Market Power Research Articles

Regulating Transgenic Soybean Production in Argentina: The Role of Agro-Associations

Argentina's economy is organized mainly around the export of transgenic soybeans. This production is associated with several environmental and social costs. This article investigates transgenic soybean production regulation possibilities, which fulfills efficiency, acceptability, and feasibility by directly controlling production levels. Production quota markets are promising because they make it possible to implement cost-effective production. However, Argentina's agricultural sector is organized into large agro-associations with significant political power. The exercise of market power could challenge the attractive properties of production quota markets. This article considers the possibility of these organizations manipulating the quota market to capture a larger share of production. The production quota market could give rise to "raising rivals' costs" behavior. Contrary to the existing literature, this article shows that this strategy is profitable, even though the price of transgenic soybeans is fixed on international markets. To restore efficiency in production levels while preserving policy acceptability, we propose to auction production quotas with an adequate rebate revenue. Alternatively, initial quota allocation can be hybrid. The initial allocation chosen will depend on the trade-off between efficiency and acceptability of the environmental policy. Thus, while proposing a specific and adapted regulation for transgenic soybeans in Argentina, this article contributes to the knowledge of tradeable production quotas, which are almost less analyzed in the economic literature.

Terms of trade or market power? Further evidence from dynamic spillovers in return and volatility between Malaysian crude palm oil and foreign exchange markets

This study examines whether the Malaysian ringgit (MYR) provides terms of trade or market power for crude palm oil (CPO). We consider MYR exchange rates against three currencies of major CPO-importing countries, including the Indian rupee (INR), euro (EUR) and Chinese yuan (CNY). Using daily data on Malaysian CPO prices (spot and futures) and foreign exchange rates (INRMYR, EURMYR and CNYMYR) from 2000 to 2018, our results provide three notable findings. First, volatility spillovers from EURMYR to CPO spot and futures are more significant during the global financial crisis of 2008–2009. Second, the return spillovers from CPO spot and futures to INRMYR and EURMYR exchange rates experience significant bursts after the crisis. Third, the volatility of CPO spot price changes shows the predictive ability of the volatility of INRMYR exchange rate changes at the end of 2018. Overall, our findings support that the terms of trade are a driver of the CPO market after the crisis.

FinTech, systemic risk and bank market power – Australian perspective

This study investigates idiosyncratic/firm-specific risk and systemic risk of FinTech firms and traditional financial institutions (FIs) in Australia. It also examines the impact of FinTech growth on bank market power. I find that stock return and idiosyncratic risk are higher in FinTech firms than in traditional FIs. Regarding systemic risk, FinTech firms are more exposed/vulnerable to systemic shocks than traditional FIs. However, they do not contribute to higher systemic risk as compared to traditional FIs. There is no substantial evidence that bank market power (captured by Lerner index) reduces due to the growth of FinTech firms. Yet, there is partial evidence that some accounting performances of banks may decline due to the growth of FinTech firms. Since FinTech firms are highly exposed/vulnerable to systemic shock, regulators should continue monitoring FinTech development closely and ensure that investors are aware of the risk and retail consumers of these firms are well protected.

Post-Globalisation Development Of Competition Law: Challenges & Opportunities

Competition law is an essential aspect of modern regulatory frameworks that aim to promote fair competition, prevent monopolistic practices, and safeguard consumer interests within markets. Globalisation has brought forth new challenges and opportunities in the post-globalisation era, necessitating a recalibration of competition enforcement mechanisms to address transnational anti-competitive practices. The liberalisation of trade and investment regimes under globalisation has also raised concerns about cross-border conspiracy and abuse of dominance. In response, competition authorities have adopted more collaborative approaches to enforcement and grappled with intricate jurisdictional issues. The rise of digitalisation and e-commerce, integral components of globalisation, has presented new competition challenges, such as platform monopolies and data-driven market manipulation. Regions have reassessed traditional competition paradigms to safeguard consumer welfare and promote innovation in the digital age. Moreover, globalisation has fostered a convergence of competition norms and principles, exemplified by the proliferation of international competition networks and the harmonisation of competition laws across jurisdictions. This underscores the imperative for greater cooperation and coordination among competition authorities to address cross-border competition concerns effectively. The evolution of competition law in the post-globalisation era embodies a compelling narrative of adaptation and recalibration in response to the transformative forces unleashed by globalisation. This evolution unfolds against the backdrop of a burgeoning recognition of the interconnectedness of markets and the imperative for harmonised regulatory responses to address cross-border competition challenges effectively. However, several challenges persist in the post-globalisation landscape, including navigating jurisdictional conflicts, addressing enforcement gaps in digital markets, combating transnational anti-competition ve practices, and balancing competition objectives with broader policy goals. These challenges require nuanced and innovative regulatory solutions that prioritise consumer welfare and promote fair competition. Despite the challenges, the post-globalisation era offers significant opportunities for competition law frameworks worldwide. By embracing collaborative approaches, leveraging technological innovation, and fostering international cooperation, we can enhance the effectiveness of competition law frameworks. This will promote competitive markets that foster innovation and safeguard consumer welfare. In conclusion, competition law regimes worldwide must adapt to post-globalisation reality and adopt policies that promote fair competition and innovation. By prioritising consumer welfare, embracing collaboration, leveraging technology, and fostering international cooperation, we can create a regulatory framework that fosters competitive markets and benefits consumers worldwide. Abstract Globalisation has transformed the world economy by promoting the integration of economies and societies worldwide. This has led to the emergence of multinational corporations that wield significant market power across borders, necessitating a recalibration of competition enforcement mechanisms to address transnational anti-competitive practices. The liberalisation of trade and investment regimes under globalisation has also raised concerns about cross-border collusion and abuse of dominance. Competition authorities have responded by adopting more collaborative approaches to enforcement and grappling with intricate jurisdictional issues. The rise of digitalisation and e-commerce, integral components of globalisation, has presented new competition challenges, such as platform monopolies and data-driven market manipulation. This has prompted regulators to reassess traditional competition paradigms to safeguard consumer welfare and promote innovation in the digital age. Furthermore, globalisation has fostered a convergence of competition norms and principles, exemplified by the proliferation of international competition networks and the harmonisation of competition laws across jurisdictions. This underscores the imperative for greater cooperation and coordination among competition authorities to address cross-border competition concerns effectively. The evolution of competition law in the post-globalisation era embodies a compelling narrative of adaptation and recalibration in response to the transformative forces unleashed by globalisation. This evolution unfolds against the backdrop of a burgeoning recognition of the interconnectedness of markets and the imperative for harmonised regulatory responses to address cross-border competition challenges effectively. The post-globalisation landscape presents many challenges and opportunities for competition law regimes worldwide. Challenges include navigating jurisdictional conflicts, addressing enforcement gaps in digital markets, combating transnational anti-competitive practices, and balancing competition objectives with broader policy goals. However, amidst these challenges lie significant opportunities. By embracing collaborative approaches, leveraging technological innovation, and fostering international cooperation, we can enhance the effectiveness of competition law frameworks. This will promote competitive markets that foster innovation and safeguard consumer welfare.

Research letter: the role of customer fear of missing out on purchase intention

ABSTRACT Despite the recent popularity of social media as a powerful marketing channel, limited studies have examined how customer personalities influence their reactions toward social media content. Thus, this study examines the role of a customer psychological characteristic known as fear of missing out (FOMO) in the formation of anticipated emotion (i.e. elation, envy, comfort, and expense regret) and purchase intention toward a restaurant based on social media marketing. Using surveys, the study collected information on 345 social media users. A SmartPLS estimation shows that customer anxiety over missing out is a strong indicator of anticipated emotions toward the restaurant experience. Specifically, positive impacts of anticipated envy and comfort on customer purchase intentions are found. However, customer anticipated expense regret toward future experiences negatively influences behavioural intentions. Finally, this study examines differences in relationships between FOMO, anticipated emotions, and purchase intentions across demographic profiles (i.e. gender, age, income, and education).

Metaphor-less Rao-3 and artificial neural network with parallel computing-based wheeling pricing in competitive power market

Metaphor-less Rao-3 and artificial neural network with parallel computing-based wheeling pricing in competitive power market

Beyond Borders: A Review of Food Market Integration and Sustaiable Develomnet Goals

This paper presents a comprehensive review of food market integration research spanning 1990–2023, provides a thorough bibliography, and emphasizes its growth between developed and emerging economies. It evaluates 140 papers with the aim of highlighting the importance of price transmission, market stability and market integration in the food sector. The study provides an overview of econometric methodologies, review global assessment methods, and identifies the major elements that influence market integration, such as commerce, social capital, government interference, export policies, institutions, information, competition, and market power. The finding reveals a rise in research activities between 2000 and 2015, with a growing focus on developing countries. This work is to offer a synopsis to researchers, academicians, and policy makers on the extent of the food market both internationally and domestically. This paper will be helpful for the researchers interested in understanding and investigating the dynamics of food market integration with a useful resource by classifying previous works and identifying current developments. The review also offers commentary on current research and prospects and their implication in line with SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities) as it promotes fair access to resources and economic opportunities.

Market power, human capital efficiency and bank performance in Kenya

PurposeThe study evaluates the influence of human capital efficiency (HCE) and market power on bank performance.Design/methodology/approachThe study employs two measures of bank performance: profitability and stability. Unbalanced panel data of 35 banks operating in Kenya for 2005–2020 collected from published financial statements is utilized. The study employs the feasible generalized least squares (FGLS) method in the analysis and the two-step system generalized method of moments (GMM) for robustness check.FindingsThe study affirms an inverted U-shaped relationship between market power and bank performance. The effect of market power on bank profitability is enhanced when a bank has highly efficient human capital. Further, HCE significantly impacts bank stability for banks with low HCE. Interestingly, a further increase in HCE narrows the net interest margins for banks with high HCE, conferring welfare benefits to customers as interest rate spreads shrink.Practical implicationsThis study provides important insights into the role of human capital in bank performance. First, banks ought to invest in promoting HCE through training and development. As regulators root for bank consolidation, attention to HCE is imperative for fostering profitability and stability.Originality/valueThe study fills an essential gap in the literature by evaluating the effect of firm-level market power on bank performance in an emerging market. We adopt a novel stochastic frontier estimator to generate the Lerner index. Further, this is the first study known to the authors to evaluate the effect of market power on bank performance in the context of human capital efficiency variations.

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.

Transmission planning in an imperfectly competitive power sector with environmental externalities

Policymakers face the challenge of integrating intermittent output from variable renewable energy (VRE). Even in a well-functioning power sector with flexible generation, producers’ incentives may not align with society’s welfare-maximisation objective. At the same time, political pressure can obstruct policymakers from pricing damage from CO2 emissions according to its social costs. In facilitating decarbonisation, transmission planning will have to adapt to such economic and environmental distortions. Using a Stackelberg model of the Nordic power sector, we find that a first-best transmission-expansion plan involves better resource sharing between zones, which actually reduces the need for some VRE adoption. Next, we allow for departures from perfect competition and identify an extended transmission-expansion plan under market power by nuclear plants. By contrast, temporal arbitrage by hydro reservoirs does not necessitate transmission expansion beyond that of perfect competition because it incentivises sufficient VRE adoption using existing lines. Meanwhile, incomplete CO2 pricing under perfect competition requires a transmission plan that matches hydro-rich zones with sites for VRE adoption. However, since incomplete CO2 pricing leaves fossil-fuelled generation economically viable, it reduces the leverage of strategic producers, thereby catalysing less (more) extensive transmission expansion under market power by nuclear (hydro) plants.

Monetary policy shock and corporate innovation: Evidence from China

This paper investigates whether and how monetary policy shock (MPS) affects corporate innovation using a large sample of 3,082 Chinese listed firms over the period 2007–2019. We provide robust evidence that firms increase their innovative activities when faced with MPS. Further analyses show that firms in competitive industries or with less market power are more inclined to increase innovation in the event of MPS, and that the influence of MPS on corporate innovation is more pronounced for firms with more growth opportunities or better financial conditions. We also find that firms tend to increase innovation to a larger extent in expansionary periods than in contractionary ones.

Study on optimal scheduling of energy storage participation in power market considering source-load uncertainty

With the increasing penetration of new energy sources such as wind and light in the power grid, the selection of new energy-storage joint scheduling and operation methods can reduce the phenomenon of wind and light abandonment, but the new energy-storage joint scheduling and operation methods need to take into account the market factors, characteristics, and other aspects of a variety of problems. Given these difficulties, this paper takes into account the uncertainty of wind power, adopts the Latin hypercube sampling method to generate and consider the probabilistic distance fast reduction method, selects the typical scenarios, establishes the energy storage market operation model by minimizing the comprehensive operation cost, and responds to the source-load demand through the integrated response of the energy storage and the power grid. Finally, the effectiveness of the proposed method is demonstrated through simulation examples.

Evolutionary game and simulation analysis of three parties of electricity market regulation under government participation mechanism

Promoting the widespread access and integration of new energy generation into existing power markets is a key strategy for China to achieve peak carbon and carbon neutrality. A joint regulatory mechanism composed of government regulators, power generation enterprises, and third-party testing organizations has become an effective way to ensure the stable operation of the power market and safeguard the economic interest of all parties. In order to analyze the key factors affecting the mechanism and improve the regulatory efficiency, this paper constructs a three-party evolutionary game model, explores the motivations of the participants under different strategy choices, and establishes a set of indicator systems for evaluating producers. The evolutionary game model is numerically simulated using the unified dynamics method, and the evolutionary stable strategy analysis is used to reveal how the key parameters affect the outcome of the game and its dynamic process, so as to find out the potential driving factors affecting the strategy choices. The results of the study show that in the early stage of market development, it is crucial to improve the profitability of firms, and the government needs to impose strict penalties and high incentives. As the market gradually matures and becomes more transparent, the government can gradually reduce the level of penalties. At the same time, ensuring accountability mechanisms from higher authorities to the government is key to ensure the effectiveness of regulation. This study provides an important theoretical basis and policy recommendations for constructing a new regulatory structure for the electricity market.

Analyzing The Role of Digital Marketing in Growth of E-Commerce in India: A Multiple Holistic Approach

The study aim to explore and analyze the multifaceted relationship between digital marketing and e-commerce growth in the Indian context, considering various dimensions such as consumer behavior, technological advancements, regulatory frameworks, and market dynamics. However, while digital marketing is widely acknowledged as a critical driver of e-commerce growth, there exists a gap in understanding the specific mechanisms through which digital marketing influences the expansion of the e-commerce sector in India. The primary ways in which digital marketing influences consumer behavior in India is through personalized advertising and targeted messaging The role of digital marketing in driving the growth of e-commerce in India is a multifaceted phenomenon that requires in-depth analysis across various dimensions. By examining the impact of digital marketing on consumer behavior, technological innovations, regulatory frameworks, and market dynamics, this study aims to provide valuable insights for businesses, policymakers, and researchers seeking to understand and leverage the power of digital marketing in the Indian e-commerce landscape.

Monopsony Amplifies Distortions from Progressive Taxes

Progressive income taxes distort hiring and wages when firms have labor market power. We characterize this novel monopsony cost of progressivity in a simple monopsony economy and derive efficiency wedges that depend on progressivity. A simple quantification of these wedges points to the possibility that the monopsony cost may be of similar magnitudes to redistribution and insurance benefits.

Protecting Patients And Society In An Era Of Private Equity Provider Ownership: Challenges And Opportunities For Policy.

Private equity (PE) acquisitions in health care delivery nearly tripled from 2010 to 2020. Despite concerns around clinical and economic implications, policy responses have remained limited. We discuss the US policy landscape around PE ownership, using policies in the European Union for comparison. We present four domains in which policy can be strengthened. First, to improve oversight of acquisitions, policy makers should lower reporting thresholds, review sequential acquisitions that together affect market power, automate reviews with potential denials based on market concentration effects, consider new regulatory mechanisms such as attorney general veto, and increase funding for this work. Second, policy makers should increase the longer-run transparency of PE ownership, including the health care prices garnered by acquired entities. Third, policy makers should protect patients and providers by establishing minimum staffing ratios, spending floors for direct patient care, and limits on layoffs and the sale of real estate after acquisition (forms of "asset stripping"). Finally, policy makers should mitigate risky financial behavior by limiting the amount or proportion of debt used to finance PE acquisitions in health care.

Health and political economy: building a new common sense in the United States.

The prevailing economic paradigm, characterized by free market thinking and individualistic cultural narratives, has deeply influenced contemporary society in recent decades, including health in the United States. This paradigm, far from being natural, is iteratively intertwined with politics, social group stratification, and norms, together shaping what is known as political economy. The consequences are starkly evident in health, with millions of lives prematurely lost annually in the United States. Drawing on economic re-thinking happening in fields like climate and law, we argue for a new "common sense" towards a health-focused political economy. Central to this proposed shift is action in 3 interconnected areas: capital, care, and culture. Re-orienting capital to prioritize longer-term investments, such as in public options for health care and baby bonds, can promote health and affirmatively include historically marginalized groups. Recognizing that caregiving is economically valuable and necessary for health, approaches like local cadres of community health workers across the United States would be part of building robust caregiving infrastructures. Advancing momentum in these directions, in turn, will require displacing dominant cultural narratives. As the health arena pursues change in the face of real obstacles, recent efforts reinvigorating industrial policy and addressing concentrated market power can serve as inspiration.

What drives equipment manufacturing enterprises green technology innovation in the Yangtze River Economic Belt? A configuration analysis based on DEA-fsQCA model

Under the dual backdrop of the “dual-carbon” goal and the strategic goal of "Made in China 2025", the equipment manufacturing industry, as the "industrial mother machine", has to undergo a green, low-carbon transformation. Green technology innovation is an essential component of achieving green transformation. Therefore, their green technology innovation efficiency (GTIE) deserves in-depth examination to achieve the "double carbon" goal. The aim of this study is to reveal the possible paths and models for equipment manufacturing enterprises to obtain high GTIE from a configuration perspective. Based on 94 listed equipment manufacturing companies' green technology innovation data in the Yangtze River Economic Belt (YREB) from 2018 to 2021, this paper explores the GTIE and its combination improvement path with a DEA-fsQCA model. The results indicate that: (1) The average efficiency score of the sample was 0.506, only 16 enterprises reached the production frontier, and the overall GTIE in equipment manufacturing industries as a whole showed a "first drop and then a steady upward" trend from 2018 to 2021; (2) The results of heterogeneity analysis revealed that the level of GTIE showed a characteristic of the upstream region > downstream region > midstream region, foreign-invested enterprises > private-owned enterprises> state-owned enterprises, and there is significant industrial heterogeneity, with a GTIE difference of up to 0.478 between the industries with the strongest green technologys innovation ability and those with the weakest. (3) A single conditional variable cannot constitute the necessary condition for high GTIE. There are four combination paths that can produce high GTIE: PCW+ MP-dual driven, PCW+ Fin-dual driven, COCEN-oriented, and COCEN+MP-dual driven. Further analysis shows that there is a substitution effect between the absence of the financing constraint and the existence of market power. This study provides a scientific basis for facilitating the improvement of YREB's equipment manufacturing industry's green technology innovation capabilities.

Are Supply Networks Efficiently Resilient?

We show that supply networks are inefficiently, and insufficiently, resilient. Upstream firms can expand their production capacity to hedge againstsupply and demand shocks. But the social benefits of such investments arenot internalized due to market power and market incompleteness. Upstreamfirms under-invest in capacity and resilience, passing-on the costs to downstreamfirms, and drive trade excessively towards the spot markets. There isa wedge between the market solution and a constrained optimal benchmark,which persists even without rare and large shocks. Policies designed to incentivizecapacity investment, reduce reliance on spot markets, and enhancecompetition ameliorate the externality.

Market power and bank risks: insights from India and Bangladesh

Purpose This study aims to investigate whether various types of risks faced by the publicly listed commercial banks of India and Bangladesh are driven by market power and provides comparative insights from both economies. Design/methodology/approach By using the adjusted Lerner index to gauge bank market power and applying the generalised methods of moments (GMM) regression approach, the research delved into the relationship between bank market power and three distinct facets of risk across a sample of 26 publicly listed commercial banks in India and 22 listed banks in Bangladesh spanning from 2011 to 2022. Findings The results indicate that for Bangladesh, both “competition fragility” and “competition stability” viewpoints coexist simultaneously across all risk types, supporting a nonlinear relationship between market power and risk. However, in the Indian context, a nonlinear association exists only in the case of credit risk, while the relationship with insolvency risk is linear, substantiating the “competition fragility view”. Apart from market power and bank-specific variables, GDP growth rate has emerged as a prominent driver across all risk categories in both countries. Research limitations/implications The filtration of banks is a limitation that might have influenced the outcomes. This study recommends that the Reserve Bank of India encourages further bank consolidation. Along the same line, Bangladesh Bank should closely oversee the growing competitive landscape. Furthermore, the regulators must monitor the elevated levels of non-performing loans to reduce credit risk so as to bolster the stability of their respective banking sectors. Originality/value This comparative study is the first attempt to analyse the market power and risk relationship and includes a novel bank-specific variable, i.e. technology, apart from other established variables.