Monopoly Profits Research Articles

国有企业垄断扩张对企业绩效影响效应研究—来自我国上市公司面板数据的实证

本文以经济增加值为公司绩效的度量指标，采用面板数据模型研究企业绩效与企业垄断扩张间的关系。并应用我国沪深上市公司数据样本，对国有企业的不断扩张和企业绩效的关系进行实证。寻求国企垄断扩张的适度规模，给政策制定者提供参考。实证结果表明：国企垄断扩张使企业绩效呈显著地下降趋势。同时存在非线性的“U型”效应，即较低程度的垄断限制了企业的创新能力，导致企业绩效降低。随着垄断扩张为企业带来的超额垄断利润弥补了创新能力的不足，又使企业绩效与垄断呈现正向关系。In this paper, we choose economic value added (EVA) as the measurement indicator of company’s performance and use the panel data model to study the relationship between the enterprise per-formance and the industry monopoly. We focus on China listing corporations covering various in-dustries and find out that there is a negative linear relation and non-linear “U” effect between the monopoly expansion of state-owned enterprises and EVA; that is to say, the monopoly decreases EVA of the company. However, when the monopoly expansion of state-owned enterprises increases to a certain transition point, EVA begins to increase, indicating that the excess monopoly profit compensates for the negative effect to enterprise. The firm performance and monopoly begin to show a positive relationship.

Fiscal Consequences of Paying Interest on Reserves

AbstractWe review the role of the central bank's balance sheet in a textbook monetary model and explore what changes if the central bank is allowed to pay interest on its liabilities. When the central bank (CB) cannot pay interest, away from the zero lower bound its (real) balance sheet is limited by the demand for money. Furthermore, if securities are not marked to market and the central bank holds its bonds to maturity, it is impossible for the CB to make losses, and it always obtains profits from being a monopoly provider of money. When the option of paying interest on liabilities is allowed, the limit on the CB's balance sheet is lifted. In this case, the CB is free to take on interest‐rate risk – for example, by buying long‐term securities and financing those purchases with short‐term debt that pays the market interest rate. This is a risky enterprise that can lead to additional profits but also to losses. To the extent that losses exceed the profits of the monopoly operations, the CB faces two options: either it is recapitalised by Treasury or it increases its monopoly profits by raising the inflation tax.

A Theory of Profit and Competition

Starting from the observation that surplus-value is almost always due to the collective undertaking of non-additively separable human capital investments, this paper proposes a theory of the institutional structure of production in the Coasean definition of firms and markets. Rather than being based on the extension of the logic of exchange to property rights, however, the paper attempts to combine institutional and evolutionary elements in light of the classic issues of value and distribution. The main result, in effect, is that monopoly profit is not the only meaningful notion of profit besides the value of individual contribution, and consequently that free entry and competition do not wipe it out. The reason is that in this context, the incumbent’s profit does not arise from some form of scarcity but from the collective nature of the production process. Therefore, the entrant has no incentives to undercut because he can earn the same profit by doing exactly the same thing. Naturally, this fairly favourable condition should not be taken for granted since, when non additive separability is combined with wealth effects, this kind of profit may give rise to structurally inefficient conflicts over the terms of both its production and distribution. In particular, this is shown to happen when the type of investments is such that the individual participation constraint ensuring that investments are made is satisfied at minimum cost when expressed in terms of the amount workers can earn from independent participation in the production process (rather than in terms of the value of the product). In this case, it turns out that profit will be appropriated by entrepreneurs (rather than shared), property rights will be concentrated (rather than distributed), and the subsequent development of the techno-economic paradigm of which the investments are meant to form a stylized representation is inhibited (rather than favoured).

The Anatomy of Twenty-First Century Exploitation: From Traditional Extraction of Surplus Value to Exploitation of Creative Activity

The modern system of exploitation presupposes integration of four historico-logical “layers” of the exploitation of labor by capital: 1) the “classical” system of hired labor and appropriation by capital of surplus value; 2) appropriation of monopoly (super) profits and financial profits; 3) partial social redistribution of a part of surplus value, and “diffusion” of capital; and 4) relations of exploitation that pertain to creative activity and appropriation of intellectual rent, which are specific to the current stage. The exploitation of creative activity is the most important resource for future development of the capitalist economy. Capitalist exploitation of intellectual activity (of creative workers) is quite different from “classical” exploitation. This difference involves 1) the appropriation of intellectual rent instead of surplus value; 2) exploitation of the human being (not only of his or her labor power), under conditions where 3) there is no precise border between labor time and free time, between necessary and surplus labor. Moreover, the exploitation of any individual creative worker is at the same time exploitation of the whole of human culture, since the creative labor of any one person is always in dialog with the culture of humankind.

ECONOMIC ANALYSIS OF THE BAN ON FOREIGNERS ACQUIRING PROPERTY RIGHTS ON AGRICULTURAL LAND IN SERBIA

In Serbia it is prescribed by The Law on Agricultural Land that foreign legal or natural persons could not become owners of agricultural land. The aim of this paper is to show that such a norm creates an economic environment where an optimal allocation of agricultural land as a production factor could not be achieved. The cost - benefit analysis shows that main gainers are Serbian producers and buyers of land who are able to realize a monopoly profit, whereas sellers of agricultural land are at loss, getting a lower economic rent, as well as foreign buyers. A total loss of domestic sellers only is bigger than a total profit of buyers. In the end, it is being pointed to a relativity of the ban, in the sense of a possibility to easily get past the ban through provisions of The Law on Foreign Trade. The conclusion points out that an eventual suspension of the ban would stimulate efficiency of Serbian economy and an increase in the net welfare.

Wireless Competition in Canada: An Assessment

If there’s one thing Canadians agree on, it’s that Canada’s wireless industry can and should be more competitive. The federal government is on side with the policy objective of having four carriers in every region and has responded with policies that provide commercial advantages to entrants. But, the rub is that there has not been a study that actually assesses the state of competition in wireless services in Canada, until now. Those in favour of policies that will promote and sustain entry point to Canada’s high average revenue per user and low wireless penetration rate (mobile connections per capita) as evidence that there is insufficient competition. The difficulty is that the facts are not consistent with this simplistic analysis. Measurements of wireless penetration are skewed toward countries that maintain the Calling Party Pays Protocol and favour pay-as-you-go plans, both of which encourage inflated user counts. Canada’s participation per capita on monthly plans and minutes of voice per capita are not outliers. Moreover, in terms of smartphone adoption and smartphone data usage, Canada is a global leader, contributing to high average revenue per user. Consistent with being world leaders in the rollout of high speed wireless networks, Canada lead its peer group in capital expenditures per subscriber in 2012: the competition of importance to Canadians is not just over price, but also over the quality of wireless networks.In any event, none of the measures typically used in international comparisons are relevant to assessing the competitiveness of Canadian wireless services. The appropriate competitive analysis recognizes two relevant features of the technology of wireless services: (i) high fixed and sunk capital costs; and (ii) economies of scale and scope. The implications of these are that profitability requires mark ups over short run measures of cost — high gross margins — and that there will be a natural, upper limit on the number of wireless carriers. The key issue in terms of competition is whether prices track long run average costs, namely, whether wireless providers make monopoly profits. An examination of the leading firm’s cash flow over the life cycle of the wireless industry suggests internal rates of return well below the likely ex ante, pre-tax, cost of capital that reflects the risk of its investments. This is not consistent with either the inefficient exercise of market power or monopoly profits. Moreover, international comparisons of structural indicators of competition indicate that, if anything, wireless services in Canada are more competitive than in many of its peers. There is no evidence that there is a competition problem in wireless services in Canada. Efforts to create competition in the short run, that increase the number of carriers, will simply squeeze margins in the short run and likely will not be sustained in the long run, as carriers exit and consolidate to reduce competition and restore margins consistent with profitability and the natural limit. And, while consumers might gain in the short run from lower prices, everyone is likely made worse off in the long run from the misallocation of spectrum, reduction in scale of carriers, and reduction in incentives to invest from such intervention. The AWS set asides allocated spectrum to carriers whose focus was on talk and text, not carriers whose focus is on data, resulting in an inefficient mix of networks and a suboptimal allocation of spectrum.

Opening to the East: Shipping Between Europe and Asia, 1770–1830

Shipping costs between Europe and Asia were reduced by two-thirds between the 1770s and the 1820s. Copper sheathing and other technical improvements which allowed ships to make more frequent voyages over longer lifetimes accounted for part of the cost reduction. British hegemony in the Indian Ocean, which ended an eighteenth-century arms race, accounted for the rest by allowing the substitution of smaller ships which cost less to build and required fewer men per ton. These changes were at least as important as the elimination of monopoly profits in narrowing intercontinental price differentials during the early nineteenth century.

A Simple Theory of Predation

We propose a simple theory of predatory pricing based on incumbency advantages, scale economies, and sequential buyers (or markets). The prey needs a critical scale to be successful. The incumbent (or predator) has an initial advantage and is ready to make losses on earlier buyers to deprive the prey of the scale it needs, thus making monopoly profits on later buyers. Several extensions are considered, including cases in which scale economies exist because of demand externalities or two-sided market effects and in which markets are characterized by common costs. Conditions under which predation may (or may not) take place in actual cases are also discussed.

Appropriate Liability Rules for Tying and Bundled Discounting

Professor Einer Elhauge’s highly acclaimed article, Tying, Bundled Discounts, and the Death of the Single Monopoly Profit Theory, 123 Harv. L. Rev. 397 (Dec. 2009), contests two propositions on which efficiency-minded antitrust scholars have largely agreed: (1) that there should be no tying liability absent substantial tied market foreclosure (a position contrary to the legal status quo), and (2) that courts should recognize a safe harbor for any bundled discount that results in above-cost pricing that could be matched by an equally efficient, single-product rival. Elhauge maintains that tie-ins that do not cause substantial tied market foreclosure may nonetheless occasion adverse “power” effects that the U.S. Supreme Court has properly deemed to be anticompetitive. Those power effects may also result, Elhauge argues, from bundled discounts (even “above-cost” bundled discounts) that involve artificial inflation of the unbundled “linking” product price. These conclusions lead Elhauge to defend prevailing tying doctrine and to advocate a bundled discount rule that eschews price-cost comparisons and instead focuses on whether the discounter has raised the unbundled price of its linking product above but-for levels. This Article asserts a comprehensive response to Elhauge’s provocative arguments. With respect to tying, the Article shows that governing Supreme Court precedent does not deem the non-foreclosure “power” effects of the practice to be anticompetitive and that those effects are unlikely to reduce social welfare in the long run, especially after accounting for dynamic efficiencies. With respect to bundled discounting, the Article shows that Elhauge’s proposed liability rule is both inapposite to consumer harm and inadministrable and that both “linked” market foreclosure and a form of below-cost pricing are necessary for anticompetitive harm and should therefore be prerequisites to antitrust liability.

Licensing of a Drastic Innovation with Product Differentiation

We analyze the licensing of a drastic innovation when products are differentiated due to consumer and/or product heterogeneity. We show that an industry insider prefers to divest its production arm and license the new technology as an industry outsider, in which case it can replicate multiproduct monopoly profit. We derive the optimal contracts and the optimal number of licenses by assuming a logit demand system. Optimal number of licenses, quite strikingly, increases when the technology has a higher relative value than a commercialized alternative. This result stands in sharp contrast with the literature on the licensing of a homogenous good.

Consumer Surplus and Prices in Perfect Competition and Monopoly

It is well known that existence of monopoly is accompanied by economic inefficiency in the form of dead weight loss and reduced consumer surplus. The consumer surplus that exists in case of perfect competition gets reduced in case of monopoly; as a part of it goes to the monopolist in the form of monopoly profit, a part of it is lost in the form of deadweight loss while the rest remains as consumer surplus in monopoly. This paper shows that under specific conditions there is a definite relationship (in case of monopoly) between monopoly profit, dead weight loss and consumer surplus and between prices in perfect competition and monopoly.

Can the Monopolist Do Better than Charge a Single Price? A Diagrammatic Way to Understand Third-Degree Price Discrimination

This paper uses a simple model of third-degree price discrimination assuming two independent linear demands and discusses the effects of price discrimination on monopoly profit, consumer surplus, and social welfare.

The Chaotic Monopoly Profit Growth Model and a Pigouvian Tax

Deterministic chaos refers to irregular or chaotic motion that is generated by nonlinear systems. The chaotic behavior is not to quantum-mechanical-like uncertainty. Chaos theory is used to prove that erratic and chaotic fluctuations can indeed arise in completely deterministic models. Chaotic systems exhibit a sensitive dependence on initial conditions. Seemingly insignificant changes in the initial conditions produce large differences in outcomes. The basic aim of this paper is to construct a relatively simple chaotic growth model of the monopoly price that is capable of generating stable equilibria, cycles, or chaos. A key hypothesis of this work is based on the idea that the coefficient μ = f (n - b - d ) plays a crucial role in explaining local stability of the monopoly profit, where, b - the coefficient of the total cost function of the monopoly firm, n - the coefficient of the inverse demand function, d - the Pigovian tax rate.μ

Fiscal Consequences of Paying Interest on Reserves

We review the role of the central bank's (CB) balance sheet in a textbook monetary model, and explore what changes if the central bank is allowed to pay interest on its liabilities. When the central bank cannot pay interest, away from the zero lower bound its (real) balance sheet is limited by the demand for money. Furthermore, if securities are not marked to market and the central bank holds its bonds to maturity, it is impossible for the central bank to make losses, and it always obtains pro ts from being a monopoly provider of money. When the option of paying interest on liabilities is allowed, the limit on the CB's balance sheet is lifted. In this case, the CB is free to take on interest rate risk, e.g, by buying long-term securities and financing those purchases with short-term debt that pays the market interest rate. This is a risky enterprise that can lead to additional profits but also to losses. To the extent that losses exceed the profits of the monopoly operations, the CB faces two options: either it is recapitalized by Treasury, or it increases its monopoly profits by raising the inflation tax.

The ban on foreigners acquiring property rights on agricultural and forest land in Serbia and other region countries

In Serbia it is prescribed that foreign legal or natural persons could not become owners of agricultural land, while in Montenegro, Croatia and The Federation of Bosnia and Hercegovina there is the ban for both agricultural and forest land. The aim of this paper is to show that such a ban creates an economic environment where an optimal allocation of agricultural and forest land as a production factor could not be achieved. The cost - benefit analysis shows that main gainers are domestic producers and buyers of land who are able to realize a monopoly profit, whereas sellers of land are at loss, getting a lower economic rent, as well as foreign buyers. A total loss of domestic sellers only is bigger than a total profit of buyers. In the end, it is being pointed to a relativity of the ban, in the sense of a possibility to easily get past the ban through provisions of the other norms. The conclusion points out that an eventual suspension of the ban would stimulate efficiency of domestic economies and an increase in the neto welfare.

The Neoclassical Apology for Monopoly Capital

While the global economy is mired in ever-deepening crisis, there is no abatement in the propaganda rationalizing free markets and perfect competition. In the world of “perfect competition” governed by the “invisible hand” of market forces, no single actor (or even a combination of a few) is in a position to influence the market equilibrium, and prices are determined by the balance of demand and supply. This is a win-win world, where actors have sufficient information for arriving at their respective choices, consumers are free to make the correct decisions, and this self-governing system leads to progressively increasing welfare for all.… In this mythological world, there is also a hell, whose name is monopoly or oligopoly, the exact opposite of perfect competition, where a few sellers or producers distort the markets and generate inefficiency, monopoly profits, and compromise consumer choice.… The only difficulty with this mythology is that, while we are constantly told that the world is increasingly being governed by competition and market forces, the real world of business and industry is moving rapidly away from such free competition, as concentration, domination, and control of most economic activities has become common place.… It might be that perfectly competitive markets will provide answers for all of our ills, but in the real world, there is an absence of “free markets,” with market rigging and failure everywhere in the economy.This article can also be found at the Monthly Review website, where most recent articles are published in full.Click here to purchase a PDF version of this article at the Monthly Review website.

Ties That Bind: Walter Rauschenbusch, Reinhold Niebuhr, and the Quest for Economic Justice

Ties That Bind: Walter Rauschenbusch, Reinhold Niebuhr, and the Quest for Economic Justice

Corporate social responsibility and marketing channel coordination

We analyze a simple linear demand bilateral monopoly situation where one of the firms, either the up-stream manufacturer or the down-stream retailer, is socially concerned in terms of its desire to enhance its end-customers’ welfare in addition to the traditional profit motive. Two cases are explored: the up-stream producer exhibits corporate social responsibility (CSR) in one case and the down-stream retailer in the other. In the two-stage game, the retailer makes their quantity-setting decision in stage-two, given the two-part tariff (wholesale price and fixed franchise fee) set by the stage-one producer. In this setting, among other things, we find that the optimal channel-coordinating tariff is very different from the standard pure profit-maximizing two-part tariff. For example, if either firm in the supply/marketing chain exhibits CSR, we show the optimal wholesale price does not equal the manufacturer’s marginal production cost, nor does the fixed fee equal the monopoly profit earned by the retailer. Finally, we find that our two-part tariff CSR model provides a theoretical rationale for the empirical finding of little to no correlation between CSR and firm profits.

Loyalty Inducing Programs and Competition with Homogeneous Goods

We analyze a market where two firms producing a homogenous good compete by means of two mechanisms: prices and a loyalty reward. We assume that firms act simultaneously when posting their loyalty reward and prices. Consumers who purchase from a firm in the first period lose the reward if they switch providers in the second period. They fully anticipate the effects on future prices of accepting the future bonus and maximize their total surplus over both periods. We first show that there is no equilibrium with prices and rewards equal to zero. We then show the existence of a SPNE where firms are able to obtain half the monopoly profits using large rewards as well as high prices in the second period. We completely characterizeall the symmetric equilibria of the game and show that, ingeneral, firmsobtain positive profits even when they compete in prices, the good is homogenous, and consumers are forward-looking. Finally we show that if firms are allowed to discriminate between old and new customers, the standard zero price Bertrand equilibria reappear.

Civil and criminal penalties for copyright infringement

Copyright violations are subject to both civil and criminal sanctions, but criminal charges are relatively rare. Using a theoretical model, this study compares the implications of civil and criminal penalty schemes from the viewpoint of social welfare, where civil and criminal schemes are distinguished by whether penalties are paid to the copyright holder or the government. The analysis suggests that when the costs of developing a copyrighted product are low, the socially most desirable scheme is one in which there are no civil penalties and criminal penalties are low. Although very severe criminal penalties may lead to the complete elimination of copyright infringements, they could also result in excessive monopoly profits for the producer of the copyrighted good. A further finding is that the number of copyright infringements is smaller under the criminal than the civil law scheme.