An experiment on spatial competition with endogenous pricing

Hotelling's (1929) principle of minimum differentiation and the alternative prediction that firms will maximally differentiate from their rivals in order to relax price competition have not been explicitly tested so far. We report results from experimental spatial duopolies designed to address this issue. The levels of product differentiation observed are systematically lower than predicted in equilibrium under risk neutrality and compatible with risk aversion. The observed prices are consistent with collusion attempts. Our main findings are robust to variations in three experimental conditions: automated vs. human market sharing rule for ties, individual vs. collective decision making, and even vs. odd number of locations.

Multiproduct activity and competition policy: The Tetra Pak case

We propose the Tetra Pak case as a real-world example to study the implications of multiproduct activity for European Competition Policy. Tetra Pak, a monopolist in aseptic carton packaging of liquid food, competes with Elopak in the nonaseptic sector. The EC Commission used the effect of Tetra Pak's dominance in the aseptic sector on its rival's performance as an evidence of the former's anticompetitive behavior. With linear demand and cost functions and interdependent demands, the Commission's position can be supported. However, a more general model suggests that the Commission's conclusions cannot be supported as the unique outcome of the analysis of the information available.

Monopolistic product line competition with ex post consumer heterogeneity

We model monopolistic competition in product lines, assuming that consumer heterogeneity is the result rather than the cause of product variety. Our results contradict some well-known policy implications yielded by the standard monopolistic competition framework.

Emotional arousal amplifies the effects of biased competition in the brain

The arousal-biased competition model predicts that arousal increases the gain on neural competition between stimuli representations. Thus, the model predicts that arousal simultaneously enhances processing of salient stimuli and impairs processing of relatively less-salient stimuli. We tested this model with a simple dot-probe task. On each trial, participants were simultaneously exposed to one face image as a salient cue stimulus and one place image as a non-salient stimulus. A border around the face cue location further increased its bottom-up saliency. Before these visual stimuli were shown, one of two tones played: one that predicted a shock (increasing arousal) or one that did not. An arousal-by-saliency interaction in category-specific brain regions (fusiform face area for salient faces and parahippocampal place area for non-salient places) indicated that brain activation associated with processing the salient stimulus was enhanced under arousal whereas activation associated with processing the non-salient stimulus was suppressed under arousal. This is the first functional magnetic resonance imaging study to demonstrate that arousal can enhance information processing for prioritized stimuli while simultaneously impairing processing of non-prioritized stimuli. Thus, it goes beyond previous research to show that arousal does not uniformly enhance perceptual processing, but instead does so selectively in ways that optimizes attention to highly salient stimuli.

Competition and dispersal in Pseudomonas aeruginosa

Dispersal plays a crucial role in a range of evolutionary and ecological processes; hence there is strong motivation to understand its evolution. One key prediction is that the relative benefits of dispersal should be greater when dispersing away from close relatives, because in this case dispersal has the additional benefit of alleviating competition with individuals who share the same dispersal alleles. We tested this prediction for the first time using experimental populations of the opportunistic pathogen Pseudomonas aeruginosa. We measured the fitness of isogenic genotypes that differed only in their dispersal behaviors in both clonal and mixed populations. Consistent with theory, the benefit of dispersal was much higher in clonal populations, and this benefit decreased with increasing growth rate costs associated with dispersal.

Strategic trade policy, competition, and welfare: the case of voluntary export restraints between Britain and Japan (1971–2002)

I evaluate the voluntary export restraint placed on Japanese automobile exports from 1977 to 1999 by the UK. I show that the policy failed to assist the British domestic car industry. Instead, UK-based US multi-nationals and Japanese manufacturers were the primary beneficiaries, at a substantial cost to UK consumers. Whilst there are a number of caveats, the policy was on balance damaging to the UK economy in welfare terms.

An experiment on energy-saving competition with socially responsible consumers: opening the black box

We present results from experimental price-setting oligopolies in which green firms undertake different levels of energy-saving investments motivated by public subsidies and demand-side advantages. We find that consumers reveal higher willingness to pay for greener sellers’ products. This observation in conjunction to the fact that greener sellers set higher prices is compatible with the use and interpretation of energy-saving behaviour as a differentiation strategy. However, sellers do not exploit the resulting advantage through sufficiently high price-cost margins, because they seem trapped into “run to stay still” competition. Regarding the use of public subsidies to energy-saving sellers we uncover an undesirable crowding-out effect of consumers’ intrinsic tendency to support green manufacturers. Namely, consumers may be less willing to support a green seller whose energy-saving strategy yields a direct financial benefit. Finally, we disentangle two alternative motivations for consumer’s attractions to pro-social firms; first, the self-interested recognition of the firm’s contribution to the public and private welfare and, second, the need to compensate a firm for the cost entailed in each pro-social action. Our results show the prevalence of the former over the latter.

Managing maize under pest species competition: is Bt (Bacillus thuringiensis) maize the solution?

Transgenic crops that contain Cry genes from Bacillus thuringiensis (Bt) have been adopted by farmers over the last 17 years. Unlike traditional broad spectrum chemical insecticides, Bt's toxicity spectrum is relatively narrow and selective, which may indirectly benefit secondary insects that may become important pests. The economic damage caused by the rise of secondary pests could offset some or all of the benefits associated with the use of Bt varieties. We develop a bioeconomic model to analyze the interactions between primary and secondary insect populations and the impact of different management options on insecticide use and economic impact over time. Results indicate that some of the benefits associated with the adoption of genetically engineered insect resistant crops may be eroded when taking into account ecological dynamics. It is suggested that secondary pests could easily become key insect pests requiring additional measures - such as insecticide applications or stacked traits – to keep their populations under the economic threshold.

The curious case of the camelthorn: competition, coexistence and nest-site limitation in a multispecies mutualism

Myrmecophyte plants house ants in domatia in exchange for protection from herbivores. Ant-myrmecophyte mutualisms exhibit two general patterns due to competition between ants for plant occupancy: i) domatia nest-sites are a limiting resource and ii) each individual plant hosts one ant species at a time. However, individual camelthorn trees (Vachellia erioloba) typically host two to four ant species simultaneously, often coexisting in adjacent domatia on the same branch. Such fine-grain spatial coexistence brings into question the conventional wisdom on ant-myrmecophyte mutualisms. Camelthorn ants appear not to be nest-site limited, despite low abundance of suitable domatia, and have random distributions of nest-sites within and across trees. These patterns suggest a lack of competition between ants for domatia and contrast strongly with other ant-myrmecophyte systems. Comparison of this unusual case with others suggests that spatial scale is crucial to coexistence or competitive exclusion involving multiple ant species. Furthermore, coexistence may be facilitated when co-occurring ant species diverge strongly on at least one niche axis. Our conclusions provide recommendations for future ant-myrmecophyte research, particularly in utilising multispecies systems to further our understanding of mutualism biology.

Using simulation models to investigate the cumulative effects of sowing rate, sowing date and cultivar choice on weed competition

With the increasing pressure on crop production from the evolution of herbicide resistance, farmers are increasingly adopting Integrated Weed Management (IWM) strategies to augment their weed control. These include measures to increase the competitiveness of the crop canopy such as increased sowing rate and the use of more competitive cultivars. While there are data on the relative impact of these non-chemical weed control methods assessed in isolation, there is uncertainty about their combined contribution, which may be hindering their adoption. In this article, the INTERCOM simulation model of crop / weed competition was used to examine the combined impact of crop density, sowing date and cultivar choice on the outcomes of competition between wheat (Triticum aestivum) and Alopecurus myosuroides. Alopecurus myosuroides is a problematic weed of cereal crops in North-Western Europe and the primary target for IWM in the UK because it has evolved resistance to a range of herbicides. The model was parameterised for two cultivars with contrasting competitive ability, and simulations run across 10 years at different crop densities and two sowing dates. The results suggest that sowing date, sowing density and cultivar choice largely work in a complementary fashion, allowing enhanced competitive ability against weeds when used in combination. However, the relative benefit of choosing a more competitive cultivar decreases at later sowing dates and higher crop densities. Modelling approaches could be further employed to examine the effectiveness of IWM, reducing the need for more expensive and cumbersome long-term in situ experimentation.