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on Industrial Competition |
| By: | Oschmann, Sebastian |
| Abstract: | This article examines the price effects of gasoline stations following a retail merger in 2022. Using detailed station-level price data from 2020 to 2024, the analysis shows that fuel prices increase at both merging stations and their competitors, but with regional differences. These regional differences cannot be explained by horizontal merger effects. Instead, changes in the vertical market structure play a key role. The divestment of the station network disrupts supply chains, creating demand pressure on local refineries. The findings highlight the importance of vertical relationships in merger assessments. |
| Keywords: | Gasoline Retail Markets, Ex-Post Merger Evaluation, Competition |
| JEL: | D22 K21 L13 L41 L81 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dicedp:314431 |
| By: | Corchón, Luis C.; Correa-Lopera, Guadalupe; Moreno, Bernardo |
| Abstract: | Traditional collusion models typically assume that players coordinatetheir actions actively during the competition process to influence the outcomes.In contrast, we consider a repeated interaction setting betweentwo players where collusion occurs through well-defined strategies: theplayers take turns, with one holding monopoly power while the other eitherrefrains from participating or behaves as if absent. We provide afull characterization of when taking turns constitutes a subgame perfectNash equilibrium in repeated games. By allowing players to discount timedifferently, we uncover a novel, non-monotonic condition on the discountfactor that sustains collusion. We apply our findings to three specificcontexts: contests, duopoly, and political competition. |
| Keywords: | Collusion; Political competition; Repeated games; Subgame perfect Nash equilibrium; Take-turns |
| JEL: | D43 C62 C73 D72 |
| Date: | 2025–03–25 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:46355 |
| By: | Ying Xue Li; Burkhard Schipper (Department of Economics, University of California Davis) |
| Abstract: | We consider a disclosure game between a seller and a buyer. The seller knows the quality of a good, while the buyer does not. Before the buyer decides how many units to purchase, the seller can disclose verifiable information about the good. The better the information, the more the buyer is inclined to buy. The information about the good is two-dimensional. We design two experimental treatments: In the unawareness treatment, the buyer is uncertain about the first dimension, but unaware of the second. Here, unawareness refers to a lack of conception rather than lack of information. In the control treatment, the buyer is aware of both dimensions, but uncertain about them. The theory predicts unraveling of information in the control treatment but not in the unawareness treatment. Our experimental findings are consistent with this prediction. However, a closer examination reveals that this outcome is driven by buyers becoming confused when sellers naively raise awareness of the second dimension. |
| Keywords: | disclosure of information, disclosure games, verifiable information, unawareness, unknown unknowns, unraveling, rationalizability, experimental games |
| JEL: | D83 C72 C92 |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:cda:wpaper:370 |
| By: | Paulo Burnier da Silveira |
| Abstract: | This paper analyses the determinants of cartel duration by using a dataset of 120 cases sanctioned by the Brazilian Competition Authority (CADE) between 1999 and 2022, which corresponds to all cartels sanctioned by CADE in Brazil from its inception until December 2022. The research considers the starting and the ending dates of the infringement as indicated in the case files, and it reveals an average duration of 4 years per cartel. Around 20% of the cartels had a very short duration (less than 3 months), while the longest cartel durations were around 20 years per cartel (i.e. the cartels in the markets of cement, salt extraction and marine hoses). The research then focuses in exploring the key determinants that may affect the duration of cartels, including the affected economic sector, the number of defendants and the geographic scope (i.e. local, national or international cartel). For this purpose, the research provides a statistics description of the database, which includes more than 2.500 defendants and total fines of around 10 billion BRL (2 billion Euros). The paper also explores possible correlations between these key determinants and the duration of cartels, by applying tests to measure the intensity of the correlations and its statistical significance. Last, a cartel survival estimation based on a Kaplan-Meier modelling indicates the probability of a cartel surviving after a given number of years, and a regression exercise using OLS and WLS completes the analysis. The paper concludes with a summary of the key findings and suggestions for future work. |
| Keywords: | Cartel duration; key determinants; correlation analysis; cartel survival estimation; Brazilian Competition Authority (CADE); economic analysis of competition law enforcement |
| JEL: | C01 K21 L49 L51 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2025-18 |
| By: | Thami, Prakriti (Department of Economics, Lund University) |
| Abstract: | This paper studies the impact of truth-telling preferences on aggregate consumer welfare within a priority pricing (PP) mechanism. Traditional models assume individuals always misrepresent private information to maximize payoffs, yet recent evidence suggests there may be an innate preference for truth-telling. By incorporating these preferences into a theoretical framework, I show that PP enhances welfare over uniform pricing only when the probability of non-truthful individuals surpasses a critical threshold, suggesting that PP may benefit populations with low truth-telling tendencies but reduce welfare when this tendency is high. To empirically test this, I conducted an online experiment, finding that while PP incentivized truth-telling, its impact did not vary significantly across groups with differing truth-telling tendencies. Instead, participants’ beliefs about others' truthfulness emerged as key in shaping behavior. These findings underscore that PP’s welfare-enhancing potential depends not only on incentives created by the pricing structure but also on the population's truth-telling tendencies and beliefs, offering valuable insight for designing effective pricing mechanisms. |
| Keywords: | priority pricing; consumer welfare; truth-telling behavior; incentive-compatible pricing |
| JEL: | D47 D61 D82 D90 |
| Date: | 2025–03–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lunewp:2025_003 |
| By: | Zhentong Lu; Kenichi Shimizu |
| Abstract: | We propose a new approach to estimating the random coefficient logit demand model for differentiated products when the vector of market-product-level shocks is sparse. Assuming sparsity, we establish nonparametric identification of the distribution of random coefficients and demand shocks under mild conditions. Then we develop a Bayesian estimation procedure, which exploits the sparsity structure using shrinkage priors, to conduct inference about the model parameters and counterfactual quantities. Compared with the standard BLP (Berry, Levinsohn, and Pakes 1995) method, our approach does not require demand inversion or instrumental variables (IVs), and thus provides a compelling alternative when IVs are not available or their validity is questionable. Monte Carlo simulations validate our theoretical findings and demonstrate the effectiveness of our approach, while empirical applications reveal evidence of sparse demand shocks in well-known datasets. |
| Keywords: | Econometric and statistical methods; Market structure and pricing |
| JEL: | C1 C3 L00 D1 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:25-10 |