Implications of banking regulation for banking sector stability and welfare

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Vertical R&D Sprillovers, Cooperation, Market Structure, and Innovation.

This paper studies vertical R&D spillovers between upstream and downstream firms. The model incorporates two vertically related industries, with horizontal spillovers within each industry and vertical spillovers between the two industries. Four types of R&D cooperation are studied : no cooperation, horizontal cooperation, vertical cooperation, and simultaneous horizontal and vertical cooperation. Vertical spillovers always increase R&D and welfare, while horizontal spillovers may increase or decrease them. The comparison of cooperative settings in terms of R&D shows that no setting uniformly dominates the others. Which type of cooperation yields more R&D depends on horizontal and vertical spillovers, and market structure. The ranking of cooperative structures hinges on the signs and magnitudes of three competitive externalities (vertical, horizontal, and diagonal) which capture the effect of the R&D of a firm on the profits of other firms. One of the basic results of the strategic investment literature is that cooperation between competitors increases (decreases) R&D when horizontal spillovers are high (low); the model shows that this result does not necessarily hold when vertical spillovers and vertical cooperation are taken into account. The paper proposes a theory of innovation and market structure, showing that the relation between innovation and competition depends on horizontal spillovers, vertical spillovers, and cooperative settings. The private incentives for R&D cooperation are addressed. It is found that buyers and sellers have divergent interests regarding the choice of cooperative settings and that spillovers increase the likelihood of the emergence of cooperation in a decentralized equilibrium.

Patent pools and competition law : an examination of the enforcement strategies of competition authorities

"Mémoire présenté à la Faculté des études supérieures en vue de l'obtention du grade de maîtrise en droit, option recherche"

Trade Liberalization and the Profitability of Domestic Mergers.

It is often thought that a tariff reduction, by opening up the domestic market to foreign firms, should lessen the need for a policy aimed at discouraging domestic mergers. This implicitly assumes that the tariff in question is sufficiently high to prevent foreign firms from selling in the domestic market. However, not all tariffs are prohibitive, so that foreign firms may be present in the domestic market before it is abolished. Furthermore, even if the tariff is prohibitive, a merger of domestic firms may render it nonprohibitive, thus inviting foreign firms to penetrate the domestic market. In this paper, we show, using a simple example, that in the latter two cases, abolishing the tariff may in fact make the domestic merger more profitable. Hence, trade liberalization will not necessarily reduce the profitability of domestic mergers.

Finite-Sample Inference Methods for Simultaneous Equations and Models with Unobserved and Generated Regressors

We propose finite sample tests and confidence sets for models with unobserved and generated regressors as well as various models estimated by instrumental variables methods. The validity of the procedures is unaffected by the presence of identification problems or \"weak instruments\", so no detection of such problems is required. We study two distinct approaches for various models considered by Pagan (1984). The first one is an instrument substitution method which generalizes an approach proposed by Anderson and Rubin (1949) and Fuller (1987) for different (although related) problems, while the second one is based on splitting the sample. The instrument substitution method uses the instruments directly, instead of generated regressors, in order to test hypotheses about the \"structural parameters\" of interest and build confidence sets. The second approach relies on \"generated regressors\", which allows a gain in degrees of freedom, and a sample split technique. For inference about general possibly nonlinear transformations of model parameters, projection techniques are proposed. A distributional theory is obtained under the assumptions of Gaussian errors and strictly exogenous regressors. We show that the various tests and confidence sets proposed are (locally) \"asymptotically valid\" under much weaker assumptions. The properties of the tests proposed are examined in simulation experiments. In general, they outperform the usual asymptotic inference methods in terms of both reliability and power. Finally, the techniques suggested are applied to a model of Tobin’s q and to a model of academic performance.

Inter-temporal Price Discrimination when Imports are Restricted by Quotas

A dominant firm holding import quota engages in inter-temporal price discrimination when facing a competitive fringe engaged in seasonal production. This causes a welfare loss that comes in addition the loss attributable to limitation of imports below the free trade level.

Bundling under the Threat of Parallel Trade

This paper examines the use of bundling by a firm that sells in two national markets and faces entry by parallel traders. The firm can bundle its main product, - a tradable good- with a non-traded service. It chooses between the strategies of pure bundling, mixed bundling and no bundling. The paper shows that in the low-price country the threat of grey trade elicits a move from mixed bundling, or no bundling, towards pure bundling. It encourages a move from pure bundling towards mixes bundling or no bundling in the high-price country. The set of parameter values for which the profit maximizing strategy is not to supply the low price country is smaller than in the absence of bundling. The welfare effects of deterrence of grey trade are not those found in conventional models of price arbitrage. Some consumers in the low-price country may gain from the threat of entry by parallel traders although they pay a higher price. This is due to the fact that the firm responds to the threat of arbitrageurs by increasing the amount of services it puts in the bundle targeted at consumers in that country. Similarly, the threat of parallel trade may affect some consumers in the hight-price country adversely.

Le contrat de distribution exclusive et le principe de la concurrence au Canada

Les contrats de distribution exclusive sont couramment utilisés dans la mise en marché des produits. Des doutes et des critiques ont été, pourtant, soulevés relativement à leur validité au regard du droit de la concurrence. Ces ententes et les pratiques qui en découlent paraissent, à première vue, anticoncurrentielles. Le propos de ce mémoire est d’examiner dans quelle mesure les contrats de distribution exclusive peuvent, en fait, stimuler la concurrence et de montrer, en conséquence, qu’ils devraient être considérés licites eu égard au droit de la concurrence. Nous trouvons, d’une part, que les pratiques exclusives sont suspectes vu qu’elles réduisent la liberté contractuelle du producteur et du distributeur. Cette restriction est susceptible d’entraver la concurrence à cause du pouvoir de marché qu’elle crée et elle peut, de ce fait, engendrer le monopole. La Loi sur la concurrence interdit de tels agissements. Les contrats de distribution exclusive peuvent, d’autre part, favoriser réellement la concurrence. Ils constituent un instrument stratégique utilisé par les entrepreneurs dans leur lutte pour accroître leur part de marché. La distribution exclusive, en portant les acteurs commerciaux à chercher les meilleures stratégies, renforce la concurrence. Celle-ci doit être entendue non seulement comme une constante rivalité entre toutes les entreprises, mais elle doit aussi inclure la coopération entre certaines entreprises en vue de mieux concurrencer d’autres à un niveau plus général. Une juste appréciation de la concurrence dans les contrats de distribution exclusive requiert le recours à l’analyse économique du droit. Cette analyse permet une évaluation de la concurrence basée sur le critère de l’efficience économique. En vue de déterminer si une pratique donnée augmente ou non le bien-être général (sur quoi l’analyse de l’efficience met l’accent), les effets négatifs de cette pratique devraient être mis en balance avec ses effets positifs résultant des gains en efficience. C’est dans ce sens que le droit de la concurrence a évolué tant dans l’Union européenne qu’aux États-Unis et au Canada pour permettre les ententes qui entraînent des gains nets d’efficience. Ce qu’on aurait pu condamner autrefois pour entrave à la concurrence, peut maintenant paraître comme une stratégie commerciale licite et saine. Compte tenu de ce récent développement, notre analyse nous conduit à la conclusion que les accords de distribution exclusive devraient être considérés licites dans la mesure où ils améliorent le bien-être du consommateur.

The interest rates and performance of MFIs in the MENA region: is there a moral issue?

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