Monopoly Models Research Articles

Complex dynamics of knowledgeable monopoly models with gradient mechanisms

Complex dynamics of knowledgeable monopoly models with gradient mechanisms

Pricing Analysis of Online Shopping Platforms Considering Consumer Information Levels.

To address the problem of frequent dishonest transactions by online shopping platform merchants, we developed monopoly and competitive platform pricing models based on two-sided market theory, which introduce consumer information levels. This article analyzes the incentives of the platforms to improve consumer information levels in platform pricing strategies. Monopoly online shopping platforms aim to maximize profits. The higher the consumer information level is, the lower the fees charged to merchants; this can lead to increased platform profits. The charging of consumers depends on cross-network externalities. Competitive online shopping platforms also aim at maximizing profits. Under the circumstance that the number of consumers remains the same, the higher the consumer information level is, the more merchants the platforms will attract. This reduces bilateral user fees, and platform profits will be lower. From the perspective of consumer information level, the article analyzes the impact of monopoly and competitive platforms adopting return measures to improve the level of consumer information on platform pricing, number of bilateral users, and profits.

Review of monopoly models and implications for antitrust

In February 2021, the Ministry of Commerce Anti-monopoly Bureau of the People’s Republic of China released the Antitrust Guidelines for the Platform Economy Industry. This announcement signaled more governmental supervision and governance with Internet-related business. In practice, tech giants have been suffering administrative penalties one after another. This study presents a review and analysis of the research literature on the monopoly quantitative models, outlining the components and concluding the implications for anti-monopoly. This paper delineates three main research topics relating to the monopoly models within the literature: the oligopoly, monopolistic competition, and Internet platform monopoly. The Cournot model, Bertrand model, Stackelberg model, and Innovational model represent the oligopoly studies when a small group of large sellers dominates the market. We then discuss the monopolistic competition models as the Krugman model, D-S Model, and Lancaster Model. We pay particular attention to the platform economy to reflect the new era of monopoly with Marshall’s Dilemma. After the summary and comparison of the literature research trajectory, our analysis culminates in implications for antitrust: why Internet corporations and government meet this monopoly predicament, who are involved by monopoly policy, how consumers and market got impacted, and what countermeasures could be taken to improve the antitrust. This study contributes to overview the development of monopoly models and critically analyze based on the current antitrust situation and trend of platform economy integration. We should scrutinize the feasibility to adopt engrain view of monopoly mechanisms as benefit loss on the information technology economy. Therefore, this research raises the novel question and synergistic effects of monopoly.

Complex Dynamics of Knowledgeable Monopoly Models with Gradient Mechanisms

Complex Dynamics of Knowledgeable Monopoly Models with Gradient Mechanisms

Complex Dynamics of Knowledgeable Monopoly Models with Gradient Mechanisms

Complex Dynamics of Knowledgeable Monopoly Models with Gradient Mechanisms

The Influence of Unions on CSR: Is There a Trade‐Off Between Employee‐Oriented and Non–Employee‐Oriented Policies?

AbstractStrategic managers are consistently faced with decisions of how to allocate a company's scarce resources to meet the demands of shareholders and other powerful and legitimate stakeholders. This article analyses whether higher union density at company level pushes management to engage more in corporate social responsibility (CSR). Drawing from stakeholder theory and the resource allocation approach of CSR as well as union voice and monopoly models, this article finds that companies have to substitute non–employee‐oriented CSR with employee‐oriented CSR as union density increases but is still at low levels. At higher levels of union density, companies can complement both types of CSR. This perhaps represents a reinforcement of mutual interests between management and organized labour, which has implications for managerial prerogatives as well as union positioning in the labour and political process.

The Musgravian transformation in the two-part tariff and other monopoly models

The Musgravian transformation in the two-part tariff and other monopoly models

Monopoly models with time-varying demand function

We study a family of monopoly models for markets characterized by time-varying demand functions, in which a boundedly rational agent chooses output levels on the basis of a gradient adjustment mechanism. After presenting the model for a generic framework, we analytically study the case of cyclically alternating demand functions. We show that both the perturbation size and the agent’s reactivity to profitability variation signals can have counterintuitive roles on the resulting period-2 cycles and on their stability. In particular, increasing the perturbation size can have both a destabilizing and a stabilizing effect on the resulting dynamics. Moreover, in contrast with the case of time-constant demand functions, the agent’s reactivity is not just destabilizing, but can improve stability, too. This means that a less cautious behavior can provide better performance, both with respect to stability and to achieved profits. We show that, even if the decision mechanism is very simple and is not able to always provide the optimal production decisions, achieved profits are very close to those optimal. Finally, we show that in agreement with the existing empirical literature, the price series obtained simulating the proposed model exhibit a significant deviation from normality and large volatility, in particular when underlying deterministic dynamics become unstable and complex.

Better to Own or to Regulate? The Case of Alcohol Distribution and Sales

Alcohol-related income generation is compared across monopoly and license off-premise alcohol regulatory models in U.S. states, 1977-2010. An optimum organizational-ownership mix is found when states directly own alcohol wholesale and employ a network of state-owned retailers serving urban regions and private agents serving less-populated regions. Per capita alcohol-related income in US dollars for these optimal systems was $58.82 compared with $26.72 with license systems. This disparity held after controlling for alcohol sales and retail hours of operation. The findings challenge the wisdom of asset divestment as a response to fiscal stress and contradict a central tenet of New Public Management (NPM) Theory.

Learning and Pricing with Models That Do Not Explicitly Incorporate Competition

In revenue management research and practice, demand models are used that describe how demand for a seller’s products depends on the decisions, such as prices, of that seller. Even in settings where the demand for a seller’s products also depends on decisions of other sellers, the models often do not explicitly account for such decisions. It has been conjectured in the revenue management literature that such monopoly models may incorporate the effects of competition, because the parameter estimates of the monopoly models are based on data collected in the presence of competition. In this paper we take a closer look at such a setting to investigate the behavior of parameter estimates and decisions if monopoly models are used in the presence of competition. We consider repeated pricing games in which two competing sellers use mathematical models to choose the prices of their products. Over the sequence of games, each seller attempts to estimate the values of the parameters of a demand model that expresses demand as a function only of its own price using data comprised only of its own past prices and demand realizations. We analyze the behavior of the sellers’ parameter estimates and prices under various assumptions regarding the sellers’ knowledge and estimation procedures, and we identify situations in which (a) the sellers’ prices converge to the Nash equilibrium associated with knowledge of the correct demand model, (b) the sellers’ prices converge to the cooperative solution, and (c) the sellers’ prices have many potential limit points that are neither the Nash equilibrium nor the cooperative solution and that depend on the initial conditions. We compare the sellers’ revenues at potential limit prices with their revenues at the Nash equilibrium and the cooperative solution, and we show that it is possible for sellers to be better off when using a monopoly model than at the Nash equilibrium.

Strategic Effects of Three-Part Tariffs Under Oligopoly

A three-part tariff refers to a pricing scheme consisting of a fixed fee, a free allowance of units up to which the marginal price is zero, and a positive per-unit price for additional demand beyond that allowance. The three-part tariff and its variations are commonly used in both final-goods and intermediate-goods markets. Recently, the offering of three-part tariffs and the like by dominant firms has become a prominent antitrust issue. Existing studies have focused on monopoly models, interpreting the three-part tariff as a price discrimination device. In this paper, I investigate the strategic effects of three-part tariffs in a sequential-move game and offer an equilibrium theory of three-part tariffs in a competitive context. I show that, compared with linear pricing equilibrium and two-part tariff equilibrium, a three-part tariff always strictly increases the dominant firm's (the leader's) profit when competing against a rival (the follower) with substitute products, in the absence of usual price discrimination motive. To explore the effects of a three-part tariff on welfare, I further perform comparative statics analysis using general differentiated linear demand system. I show that the competitive effect of a three-part tariff in contrast to linear pricing depends on the degree of substitutability between products: Competition is intensified when two products are more differentiated, yet softened when two products are more substitutable. This is in stark contrast with the competitive scenario posed by a two-part tariff: A two-part tariff always enhances competition and gives the highest total surplus of these three pricing schemes. Moreover, the rival firm always gets hurt in both profit and quantity sale when the dominant firm switches from linear pricing to a two-part tariff, yet it enjoys higher profit when the dominant firm moves from a two-part tariff to the more ornate three-part tariff, despite the fact that its quantity and market share are decreased even further. My findings offer a new perspective on three-part tariffs, a perspective which could help antitrust enforcement agencies distinguish the exclusionary three-part tariff from the procompetitive one.

Daubert, Science, and Modern Game Theory: Implications for Merger Analysis

To be admissible in federal court under the Daubert standard, expert economic testimony must (1) be based on scientific analysis and (2) aid the dispute resolution process. Expert evidence should be considered scientific when (1) it meets Karl Popper's falsification standard and (2) some evidence compatible with the scientific proposition is provided. Standard competitive and monopoly models are well supported in the literature and therefore would generally meet this standard, while structuralism clearly fails the test. Modern game-theoretic analysis focuses on either collusion (coordinated interaction) or unilateral effects but only raises the possibility of a merger-related competitive problem and thus must be supported with case-specific evidence to be considered scientific. Economic evidence underpinning game-theoretic analysis can involve either a “systematic” study of competition in a market or a narrow “shock” analysis of a specific economic event. When both parties to a merger dispute provide evid...

Monopoly: An Appendix to 'Pass-Through as an Economic Tool'

This appendix formally proves and extends results appearing in Section I of Pass-through as an Economic Tool, which primarily cover applications of pass-through to monopoly models.

Daubert, Science, and Modern Game Theory: Implications for Merger Analysis

To be admissible in federal court under the Daubert standard, expert economic testimony must be (1) based on scientific analysis and (2) aid the dispute resolution process. Expert evidence should be considered scientific when (1) it meets Karl Popper’s falsification standard and (2) some evidence compatible with the scientific proposition is provided. Standard competitive and monopoly models are well supported in the literature and therefore would generally meet this standard, while structuralism clearly fails the test. Modern game theoretic analysis focuses on either collusion (coordinated interaction) or unilateral effects but only raises the possibility of a merger-related competitive problem and thus must be supported with case-specific evidence to be considered scientific. Economic evidence underpinning game theoretic analysis can involve either a “systematic” study of competition in a market or a narrow “shock” analysis of a specific economic event. When both parties to a merger dispute provide evidence admissible under the Daubert standard, the court must resolve the scientific dispute in the decision on the merits.

Monopolistic competitive market in religion: a case study of Hindu temples

The objective of this article is to examine, based on field survey, the market behaviour of the Hindu temples in India. The cost and revenue functions have been estimated for the Hindu temples, and it has been found that the market of Hindu temples does not strictly follow the monopoly models. The estimated average revenue curve has been observed to be slightly negatively sloped. Moreover, like perfect competition here exist a large number of small temples with easy entry and exit. The actions of any single temple do not have significant impact on the other temples in the market. Thus is resembles the monopolistic competition model rather than the pure monopoly model.

Market structure and insider trading

In this paper we examine the real and financial effects of two insiders trading in a static Jain and Mirman model [Jain, N., & Mirman, L. J. (2000). Real and financial effects of insider trading with correlated signals. Economic Theory, 16, 333–353] (henceforth JM). The first insider is the manager of the firm. The second insider is the owner. First, we study the change of the linear-equilibrium variables, in the presence of two insiders. Specifically, we show that the trading order and the real output of the manager are less in this model than in JM model [Jain, N., & Mirman, L. J. (2000). Real and financial effects of insider trading with correlated signals. Economic Theory, 16, 333–353]. Secondly, we show that the stock price reveals more information than in Cournot duopoly and monopoly models studied by Jain and Mirman [Jain, N., & Mirman, L. J. (2000). Real and financial effects of insider trading with correlated signals. Economic Theory, 16, 333–353; Jain, N., & Mirman, L. J. (2002). Effects of insider trading under different market structures. The Quarterly Review of Economics and Finance, 42, 19–39]. Finally, we analyze the comparative statics (insiders' profits) of this model, when the market maker receives one or two signals.

Efficient Contracts Without Bargaining Over Employment

It is often asserted that unions must bargain over employment if efficient contracts are to be achieved. However, efficient outcomes can be reached and supported if the average rate of compensation paid to labour decreases with employment. The author argues that common fringe benefit and layoff and recall provisions should make the average cost of compensation decline with employment. This implies that most firms and unions can reach and support efficient outcomes even though the union negotiates only wages and fringes, and the employer chooses employment unilaterally. Thus the distinction between monopoly models and efficient bargain models of union-firm interaction is not as relevant an empirical issue as previously believed.

Regulatory and Competition Law Remedies in the Postal Sector

European Community law has played a pivotal role in opening to competition economic sectors previously under the control of public monopolies. As with other sectors such as telecommunications, air transport, electricity, gas, and rail, the postal sector has succumbed to the wave of liberalisation. Liberalisation in the postal sector has forced stagnant state-owned monopolies to modernise themselves in order to compete with new entrants which are nibbling at the fringes with innovative business strategies. As is the case in network industries, the postal sector is subject to market failures. It finds itself in a position whereby the postal incumbents for letter mail usually remain protected by exclusive rights while the same entities are increasingly competing on the international mail, parcel and logistics markets. This situation has the potential to have a detrimental effect on consumer welfare. In order to prevent the postal incumbents using their market power, remedial action is necessary to allay such fears. Another market failure requiring intervention relates to universal service. There are indeed areas in which postal services will not be provided by the market because they are not profitable. Hence, universal services need to be defined and mechanisms have to be developed to fund these obligations without, however, distorting competition. In this paper, we will focus on the first category of market failures, i.e. the bottlenecks that may prevent competition in the postal sector. There are two regulatory instruments to impose remedies in network industries, sector-specific regulation and competition law. In this paper, we explore how these two approaches have been used to facilitate the arrival of competition in the postal sector. Until recently, the Community institutions have been reluctant to use regulatory intervention and competition law to challenge the public monopoly models. Regulatory requirements have, however, been imposed through Directive 97/67 and, over the last few years, competition rules have been applied much more rigorously in the postal sector, with the result that there is an increasing corpus of case law.

Market Structure and Insider Trading

In this paper we examine the real and financial effects of two insiders trading in a static Jain-Mirman model (Henceforth JM). The first insider is the manager of the firm. The second insider is the owner. First, we study the change of the linear-equilibrium variables, in the presence of two insiders. Specifically, we show that the trading order and the real output of the manager are less in this model than in JM model. Secondly, we show that the stock price reveals more information than in Cournot duopoly and monopoly models studied by Jain-Mirman. Finally, we analyze the comparative statics (insiders' profits) of this model, when the market maker receives one or two signals.

Editorial: Marketing Science, Models, Monopoly Models, and Why We Need Them

Editorial: Marketing Science, Models, Monopoly Models, and Why We Need Them