Interbank Competition with Costly Screening

We analyse credit market equilibrium when banks screen loan applicants. When banks have a convex cost function of screening, a pure strategy equilibrium exists where banks optimally set interest rates at the same level as their competitors. This result complements Broecker s (1990) analysis, where he demonstrates that no pure strategy equilibrium exists when banks have zero screening costs. In our set up we show that interest rate on loans are largely independent of marginal costs, a feature consistent with the extant empirical evidence. In equilibrium, banks make positive profits in our model in spite of the threat of entry by inactive banks. Moreover, an increase in the number of active banks increases credit risk and so does not improve credit market effciency: this point has important regulatory implications. Finally, we extend our analysis to the case where banks have differing screening abilities.

Endogenous spillovers, increased competition and re-organization waves

We consider an entrepreneur that is the sole producer of a costreducing skill, but the entrepreneur that hires a team to usethe skill cannot prevent collusive trade for the innovation related knowledge between employees and competitors. We showthat there are two types of diffusion avoiding strategies forthe entrepreneur to preempt collusive communication i) settingup a large productive capacity (the traditional firm) and ii)keeping a small team (the lean firm). The traditional firm ischaracterized by its many "marginal" employees that work shortdays, receive flat wages and are incompletely informed about the innovation. The lean firm is small in number of employees,engages in complete information sharing among members, that are paid with stock option schemes. We find that the lean firm is superior to the traditional firm when technological entry costsare low and when the sector is immature.

Pharmaceutical generics, vertical product differentiation and public policy

This paper studies oligopolistic competition in off-patent pharmaceuticalmarkets using a vertical product differentiation model. This model canexplain the observation that countries with stronger regulations havesmaller generic market shares. It can also explain the differences inobserved regulatory regimes. Stronger regulation may be due to a higherproportion of production that is done by foreign firms. Finally, a closelyrelated model can account for the observed increase in prices by patentowners after entry of generic producers.

Auction theory, sequential local service privatization, and the effects of geographical scale economies on effective competition

A sequential weakly efficient two-auction game with entry costs, interdependence between objects, two potential bidders and IPV assumption is presented here in order to give some theoretical predictions on the effects of geographical scale economies on local service privatization performance. It is shown that the first object seller takes profit of this interdependence. The interdependence externality rises effective competition for the first object, expressed as the probability of having more than one final bidder. Besides, if there is more than one final bidder in the first auction, seller extracts the entire bidder¿s expected future surplus differential between having won the first auction and having lost. Consequences for second object seller are less clear, reflecting the contradictory nature of the two main effects of object interdependence. On the one hand, first auction winner becomes ¿stronger¿, so that expected payments rise in a competitive environment. On the other hand, first auction loser becomes relatively ¿weaker¿, hence (probably) reducing effective competition for the second object. Additionally, some contributions to static auction theory with entry cost and asymmetric bidders are presented in the appendix

Generic brands and product differentiation strategies

Generic or own brand products were initially only lesser expensive copies of the branded label alternative, but nowadays, pricing alone is not enough in order to survive in the Fast Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG)markets. With this in mind manufacturers of generic brands have adapted to this rapidlygrowing niche by investing in design and marketing during the initial phase in order to be perceived as having a quality product comparable to that of the branded products. In addition, they have gone further ahead with a second phase and resorted to innovativeproduct differentiation strategies and even pure innovation in many cases. These strategies have granted generic brands constantly increasing market shares and a position of equals relative to national brands.Using previous analyses and case studies, this paper will provide conceptual and empirical evidence to explain the surprisingly fast growth and penetration of generic supermarket brands, which in their relatively short lifespan, have grown to rival the historical market leaders, the branded products. According to this analysis, the main conclusion is that the growth in generic brands can be explained not only by price competition, but also by the use of innovative product differentiation strategies.

Mineralogical alteration of artificial meteorites during atmospheric entry. The STONE-5 experiment

The generic concept of the artificial meteorite experiment STONE is to fix rock samples bearing microorganisms on the heat shield of a recoverable space capsule and to study their modifications during atmospheric re-entry. The STONE-5 experiment was performed mainly to answer astrobiological questions. The rock samples mounted on the heat shield were used (i) as a carrier for microorganisms and (ii) as internal control to verify whether physical conditions during atmospheric re-entry were comparable to those experienced by "real" meteorites. Samples of dolerite (an igneous rock), sandstone (a sedimentary rock), and gneiss impactite from Haughton Crater carrying endolithic cyanobacteria were fixed to the heat shield of the unmanned recoverable capsule FOTON-M2. Holes drilled on the back side of each rock sample were loaded with bacterial and fungal spores and with dried vegetative cryptoendoliths. The front of the gneissic sample was also soaked with cryptoendoliths. <p>The mineralogical differences between pre- and post-flight samples are detailed. Despite intense ablation resulting in deeply eroded samples, all rocks in part survived atmospheric re-entry. Temperatures attained during re-entry were high enough to melt dolerite, silica, and the gneiss impactite sample. The formation of fusion crusts in STONE-5 was a real novelty and strengthens the link with real meteorites. The exposed part of the dolerite is covered by a fusion crust consisting of silicate glass formed from the rock sample with an admixture of holder material (silica). Compositionally, the fusion crust varies from silica-rich areas (undissolved silica fibres of the holder material) to areas whose composition is "basaltic". Likewise, the fusion crust on the exposed gneiss surface was formed from gneiss with an admixture of holder material. The corresponding composition of the fusion crust varies from silica-rich areas to areas with "gneiss" composition (main component potassium-rich feldspar). The sandstone sample was retrieved intact and did not develop a fusion crust. Thermal decomposition of the calcite matrix followed by disintegration and liberation of the silicate grains prevented the formation of a melt.</p> <p>Furthermore, the non-exposed surface of all samples experienced strong thermal alterations. Hot gases released during ablation pervaded the empty space between sample and sample holder leading to intense local heating. The intense heating below the protective sample holder led to surface melting of the dolerite rock and to the formation of calcium-silicate rims on quartz grains in the sandstone sample. (c) 2008 Elsevier Ltd. All rights reserved.</p>

Broadband prices in the European Union : competition and commercial strategies

This paper analyses the determinants of broadband Internet access prices in a group of 15 EU countries between 2008 and 2011. Using a rich panel dataset of broadband plans, we show the positive effect of downstream speed on prices, and report that cable and fibre-to-the-home technologies are available at lower prices per Mbps than x DSL technology. Operators’marketing strategies are also analysed as we show how much prices rise when the broadband service is offered in a bundle with voice telephony and/or television, and how much they fall when download volume caps are included. The most insightful results of this study are provided by a group of metrics that represent the situation of competition and entry patterns in the broadband market. We show that consumer segmentation positively affects prices. On the other hand, broadband prices are higher in countries where entrants make greater use of bitstream access and lower when they use more intensively direct access -local loop unbundling-. However, we do not find a significant effect of inter-platform competition on prices.

ICTINEUAUV wins the First SAUC-E competition

A pioneer team of students of the University of Girona decided to design and develop an autonomous underwater vehicle (AUV) called ICTINEU-AUV to face the Student Autonomous Underwater Challenge-Europe (SAUC-E). The prototype has evolved from the initial computer aided design (CAD) model to become an operative AUV in the short period of seven months. The open frame and modular design principles together with the compatibility with other robots previously developed at the lab have provided the main design philosophy. Hence, at the robot's core, two networked computers give access to a wide set of sensors and actuators. The Gentoo/Linux distribution was chosen as the onboard operating system. A software architecture based on a set of distributed objects with soft real time capabilities was developed and a hybrid control architecture including mission control, a behavioural layer and a robust map-based localization algorithm made ICTINEU-AUV the winning entry

Interference competition and high temperature reduce the ‘virulence’ of fig wasps and contribute to stability of a fig-wasp mutualism

Fig trees are pollinated by fig wasps, which also oviposit in female flowers. The wasp larvae gall and eat developing seeds. Although fig trees benefit from allowing wasps to oviposit, because the wasp offspring disperse pollen, figs must prevent wasps from ovipositing in all flowers, or seed production would cease, and the mutualism would go extinct. In Ficus racemosa, we find that syconia (‘figs’) that have few foundresses (ovipositing wasps) are underexploited in the summer (few seeds, few galls, many empty ovules) and are overexploited in the winter (few seeds, many galls, few empty ovules). Conversely, syconia with many foundresses produce intermediate numbers of galls and seeds, regardless of season. We use experiments to explain these patterns, and thus, to explain how this mutualism is maintained. In the hot summer, wasps suffer short lifespans and therefore fail to oviposit in many flowers. In contrast, cooler temperatures in the winter permit longer wasp lifespans, which in turn allows most flowers to be exploited by the wasps. However, even in winter, only in syconia that happen to have few foundresses are most flowers turned into galls. In syconia with higher numbers of foundresses, interference competition reduces foundress lifespans, which reduces the proportion of flowers that are galled. We further show that syconia encourage the entry of multiple foundresses by delaying ostiole closure. Taken together, these factors allow fig trees to reduce galling in the wasp-benign winter and boost galling (and pollination) in the wasp-stressing summer. Interference competition has been shown to reduce virulence in pathogenic bacteria. Our results show that interference also maintains cooperation in a classic, cooperative symbiosis, thus linking theories of virulence and mutualism. More generally, our results reveal how frequency-dependent population regulation can occur in the fig-wasp mutualism, and how a host species can ‘set the rules of the game’ to ensure mutualistic behavior in its symbionts.

Inferring conduct under the threat of entry : the case of Brazilian cement industry

This paper demonstrates that when an industry faces potential entry and this threat of entry constrains pre-entry prices, cost and conduct are not identified from the comparative statics of equilibrium. In such a setting, the identifying assumption behind the well-established technique of relying on exogenous demand perturbations to empirically distinguish between alternative hypotheses of conduct is shown to fail. The Brazilian cement industry, where the threat of imports restrains market outcomes, provides an empirical illustration. In particular, pricecost margins estimated using this established technique are considerably biased downward, underestimating the degree of market power. A test of conduct is proposed, adapted to this constrained setting, which suggests that outcomes in the industry are collusive and characterised by market division.

Bens credenciais e poder de mercado : um estudo econométrico da indústria farmacêutica brasileira

The Brazilian pharmaceutical industry has always been targeted by the society, due to the ethical drugs’ high weight in the families’ consumption budgets (especially within the poorer ones) and price raises traditionally above inflation (when the government does not run a price control). The present article aims to organize the debate on regulation for this industry. We review the literature on market failures and regulation solutions adopted for this industry worldwide and try to relate empirically drug prices to some explaining variables, based on original microdata. We find that, similarly to previous U.S. estimations, Brazilian leading brand name drugs – before a 1999 law, which created officially the generic drug defined by its bioequivalence to the reference drug, and a massive advertisement campaign for spreading use of generic drugs, run by the Ministry of Health – accommodated entry and share growth of the followers by raising their prices and catering to a more inelastic market segment. As opposed, the followers reduce relative prices when they lose market. Therefore, a fall of the concentration index in a particular segment has ambiguous effects: if it is due to reduced leader power, the followers raise their relative prices; if it is due to a tougher competition within the fringe, relative prices tend to go down.

Barriers to entry and development

This paper analyzes the effect of an accountability system in the Brazilian college market. For each discipline, colleges were assigned a grade that depended on the scores of their students on the ENC, an annual mandatory exam. Those grades were then disclosed to the public, giving applicants information about college quality. The system also established rewards and penalties based on the colleges’ grades. I find that the ENC had a substantial effect on different measures of college quality, such as faculty education and the proportion of full-time faculty. The detailed information from this unique dataset and the fact that the ENC started being required for different disciplines in different years allow me to control for time-specific effects, thus minimizing the bias caused by policy endogeneity. Indeed, I find strong evidence on the importance of controlling for time-specific effects: estimates of the impact of the ENC on college quality more than double when I do not take those effects into account. The ENC also affects positively the ratio between applicants and vacancies, and it decreases the faculty and the entering class sizes. The results suggest that its introduction fostered competition and favored colleges entering the market.

Exclusivity contracts and competition : the case of the Brazilian fuels market

Exclusivity contracts can help stations by providing brand-value that allows them to obtain higher profits, relative to unbranded retailers. However, branded retailers may have a stronger negative effect over its competitors’ profits. It is not clear which one of these two effects dominates (brand-value vs competition effect). Therefore, the impact of exclusivity over the number of participants in the downstream market is not determined. In this paper, I empirically study the effects of exclusivity agreements on competition in the Brazilian gasoline sector. In order to do so, I estimate an entry model of endogenous product-type choices using data of retailers’ locations and contract choices along with data from the 2010 Brazilian Census. I use my estimates to simulate entry decisions under two counterfactual scenarios: i) mandatory exclusivity and ii) no exclusivity.

The WTO entry of China and its impact on the countries of the Caribbean Basin

Includes bibliography