Empirical models of firms and industries

Aguirregabiria, Vı́ctor; Slade, Margaret E.

doi:10.1111/caje.12304

Cited by 5 publications

(3 citation statements)

References 220 publications

(317 reference statements)

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“…A now‐vast body of work, surveyed by Aguirregabiria and Slade (), estimates structural market models to examine various aspects of market performance. Although their focus is elsewhere, such studies produce estimates of the marginal utility of income.…”

Section: Marginal Utility Of Income: Evidencementioning

confidence: 99%

The Potential Compensation Principle and Constant Marginal Utility of Income

Martin

2019

Jpn Econ Rev

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In policy applications, industrial economists are wont to invoke the Kaldor–Hicks potential compensation principle to justify the use of deadweight loss as a measure of the welfare cost of market power. This usage rests on two assumptions. One of these assumptions, that changes in consumer and producer surplus are weighted equally, is well understood. The other assumption, that the marginal utility of income is constant, receives less attention. In a simple model, I show that if there is decreasing marginal utility of income, the use of deadweight loss as an index of market performance rests on shaky ground.

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Section: Marginal Utility Of Income: Evidencementioning

confidence: 99%

The Potential Compensation Principle and Constant Marginal Utility of Income

Martin

2019

Jpn Econ Rev

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“…The availability of such a large and detailed panel data set that provides information on product characteristics (brands, prices, purchase retail stores, etc.) enables us to estimate a sophisticated model of collusion behavior (see Aguirregabiria and Slade (2017)), from which we infer the implication on final prices, profit sharing and consumer welfare.…”

Section: Introductionmentioning

confidence: 99%

Empirical methodology for the evaluation of collusive behaviour in vertically-related markets: An application to the “yogurt cartel” in France

Bonnet

Bouamra‐Mechemache

2020

International Review of Law and Economics

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During the period 2006 to 2012, French competition authorities pressed charges against the country's top 11 firms for engaging in a price-fixing cartel in the fresh dairy store brand segment. Using an empirical vertical bargaining model, this paper studies the effects of the "yogurt cartel" on the price of store brand and national brand products, on the profit sharing between dairy dessert companies and retailers, and consumer welfare. We find that data supports collusive behavior in the dairy dessert market. The cartel leads to price effects for store brands varying from 7.3% for other dairy desserts to 11.3% for yogurts, and those price effects would even be stronger if the cartel also affects the ability of retailers to negotiate with manufacturers. We also show that in a hypothetical situation without the collusion of private label providers, the prices of national brands would have been higher and manufacturers' profits for the sales of their national brand products would have been lower. The cartel thus benefits manufacturers both in the national brand and private label markets. We show that the national brand dairy dessert market should be taken into account when evaluating the damages to the private label dairy dessert market, which the French competition authorities failed to do.

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“…This formulation nests perfect competition, θ = 0, Cournot competition, θ = 1, N firm symmetric perfect collusion, θ = N, etc. See Aguirregabiria and Slade (2017) for more detail derivation and interpretation of this formulation. Using this model, we can calculate the markups as…”

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confidence: 99%

Excess Capacity and Effectiveness of Policy Interventions: Evidence From the Cement Industry

Wakamori

2021

Int Economic Review

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Strategic interaction among firms may hinder the reduction of excess capacity in a declining industry. Policy interventions that attempt to reduce excess capacity may increase efficiency by accelerating the capital adjustment but may decrease efficiency by increasing the market power of firms and/or by distorting firms' divestment decisions. We study capacity coordination policies—forcing firms to reduce their capacity simultaneously—applied to the Japanese cement industry. Estimation results suggest that these interventions did not increase market power because reduction in capacity resulted in higher utilization of the remaining plants, and did not distort firms' scrappage decisions.

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Empirical models of firms and industries

Cited by 5 publications

References 220 publications

The Potential Compensation Principle and Constant Marginal Utility of Income

The Potential Compensation Principle and Constant Marginal Utility of Income

Empirical methodology for the evaluation of collusive behaviour in vertically-related markets: An application to the “yogurt cartel” in France

Excess Capacity and Effectiveness of Policy Interventions: Evidence From the Cement Industry

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