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Industry Restructuring: A Case for Affirmative Action

Forthcoming at Annales d'Economie et Statistique

25 Pages Posted: 20 Sep 2012  

Bertrand Villeneuve

Université Paris Dauphine

Vanessa Yanhua Zhang

Global Economics Group, LLC; Renmin University of China

Date Written: May 30, 2012

Abstract

We analyze the trade-off faced by authorities envisaging a one-shot structural reform in a capitalistic industry. A structure is modeled as (1) a sharing of productive capital at some time and (2) a sharing of scarce sites or any other non-reproducible assets. These two distinct dimensions of policy illustrate the importance of a dynamic theory in which firms durably differ in several respects. Though equalization of endowments and rights is theoretically optimal, realistic constraints force competition authorities to adopt second-best solutions. Affirmative action here is the policy that recognizes the fact that, under certain circumstances, helping the disadvantaged contributes maximally to social surplus.

Keywords: competition policy, capacity accumulation, Cournot competition, asymmetric duopoly, regulatory consistency

JEL Classification: C73, L13, L40

Suggested Citation

Villeneuve, Bertrand and Zhang, Vanessa Yanhua, Industry Restructuring: A Case for Affirmative Action (May 30, 2012). Forthcoming at Annales d'Economie et Statistique. Available at SSRN: https://ssrn.com/abstract=2148683

Bertrand Villeneuve

Université Paris Dauphine ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775
France

Vanessa Zhang (Contact Author)

Global Economics Group, LLC ( email )

1400 S. Dearborn, Suite 1000
Chicago, IL 60603
United States

Renmin University of China ( email )

Room B906
Xianjin Building
Beijing, Beijing 100872
China

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