A central result in price theory is the law of one price: prices of a homogeneous good sold at different locations should be equal. Empirical studies of the law of one price find that it is often violated. In my dissertation I explore the allocation problem that suppliers face when supplying multiple markets. I use the experimental method to examine the effect of an increase in the number of suppliers in a market, ceteris paribus, has on the allocation decisions of market participants. I also use the experimental method to investigate suppliers that are strategic and show that market concentration and transportation costs restrict the supplier’s ability to coordinate on an efficient equilibrium. A strategic supplier takes account his own effect on prices. Strategic supplies face a difficult strategy coordination problem. If they cannot solve it, then an inefficient outcome may result. Coordination failure may result in price dispersion across the markets. Resulting price signals do not inform suppliers who should respond and by how much. Price signals are not sufficient for suppliers to solve the strategy coordination problem. In the experiments, I observe that increasing the quantity of suppliers, that is the Herfindahl index of concentration, in the market will decrease the frequency of the equilibrium strategy to be played, holding other things constant. Increasing the number of firms in a market, ceteris paribus, increases price dispersion and coordination on an efficient market allocation is decreased. The experiments reveal that the ability of suppliers to coordinate is directly correlated with the optimization premium: the expected payoff difference between best responding to an opponents strategy and the payoff to an inferior response. The incentive is greater to best respond when the optimization premium is larger. Coordination at the equilibrium allocation is quicker.

In this paper, we examine the effects of market competition on corporate performance. In the first stage, we use Herfindahl-Hirschman Index to measure the degree of competition and markets are divided into three categories, namely competition, moderate competition and oligopoly. Fama-French is used to examine whether there is abnormal return existing in competition market. Then we use the index constructed by Chen, Kao, Tsao and Wu (2007) to decide the performance of internal governance and use it with competition degree to conduct the regression. This paper finds the following results, 1. the moderate competition market is reducing; 2. the portfolio of firms in competition markets outperforms that in oligopoly; 3. market competition has positive effect on ROA, ROE, EPS and Tobin¡¦s Q; 4. market competition and corporate governance are complementary.

This dissertation investigates the effect of market concentration on nonlinear pricing strategies in the airline industry. The study develops a theoretical nonlinear pricing model with both discrete product and consumer types to derive testable implications about the impact of market concentration on the structure of relative prices within a menu of prices. The analysis then uses a unique, airline ticket level data set to test the model predictions. The data set consists of a representative sample of airline tickets purchased between June and December 2004 from one major Computer Reservation System (CRS), for travel in the fourth quarter of the same year. The study restricts attention to 246 domestic routes in the United States, resulting in 878,169 tickets. This unique data set allows us to examine the effect of market structure conditions on relative prices within a menu of fare types with restrictive ticket characteristics. The analysis also contributes to the understanding of how the level of competition in a market affects the dispersion of airline prices. The results indicate that market concentration differentially impacts high versus low priced fares, as predicted by the theoretical model. More specifically, there is a decrease in the ratio of high- to low-quality fares as markets become more concentrated, after controlling for numerous factors that may affect prices through costs and market characteristics. The ratio of medium- to low-quality fares, however, increases with less competition. From a welfare perspective, it is interesting to observe that not all travelers are affected in the same way by a decrease in the level of competition. Business travelers, who purchase high priced fares, end up paying relatively lower prices in more concentrated markets while leisure travelers pay more.

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Statistics paint a picture of a wheat industry under severe pressure, with the number of hectares dedicated to wheat production that have decreased while imports notably increased since 1997. This has had a negative impact on the industry‘s global competitiveness. The direct and indirect linkages between wheat and wheat products, together with the benefits that the industry can bring to the economy in the form of heightened food security and employment opportunities, highlight the need for a competitive wheat industry in South Africa. Clearly, the underlying causes of the declining wheat production in South Africa need to be investigated and understood. The presence of strict wheat quality standards and the fact that one of the general characteristics of wheat is the defect of conversion (that is, yield declines as quality improves) help to explain why wheat production in South Africa has declined in recent years. This can also negatively affect prices received for produce because South African wheat prices are determined by the lowest import parity price and not by the specific quality of the wheat. The fact that market concentration has been observed in certain parts of the wheat industry in South Africa has raised concerns that this phenomenon could potentially have had a negative impact on the performance of the country‘s wheat production sector. Consequently, this study revolves around the following main questions: ―could the evident market concentration in the South African wheat industry influence the performance of the wheat production sector by prescribing certain quality standards which attract relatively low prices?‖, and if so, ―can the wheat quality standards and prices be held responsible for the decline in the industry‘s performance, and to what extent?‖ Both qualitative and quantitative approaches were used in pursuit to answer these questions. The qualitative approach was used to describe the theoretical basis of performance, competitiveness and concentration. Three different quantitative approaches were employed to determine the current state of competitiveness (Relative Trade Advantage (RTA) method), the factors influencing it (hedonic price model) and the extent of such influence (dynamic linear model). From the RTA, it was clear that South Africa is the only country, compared to its trading partners, that has an uncompetitive unprocessed (production) wheat sector alongside a competitive semi-processed (flour) wheat sector. The hedonic price model supported the finding that the institutional environment of the wheat industry uses quality-related mechanisms such as the cultivar release criteria to influence the competitiveness of the wheat production sector. Four comparisons were developed to determine whether the strict qualities required for the release of new cultivars are justified. It was found that with all four of these comparisons, the strict prescribed wheat quality was not justified in terms of the quality and demand considerations. It was found that when prescribed wheat quality could be relaxed to accommodate market supply and demand, an estimated 12.8 percent increase in yields could have been realised equating to a loss of approximately R606 million in Net Farm Income (NFI) per annum. When increasing this percentage to 20 percent, it was seen that the effect on NFI per annum would be R920 million. This study therefore provides evidence as to why the performance of the wheat industry has been declining over the last two decades and also contributes to the development of a framework for policy and decision makers which will encourage more competition and a freer market in terms of quality standards. Further contributions of this study lies in the body of literature on competitive behaviour by showing how concentrated industries can use statutory bodies to manipulate markets for rent-seeking purposes. It further shows how these decisions impact on important aspects like the profits of role players in an industry. / PhD (Agriculture, Economics), North-West University, Potchefstroom Campus, 2015

Statistics paint a picture of a wheat industry under severe pressure, with the number of hectares dedicated to wheat production that have decreased while imports notably increased since 1997. This has had a negative impact on the industry‘s global competitiveness. The direct and indirect linkages between wheat and wheat products, together with the benefits that the industry can bring to the economy in the form of heightened food security and employment opportunities, highlight the need for a competitive wheat industry in South Africa. Clearly, the underlying causes of the declining wheat production in South Africa need to be investigated and understood. The presence of strict wheat quality standards and the fact that one of the general characteristics of wheat is the defect of conversion (that is, yield declines as quality improves) help to explain why wheat production in South Africa has declined in recent years. This can also negatively affect prices received for produce because South African wheat prices are determined by the lowest import parity price and not by the specific quality of the wheat. The fact that market concentration has been observed in certain parts of the wheat industry in South Africa has raised concerns that this phenomenon could potentially have had a negative impact on the performance of the country‘s wheat production sector. Consequently, this study revolves around the following main questions: ―could the evident market concentration in the South African wheat industry influence the performance of the wheat production sector by prescribing certain quality standards which attract relatively low prices?‖, and if so, ―can the wheat quality standards and prices be held responsible for the decline in the industry‘s performance, and to what extent?‖ Both qualitative and quantitative approaches were used in pursuit to answer these questions. The qualitative approach was used to describe the theoretical basis of performance, competitiveness and concentration. Three different quantitative approaches were employed to determine the current state of competitiveness (Relative Trade Advantage (RTA) method), the factors influencing it (hedonic price model) and the extent of such influence (dynamic linear model). From the RTA, it was clear that South Africa is the only country, compared to its trading partners, that has an uncompetitive unprocessed (production) wheat sector alongside a competitive semi-processed (flour) wheat sector. The hedonic price model supported the finding that the institutional environment of the wheat industry uses quality-related mechanisms such as the cultivar release criteria to influence the competitiveness of the wheat production sector. Four comparisons were developed to determine whether the strict qualities required for the release of new cultivars are justified. It was found that with all four of these comparisons, the strict prescribed wheat quality was not justified in terms of the quality and demand considerations. It was found that when prescribed wheat quality could be relaxed to accommodate market supply and demand, an estimated 12.8 percent increase in yields could have been realised equating to a loss of approximately R606 million in Net Farm Income (NFI) per annum. When increasing this percentage to 20 percent, it was seen that the effect on NFI per annum would be R920 million. This study therefore provides evidence as to why the performance of the wheat industry has been declining over the last two decades and also contributes to the development of a framework for policy and decision makers which will encourage more competition and a freer market in terms of quality standards. Further contributions of this study lies in the body of literature on competitive behaviour by showing how concentrated industries can use statutory bodies to manipulate markets for rent-seeking purposes. It further shows how these decisions impact on important aspects like the profits of role players in an industry. / PhD (Agriculture, Economics), North-West University, Potchefstroom Campus, 2015

The international marketing literature has a common assumption that consumers across countries are becoming more similar in their consumption behavior over time. However, this assumption of global convergence of consumer spending has not been empirically tested in the literature. In this dissertation, we examine the convergence hypothesis across a heterogeneous set of countries and multiple product categories. In the first essay, we develop a conceptual framework of convergence of consumer spending behavior. In the second essay, we empirically test whether convergence is observed across markets and product categories over time. Finally, in the third essay, we investigate the effect of global convergence of consumer spending on market concentration and firms’ market shares. Using the four-firm concentration ratio, we compute the market concentration by industry in each market to investigate the effect of convergence on market concentration. We also examine the effect of convergence on market shares of individual firms, considering the moderating effects of country of origin, country of operation, and the degree of internationalization of the firm. We model the dependent variables, market concentration and market shares, using the fractional logit model. Our results show that there is an overall convergence trend across product categories and countries over time. Moreover, we find that convergence increases the market shares of the largest firms in a market. The findings of this study have theoretical and managerial implications on major marketing areas including global marketing strategy, internationalization, and market segmentation.

The United States acute care hospital (ACH) market provides a unique environment in which to examine questions about market structure and performance. The ACHs operate in a mature market of health services that is highly regulated and has one dominant primary consumer of services. The uncharacteristic industry structure offers the opportunity to analyze pervasive agency relationships and capital structure issues in a new setting. In addition, the policies of the U.S. Government have created an environment in which tacit collusion is likely to flourish, which leads to market buyer power (monopsony, or buyers acting as one monopoly buyer). A key question is the extent to which monopsony and agency affect capital structure decisions. Agency is defined by Ross (1973, p.134) as a relationship formed between a principle and their agents, “when one, designated as the agent, acts for, on behalf of, or as representative for the other, designated the principal, in a particular domain of decision problems.” This thesis extends the agency framework provided by Jensen and Meckling (1976), along with the econometric understanding of monopsony in healthcare via tacit collusion, as suggested by Pauly (1998) and Sevilla (2005), and the research constraints of monopsony under an all-or-nothing contract, as outlined by Taylor (2003). Using data on ACHs from the period of 1995 to 2007 for approximately 5,000 ACHs, which was derived from the Medicare Cost Report and medical payments for a sub-population of 1,500, this research examines the determinants of capital structure in a distorted market. Building upon this initial analysis, the research seeks to examine the effects of market distortions upon free cash flow, and ultimately, capital structure. Two theories of distortion are presented that would affect free cash flow: The first is that of the agency cost of free cash flow and signaling, and the second is a theory of monopsony via tacit collusion between buyers. A model of the agency relationship between ACHs and the U.S. Government is proposed, promoting agency cost (signaling and the agency cost of free cash flows) as a causal relation with free cash flows and capital structure (Jensen & Meckling 1976; Jensen 1986). Empirical models of agency are constructed, examining the dependence on government business and the relation to the leverage (signaling) and free cash flows (agency cost of free cash flows) for ACHs. In addition, a complementary theory of capital structure determinant via market power (monopsony) is formulated, suggesting that monopsony conditions within the ACH market affect free cash flows and capital structure. The analysis provides a framework for understanding the environments in which ACHs operate and the strength of bargaining within the market. The research concludes with a review of the determinants of capital structure in light of the inefficiencies and distortions of the industry and the relationships observed.

Há dez anos, as ações do Programa Nacional de Produção e Uso de Biodiesel (PNPB) inseriram o biodiesel na matriz energética brasileira. A venda de biodiesel com a finalidade de suprir os estoques que o Governo necessita, para cumprir a exigência do porcentual de mistura obrigatória por lei, é realizada por meio de leilões e estes são regulamentados pela Agência Nacional de Petróleo, Gás Natural e Biocombustíveis (ANP). Tal regulamentação inclui e dá privilégios de participação nos leilões aos possuidores do Selo Combustível Social (SCS), que, por sua vez, é concedido às empresas que adquirem parcela de sua matéria-prima de agricultores familiares enquadrados no Programa Nacional de Fortalecimento da Agricultura Familiar (PRONAF). Diante disso, este trabalho tem como objetivo identificar e estudar os fatores que influenciaram a evolução do mercado brasileiro de biodiesel sob a ótica da oferta deste produto nos leilões públicos realizados pela ANP. Primeiramente, buscou-se descrever a evolução da produção de biodiesel no Brasil, detalhar as principais variações comportamentais do mercado e verificar o cumprimento das principais funções do sistema. Para isso, foram feitas análises gerais acerca de volumes ofertados e arrematados, preços máximo e médio, e deságios. A análise da estrutura de mercado que melhor delineia o setor foi feita de acordo com o grau de concentração das empresas participantes dos leilões. Para isso foram utilizados o índice de Razão de Concentração (CR), o índice de Hirshman-Herfindahl (HH) e o índice de Entropia de Theil (TH). A partir do resultado desta, buscou-se detectar e quantificar os fatores que mais influenciaram tais índices. Para isso, foi utilizada a prática econométrica com um modelo de Regressão Linear Múltipla. Os dados coletados a partir do site da ANP foram analisados com a utilização do pacote estatístico StataCorp LP, versão 12.0, adotando o intervalo de confiança de 95% para a análise. Os resultados obtidos mostraram que o mercado de biodiesel no Brasil foi concentrado inicialmente, porém, a partir do aumento da quantidade de empresas participantes, do percentual de mistura obrigatório e do amadurecimento do PNPB, o mercado foi se desconcentrando e efetivando-se em moderadamente concentrado. Assim, constatou-se que o setor de biodiesel é caracterizado pelo oligopólio como estrutura de mercado. Mais especificamente, oligopólio puro. / Ten years ago, the actions of the National Program for Production and Use of Biodiesel (PNPB) inserted biodiesel in the Brazilian energy matrix. The sale of biodiesel in order to meet the stocks that the government needs to meet the requirement of mandatory blending percentage by law, is carried out through auctions and these are regulated by the National Petroleum, Natural Gas and Biofuels (ANP). Such legislation includes and gives privileges to participate in auctions to the holders of the Social Fuel Seal (SCS), which, in turn, is granted to companies taking over part of its raw materials from family farmers framed in the National Family Farming Strengthening Program (PRONAF). Thus, this study aims to identify and study the factors that influenced the evolution of Brazilian biodiesel market from the perspective of supply of the product in public auctions held by the ANP. First, we attempted to describe the evolution of biodiesel production in Brazil, detailing the major behavioral changes in the market and verify compliance with the main system functions. For this, general analyzes were made about offered and auctioned volumes, maximum and average prices, and discounts. The analysis of the market structure that best outlines the sector was made according to the degree of concentration of the participants of the auction company. For this we used the concentration ratio index (CR), the Herfindahl-Hirshman Index (HH) and the entropy index of Theil (TH). From the result of this, we sought to detect and quantify the factors affecting such rates. For this, we used the econometric practice with a multiple linear regression model. The data collected from the ANP site were analyzed using the statistical package Stata Corp LP, version 12.0, adopting the 95% confidence interval for analysis. The results showed that the biodiesel market in Brazil was concentrated initially, however, from the increased amount of participating companies, the mandatory blending percentage and ripening PNPB, the market was to decentralizing and making effective in moderately concentrated . Considering the studied literature, it appears that the biodiesel industry is characterized by oligopoly as market structure. More specifically, pure oligopoly.