My thesis consists of two relatively independent topics. In the first topic I empirically inves- tigate the factors that determine the presence of the independent coffee shops in the market of Central London. In the second topic I present a theory of cartel detection. The common feature of these topics is that I investigate the demand side effects on market structure and its impact on competition. To be more specific, in the first topic I build a simple theoretical model of product differentiation in adjacent markets, based on Mazzeo (2002). For the empirical estimation I have constructed a unique dataset of coffee shops in Central London. I further manage to identify differences on demand characteristics across markets by utilizing data on people’s mo- bility from the tube stations and provide evidence for the existence of product differentiation. It is found that residential areas with high employment, areas with small business density and leisure areas increase the profitability of the independent coffee shops. A counterfactual analysis is also presented. In the second topic I investigate the cartel’s strategies and likelihood of collusion when the buyers of the cartel are able to report its existence to the anti-trust authority. I char- acterize the cartel’s optimal behavior when the buyers are actively monitoring the cartel’s members and are able to report a cartel to an anti-trust authority1. I present a simple static model and I show that the likelihood of collusion increases as the willingness of the buyers to report increases (cost of reporting decreases). Furthermore, it is shown that it is optimal for an anti-trust authority to decrease the cost of reporting (a trade-off between price reductions in existing cartels and increased likelihood of cartel formation is identified). Finally, alterna- tive cartel strategies are also explored in this topic. As for the last point, I show that the threat of exclusion (foreclosure) and price discrimination are robust strategies that prevent buyers from reporting.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:582324 |
| Date | January 2012 |
| Creators | Zaouras, Michalis |
| Publisher | University of Warwick |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://wrap.warwick.ac.uk/57065/ |
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