Changes In Market Structure Research Articles

Commodity market financialization, herding and signals: An asymmetric GARCH R-vine copula approach

Institutional investors have significantly increased their exposure to commodity futures after 2004 in the process of commodity market financialization, raising questions about the risk-sharing and price-discovery functions of the market. We identify some symptoms of financialization through examining S&P500, JPM bond index, and 18 S&P GSCI excess return indices, employing ARMA-GARCH R-vine copula approach that can flexibly model high-dimensional multivariate asymmetric tail dependence. We discover three trends: an increased resemblance between the news impact curve of stocks and those of commodities; an increased bi-variate stock-commodity tail dependence; and an increased multivariate tail-dependence across all commodities. We also explore the market structural change underlying these symptoms using an augmented news impact curve. We suggest and provide evidence that herding, in addiction to leverage effect, explains the observed symptoms. The findings have profound implications for commercial hedgers and financial traders, and for regulators who are concerned about the functionalities of commodity futures market.

Business Value of Information Technology Capabilities: An Institutional Governance Perspective

Situated in the U.S. electric utility industry in a period of significant market restructuring, our study investigates how market valuations of a firm’s investments to develop intrafirm and interfirm information technology (IT) capabilities are conditional on regulatory context. We find that firms are rewarded by investing in intrafirm IT capabilities in a more deregulated context, and by investing in interfirm IT capabilities in a more uncertain regulatory context. When deregulation expands customer choice, intrafirm IT capabilities create value by enabling greater efficiency and service reliability through coordination of a firm’s internal activities. When regulatory uncertainty increases for key aspects such as price control, value chain configuration, and information control, interfirm IT capabilities create value by enabling greater flexibility through reduction of external transaction costs with customers and suppliers. When allocating resources to develop IT capabilities, executives need to consider that market valuation of IT capabilities development is not static, but dynamic with changes in market structure and regulatory uncertainty. Regulators also need to consider that the regulatory context that they shape through their deliberations and decisions has a substantial impact on the market valuation of investments by firms to develop different types of IT capabilities.

Archetypes of product launch by insiders, outsiders, and visionaries

Abstract What archetypes emerge from prominent episodes of product launches? This essay examines a set of episodes in information technology history that led to significant changes in industry leadership. It highlights that, in all of these instances, there is an example of a “visionary” archetype—an individual or a set of leaders who promulgate a unique view for addressing a business opportunity, which they use as they launch a new product. These archetypes are couched as insiders or outsiders depending on the firm’s status before the new product launch, and incumbent market leaders are insiders. The narrative arc is similar, as the visionary first encounters resistance and crises, must overcome challenges, and usually has to overcome skeptics via a product launch that gains market acceptance. However, the narratives of insiders and outsiders differ systematically based on their market position, leading to asymmetric approaches to market competition. This review stresses the importance of visionaries in industrial change brought about by product entry. It raises questions about integrating such narratives into the analysis of significant changes in market structure.

The Impact of Migration of Road Freight Transport Services on Economic Indicators in Selected EU Countries

Transport is an industry that generates a significant portion of national income and directly or indirectly employs a large number of workers, while supporting the existence and development of all other sectors of the economy. Despite the long-standing goal of decoupling economic and transport growth in the European Union (EU), freight transport volumes, especially road freight transport, continue to increase. This leads to a deterioration of the quality of life and the environment, but on the other hand also creates business opportunities. The question is which country’s haulers will benefit the most. Using a shift-share analysis, the authors provide an overview of the dynamics of the EU road freight market and select countries for closer examination. They then examine the extent to which the road freight sector contributes to national income in these countries. Using a regression analysis, they estimate transport prices and changes in turnover and gross value added (GVA) for selected countries due to market structure change. The results show that the sector’s turnover increased by 4% due to market changes, sectoral GVA deviated only slightly, and there was a loss of at least 8 billion EUR in GVA due to the shortage of truck drivers.

The anatomy of a bubble company: The London Assurance in 1720

AbstractThe London Assurance Company (LA), which incorporated during the bubble of 1720, experienced more dramatic price movements in its shares than the South Sea Company. This paper examines how incorporating during the bubble affected its long run performance. We show that the bubble in the Company's share price was partly attributable to changes in market structure during the share issuance process. As a result of the bubble, the Company's original subscribers, who had been curated for expertise and political connections, overwhelmingly exited during 1720 and were replaced by unsuccessful speculators. Analysis of LA shareholder behaviour up to 1737 suggests that this loss of shareholder expertise had detrimental consequences for the Company's performance. These results demonstrate how a bubble in the shares of a newly created company can lead to an exodus of value‐adding investors, damaging the company's long‐term prospects.

Predicting the Blockchain Technology Acceptance in Supply Chains with Inter-Firm Perspective: An Integrated DEMATEL and PLS-SEM Approach

Predicting the Blockchain Technology Acceptance in Supply Chains with Inter-Firm Perspective: An Integrated DEMATEL and PLS-SEM Approach

Wars, cartels and COVID-19: regime switching in commodity prices

ABSTRACT Commodity prices are extremely volatile, and volatility itself fluctuates over time. Using data from 1959 to 2022, we estimate a 3-state Markov-switching model to identify expansions and contractions in oil and copper price volatility. We found a transition from a low to a medium variance regime for the oil price, in 1979, reflecting changes in the oil market structure. In addition, we identify infrequent and short-lived episodes of unusually high oil price volatility. For copper, there is no transition across regimes, and episodes of high volatility are not synchronized with the periods of high volatility in oil prices. We found that oil prices are much more volatile than copper prices in all states. Oil prices react more strongly to market cartelization, war episodes, and global demand shifts, like the 2008 Great Recession and the COVID-19.

An Exploratory Study of the Perception of Peer-to-Peer Energy Trading within the Power Distribution Network in the UAE

The introduction of Smart Grid resulted in the development of various applications that are built upon the concept of bi-directional flow of electricity and data. One of the Smart Grids pillars is the Distributed Generation (DG) technologies, where customers turn to be prosumers with power generation capability. Another pillar is the Demand Side Management (DSM), which helps control the energy consumption by changing the power usage slots among other peers. DG and DSM have facilitated the sharing of excess power by customers to the grid, and then to their peers through the grid as a trading agent. Although the concept of integrating Peer-to-Peer energy trading with DSM has been explored by scholars and relatively established trading frameworks, there are very limited research performed in respect to the UAE market in terms of its acceptance and readiness towards this energy trading market. This research aims to explore the perception of Peer-to-Peer electricity trading within the Power Distribution Network in the United Arab Emirates. The study will review the Smart Grid network in the UAE and will obtain insights on people’s perception of the transition from classical electricity network to Smart Grid. It will also look into peoples’ perception regarding the transition from being electricity consumers to being electricity producers that trade among peers through semi-structured interviews. This will enhance the understanding of the energy trading market between self-generated power producers connected to a network grid, where the consumer will be utilizing the excess power available in the form of electricity trading, by importing and exporting power, without adding any additional power to the grid. The outcome of the study will provide an insight on the UAE electricity market by designing an electricity trading model that is built upon the following vital factors: power quality, supply reliability, type of integration, peers, and trading time. Furthermore, the study will provide a foundation base to the utilities, as well as individuals, when dealing with the changes in the electricity market structure.

Price asymmetries and the path dependence of market power: Evidence from the U.S. airline industry

This paper uncovers price asymmetries across oligopolistic and monopolistic markets that are seemingly identical in structure but different in competitive history. This is done by identifying “quiet life” markets that have not (yet) experienced a change in structure, and “non-quiet life” markets that have been disrupted by firm entry and/or exit. Using a long panel dataset from the U.S. airline industry, we find that quiet life duopolies price significantly higher than duopolies that come about by entry in monopoly, and that quiet life monopolies price significantly lower than monopolies that come about by exit in duopoly. We show that the path towards a particular market structure matters for the determination of prices and explore several mechanisms that likely explain the price asymmetries, including engagement in anticompetitive behaviour, adjustment behaviour to market structure changes, and the cost heterogeneity of competing firms.

Taking maritime shipping agreements out of the box

ABSTRACT Since its beginnings in the 19th century, the liner shipping industry has shown specific peculiarities characterized by close collaboration between sea carriers. This cooperation has materialized through various types of inter-firm agreements that have been exempted from the key principles of competition law. Recently, strong criticism has emerged against strategic alliances and related agreements that rule a concentrated market where operators are strongly interrelated and increasingly integrated. However, the maritime management literature so far has given little attention to the concrete provisions of these agreements, which still appear as ‘black boxes.’ To fill this gap, we collected 61 enforced cooperative agreements registered with the U.S. Federal Maritime Commission from 1973 to 2020 using a three-way comparison through legal, linguistic, and business lenses of the differences between older and newer types of agreements. We underline the key temporal evolutions of these contracts and show how ocean carriers have incorporated new legal constraints and strategic needs driven by structural market changes toward greater logistics integration.

Audience and Revenue Concentration in Lithuanian Media Markets (2008–2019)

The article examines the change in audience and revenue concentration in the Lithuanian television, radio, internet, and newspaper markets in 2008–2019, as well as discusses the factors that determined the changes in media concentration and market structure. The study revealed that without any special measures to regulate media concentration in Lithuania, all four media revenue markets (television, radio, internet, and newspapers) have become highly concentrated. In terms of audience (circulation) concentration, the concentration of newspaper and television markets was divided between un concentrated and moderately concentrated areas, the radio audience was moderately concentrated, and the audience of internet news websites was highly concentrated. The results of the analysis show a tendency for audience concentration in media markets to be generally lower than income market concentration. Therefore, when legally defining a dominant position in media markets, it is recommended to set a lower value for audience share than for revenue market share.

Bank market power and performance of financial technology firms

AbstractWe adopt a novel variation of the traditional structure‐conduct‐performance modelling approach, looking atbetween, rather thanwithin, industries to study the impact of changes in the bank market structure on the corporate performance of financial technology (fintech) firms using firm‐level data. We use two samples, one with 231 fintech firms and one with 231 non‐fintech firms across 24 industrialized countries over the 10‐year period from 2008 to 2017. We find that changes in bank market power have a positive impact on the performance of fintech companies suggesting that such firms complement rather than compete with banks. On the other hand,withinthe non‐fintech sector, we find that changes in bank market power have no impact on non‐fintech firms. Our results are robust to several tests.

Changing Market Structure and Evolving Ways to Compete: Evidence from Retail Gasoline

This paper examines the pricing behavior of sellers in a market undergoing a significant restructuring, using data from the ongoing introduction of self-service technology in the Korean gasoline market in the 2000s. I provide evidence that full-service premium increased during the market transition. I further show that a monopolistic competition model is not enough to explain the increasing premium.The pricing behavior of sellers differs by product position: self-service sellers compete for price-sensitive consumers, whereas full-service sellers differentiate their product by offering a variety of bundled products and services, such as coffee, carwash or even nail salons, to compete for less-price-sensitive consumers.Taken together, the strategic choices of sellers evolve in different ways when the market structure changes, with each type of seller using its unique position, resulting in an increase in full-service premium during the market transition from full-service to self-service.

A Conceptual Analysis of Equilibrium Bidding Strategy in a Combined Oligopoly and Oligopsony Wholesale Electricity Market

This paper proposes a semi-analytical method to obtain the equilibrium bidding strategies for generation and demand units in a <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">combined</i> oligopoly and oligopsony wholesale electricity market. Such market structure is the outcome of the increasing deployment of demand response programs that facilitate <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">active participation of demand-side players</i> in the price-setting process. In this analysis, the concept of supply function equilibrium (SFE) is used to investigate the oligopolistic competition among generation units. The SFE model is extended and the demand function equilibrium (DFE) is obtained to study the oligopsonistic competition among demand units. The economic behavior of a market participant is formulated as a bi-level programming (BLP) problem. The <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">imperfect competition</i> among generation units, as well as among demand units, are modeled as a non-cooperative game. Next, a direct method is developed to calculate all candidate equilibriums of the market, and the locational marginal prices (LMPs) in terms of the bidding strategies of the market participants. The BLP problem is solved by obtaining the coordinated Pareto-dominant Nash equilibrium of the market participants’ non-cooperative games. Finally, the proposed analysis is examined in case studies. Accordingly, we report <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">insightful observations</i> with respect to the impact of the changes in the new market structure, at firm-level and market-level, such as in terms of mitigating market power of generation units, the market clearing prices and quantities, surplus for generation units and demand units, and potential impact on market efficiency.

Optimization Operation of the Park-Level Integrated Energy System Based on the Improved Coyote Optimization Algorithm

Conventional optimization methods cannot fully satisfy the interests of multiparticipants and protect the privacy of participants in the integrated energy system that observe changes in the energy market structure. To allocate the benefits among the stakeholders in the integrated energy system and improve renewable energy accommodation, the manuscript proposes an optimal dispatching strategy for a park-level integrated energy system employing the Stackelberg game. Firstly, the benefits and cost models of each stakeholder of the integrated energy system are constructed by considering the integrated demand response and the uncertainty of renewable energy output. A master-slave game model that contains the energy system operator, energy producer, and energy users is then established, and the existence of the Stackelberg equilibrium is demonstrated. Furthermore, a distributed algorithm is proposed to resolve the game model by combining an improved coyote optimization algorithm with quadratic programming. Due to the shortcomings of the conventional coyote optimization algorithm, such as slow convergence rate and quickly falling into local optimum, a beetle antennae search is utilized to strengthen the optimal and the worst coyotes and to improve the convergence speed, global search ability, and optimization accuracy of the standard coyote algorithm. Finally, an industrial park in Northern China is adopted as an illustration to evaluate the effectiveness of the model and the improved algorithm.

Worker intra‐urban residential migration and spatial labour market change in Melbourne's functional economic regions

AbstractThis paper investigates the intra‐urban residential migration of workers in Melbourne and assesses the spatial effects of this dynamic on urban internal structure and spatial labour markets. Intra‐urban migration is an important category of internal migration that relocates human and social capital in urban areas, contributing to changes in urban residential and labour market structure. This paper fills the gap in internal migration literature by determining spatial residential movement dynamics through a spatial analysis of census‐based intra‐urban migration flow data. In addition to detailed migration flow analysis undertaken at a local scale, the paper contributes an improved economic data geography based on functional economic regions (FERs) that permits analysis of the intersection of worker migration flows with sub‐metropolitan labour markets. Our results show that intra‐urban migration results in a strong outward flow of workers in Melbourne, which primarily appears to be shaped by spatial housing markets. This process, in turn, contributes to the dispersion of labour markets in Melbourne, complicating policy aims concerning urban agglomeration and limiting urban spatial expansion.

Collusion in the US generic drug industry

We study cartels that operated in the US generic drug industry, leveraging quarterly Medicaid data for the period 2011–2018 and a difference-in-differences approach comparing the evolution of prices of allegedly collusive drugs with a group of competitive control drugs. Our analysis highlights (i) the difficulty of establishing a suitable control group when collusion is pervasive, (ii) the importance of accounting for market structure changes when defining the control period, and (iii) the existence of across- and within-drug heterogeneity. We focus on six drug markets that that were part of the expanded initial complaint and where there was no entry in the same class during the collusive period, permitting a clean measure of the causal impact of collusion on prices. Our most conservative estimates suggest that collusion led to price increases of between 0 and 166% for each of the six drugs, and damages of between $0 and $3 million for the Medicaid market.

Going ‘Super Value’ in New Zealand: cigarette pricing strategies during a period of sustained annual excise tax increases

BackgroundBetween 2010 and 2020, the New Zealand (NZ) Government increased tobacco excise tax by inflation plus 10% each year. We reviewed market structure changes and examined whether NZ tobacco companies...

Forecasting carbon price in the European carbon market: The role of structural changes

Examining and analyzing the role of breakpoints in carbon price prediction can help people better understand the carbon market's structural changes to carry out technological predictions. However, the current carbon price prediction models lack comprehensive utilization of structural breakpoints. Then, a hybrid forecasting model is proposed by combining the Bai&Perron test, Iterated Cumulative Sums of Squares algorithm (ICSS), wavelet transform, and long short-term memory neural network (LSTM). According to the results, there are fifteen breakpoints in the EU allowance (EUA) carbon price. And the breakpoints can improve the prediction accuracy of the proposed model by 10–20 %. The ICSS algorithm is superior to the Bai&Perron test in detecting the breakpoints and improving the prediction accuracy. Compared with other benchmark models, the proposed hybrid model has the best prediction accuracy. We suggest that two types of breakpoints information could be accounted for in future prediction models.

Analysis on the evolution of shipping logistics service supply chain market structure under the application of blockchain technology

With the digital transformation of the shipping industry, the business potential of shipping companies is gradually expanding. In recent years, shipping companies have begun operating freight forwarding businesses powered by the advantages of cost and network. As a result, their business expansion and gradually occupying the market share of agency services. At the same time, the development requirements of digitization are further highlighted, while the problems of opaque information and inaccurate data in the operation of the shipping logistics service supply chain have become more prominent. Thus, the shipping industry has begun to apply Blockchain Technology (BCT) to the shipping logistics. However, the promotion of BCT, an emerging technology in the shipping logistics service market, is not systematic. The members of the supply chain do not have a deep understanding of it, which have led to changes in market demand. We take the shipping logistics service supply chain composed of shipping companies and freight forwarders as the research object in order to investigate the vertical competition between shipping companies and freight forwarders as well as the impact of BCT application on market structure changes. From the perspectives of freight rate competition and the promotion of BCT, the Stackelberg game theory is applied to create a mathematical model that can be used to discuss the evolution of the shipping logistics service market. The results indicate that, the impact of freight rate competition on market evolution is reduced after the application of BCT. Shipping companies should actively promote BCT to reduce the impact of freight competition on the market. Furthermore, freight forwarders can actively participate in the initial stage of application to increase market demand, and the cost of promoting BCT should be reduced in the later stage.