Browsing by Author "Ribeiro, Ricardo"
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- Can partial horizontal ownership lessen competition more than a monopoly?Publication . Brito, Duarte; Ribeiro, Ricardo; Vasconcelos, HelderIn this paper we investigate the anti-competitive effects of partial horizontal ownership in a setting where: (i) two cost-asymmetric firms compete a la Cournot; (ii) managers deal with eventual conflicting interests of the different shareholders by maximizing a weighted sum of the two firms' operating profits; and (iii) weights result from the corporate control structure of the firm they run. Within this theoretical structure, we find that if the manager of the more efficient firm weights the operating profit of the (inefficient) rival more than its own profit, then partial ownership will lessen competition more than a monopoly when both firms produce. (C) 2019 Elsevier B.V. All rights reserved.
- Common-ownership versus cross-ownership: evidence from the automobile industryPublication . Huse, Cristian; Ribeiro, Ricardo; Verboven, FrankOverlapping ownership has gained considerable momentum in the last decades, yet little is known about the role of its sources. We quantify the relative importance of common-ownership (by shareholders external to an industry) and cross-ownership (by firms within the industry). We focus on the global automobile industry, over the period 2007–2021, and document that common-ownership links constitute between 31% and 39% of the equity ownership of automobile manufacturers, while cross-ownership links amount to 6%–9%. We show that not accounting for these relatively modest cross-ownership links has important implications: it can increase the average weight assigned by managers to the profit of competitors by between 33% and 68%.
- Conversion to organic farming in mainland PortugalPublication . Costa, Leonardo; Sottomayor, Miguel; Ribeiro, RicardoThe objectives of the research were: i) to assess the in-conversion period as a barrier impeding farms conversion to organic; ii) to assess the potential of conversion-grade markets in removing this barrier; iii) to identify other barriers (drives) along the food chain impeding (easing) farms conversion in mainland Portugal. Results show that the in-conversion period is not the major barrier to conversion nor is a good idea the set-up of conversion grade markets to help Portuguese farms' conversion. Conversion feasibility depends of the organic market premium prices, in intensive farms, and of the CAP organic agri-environmental area payments, in extensive farms.
- Endogenous product design and quality with rationally inattentive consumersPublication . Cunha, Mariana; Osório, António; Ribeiro, Ricardon some markets, consumers do not know the attributes of all the products that are available in the market, or the prices at which they are offered. To overcome this uncertainty, consumers may gather and process information about those attributes and prices. In this paper, we examine the consequences of consumer costs of doing so on firms product attribute and pricing decisions. To do so, we follow the rational inattention literature in assuming that, before entering the choice situation, consumers are in contact with all products, but may have an incomplete or imprecise prior idea about their attributes and prices. Further, we also assume that consumers can, at a cost, gather and process information in a non-random fashion about any (sub)set of products, with any precision about their attributes and prices. Furthermore, we assume that products are characterized by both horizontal and vertically differentiated attributes, which we address as design and quality, respectively. We find a number of interesting results. First, if the unit costs of gathering and processing information are homogeneous among consumers, firm' should differentiate their products as those costs fall, so to relax the otherwise increasing price competition. This implies that equilibrium prices may increase as these costs decrease, because product differentiation countervails the otherwise negative impact on prices. Second, if the unit costs of gathering and processing information are heterogeneous among consumers, with a sizeable proportion of "informed" consumers, firms should always seek to differentiate their products as maximum as possible, independently of the level of information costs of the "uninformed" consumers. This implies that equilibrium price levels do not increase (and, in fact, tend to decrease) as the unit costs of those consumers decrease and that "informed" consumers serve as a "market competition guardian". Finally, in all the above cases, firms do not need to differentiate themselves along all attribute dimensions. Differentiation along one attribute dimension is more than enough to relax price competition.
- How to serve online consumers in rural markets: evidence-based recommendationsPublication . Sousa, Rui; Hort, Carolina; Ribeiro, Ricardo; Rabinovich, ElliotOnline shopping is growing significantly among rural consumers interested in overcoming product assortment limitations in their local markets. Retailers are taking notice, and some are looking for first-mover-advantage opportunities in rural areas where they see greater potential for growth when compared to saturated urban markets. However, expanding to these areas presents significant and unresolved challenges related to last mile fulfillment caused by low levels of population density as well as other socioeconomic and demographic characteristics. In this article, we present an integrated set of recommendations for online retailers to differentiate strategies to serve rural markets efficiently. To that end, we partnered with an online grocery retailer to examine differences between rural and urban consumers across online shopping preferences that significantly impact fulfillment costs. We draw on those differences and existing knowledge on last mile fulfillment operations to propose a tailored consumer value proposition and operational model for last mile fulfillment in rural markets.
- Measuring Unilateral Effects in Horizontal Partial AcquisitionsPublication . Brito, Duarte; Ribeiro, Ricardo; Vasconcelos, HélderRecent years have witnessed an increased interest, by competition agencies, in assessing the competitive effects of partial acquisitions.We propose an empirical structural methodology to examine quantitatively the unilateral impact of partial horizontal acquisitions. The acquisitions may be direct or indirect, and may or may not correspond to control. The proposed methodology simulates the effects on prices,market shares, firm profits and consumer welfare. It can deal with differentiated product industries and nest full mergers as a special case. We provide an empirical application to several acquisitions in the wet shaving industry
- Modeling horizontal shareholding with ownership dispersionPublication . Brito, Duarte; Elhauge, Einer; Ribeiro, Ricardo; Vasconcelos, HelderThe dominantformulationformodelingtheobjectivefunctionofmanagersofcompeting rms withhorizontalshareholdinghasbeencritiquedforproducingtheresultthat,ifnon-horizontal shareholdersarehighlydispersed,managerswouldmimictheinterestsofhorizontalsharehold- ers eveniftheyownashareofthe rmthatdoesnotinducefullcontrol.Weshowthatthis issuecanbeavoided(whilemaintainingtheremainingfeaturesofthedominantapproach) withanalternativeformulationthatisderivedfromaprobabilisticvotingmodelthatassumes shareholderswithhigher nancialstakeswilltakegreaterinterestinthemanagerialactions, whichyieldstheresultthatmanagersmaximizeacontrol-weightedsumoftheshareholders relativereturns.
- Modelling the objective function of managers in the presence of overlapping shareholdingPublication . Brito, Duarte; Elhauge, Einer; Ribeiro, Ricardo; Vasconcelos, HelderThe objective function of managers in the presence of overlapping shareholding may differ from the traditional own-firm profit maximization, as they may internalize the externalities their strategies impose on other firms. The dominant formulation of the objective function in such cases has, however, been critiqued for yielding counter-intuitive profit weights when the ownership of non-overlapping shareholders is highly dispersed. In this paper, we examine this issue. First, we make use of a probabilistic voting model (in which shareholders vote to elect the manager) to microfound an alternative formulation of the objective function of managers, which solves the above-mentioned criticism. Second, we apply the two formulations to the set of S&P 500 firms. We show that ownership dispersion of non-overlapping shareholders is, in fact, a relevant empirical issue, which may induce an over-quantification of the profit weights computed from the dominant formulation, particularly under a proportional control assumption.
- Overlapping ownership, endogenous quality, and welfarePublication . Brito, Duarte; Ribeiro, Ricardo; Vasconcelos, HelderThis paper investigates how overlapping ownership affects quality levels, consumer surplus, firms' profits and welfare when the industry is a vertically differentiated duopoly and quality choice is endogenous. This issue is particularly relevant since recent empirical evidence suggests that overlapping ownership constitutes an important feature of a multitude of vertically differentiated industries. We show that overlapping ownership while detrimental for welfare, may increase or decrease the quality gap, consumer surplus and firms' profits. In particular, when the overlapping ownership structure is such that the high quality firm places a positive weight on the low quality firm's profits, the incentives of the high quality firm to compete aggressively reduce. This may increase the equilibrium quality of the low quality firm, which in turn may lead to higher consumer surplus, despite higher prices.
- Quantifying the Coordinated Effects of Partial Horizontal AcquisitionsPublication . Brito, Duarte; Ribeiro, Ricardo; Vasconcelos, HelderRecent years have witnessed an increased interest, by competition agencies, in assessing the com- petitive e§ects of partial acquisitions. We propose an empirical structural methodology to quantify the coordinated e§ects of such acquisitions on di§erentiated products industries, by evaluating the impact of such acquisitions on the minimum discount factors for which coordination can be sustained. The methodology can deal with settings involving all type of owners and ownership rights: owners that can be internal to the industry (rival Örms) and external to the industry; and ownership rights that can involve Önancial interests and corporate control, can be direct and indirect, can be partial or full. We provide an empirical application of our proposed methodology to several acquisitions in the wet shaving industry that give rise to cross- and common-ownership structures. The results seem to suggest that the incentives of (i) the acquiring partyís Örm to coordinate are non-decreasing after an acquisition (independently of whether it involves full or partial Önancial or corporate control rights, by internal or external owners), (ii) the acquired Örm to coordinate are non-decreasing after acquisitions involving full or partial corporate control rights, but non-increasing after acquisitions involving full or partial Önancial rights, and (iii) the remaining Örms in the industry to coordinate are non-increasing after an acquisition (again, independently of whether it involves full or partial Önancial or corporate control rights, by internal or external owners).