Competitive Segment Research Articles

Tying by an Essential-Good Monopolist: The Role of Multihoming and the Reversible Tie

We explore an essential-good monopolist's motivations for tying and the role of multihoming and the reversible tie when there are network effects in a complementary market. We consider the configuration where consumers purchase a system sequentially and a subset of consumers multihome. In contrast to the existing argument, we show that the essential-good monopolist may have an incentive to engage in tying. In the case of irreversible tie, tying can be used as a strategic device to restore monopoly power in the essential product market, which is hurt by multihoming consumers. In that case, tying works as a foreclosure mechanism for an existing or potential rival in the competitive segment. Furthermore, we extend our analysis to the case where the tie is reversible. We show that tying can also be made more profitable by squeezing the rival's complementary good price even though tying may not foreclose the rival completely.

Competitive disadvantage and segment disclosure: evidence from Malaysian listed companies

PurposeThis paper seeks to investigate the level of competitive disadvantage experienced by Malaysian listed companies by disclosing segmental information as required by the new accounting standard on segments disclosure by Malaysian Accounting Standards Board.Design/methodology/approachA total of 116 Malaysian listed companies are included in the study. Their annual reports for financial year ended 2002 are the main sources. The dependent variable is competitive disadvantage, which is proxied by Total Performance Index. The independent variables are quality of segmental disclosure by employing weighted average correlation technique, size of companies, the use of stricter accounting standard and the choice of business segment or geographical segment as the primary segment. To examine the developed hypotheses of the study; a multivariate least square regression model is employed. The analysis is also supported by correlation technique.FindingsThe outcomes of the study indicate that competitive disadvantage exists by disclosing segments information but it is not significant. In addition, larger companies experience greater competitive disadvantage than smaller companies, more extensive segment disclosure standard leads to less competitive disadvantage and the state of competitive disadvantage is greater when geographical segment is disclosed as the primary segment.Research limitations/implicationsSince the standard allows the reporting companies to disclose their segment information based on internal structure of the organization, the potential existence of materiality judgement may distort the comprehensiveness of the outcome. In addition, the limited number of companies included in the final sample leads to a more cautious approach in generalizing the findings.Practical implicationsSince the new accounting standard governing segment disclosure in Malaysian environment took effect in 2002, the study is considered timely. It allows the relevant accounting bodies to continue monitoring the level of compliance among the listed companies towards the new standard and, more importantly, it permits further improvement of the standard given the level of competitive disadvantage that may be experienced by reporting companies.Originality/valueThe remarkable contribution of the study lies in its timely effort to investigate the potential competitive disadvantage suffered by reporting companies in the first year of the implementation of the new accounting standard governing segment disclosure.

Competition and waiting times in hospital markets

This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients: high-benefit patients who choose between neighbouring hospitals (competitive segment), and low-benefit patients who decide whether or not to demand treatment from the closest hospital (monopoly segment). Compared with a benchmark case of monopoly, we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large. Given a policy regime of hospital competition, the effect of increased competition depends on the parameter of measurement: Lower travelling costs increase waiting times, higher hospital density reduces waiting times, while the effect of a larger competitive segment is ambiguous. We also show that, if the competitive segment is large, hospital competition is socially preferable to monopoly only if the (regulated) treatment price is sufficiently high.

Promotion of the cultural heritage of Mediterranean city in the scope of upgrading cultural tourism

World and especially European trends of tourist economy are mainly focused on development of diversity in cultural tourism. Cultural tourism is a complex of numerous activities that enables not only the affirmation of cultural-historic motives, but also provides important resources for renewal of cultural-historic monuments, tangible and intangible heritage and resources. Today, there is no serious and ambitious country that does not prefer development of tourism in its development strategies as a planetary phenomenon and development sector. This specially refers to cultural tourism, as a competitive segment, based on local authenticity, unique areas, urban entities and ambiance, different historic layers and monuments, local tradition, myths and customs, affirmative mentality of population, geographic and ecological resources, in brief - complex and original identity of its area and its population. Cultural tourism in Montenegro has a modest tradition and only recently through valuable but sporadic initiatives and encouragements from Europe, attempts to valorize its own potentials, making them competitive through creative projects and programs. It is most certainly that the Montenegrin coast is a deeply settled part of complex Mediterranean cultural sphere that possesses certain characteristics which marks it as a unique cultural space in which different historical, geographic, confessional and other influences from surroundings intersect, predefining it for development of cultural tourism. This paper represents an effort to create a professional study report, although limited to single destination - city of Budva that treats cultural tourism in correlation with evaluation of renewal and use of cultural-historic and built heritage. From the mentioned reasons and within described context, this paper tends to be a small, but precisely created contribution to the future actions of creating complex tourist offer at Montenegrin coast, especially in Budva as its 'capital', as it is often emphasized with reasonable expectations in public. .

Impact of Tourism Policy on Development of Selective Tourism

There is no proper development of tourism product, whether it is about a micro-or macro-approach, without design and implementation of an adequate tourism policy. The same could apply when it comes to selective tourism and selective tourism offer, as well. The process of tourism policy creation aimed at stimulating development of selective tourism, is a highly sophisticated and demanding activity, entailing emphasized multidisciplinary, as well as support of all participants in tourism policy creation. Montenegro is an example of destination which knew how to create an incentive tourism policy in the field of selective tourism development, but it is also a destination which, due to numerous negative occurrences in both micro- and macro-environment, was often limited in creating a more stimulating environment for development of selective tourism offer. With regard to the fact that offer of different types of selective tourism represents the most competitive segment of the total tourism product of Montenegro in the global tourism market, the future tourism policy makers will have to innovate the approach to its creation.

Lessons learned from Brazilian natural gas industry reform

Over the past decades many countries have reformed their infrastructure industries. Although these reforms have been broadly similar for the most part, aiming at introducing competition in potentially competitive segments, the contexts in which they have been carried out differ. This is due to the past regulatory experience in each country, the maturity of the industry and/or the number of agents when the reform process started. The Brazilian natural gas reform stands out due to the country's singular conditions. The development of the natural gas industry in Brazil was grounded on stepping up supplies through integration with neighboring nations (particularly Bolivia) and establishing a competitive environment by lowering the barriers hampering the arrival of new investors. However, natural gas is located at the crossroads of two main energy chains: oil and hydroelectricity. This article analyzes the Brazilian natural gas reform, and extracts lessons from this process. The low capillarity of transportation and distribution systems continues to be the main bottleneck of the country's natural gas industry. The challenges of the new legal framework are to encourage investments in networks and guarantee supply, to allow the industry to consolidate and mature, against a backdrop of rapid changes in the world market.

Design of Evaporation Systems and Heaters Networks in Sugar Cane Factories Using a Thermoeconomic Optimization Procedure

Sugar cane production in Brazil is one of the most competitive segments of the national economy, producing sugar and ethanol for internal and external markets. Sugar production is done basically in several steps: juice extraction, juice clarification and evaporation, syrup treatment and sugar boiling, crystallization, centrifugation and drying. Much heat exchange equipment is used in this process.. An optimized design of the evaporation system with the correct distribution of the vapor bleed to attend other parts of the process may contribute to exhausted steam demand reduction. This paper presents a thermoeconomic optimization of the evaporation system and the heaters network of a sugar factory, aiming at minimum investments and operation costs. Data from Brazilian sugar factories were used to define the process parameters. The methodology proposed is used to evaluate the cost of the steam consumed by the factory and the optimized design of the equipment. An initial version of this paper was published in July of 2006 in the proceedings of ECOS’06, Aghia Pelagia, Crete, Greece.

Marketing African Leafy Vegetables: Challenges and Opportunities in the Kenyan Context

Activities to scale up production and consumption of African leafy vegetables have increased greatly in the recent past. What are the emerging issues in relationship to commercialization of these vegetables, given their previous unexploited state? The market share of ALVs vis -à-vis other vegetable species, particularly kales, cabbages and spinach, has been on the upward trend, in the urban markets and increased consumption in rural areas too. How has this influenced the various players in the ALVs sector for example farmers, traders and consumers? Issues of quality control, reliability and pricing remain critical to the future success of ALVs farming. The fact that ALVs are fast becoming the vegetable of choice, especially in the hitherto, non -consuming segments of t he society including the upper and middle class households, and generally among the elite in Kenya is a situation that requires serious assessment and action plan. The paradigm shift in the consumption patterns of ALVs has implications on the continued availability of the vegetables to the lower -end of the market consumers -the poor. Therefore, the reality that their income and nutritional resources could be exploited to their disadvantage is very much a possibility. What should be the policy and research considerations in the unfolding scenario? Women have been closely associated with cultivation and selling of ALVs; however ,studies have shown that whenever a crop begins to appreciate in the market and starts fetching higher income, men tend to push their w ay into the trade. Similarly, higher income prospects in any trade create competition and sooner or later non -competitive segments of the market fall by the way side in due course, and in our case these would be small -scale farmers and traders. These issue s are fundamental and need focusing as ALVs enter a new phase of production and consumption regimes. More efforts are needed to cushion the vulnerable groups ,who have previously dominated the ALVs market ,against the emerging big and medium commercial players. Otherwise, exploitation and loss of livelihoods among the vulnerable groups will be inevitable.

Necessity of Innovating Management Concept of Health Tourism Product Development in Montenegro

Health tourism product is one of the most competitive segments of the Montenegro’s total tourist product on the global tourist market. The stated fact is proved by the economic effects generated by health-related tourism organizations since 1949 and tendency to innovate and turn the offer of the majority hotel organizations into hotel products of wellness tourism. However, business outcomes achieved in the period of transition were and are still weaker than expected despite the fact that World Travel and Tourism Council has ranked Montenegro as the top destination up to 2015. In addition to falling apart of ex-Yugoslav federation, significant cause of such a situation is lack of strategic concept in development management, not only on the level of tourist politics providers but also on the level of management of the health-related tourism organization in Montenegro.

Economic Liberalization with Rising Segmentation in China's Urban Labor Market*

The massive downsizing of the state-owned sector and the concomitant impressive growth of the private sector at the end of the 1990s have altered the nature of the Chinese labor market. By bringing in more competition and market mechanisms, they have contributed to increasing labor turnover and competitiveness in market wages. Using two urban household surveys for 1995 and 2002, this paper analyzes the evolution of labor market segmentation in urban China, by applying an extended version of Oaxaca-Blinder decomposition methods. During the 7-year period, the sharp increase in earnings for all workers however shows substantial differences across ownership, economic sectors, and regions. We find strong evidence of a multi-tiered labor market along these three major lines and highlight increasing segmentation within each of the three dimensions, the gap between the privileged segments of the labor market and the most competitive segments widening over time.

Economic Liberalization with Rising Segmentation on China's Urban Labor Market

The massive downsizing of the state-owned sector and the concomitant impressive growth of the private sector at the end of the 1990s have altered the nature of the Chinese labor market. By bringing in more competition and market mechanisms, they have contributed to increasing labor turnover and competitiveness in market wages. Using two urban household surveys for 1995 and 2002, this paper analyzes the evolution of labor market segmentation in urban China, by applying an extended version of Oaxaca-Blinder decomposition methods. During the 7-year period, the sharp increase in earnings for all workers however shows substantial differences across ownership, economic sectors, and regions. We find strong evidence of a multitiered labor market along these three major lines and highlight increasing segmentation within each of the three dimensions, the gap between the privileged segments of the labor market and the most competitive segments widening over time.

Economic Liberalization with Rising Segmentation in China's Urban Labor Market

The massive downsizing of the state-owned sector and the concomitant impressive growth of the private sector at the end of the 1990s have altered the nature of the Chinese labor market. The introduction of market mechanisms has contributed to increasing labor turnover and competitiveness in market wages. Using two urban household surveys for 1995 and 2002, this paper analyzes the evolution of labor market segmentation in urban China by applying an extended version of Oaxaca-Blinder decomposition methods. During the seven-year period, the sharp increase in real earnings for all workers shows substantial differences across ownership, economic sectors, and regions. We find strong evidence of a multitiered labor market along these three major lines and highlight increasing segmentation within each of the three dimensions, with the gap between the privileged segments of the labor market and the most competitive segments widening over time.

SOUTH AFRICAN BANKS AND THE UNBANKED: PROGRESS AND PROSPECTS

Consideration is given to what the big four South African banks have done since the late nineties to open up their lending facilities to the unbanked, taking cognisance of the trends internationally, finally leading to a conclusion as to the most appropriate strategy for the future. The banks' focus has been on lending to low-income salaried individuals, making use of the downscaling strategy. Inappropriate credit technologies in this very competitive market segment led to a serious setback in 2002 when two bank micro-lenders had to terminate their operations. In contrast to their enthusiasm for the low-income market, the banks have shown a lack of interest to engage micro-entrepreneur lending, but this is to an extent vindicated by the international experience. Establishing banks dedicated to micro-finance by means of specialised public/private sector partnerships emerges as the most appropriate strategy to engage with micro-entrepreneurs. The big four banks' focus in micro-lending is expected to remain on consumption related loans for low-income salaried individuals. (This abstract was borrowed from another version of this item.)

A Conversation with Matt Wells

Search is a small but intensely competitive segment of the industry, dominated for the past few years by Google. But Google’s position as king of the hill is not insurmountable, says Gigablast’s Matt Wells, and he intends to take his product to the top.

The Positive Effects of Competition on Employment in the Telecommunications Industry

Government data on employment in the telecommunications industry reveals a substantial increase in sector employment following passage of the Telecommunications Act of 1996. This increase in employment reversed the declining jobs trend prior to the Act. Econometric analysis indicates that competitors are the primary source of job growth in wireline communications. While employment has declined in the wake of a recession, the collapse of the internet bubble, and the near complete demise of the competitive telecoms segment, the residual competition resulting from the 1996 Act, based primary on unbundled elements, has allowed current employment levels in the wireline telecoms sector to remain 17% above historical trend, presently adding about 92,000 jobs to the wireline telecommunications segment of the industry. Because the Federal Communications Commission's recent Triennial Review Order raises substantial entry barriers in the form of fixed regulatory expenses and increased risk, one also can expect that employment in the telecommunications industry will decline as entry slows and the potential for exit rises.

Liberalisation of Network Industries: Is the Electricity Sector an Exception to the Rule?

For quite a long time, network industries used to be regarded as (natural) monopolies. This was due to these industries having some special characteristics. Network externalities and economies of scale in particular justified the (natural) monopoly thesis. Recently, however, a trend towards deregulation of such industries has been observed. This trend started with the successful introduction of competition in the telecommunications sector. The main reason behind this success is that the economies of scale have disappeared as a result of emerging new technologies. The successful deregulation in telecommunications is in line with micro-economic theory, which predicts an increase in efficiency and lower prices when markets are opened up to competition. The success in the telecommunications sector is often used as an argument for opening up other network industries to competition as well. In this paper we analyse whether this reasoning can be transposed to the electricity sector. It is argued that the two sectors, electricity and telecommunications, are similar in that they are both network industries which used to be characterised by economies of scale, and that technological progress might have put an end to this scale effect. There are however certain differences. Firstly, technological progress on the supply side was accompanied by a strong growth in demand in the telecommunications sector. This demand side effect is absent in electricity. Moreover, due to physical characteristics, the electricity sector seems to be more complicated: in order to introduce competition in the sector, it has to be split up into subsectors (production, transmission, distribution and supply). Competition is introduced in production and supply, transmission and distribution remain monopolies. This splitting up creates a new kind of costs, the so-called transaction costs. The paper is centered around two issues: (a) are the basic assumptions behind the theoretical model of the perfectly free market met in the deregulated subsectors? and (b) do the transaction costs (partly) offset possible price decreases in competitive segments ? There is no hard evidence that the hypotheses behind the theoretical model are met in the electricity sector, and there are strong indications that these transaction costs might be substantial. Moreover, in addition to the deregulation process, the electricity sector is also subject to other changes such as the internalisation of externalities (see the Kyoto protocol) and the debate on nuclear energy. These elements could exert an upward pressure on prices. Since electricity is ubiquitous, the deregulation process should be closely monitored.

Character Skeletonization by a Competitive Segment Based Neural Network

Character Skeletonization by a Competitive Segment Based Neural Network

Promoting Competition in the Natural Gas Industry

Natural gas is a key source of energy for OECD countries, both in its own right and as an input into the production of electricity. Regulatory reform in this sector shares both important similarities and important differences with regulatory reform in other network industries. Like other network industries, regulatory reform in natural gas involves promoting competition in the competitive segments of the industry (particularly competition between gas producers), the development of a robust regime for access to the remaining essential facilities, and structural separation between the competitive and non-competitive segments of the industry. OECD countries have pursued each of these steps, licensing independent producers, pricing access to pipeline infrastructure and separating gas production from transportation (although long-term take-or-pay contracts make this last reform more difficult). Unlike other network industries, however, the structure of the industry varies widely from country to country according to the number of domestic gas producers, the geographic location of pipelines and the uses to which natural gas is put. Countries which rely primarily on imported gas have less to gain from domestic reform and much to gain from reform in producing countries. As OECD gas sources diminish and reliance on imports increases, regulatory reform in natural gas will increasingly become an issue for international trade.

Strategic reorientation in former public utilities: the example of UK electricity

Much current discussion of strategic content focuses upon the elaboration and refinement of existing strategies, rather than upon the demands of strategic reorientation. This lack of attention is particularly in relation to organisations undergoing market liberalisation. Consequently, our understanding of the complex outcomes resulting from the deregulation of industries is yet nascent. This paper reports empirical research undertaken in the United Kingdom aimed at identifying viable combinations of corporate and business level strategy within a regulated environment, the recently privatised UK electricity industry. The conclusions reached by the authors suggest that despite the introduction of competition to the industry, companies seeking superior market performance face limited options in their choice of strategic content. Key success criteria for companies in competitive segments of the industry are the achievement of critical mass and of some form of integration, while companies operating in regulated segments may face a very limited choice of strategic approach.

Promoting Competition in the Natural Gas Industry

This document (of 418 pages) comprises the proceedings of an OECD roundtable on promoting competition in the natural gas industry, held in February 2000. Natural gas is a key source of energy for OECD countries, both in its own right and as an input into the production of electricity. Regulatory reform in this sector shares both important similarities and important differences with regulatory reform in other network industries. Like other network industries, regulatory reform in natural gas involves promoting competition in the competitive segments of the industry (particularly competition between gas producers), the development of a robust regime for access to the remaining essential facilities, and structural separation between the competitive and non-competitive segments of the industry. OECD countries have pursued each of these steps, licensing independent producers, pricing access to pipeline infrastructure and separating gas production from transportation (although long-term take-or-pay contracts make this last reform more difficult). Unlike other network industries, however, the structure of the industry varies widely from country to country according to the number of domestic gas producers, the geographic location of pipelines and the uses to which natural gas is put. Countries which rely primarily on imported gas have less to gain from domestic reform and much to gain from reform in producing countries. As OECD gas sources diminish and reliance on imports increases, regulatory reform in natural gas will increasingly become an issue for international trade. This document consists of a background paper by the Secretariat, submissions from 18 OECD countries and a summary of the oral discussion.