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18
The strategic impact of resource flexibility in business groups
- Rand Journal of Economics Forthcoming
, 2005
"... The strategic impact of resource flexibility in business groups Giacinta Cestone∗ Chiara Fumagalli∗∗ Barcelona Economics WP n.49 We show that in business groups with efficient internal capital markets resources may be channelled to either more or less profitable units. Depending on the amount of int ..."
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Cited by 14 (3 self)
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The strategic impact of resource flexibility in business groups Giacinta Cestone∗ Chiara Fumagalli∗∗ Barcelona Economics WP n.49 We show that in business groups with efficient internal capital markets resources may be channelled to either more or less profitable units. Depending on the amount of internal resources, a group may exit a market in response to increased competition, or channel funds to the subsidiary operating in that market. This has important implications for the strategic impact of group membership. Affiliation to a monopolistic subsidiary can make a cash-rich (poor) stand-alone more (less) vulnerable to entry deterrence. Also, resource flexibility within a group makes subsidiaries’
Collusion in Industrial Economics—a Survey
- Journal of Industry, Competition and Trade
, 2005
"... Abstract. The aim of this paper is to summarize the theory of (implicit) collusion in the framework of infinitely repeated games, and in particular, to survey the comprehensive literature exploring which factors make collusion easier or more difficult to sustain. On this basis, the existing empirica ..."
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Cited by 6 (0 self)
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Abstract. The aim of this paper is to summarize the theory of (implicit) collusion in the framework of infinitely repeated games, and in particular, to survey the comprehensive literature exploring which factors make collusion easier or more difficult to sustain. On this basis, the existing empirical studies and the experimental results will be discussed. Policy options as e.g. leniency programs are also analyzed. Although the number of clear cut policy conclusions is limited, understanding thoroughly the mechanisms of collusion is important for (antitrust) policies.
Debt as a (Credible) Collusive Device, or Everybody Happy but the Consumer, working paper
, 2000
"... The paper proposes a theory of anti-competitive effects of debt finance based on the inter-action between capital structure, managerial incentives, and firms ’ ability to sustain collusive agreements. Shareholders ’ commitments not to expropriate debtholders through managers with valuable reputation ..."
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Cited by 3 (0 self)
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The paper proposes a theory of anti-competitive effects of debt finance based on the inter-action between capital structure, managerial incentives, and firms ’ ability to sustain collusive agreements. Shareholders ’ commitments not to expropriate debtholders through managers with valuable reputations or “conservative ” incentives greatly facilitate collusive behavior in product markets. Concentrated/collusive credit markets or large banks in competitive ones can confer credibility to such arrangements, thereby “exporting ” collusion through leverage in otherwise competitive downstream industries. Managers are happy with the arrangement since they share in the collusive rent. These “conservative governance structures ” imply high prices and underinvestment in R&D. Corruption and bad debtholder protection may restore competition by allowing shareholders to bribe managers and induce them to undercut rivals
Optimal Collusion with Internal Contracting
, 2008
"... In this paper, we develop a model of collusion in which two firms play an infinitelyrepeated Bertrand game when each firm has a privately-informed agent. The colluding firms, fixing prices, allocate market shares based on the agent’s information as to cost types. We emphasize that the presence of pr ..."
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Cited by 2 (2 self)
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In this paper, we develop a model of collusion in which two firms play an infinitelyrepeated Bertrand game when each firm has a privately-informed agent. The colluding firms, fixing prices, allocate market shares based on the agent’s information as to cost types. We emphasize that the presence of privately-informed agents may provide firms with a strategic opportunity to exploit an interaction between internal contracting and market-sharing arrangement: the contracts with agents may be used to induce firms’ truthful communication in their collusion, and collusive market-share allocation may act to reduce the agents’ information rents.
Contracts, Ownership, and Industrial Organization: Past and Future’,
- Journal of Law, Economics, and Organization
, 2014
"... Abstract We review the formal literature in industrial organization that incorporates organizational models of the firm into the analysis of industry behavior. Although many insights have been generated, this "organizational industrial organization" is still in its early stages: a complet ..."
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Cited by 1 (1 self)
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Abstract We review the formal literature in industrial organization that incorporates organizational models of the firm into the analysis of industry behavior. Although many insights have been generated, this "organizational industrial organization" is still in its early stages: a complete theory of the relationship between organizational design and traditional IO variables such as price, quantity or welfare has yet to be developed. We show how the insights emanating from the incomplete contract literature can be used to address these questions and others of interest to both IO and organization economists: endogenous heterogeneity; the role of liquidity and surplus division in organizational design; the relationship between product price, industry supply and organizational choices; the response of industry supply to shocks in fundamentals.
Monitoring Managers Through Corporate Compliance Programs ∗
, 2010
"... Compliance programs entail monitoring of employees ’ behavior with the claimed objective of fighting corporate crime. (Competition) Authorities promote such intra-firm monitoring. In a three-tier hierarchy model, authority-shareholder-manager, we study the impact of monitoring on contracting within ..."
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Cited by 1 (1 self)
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Compliance programs entail monitoring of employees ’ behavior with the claimed objective of fighting corporate crime. (Competition) Authorities promote such intra-firm monitoring. In a three-tier hierarchy model, authority-shareholder-manager, we study the impact of monitoring on contracting within the firm and the authority’s optimal sanctions and leniency policy. We find that compliance programs are beneficial in the fight against corporate crime if and only if the managerial sanction is low. Moreover, when the shareholder blows the whistle, the authority optimally grants partial corporate leniency, while not granting individual leniency to the involved employees. Conversely, when the employee blows the whistle, the authority grants individual leniency if and only if the expected managerial sanction is either particularly high or particularly low. Finally, we find that the authority does not apply a discount on the corporate sanction for the mere fact of having adopted a compliance program. Our results thus contradict
Oligopolistic Equilibrium and Financial Constraints *
"... In this paper we present a model of oligopoly and financial constraints. We study allocations which are bankruptcy-free (BF) in the sense that no firm can drive another firm to bankruptcy without becoming bankrupt. We show how such allocations can be sustained as an equilibrium of a dynamic game. Wh ..."
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In this paper we present a model of oligopoly and financial constraints. We study allocations which are bankruptcy-free (BF) in the sense that no firm can drive another firm to bankruptcy without becoming bankrupt. We show how such allocations can be sustained as an equilibrium of a dynamic game. When there are two firms, all equilibria yield BF allocations. When there are more than two firms, allocations other than BF can be sustained as equilibria but in some cases the set of BF allocations still useful in explaining the shape of equilibrium set. This paper is a merger of two independent papers, "Oligopolistic Equilibrium and Bankruptcy " by Beviá and Corchón and "The Theory of Collusion under Financial Constraints " by Yasuda. The.rst two authors wish to thank to A. Brandenburger, L. Cabral,
Information Disclosure: Theory, Policy and Experiment
"... All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form, or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission in writing from the author. This book was typeset by the author us ..."
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form, or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission in writing from the author. This book was typeset by the author using LaTex. Published by Universitaire Pers Maastricht
zbw Leibniz-Informationszentrum WirtschaftLeibniz Information Centre for Economics
"... Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nut ..."
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Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.
Barcelona GSE Working Paper Series Working Paper nº 547Oligopolistic Equilibrium and Financial Constraints
, 2011
"... In this paper we present a model of oligopoly and …nancial constraints. We study allocations which are bankruptcy-free (BF) in the sense that no …rm can drive another …rm to bankruptcy without becoming bankrupt. We show how such allocations can be sustained as an equilibrium of a dynamic game. When ..."
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In this paper we present a model of oligopoly and …nancial constraints. We study allocations which are bankruptcy-free (BF) in the sense that no …rm can drive another …rm to bankruptcy without becoming bankrupt. We show how such allocations can be sustained as an equilibrium of a dynamic game. When there are two …rms, all equilibria yield BF allocations. When there are more than two …rms, allocations other than BF can be sustained as equilibria but in some cases the set of BF allocations still useful in explaining the shape of equilibrium set.
