Project

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Industrial Organization, Regulation, and the Foundations of Competition Policy

English title Industrial Organization, Regulation, and the Foundations of Competition Policy
Applicant Bühler Stefan
Number 135143
Funding scheme SNSF Professorships
Research institution
Institution of higher education University of St.Gallen - SG
Main discipline Economics
Start/End 01.09.2011 - 31.07.2012
Approved amount 186'015.00
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Keywords (6)

Non-Binding Retail-Price Recommendations; Network Industries; Infrastructure Quality; Public Investment; Trade Liberalization; Mergers and Acquisitions

Lay Summary (English)

Lead
Lay summary

This research project adds to the analysis and understanding of three key issues in modern industrial organization and regulation. Each of these key issues is analyzed in a separate sub-project:

1) Imperfect Competition in Vertically-Related Markets

In vertically-related industries, non-binding retail-price recommendations (RPRs) are ubiquitous. Surprisingly, the economics of RPRs are not very well understood. The object of this subproject is to (i) provide a theory of RPRs which does not presuppose that economic agents are either non-rational or harbor interests beyond their own material payoffs, and (ii) apply this theory to improve competition policy towards vertical restraints.

2) Restructuring Network Industries

The recent restructuring of network industries has brought about mixed results. A particular concern is the potential for degradation of infrastructure quality. The purpose of this subproject is to examine the conditions under which the restructuring of network industries provides opportunities for more competition without undermining investment incentives. In particular, the project examines the conditions under which regulation or the engagement of (state-owned) public firms may crowd out private investment into infrastructure quality.

3) Foundations of Competition Policy

The effectiveness of competition policy in a small open economy such as Switzerland crucially depends on the openness towards international trade. Yet, due to the lack of adequate micro data, there is little evidence on the causal effects of liberalizing international trade on individual firms and industries. This subproject views the enactment of the Bilateral Agreements I between Switzerland and the European Union in 2002 as a natural experiment to measure the impact of liberalizing trade on firms and industries. For this project, a unique data set on the universe of Swiss plants is provided by the Swiss Federal Statistical Office.

Direct link to Lay Summary Last update: 21.02.2013

Responsible applicant and co-applicants

Employees

Publications

Publication
When Do State-Owned Firms Crowd Out Private Investment?
Buehler Stefan, Wey Simon (2014), When Do State-Owned Firms Crowd Out Private Investment?, in Journal of Industry, Competition and Trade, 14, 319-330.
Making Sense of Nonbinding Retail-Price Recommendations
Buehler Stefan, Dennis Gärtner (2013), Making Sense of Nonbinding Retail-Price Recommendations, in American Economic Review, 103(1), 335-359.
Persuading Consumers with Social Attitudes
Bühler Stefan, Halbheer Daniel (2012), Persuading Consumers with Social Attitudes, in Journal of Economic Behavior and Organization, 84(1), 439-450.

Scientific events

Active participation

Title Type of contribution Title of article or contribution Date Place Persons involved
International Industrial Organization Conference (IIOC) Talk given at a conference Trade Liberalization and Employment Growth: Plant-Level Evidence from Switzerland 16.03.2012 Arlington, United States of America Bühler Stefan;
European Association for Research in Industrial Economics (EARIE) Talk given at a conference Trade Liberalization and Growth: Plant-Level Evidence from Switzerland 01.09.2011 Stockholm, Sweden Bühler Stefan;


Associated projects

Number Title Start Funding scheme
114754 Industrial Organization, Regulation, and the Foundations of Competition Policy 01.09.2007 SNSF Professorships

Abstract

This research project adds to the analysis and understanding of three key issues in modern industrial organization and regulation. Each of these key issues is analyzed in a separate sub-project:Imperfect Competition in Vertically-Related MarketsIn vertically-related industries, non-binding retail-price recommendations (RPRs) are ubiquitous. Surprisingly, the economics of RPRs are not very well understood. Apart from a behavioral explanation by Puppe and Rosenkranz (2010), there is no theoretical analysis of the economic rationale for RPRs.The object of this subproject is to (i) provide a theory of RPRs which does not presuppose that economic agents are either non-rational or harbor interests beyond their own material payoffs, and (ii) apply this theory to improve competition policy towards vertical restraints.Restructuring Network IndustriesThe recent restructuring of network industries has brought about mixed results. A particular concern is the potential for degradation of infrastructure quality.The purpose of this subproject is to examine the conditions under which the restructuring of network industries provides opportunities for more competition without undermining investment incentives. In particular, the project examines the conditions under which public regulation or the engagement of (state-owned) public firms may crowd out private investment into infrastructure quality.Foundations of Competition PolicyThe effectiveness of competition policy in a small open economy such as Switzerland crucially depends on the openness towards international trade. Yet, due to the lack of adequate micro data, there is little evidence on the causal effects of liberalizing international trade on individual firms and industries.This subproject uses the enactment of the Bilateral Agreements I between Switzerland and the European Union in 2002 as a natural experiment to measure the impact of liberalizing trade on firms and industries. For this research project, a unique data set providing full sample information at the plant level (assembled by the Swiss Federal Statistical Office) is available. This data will also be used to provide the first study of all mergers and acquisitions in an economy (rather than just those notified to the competition authorities or the stock exchange).
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