code-sharing agreement between ATA and Southwest Airlines, the first time Southwest has chosen to enter markets via a code-share alliance rather than direct entry. We examine the impact of complementary code-sharing on incumbent airline's fares and passenger volumes and also the overall impact on consumer welfare in Denver airline markets. Empirical results show that air fares decreased and passenger volumes increased for incumbent carriers operating on code-shared routes. Further, we find evidence that this code-sharing arrangement increased both consumer and producer surplus. Thus, the well-known ''Southwest Effect'' is observed not only when Southwest enters a route directly, but also when it enters a route via a code-share agreement with another airline.

Análisis descriptivo del contrato de abastecimiento  de energía eléctrica y el contrato de reserva de potencia de acuerdo a lo que regula la Ley General de Electricidad (LGE), contenida en el Decreto 93-96 del Congreso de la República y  sus reglamentos.
El presente artículo fue publicado originalmente en la Revista del Colegio de Abogados y Notarios de Guatemala.

There is a growing body of evidence that interest rate spreads in Africa are higher for big banks compared to small banks. One concern is that big banks might be using their market power to charge higher lending rates as they become larger, more efficient, and unchallenged. In contrast, several studies found that when bank size increases beyond certain thresholds, diseconomies of scale are introduced that lead to inefficiency. In that case, we also would expect to see widened interest margins. This study examines the connection between bank size and efficiency to understand whether that relationship is influenced by exploitation of market power or economies of scale. Using a panel of 162 African banks for 2001–2011, we analyzed the empirical data using instrumental variables and fixed effects regressions, with overlapping and non-overlapping thresholds for bank size. We found two key results. First, bank size increases bank interest rate margins with an inverted U-shaped nexus. Second, market power and economies of scale do not increase or decrease the interest rate margins significantly. The main policy implication is that interest rate margins cannot be elucidated by either market power or economies of scale. Other implications are discussed.

Recent developments in European energy policy reveal an increasing interest in implementing the so-called 'Tradable White Certificate' (TWC) schemes to improve energy efficiency. Based on three evaluation criteria (cost-effectiveness, environmental effectiveness and distributional equity) this paper analyses the implications of implementing a European-wide TWC scheme targeting the household and commercial sectors. Using a bottom-up model, quantitative results show significant cost-effective potentials for improvements (ca. 1400 TWh in cumulative energy savings by 2020), with the household sector, gas and space heating representing most of the TWC supply in terms of eligible sector, fuel and energy service demand, respectively. If a single market price of negative externalities is considered, a societal costeffective potential of energy savings above 30% (compared to the baseline) is observed. In environmental terms, the resulting greenhouse gas emission reductions are around 200 Mt CO 2-eq by 2010, representing nearly 60% of the EU-Kyoto-target. From the qualitative perspective, several embedded ancillary benefits are identified (e.g. employment generation, improved comfort level, reduced 'fuel poverty', security of energy supply). Whereas an EU-wide TWC increases liquidity and reduces the risks of market power, autarky compliance strategies may be expected in order to capture co-benefits nationally. Cross subsidies could occur due to investment recovery mechanisms and there is a risk that effects may be regressive for low-income households. Assumptions undertaken by the modelling approach strongly indicate that high effectiveness of other policy instruments is needed for an EU-wide TWC scheme to be cost-effective.

The universal problematic of market definition poses peculiar challenges in multilingual and fragmented media markets, like in India. This article engages with this problematic by taking up the case of the TV distribution in India. Amidst the heightened expansion of the TV distribution business during the last decade, we notice a series of cases at the Competition Commission of India (CCI) pertaining to ‘relevant market’. This paper provides a critical appraisal of CCI’s engagement with ideas of relevant geographical market and relevant product market between 2011 and 2015. Focusing on key ideas deployed in debating relevant markets, viz. substitutability and service area, the paper unravels conceptual and methodological challenges provoked by market definition in complex media landscapes.

In this study, using market-level data on quantities, prices' and automobile characteristics from 1995 to 2001, we conduct a market analysis of the Chinese automobile industry under imperfect competition. On the demand side, we apply a nested multinomial logit model to the national market share data in order to ascertain the demand features of China's automobile market. On the supply side, we assume Bertrand behavior to uncover the markups set by automobile manufacturers. Our empirical results suggest that some large automobile manufacturers set high markups, indicating their strong market power in China's automobile market. However, their declining markups in the late 1990's imply a reduction in market control by the major producers.

Procurement contracts are often incomplete because the initial plans and specifications are changed and refined after the contract is awarded to the lowest bidder. This results in a final cost to the buyer that differs from the low bid, and may also involve significant adaptation and renegotiation costs.