Mats Bergman

Measuring Oligopsony Power* An Application to the Swedish Pulp and Paper Industry

An empirical test of oligopsony power is developed, where the conjectural and supply elasticities are estimated simultaneously. A Generalized Leontief profit function is used to represent the production structure. The test is applied to the Swedish pulpwood market. Support is found for the hypothesis that the degree of market power varies over time.

The costs of paying : private and social costs of cash and card payments

Despite the central role of payments in theoretical and policy oriented economics, there is surprisingly little known about the costs of different payment instruments. We estimate social and private costs of cash, debit and credit card payments in Sweden in 2002. The combined social cost of providing these payment services is approximately 0.4 per cent of GDP. Debit and credit cards are socially less costly than cash for payments above EURO 8 and EURO 18, respectively. Corresponding thresholds for consumers’ private costs are somewhat higher. Data indicate a too extensive use of cash relative to card payments in terms of both private and social costs.

Antitrust, Marketing Cooperatives, and Market Power

Marketing cooperatives are common in agricultural markets. This article explores their price and welfare effects and relates to antitrust legislation in the United States, the European Union, and some of the EU member states-in particular, Sweden. Welfare is higher with a monopoly cooperative than with a profit-maximizing monopoly, if the scope for price discrimination is small and if the world-market price is low relative to the domestic price. As the world-market price rises (or as price discrimination becomes more important), the welfare effect is reversed. The price-discrimination effect suggests that, as a marketing cooperative integrates vertically, welfare may fall. These results carry over to a duopoly with a cooperative firm and a profit-maximizing firm. In such a duopoly, the cooperative behaves more aggressively and obtains a larger market share. Empirical evidence supports these conclusions.

A note on N. Economides: the incentive for non-price discrimination by an input monopolist

A note on N. Economides : the incentive for non-price discrimination by an input monopolist

Tender Evaluation and Award Methodologies in Public Procurement

The EU procurement directives stipulate that public contracts are awarded to the lowest bidder or to the bidder with the economically most advantageous offer; the latter requiring that a scoring rule must be specified. We provide a simple theoretical framework for tender evaluation and discuss the pros and cons of common scoring rules, e.g., highest quality (beauty contest) and price-and-quality-based evaluation. Some descriptive facts are presented for a sample of Swedish public procurements. We argue that the most common method, price-to-quality scoring, is flawed for several reasons. It is non-transparent, making accurate representation of the procurer’s preferences difficult. It is often open to strategic manipulation, due to dependence on irrelevant alternatives, and it is unreasonably non-linear in bid prices. We prefer quality-to-price scoring, where money values are assigned to different quality levels. When the costs of quality are relatively well-known, however, lowest price is the preferable award criteria.

Privatization and Quality: Evidence from Elderly Care in Sweden

Non-contractible quality dimensions are at risk of degradation when the provision of public services is privatized. However, privatization may increase quality by fostering performance-improving innovation, particularly if combined with increased competition. We assemble a large data set on elderly care services in Sweden between 1990 and 2009 and estimate how opening to private provision affected mortality rates - an important and not easily contractible quality dimension - using a difference-in-difference-in-difference approach. The results indicate that privatization and the associated increase in competition significantly improved non-contractible quality as measured by mortality rates.

Atlantic Divide or Gulf Stream Convergence: Merger Policies in the European Union and the United States

We collect a sample of EU and US in-depth merger investigation, estimate models of the regulatory decisions and use the models to compare merger policies in the two jurisdictions. The approach used allows us to decompose observed differences between merger decisions into regime effects and case-mix effects. Focusing on dominant-firm mergers, we find that EU is tougher than the US on average and on mergers resulting in low market shares. We also find that US policy is more affected than EU policy by a range of market considerations.

A note on the application of the restricted generalised Leontief profit function

Abstract The conditions for a restricted generalised Leontief profit function to fulfil the requirements of profit functions are explored. A specification is proposed in which homogeneity of degree 1 in the fixed inputs is nested in the non-homogeneous case.

Merger Control in the European Union and the United States: Just the Facts

Using a combination of public and internal information, this paper compares and contrasts European Union (EU) and United States (US) merger policies. Common economic analysis leads both authorities to subject remarkably comparable portfolios of mergers to close scrutiny. Vertical mergers account for less than 10%, and potential competition matters for around 5%, of in-depth merger investigations in both jurisdictions, while purely conglomerate mergers are extremely rare or non-existent. The share of collusion investigations falls over time in both jurisdictions. However, the US relies on collusion theory more than three times as often as the EU, where over 80% of the horizontal cases address dominance. Across both regimes, roughly one eighth of all recent horizontal investigations have been analysed as non-dominance unilateral-effects cases. Only minor differences in the average probability of a merger being challenged are observed when controlling for market share. The 2004 EU reforms seem to be leading towards at least some convergence of enforcement policy.

The restricted profit function and the application of the generalised Leontief and the translog functional forms

Abstract A flexible form must have certain properties, in order to represent a restricted profit function. These are discussed, and a comparison is made between the translog and the generalised Leontief functional form, with and without homogeneity of degree one in the fixed factors. A specification for the restricted generalised Leontief profit function is proposed, in which homogeneity of degree one in the fixed factors is nested in the non-homogeneous case.