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on Industrial Competition |
| By: | Martinez Cillero Maria (European Commission - JRC); Napolitano Lorenzo (European Commission - JRC); Rentocchini Francesco (European Commission - JRC); Seri Cecilia; Zaurino Elena (European Commission - JRC) |
| Abstract: | "Rising market concentration and the dominance of `superstar' firms have sparked concerns about declining competition and innovation. While technological change and globalisation are key drivers, mergers and acquisitions (M&As) may also play a role. This paper investigates whether firms use technological M&As — acquisitions of innovative subsidiaries with patent portfolios — to enhance market power. Using a global panel of 8, 314 publicly listed firms from 2008 to 2020 and a staggered difference-in-differences approach, we find that such acquisitions increase acquiring firms’ markups by 2% on average. Effects are stronger among top R&D investors, US-based firms, and those in high-tech manufacturing. The main mechanism appears to be greater insulation from competitors via acquired patents, which limit knowledge spillovers and raise entry barriers. These findings highlight the need for antitrust policies that balance innovation incentives with the risks of growing market power." |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:wpaper:202503 |
| By: | Paul S. Koh (Yonsei University) |
| Abstract: | Standard empirical tools for merger analysis assume price data, which are often unavailable. I characterize sufficient conditions for identifying the unilateral effects of mergers without price data using the first-order approach and merger simulation. Data on merging firms' revenues, margins, and revenue diversion ratios are sufficient to identify their gross upward pricing pressure indices and compensating marginal cost reductions. Standard discrete-continuous demand assumptions facilitate the identification of revenue diversion ratios as well as the feasibility of merger simulation in terms of percentage change in price. I apply the framework to the Albertsons/ Safeway (2015) and Staples/Office Depot (2016) mergers. |
| Keywords: | Merger, unilateral effect, diversion ratio, upward pricing pressure, merger simulation |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2025rwp-263 |
| By: | Anna D’Annunzio (Tor Vergata University of Rome, CSEF and Toulouse School of Economics.); Antonio Russo (Institut Mines-Telecom Business School.) |
| Abstract: | We study the effects of taxes and fees in markets where sellers practice second-degree price discrimination, offering multiple versions of their product. Sellers distort the quantity (or quality) intended for all types of consumers, except for those with the highest marginal willingness to pay. We show that ad valorem taxes/fees can alleviate this distortion, thereby generating revenue while increasing consumer surplus and welfare, provided the tax rate increases with the size or quality of the version it applies to. We explore the implications of this result for important issues in fiscal policy (taxation of sin goods and of goods affecting labor supply). We also consider applications to the analysis of vertical relations between firms, as well as the strategy of platforms when setting prices for access and when competing with sellers. |
| Keywords: | Commodity taxation, tax incidence, price discrimination, sin goods. |
| JEL: | D4 H21 H22 L1 |
| Date: | 2025–09–26 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:761 |
| By: | Esteban Jaimovich; Boryana Madzharova; Vincenzo Merella |
| Abstract: | The paper investigates firms' rollout strategies for quality-differentiated products across geographically dispersed markets. Using a theoretical framework that integrates nonhomo- thetic preferences, we show that premium goods are more likely to enter wealthier markets first, allowing firms to capture higher markups. We find that the main factors influencing the selection of follow-up markets differ by product quality: for premium goods, income levels are the primary determinant of expansion paths, whereas geographic proximity is the main driver for lower-quality products. Using micro-level data from the refrigera- tion industry, we confirm a significant positive association between market-entry order and income for higher-quality products. Furthermore, we observe that follow-up markets tend to be geographically more dispersed for premium goods, reflecting a shift away from proximity-based expansion strategies. |
| Keywords: | Market entry; Gravity; Nonhomothetic preferences; Quality differentiated products. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cca:wpaper:749 |
| By: | Karine Brisset (Université Marie et Louis Pasteur, CRESE UR3190, F-25000 Besançon, France); Emmanuel Peterlé (Université Marie et Louis Pasteur, CRESE UR3190, F-25000 Besançon, France) |
| Abstract: | Leniency programs encourage corporate cooperation with antitrust authorities by offering immunity or fine reductions for reporting illegal cartels. While prior studies suggest these programs discourage collusion and destabilize existing cartels, experimental evidence in environments with unrestricted communication indicates that the effectiveness of leniency is not clear-cut. We conduct a laboratory experiment in such an environment to examine the interaction between leniency programs and follow-on private damages, proposing the use of Fair Funds to maintain victim compensation and preserve incentives for leniency application. Contrary to theoretical predictions, we find that the prospect of private damages can increase cartel formation, though this effect is mitigated when our Fair Funds compensation scheme is introduced. In addition, leniency applications decline when private damages are introduced, but this decline is partially offset by the presence of Fair Funds. |
| Keywords: | Antitrust, Illegal Cartels, Leniency Programs, Private Damages |
| JEL: | C92 D03 K21 K42 L41 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:crb:wpaper:2025-12 |
| By: | Maurice E. Stucke (University of Tennessee Winston College of Law) |
| Abstract: | Generative artificial intelligence (AI) is reshaping how companies profile individuals, create and target ads, and influence behavior—often in ways that undermine privacy, autonomy, and democracy. This article explores a critical but overlooked question: how AI affects the relationship between competition and privacy. Increased competition in the AI supply chain may seem like a solution to Big Tech's dominance, but when firms are rewarded for surveillance and manipulation, more competition can actually make things worse. Drawing on recent market trends and twenty state privacy laws, the Article shows how the existing legal frameworks-even those designed to protect privacy—fall short and may unintentionally entrench the power of few data-opolies. It argues that privacy and competition must be addressed together, not in silos, and offers specific legislative reforms to help align business incentives with public interests. Without stronger guardrails, AI risks accelerating a race to the bottom—fueled not only by powerful technologies, but by well-intentioned, but flawed policies. |
| Keywords: | Antitrust, privacy, monopolies, data, artificial intelligence |
| JEL: | K21 K24 L40 L41 L50 O33 |
| Date: | 2025–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:thk:wpaper:inetwp236 |
| By: | Olivier Bochet (Division of Social Science, New York University Abu Dhabi; Center for Behavioral Institutional Design (C-BID), New York University Abu Dhabi); Mathieu Faure (Aix-Marseille Univ., CNRS, AMSE, Marseille, France); Yan Long (Huazhong University of Science and Technology, China); Yves Zenou (Monash University, Australia, and CEPR) |
| Abstract: | In contrast to standard economic models, recent empirical evidence suggests that agents often operate based on subjective and divergent views of the competitive landscape. We develop a novel framework in which such imperfections are explicitly modeled through subjective perception networks, and introduce the concept of perception-consistent equilibrium (PCE), in which agents' actions and conjectures respond to the feedback generated by perceived competition. We establish the existence of equilibrium in broad classes of aggregative games. The model typically yields multiple equilibria, including outcomes that feature patterns of localized exclusion. Remarkably, heterogeneity in beliefs induces perceived competition rents-payoff differentials that arise purely from subjective misperceptions. We further show that PCE actions correspond to ordinal centrality measures, with eigenvector centrality emerging as a behavioral benchmark in separable payoff environments. Finally, a graph-theoretic taxonomy of PCEs reveals a hierarchical structure that ranks perceived competition rents. We also give conditions under which a unique stable equilibrium exists. |
| Keywords: | competition, perception-consistent equilibrium, exclusionary equilibria, bounded rationality, ordinal centrality, eigenvector centrality, perceived competition rent |
| JEL: | C72 D43 Z13 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2515 |
| By: | Paul S. Koh (Yonsei University) |
| Abstract: | Market definition holds significant importance in antitrust cases, yet achieving consensus on the correct approach remains elusive. As a result, analysts routinely entertain multiple market definitions to ensure the resilience of their conclusions. I propose a simple framework for conducting organized sensitivity analysis with respect to market definition. I model candidate market definitions as partially ordered and use a Hasse diagram, a directed acyclic graph representing a finite partial order, to summarize the sensitivity analysis. I use the Shapley value and the Shapley-Shubik power index to quantify the average marginal contribution of each firm in driving the conclusion. I illustrate the method's usefulness with an application to the Albertsons/Safeway (2015) merger. |
| Keywords: | Market definition, sensitivity analysis, partial order, Hasse diagram, Shapley value |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2025rwp-262 |
| By: | Elise Penalva-Icher (IRISSO - Institut de Recherche Interdisciplinaire en Sciences Sociales - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Paola Tubaro (ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - GENES - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique); Fabien Eloire (CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | How do digital platforms affect coordination in the restaurant market? In particular, how do they reshape firms' positions in the quality space and their dependence on both consumers' valuations and competitors' choices? Focusing on the case of a widely used platform for restaurant booking and reviewing, we analyze the dine-in services market in the city of Lille, France. In line with economic sociology's definition of markets as concrete social spaces, we frame these restaurants as a producer market in which multiple quality conventions coexist. We use sequential mixed methods and data (observations and interviews, web-scraping and business data) to show that platforms rationalize firms' practice of observing one another as a basis for making decisions on volume and quality. The rise of digital platforms provides producers with devices that amplify their view of competitors, standardize their offerings and support the stability of their business choices over time, conditional on spatial constraints and quality positioning. |
| Keywords: | Harrison White, Digital Platforms, Quality, Valuation, Markets, Economic Sociology |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05281701 |
| By: | Delia Coculescu; Maximilian Janisch; Thomas Leh\'ericy |
| Abstract: | Pharmaceutical markets for life-saving therapies combine monopoly power with insurance coverage. We build a tractable sequential game in which a patent-holder chooses the drug price, a profit-maximising insurer sets its premium, and a population of heterogeneous agents decide whether to insure and, conditional on diagnosis, whether to purchase treatment. Two sufficient statistics - subjective illness probability and reservation price - capture heterogeneity and nest risk-aversion and liquidity-constraint motives within a unified framework. We prove existence of subgame-perfect Nash equilibria and show that entry of an insurer strictly raises producer profits but may raise or lower both drug prices and treatment uptake, depending on the joint distribution of the population statistics. Numerical experiments calibrated to flexible parametric families illustrate non-monotone comparative statics and quantify conditions under which insurance reduces access. Our results provide benchmarks for evaluating price negotiations, price caps, and subsidy schemes in high-cost drug markets. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.16125 |
| By: | Honglin Li; Chenyuan Liu; Justin R. Sydnor |
| Abstract: | How does community rating distort relative prices for vertically differentiated plans in insurance markets? We show that common community-rating approaches can distort price differentials in the opposite direction to the distortions in overall price levels. Partial age-based community rating in the U.S. private health insurance exchanges causes older individuals to pay marginal prices for generous coverage significantly above marginal cost, while younger enrollees are subsidized on the margin. These distortions are large enough that older individuals often face and sometimes choose dominated options. We present simulations and theoretical discussions of community rating’s impacts on efficiency and distributional outcomes. |
| JEL: | D0 I13 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34367 |
| By: | Jaap A. Bikker; Michiel van Leuvensteijn; Jeroen Meringa |
| Abstract: | This paper adds to the literature by analysing for the first time the functioning of the Dutch pension funds market from a competition or efficiency perspective. Of course, competition is severely limited on this highly regulated market. The analyses focus on a key property of well-functioning markets: the reward of efficiency. The conclusion can be drawn that in the market for pension funds efficiency is indeed rewarded, up to a certain level. New regulations on cost transparency and on the quality of pension boards, and the ongoing consolidation among pension funds may be explanations for this development over time. At the same time, the level at which efficiency is rewarded is very low compared to other financial sectors such as the life insurance and banking sector. |
| Keywords: | Competition; efficiency; net investment returns; market shares; pension funds |
| JEL: | D4 H55 G22 G23 G28 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:dnb:dnbwpp:839 |
| By: | Paul S. Koh (Yonsei University); Devesh Raval (Yonsei University) |
| Abstract: | The prevailing explanation for large, multi-product firms is economies of scope from inputs shared across production lines. Using the Federal Trade Commission's Line of Business Surveys, we show that manufacturers report substantial shared inputs for both capital and management/marketing expenses that are correlated with firm size and scope. We estimate a nested CES production function between line-specific and shared inputs, which are substitutes with a substitution elasticity of 2.6. For the average firm, reducing shared inputs by 50% decreases revenue by 3.4%. Finally, synergies from greater scope economies generated by pooling shared inputs in merger simulations are small. |
| Keywords: | Economies of scope, shared inputs, multiproduct firms, production function, productivity |
| JEL: | D24 L23 L40 L60 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2025rwp-264 |