This thesis examines competition in three local markets: homebuilding, estate agency and groceries. It uses and extends the methodology developed by Bresnahan and Reiss in their seminal work in the 1990s, whereby the relationship between market structure and market size is used to evaluate how competition varies with finn numbers. U sing data from the homebuilding market, the rationale for using the Ordered Probit rather than count data alternatives to estimate these models is explored. Contrary to the existing literature, it is shown that the choice of estimator can significantly affect the results. In addition, several extensions to the Bresnahan and Reiss methodology are proposed. Firstly, the model is generalised to allow analysis of the persistence of certain effects as the number of finns in the market increases. It is shown that estate agents are able to profit from price discrimination and market segmentation, even in relatively unconcentrated markets. Secondly, a methodology is proposed to analyse the effects of competition on market expansion by augmenting the model with sales data. It is shown that increased competition between estate agents leads to a transfer of surplus but no increase in the size of the market. Thirdly, the model is extended in two ways to allow for competition between differentiated finns. When finn level data on differentiation is not available, the effect of the scope for differentiation is analysed. It is shown that markets with greater scope for differentiation are more profitable for estate agents. However, as finns can be identified by type, a more strategic approach is used to analyse the competition between different grocery formats. It is shown that small supermarkets, when located near at least one specialist store (e.g. a butcher or baker), negatively affect the profits of large supermarkets; a result that differs from previous studies by competition authorities.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:527635 |
| Date | January 2010 |
| Creators | Ball, Catherine |
| Publisher | University of East Anglia |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
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