1 / 7

Consumers and Competition

Consumers and Competition. ENCORE Workshop February 23, 2006. Most Competition Policy. Based on Economic Insights where consumer search and switching cost do not play a rule Perfect Competition / Monopoly Strategic Behavior: Collusion Merger decisions

ellema
Download Presentation

Consumers and Competition

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Consumers and Competition ENCORE Workshop February 23, 2006

  2. Most Competition Policy • Based on Economic Insights where consumer search and switching cost do not play a rule • Perfect Competition / Monopoly • Strategic Behavior: • Collusion • Merger decisions • Entry deterrence / Abuse of Dominant positions • ….

  3. Today’s Focus • Cost Consumer has to make in order to get • Information about available products and prices (search cost) • Cost (time) to visit shop where product is available • Cost of searching where product is available • Another product than what she has bought in the past (switching cost) • Sometimes literally money (number portability, pensions) • Cost of getting acquainted with use (software) • …. • “Radically” different modeling outcomes

  4. Waldman’s Paper(s) • Should durable goods producers be allowed to Monopolize their own Aftermarket? • Ex: Kodak Cameras / Cars. Once you bought a Ford, are you tight to Ford Dealer for repairs? (ex. refusal to sell spare sparts to competitors) • Context: competitive market • Without switching cost: there is an inefficiency as too many consumers substitute maintenance for replacement • Monopolization (switching cost) eliminates inefficiency • Yes, Monopolization should be allowed (in this case)

  5. Second Case Waldman • Should tying of a complementary product by a monopolist be allowed? • Whinston: if primary good is essential, tying cannot increase monopoly profits. • Waldman: In case of switching cost, this is no longer true. Monopolist will engage in tying and social welfare deteriorates • No, tying should not be allowed (in this case).

  6. Focus comes at a Cost • Analysis presented today not always superior to traditional analysis. • There is not one encompassing model • A model focuses on some aspects (forces), leaving other out • Applying models is art: what are important factors in a certain context • Focus of academics is on new aspects; old is not necessarily wrong • Useful to get better idea how new forces may work

  7. Today’s program 13.30 Introduction 13.45 Yongmin Chen (Colorado) “Dynamic Price Discrimination with Asymmetric Firms”   14.45 Maarten Janssen (Erasmus; TI) “Consumer Search: Implications for Merger Decisions and Price Matching Strategies” 15.30 Break 16.00 Jose-Luis Moraga-Gonzalez (Groningen)“Estimation of Search Costs” Discussion  17.00 Drinks

More Related