Monopolistic Competition Research Articles

Empirical analysis of the market structure of the Hungarian bank market

This paper analyzes the market structure of the Hungarian bank market and the effects of the financial crisis of 2008 on it. With a static and a dynamic panel model we estimate the elasticity of total revenues with respect to changes in input prices so that we can determine the market structure based on the Panzar and Rosse methodology for the period between 2003 and 2020. We test the input price elasticity according to the balance sheet and profit and loss data of the top 13 companies. The results show that the Hungarian bank market was a monopolistic competition or a monopoly market in long run equilibrium. To see the effects of the financial crisis we use three subsamples, furthermore we estimate and test the H-statistic with a fixed effect model. During the examined period the level of factor price elasticity increased in time.

Comparison Between Business Model of Ecommerce Retail Segment of Amazon and Alibaba

In this digital era, ecommerce has been an essential element of the economy of most developed countries and a lot of developing countries. The US and China were pioneers in this industry and exhibited a significant amount of growth since the 1990s with Amazon and Alibaba being the current dominant firms. This paper compares the business model and past performances of Amazon and Alibaba primarily through examining their annual reports in 2022, supported by data from reports in 2020. This paper concluded that the two companies were similar in stem but adopted different strategies because of difference in business environment including demographics, legal restrictions and level of competition. The author believes that the ecommerce industry will gradually evolve into a monopolistic competition. Amazon and Alibaba shall keep up with the latest technologies to maintain their market shares from taking away by competitors, including advancements in big data computing and generative AI, as well as alternate business models as demand for online services became more diversified with the increasing reliance of ecommerce after covid.

A micro‐founded comparison of fiscal policies between indirect and direct job creation

AbstractThe purpose of this paper is to provide a micro‐economic foundation for an argument that the direct employment by the government is more desirable than the government purchase of private goods to eliminate unemployment. A general equilibrium model with monopolistic competition is devised, and the effects of policies (government purchase, tax rate operation, and government employment) on macroeconomic variables (consumption, price, and profit) are investigated. It is shown that (1) the government purchase is inflationary in the sense that additional effective demand by the government not only increases private employment but also raises prices; (2) the government employment can achieve full employment without causing a rise in prices.

Economic distributions, primitive distributions, and demand recovery in monopolistic competition

We link fundamental technological and taste distributions to endogenous economic distributions of prices and firm size (output, profit) generated under monopolistic competition with heterogeneous productivities as per recent Trade and Industrial Organization models. We derive full equivalence properties for monopoly mark-ups, demand shape, marginal revenue, and profits to match distributions of cost, price, output, and profit under monopolistic competition. Demand and one distribution determine the rest. We provide constructive proofs to recover demand and all distributions from just two (e.g., price and cost distributions uncover demand form), and derive restrictions on distribution pairs. Finally, we extend to analyze mark-up distributions.

Adaptive Estimation and Uniform Confidence Bands for Nonparametric Structural Functions and Elasticities

Abstract We introduce two data-driven procedures for optimal estimation and inference in nonparametric models using instrumental variables. The first is a data-driven choice of sieve dimension for a popular class of sieve two-stage least-squares estimators. When implemented with this choice, estimators of both the structural function h0 and its derivatives (such as elasticities) converge at the fastest possible (i.e. minimax) rates in sup-norm. The second is for constructing uniform confidence bands (UCBs) for h0 and its derivatives. Our UCBs guarantee coverage over a generic class of data-generating processes and contract at the minimax rate, possibly up to a logarithmic factor. As such, our UCBs are asymptotically more efficient than UCBs based on the usual approach of undersmoothing. As an application, we estimate the elasticity of the intensive margin of firm exports in a monopolistic competition model of international trade. Simulations illustrate the good performance of our procedures in empirically calibrated designs. Our results provide evidence against common parameterizations of the distribution of unobserved firm heterogeneity.

Optimal policy against distortions caused by monopolistic competition and variable markup pricing

This study investigates the optimal policy design against distortions under monopolistic competition with firm heterogeneity and variable markups. In this framework, distortions arise from differences in markups across firms, necessitating sophisticated policy interventions to eliminate all markup differences. This study shows that simultaneous implementation of ad valorem tax and per-unit subsidy works effectively in eliminating the markup differences, enabling efficient resource allocation without resorting to firm-specific taxes/subsidies, whose implementation would require each firm’s private information.

Competition Law, Market Dynamics, And Human Rights in The Pharmaceutical Sector: An Integrative Analysis

The pharmaceutical industry is widely recognized as a crucial sector that contributes significantly to the country's economic growth, and the importance of Competition Law in this industry is widely acknowledged. However, this market is also susceptible to various unlawful transactions and monopolistic competition, given that medicine is an essential item that every consumer needs, and market players often take advantage of this to trade their products and achieve monopolies or control product prices. To address these issues, the Competition Act, 2002 was instituted, and various regulations were implemented to regulate market competition across different sectors.
 The importance of public health is a major consideration in the pharmaceutical industry, and it is crucial to understand how competition law is applied in this sector. This article aims to shed light on the interplay between IP rights and competition law in the pharmaceutical sector and provide insight into how the development of the industry has spurred competition in the market. Additionally, the article will offer some suggestions.
 The integrative analysis of competition law, market dynamics, and human rights in the pharmaceutical sector underscores the need for a holistic approach to address the complex challenges. By considering the interplay between competition law, market dynamics, and human rights, policymakers, regulators, and stakeholders can develop strategies that foster fair competition, ensure access to affordable medicines, and protect human rights. Collaborative efforts and evidence-based policies are vital to achieve a balance that promotes innovation, fosters competition, and fulfills human rights obligations in the pharmaceutical sector.

Analysis of development of dental business in Ukraine

Methods. During the study of the state of the dental business and modern trends in its development in Ukraine, the following scientific methods were used: abstraction - when defining the concept of «medical service», statistical analysis – when establishing trends in the development of the field of dental services, factor analysis – when distinguishing external factors and the internal environment of the operation of the dental business, strategic analysis – when creating a strategic map of the development of the dental business. Results. As a result of the conducted research, it was established that the modern market of dental services corresponds to the type of market of monopolistic competition to a greater extent by the set of features. The author’s definition of the concept of «medical service» is provided, according to which it is presented as consistently defined actions or a set of actions of medical personnel aimed at prevention, diagnosis, treatment and rehabilitation of diseases that have a complete independent essence and a certain price. Information asymmetry, which creates a conflict between the medical and economic interests of dentists, is singled out as one of the features of the market of dental services. The price and non-price factors of demand for dental services, in particular for dental implants, were determined, and the cost structure of basic dental services was analyzed. The transformation of providers of dental services into vertically integrated holdings is recognized as one of the most promising ways of developing the dental market. Novelty. A quantitative assessment of the influence of external and internal environmental factors on the development opportunities of the dental company was carried out. A strategic map of the development of the dental business was created and a system of balanced indicators was developed to assess the situation. Practical value. The proposed improved method of assessing the factors of the internal and external environment, as well as the created strategic map of the development of the dental business allows seeing the goals of its development.

Marketing Analysis of Big Chilli in Sembalun District, East Lombok District<b></b>

The aim of this research is to analyze the structure, behavior and performance of the large chili market in Sembalun District, East Lombok Regency. With 80 farmer respondents and 37 marketing institutions consisting of 17 collectors, 8 wholesalers and 12 retailers. The data sources used are primary data and secondary data. The method used in this research is snowball sampling. The research results show that the large chili market structure in Sembalun District is classified as a monopolistic competition market structure. The market behavior of the large chili buying and selling process in Sembalun sub-district forms six types of marketing channels involving five marketing institutions. The longest channel is the first channel, namely from Farmers - Village Level Collectors - District Level Collectors - Retailers and then Consumers. Prices for large chili commodities tend to be determined by traders. The most efficient performance of the large chili market in Sembalun District, seen from the indicators of marketing margin, farmer share and profit to cost ratio, is the VI marketing channel, namely farmers directly to consumers.

Analyzing the Influence of Bank Competition on Credit Risk: Perspectives from Indonesia's Dual Banking System

This study analyzes the effect of competition banks on credit risk in the dual banking system in Indonesia. This research was conducted using a purposive sampling technique in selecting a sample of 5 conventional commercial banks and 5 Islamic commercial banks. The method used is the Generalized Method of Moments (GMM) from 2011 to 2020. Credit risk for Conventional Banks is measured by the value of Non-Performing Loan (NPL), while Islamic Bank Financing is measured by the value of Non-Performing Financing (NPF). The results of this study indicate that Return on Assets (ROA) for Conventional Banks and Islamic Banks has a significant effect on credit risk in the dual banking system, Loan to Deposit Ratio (LDR) for Conventional Banks does not have a significant effect on Non-Performing Loan (NPL) while Financing to Deposit Ratio (FDR) of Islamic Banks has a significant level 2 influence on Non-Performing Financing (NPF). Bank size does not have a significant influence on credit risk in the dual banking system, and the Lerner Index for Conventional Banks has a significant effect on Non-Performing Loan (NPL), while the Lerner Index for Islamic Banks has no effect on Non-Performing Financing (NPF). The Central Bank in making policies can see that the level of competition for banks in the dual banking system in Indonesia is categorized as a monopolistic competition market, where each bank has its own market segment so that it has market power that is strong enough to set prices that are relatively.

Market size, income heterogeneity, and trade

This paper studies the effects of market enlargement in the context of monopolistic competition, variable markups, and income heterogeneity. Market enlargement increases product diversity and entices firms to reduce prices and markups due to pro-competitive effects. It benefits all individuals but more high-income ones. The strength of the market enlargement effect is independent of income inequality for Pollak’s (1971) preferences. In an open economy, the market enlargement of one country reduces prices globally while it fosters firm entry in this country and exit in the other country. Welfare gains are also larger for higher-income groups. A calibration exercise suggests that effects on market outcome and welfare gains are sizable.

СУЩНОСТЬ И РОЛЬ КОНКУРЕНЦИИ В УСЛОВИЯХ РЫНОЧНОЙ ЭКОНОМИКИ

This article reveals the essence of such a term as “competition”. Its interpretation is given, and emphasis is placed on the study of the main types of competition, among which perfect and imperfect competition are in great demand. The second type, in turn, includes oligopoly, monopoly and monopolistic competition. In addition, we considered the main consequences of rivalry, having both positive and negative effects on the development of the economy as a whole. Undoubtedly, in our opinion, the topic of our research is very relevant, since the market of goods and services is always in the phase of creating various innovations and strives to improve its goods or services, which becomes possible due to the presence in the economic environment of such an important component as competition.

Insufficient Entry in Monopolistic Competition

Insufficient Entry in Monopolistic Competition

РЫНОК ЖИЛОЙ НЕДВИЖИМОСТИ В РОССИИ: СТРУКТУРА И ЦИКЛИЧНОСТЬ РАЗВИТИЯ

Conducting a structural analysis of the real estate market is important for participants. It allows an investor, buyer, seller, or other participant to determine the phase of development of the real estate market. Analysis provides an additional tool for making the optimal decision now and in the future, which means that the problem is relevant. The purpose of the study was to identify the main market structures for the primary and secondary housing market, as well as to identify their relationship with the cyclical development of the market. The objectives of the study were to study the experience of domestic scientists, to determine market structures and cycles in the de-velopment of various segments of the residential real estate market. There was also an analysis of statistical data in physical and monetary terms, a description of the dynamics of the housing mar-ket over a twenty-year period by regions of Russia, Kazakhstan, and the Republic of Belarus. The methods of detailing, generalization, logical inferences, and graphical visualization of data were used in the article. The study revealed a typical market structure for the primary and secondary segments of the housing market, and established a link between the phase of market development and the market structure. The primary residential real estate market is characterized by elements of perfect competition, while the secondary real estate market is characterized by monopolistic competition. Cyclicity in the development of the real estate market is reflected in the type of struc-ture and there is a decrease in the level of competitiveness.

ВЛИЯНИЕ ОЛИГОПОЛИСТИЧЕСКОЙ КОНКУРЕНЦИИ НА ЭКОНОМИКУ СТРАНЫ

This paper studies the essence and significance of one of the components of imperfect competition – oligopoly. In the course of writing the paper, the main specific features of oligopoly that distinguish it from monopoly and monopolistic competition have been identified. In addition, the main conditions of its emergence were noted, with the allocation of varieties of the category under consideration. An important place in the study was given to the main models of oligopoly, in particular: price leadership model, Bertrand model, cartel model and Cournot model. In addition, a comparative analysis was conducted to identify the positive and negative sides of the existence of oligopoly. Undoubtedly, the topic of our research is very relevant at the current stage of economic development. This is primarily due to the fact that oligopoly acts as one of the most common market structures. After all, almost all technically complex industries belong to oligopoly, in particular such industries as metallurgy, electronics, automobile manufacturing and many others.

Correlation Analysis of International Student Exchange and the Enhancement of China’s International Cultural Communication Power Based on the Subsumption Sorting Algorithm

Abstract International students are a bridge between Chinese and foreign cultures, but they still face multiple dilemmas in Chinese cultural communication due to different cultural backgrounds and values. In this paper, we utilize the subsumption sorting algorithm to sort the amount of cultural communication of international students’ exchanges, which is dynamically switched by a combination of two methods: back-block forward interpolation and header exchange. The D-S monopolistic competition model is used to construct the theoretical model of international student exchange that affects China’s international cultural communication power. The CES utility function is used to construct China’s international cultural communication network, which calculates the total amount of communication culture of cross-cultural exchanges between international students. In the end, an analysis of 85 international student samples revealed a correlation between international student exchanges and China’s international cultural communication. The results show that the correlation coefficient between international student exchanges and China’s international cultural communication is 0.305 p > 0.05, indicating that international student exchanges have a positive promotion effect on China’s international cultural communication. This study examines the general law of international cultural communication, which is crucial in promoting Chinese culture worldwide.

Potential market failures in the Portuguese wine industry

The wine industry is characterized by a monopolistic competition market structure, with high product differentiation. In this study, based on the predictions of microeconomic theory as applied to market equilibrium and market failure, the statistical data on production, trade and domestic consumption, as well as the governance model adopted, were analyzed. The main goal was to examine potential market failures in the Portuguese wine industry, concentrating mainly on those related to information asymmetry and transaction costs. The analysis shows that while Portugal constitutes a significant source of low-priced wines, both for its home consumers as well as for those abroad, most wines lack reputation and therefore have little potential to transfer value to upstream economic agents, and almost no possibility of increasing consumers’ willingness to pay. Though there is detailed information on production, exports and trade, limited information exists on domestic consumption. Given the small dimension of some wine regions, the governance model adopted does not benefit from scale economies and requires higher transaction costs.

ANÁLISE DA CONCENTRAÇÃO DE MOAGEM DE USINAS DE CANA-DE-AÇÚCAR NO BRASIL NA SAFRA 2022/2023

The objective of this research was to analyze the industrial concentration and determine the market structure of sugarcane industries based on the milling data from the 2022/2023 harvest season in Brazil. Thus, a quantitative approach of applied nature, descriptive objective, and bibliographic and documentary research were adopted. Concentration measures such as the Concentration Ratio – CR(k), Hirschman-Herfindahl Index – HHI, and equivalent number – vH were used for concentration calculation. The results indicate that there is a company that holds a significant portion of the national milling, but the market is considered unconcentrated, characterized by monopolistic competition and relatively light competition.

Уніфікація показників для контролю за різними формами монопольної влади

The paper demonstrates the necessity and possibility to unify the controlling indicators for different types of monopoly (monopolistic competition, oligopoly, natural monopoly) in order to increase efficiency of the monopoly control. Especially this concerns the complex types of monopoly from the point of view of its control, for example, oligopoly. The complexity of this type of monopoly control is associated with the actual inevitability of the appearance of tacit pricing coordination among the oligopoly participants. And the problem is not so much in admitting that the very fact of such a coordination is difficult to prove as in defining the harm it causes to the market and the entire economy. This paper shows the possibility to use the quantitative indexes of monopoly control proposed based on author’s CMI-model of macroeconomic dynamics, to apply these indexes for various types of monopoly. A distinctive feature of this model is the possibility to calculate the vector of “natural” prices for any sector (i.e., the prices that correspond to the state of perfect competition even if it is impossible to reach this state in the existing markets). And the comparison of the actual market price with the “natural” one allows us to control a monopoly using the price indexes alone. In turn, it allows us to perform a monopoly control at various hierarchical levels of the economic system (a firm, an economic sector and economy as a whole). Such a control enables us to calculate the degrees of the monopoly impact both on the entire economy, and on its various sectors. Quantitative values of these degrees can be used as evidence in antitrust litigations and for choice of corresponding instruments to “punish” the monopoly for such abuses. The paper reveals the mechanism of use of the proposed formulas for determination of the monopolistic power and degree of its impact on economy and various economic sectors for the cases of oligopoly and natural monopoly. Also, this paper demonstrates the mechanism of the influence of antimonopoly policy on the configuration of business cycle and on economic growth rate (when other policies are neutral). This opens up the possibility to combine the antitrust policy with the anticyclical and fiscal ones, because, under recession, increased monopolistic power in an individual sector may help the whole economy get out of the crisis.

The Impact of Geopolitical Risk on Portuguese Exports

This investigation evaluates the performance of Portuguese exports by focusing on the 11 main partners for 1990–2021, considering panel data. Country risk analysis has been frequently used to assess the determinants of international trade in recent years. Empirical studies demonstrate that country risk can affect bilateral relationships between economies, especially in economies with greater geopolitical risk. Next, we refer to the methodology used in this research. In this context, we assessed the stationarity of the variables used in this study. Subsequently, models were used to eliminate bias and endogeneity between the variables. The panel quantile regression model allows us to understand the behaviour of variables across different quartiles. The empirical study shows that countries with low country risk promote the performance of Portuguese exports. On the other hand, the size of the economies, both the exporting country (Portugal) and the importing countries (commercial partners), is decisive for increasing Portuguese exports. This finding can be explained as a monopolistic competition with the economy’s scale and industrial concentration serving as theoretical support. As noted with previous studies on the gravity model, the common language of Portuguese-speaking countries reduces communication costs and increases Portuguese exports. Furthermore, the econometric model also validates the issue of geographical distance, where this variable has a negative impact on exports, demonstrating that geographical proximity reduces transport costs.