Implications For Market Structure

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Implications of Price Regulation on Market Structure of Oil Marketing Firms in Kenya

Implications of Price Regulation on Market Structure of Oil Marketing Firms in Kenya

Abstract Despite a substantial growth in the sub-Saharan African region, a trend of divestment by multinational oil marketing companies has been witnessed in Kenya in the recent past. These companies have often cited stringent operating markets and pricing laws in the country which bites on their profits. The implications of price regulation whether economic or social could depend on a variety of factors, thus an empirical study was carried out to estimate the relationship between price regulation, market concentration, product differentiation and number of firms entering and exiting the industry within the study period. This explored the implications of price regulation on market structure of oil marketing firms in Kenya. An analytic study approach was used and secondary data was obtained from Petroleum Institute of East Africa for 63 companies registered as at December 2014. Data was analyzed using an entry and price competition model to analyze data using OLS estimates for a period spanning from 2004 to 2014. The obtained results were used to make inferences and conclusions. The findings of this study showed that opportunity costs for price regulation is significant, price regulation significantly affected the market concentration by of these companies an indicator of reduced competition in the industry after the implementation of the policy. The number of firms entering and exiting the market also intensified. Therefore, as long as the policy is still in place, the regulator should always be aware of hidden costs of price regulation and should put in place structures and mechanisms to ensure that competitive markets are natured to attract investors into the country.
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The syndicated loan market: structure, development and implications 1

The syndicated loan market: structure, development and implications 1

market). They also started to make wider use of covenants, triggers which linked pricing explicitly to corporate events such as changes in ratings and debt servicing. While banks became more sophisticated, more data became available on the performance of loans, contributing to the development of a secondary market which gradually attracted non-bank financial firms, such as pension funds and insurance firms. Eventually, guarantees and unfunded 2 risk transfer techniques such as synthetic securitisation enabled banks to buy protection against credit risk while keeping the loans on the balance sheet. The advent of these new risk management techniques enabled a wider circle of financial institutions to lend on the market, including those whose credit limits and lending strategies would not have allowed them to participate beforehand.
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One size fits all? High frequency trading, tick size changes and the implications for exchanges: market quality and market structure considerations

One size fits all? High frequency trading, tick size changes and the implications for exchanges: market quality and market structure considerations

Very little research investigates the effects of a minimum resting time for orders; specifically, we are aware only of two working papers, which use simulated markets and do not find conclusive evidence that market participants benefit from a minimum resting time. The first contribution is provided by Lee et al. (2011); they develop a market simulation where an asset is traded in multiple markets and in which market makers trade with three types of traders: random limit order submitters, trend following agents that apply similar strategies, and arbitrageurs. The design considered is a modification of Lee et al. (2010), who examine position limits as a way to stabilize markets. One of the main results is that patterns similar to the aforementioned flash crash are due to the domination of trading strategies that are responding in the same way to the same set of market variables. The findings of Lee et al. (2011) suggest that reducing the speed of order submission does not reduce the order imbalance which leads to flash crashes. Furthermore, Lee et al. (2011) argue that reducing the speed of order submission induces adjustments which may decrease liquidity. The problem is exacerbated in presence market fragmentation, where traders can move across different markets as a response to differences in speed regulation. The second study, by Brewer et al. (2014), examines call auctions, minimum resting time, and circuit breakers (the options considered after shutting the trading are: a one-time call auction, a series of temporary call markets, clear books, temporary suspension of trading for ten seconds without clearing the books) as mechanisms to reduce volatility caused by flash crashes and to facilitate recovery after a crash. They simulate a limit order market with buy and sell orders with random values arriving at random times. A flash crash is induced by introducing a very large order to the market. The three mechanisms tested help to limit volatility and aid the recovery of liquidity. The results show that call auctions are the most effective mechanism to limit the adverse effect of flash crashes. Brewer et al. (2014) caution that the results on minimum resting time are highly dependent on the conditions
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Market structure and market access

Market structure and market access

varying our index of competition σ and then plotting optimum quantities q ∗ m and q ∗ d , along with welfare W and the optimum tariff t ∗ = (τ − 1). As can be seen in the figure, the optimal tariff rate falls with our market power index σ, as does welfare W and do- mestic shipments q d , while from equation (21) imports remain fixed. With the additional distortion in the market, in the form of an imperfectly competitive distribution sector, the welfare implications of trade policy become more complicated. It is evident that the optimal tariff declines with increasing concentration in services. Indeed, as illustrated in Figure 2, the optimal tariff when the service sector is a monopoly is a subsidy. In the absence of such an optimal tariff offset by the government, the more concentrated the service sector, the greater its exercise of its market power and, consequently, the lower the trade volume. A tariff further reduces the volume of trade, whereas a subsidy in- creases the level of imports and hence consumption. Such a subsidy benefits the service sector but, as their profits are part of national welfare, a welfare maximizing government would be prepared to offer it.
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Market Structure and Market Access

Market Structure and Market Access

and then plotting optimum quantities q m ∗ and q ∗ d , along with welfare W and the optimum tariff t ∗ = (τ − 1). As can be seen in the figure, the optimal tariff rate falls with our market power index σ, as does welfare W and domestic shipments q d , while from equation (21) imports remain fixed. With the additional distortion in the market, in the form of an imperfectly competitive distribution sector, the welfare implications of trade policy become more complicated. It is evident that the optimal tariff declines with increasing concentration in services. Indeed, as illustrated in Figure 2, the optimal tariff when the service sector is a monopoly is a subsidy. In the absence of such an optimal tariff offset by the government, the more concentrated the service sector, the greater its exercise of its market power and, consequently, the lower the trade volume. A tariff further reduces the volume of trade, whereas a subsidy increases the level of imports and hence consumption. Such a subsidy benefits the service sector but, as their profits are part of national welfare, a welfare maximizing government would be prepared to offer it.
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Market structure and market access

Market structure and market access

dτ ∗ dσ = − (J − a m K)(a m b d y + b m α)(b d y + 2b m β) [a m b m (σ − 2)K − σb m J − a m b d y] 2 K (21) The sign of equation (21) is negative whenever q ∗ m > 0. These relationships are illustrated in Figure 2, where we plot optimized tariffs, welfare, and quantities for a range of competition index values. The figure is based on the same set of model coefficients as in Figure 1. The key difference is that we are now varying our index of competition σ and then plotting optimum quantities q m ∗ and q ∗ d , along with welfare W and the optimum tariff t ∗ = (τ − 1). As can be seen in the figure, the optimal tariff rate falls with our market power index σ, as does welfare W and domestic shipments q d , while from equation (20) imports remain fixed. With the additional distortion in the market, in the form of an imperfectly competitive distribution sector, the welfare implications of trade policy become more complicated. It is evident that the optimal tariff declines with increasing concentration in services. Indeed, as illustrated in Figure 2, the optimal tariff when the service sector is a monopoly is a subsidy. In the absence of such an optimal tariff offset by the government, the more concentrated the service sector, the greater its exercise of its market power and, consequently, the lower the trade volume. A tariff further reduces the volume of trade, whereas a subsidy increases the level of imports and hence consumption. Such a subsidy benefits the service sector but, as their profits are part of national welfare, a welfare maximizing government would be prepared to offer it. We summarize the relationship between tariffs, profits, trade, and welfare in the following propositions:
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Globalisation and Market Structure

Globalisation and Market Structure

returns and product differentiation have been successfully incorporated into general equilibrium in the voluminous literature on monopolistic competition initiated by Dixit and Norman (1980), Ethier (1982) and Helpman and Krugman (1985). 18 General-equilibrium implications of the internal organisation of firms have recently been explored by Grossman and Helpman (2002), Marin and Verdier (2001) and McLaren (2000). Finally, the new micro- econometrics of trade has uncovered some intriguing stylised facts - for example, surprisingly few firms engage in exporting, and those that do tend to be larger than average. 19 However, all these exciting developments have so far drawn little on models of industrial organisation, where incumbent firms engage in strategic and typically multi-stage behaviour, and where entry of new firms is partly or fully restricted. I believe there is a huge pay-off to integrating this literature with general equilibrium theory, and the benefits may flow both ways, as I have suggested in my proposed resolution of the Cournot merger paradox. While the simple models I have presented here are only a first step, I hope I have persuaded at least some of you that the approach sketched in this paper is a promising route to this integration, which is badly needed if we are to increase our understanding of the real-world problems of globalisation.
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Market structure and inefficiency in the foreign exchange market

Market structure and inefficiency in the foreign exchange market

IV. Results of the experiments A. The issues Before considering the experimental results, it is useful to review the issues that make them relevant. The first three experimental variables (M, B and C) could imply normative policy implications. If there were some market composition minimizing the inefficiency measures, and the market. is not currently achieving that optimum, then it would be in the general interest exogeneously to impose barriers to entry or exit, to force the market toward the optimal composition. Such a direct approach falters here on the standard vector optimization problem: none of the four experimental variables is uniformly good or bad across all five inefficiency measures. Establishing an objective function for inefficiency .minimization would require some implicit or explicit prioritization of the different types of inefficiency. Such a weighting is not attempted here. A more holistic analysis of the results proves fruitful, however. It is suggested that a single microstructural fact
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Trends in Financial Market Concentration and Their Implications for Market Stability

Trends in Financial Market Concentration and Their Implications for Market Stability

The link between concentration and stability is hard to pin down, so we mostly try to identify the link by breaking it down into parts. For example, we distinguish between the probability of distress by a given firm and the severity of the market consequences in that event. After reviewing literature that investigates the link between financial market concentration and financial stability, we conclude that the link is ambigu- ous—some of the side effects of changing market structure may have a stabilizing influence, while other influences may be destabilizing. Our own findings are consistent with that ambiguity. We find a mixed relationship between market concentration and volatility in the investment-grade-bond and syndicated loan markets, consistent with an ambiguous relationship as suggested in the theoretical literature. We conclude that there are no simple answers to the question of whether concentrated financial markets are more stable or less stable than less concentrated markets.
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Market Structure and the Banking Sector

Market Structure and the Banking Sector

Keywords: Bank structure and Credit auctions. JEL Codes: D43, D44, G21. 1 Introduction The mechanism through which the banking system impacts economic growth by providing liquidity, risk pooling and reducing agency problems is fairly well understood. 1 Unfortunately, much less attention has been devoted to study how market structure in banking a¤ects credit allocation and subsequent growth. It is often argued that a departure from competition is detrimental to growth because banks with market power restrain the supply of loanable funds by setting higher interest rates. On the other hand, competition policies in banking may involve di¢ cult trade-o¤s. While greater competition may enhance the e¢ ciency of banks with positive implications for economic growth, greater competition may also destabilize banks with costly repercussions for the economy.
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Welfare versus Market Access - The Implications of Tariff Structure for Tariff Reform

Welfare versus Market Access - The Implications of Tariff Structure for Tariff Reform

are non-intersecting. It should be emphasised that each cone shows only those regions in which an unambiguous increase in the target of interest is guaranteed, given the mild assumptions that T and (in the case of import volume) M b are between zero and one. They thus correspond to types of tariff reform which can be recommended to attain either target subject to minimal informational requirements. If additional information is available then it may be possible to identify further tariff changes which can attain the desired goal. For example, Proposition 7 gives additional assumptions which ensure that import volume rises following a uniform radial reduction in tariffs, which we know will always raise welfare. Nevertheless, the conclusion is inescapable that there is likely to be a conflict between the objectives of raising welfare and increasing market access. The only tariff change which is guaranteed to achieve both goals, with no assumptions other than that T lies between zero and one, is a uniform absolute reduction in T, which reduces domestic prices proportionally.
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Welfare vs. Market Access: The Implications of Tariff Structure for Tariff Reform

Welfare vs. Market Access: The Implications of Tariff Structure for Tariff Reform

are non-intersecting. It should be emphasised that each cone shows only those regions in which an unambiguous increase in the target of interest is guaranteed, given the mild assumptions that T and (in the case of import volume) M b are between zero and one. They thus correspond to types of tariff reform which can be recommended to attain either target subject to minimal informational requirements. If additional information is available then it may be possible to identify further tariff changes which can attain the desired goal. For example, Proposition 7 gives additional assumptions which ensure that import volume rises following a uniform radial reduction in tariffs, which we know will always raise welfare. Nevertheless, the conclusion is inescapable that there is likely to be a conflict between the objectives of raising welfare and increasing market access. The only tariff change which is guaranteed to achieve both goals, with no assumptions other than that T lies between zero and one, is a uniform absolute reduction in T, which reduces domestic prices proportionally.
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Labour Market Implications of a Compressed Wage Structure when Education and Training are Endogenous

Labour Market Implications of a Compressed Wage Structure when Education and Training are Endogenous

In a more general model with many different levels of education and train- ing, similar effects would be observed. A skill-biased technological change will in general affect the incentives to acquire human capital — both through ed- ucation and training, where the latter becomes increasingly important with a compressed wage structure. As a result, the compositions of the groups of educated and uneducated will change: More will be trained (educated) or receive a higher level of training (education) in response to a skill-biased tech- nological change This can have significant effects on not only average wages, but also the different percentiles in the wage distribution. If a skill-biased technological change implies that the workers with only a little or no train- ing become better trained, it is for example perfectly possible that the 5th percentile in the wage distribution increases relative to the 95th percentile.
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Capital structure and its implications: empirical evidence from an emerging market in South Asia

Capital structure and its implications: empirical evidence from an emerging market in South Asia

P-value 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.082 0.000 Note: ***, **, * significant at 1%, 5%, 10% level respectively. Numbers in parentheses are t-values. Leverage is alternately TD/TA, TD/TE and STD/TA Our analysis to examine the impact of leverage on market-based performance measure found a significant positive relationship. More specifically, contrary to the theoretical assertion, we found both TD/TA and STD/TA variables have significant positive impact on TQ at 1 per cent level. However, it revealed that the estimated coefficients of leverage were less than 1 per cent for all the models indicating a negligible impact. The significant positive results suggest that the existence of market anomalies in Sri Lankan market where economic and company fundamentals do not properly reflect on share prices. This restricts the ability of market prices to give a true picture of firm performance. Thus, TQ as a performance measure is not suitable since it is subject to inherent anomalies of the market such as insider trading and price fixing. This phenomenon is common to most of the small markets. This problem might have been aggravated owing to the use of proxy TQ as accounting measurement problems were also imbedded into estimated TQ in addition to market inefficiencies.
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UI BENEFITS STUDY. Trends in the Structure of the Labor Market and Unemployment: Implications for U.S. Unemployment Insurance.

UI BENEFITS STUDY. Trends in the Structure of the Labor Market and Unemployment: Implications for U.S. Unemployment Insurance.

Health insurance is not only a problem for the unemployed, many of whom lose insurance coverage when they lose their jobs. It is also a problem for people who are steadily employed. Though statistics on health insurance coverage are subject to measurement error, the Census Bureau’s annual survey on coverage shows a trend toward lower private insurance coverage among working-age adults under age 55 (see Figure 23). Declines in coverage rates occurred primarily in 1990-1992 and after 2000 when the job market was weak. Between 1987 and 2006 coverage under private health plans, mainly provided by employers, declined 2 percentage points to 8 percentage points depending on the age group. Only among adults between 55 and 64 did coverage under employer health plans increase. Low-wage workers who head families containing children may qualify for publicly subsidized health insurance or free insurance for their children. Workers with higher incomes may need to find an employer offering good health insurance if they want to obtain reliable coverage for their families. Many middle-class families cannot afford to purchase a private health insurance plan without the contributions of an employer. A Kaiser Foundation survey in 2005 found that the combined employee and employer premium for a family health plan was nearly $10,900, annually. Of this amount, one-quarter of the total premium is usually paid by the employee and three-quarters by the employer. 46 For purposes of comparison, the average annual wage earnings of Americans who have any earnings at all was $36,950 in 2005. The combined premium for a family insurance plan is thus almost 30 percent of the average U.S. wage.
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Market Structure.

Market Structure.

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Inventories, financial structure and market structure.

Inventories, financial structure and market structure.

Concerning "rm "nancial structure, we have found that market debt-"nanced "rms store a lower level of inventories than bank debt-"nanced "rms, which in turn accum[r]

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THE CLINICAL IMPLICATIONS OF HEMOGLOBIN STRUCTURE

THE CLINICAL IMPLICATIONS OF HEMOGLOBIN STRUCTURE

“new” amino acids replace the missing nor- mal amino acids, and hence also are in the immediate vicinity of the heme group.’#{176} They are thus able to influence the heme group of their[r]

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THE STRUCTURE OF AN ELECTRICITY MARKET

THE STRUCTURE OF AN ELECTRICITY MARKET

• Player with negative imbalance buys for up- regulation price  worse price than in the ahead trading. €/MWh price MWh/h imbalance + – up-regulation price system price.[r]

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Market Structure and Performance

Market Structure and Performance

Based on these two properties, Sutton establishes a series of strong results or “robust mechanisms” characterizing equilibrium market structure. The first applies to industries in which advertising and R&D play no major role in competition (i.e. the types of industries with which Bain was originally concerned). These are referred to as exogenous sunk cost markets or Type 1 industries. What happens to market structure as market size expands in these settings? Sutton shows that, in these exogenous sunk cost markets, as market size increases, the minimum level of concentration that can be supported as an equilibrium configuration decreases asymptotically to zero. Phrased differently, the lower bound to concentration decreases to zero as market size expands. Note that this does not imply that every market will experience a monotonic decrease in concentration as market size expands – this is a bound not a functional relationship. In some cases, markets may remain concentrated indefinitely. This lack of precision is a product of the theory’s breadth: although we can construct examples in which the profitable opportunities that arise as market size expands are systematically capture by the largest firms, we cannot rule out equilbria in which markets become more fragmented as markets grow in size. For this reason, this is sometimes called a “fragmentation” result. Note that we will find the opposite conclusion when we shift attention to advertising and R&D intensive industries below.
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