This thesis deals with gathering of private information when company tries to enter on concentrated markets. Aim of the thesis is to show how much private information will company require and how is its output and profit affected by private information. Thesis uses standard optimalization tools of microeconomic analysis.

The introduction of a liberalised electricity market has brought a new challenge to generating companies as well as system regulators. Under this more competitive environment, generating companies are exposed to various risks that might compromise their investment return. Moreover, the various risks in the market affect each type of generation technology in a different way; hence influence the technology choice. Furthermore, it is not yet clear whether the investment cycles in a liberalised electricity market will take place in an orderly fashion or whether 'boom and bust' cycles may arise. As a consequence various market designs, investment incentives and policies have been implemented by system regulators to try to ensure the security of supply. Investment decisions under a market with incentive mechanism are even more complicated to model because the generating company needs to forecast the revenue that the new investment will make from both the energy market and the mechanism. This thesis develops some models that could be used by system regulators to study the performance of market designs and by generating companies to assess a new investment under a liberalised electricity market. Three main models have been developed to serve these purposes. A generation expansion model has been developed using Agent-based modelling approach. In this model each generating company makes investment decision taking into account their competitors' investment strategies and the interactions between them. Several incentive mechanisms are also modelled to study their impacts on the generating companies' investment decision and the dynamic of the investments. A more comprehensive investment framework for a generating company to evaluate an investment in a new power plant has also been developed. The framework consists of two stages: 1) it first models the expected future investments and retirements from all the companies in the market and 2) then calculates the market prices and revenues of the new investment against the future system expansion obtained in the first stage. Two investment models have been developed using this framework. The first model is a probabilistic valuation model to assess investment considering risks and uncertainties. The second model is developed to evaluate investment in an oligopoly electricity market taking into account various risk characteristics of different technologies. The investment framework for a generating company to evaluate an investment is also extended so that the generating company can evaluate investments in a market with an incentive mechanism.

Dans le cadre de cette thèse, nous nous interrogeons sur la concurrence que peut potentiellement apporter les recycleurs sur un marché des matières premières traditionnellement dominé par un oligopole minier. Dans quelle mesure les recycleurs peuvent-ils concurrencer les firmes minières et quels sont les effets sur l'oligopole? Comme deuxième axe de recherche, nous tenons compte du différentiel d'externalités environnementales qui existe entre les deux types d'offre. Nous intégrons donc dans notre modèle une subvention au recyclage ainsi qu'une taxe sur la pollution minière, ceci, en réponse aux deux distorsions de marché que sont la structure non concurrentielle de l'extraction minière et les externalités qui sont associées à cette activité. Pour donner une dimension empirique à cette thèse, nous utilisons les marchés du minerai de fer et de l'acier. Préalablement à l'analyse de la concurrence avec les recycleurs, nous effectuons dans le cadre du Chapitre 1, une analyse de l'évolution des marchés du fer et de l'acier suite au choc de demande des années 2000. La concentration de la demande autour des sidérurgistes chinois ainsi que la stratégie mise en place par les autorités à partir de 2010, aboutissent à l'existence d'un monopsone contrarié sur le marché mondial du minerai de fer.En se recentrant sur l'amont de la chaîne de valeur, notre Chapitre 2 pose le cadre théorique de la concurrence entre les entreprises minières et les recycleurs. A travers un modèle Cournot-Stackelberg, nous montrons que la part de marché du secteur minier augmente avec le degré de concurrence de ce secteur. Les recycleurs ne peuvent en effet pas augmenter de manière significative leur part de marché si une technologie de recyclage efficace n'est pas, dans le même temps, associée à une importante disponibilité de déchets. Cette double condition est également nécessaire pour garantir la diminution de la rente minière. Par ailleurs, nous mettons en avant l'existence d'un niveau de technologie de recyclage minimum pour que les recycleurs puissent entrer sur le marché. La prise en compte du différentiel d'externalités environnementales dans le Chapitre 3 renforce la nécessité d'une augmentation de l'offre de matières secondaires, au regard de son effet bénéfique sur le bien-être. L'instauration d'une taxe environnementale sur la production minière s'avère, à cet effet, moins pertinente qu'une subvention au recyclage. La taxe renforce la contrainte de capacités pour les recycleurs, repose sur une nécessaire évaluation de la pollution minière difficile à réaliser pour certaines matières premières, et des limites quant à sa mise en œuvre semblent également se poser. A l'inverse, l'instauration d'une subvention au recyclage aurait des effets significatifs sur les parts de marché des recycleurs et sur la nécessaire baisse des dommages liés à l'extraction. Comme nous le montrons, la différence d'effets entre les deux politiques est d'autant plus forte lorsque le niveau de recyclage initial est faible. Enfin, en s'intéressant à une politique publique axée sur la demande de matières plutôt que sur l'offre, le Chapitre 4 met en exergue la faible incitation du marché européen du carbone sur la baisse des émissions de CO$_2$ des sidérurgistes, et donc sur un potentiel recours accru à la matière secondaire. Nous montrons également comment cette politique climatique interfère avec la politique de concurrence car elle bénéficie essentiellement aux leaders du marché, au détriment du principe de concurrence libre et non faussée qui prévaut au sein du marché commun. Plus surprenant, nos résultats indiquent que le leader du marché est la firme la moins efficace dans la consommation de matières premières, par rapport à la quantité d'acier produite et aux émissions de CO2 générées. A l'inverse, la firme qui semble être la plus efficace est, dans le même temps, celle qui aurait été la moins avantagée dans l'attribution des quotas gratuits depuis 2007. / In addition to a solution for managing end-of-life products, recycling is also an alternative to the production of virgin raw materials. In this thesis, we are therefore wondering about this new form of competition that could potentially include recyclers, on a commodity market traditionally dominated by a mining oligopoly. To what extent can recyclers compete with mining firms and what are the effects on oligopoly? As a second line of research, we consider the differential of environmental externalities that exists between the two types of supply. We therefore include in our model a recycling subsidy and a tax on mining pollution, in response to the two market distortions: the non-competitive structure of mining extraction and the externalities that are associated with this activity. To give an empirical dimension to this thesis, we use the iron and steel industry. Prior to the analysis of the competition with recyclers, we carry out in Chapter 1, an analysis of the evolution of the markets of iron and steel following the demand shock since the year 2000. The concentration of the demand from Chinese steelmakers as well as the strategy put in place by the authorities from 2010, led to a new market structure of the world iron ore market: a thwarted monopsony.By focusing on the upstream value chain, Chapter 2 sets the theoretical framework for competition between mining firms and recyclers. Through a Cournot-Stackelberg model, we show that the market share of the mining sector increases with the degree of competition in this sector. Recyclers cannot significantly increase their market share if an efficient recycling technology is not associated with a high availability of waste. This dual condition is also necessary to ensure the reduction of the mining rent. In addition, we highlight the requirement of a minimum level of recycling technology for recyclers to enter the market.Taking into account the differential of environmental externalities in Chapter 3 strengthens the need for increasing the supply of secondary materials, with regard to its positive effect on social wellfare. For this purpose, the introduction of an environmental tax on mining extraction is less relevant than a subsidy for recycling. The tax reinforces the capacity constraint for recyclers, relies on a necessary assessment of mining pollution that is difficult to achieve for certain raw materials, and there are limits on its implementation which also seem to arise. On the other hand, the introduction of a recycling subsidy would have a significant impact on recyclers' market share and the necessary reduction of extraction-related damages. As we show, the difference in effects between the two policies is even stronger when the initial level of recycling is low.Finally, by focusing on a public policy based on the demand for materials rather than on supply, Chapter 4 highlights the weak incentive of the EU-ETS to reduce CO2 emissions from steelmakers, and therefore a potential increase of the secondary input instead of the virgin one. We also show how this climate policy interferes with the EU competition policy because it mainly benefits market leaders, to the detriment of the principle of free and undistorted competition prevailing in the EU market. More surprisingly, our results indicate that the market leader is the least efficient firm in the consumption of raw materials, considering the quantity of steel produced and the CO$_2$ emissions generated. Conversely, the firm that seems to be the most efficient would also have been least favoured when free allowances were allocated from 2007 onwards.

This paper considers the widely successful employee discount pricing (EDP) promotional program of 2005 to uncover the nature of competition in the US automobile industry, with a specific focus on the big three automakers. In contrast to previous research on automobile competition, this paper uses quarterly average dealer-level transaction price data to capture the short term nature of inter-firm competition that might be embedded in such promotional programs. In doing so, a structural oligopoly model of differentiated products is setup explicitly incorporating the nature of competitive interactions. Results imply that the overall nature of competitiveness in the US automobile industry is consistent with a static model of Bertrand behaviour without any changes in conduct among the big three during the EDP promotion period. These results corroborate the problems of inventory backlog faced by the big three in recent years and indicate that the EDP program has been more of a novel marketing intent on part of the big three to clear up such backlogs.

This dissertation investigates the impact that a duopoly of a multinational firm and local firm has on a closed economy as they engage in Bertrand competition involving quality and price. It answers the question: Does helping a minor firm reduce welfare? Using a different framework than the existing literature, I examine the following: 1. The welfare effect of a reduction in the R\&D cost parameter induced by ``help'' from the government to one of the firms within a closed economy. 2. The effects of government policy instruments (taxes or subsidies) on welfare considering different ownership of the firms and trade pattern - closed economy and export-oriented economy as government institutes a unilateral policy, discriminatory policy, or non-discriminatory policy. 3. How marginal cost of production of the local firm affects welfare within a closed economy when all consumers are either served or partially-served. In chapter 1, we provide a review of past literature that have studied the endogenous choice of quality by firms and describe how this dissertation is organized. In chapter 2, we examine effect on national welfare from competition in quality between a multinational firm and a local firm operating in a vertically differentiated oligopolistic industry given their strategic use of R\&D costs without any possibility of spillover effects. The model assumes that the multinational firm produces high quality product and the local firm produces low quality product. Both firms have zero marginal production cost. Assuming a closed-economy, we determine the effect of a change in the local firm's R\&D cost parameter on the endogenous variables (prices and qualities) as well as national welfare. We found that a reduction in the cost parameter of the local firm do increase national welfare. Chapter 3 extends the work of Chapter 2. It investigates the incentives to a government for instituting strategic trade policy (unilateral, discriminatory or non-discriminatory) mechanism that would induce R\&D within the duopoly of a multinational and local firms and thereby promote national welfare, under varying assumptions with respect to the ownership structure of the firms and their trade patterns. It determines which policy mechanism would be socially optimal to strategically affect the quality of the target firm (local). We find under an open-economy situation when government policy is unilateral, the optimal policy tool to pursue is a subsidy for the local firm. When the economy is partially-closed, it is optimal for the government to tax the local firm. Besides, under a discriminatory policy mechanism, it is best for government to subsidize the local firm and tax the foreign firm when both export to a third country. However, if both sell to a third country, but profit is retained in the domestic economy, it becomes optimal for the government to tax the local firm. Under a non-discriminatory policy by government when the firms operate within an open-economy, the optimal tool is a tax policy for government that affects both firms. Moreover, when the firms operate within a partially closed-economy, the optimal policy is also a tax policy on both firms. Whereas, given a non-discriminatory policy under a closed-economy framework, it is optimal for the government to subsidize the firms. As a result, these mechanisms by government do promote social welfare as well as correct any distortion that might result into making the multinational firm having a significant market power within the industry. In Chapter 4, we relax the assumption of Chapter 2 that the firms have zero production cost. The duopoly is considered to operate under the condition that one of the firms (local firm) has a production cost disadvantage. The firms are assumed to served the entire market. Hence, the firms compete within a fully covered market scenario. Considering a variable unit (constant marginal) cost of production of the local firm, we determine the effect of an increase in production cost of the local firm on national (total) welfare. We find that within a closed-economy, due to strategic substitutability of the products of both firms, an increase in the marginal cost of production by the local firm would bring about reduction in national social welfare. Chapter 5 continues our welfare analysis. It assumes the firms have asymmetric production costs. The cost of production depends on investment in R\&D to produce an output of quality, $q_i$. Now, we do not associate the output quality to a specific firm in the beginning of our analysis. Notwithstanding, we assume the firms are required to meet a minimum quality standard in the industry. Then, we seek to find the effect of the marginal cost of production of the local firm on national welfare. We find unlike previous chapters, an increase in marginal cost of production by the local firm results into increase benefits to consumers. Hence, national social welfare is improved (positive).

In many markets, efficiency depends on the quality of information that participants have. However, participants may face frictions in accessing information, which could result in significant welfare losses. My dissertation studies the causes and consequences of information frictions, focusing on the security analyst market and the public cloud market. The first two chapters investigate how information frictions are generated in the security analyst market. Security analysts observe signals and compete to make forecasts on securities’ earnings, which serve as public information to investors. Here I study how analysts’ incentives affect the quality of information they provide. In Chapter 1, I consider security analysts’ incentives as a whole and estimate them using revealed preference. Security analysts are rewarded for being more accurate than their peers. This reward for relative accuracy leads analysts to distort their forecasts to differentiate themselves, but also disciplines them from being overoptimistic. I structurally estimate a contest model with incomplete information to capture both effects, disentangling the payoffs for relative accuracy, optimism and absolute accuracy. Using the model, I conduct counterfactuals to evaluate policies that reduce analysts’ payoff for relative accuracy. I simulate the effect of these policies on the quality of information in terms of forecast errors and variances. The reward for relative accuracy reduces errors by 33 - 58%, but increases variances by 4%. It is optimal to have moderate competition between the covering analysts of each security. In Chapter 2, I ask where these incentives come from. Are analysts motivated by dynamic incentives of reputation, or by short-term compensation such as bonuses? I show with reduced form evidence that low-reputation analysts may face more incentive to outperform their rivals than high reputation analysts. Building on this, I develop and estimate a dynamic model where analysts compete to build reputation and earn compensation. I find that analysts face a strong reputation-building incentive because high reputation is associated with a much higher fixed wage. Meanwhile, their forecasts have an insignificant impact on their immediate compensation. Chapter 3 studies the consequences of information frictions in the public cloud market. Firms need information about available technologies to make good adoption decisions. Inattentiveness to such information may create stickiness to outdated technology. In a joint project with Sida Peng and Peichun Wang, we study the welfare benefits of firms’ public cloud adoption and the consequence of consumer inertia in this market. We develop a novel demand model that allows for both multiple product choices and continuous quantities on each product. We estimate the model using a proprietary dataset on individual firms’ cloud usage history from a major public cloud provider. The estimated average return on investment in cloud is 2.2 times the cost of investment, which is driven by smaller firms disproportionately benefiting from access to computing resources on the cloud. On the other hand, inertia on the cloud leads to sub-optimal product choices for all firms and reduces welfare from cloud usage by almost 62%. We show that introductory discounts incentivizing firms to try new products can improve both consumer welfare and provider revenue.

Made available in DSpace on 2016-04-26T20:48:34Z (GMT). No. of bitstreams: 1 Dissertacao.pdf: 736396 bytes, checksum: fafe53aaad24a920b5cebd085c8503f3 (MD5) Previous issue date: 2005-10-20 / This paper analyzes the evolution of tin industry in the Brazilian Economy, verifying the basis of its origin and development, and assuming as a starting point the characteristics of a worldwide oligopoly. The history of national tin industry is analyzed from its initial stages, going through the development of the 1980-1990 decade, with all the consequences for the international market. The changes in the Brazilian Economy and Industry that took part during the 90 s are emphasized, showing how they led to the current scenario. Other than that, this work points out the importance of the Amazon occupation and exploration model in the process of the industry development, thus the government role in the sector. It also analyzes the insertion of national production in the international market and its consequences, such as the collapse of the so far existing cartel. / O presente trabalho tem por objetivo analisar a evolução da indústria do estanho na economia brasileira, verificando as bases de sua formação e seu desenvolvimento, tendo como ponto de partida as características de oligopólio concentrado no âmbito internacional. Os estágios iniciais do setor nacional com sua trajetória foram analisados para que fosse possível observar o desenvolvimento apresentado na década de 1980, incluindo as conseqüências no mercado internacional. Dando continuidade, são observados os anos 1990, enfatizando as mudanças na economia brasileira e na indústria, a fim de verificar como este cenário conduziu para a atual conjuntura. Destaca-se ainda no trabalho, a importância do modelo de ocupação e exploração econômica da Amazônia no processo de desenvolvimento da indústria, reforçando o papel do governo para o setor. Apresenta-se uma análise das conseqüências da inserção da produção brasileira no mercado internacional e a sua colaboração para o colapso do cartel até então existente, as conseqüências da extinção do conluio e a trajetória do setor no Brasil.

[pt] O mercado brasileiro de derivados de petróleo está sendo aberto para competição este ano, saindo de um ambiente de preços regulados pelo Governo Federal para um ambiente onde os preços são estabelecidos pelas leis de oferta e demanda. Neste contexto, existe a preocupação de como serão estes preços, e seus impactos sobre os consumidores e sobre os produtores locais. Esta Tese propõe alguns modelos matemáticos para estimar preços, níveis de produção, níveis de consumo (demanda), e importação e exportação de derivados de petróleo nas diversas regiões do mercado brasileiro. O fornecimento de derivados de petróleo não é considerado um mercado competitivo, e sim oligopolizado, principalmente no curto prazo, devido à capacidade instalada de refinarias e aos altos custos envolvidos na construção de novas refinarias. Estes modelos são multi- produto, considerando um fato importante na produção de derivados que é a impossibilidade de produzir apenas um derivado. Assim, existem restrições onde a oferta de um derivado é relacionada a oferta dos outros. O primeiro modelo considera um mercado de oligopólio fechado, com um número fixo de firmas. Tal modelo é formulado como um problema de equilíbrio a Nash. Um segundo modelo é apresentado expandindo o primeiro para o caso em que existem preços teto de demanda definidos politicamente. O terceiro modelo relaxa a suposição do mercado fechado, com número fixo de firmas, e considera a possibilidade de competição de novas firmas no mercado. Um quarto modelo é discutido, onde assume-se que existe uma firma líder no mercado, que consegue definir sua estratégia antes das demais firmas, semelhante ao problema econômico de Stackelberg. Todos os modelos foram formulados como problemas de inequações variacionais, sendo que o último modelo é ainda um problema de programação binível. Algoritmos de solução são propostos para os três primeiros modelos. Simulações sobre o mercado brasileiro de derivados são apresentadas. / [en] The Brazilian petroleum refined products market is being opened to competition this year, leaving an environment of regulated prices to another one where the prices are defined by the supply demand interactions. Considering this new scenario, there is a concern about how high the prices will be, and about their impact on the consumers and on the local producers. This thesis proposes some mathematical models to predict prices, production, consumption, and import and export levels of petroleum-refined products in all the sub-regions of the Brazilian market. Instead of a competitive market, the supply of refined products is considered an oligopoly market, especially in the short term, given the already installed refining capacity and the high costs involved in building new refineries. These models are multi-products, and they consider an important characteristic of the production of refined products, the impossibility of producing only one refined product. Hence, constraints where the production of one refined product is related to the production of the others are considered. The first model considers a closed oligopoly market, with a fixed number of firms. This problem is formulated as a Nash equilibrium problem. A second model is presented generalizing the first one to consider the possibility of ceiling demand prices politically defined. The third model relaxes the assumption of a fixed number of firms in the first model, and considers the possibility of competition by new entrants. A fourth model is discussed, where it is assumed that there is a leader firm in the market, which can define its strategy before the other firms, similar to the economic problem of Stackelberg. All the models are formulated as variational inequalities problems, and the last model is also a bi-level programming problem. Solution algorithms for the three first models are proposed. Some analyses of the Brazilian petroleum refined- products market are presented.

In a model with a unionised immobile labour force we analyse how labour taxes and transfers towards unemployed workers are optimally cho- sen when a welfare maximising government faces oligopolistic and partly mobile firms. We consider two polar types of government: one whose objective consists of maximising the sum of domestic producer's and con- sumers' surplus and one that aims at maximising employed and unem- ployed workers' payoffs. We show that depending on the combination of foreign labour costs, the degree of domestic union bargaining power, and the sunk costs of relocation, the former type of government may choose to set taxes so as to induce an outward relocation of production. (author's abstract) / Series: Discussion Papers SFB International Tax Coordination

In a model with a unionised immobile labour force we analyse how labour taxes and transfers towards unemployed workers are optimally chosen when a welfare maximising government faces oligopolistic and partly mobile firms. We consider two polar types of government: one whose objective consists of aximising the sum of domestic producer's and consumers' surplus and one that aims at maximising employed and unemployed workers' payoffs. We show that depending on the combination of foreign labour costs, the degree of domestic union bargaining power, and the sunk costs of relocation, the former type of government may choose to set taxes so as to induce an outward relocation of production. (author's abstract) / Series: Department of Economics Working Paper Series