Tobias Wenzel

Deregulation of Shopping Hours: The Impact on Independent Retailers and Chain Stores

This paper studies shopping hour decisions by retail chains and independent competitors. We use a Salop-type model where retailers compete in prices and shopping hours. Our results depend significantly on efficiency differences between retail chain and independent retailer. If the efficiency difference is small, the independent retailer may choose longer shopping hours than the retail chain and may gain from deregulation at the expense of the retail chain. The opposite result emerges when the efficiency difference is large. Then, the retail chain may benefit whereas the independent retailer loses from deregulation.

Price-dependent demand in spatial models

Abstract This paper introduces price-dependent individual demand into the circular city model of product differentiation. We show that for any finite number of firms, an unique symmetric price equilibrium exists provided that demand functions are not “too” convex. As in the case of unit demand, the number of firms under free entry decreases in the fixed cost of entry while increases in the transportation cost of consumers. However, this number is no longer always in excess of the socially optimal level. Insufficient entry occurs when the fixed and transportation costs are high.

Independent Service Operators in ATM Markets

This paper studies the impact of entry of non-banks (termed Independent Service Operators, ISOs) into ATM markets. We compare two different regimes by which the ISO may generate income: (1) The ISO receives interchange fees and (2) the ISO charges consumers directly. We find that due to the entry of an ISO, the size of the total ATM network increases independent of the way the ISO is financed. Account fees increase if the ISO receives interchange fees and decrease if the ISO charges consumers directly. Consumers may not benefit from the entry of the ISO. If a regulator can control the interchange fee, entry by an ISO financed through interchange fees increases consumer surplus, while the entry of a surcharging ISO decreases consumer surplus.

Strategic Obfuscation and Consumer Protection Policy

This paper studies obfuscation decisions by firms. We show that more prominent firms are more likely to obfuscate. While prominent firms always choose maximum obfuscation, the obfuscation by less prominent firms depends on the degree of asymmetry in prominence and consumer protection policy. We evaluate the impact of a consumer protection policy that limits the scope of obfuscation. We show that such a policy may not be effective as less prominent firms may increase their obfuscation practice.

A Note on the Excess Entry Theorem in Spatial Models with Elastic Demand

This paper revisits the excess entry theorem in spatial models a la Vickrey (1964) and Salop (1979) while relaxing the assumption of inelastic demand. Using a demand function with a constant demand elasticity, we show that the number of firms that enter a market decreases with the degree of demand elasticity.We find that the excess entry theorem does only hold when demand is sufficiently inelastic. Otherwise, there is insufficient entry. In the limiting case of unit elastic demand, the market is monopolized. We point out when and how a public policy can be desirable and broaden our results with a more general transportation cost function.

Wettbewerb im Internet: Was ist online anders als offline?

Abstract The Internet is characterized by competition between platforms which bring together potential partners of exchange. The degree of competition between these multi-sided platforms und market concentration are determined through (1) the strength of the direct and indirect network effects, (2) the extent of economies of scale, (3) the risk of congestition, (4) platform differentiation, and (5) the possibility of multi-homing. Depending on these factors different market concentrations and barriers to entry result. While there is no general tendency for concentration in the Internet and no general need for special market regulation of online content providers and intermediaries, single platforms may still have long lasting and significant market power which is unlikely to erode fastly, as the example of ebay illustrates.

Product Variety, Price Elasticity of Demand and Fixed Cost in Spatial Models

This paper explores the implications of price-dependent demand in spatial models of product differentiation. We introduce consumers with a quasi-linear utility function in the framework of the Salop (1979) model. We show that the so-called excess entry theorem relies critically on the assumption of completely inelastic demand. Our model is able to produce excessive, insufficient, or optimal product variety. A proof for the existence and uniqueness of symmetric equilibrium when price elasticity of demand is increasing in price is also provided.

Naive Consumers, Banking Competition, and ATM Pricing

Abstract This paper studies the performance of a direct charging regime in the ATM market in the presence of uninformed consumers who fail to recognize all relevant fees when selecting a bank. We show that the success of a direct charging regime critically depends on consumer information: the equilibrium surcharge fee is increasing in the number of uninformed consumers. If consumers are poorly informed, banking competition is weakened and prices for banking services are high. We discuss various regulatory interventions to improve market performance. We show that regulating the surcharge fee is an effective policy while intensifying competition (entry of additional banks or of independent service operators) fails to improve the outcome.

Liberalization of Opening Hours With Free Entry

This paper studies competition in prices and opening hours in a model with free entry. It is shown that under free competition a market failure arises: Entry is excessive and opening hours are under-provided. Restrictions on opening hours aggravate this failure. I analyze the impact of a liberalization of opening hours. The model predicts that in the short run prices will remain constant, but increase in the long run. Concentration in the retail sector will rise and opening hours will increase in two steps, immediately after deregulation and further over time. Finally, employment in the retail sector increases.

Consumer confusion, obfuscation and price regulation

This paper studies firms’ obfuscation choices in a duopoly setting where two firms differ in their marginal costs of production. We show that the high-cost firm chooses maximum obfuscation while the lowcost firmchooses minimal (maximal) obfuscation if the cost advantage is large (small). We argue that price regulation might be a useful policy in such an environment for two reasons: Introducing a price cap benefits consumers as it i) makes pricing more competitive and ii) reduces firms’ incentives to obfuscate. Moreover, a price cap benefits social welfare as it shifts production to the more efficient low-cost firm.