nep-com New Economics Papers
on Industrial Competition
Issue of 2020‒07‒13
29 papers chosen by
Russell Pittman
United States Department of Justice

  1. Network Topology and Market Structure By Chen, Ying-Ju; Zenou, Yves; Zhou, Junjie
  2. Solving Structural Competition Problems Require Changes in EU Merger Regulation By Koski, Heli
  3. Slowdown antitrust investigations by decentralization By Emilie Dargaud; Armel Jacques
  4. Search, Information and Prices By Bergemann, Dirk; Brooks, Benjamin A; Morris, Stephen
  5. Evidence on search costs under hyperinflation in Brazil: the effect of Plano Real By Julia P Araujo; Mauro Rodrigues
  6. Interlocking Directorates and Competition in Banking By Barone, Guglielmo; Schivardi, Fabiano; Sette, Enrico
  7. Joint identification of monopoly and monopsony power By Michał Gradzewicz
  8. The draft for the 10th amendment of German competition law: Towards a new concept of "Outstanding relevance across markets"? By Budzinski, Oliver; Gänßle, Sophia; Stöhr, Annika
  9. Competition and Quality: Evidence from High-Speed Railways and Airlines By Hanming Fang; Long Wang; Yang Yang
  10. Patent Portfolios and Firms Technological Choices By Stefano Comino; Fabio M. Manenti
  11. European Privacy Law and Global Markets for Data By Batikas, Michail; Bechtold, Stefan; Kretschmer, Tobias; Peukert, Christian
  12. Markups and markdowns By Mauro Caselli; Stefano Schiavo; Lionel Nesta
  13. Market Competition and Discrimination By, Abu; Vlassopoulos, Michael; Zenou, Yves
  14. Killers on the Road of Emerging Start-ups – Implications for Market Entry and Venture Capital Financing By Koski, Heli; Kässi, Otto; Braesemann, Fabian
  15. Geographic Clustering and Resource Reallocation Across Firms in Chinese Industries By Guo, Di; Jiang, Kun; Xu, Chenggang; Yang, Xiyi
  16. On "Trade Induced Technical Change: The Impact of Chinese Imports on Innovation, IT and Productivity" By Douglas L. Campbell; Karsten Mau
  17. What effect has the 2015 power market reform had on power prices in China? Evidence from Guangdong and Zhejiang By Bai-Chen Xie; Jun Xu; Michael G Pollitt
  18. Cost Pass-through in the British Wholesale Electricity Market: Implications of Brexit and the ETS reform By Bowei Guo; Giorgio Castagneto Gissey
  19. The value of cooperative investment in nonexclusive contracts By Roig, G.
  20. Introducing Competition in the European Rail Sector: Insights for a Holistic Regulatory Assessment By Yves Crozet
  21. The CMA's assessment of customer detriment in the UK retail energy market By Stephen Littlechild
  22. Merchant utilities and boundaries of the firm: vertical integration in energy-only markets By Paul Simshauser
  23. Mis-allocation Within Firms: Internal Finance and International Trade By Doerr, Sebastian; Marin, Dalia; Suverato, Davide; Verdier, Thierry
  24. The impact of EU cartel policy reforms on the timing of settlements in private follow-on damages disputes: An empirical assessment of cases from 2001 to 2015 By Hans W. Friederiszick,; Linda Gratz,; Michael Rauber,
  25. Market Segmentation by Certification: Quantity effects on tropical timber production By Matthew T. Cole; Jacqueline Doremus; Stephen Hamilton
  26. Promoting or restricting competition? - The 50plus1-rule in German football By Budzinski, Oliver; Kunz-Kaltenhäuser, Philipp
  27. The determinants and performance implications of alliance partner acquisition By Stienstra, Miranda
  28. Migration between platforms By Biglaiser, Gary; Crémer, Jacques; Veiga, André
  29. Two Centuries of U.S. Banking Concentration: 1820-2019 By Fohlin, Caroline; Jaremski, Matthew

  1. By: Chen, Ying-Ju; Zenou, Yves; Zhou, Junjie
    Abstract: We develop a two-stage oligopolistic network competition model where, first, firms simultaneously determine their prices and, then, users connected through a network determine their product's consumption. We show that denser networks (network topology) reduce prices and that a higher number of firms (market structure) reduces prices only when competition is weak. However, the price for the most influential users can increase with the number of firms when competition is very fierce and when there are enough network externalities. We also show that increasing competition always leads to a lower firm's profit while increasing network density leads to a clockwise rotation of the profit curve as a function of the number of firms. Finally, we study the effect of network topology and market structure on price dispersion and determine the optimal network structure from the perspective of both firms and users.
    Keywords: competitive pricing; Entry; market structure; optimal network structure
    JEL: D43 D85 L13 L14
    Date: 2020–03
  2. By: Koski, Heli
    Abstract: Abstract EU competition law does not effectively address or make it possible to resolve some of the structural competition problems identified in the markets. The Commission plans to design and launch a new competition tool to ensure fair and undistorted competition, benefit consumers, and increase innovation. Economic research suggests that the market dominance of large platform companies may shift to traditional product markets through exploiting consumer data. Firms increasingly utilize algorithms, and also the non-dominant companies may use them for anti-competitive practices. The scope of a new competition tool should limit neither to dominant-based enforceability nor to sectors identified as being prone to structural competition problems. Under current EU legislation, it is not possible to intervene in acquisitions where global technology giants prevent small companies from becoming market challengers. It is necessary to amend EU merger control legislation to address the acquisitions of technology giants, potentially reducing future competition, even when the acquired companies’ turnover is relatively low. In the assessment of competitive impacts of acquisitions, it is essential to evaluate whether the acquiree’s innovation can challenge the buyer in its market in the future.
    Keywords: Competition, Competition policy, Algorithms, Data economy, Acquisitions
    JEL: G34 L1 L41
    Date: 2020–06–23
  3. By: Emilie Dargaud (Univ Lyon, Université Lumière Lyon 2, GATE, UMR 5824, F-69130 Ecully, France); Armel Jacques (CEMOI TEPP-CNRS (FR2042), Université de La Réunion, Faculté de Droit et d'Economie, 15, avenue René Cassin, 97715 Saint-Denis messag cedex 9)
    Abstract: When multi-product firms make simultaneous price-fixing agreements in different markets, the introduction of leniency programs may induce firms to compartmentalize their activities. Doing so results in slowdown antitrust investigations and decentralized ?rm can easily request leniency for a second cartel after the detection of an other. We study how variation of fine reduction may produce procompetitive but also procollusive effects.
    Keywords: Collusion, antitrust policy, leniency programs, multimarket contact, organizational form
    JEL: K42 L22 L41
    Date: 2020
  4. By: Bergemann, Dirk; Brooks, Benjamin A; Morris, Stephen
    Abstract: Consider a market with many identical firms offering a homogeneous good. A consumer obtains price quotes from a subset of firms and buys from the firm offering the lowest price. The "price count" is the number of firms from which the consumer obtains a quote. For any given ex ante distribution of the price count, we obtain a tight upper bound (under first-order stochastic dominance) on the equilibrium distribution of sale prices. The bound holds across all models of firms' common-prior higher-order beliefs about the price count, including the extreme cases of complete information (firms know the price count exactly) and no information (firms only know the ex ante distribution of the price count). A qualitative implication of our results is that even a small ex ante probability that the price count is one can lead to dramatic increases in the expected price. The bound also applies in a wide class of models where the price count distribution is endogenized, including models of simultaneous and sequential consumer search.
    Keywords: "Law of One Price"; Bayes correlated equilibrium; Bertrand Competition; information structure; price competition; Price Count; Price Quote; search
    JEL: D41 D42 D43 D83
    Date: 2020–03
  5. By: Julia P Araujo; Mauro Rodrigues
    Abstract: Plano Real put an end to hyperinflation in 1994 and significantly altered price-setting behavior in Brazil. This paper investigates the impact of Plano Real on search frictions. I estimate a nonsequential search model for homogeneous goods to structurally retrieve consumers' search costs. The dataset comprises 11,673 store-level price quotes collected from 1993 to 1995 by FIPE to calculate the Consumer Price Index (CPI) in the city of São Paulo. I choose 15 brands to analyze: 7 food items, 4 industrial goods, and 4 services. To quantify the extension of search costs, I focus only on geographically isolated markets, defined as all stores that sell a certain brand within a radius of 6 km. The empirical strategy consists of using Plano Real as a structural breakpoint in the data. I estimate the model splitting the data into before (January 1993 to June 1994) and after (August 1994 to December 1995) the plan, and I find evidence on first-order stochastic dominance of the search-cost ibution of the former into the latter; that is, search costs are higher during hyperinflation. The majority of consumers search only once or twice before buying an item, but this share is marginally higher during hyperinflation (84% vs 79%). In addition, after Plano Real, a larger share of consumers is willing to quote prices in all stores before committing to a purchase. I also document evidence of the effect of the plan on shrinking price-cost margins. When searching is less costly, stores lose market power.
    Keywords: Hyperinflation; Search costs; Price dispersion; Structural estimation
    JEL: C14 D4 D83 E31
    Date: 2020–06–26
  6. By: Barone, Guglielmo; Schivardi, Fabiano; Sette, Enrico
    Abstract: We study the effects on loan rates of a quasi-experimental change in the Italian legislation which forbids interlocking directorates between banks. We use a difference-in-differences approach and exploit multiple banking relationships to control for unobserved heterogeneity. We find that the reform decreased rates charged by previously interlocked banks to common customers by between 10-30 basis points. The effect is stronger if the firm had a weaker bargaining power vis-a-vis the interlocked banks. Consistent with the assumption that interlocking directorates facilitate collusion, interest rates on loans from interlocked banks become more dispersed after the reform.
    Keywords: Banking; Competition; Interlocking directorates
    Date: 2020–04
  7. By: Michał Gradzewicz
    Abstract: The article presents a generalization of an identification scheme of a monopolistic markup proposed by De Loecker and Warzynski (2012). We showed the relation between a price markup and factor wedges arising either due to firm's monopsony power and/or factor adjustment costs. The joint estimation of both kind of wedges (or price markup only) is subject to an identification problem and we discussed the possible restrictions identifying all wedges jointly. We argue that the identification restriction implicitly imposed in the empirical literature is reasonable, but in specific circumstances (or with additional information introduced) different choices may lead to better estimates of not only price markups, but also factor wedges if available data allow to measure multiple variable production factors.
    Keywords: markup, wedge, monopsony power, identification
    JEL: E31 E52 J11
    Date: 2020–06
  8. By: Budzinski, Oliver; Gänßle, Sophia; Stöhr, Annika
    Abstract: The ministerial proposal for a 10th amendment of the German competition law particularly addresses abuse control and seeks to tighten this pillar of competition policy against the background of the challenges from the digital economy. Next to extending the classic policy instruments of abuse control, the reform proposal suggests to introduce an additional and novel type of market power: the outstanding relevance across markets (ORAM). From an economic perspective, such an institution is interesting as it emphasizes non-horizontal and less direct anticompetitive abuses of market power. We review what type of cases could be subject to such a concept of systemic market power. Furthermore, we address the question whether merger control could also benefit from an ORAM-style conception.
    Keywords: competition policy,abuse control,digital economy,market power,merger control,antitrust
    JEL: L40 K21 L41 L42 L49 K42 L81 L86 M21
    Date: 2020
  9. By: Hanming Fang (University of Pennsylvania); Long Wang (ShanghaiTech University); Yang Yang (The Chinese University of Hong Kong)
    Abstract: The entry of High-Speed Railways (HSR) represents a disruptive competition to air-lines, particularly for short- to medium-distance journeys. Utilizing a unique dataset that contains the details of all ?ights departing from Beijing to 113 domestic desti-nations in China since January 2009, we employ a di?erence-in-di?erences approach to examine the e?ects of HSR entry on the quality of service provided by airlines as proxied by their on-time performance, and to identify the channels through which competition leads to quality improvement. We document two main ?ndings. First, the competition from the entry of HSR leads to signi?cant reductions in the mean and variance of travel delays on the a?ected airline routes. Second, the reductions in departure delays–which are controlled mostly by airlines, and the duration of taxi-in time–which are controlled mostly by destination airports, are identi?ed as the main sources of the improvement in the airlines’ on-time performance.
    Keywords: Competition; Quality; Transportation; Airlines; High-speed Rail; On-time Performance
    JEL: L1 L91 O18 R4
    Date: 2020–06–26
  10. By: Stefano Comino (Department of Economics and Statistics - University of Udine); Fabio M. Manenti (Department of Economics and Management - University of Padova)
    Abstract: In many industrial sectors, firms amass large patents portfolios to reinforce their bargaining position vis a vis competitors. In a context where patents have a pure strategic nature, we discuss how the presence and the effectiveness of a patent system affect firms technological decisions. Specifically, we present a two-stage game where firms first choose whether to agglomerate (i.e. develop technologies for the same technological territory) or to separate (i.e. develop technologies for different territories) and then they take their patenting decisions. We show that strong patents may distort technological choices yielding to firms to follow inefficient technological trajectories in an attempt to reduce competitors’ patenting activity. While an increase in the strength of patent rights − i.e. the extent to which patents can be used to extract value − undoubtedly distorts firms choices, the impact of a larger scope − the degree to which patent protection carries out in the adjacent ares as well − is ambiguous. We also discuss how such distortions change when one firm is prevented from obtaining its optimal number of patents and when firms patenting activities generate additional market value.
    Keywords: patent portfolios, patent strength and scope, technological territory, strategic patenting
    JEL: D43 L13
    Date: 2020–06
  11. By: Batikas, Michail; Bechtold, Stefan; Kretschmer, Tobias; Peukert, Christian
    Abstract: We demonstrate how privacy law interacts with competition and trade policy in the context of the European General Data Protection Regulation (GDPR). We follow more than 110,000 websites for 18 months to show that websites reduced their connections to web technology providers after GDPR became effective, especially regarding requests involving personal data. This also holds for websites catering to non-EU audiences and therefore not bound by GDPR. We further document an increase in market concentration in web technology services after the introduction of GDPR. While most firms lose market share, the leading firm, Google, significantly increases market share.
    Keywords: Antitrust; Brussels effect; competition policy; compliance risk; cookies; GDPR; Internet regulation; privacy; web tracking
    JEL: K21 L12 L15 L86
    Date: 2020–03
  12. By: Mauro Caselli (Università di Trento); Stefano Schiavo (Observatoire français des conjonctures économiques); Lionel Nesta (Observatoire français des conjonctures économiques)
    Abstract: This paper studies the high yet undocumented incidence of firms displaying markups lower than unity, i.e., prices lower than marginal costs, for protracted periods of time. Using a large sample of French manufacturing firms for the period 1990–2007, the paper estimates markups at the firm level and documents in a robust way the extent to which firms exhibit negative price-cost margins. The paper also investigates the relationship between the incidence and persistence of negative price-cost margins and candidate explanations, such as subsidies, strategic behaviour, uncertainty and irreversibility.
    Keywords: Markups; Irreversibility; Uncertainty; Negative price-cost margins; French manufacturing data
    JEL: D24 D81 E22 L11
    Date: 2018–12
  13. By:, Abu; Vlassopoulos, Michael; Zenou, Yves
    Abstract: Becker (1957) famously postulated that taste-based discrimination should disappear in the long run if the market operates competitively. This study provides evidence in support of this idea by carrying out a field experiment in the context of the rice market in Bangladesh. We recruit professional rice buyers (middlemen) to act as judges in a rice competition by providing their quality rating and willingness to pay (WTP) for rice samples that we randomly associate with farmers bearing ethnic majority or minority names. First, we find that there is no ethnic difference in buyers' evaluation of rice quality. Second, we find that local buyers, who have local monopsony power, discriminate against ethnic minority farmers by expressing a lower WTP for their rice (2.7% less) relative to that of ethnic majority farmers. Third, we find that wholesale buyers, who face fierce competition in the marketplace, do not discriminate against ethnic minority farmers in terms of their WTP for rice. In terms of mechanisms, we show through a second lab-in-the-field experiment and survey information that local and wholesale buyers do not have different tastes for discrimination. This suggests that market competition can eliminate the discrimination of wholesale buyers.
    Keywords: Bangladesh; discrimination; Ethnicity; market competition
    JEL: C93 J15 J43 Q13
    Date: 2020–03
  14. By: Koski, Heli; Kässi, Otto; Braesemann, Fabian
    Abstract: Abstract This paper empirically studies the effect of acquisitions made by the large US-based technology companies on the entry dynamics and venture capital financing in different product markets. We use data from 742 product markets globally, distinguishing the US and European markets, for the years 2003-2018. The estimation results based on the difference-in-differences estimation suggest that the technology giants’ buyouts subsequently reduced market entry rates and decreased available venture capital funding in the target product markets of tech giants’ acquisitions. In other words, the acquisitions of technology giants seem to generate the so-called kill zone effect. Our empirical analysis further suggests that this effect was strengthened during the 2010s when large technology companies gained increasing access to user data. Furthermore, we find that technology giants’ acquisitions of platform companies have decreased market entry in non-platform markets. In the US, unlike in the EU area, also available venture capital financing has declined in such non-platform markets from which technology giants have acquired companies.
    Keywords: Acquisitions, Venture capital funding, Competition, Technology giants
    JEL: G24 G34 L1 L41
    Date: 2020–07–01
  15. By: Guo, Di; Jiang, Kun; Xu, Chenggang; Yang, Xiyi
    Abstract: We examine the effects of China's industrial clustering on resource reallocation efficiency across firms. Based on our county-industry level DBI index panel, we find that industrial clustering significantly increases local industries' productivity by lifting the average firm productivity and reallocating resources from less to more productive firms. Moreover, we find major mechanisms through which resource reallocation is improved within clusters: (i) clusters facilitate higher entry rates and exit rates; and (ii) within clusters' environment the dispersion of individual firm's markup is significantly reduced, indicating intensified local competition within clusters. The identification issues are carefully addressed by instrumental variable (IV) regressions.
    Keywords: Competition; Industrial Cluster; Productivity Growth; Resource reallocation
    JEL: D2 H7 L1 O1 R1 R3
    Date: 2020–03
  16. By: Douglas L. Campbell (New Economic School); Karsten Mau (Maastricht University)
    Abstract: Bloom, Draca, and Van Reenen (2016) find that Chinese import competition induced a rise in patenting, IT adoption, and TFP by up to 30% of the total increase in Europe in the late 1990s and early 2000s. We uncover several coding errors in an important robustness check of their patent results. When corrected, we find no statistically significant relationship between Chinese competition and patents. Other specifications in the original paper use a problematic log(1 + patents) transformation. This normalization induces bias given low average patent counts for firms in China-competing sectors, and rapidly declining patents across the sample.
    Keywords: Patents, China, Europe, Textiles, Trade Shocks, Manufacturing
    JEL: F14 F13 L25 L60
    Date: 2020–06
  17. By: Bai-Chen Xie (College of Management and Economics, Tianjin University); Jun Xu (China Institute of Regulation Research, Zhejiang University of Finance and Economics); Michael G Pollitt (EPRG, University of Cambridge)
    Keywords: Chinese power market reform, electricity prices, No.9 Document
    JEL: L94
    Date: 2020–05
  18. By: Bowei Guo (Faculty of Economics, University of Cambridge); Giorgio Castagneto Gissey (Bartlett School of Environment, Energy and Resources, University College London)
    Keywords: Electricity market, Cost pass-through, Competition, Carbon price, VECM
    JEL: L13 Q48 D41 H23 C32
    Date: 2019–12
  19. By: Roig, G.
    Abstract: This article examines the incentives for a buyer to undertake relationship-specific investment in the presence of multiple suppliers who provide a homogeneous input. When multiple suppliers compete for a single buyer, the buyer’s investment affects its outside option in the event of a relationship breakdown. Relationship-specific investment with a supplier thus reduces the buyer’s outside option, were there to be a supply breakdown with this supplier, but increases the buyer’s outside option with respect to a supply breakdown of competing suppliers. The extent to which suppliers offer trading contracts designed to substitute the trade loss from a relationship breakdown, therefore shapes the changes in the buyer’s outside option and its incentives to invest. The present paper shows that introducing competition to one side of the market reduces the hold-up problem associated with relationship-specific investment and establishes conditions where investment does not materialize.
    Keywords: Specific investment, Outside option, Relationship breakdown
    JEL: D4 L11
    Date: 2020–06–19
  20. By: Yves Crozet (University of Lyon)
    Abstract: This paper assesses the impact of European rail transport regulation in the past 25 years. It highlights competition as a necessary condition to overcome the inertia of legacy railway operators, but argues that competition is not sufficient to increase efficiency when they feel protected by the state.
    Date: 2019–11–13
  21. By: Stephen Littlechild (University of Birmingham and CJBS)
    Keywords: retail energy markets, market power, efficient costs
    JEL: L94 L95 L51
    Date: 2020–06
  22. By: Paul Simshauser (Griffith Business School, Griffith University)
    Keywords: vertical integration, electricity markets, energy-only markets, transaction costs, credit ratings
    JEL: D23 D24 G34 L94
    Date: 2020–05
  23. By: Doerr, Sebastian; Marin, Dalia; Suverato, Davide; Verdier, Thierry
    Abstract: We develop a novel theory of mis-allocation within firms (rather than between firms) due to managers' empire building. We introduce an internal capital market into a two-factor model of multi-segment firms. We show that more open markets impose discipline on competition for capital within firms, which explains why exporters exhibit a lower conglomerate discount than non-exporters (a fact that we establish). Testing our model with data on US companies, we establish that import competition reduces mis-allocation within firms. A one standard deviation increase in Chinese imports lowers the conglomerate discount by 32% and over-reporting of costs by up to 15%.
    Keywords: China shock; Conglomerate discount; Internal Capital Markets; multi-product firms; trade and organization
    JEL: D23 F12 G30 L22
    Date: 2020–03
  24. By: Hans W. Friederiszick, (ESMT European School of Management and Technology and E.CA Economics); Linda Gratz, (E.CA Economics); Michael Rauber, (E.CA Economics)
    Abstract: Private cartel damages litigation is on the rise in Europe since early 2000. This development has been initiated by the European courts and was supported by various policy initiatives of the European Commission, which found its culmination in the implementation of the EU Directive on Antitrust Damages end of 2016. This paper explores the impact of this reform process on effective compensation of damaged parties of cartel infringements. For that purpose we analyse all European cartel cases with a decision date between 2001 and 2015, for which we analyse litigation activity and speed. Overall, we find a substantial reduction of the time until first settlement (increase in litigation speed) together with a persisting high share of cases being litigated (high litigation activity). This supports the view that the reform not only increased the claimant’s expectation about the amount of damages being awarded, but also resulted in an alignment in the expectations of claimants and defendants in the final damages amount, i.e. the European Commission succeeded in reaching its objective to clarify and harmonize legal concepts across Europe.
    Keywords: Cartels, private damages, competition law
    Date: 2019–08–26
  25. By: Matthew T. Cole (Department of Economics, California Polytechnic State University); Jacqueline Doremus (Department of Economics, California Polytechnic State University); Stephen Hamilton (Department of Economics, California Polytechnic State University)
    Abstract: Eco-certification standards are increasingly used by industrial countries to impose import restrictions on goods produced by foreign suppliers. Import restrictions on eco-certified goods that prevent the trade of goods derived from unsustainable practices serve to segment global markets served by foreign producers into a conventional market and a certified market, altering market structure and equilibrium prices in a manner that potentially works against sustainability goals. In this paper, we examine the effect of forest certification on tropical timber production in Central Africa. Using panel data of timber production in Cameroon from 2003 to 2009, we show that conventional timber producers substantially increase harvest rates in response to eco-certification standards, and that this effect is strongest in less competitive timber markets. Moreover, we find eco-certification shifts production to forests with higher extraction costs and potentially higher marginal damages from timber extraction, exacerbating economic inefficiency.
    Keywords: forestry, trade, product differentiation, eco-label
    JEL: Q23 O13 L31
    Date: 2019
  26. By: Budzinski, Oliver; Kunz-Kaltenhäuser, Philipp
    Abstract: The 50plus1-rule in German football is a controversially discussed institution that regulates investment behavior of professional football teams. This paper discusses from a sports economics perspective the suspected market failures that the 50plus1-rule is expected to prevent. To examine the effects of the regulation empirically, we gathered panel data on 47 teams in the German Major League Football ("Erste Bundesliga") from the seasons 1989/90 until 2018/2019. Applying various approaches to measure financial and competitive imbalance in the league, we derive a growing trend of imbalance since the introduction of the 50plus1-rule. We employ a Difference-in-Differences approach to examine investment behavior in budgets and sporting success between afflicted competitors and those exempted from the rule. Our results do not suggest any equalizing properties of the regulation. We find anticompetitive effects and distorting properties of the regulation.
    Keywords: 50plus1-rule,football,sports economics,financial regulation,investment,sport finance,soccer,competition economics
    JEL: Z23 Z21 Z2 J83 L11 L50
    Date: 2020
  27. By: Stienstra, Miranda (Tilburg University, School of Economics and Management)
    Date: 2020
  28. By: Biglaiser, Gary; Crémer, Jacques; Veiga, André
    Abstract: We study incumbency advantage in markets with positive consumption externalities. Users of an incumbent platform receive stochastic opportunities to migrate to an entrant. They can accept a migration opportunity or wait for a future opportunity. In some circumstances, users have incentives to delay migration until others have migrated. If they all do so, no migration takes place, even when migration would have been Pareto-superior. This provides an endogenous micro-foundation for incumbency advantage. We use our framework to identify environments where incumbency advantage is larger.
    Keywords: industry dynamics; migration; Platform; Standardization and Compatibility
    JEL: D85 L14 L15 L16 R23
    Date: 2020–03
  29. By: Fohlin, Caroline; Jaremski, Matthew
    Abstract: Concentration plays a key role in banking efficiency and stability, yet the literature lacks any long-run analysis of U.S. banking industry structure. This paper uses newly-collected archival data to provide the first study of banking concentration from the early years of the republic through 2019. While concentration was declining or stable before the mid-1920s, statistical tests identify a structural break thereafter, as concentration started steadily rising as a result of growth at the nation's largest five banks, particularly those located in New York City. A second structural break in the mid-1990s further accelerated the upward trend in concentration before slowing down during the Great Recession.
    Keywords: bank concentration; Too Big To Fail
    JEL: E44 G20 N11
    Date: 2020–03

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