Yannis Katsoulacos

Environmental Policy Under Oligopoly with Endogenous Market Structure

Emission taxes under both fixed-number oligopoly and endogenous market structure, which are the most relevant market structures for policy issues, are examined. In the latter case, and contrary to what is expected under imperfect competition, the optimal tax could exceed marginal external damages, which implies that externalities generated by oligopolistic firms could be optimally controlled by overinternalizing environmental damages. Under endogenous market structure, a scheme consisting of a license fee and a second-best underinternalizing emission tax can increase social welfare as compared to the use of a single emission tax exceeding marginal damages. Copyright 1995 by The editors of the Scandinavian Journal of Economics.

Strategic R&D Policy

The outcome of technological competition between firms (or countries) depends on the resolution of two forces: the profit incentive and the competitive threat. This is illustrated using a simple duopoly model. This model is then used to analyze two policy issues: subsidizing R & D and collaborative research ventures. In evaluating the second of these, some use is made of numerical simulations.

Sequential Product Innovation and Industry Evolution

A certain sequence of innovations in a vertically differentiated good is considered. Two firms are engaged in a series of bidding games to acquire the (infinitely- lived) patents to these. Managerial diseconomies restrict firms to producing a single good which is chosen optimally from the set of patents owned by the firm. Product market equilibrium is Bertrand. Two theorems provide (1) a sufficient condition for the current leader to be overthrown (action-reaction) and (2) a necessary and sufficient condition for persistent dominance. An illustrative example shows that sequences satisfying these conditions can always be constructed. Copyright 1987 by Royal Economic Society.

Environmental innovation, spillovers and optimal policy rules

The great majority of the analysis of environmental policy has been undertaken under the assumption that emissions per unit of produced output are constant. Then once environmental policy is introduced, firms either reduce their output or engage in abatement which mainly represents end-of-pipe emissions reduction (e.g., Keeler, Spence and Zeckhauser, 1971; Baumol and Oates, 1988; Barnett, 1980). Recently, however, increasing attention has been directed towards the analysis of environmental policy aimed at reducing unit emissions coefficients through the introduction of environmentally-clean technology. That is, firms are induced by the policy to engage in environmental innovation, or environmental RD Ulph and Ulph, 1994) and by doing so they could reduce emissions without reducing output or undertaking end-of-pipe abatement.

Product innovation and employment

Abstract We look at the employment effect of product innovation in a general equilibrium setting, seeking to obtain theoretical support for the claim that product innovation (as opposed to process innovation) leads to an increase in the equilibrium level of employment. The mechanism through which product innovation acts on the level of employment is seen to involve two effects which we will term the ‘Welfare effect’ and the ‘Displacement effect’, respectively. Our analysis, using the recently developed, ‘Natural Oligapoly’ model suggest that in determining the effect of product innovation on the level of employment, the primary factor involved is the ‘Welfare effect’.

Integrating corporate responsibility principles and stakeholder approaches into mainstream strategy: a stakeholder‐oriented and integrative strategic management framework

Purpose – The purpose of this article is to establish a strategic management framework that supports the integration of corporate social responsibility principles and stakeholder approaches into mainstream business strategy.Design/methodology/approach – A top‐down and bottom‐up approach was used to develop the proposed framework. The top‐down approach focused on analyzing the main strategic management theories including social responsibility movements to identify complementary concepts and create a relevant topology. The bottom‐up approach was based on empirical research on the views of business companies on corporate social responsibility, a review of best practices and case studies mainly in Greece.Findings – The paper describes a stakeholder‐oriented integrative strategic management framework linking the main strategic management theories across value, responsiveness and responsibility dimensions. A mathematical model is presented describing the synergistic development of advantage‐creating knowledge a...

The Distortive Effects of Antitrust Fines Based on Revenue

In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple models to characterise their comparative static properties, and quantify them with simulations based on market data. We conclude by discussing the obvious need to depart from these distortive rules-of-thumb that appear to have the potential to substantially reduce social welfare.

On Optimal Legal Standards for Competition Policy: A General Welfare-Based Analysis

We present a new welfare-based framework for optimally choosing legal standards (decision rules). We formalise the decision-theoretic considerations widely discussed in the existing literature by capturing the quality of the underlying analysis and information available to a regulatory authority, and we obtain a precise necessary and sufficient set of conditions for determining when an Economics or Effects-Based approach would be able to discriminate effectively between benign and harmful actions and consequently dominate per se as a decision-making procedure. We then show that in a full welfare-based approach, the choice between legal standards must additionally take into account, (i) indirect (deterrence) effects of the choice of standard on the behaviour of all firms when deciding whether or not to adopt a particular practice; and (ii) procedural effects of certain features of the administrative process in particular delays in reaching decisions; and the investigation of only a fraction of the actions taking place. We therefore derive necessary and sufficient conditions for adopting Discriminating Rules, as advocated by the Effects-Based approach. We also examine what type of Discriminating rule will be optimal under different conditions that characterise different business practices. We apply our framework to two recent landmark decisions – Microsoft vs. EU Commission (2007) and Leegin vs. PSKS (2007) – in which a change in legal standards has been proposed, and show that it can powerfully clarify and enhance the arguments deployed in these cases.

Antitrust Penalties and the Implications of Empirical Evidence on Cartel Overcharges

This article makes two contributions to the literature linking penalties charged by competition authorities to observed cartel price overcharges. (i) It extends the theory of optimal penalties by introducing new considerations regarding the timing of penalty decisions. Drawing on a new European data set to calculate these additional factors, the optimal penalty is shown to be approximately 75% of that implied by the conventional formula. (ii) It shows that because penalties are typically imposed on revenue, a tougher regime may increase cartel overcharges. This calls into question some recent empirical findings on this issue and the potential benefits of raising penalties.

Innovation Spillovers and Technology Policy

— We examine a model of RD between information sharing and research coordination; between each of the latter and cooperation; between substitute and complementary research paths; between firms being located in the same industry or in different industries. These distinctions matter because, as we show, coordination can arise without cooperation (different industries, complementary research, research design) while cooperation need not induce information sharing (same industry, substitute research, information sharing). In many cases, however, allowing cooperation is sufficient to induce full infonnation sharing/research coordination, in which case the justification, if any, for a technology policy that takes the form of an R&D subsidy lies in encouraging firms to undertake more R&D. Our analysis suggests that cooperative arrangements between firms may often produce too little R&D, and therefore that R&D subsidies can be justified — but not to correct information problems, but other market failures in the amount of R&D firms choose to do.