Oligopoly Structure Research Articles

Competition and alliances in fuel cell power train development

For the realisation of the effective application and cost effectiveness of fuel cell power trains, and competitiveness with the current internal combustion engine technology, it will be necessary to either: (a) produce a large number of vehicles, (b) reduce the production costs by permanent production optimisation, or (c) introduce new materials. Learning curves, which have been derived from empirical data of past energy technologies, are initially used to provide a cost prognosis for the market launch of fuel cell power trains. Drawing on game theory the paper then describes a basic model which addresses the issue of the optimal strategy of the automotive industry, in either a monopoly or oligopoly structure. When this model's outputs are combined with the anticipated rate of fuel cell vehicles (FCVs), learning curves and network effects, from the first section of the paper we can see that if the successful market launch of FCVs is desired, an alliance structure within the automotive industry is the optimal path.

SPATIAL COMPETITION AND PRICING IN THE AGRICULTURAL CHEMICAL INDUSTRY: EMPIRICAL EVIDENCE FROM GEORGIA

Three models of spatial competition are tested on retail price data for the agricultural chemical industry. Three empirical tests find no evidence of any spatial competition using data from sixty-five retailers and twelve different chemicals. Demand and supply-side variables have statistically significant, but economically trivial impacts on retail chemical prices. These results point to a virtually complete control of retail prices by the chemical manufacturers, likely through the rebate program they offer retailers. The oligopoly structure of the chemical manufacturing industry makes such control possible. The results suggest that consolidation of retailers or distributors will not have anti-competitive effects since price competition is essentially absent from this market already.

Strategy for leasehold dispositions in high‐tech markets

AbstractEffective leasehold disposition strategies must recognise how the structure of real estate markets has changed fundamentally since the major downturn in the mid‐1980s. Today, ownership is concentrated in the hands of fewer institutional investors. This ‘oligopoly’ structure enables landlords to hold a floor under lease rates in a declining market. While this floor would appear also to serve the interests of corporate tenants marketing excess lease space, this new market structure masks a serious problem: in most high‐tech sub‐markets, the majority of the vacant space is held by a few high‐tech tenants. These technology companies constitute an oligopoly structure similar to that of the owners, but with a major difference: their pricing ‘floor’ is exceedingly fragile since those leaseholds are a ‘wasting asset’. Ultimately, they must aggressively market space by cutting prices if they are to recover any value before their lease terms run out. As the pricing floor cracks, a downward pricing spiral will have negative consequences for companies that are late to recognise the situation. Corporations that align their leasehold disposition strategies with the new market structure and act decisively are most likely to maximise the value of their dispositions. Copyright © 2002 Henry Stewart Publications

Competition and market power in the European airline industry: 1976-90

In this paper, we study the market power of European airlines in an oligopoly structure with product differentiation for the period 1976–1990 and test the monopoly hypothesis (Captain, 1993). The paper analyzes the level of competition among eight major European airlines and finds little evidence for market power in the industry over that period. One of our main findings is that the high prices in Europe are not entirely due to the bilateral agreements (leading to possible monopoly power), but rather are a result of very high cost structures in the industry. These results are broadly in agreement with those of Roeller and Sickles (1994) which analyzes these issues in the European Industry by estimating a structural, two-stage game. © 1997 John Wiley & Sons, Ltd.

Competition and market power in the European airline industry: 1976–90

In this paper, we study the market power of European airlines in an oligopoly structure with product differentiation for the period 1976–1990 and test the monopoly hypothesis (Captain, 1993). The paper analyzes the level of competition among eight major European airlines and finds little evidence for market power in the industry over that period. One of our main findings is that the high prices in Europe are not entirely due to the bilateral agreements (leading to possible monopoly power), but rather are a result of very high cost structures in the industry. These results are broadly in agreement with those of Roeller and Sickles (1994) which analyzes these issues in the European Industry by estimating a structural, two-stage game. © 1997 John Wiley & Sons, Ltd.

Adjusting to a demand oriented food system: New directions for biotechnology innovation

This article analyses the results of a series of interviews conducted among leading firms in agrofood designed to assess the strategic importance of biotechnologies. Earlier analyses have emphasized either the revolutionary character of these technologies or the ability of oligopoly structure to contain the potential within existing market patterns. Our interviews would suggest that biotechnologies must be situated within the shift to a demand oriented food system. This has led on the on hand to a preoccupation with quality rather than cost-cutting applications. It has also highlighted the inter-connectedness of the different phases of the agrofood system, since the incentive and the capacity to introduce innovations at any one point in the system depends on their acceptability to other actors in the agrofood chain. Biotechnologies have now become integrated into the competitive strategies of the leading actors but they remain ambiguously placed within the emerging “biotechnology” paradigm. The peculiarities of the agrofood system and the limitations of its industrialization have opened the way to strong consumer pressure based on the demand for quality and “natural” food and agriculture. It remains to be seen whether advanced biotechnologies can be assimilated within these priorities

Price Formation and Import Penetration in U.K. Manufacturing Industry

The hypothesis that the U.K.’s domestic manufacturing industry is subject to significant foreign price competition has been frequently vaunted in both the academic and journalistic literature. Empirical examinations of this hypothesis have either related domestic to foreign prices — in times series analysis — or some measure of the domestic price-cost markup to a tariff or import share variable — in the cross-section approach. Since our concern is with allegedly increasing international competition over time, we examine a simple price formation specification in time series.We proceed by discussing the theoretical and empirical literature. It is suggested that the existing empirical results may have several possible alternative explanations and that U.K. manufacturing industry may not be subject to significant foreign price competition. It is argued that the conventional hypothesis that imports are independent of the domestic oligopoly structure is not altogether convincing. We pursue a specification which is an adaptation of that adopted by Coutts et al (1978) and use this to question the conventional view of import price competition. The results obtained in the estimation of this model, while not conclusive, do give grounds for doubting the conventional hypothesis.