The role of exclusive territories in producers' competition

Article Abstract:

Vertical restraints such as exclusive territories can be a useful tool for minimizing competition between brands and increasing the profits of manufacturers. As exclusive territories change producers' perception of the demand curve, they get the impression that they face a less elastic demand curve, thus resulting in an increase of the equilibrium price. Producers' profits increase with the application of exclusive territories, despite the non-charging of franchise fees. Reduced competition, however, offsets these 'double marginalization' effects.

Vertical integration, Equilibrium (Economics)

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Monopolistic competition when price and quality are imperfectly observable

Article Abstract:

A model of consumer search behavior in a monopolistic competitive industry with special emphasis on price observation is presented. A consumer could find it problematic to discover the correct value of a product's price and quality because of the great amount of information and observations available. It was suggested that enhanced consumer information may not improve welfare if price reductions resulting from strong price competition will lessen quality.

Economic aspects, Consumer behavior, Online searching, Searching behavior

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Is hospital competition wasteful?

Article Abstract:

Local hospital competition or the 'medical arms race' (MAR) is deemed as costly and wasteful. The MAR hypothesis does not take into account the the local population. It is the extent of the market, not competition, which determines the supply of services. Public policy on hospital mergers to increase efficiency is not justified by the MAR hypothesis. In fact, there is evidence that scale economies are present for smaller markets.

Analysis, Medicine, Services, Hospitals, Medical specialties

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