Title page for ETD etd-06022008-193442

Type of Document Dissertation
Author Crawford, Andre J. D.
URN etd-06022008-193442
Title Product Differentiation, Collusion, and Empirical Analyses of Market Power
Degree PhD
Department Economics
Advisory Committee
Advisor Name Title
Haller, Hans H. Committee Chair
Ashley, Richard A. Committee Member
Dave, Chetan Committee Member
Lutz, Nancy A. Committee Member
Parmeter, Christopher F. Committee Member
Peterson, Everett B. Committee Member
  • Collusion
  • Spatial Duopoly
  • Product Differentiation
Date of Defense 2008-05-19
Availability unrestricted
This dissertation comprises three essays on theoretical and empirical issues in industrial organization. Chapter 1 outlines the issues explored in the subsequent chapters and briefly describes their conclusions.

Chapter 2 explores how product differentiation impacts the incentive compatibility condition for firms to sustain implicit collusion in games of repeated interaction where, in contrast to previous studies, I focus on a market which is simultaneously vertically and horizontally differentiated. To achieve this objective, vertical differentiation is incorporated into an otherwise standard Hotelling framework. The ensuing mixed model of differentiation shows how the interrelationships between both forms of differentiation impact the incentives to collude, and is more general since it replicates previous findings throughout the literature.

In Chapter 3, a multiproduct oligopoly model admitting product differentiation and a discrete choice demand model are proposed and estimated to determine if patterns of anti-competitiveness exist across distinct segments of the European car market. This chapter focuses on the evolution of price competition at a finer level than has been studied with a view to empirically challenge the notion that the European car market is wholly anti-competitive. Empirical results show that firm conduct varies due to the intensity of within-segment competition among rival firms. There is evidence of softer competition in the larger, mid- to full-sized segments and more aggressive competition in the smaller, entry-level subcompact segment.

Chapter 4 represents a formal extension of the analysis in Chapter 3. In this chapter I examine the competitive structure of the U.S. automobile market using proprietary data comprising actual dealer-level transaction prices of several models of cars and light trucks sold in the domestic U.S. market between 2004 and 2007. The chapter is the first such study to employ consumer end-prices for automobiles in a structural New Empirical Industrial Organization (NEIO) framework. Empirical results reveal that there is more aggressive pricing in the light truck segments comprising minivans/SUVs and pickups, Bertrand pricing in the smaller, entry-level car segments, and softer competition in the full-size car segment. There is also a strong preference for domestically produced light trucks although consumers generally prefer to drive fuel efficient vehicles.

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