Michael Waterson

BUYER POWER AND ITS IMPACT ON COMPETITION IN THE FOOD RETAIL DISTRIBUTION SECTOR OF THE EUROPEAN UNION

In recent years, there has been significant consolidation and concentration in food retail distribution in the European Union, as our paper documents. We examine the implications of this from the social welfare viewpoint. Our focus is on buyer power, since a commonly held view is that, arising from increased concentration, it may be a buffer to significant manufacturer power. We investigate the issue both theoretically and through data and case study work. We suggest the market will develop into a concentrated pattern across Europe, but that the eventual impact on consumers will depend significantly on the nature and form of competition between large retail chains and how well buying groups ensure that even the smaller retailers can compete on an effective basis.

The role of consumers in competition and competition policy

This paper develops the idea that consumers’ behavior matters significantly from the viewpoint of industry performance. This is examined through some theoretical propositions, but then at greater length by means of some case study examples. These examples demonstrate how, even in potentially competitive industries, reluctance on the part of consumers to search or to switch suppliers can lead to a sub-competitive outcome. The significance of non-traditional competition policy remedies in changing the outcome is drawn out.

No Win, No Fee: Some Economics of Contingent Legal Fees

This paper analyzes the effects on the litigation process of alternative contracts between plaintiffs and their lawyers. Three contracts are compared: normal (hourly fee), contingent mark up fees, and contingent share contracts. The focus is on the first two, a recent change in English law governing legal fees providing the motivation. The influences of the contract type on the acceptance of settlement offers, the settlement probability, the accident probability, the demand for trials, and the ex ante and ex post welfare of litigants are examined. Copyright 1993 by Royal Economic Society.

Empirical research on discrete choice game theory models of entry: An illustration

Abstract We discuss the empirical implementation of discrete game theoretic models of firm entry. After presenting a simple model of entry that underlies much of existing empirical analysis, we discuss the major problems that must be tackled when empirically implementing theoretical models, and econometric methods used in the literature. Finally, we present results from a reduced form estimation of a sequential move entry game, using data from the UK hamburger market.

Strategic behaviour of incumbent firms in the UK

Abstract The main purpose of this paper is to examine the incidence of strategic behaviour in the UK by means of a questionnaire study performed across three broad manufacturing industries – food, electrical engineering and chemicals. Of the strategies which have received substantial theoretical attention, R&D and advertising appear widely used, patenting, pricing and excess capacity much less so. Vertical instruments such as purchasing policy also stand out as important. But possibly only a minority of firms in our sample actively pursue strategic instruments.

Vertical Relationships: An Introduction

This short essay introduces a special issue of The Journal of Industrial Economics on vertical relationships, including both vertical integration and vertical restraints. In the last few years, there has been a resurgence of theoretical and empirical work on vertical relationships, and they are central to major current issues in industrial policy. In this introduction, the authors briefly describe the contribution by the papers that make up this special issue. Copyright 1991 by Blackwell Publishing Ltd.

Retail pharmacy in Melbourne: Actual and Optimal densities

This paper models retail pharmacy distribution in terms of a quasimonopolistically competitive market structure in which government remuneration determines industry numbers. The model is calibrated using industry estimates for metropolitan Melbourne and comparisons are made with actual pharmacy numbers, with reasonable results. Some normative implications are also drawn, based upon the use of a social loss function. Copyright 1993 by Blackwell Publishing Ltd.

Revenues from Storage in a Competitive Electricity Market: Empirical Evidence from Great Britain

Despite the high upfront financial costs associated with the existing technologies for energy storage they have become more appealing in recent years in response to the increasing importance of non-dispatchable sources of generation in the energy systems of developed countries. One of the essential pieces of information required to value the monetary benefits which can be achieved when investing in energy storage is the price that energy will command when it is released, compared with the price paid when injected into the storage. In this paper we investigate this relationship using time series statistical techniques for various maturities of forward prices, using data on assessments of power prices for future delivery. We will examine the relationship for predictability and size of gap in order to answer questions about the likely financial benefits which can be obtained from optimal time management of storage facilities, using a technology neutral approach. Our initial results indicate that such arbitrage opportunities exist for storage facilities, especially when energy is stored over a short-term period of a day or a week.

Product Differentiation and Profitability: An Asymmetric Model

The purpose of this paper is to develop a model of product differentiation in which there is an asymmetry, namely that some customers are easier to serve than others. It turns out that profits are negatively related to difficulty of service, and that profits and market share are negatively related. The results of this model are used to shed light on some aspects of the collusion versus differential efficiency debate, and are also compared with vertical product differentiation models. Copyright 1990 by Blackwell Publishing Ltd.

Your Call: eBay and Demand for the iPhone 4☆

Abstract The iPhone 4 was introduced into the UK market on 24th June 2010 to significant consumer interest. Demand revealed itself exceeding supply through conventional channels, since there was very extensive activity in terms of bidding on eBay auctions for the product. We monitored all UK eBay transactions on the iPhone 4 for six weeks from introduction, with total transactions amounting to around £1.5m. We analyse determinants of winning bids in terms of characteristics of the phone, the seller, and the buyer. Our most notable and novel finding relative to previous studies is a very significant premium over list price being paid in almost all cases, with positive uplift factors including whether the phone was unlocked and whether it could be sold overseas. Demand fell over time, as evidenced by lower achieved prices, but the fall in price was relatively modest. A significant premium of 32GB over 16GB versions is revealed.