Market Structure Research Articles

Bank Performance and Stability: The Mediating Role of Market Structure in Pre-and Post-Merger and Acquisition

Bank Performance and Stability: The Mediating Role of Market Structure in Pre-and Post-Merger and Acquisition

Purchase discounts on federal holidays and adjacent shopping holidays: Evidence from the airline industry

AbstractDiscounts during Thanksgiving and Christmas are common in a variety of retail markets. In this article, we examine whether holiday discounts extend to the airline industry. In contrast to many retail markets where purchased goods are meant for immediate consumption (e.g., groceries), goods in airline markets are often consumed in the future due to advance purchases. Exploiting a unique panel of almost 22 million fares, we find that fares purchased on a holiday for flights in the 60‐day period following the holiday are 1.9% cheaper, supporting the conjecture that airlines price discriminate when demand is lower than average or when the mix of purchasing passengers makes demand more elastic. These holiday discounts also do not vary with the level of competition, indicating that market structure has no impact on the magnitude of the holiday purchase discount.

Optimal labor income taxation with the dividend effect

AbstractThe unequal distribution of dividends implies the unequal distribution of the profit share of workers’ product of labor. In a Mirrleesian framework when dividends cannot be expropriated, we show that a progressive distribution of dividends creates a positive dividend effect on labor income taxes. Our numerical simulations show the dividend effect to be approximately four percentage points. We analyze the dividend effect under different market structures and its interplay with other forms of taxation.

CONSUMER BEHAVIOUR AND DECISION MAKING IN HEALTHCARE PURCHASES

In the complicated healthcare environment of today, obtaining health insurance is essential to guaranteeing both financial stability and access to high-quality medical care. However, there are still many unknowns when it comes to consumer behaviors while choosing health insurance, which affects market dynamics and decision-making procedures. By combining knowledge from the fields of economics, psychology, marketing, and public policy with a thorough investigation of consumer behaviors in the healthcare insurance market, this study seeks to close these gaps. The research attempts to elucidate the elements influencing decision-making, the complexities of choosing insurance, and the implications for market dynamics, consumer welfare, and policy development through theoretical investigation, empirical analysis, and practical implications. Important conclusions highlight the need for focused marketing and governmental interventions by revealing the intricate interactions between social, marketing, and personal aspects in decision-making. The study emphasizes how crucial decision support tools and consumer education are to enhancing consumer comprehension and decision-making. Furthermore, it highlights how important it is to have regulatory frameworks that support competition, consumer welfare, and market efficiency that are based on a deeper understanding of consumer behaviour. Through the utilisation of these insights, interested parties can endeavor to establish a healthcare insurance market that is reasonably priced, easily accessible, and adaptable to the various requirements of people and communities, guaranteeing access to top-notch medical care while upholding financial stability. Key Words: health insurance, consumer behaviours, decision-making, market structure, policy formulation, safety of consumers, regulatory frameworks, affordability, access, quality care.

Research on Disney's Streaming Media Industry Behavior under the Digital Transformation

In the era of the digital economy, competition among media and film companies in the streaming media sector has entered a new stage. Following the steady growth of global users, the streaming media market is now trending towards a relatively consolidated monopoly. This paper takes Disney, an American media giant, as a case study to analyze its internal and external motivations for undertaking streaming media reform. It examines Disney's strategic layout in the streaming media industry from an industrial behavior perspective, focusing on organizational behavior and pricing strategies. Additionally, HHI is employed to verify that North America's streaming media market structure can be characterized as a "competitive monopoly" market. Therefore, considering the current market situation, this analysis aims to provide insights and explore potential pathways for traditional film and television companies' digital transformation.

The impacts of the Ethiopian developmental state model on the competition, efficiency and profitability of banks

PurposeThis study examines the impacts of the Ethiopian developmental state model on the competition, efficiency and profitability of banks.Design/methodology/approachThe competition, efficiency and profitability of the Ethiopian bank are measured using Panzar Rose, data envelopment analysis and financial ratio. Fixed-effect panel regression methods are applied to test the direction and strength of association between the Ethiopian developmental state model and the competition, efficiency and profitability of the country's banks while controlling bank-specific market structure and macroeconomic factors.FindingsThe Ethiopian developmental state model embeds the state-directed financial system, which affects the banking industry using a range of credit allocation instruments. Of which, directed credit schemes, interest rate control and the lack of financial freedom reduce the competition and efficiency of banks. The National Bank of Ethiopia (NBE) advances to the government and the sale of Treasury bills to a captive market enhances banking competition while negatively affecting banking efficiency. Interest rate control and the lack of financial freedom lower banking profitability. Unexpectedly, directed credit schemes improve banking profitability.Research limitations/implicationsAs with any study, this one has limitations. The intra-period comparison of efficiency is based on balanced data. Future studies can use methods that can measure the efficiency of banks using unbalanced data. The computation of the yearly H-statistic is constrained by the small sample size. The use of high-frequency data for measuring competition can provide us with better insights into banking competition in Ethiopia. Furthermore, there are a number of methods for measuring banking competition, efficiency and profitability with different assumptions. Approaching the subject of this study by applying different methods will offer different insights.Practical implicationsThe contributions of this study to practice are at two levels. First, at the policy level, it enhances our understanding of the impacts of developmental state model policies, as implemented in Ethiopia, on the banking industry and therefore provides suggestions to policymakers to reform the sector's policies. Second, it offers input to the management of banks regarding the factors that impact the industry.Originality/valueThe banking industry is often studied in the context of financial liberalisation. The originality of this study lies in investigating how the competition, efficiency and profitability of banks are affected when operating in the context of significant state interventions in the industry.

Generic technology R&D decision with technology spillover, cost difference, and bargaining power under oligopoly competition

ABSTRACT This study constructs an oligopoly model considering generic technology R&D, analyzes the market equilibrium results under R&D cooperation and non-cooperation, explores the impacts of technology spillover, cost difference, and firm’s bargaining power, and compares the boundary conditions between R&D cooperation and non-cooperation. The results show that when the degree of technology spillover is small, the R&D firm conducts drastic R&D, resulting in a complete monopoly. The market structure and equilibrium results are influenced by the degree of technology spillover, cost difference, bargaining power, and the number of following firms. Cooperation in R&D can be considered as a Nash equilibrium in certain cases. Compared with R&D non-cooperation, R&D cooperation can lead to higher profits for firms. When the degree of technology spillover is large and the number of following firms is small, R&D cooperation yields greater consumer surplus and social welfare.

Market configurations when marginal costs are quality‐dependent

AbstractMost quality‐then‐price decision models under vertical product differentiation consider a predetermined market configuration. We endogenize market configuration considering quality‐dependent marginal costs and conclude that a strictly interior full coverage duopoly holds for some parameter values, unveiling the relevance of this commonly assumed market structure. Moreover, we show that a monopoly never arises in equilibrium, and (i) there are multiple equilibria at the frontier between interior and corner full coverage duopoly, (ii) the market is fully (partially) covered when relative tastes' heterogeneity is low (high), and (iii) there is a discontinuity in the transition from partial coverage to full coverage duopoly.

The Structure-Conduct-Performance of Indonesian Coffee Processing Industry

Coffee industry in Indonesia in the short- and long terms has the potential to boost the country’s economy which can be seen in the form of structure, behavior, and performance. Market forces affect the market structure in an industry. The formation of the market structure affects a company’s behavior which further affects the performance of the company. The data used in this study is sourced from the Central Statistics Agency. The study measures the relationship of structure and other factors that affect the performance of the Indonesian coffee industry using a multiple regression model. Our findings show that the coffee processing industry in Indonesia has an oligopoly structure with a fairly high market barrier. The market behavior of the coffee processing industry is seen in terms of price strategy, products, and promotion. The performance of the coffee processing industry in Indonesia has an increasing trend every year. A positive trend results in good performance for the company so that it will increase the level of profit. Based on the regression results, the Minimum Cost Price which represents the performance of the Indonesian coffee processing industry is significantly influenced by the Efficiency Value. CR4 value and Labor Productivity have no real effect on the Minimum Price Cost. The pattern of the relationship between Efficiency and Labor Productivity to the Minimum Price Cost has a positive effect while CR4 has a negative effect. Keywords: structure, conduct, performance, coffee processing industry

STATE AND PROSPECTS FOR THE DEVELOPMENT OF ISLAMIC FINANCE INSTRUMENTS (SUKUK) IN RUSSIA AND ABROAD

The search for new sources of financing investment projects in modern Russia in the context of external sanctions and the implementation of geopolitical threats actualizes the problem of incorporating Islamic finance instruments into the structure of the financial market. The early twentieth century development experience of a number of foreign countries shows the steady growth of the assets of Islamic banks, investment funds and the volume of issuance of investment certificates (sukuk), which constitute the main segments of Islamic finance in the world. Islamic financial assets are widely represented in the Gulf countries, Southeast Asia, the Middle East and South Asia, and Africa. The implementation of the principles of Islamic finance in the Russian Federation is hampered by legal, cultural, historical and political factors. While there are certain Islamic financial products in Russia, there is no issue of sukuk at all. In this regard, the purpose of this paper is to study the principles of Islamic finance and the functioning mechanism of the market for the investment certificates (sukuk), possibilities and limitations of their implementation in the modern Russian economy. The author defines sukuk as an Islamic financial instrument used for securitization of assets, and identifies its differences from traditional bonds. Alternative approaches to solving the problem of compliance of sukuk with Sharia principles are analyzed. The prerequisites for realizing the potential of sukuk in modern Russia are determined and the obstacles to their issuance are formulated. It is concluded that the adoption of the Federal Law of 04.08.2023 N 417-FZ "On Conducting an Experiment to Establish Special Regulation in Order to Create the Necessary Conditions for Carrying out Partnership Financing Activities in Certain Constituent Entities of the Russian Federation and on Introducing Amendments to Certain Legislative Acts of the Russian Federation" and its implementation, taking into account its provisions of pilot projects in a number of Russian regions, will make it possible to intensify the process of incorporation of project financing instruments into the structure of the financial markets of modern Russia.

Sustainable development goals disclosure and analyst forecast quality

PurposeThis study aims to investigate the relationship between corporate sustainable development goals (SDGs) disclosure and analyst forecast quality.Design/methodology/approachThe study focuses on a sample of 95 Italian-listed companies preparing the mandatory non-financial declaration (NFD) according to the Global Reporting Initiative (GRI) standards over a five-year period (2017–2021), corresponding to an unbalanced sample of 438 observations. Analyst forecast quality was proxied by earnings forecast accuracy (FA) and earnings forecast dispersion (FD), built on data retrieved from the Refinitiv database. A manual content analysis was performed on NFDs to derive an SDG disclosure score (SDGD) for each sampled company.FindingsThis study provides empirical evidence suggesting that voluntary SDG disclosure matters to the capital market in that it helps enhance the information environment of companies, evidenced by improved analyst forecast quality. In particular, this study highlighted that SDG disclosure positively influences analyst FA while negatively affecting analyst FD.Research limitations/implicationsThis study focuses on the Italian context, which has idiosyncratic characteristics regarding the structure of the financial market, the composition of corporate ownership and experience in non-financial reporting practices.Practical implicationsThis study indicates to corporate managers that following GRI standards may represent the right way to better integrate SDG disclosure in corporate non-financial reports and increase the relevance of such information for investors and other capital market participants.Originality/valueTo the best of the authors’ knowledge, this is the first study that empirically examines the association between SDG disclosure and analyst forecast quality.

GLOBAL FINANCIAL INFRASTRUCTURE MEDIATED BY THE ESTABLISHMENT OF ISLAMIC CENTRAL BANKS

The current global financial market, where money is based on debt, does not reflect a perception of wealth creation for inter-country life. The orientation of national income and expenditure has shifted towards debt. Citizenship has transformed into a consumerist lifestyle, and a country's economic policies have become dependent on the supply of debt. The financial structure of both nations and societies is created from one debt to another, with debt serving as the global financial standard. The Taylor rule links debt parallel to interest rates, transforming money into a commodity. Removing money from the current global financial market structure must be mediated by the establishment of a Shariah central bank under the supervision of the World Bank.

Explaining why increases in generic use outpace decreases in brand name medicine use in multisource markets and the role of regulation.

Healthcare systems worldwide face escalating pharmaceutical expenditures despite interventions targeting pricing and generic substitution. Existing studies often overlook unwarranted volume increases in multisource markets due to differential physician perceptions of brand name and generics. This study aims to explain the outpacing of generic medicine use over brand name use in multisource markets and assess the regulatory role, specifically examining the impact of reference pricing on volume and intensity increases. Analyzing German multisource prescription medicine markets from 2011 to 2014, we evaluate regulatory mechanisms and explore whether brand name and generic medicines constitute separate market segments. Using an Oaxaca-Blinder decomposition approach, we divide the differential in brand name versus generic medicine use rates into market structure and unobserved segment effects. Generic use rates surpass same-market brand name substitution by 3.87 prescriptions per physician and medicine, on average. Reference pricing mitigated volume increase, treatment intensity and expenditure. Disparities in quantity and expenditure dynamics between brand name and generic segments are partially explained by market structure and segment effects. Generic medicine use effectively reduces expenditures but contributes to increased net prescription rates. Reference pricing may control medicine use, but divergent physician perceptions of brand name and generics, revealed by identified segment effects, call for nuanced policy interventions.

The study of marketing opportunities for the use of the raw material of feverfew (Tanacetum parthenium L.) in the pharmacotherapy of musculoskeletal system diseases

Aim. To form a modern idea of the market structure and trends in the consumption of drugs for the pharmacotherapy of rheumatoid arthritis, to determine the possible potential for use of plant raw material of feverfew (Tanacetum parthenium). Materials and methods. The study was conducted using the structural analysis, logical and graphical methods, and marketing analysis methods. Results. It was found that in the pre-war period the market for drugs affecting the musculoskeletal system developed quite vigorously – its growth rate in the period of 2020-2021 ranged from 16 to 29 % in natural units and from 20 to 30 % in monetary terms. According to the structure of producing countries, the market was significantly import-dependent. The market for synthetic drugs was quite saturated, represented by various dosage forms – tablets, powder for suspension, injection solutions (ampoules), granules, capsules, sachets, alcohol solutions, oil solutions, suppositories, oral suspensions, transdermal patches, gels, ointments. The research was conducted taking into account the study of marketing opportunities for the use of the raw material of Tanacetum parthenium in the pharmacotherapy of diseases of the musculoskeletal system since this raw material had certain advantages compared to synthetic analogs. It should be noted that the market of herbal medicines for the treatment of the musculoskeletal system diseases or the prevention of their manifestations is very limited and is represented by a minimum number of product items and one representative of the medicinal flora – Symphytum officinale. In addition, 90 % of the market for this group of drugs belongs to foreign manufacturers. Although research of the market for biological supplements indicates a certain demand for products based on the medicinal plant raw material. Conclusions. Based on the trends identified, we can state the positive development of the market for drugs that affect the musculoskeletal system, the prospects for the development of drugs based on the medicinal plant raw material, including Tanacetum parthenium.

Do Cross-Border Mergers and Acquisitions by Emerging Market Enterprises Enhance Long-Term Productivity? The Host Country Market Size Effect Moderated by Technological Absorption Efforts

The purpose of this study was to establish a spatial structural framework to explore how cross-border mergers and acquisitions (M&As) in emerging markets can enhance long-term productivity and select the appropriate host country market structures. Utilizing cross-border M&A data from Chinese companies from 2008 to 2016, we developed a moderated U-shaped mediation model. Employing Two-Stage Least Squares and the Generalized Method of Moments for endogeneity analysis, we offer robust empirical insights. Our findings illustrate that enterprise productivity progression from cross-border M&As is significantly influenced by a U-shaped mediation of the host country’s market size effect, which is further moderated by the technological distance between the home and host countries. A high technological distance intensifies the U-shaped mediation of market size effects on enterprise productivity, while low technological distances result in an inverted U-shaped curve, indicating that such markets may boost short-term productivity but limit long-term growth. Conversely, larger markets with greater technological distances better support sustained productivity increases, even requiring persistent technological absorption efforts. This study underscores the necessity of selecting appropriate host country market structures and effectively managing the acquisition timeline to positively impact both short- and long-term productivity. By conceptualizing firm-level technological absorption efforts as the technological gap between the home and host countries, this study highlights the crucial moderating role that the technological gap plays in influencing long-term productivity at the macro level, providing new insights into the economic geographic strategic decisions and spatial planning for emerging market enterprises in cross-border acquisitions.

The role of imperfect market structure in the employment effect of emissions trading scheme in China: A theoretical extension and empirical investigation

The Chinese government aims to balance employment stabilization and emissions reduction when it initiates an emissions trading scheme (ETS) to control carbon emissions. However, the policymakers should not neglect the role of imperfectly competitive market structure and market power from incumbent firms. In view of this, classical framework of Berman and Bui's (2001) is extended in this paper to clarify the theoretical mechanism of employment effect of the ETS considering firm-level market power. In addition, based on the firm-level panel data from 2008 to 2019 of China, the employment effect of each pilot ETS is measured with the method of difference-in-difference-in-differences. Then a moderating effect model is established to verify the role of firm-level market power on the heterogeneous employment effect among the pilot ETSs. Moreover, the employment effect is further decomposed to evaluate the influential mechanism from the perspective of firms’ strategic behavior. It is found that there is negative employment effect of China's ETS policy, due to the significant moderating role of firm-level market power. This decrease in labor demand is mainly dominated by a negative output effect rather than a positive substitution effect because strategic allowance sellers with stronger market power tend to hire fewer employees to reduce carbon emissions by controlling production scale. However, the heterogeneity of policy effects resulted by market structure is also identified in different pilot regions. Employment dividend has been found in Beijing and Tianjin where strategic allowance buyers manipulate the carbon market and hire more employees to consolidate their market power. Therefore, policymakers should improve the design of the ETS to overcome the adverse employment effect duo to the region-specific market structure.

Desirable banking competition and stability

Every financial crisis raises questions about how the banking market structure affects the real economy. Although low bank concentration may reduce markups and foster riskier behavior, concentrated banking systems appear more resilient to financial shocks. We use a nonlinear dynamic stochastic general equilibrium model with financial frictions to compare the transmissions of shocks under different competition and concentration configurations. The results reveal that oligopolistic competition amplifies the effects of the shocks relative to monopolistic competition. The transmission mechanism works through the markups, which are amplified when banking concentration is increased. The desirable banking market structure is determined according to financial stability and social welfare objectives. Moreover, we find that depending on policymakers’ preferences, a banking concentration of five to eight banks balances social welfare and bank stability objectives in the United States.

Critique and expansion of conceptions of control

AbstractNeil Fligstein's Conceptions of control have multiple theoretical origins in the institutional, political, and cultural perspectives of the new economic sociology. However, conceptions of control as a key concept of market structure have not systematically been formulated in Fligstein's works, remaining insightfully but relatively fragmentally. This paper summarizes the normative, power, and cognitive dimensions of conceptions of control, respectively corresponding to market agreement, dominant relationship and common understanding. On this basis, this paper provides a clear definition of conceptions of control. Additionally, this paper summarizes the formation of the conceptions of control and its change, distinguishes the differences between conceptions of control and other related concepts, and presents the evolution of the concept that has taken place in subsequent studies, as well as the criticisms to which it has been subjected. This paper suggests that this concept needs to be expanded in terms of the connotation of market actors, the role of government, and the forms of existence. Conceptions of control provide a concise conceptual tool for analyzing market transformation. We believe that the market changes triggered by the new business formats in the digital economy era will be more frequent, and conception of control will have a broader application prospect.

Review of Literature: The Impact of Competitive Advantage on Business Marketing Performance

This research aims to thoroughly investigate the impact of competitive advantage on the marketing performance of businesses. Companies possessing a competitive advantage consistently demonstrate an understanding of changes in market structure and the ability to choose effective marketing strategies. Competitive advantage can be achieved through various means, such as offering high-quality products or services, establishing uniqueness compared to competitors, or targeting specific market segments. Recognizing how to sustain a competitive advantage is a key factor in a company's success in a competitive environment. In summary, the roles of competitive advantage in the marketing performance of business actors include its impact on company performance, increasing business profits, influencing financial performance, affecting work performance, and shaping buyer decisions

CONVERSION INTO FULL-FLEDGE ISLAMIC BANKS AND IT’S IMPACT ON ASSET: EVIDENCE FROM INDONESIAN ISLAMIC BANKING INDUSTRY

Objective: This study aims to analyze whether the number of assets differs before and after conversion to an Islamic bank. Theoretical Framework: The theoretical framework provides relevant information on Islamic banking and market structure, which forms the basis for the development of hypothesis. Method: Using regression analysis with dummy variables, the study found differences in assets between the pre and post-conversion periods. Results and Discussion: The findings suggest that conversion could be a recommended approach for the Islamic banking industry in Indonesia to accelerate asset growth. Additionally, it offers an optimal solution for smaller-sized conventional banks as an alternative to spin-offs or mergers. Research Implications: This research provides significant contributions to the study of Islamic banking. This research has the implication that conversion can be an alternative strategy for small parent banks. Originality/Value: Several conventional banks in Indonesia have chosen full conversion into Islamic banks as an exit strategy. This decision is in addition to the spin-off option. Bank of Aceh, Bank of NTB and Bank of Riau Kepri completed the full conversion in 2016, 2018 and 2022, respectively. However, research on Islamic bank conversion is still limited.