RICARDO MIGUEL RIBEIRO
CONTACT DETAILS
London School of Economics & Political Science (LSE)
Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Houghton Street
London WC2A 2AE
United Kingdom
Phone: +442079556690
Fax: +442079556951
EDUCATION
2005-present MRes/PhD in Economics Candidate London School of Economics & Political Science
2004-2005 MSc in Economics London School of Economics & Political Science
1996-2001 Licenciatura in Economics Universidade Catolica Portuguesa
RESEARCH INTERESTS
Industrial economics, competition policy, demand modelling and applied microeconometrics
WORK IN PROGRESS
The MiFID Impact on Brokerage Competition, November 2007
The Market in Financial Instruments Directive (MiFID) aims to increase competition and to foster client protection in the European financial market. Among other provisions, it abolishes the concentration rule and challenges the market power of existing trading venues. The directive introduces venue competition in order to achieve better execution and ultimately lowering costs of trading for investors and does so by allowing trading services to be executed at a variety of alternative venues. However, it may be argued that the MiFID may generate an asymmetric impact on the market for brokerage as it allows financial firms which, on an organised, frequent and systematic basis, deal on own account to act as internalisers (SI), that is, to execute client orders outside multilateral trading venues. The reason for the asymmetry relies in the fact that the MiFID will reduce trading costs for the subset of financial firms that have the scale to become SI, providing them with a comparative advantage relative to the subset that do not have such scale. As a result, small and medium sized financial firms may end up getting out of the business or outsource certain areas, implying a more concentrated brokerage industry. The new market configuration can in turn impact the fees charged to investors in such a way that the MiFID directive could end up fostering the very opposite result it aimed for. I evaluate empirically the impact of the MiFID on financial markets by specifying a structural demand model for brokerage and for trading venues as well as a model of industry supply behaviour.
A New Continuous Demand Model for Market Level Data (with Peter Davis), October 2007
This paper considers a new method of uncovering demand information from market level data on differentiated products. In particular, we propose a continuous-choice demand model with distinct advantages over the models currently in use and describe the econometric techniques for its estimation. The proposed model combines key properties of both the discrete- and continuous-choice traditions: i) it is flexible in the sense of Diewert (1974), ii) can deal with the entry and exit of products over time, and iii) incorporates a structural error term. Furthermore, it is relatively simple and fast to estimate which can prove a key advantage in competition policy issues where time and transparency are always crucial factors. Akin also to the continuous-choice tradition, the model encompasses a more general version (not consistent with an indirect utility function) that enables us to test the validity of symmetry properties and, for those cases it appears to be consistent with the data, also impose it a priori. In what concerns the estimation procedure in particular, we propose an analog to the algorithm derived in Berry (1994), Berry, Levinsohn and Pakes (1995). Along the way, we present an alternative procedure to BLP's contraction mapping for matching observed and predicted quantities.
Competition in the Cable Services Industry (with Pedro Pereira), October 2007
The cable industry in Portugal presents extremely high concentration ratios. This paper empirically examines the cost structure of the industry to conclude about an eventual technological reason for the high concentration and estimates observed price-cost margins, using afterwards this information to evaluate the degree of price competition in the market, by means of comparison with estimated economic price-cost margins. Lastly we examine the price effects of a proposed merger. Demand is described by a structural multinomial nested logit model random utility demand model following McFadden (1978). Economic price-cost margins are recovered from demand side estimates using standard Nevo (2001) methodology, whereas observed price-cost margins are estimated using a Greene (2002) fixed effects frontier cost. We show that cable television services in Portugal are characterized by increasing returns to scale, economies of scope and, despite the significant efficiencies differences across firms in the industry, relatively low observed price-cost margins. Furthermore, in what the degree of price collusion is concerned, the price-cost margins predictions from demand side estimates i) can reject that firms (all or only a specific subset) engage in fully price collusion, and ii) suggest consistency with a non collusive setting among the firms in the industry. The price effect of the proposed merger for consumers is almost null.
Crowding Out or Complementarity in the Telecommunications Market (with Joao Vareda), September 2007
There is a substantial number of cases where the a priori relationship between products is not at all clear in the sense that although apparent to be clear substitutes may turn out to be in fact complements, or vice-versa. This paper aims to study the relationship between fixed and mobile telephony in the United Kingdom and, in particular, address the question if mobile communications crowded out fixed telephony or if, on the other hand, the two types of communications are in fact complements. We estimate a structural continuous-choice demand model following Pinkse et al. (2002), Pinkse and Slade (2004), and Slade (2004) and we find that at the current diffusion stage, fixed and mobile communications appear to be complements. Given that the model is micro-founded, we also address the question of how the evolution of the price differential between the two types of communication may, respectively, affect the welfare of consumers and firms. We find that the continuation of these price trends have substantial welfare benefits for subscribers and at the same time have no significant impact on the profits for firms. Finally, we present some economic policy implications, especially about the need to (de)regulate telecommunications provision.
The Determinants of the Diffusion of Cellular Telephony in Portugal (with Pedro Pereira and Jose C. Pernias), December 2006
We develop a diffusion model that incorporates a flexible specification of the non-linear long-run trend. Our specification explicitly takes into account short-run dynamics and allow for economic variables determining the long-run saturation level of the diffusion process. We apply the model to the Portuguese mobile telephony industry. Our model outperforms a purely time series model and shows the importance of short-run dynamics. The entry of rivals and the decrease of price contributed to speed up the diffusion process.
Measuring Market Power in the Toothpaste Industry, October 2006
I investigate the question of eventual price collusion for an industry which has been until now incomprehensibly neglected by the literature: the toothpaste industry. Price collusion is here of particular concern as the frequent use of modern toothpastes has been scientifically proven to help prevent dental caries and limit the regrowth of dental plaque. I specify a partial equilibrium model incorporating the retail channel structure and estimate economic manufacturer price-cost margins for the US market. The results i) can reject that firms price collude, but ii) suggest inconsistency with a non collusive setting among the firms in the industry.