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What Determines Market Structure? An Explanation from Cooperative Investment with Non‐Exclusive Co

Roig, Guillem (2014) What Determines Market Structure? An Explanation from Cooperative Investment with Non‐Exclusive Co. TSE Working Paper, n. 14-482

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Official URL: http://tse-fr.eu/pub/28043

Abstract

In a common agency setting, where the common buyer undertakes cooperative investment with her suppliers, we obtain a direct link between the level of ex-post competition and investment which affects the market structure of the supply side of the market. We show that more competitive equilibria are associated with a larger and more homogeneous distribution of investment among active suppliers, and an equilibrium with no investment might occur when competition is mild. In our model, buyer's investment works as a mechanism to incentivize competition, and its effectiveness is positively related to the level of competition ex-post. In general, the equilibrium investment profile is lower than efficiency, and we surprisingly find that higher competitive markets may sustain a larger number of suppliers.

Item Type: Monograph (Working Paper)
Language: English
Date: 26 March 2014
Uncontrolled Keywords: cooperative investment, investment distribution, competition
JEL codes: C72 - Noncooperative Games
D43 - Oligopoly and Other Forms of Market Imperfection
D44 - Auctions
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:43
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:28043
URI: http://publications.ut-capitole.fr/id/eprint/15875

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