In this paper, the Bertrand's price competition in the retail duopoly with asymmetric costs is analyzed. Retailers sell substitute products in the framework of the classical economic order quantity (EOQ) model with linear demand function. The market potential and competitor price are considered to be the bifurcation parameters of retailers. Levels of the barriers to market penetration depending...

An influential literature has emerged around the premise that there exists an uneasy tension between (1) bank-firm relationships that promote incentives for firm—specific investments by banks, and (2) competition between banks that can destroy such incentives. This paper studies the industrial organization of the investment banking market in order to shed light on how this tension may be resolv...

Competition causes suppliers of goods and services to lower prices, raise quality, and innovate. It is crucial for maximizing social welfare in a market economy. Ironically, however, the market by itself does not guarantee competition, unless one makes heroic assumptions about the costlessness of market entry (North 1981; Neumann 2001: 5ff.). As Adam Smith famously warned, ‘people of the same t...

This paper deals with corporate governance issues and competition policy. The impact of private benefits extraction on the values of oligopolistic firms is analyzed. Private benefits are assumed to generate costs which create price distortion on the product market. For a wide range of industry concentrations, we prove that this may affect the profit (i.e. the value) of the firms in a positive s...

n the past two years, Australia and other jurisdictions have again witnessed a series of unsignalled corporate collapses. As with previous generations of corporate collapse several have been associated with questionable accounting policies and concerns with auditing quality. With the decomposition of the former global auditing firm once known as Arthur Andersen, the implications for the account...

It is generally considered that more competition might help curb corruption, as rents, which motivate corrupt agreements, are decreasing in the degree of competition. This paper proposes a framework to analyze the relationship between corruption and competition. It studies the optimal incentive scheme for potentially corrupt officials in charge of inspecting firms that compete in the product ma...

Employment Protection and Product Market Competition by Sebastian Kessing A firm facing employment protection will defend its market position more fiercely than a firm operating without such restrictions. However, ex ante it will be more reluctant to expand its market position. For the benchmark case of contest competition, the defensive effect dominates. A firm facing employment protection has...

Consumers often find it hard to make correct value comparisons between market alternatives. This "choice complexity" partly results from deliberate obfuscation by firms. This review synthesizes a theoretical literature that analyzes the role of choice complexity in otherwise-competitive markets. I identify two general classes of models in the literature: (1) firms’ obfuscation strategy is an in...