In this paper, we define and solve the sensor location problem (SLP), that is, we look for the minimum number and location of counting points in order to infer all traffic flows in a transport network. We set up a couple of greedy heuristics that find lower and upper bounds on the number of sensors for a set of randomly generated networks. We prove that solving the SLP implies that the Origin/Destination (O/D) matrix estimation error be always bounded. With respect to alternative sensor location strategies, simulation experiments show that: (i) measurement costs being equal, the O/D estimation error is lower, and (ii) conversely, O/D estimation error being equal, the number of sensors is smaller.
We show how a monopolist in a primary market uses mixed bundling to extract surplus from quality-enhancing investment by a single-product rival in a complementary market, or even force the rival to provide low quality. In our model, bundling does not hinge on commitment ability.Although we assume that bundling creates efficiency gains, we find that bundling reduces consumer surplus and may reduce social welfare, even if the rival is not foreclosed, and investment is not blockaded. Nonetheless, bundling improves welfare when prevents inefficient investment. We propose to check bundled offers via a price test that controls the monopoly component stand-alone price to preserve efficiencies from both bundling and investment. When the rival invests, the test improves consumer surplus and welfare compared with the 'do-nothing' scenario, or a ban on bundling. The test is not consistent with the predatory pricing framework. Qualitative results hold when we endogenize the bundling strategy.
JEL codes: L13, L41
We study the welfare effects of parallel trade (PT) considering investment in quality. We thus revisit the case for PT in research-intensive industries. We find that PT may raise quality, depending on how preferences for quality differ across countries. Conditional on quality, consumer surplus may rise (fall) in the PT-source (PT-recipient) country. While PT reduces ex post welfare, improving quality is a necessary condition for PT to increase welfare ex ante. (C) 2013 Elsevier B.V. All rights reserved
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