Conditions Of Imperfect Competition Research Articles

Firm theory: behavior of small and medium-sized companies in conditions of imperfect competition

Firm theory: behavior of small and medium-sized companies in conditions of imperfect competition

СТАНОВЛЕННЯ ТА ОСНОВНІ ІДЕЇ НОВОЇ КЕЙНСІАНСЬКОЇ ЕКОНОМІКИ

The world economy and the phenomena that emerge in it are developing so rapidly in the current environment that traditional scientific schools, methods or recommendations are unable to actively explain them, let alone provide practical recommendations to governments on how to implement effective economic policies. All of the schools of thought that flourished in the early twentieth century have undergone modifications, crises, or have fallen out of favor in academic debate or public policy over the past hundred years. The economic crisis of 2007-2009 put more than one economic school or trend in a hopeless situation. In these conditions, the followers of classical Keynesianism, the scholars of the "new Keynesian economy", made quite successful attempts to explain the causes of crises and imbalances in the modern economy and offered practical recommendations for their prevention. Purpose. The purpose of the article is to reveal the main postulates and effective proposals of researchers of the new Keynesian economy. Methods. The following scientific methods were used during the research: analysis and synthesis, deductive method, analogy method, modeling, system approach, abstraction method. Results. New Keynesian economics is based on the postulates of classical Keynesianism and contains elements of classical economics and microeconomic analysis. By accepting that the economy operates under imperfect competition, wages and unemployment are procyclical, and output depends on aggregate demand, which is affected by nominal and real rigidities, New Keynesians have found quite effective explanations and practical recommendations for forecasting and modeling economic processes. As a result, the need for government intervention in the economy has returned to the economic discussion. Conclusion. Representatives of the new Keynesian economics were able to adapt to changes in the global economy and proposed effective scientific methods and approaches to solve economic problems and explain phenomena that arise in the modern economy. Their postulates on nominal and real cruelties that arise under conditions of imperfect competition can be used in fiscal and monetary economic policy.

Теория хаоса: расширение границ экономических исследований

The application of chaos theory in economics is associated with an increasing level of uncertainty and external shocks faced by economic systems. This article reviews and systematizes the approaches to the use of chaos theory in economic research. To this end, we discuss the concept of chaos and its relevance; and identify those areas of research for which the application of chaos theory holds most promise. The research methodo­logy comprises methods of system-functional and system-historical analysis. These methods are used to analyze the content of publications devoted to the application of chaos theory to study price fluctuations in individual markets, the behaviour of firms in the conditions of imperfect competition, the analysis of uncertainty of consumer behaviour, as well as cyclical economic development and disequilibrium associated with the ba­lance of unemployment and inflation and geopolitical tensions. The study draws the distinction between the concepts of synergetics and chaos theory. It is shown that although these two research areas are related, they have a different focus of application. The study also identifies some common patterns in the use of chaos theory tools for economic research: at the first stage, elements of chaos, fractals and nonlinearity in the series of economic data are identified; at the second stage, researchers try to explain certain events by using the tools of chaos theory; and at the third stage, chaos theory is used to model and subsequently predict short-term and long-term trends. Chaos theory expands the mathematical apparatus of economic research, allowing researchers to access tools from the field of physics and other natural sciences, which enhances interdisciplinary synthesis.

DEFINING CONDITIONS FOR INCREASING INNOVATION ACTIVITY IN THE INDUSTRIAL COMPLEX: ESSENCE, SYSTEMATIZATION, IDENTIFICATION

The subject of the study is to substantiate classifications of the factors of innovation development of the industry: according to the priority, traditional, barrier, according to the hierarchical level of innovation, the nature of supply demand for innovation, the peculiarity of the influence of factors on the market environment, the influence of factors on innovation localization, importance of innovations, the effect of innovation, nature of the impact, the power of influence, the type of competition, and other classifications of factors of innovation development of the industry. The need to intensify the development of Ukrainian industry in an innovative way requires the identification of the impact on these processes of various factors. To group these influences, the assessment of these factors should be done in the context of separate classes. For this purpose, it is necessary to develop a classification of innovative factors of industrial development. The purpose of the paper is to investigate and systematize the defining conditions for the activation of innovative development in the industrial sphere. The following methods were used in the work: dialectical method of scientific knowledge, analysis and synthesis, comparative, as well as the method of data generalization. It is proved that the complex non-use of these classifications for the substantiation of innovative development of the industry will improve the quality of planning and forecasting documentation and provisions of industrial policy. The applied meaning arising from the criteria for the classification of factors is based on their specific spatiotemporal and situational application, in particular, in conditions of imperfect competition. The classification of innovative factors of industrial development according to their priority is given. In this classification, the priority is determined by the importance and relevance of innovative industry development tasks on the basis of conclusions made as a result of the literature review. Summarizing the factors of innovation development in the barrier classification allows us to distinguish three aggregated groups of factors: socio-political and managerial, socio-economic, and financial. Our socio-economic analysis of innovative development factors of industry also allowed us to identify the following their classification attributes: the hierarchical level of innovation implementation, the character of demand for innovation, the nature of the impact on the market environment, the type of impact, the time horizon of action, impact on the area of innovation localization, the economic essence of innovation, the nature of the significance of innovation, innovation effect, the nature of effective impact, the power of influence, the type of competition.

ESSENCE, TYPES, FORMS, POSSIBILITIES AND THREATS OF DECENTRALIZATION

The article presents separate results of the theoretical substantiation of the marginal approach to the research and optimization of company expenses. The ways of further elaboration of practical recommendations concerning the complex application of the marginal approach to research, optimization of the company's activities and its costs are given. It is proved that from the positions of marginalism such categories as price, value and value do not act as synonyms, one-serial interchangeable entities, as each of these words has its strict meaning, and their corresponding phenomena - their boundaries, their content, a kind of immanent content. It is determined that cost is a key problem of market relations, and therefore only in connection with the value measure (explicit or implicit) market relations actually occur. The genesis of the phenomenon of value is accompanied by the development of not only forms of exchange (from the natural to the money, further - to the virtual), but also in the form of participants, in the form of observance of its main principle of communication - equivalence. The main approaches to the problem of analysis and cost accounting are generalized, the possibility of using the margin approach is determined. The key elements of margin analysis and further implementation in the activities of firms are determined. The nature of the influence of marginal (marginal) costs on the results of activities in conditions of imperfect competition, and not in abstract, perfectly competitive, is established. The correlation between value, price and marginal costs was established, which allowed to determine certain directions of increasing the efficiency of economic behavior. Particular attention is paid to the relationship between value, price, marginal costs and financial ratios, which are the second and third derivative function to cost, which allows a new interpretation of financial relations, namely: the relationship of the real sector of the economy with the financial, commodity market - from currency, money market, mortgage, debt markets. It is assumed that it is probably the breakdown of prices and values and forms the source of economic imbalances and crisis phenomena in the modern economy, and the state has every means to correct this.

Еволюція теорії ціноутворення та їх вплив на формування ціни на продукцію військового призначення

В статті проведено аналіз розвитку теорії цін і ціноутворення, які розглядалися в теорії трудової вартості, теорії граничної корисності та завершуючи сучасними напрямами неокласичного синтезу, що становлять теоретичну основу сучасних досліджень ринкового господарства. Пізнання економічної природи ціни відзначається за наступними етапними: кількісна теорія грошей, яка отримала широке поширення у вигляді “рівняння обміну” (MV = PQ); теорія трудової вартості визначає ціну як грошовий вираз мінової вартості товару; теорія граничної корисності де ціна представляється у вигляді оцінки граничної корисності даного блага, ціна є грошовий вираз кінцевої або граничної корисності економічного блага. Дані теорії не враховують специфіки ціноутворення на продукцію військового призначення, адже дана продукція має специфічні характеристики, а саме: єдиний покупець це держава, в більшості випадків присутня монополія на даний вид продукції тощо. Тому виникає необхідність розробки методології ціноутворення на продукцію військового призначення.

Mechanism of conflict resolution under conditions of imperfect competition

This paper presents an approach and a corresponding mechanism for adjusting resource use strategies under conditions of uncertainty. Situations of competition between two economic agents are considered in which individual agents can affect the general characteristics of resources (particularly, the price). The proposed approach allows one to choose strategies depending on one's interests regardless of the behavior of other agents as in the case of perfect competition.

Concentration in the Turkish Cement Industry

The market structure of the industry can be analyzed by reference to various indicators. These indicators are small or large firms operating in industry, market share, technological structure and competitive conditions. Todays is valid conditions of imperfect competition, concentration is one of the important indicators that determine whether they have a competitive structure operates. The main objective of this study is to analyze the market structure of the Turkish Cement Industry for the period of 2010-2014. To achieve this goal, domestic, foreign and net sales of firms data used in the study, N-Firm Concentration Ratio, Herfindahl-Hirschman and Entropy Index methods applied separately for each period, using the data set related to the domestic, foreign and net sales of firms in the industry. Consequently, the industry was determined as an oligopoly according to CR4 and CR8 while it was in a competitive market structure according to Herfindahl-Hirschman Index and Entropy Index.

Incentive compatible pool-based electricity market design and implementation: A Bayesian mechanism design approach

Under conditions of imperfect competition, the issue of asymmetric information, which has not been effectively managed and settled until now, has been one of the most significant problems of the pool-based electricity market, both in theory and practice. Electricity generation companies expect to maximize their profits and control the market price by strategically bidding and their offers will necessarily deviate from the true marginal costs. These practices would result in great losses of market efficiency and incur much more payments from the consumers than actually needed. Therefore, this paper uses the analytical paradigm of economic mechanism design theory to deduce and design a customized pool-based market mechanism, which simultaneously satisfies three major properties of mechanism design theory: incentive compatibility, individual rationality and payment cost minimization. Then, several issues associated with the operational principle and implementation of this innovative mechanism are discussed and examined in detail. Finally, the results of numerical examples and case study validate the effectiveness of the proposed mechanism, which can encourage truthfulness and eliminate tacit collusion, even when there is a tight market or transmission congestion with pivotal suppliers.

Measurement of banks' economic efficiency under conditions of imperfect competition

One of the modes of the measurement of banks' and their branches' economic efficiency is constituted by an econometric approach based on stochastic frontier functions. In this approach, the following three basic goal functions can be considered: the cost, revenue and profit functions. This paper aims to present alternative (relative to the standard formula) concepts of the measurement of revenue and profit efficiency constituting an important assessment criterion of banks' operations. The paper also presents the results of the empirical studies of revenue and profit efficiency, as exemplified by the selected commercial bank. The theoretical part of the paper proceeds from an introduction to present the premises of an alternative efficiency assessment, then the formulas of the frontier functions of revenue and a profit. These are formulas that can exclusively be used under the conditions of imperfect competition between banks. The empirical part focuses on the application of the above models to assess the efficiency of a Polish bank's branches. The calculations returned the indicators of revenue and profit efficiency and the rankings of the studied sample of branches in three different quarters. Due to the use of an excessively simple assessment method (Corrected Least Squares Method), the efficiency indicators obtained are understated and not accurate enough to lend themselves to further analysis. On the other hand, the rankings prepared on its basis are reliable and can be used for further assessments and comparisons, which should be considered as a meaningful research benefit.

Strategic Firm Interaction, Returns to Scale, Environmental Regulation and Ambient Charges in a Cournot Duopoly

Environmental regulation under conditions of imperfect competition in the presence of nonpoint sources (NPS) of pollution has not been well analyzed in the literature. This paper models strategic firm interaction and the effect of ambient charges on total NPS pollution in an imperfectly competitive, Cournot type duopoly under constant and decreasing returns to scale (CRTS & DRTS). We identify two distinct and often opposing effects. Under CRTS, the primary effect of a higher ambient charge is to increase pollution abatement (and thus decrease pollution) while the secondary effect is to lower output. Higher pollution abatement and lower output reinforce each other so that a higher ambient charge results in an unambiguous decrease in NPS pollution. Under DRTS, a higher ambient charge decreases output but the effect on abatement is ambiguous. Moreover, the marginal effect of a change in the ambient charge is larger under CRTS than DRTS. Our results indicate that, in general, pollution control mechanisms such as ambient charges tend to be more effective under CRTS.

Modelling the economic impact of sports events: The case of the Beijing Olympics

Major sports events are used increasingly by policy-makers to stimulate economic development. This has resulted in a growth of academic interest in ways of analysing their contribution. Following a review of the literature on the contrasting approaches that have been used, this paper assesses the economic impact of the Beijing Olympics, in particular the tourism impact, using computable general equilibrium (CGE) modelling. To add novelty, it analyses the data under conditions of imperfect competition, an approach that has been used to good effect in other contexts, notably international trade. The findings suggest that staging the Beijing Olympics brought economic benefits to the host economy but that the scale of the impact was not significant compared to the total size of the economy. The welfare impacts of the Beijing Olympics under imperfect competition are shown to be higher than when perfect competition is assumed. This is explained by the pro-competitive effect.

International Competition In Research And Development; Incentives To Subsidize And Retaliate

<span>Is laissez faire optimal in international trade under conditions of imperfect competition? Possible economic profits may tempt governments to intervene in trade in order to enhance the national income. An intriguing intervention is subsidizing a firms research and development (R&D) efforts. This paper presents Bertrand competitors, in an international duopoly, who invest in R&D directed towards process innovation. Ironically, a subsidy may not be welfare-enhancing.</span>

Appraising Transport Investments in a Regulatory Regime

There has been considerable work in recent years improving the methods for the appraisal of transport investments under conditions of imperfect competition which gives rise to possible wider economic benefits. This paper examines the further situation where the market for transport operates under a range of regulatory regimes. This develops the issues which may arise in the appraisal of investments by various forms of public-private partnerships where there may be different objectives for the private and public sectors. The paper discusses the issues involved in different forms of regulatory regime on the basis of experience with regulated transport markets in the U.K. and the European Union’s trans-European networks to assess the effects on investment decisions which fall into different regulatory regimes.

Deux modèles de pouvoir : une étude empirique dans le milieu carcéral russe

Two models of power: An empirical study in theRussian carcéral environment Deeply enrooted in Russian history, the samovlastie runs through the history of the Soviet and post-Soviet periods. This particular model of power has five characteristics: (i) it is a "power over" rather than the "power to"; (ii) relations between superior and inferior are extremely asymmetrical; (iii) the inferior have no say; (iv) the only justification of this power is the exercise of power itself; and (v) violent techniques (force, coercion, manipulation) prevail. The reproduction of samovlastie through the Soviet and post-Soviet history can explain the continuity in Russia's political and economic evolution. An alternative model of power relations, illustrated by informal leaders in prison, differs from the samovlastie in all five respects. In the repertory of techniques, a new one - "domination by virtue of a constellation of interests" - has arisen out of a nearly rational choice in the conditions of imperfect competition and other biases in market structure.

Barriers to Trade and Imperfect Competition: The Choice of Commodity Tax Base

Recent work has started to analyze the choice of international commodity tax base under conditions of imperfect competition. This paper focuses on the effects of changing levels of trade barriers in a model where firms engage in duopoly competition and governments set commodity taxes non-cooperatively. It is shown that the consumption base (destination principle) dominates the production base (origin principle) when trade costs are high, but the ranking of the two tax bases is reversed for low levels of trade costs. We conclude that the case for origin-based commodity taxes becomes stronger when barriers to trade fall.

Globalization and the Good Corporation: A Need for Proactive Co-existence

Large corporations are coming under intense pressure to act in a socially responsible manner. Corporations have accepted this notion provided that it is exercised voluntarily. It has also been argued that corporations can do well by doing good, and that good ethics is good business. This paper presents an alternative viewpoint by demonstrating that while voluntary socially responsible conduct is desirable, it plays a rather small role in inspiring good corporate conduct. Instead, (a) it is the external economic-competitive conditions that define the parameters and opportunities for good corporate conduct; and (b) the values and traditions of the corporations, and their perceived risk in exploiting those opportunities, that influence the extent of a corporation's socially responsible conduct. The framework presented here analyzes certain market-competitive conditions, which determine the scope and direction of socially responsible corporate conduct, and the instruments available to society to enhance ethical corporate conduct. It suggests that from society's perspective, we should move away from the notion of corporate social responsibility and toward corporate social accountability. Most modern economies operate under conditions of imperfect competition where corporations gain above-normal profits, i.e., market rent, from market imperfections. Therefore, corporations should be held accountable for a more equitable distribution of these above-normal profits with other groups, e.g., customers, employees, etc., who were deprived of their market-based gains because of market imperfections and corporate power. Three approaches are suggested for measuring corporate accountability through corrections. These are: information imbalance, bargaining power imbalance, and, adjudication, remedy and relief imbalance.

The comparison between destination and origin principles under imperfect competition

Especially, but not only, in the European Union, closer economic integration is putting increasing pressure on the destination principle under which goods entering international trade are normally taxed. This has raised the possibility of switching to the origin principle, which dispenses with problematic border tax adjustments. This paper compares destination and origin principles under conditions of imperfect competition. Previous analyses, which have considered only the competitive case, have led to a (qualified) presumption in favour of the destination principle. A series of results are established here – for both cooperative and non-cooperative tax-setting – which challenge that presumption under imperfect competition.

Corporate Tax Analysis in a Dominant Firm Model with Sunk Capital Investment

The design of corporate tax policy under conditions of imperfect competition in product markets is of considerable interest to policy makers, academics and practitioners. Unfortunately, few research studies on this topic have been undertaken. Theoretical and empirical results available in the public economics literature are generally obtained by assuming perfectly competitive product markets. Imperfect competition raises a number of interesting issues that do not arise under perfect competition. These include strategic interactions between firms arising from past investments, asymmetries in cost and market structure, and the differential treatment of firms. Consideration of these issues suggests that taxation may cause changes in market structure via the entry and exit of firms. When this occurs, small tax changes may induce large changes in market output and price. The present paper will address these issues by examining the impact of taxes on capital within a dominant firm model. It is organized as follows. Section II presents an overview of the model. Section III examines the effects of capital taxes and subsidies on market output and price. Section IV concludes the paper by briefly discussing the economic welfare implications of the results.

THE WELFARE EFFECTS OF IMPERFECT HARMONISATION OF TRADE AND INDUSTRIAL POLICY

In recent years several countries have made major efforts to coordinate trade and industrial policies. Examples include the United States-Canada Free Trade Agreement and the European attempt to complete the E.C. internal market by the year I992. The design of welfare-improving policy reform is complicated by the presence of a large number of policy-induced distortions and by the imperfectly competitive nature of many industries. It is well known that the nominal reduction of a set of distortions, holding other distortions fixed, does not necessarily improve welfare. This conclusion, which arises because the reform occurs in a second-best environment, certainly survives the introduction of imperfect competition. We examine additional complications that arise when reform is carried out under conditions of imperfect competition. This subject, which is of general theoretical interest, is also of immediate practical interest due to the current attempts to harmonise European trade and industrial policies. The principal conclusion is that limited cooperation, as occurs in customs unions, may be worse for members of the union than no cooperation. This possibility arises because comparison of welfare under the two situations (no cooperation and partial cooperation) amounts to a comparison of two second- best equilibria. Such a comparison is, in general, ambiguous. An alternative explanation of the result is that different degrees of cooperation induce different games. A comparison of the equilibria of these different games is, in general, ambiguous. In view of this, the possibility of disadvantageous cooperation is not surprising.' This paper identifies circumstances under which the possibility is likely. We study the case where countries that form the union (i.e. cooperate) coordinate trade policy in an attempt to alter the incentives faced by imperfectly competitive domestic industries. For simplicity we assume that these industries, each of which is treated as a single firm, produce for export only. We analyse three variations of a partial equilibrium trading model, which illustrate different reasons why limited cooperation may be worse than no cooperation for members of a union. We study complete information subgame- perfect equilibria. Section I considers the case where n firms, each identified with a different