|
on Industrial Competition |
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Issue of 2026–01–19
thirty-one papers chosen by Russell Pittman, United States Department of Justice |
| By: | Hoover, D. |
| Abstract: | This paper explores the profitability and impact of opaque selling in a monopolist market with endogenous product characteristics. Opaque selling is a strategy where a firm sells goods through a lottery mechanism that randomly rewards consumers with a product that is revealed after purchase. Using a standard two-good Hotelling model with endogenous product locations, I compare market equilibria for a monopolist under traditional selling and opaque selling. I find that opaque selling always earns the firm a higher profit when product locations are endogenous. Additionally, it generally induces the firm to select more extreme product varieties. Using an extension to the Salop circular city model, I also show that opaque selling results in the firm introducing fewer product varieties. In terms of welfare, opaque selling unambiguously increases producer surplus and reduces consumer surplus. Although consumption of the lottery good is welfare inefficient, opaque selling can potentially increase welfare by inducing the firm to serve more consumers than it would under traditional selling. These results suggest that opaque selling may be a more viable long-term strategy when firms are capable of adjusting their product mix. |
| Keywords: | Opaque Selling, Lottery Goods, Endogenous Products, Product Differentiation |
| JEL: | D42 L11 L12 |
| Date: | 2026–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2601 |
| By: | Lopez, Rigoberto A.; Lettu, Sandra; Seoane, Luis |
| Abstract: | Discourse surrounding the U.S. meatpacking industry has increasingly focused on concentration and its effects on competition and market power. Although the literature is replete with studies examining these issues using aggregated data, several factors, including transportation constraints for livestock, suggest that farmers primarily operate within local or regional markets. Therefore, locality and heterogeneity in regional supply conditions invariably influence the prices received by livestock farmers and the market power held by packing plants. In this study, we provide new insights into the extent of oligopoly and oligopsony power, if any, at the national and regional levels respectively, that is exercised by the beef packing industry. We also propose a new model to estimate the retail-farm price spread. Leveraging data from multiple sources including the National Establishment Time Series Database (NETS), the U.S. Department of Agriculture (USDA), and the Bureau of Economic Analysis (BEA), we find no evidence of the exercise of oligopsony power at the regional level by beef packing plants. |
| Keywords: | Industrial Organization, Demand and Price Analysis |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360969 |
| By: | Sindri Engilbertsson; Sander Onderstal; Leonard Treuren |
| Abstract: | Antitrust authorities impose substantial penalties on firms engaging in illegal price-fixing. We examine how basing cartel fines on revenue, profit, or price overcharge influences prices, cartel incidence, and cartel stability. In an infinitely repeated Bertrand oligopoly game, we show that fines based on revenues/profits/overcharge incentivize firms to charge prices above/equal to/below the monopoly price. Cartels are stable for a smaller range of discount factors when fines are based on overcharges rather than other bases. We test these predictions in a laboratory experiment where subjects can form cartels, which allows them to discuss pricing at the risk of being detected and fined. By equalizing expected fines across treatments, we isolate the effect of the fine's base. We find that market prices are lowest under overcharge-based fines and highest under revenue-based fines. While these results align with the theoretical predictions, cartel incidence and cartel stability do not differ significantly across fining regimes. Our results suggest that antitrust authorities could improve enforcement by shifting from revenue-based fines to profit- or overcharge-based fines. |
| Keywords: | STG/23/026#57790427 |
| Date: | 2025–02–21 |
| URL: | https://d.repec.org/n?u=RePEc:ete:msiper:779661 |
| By: | Jeroen Hinloopen; Stephen Martin; Sander Onderstal; Leonard Treuren |
| Abstract: | Antitrust laws prohibit private firms to coordinate their market behavior, yet many types of interfirm cooperation are legal. Using laboratory experiments, we study spillovers from legal cooperation in one market to non-competitive prices in a different market. Our theoretical framework predicts that such cooperation spillovers are most likely to occur for intermediate levels of competition. Our experimental findings support this theoretical prediction. In addition, our experimental results show that repeated interaction and communication about prices in a market are not necessary to achieve non-competitive prices in that market, as long as subjects can form binding agreements in a different market. Results from additional treatments suggest that commitment and multimarket contact are necessary for cooperation spillovers to emerge. |
| Keywords: | STG/23/026#57790427 |
| Date: | 2024–12–20 |
| URL: | https://d.repec.org/n?u=RePEc:ete:msiper:779662 |
| By: | Jan De Loecker; Catherine Fuss; Nathan Quiller-Doust; Leonard Treuren |
| Abstract: | We separately observe variable input expenditure and expenditure on fixed inputs in novel firm-level data covering the Belgian manufacturing sector over the last decades. This permits a deeper investigation of two potential drivers of the globally observed widening gap between firms’ revenue and variable input expenditure: technology and market power. Across the board, cost structures have become less reliant on variable input expenditure over time, while expenditure on fixed inputs or overhead costs has increased in prominence. We relate these changes in firms’ cost structures to performance measures and document that markups and gross profit rates increase substantially as the role of variable costs in production diminishes. Profit rates net of fixed input expenditure also increase, but by substantially less than gross profit rates. Our results suggest that technological change can explain a considerable portion of the widening gap between revenue and variable input expenditure, but that markups increase by more than necessary to break even, and that this phenomenon operates remarkably similarly across different firms and industries. |
| Keywords: | STG/23/026#57790427 |
| Date: | 2024–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:ete:msiper:779663 |
| By: | Francesco Agostinelli; Domenico Ferraro; Giuseppe Sorrenti; Leonard Treuren |
| Abstract: | We ask to what extent the quantification of labor market power depends on the modeling of the long-term worker-firm employment relationship. We develop an oligopsony model with dynamic wage contracts. Workers decide whether and where to work, choosing among firms providing different amenities and solving a dynamic discrete choice labor supply problem with firm-specific human capital. As a result, firms optimally choose wage-tenure contracts to attract and retain workers. We find that such contracts mitigate firms' incentives to impose large instantaneous wage markdowns—compared to standard static wage-setting models—thereby reducing the share of socially inefficient worker-firm separations. As a consequence, we show that the empirical approaches based on "sufficient statistics" tend to overestimate the extent of labor market power: low levels of firm-specific labor supply elasticities do not necessarily indicate rent extraction, but instead reflect firms’ ability to retain workers by offering long-term value through human capital accumulation. |
| Keywords: | STG/23/026#57790427 |
| Date: | 2025–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ete:msiper:779664 |
| By: | Çakmak, Kadircan (Tilburg University, School of Economics and Management) |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tiu:tiutis:374c7509-f9e5-42d4-939a-36e33a034ef0 |
| By: | Giovanna Marani Batista (UFMG); Mônica Viegas Andrade (Cedeplar/UFMG); André Soares Motta Santos (Cedeplar/UFMG) |
| Abstract: | This study analyzes mergers and acquisitions (M&A) in the supplementary health sector in Brazil between 2012 and 2024. It focuses on identifying transactions and the consolidation dynamics of the main economic groups, understanding their market share, classifying operational strategies, mapping territorial expansion and conducting a network analysis to visualize interactions between acquirers and targets. The methodology included document analysis of Concentration Acts (AC) approved by CADE involving health plan operators and insurers, cross-referencing with ANS data on the number of beneficiaries per operator and network visualization. The results reveal a strong concentration of operations among a few economic groups, especially Intermédica Group (GNDI), Hapvida Group and Amil Group, which accounted for over 88% of the M&A transactions observed. The strategies mainly prioritized vertical integration, particularly through acquisitions of hospitals, laboratories, emergency care units and diagnostic imaging services. Territorial expansion focused on more populous regions with higher market potential, such as the state of São Paulo. These movements reflect efforts by the operators to achieve economies of scale, internalize stages of the production chain, control costs and strengthen market presence. Such strategies reinforce entry barriers and increase the market power of dominant groups, generating regulatory challenges and implications for competition. This research contributes to understanding the competitive dynamics and consolidation mechanisms in Brazil’s supplementary health sector. |
| Keywords: | Supplementary health. Mergers and acquisitions. Economic groups. Vertical integration. Territorial expansion. |
| JEL: | L41 L42 I11 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cdp:texdis:td690 |
| By: | Wang, Lingxiao; Capps Jr., Oral; Zheng, Yuqing; Pan, Yuxuan |
| Abstract: | Using NielsenIQ Retail Scanner data from 2021 to 2023, merged with the product-level ingredient data from Mintel Global New Products Database (GNPD), we estimate a Berry-Levinsohn-Pakes (BLP) model to evaluate consumers' revealed preferences for nutritional and functional ingredients concerning energy drinks. Results indicate that consumers have strong preferences for functional ingredients such as taurine, while showing aversion toward excessive sugar and certain mineral and chemical additives. Estimated price elasticities suggest that the demand for energy drink products is quite elastic, and generally are substitutes for one another, although some products within the same brand are complements. Simulations of three hypothetical mergers show that prices increase for both acquiring and acquired firms, profit declines for the acquired brands due to reduced market share, and consumer surplus largely decreases. The Difference-in-Difference (DID) event study of the actual Monster-Bang merger confirms similar directional effects on prices and market shares, though the magnitudes differ. |
| Keywords: | Marketing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360839 |
| By: | Yueyuan Ma; Shaoshuang Yang |
| Abstract: | Using a newly-created measure of technology novelty, this paper identifies periods with and without technology breakthroughs from the 1980s to the 2020s in the US. It is found that market concentration decreases at the advent of revolutionary technologies. We establish a theory addressing inventors’ decisions to establish new firms or join incumbents of selected sizes, yielding two key predictions: (1) A higher share of inventors opt for new firms during periods of heightened technology novelty. (2). There is positive assortative matching between idea quality and firm size if inventors join incumbents. Both predictions align with empirical findings and collectively contribute to a reduction in market concentration when groundbreaking technologies occur. Quantitative analysis shows the overall slowdown in technological breakthroughs can capture 95.9% of the rising trend in market concentration and the correlation between the model-generated and the actual detrended market concentration is 0.910. |
| Keywords: | technological waves, HHI, startups, incumbent firms |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-78 |
| By: | Richards, Timothy |
| Abstract: | Problem Definition: U.S. agricultural supply chains are arguably among the most efficient in the world, yet recent disruptions have exposed a fundamental lack of resilience. Some point to market concentration as one reason for this lack of resilience, but there is little empirical evidence to support this claim. In this paper, we develop a model to test the effect of market concentration, both in the supplier and retail markets, on agricultural supply chain resilience. Methodology / Results: We measure resilience using the time it takes price spreads—the difference between retail and wholesale prices—to return to their previous levels after a major disruptive event. We test our model using data from the US beef supply chain following the 2019 Tyson beef packing plant fire in Holcomb, KS, which temporarily removed 6% of the beef supply from the market. Using an event-study approach, we find that supplier and retail concentration improve recovery times by about 1.45%. Managerial Implications: Our results demonstrate that market concentration may not necessarily reduce resilience in agricultural supply chains. Therefore, managerial strategies that promote closer supply chain relationships between supply chain partners may promote broader supply chain resilience than previously thought. Moreover, government policies targeting market concentration, specifically to achieve resilience goals, may be misguided. |
| Keywords: | Demand and Price Analysis |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:361139 |
| By: | Muhammed Ceesay; Nicola Doni; Domenico Menicucci |
| Abstract: | This paper is about a procurement auction setting with two sellers in which before the auction seller i can make an investment which improves the ex ante probability distribution of his cost; seller j observes seller i's investment decision before bidding occurs. Under somewhat restrictive assumptions on the pre- and the post-investment cost distributions, Arozamena and Cantillon (2004) prove that in the first price auction seller i's investment induces seller j to bid more aggressively. This negative strategic effect contributes to AC's result that the investment incentive for seller i is stronger in the second price auction than in the first price auction. We prove that under weaker but economically significant assumptions, and discretely distributed costs, an investment by seller i may actually induce seller j to bid less aggressively in the first price auction (i.e., the strategic effect may be positive), and the investment incentive may be stronger in the latter auction. Moreover, in some cases the buyer prefers the first price auction precisely because it provides a stronger investment incentive, even though the second price auction is preferable when no investment is possible. We prove that the two auctions are not equivalent in a setting in which each seller has the option to invest and the sellers are ex ante symmetric, and that the second price auction gives a stronger investment incentive to the initially stronger seller than to the other seller (this increases asymmetries), but such result does not necessarily hold in the first price auction. |
| Keywords: | Procurement Auctions, First-Price Auction, Second-Price Auction, Pre-Auction Investment, Strategic Effect, Auction Ranking. |
| JEL: | D44 D82 L15 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2026_01.rdf |
| By: | Keisuke HATTORI; Takeshi YOSHIKAWA |
| Abstract: | We analyze a two-stage duopoly where rivals first make non-cooperative demand-expanding investments yielding non-excludable benefits and then compete in product markets. Two efficiency paradoxes emerge endogenously. First, when production technologies are identical, firms with less efficient investment technology earn higher profits. Second, firms disadvantaged in both production and investment can outperform superior rivals. The mechanism is that market-expanding investments benefit all firms while costs fall disproportionately on efficient investors, enabling inefficient firms to free-ride. These paradoxes persist across product differentiation, simultaneous timing, and alternative aggregation technologies. Subsidies intended to remedy market failures paradoxically exacerbate efficiency reversals. While efficiency heterogeneity enhances short-run welfare through complementary effects, it may undermine long-run market selection, potentially causing inefficient monopolization. Our framework applies to brand advertising, platform development, standard-setting, and industry reputation, revealing fundamental tensions between static welfare gains and dynamic efficiency, with implications for competition policy and strategic management in coopetitive markets. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25126 |
| By: | Dirk Bergemann (Yale University); Tibor Heumann (Pontificia Universidad Cat—lica de Chile); Stephen Morris (Massachusetts Institute of Technology) |
| Abstract: | How should a buyer design procurement mechanisms when suppliers' costs are unknown, and the buyer does not have a prior belief? We demonstrate that notably simple mechanisms Ñ those that share a constant fraction of the buyer utility with the seller Ñ allow the buyer to realize a guaranteed positive fraction of the efficient social surplus across all possible costs. Moreover, a judicious choice of the share based on the known demand maximizes the surplus ratio guarantee that can be attained across all possible (arbitrarily complex and non-linear) mechanisms and cost functions. Results apply to related nonlinear pricing and optimal regulation problems. |
| Date: | 2025–12–08 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2479 |
| By: | Minwoo Hyun |
| Abstract: | Using matched employer-employee data covering 1.35 million US workers separated from the fossil fuel extraction industry between 1999 and 2019, I estimate how local fossil fuel labor demand shocks affect employment and earnings. Employment probabilities fall markedly after exposure, and earnings decline gradually over the first seven years with only partial recovery by ten years since exposure to the shocks. Workers who remain in the fossil fuel sector, disproportionately men in sector-specific roles, experience nearly twice the earnings losses of those who switch sectors, possibly due to limited occupational mobility. Among non-switchers, losses are larger in labor markets with high employer concentration, indicating that scarce outside options translate into lower reemployment wages and weaker bargaining positions. Geographic movers fare worse than stayers, reflecting negative selection (younger, lower-earning) and relocation to metropolitan areas where fossil fuel or low-skilled service sectors remain highly concentrated, leaving monopsony power intact. |
| JEL: | Q32 R11 J31 J60 J42 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-76 |
| By: | Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)) |
| Abstract: | The European football (soccer) market increasingly funnels rents to superstar players and intermediaries while weakening competitive balance. We trace this dynamic to two forces: (a) technological innovation that globalized broadcasting and magnified superstar returns, and (b) legal rulings boosting player mobility and causing bidding wars. The 2024 Diarra ruling by the Court of Justice of the European Union further loosens transfer constraints and will likely intensify talent concentration at “superclubs”. The result is soaring salaries and transfer fees, persistent financial fragility among non-elite clubs, and growing predictability of match outcomes. We evaluate reform options that preserve Europe’s open-league tradition yet borrow from North American competitive-balance tools: greater revenue sharing, hard/soft salary caps, and draft-like mechanisms. These should be complemented by a “cartel tax” to fund youth sport, and club-governance codes plus credible financial-sustainability rules. |
| Keywords: | Bosman ruling; Competitive balance; Diarra ruling; Market integration; Sports industry; Talent development |
| JEL: | D33 D43 D63 J44 L50 L83 Z28 |
| Date: | 2026–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1548 |
| By: | Kamphaus, Jost; Hirsch, Stefan; Koppenberg, Maximilian |
| Abstract: | Most previous research on consumer preferences for meat alternatives has investigated them in a standalone way. However, whether consumers make purchasing decisions in this market independently of the traditional meat market has not yet been investigated. Therefore, we analyze the separability of the meat alternative and meat market using the LA-EASI demand model and a separability test applied to the German meat market. Our results enhance the understanding of consumer demand for meat and meat alternatives and provide valuable insights for agribusiness firms to better segment customer groups. We find evidence of weak separability between meat and plant-based meat alternatives, which implies that consumers make their purchasing decision in these categories independently from another. In addition, we observe separability within the meat market between sausages/bratwurst and other product categories and within the plant-based meat alternative market between coated and non-coated products. Furthermore, the results of the demand model support previous literature that retailers and food processing companies need to personalize their marketing strategies towards regional and time specific characteristics. |
| Keywords: | Consumer/Household Economics |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360600 |
| By: | Kala, Namrata (MIT Sloan School of Management); Haseeb, Muhammad (University of Bristol); Fenske, James (University of Warwick) |
| Abstract: | Effective regulatory design requires an understanding of how regulatory burden affects regulated entities. Using novel data on all applications for environmental permits in five Indian states and a natural experiment, we estimate how regulatory burden of environmental permitting affects firms. Difference-in-difference estimates show that deregulation induces smaller firms to enter and increases entry. Standard data sources would miss these substantial effects, underscoring the importance of collecting data across the firm size distribution. We also use full texts of permit certificates to create novel measures of regulatory burden. Firms in industries with reduced regulations face fewer, less stringent, permit conditions. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1593 |
| By: | Manuel, Ed; Piton, Sophie; Yotzov, Ivan |
| Abstract: | How have profits behaved in the current period of sustained inflation? In part, the answer depends on how ‘profits’ are defined. Some broad measures suggest increasing profits, but conflate market and non-market sector dynamics and omit important corporate costs. This paper constructs an alternative measure of corporate profits to capture UK firm earnings in excess of all production costs. This measure has been declining since the start of 2022, consistent with evidence from historical energy shocks. This decline has not been uniform across firms, however: firms with higher market power have been better able to protect their margins; others have experienced large declines. |
| Keywords: | energy shock; inflation; mark-ups; profit margins |
| JEL: | E25 E31 L11 |
| Date: | 2024–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:121997 |
| By: | Van Hee Jens; Krumbiegel Katharina (European Commission - JRC); Tillie Pascal (European Commission - JRC) |
| Abstract: | This study investigates the underexplored role of intermediaries within the cocoa value chains of Côte d’Ivoire and Ghana, utilizing a novel dataset comprising data from 1, 071 cocoa producers and 293 buyers. While previous research has primarily focused on small-scale farmers, this study shifts attention to the dynamics involving primary buyers—pisteurs, cooperatives, cooperative delegates, and purchasing clerks—and their interactions with producers. Our findings reveal that the producer-cooperative relationship can be considered the strongest among various buyer types, characterized by long-term contracts and high trust levels, particularly during weighing and pricing of cocoa. In contrast, pisteurs and purchasing clerks maintain more flexible yet less stable relationships, with competition driven by service provision rather than price due to government-set farmgate prices. Despite 83% of producers striving to improve cocoa quality, there is a lack of monetary incentives at the farm level. Approx. 97% of buyers report that quality does not influence pricing. As the EU Due Diligence Regulation and EU Deforestation Regulation are put in place, buyers will play a more important role in formalizing the cocoa value chain and enhancing its transparency. Their role could significantly influence the implementation of traceability and legal compliance, aligning local practices with global standards and fostering more economically sustainable and equitable trade in the cocoa industry. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:eapoaf:202511-1 |
| By: | McCluskey, Jill J.; Mittelhammer, Ron C.; Okhunjanov, Botir |
| Abstract: | For U.S. cult wines, Okhunjanov, McCluskey, and Mittelhammer (2025) provide evidence that secondary market prices are higher than corresponding release prices. They also present a theory in which a firm may choose to price its product below the market equilibrium level in order to create a perception of scarcity, which increases demand in subsequent periods. In this paper, we extend this work by examining whether the price gap, i.e., the difference between the secondary-market price and release price, impacts subsequent secondary-market prices differently across cult and non-cult wines. For cult wines, as reported in the previous study, the lagged price gap has a positive and statistically significant relationship with the average secondary-market price for all model specifications. However, we find that non-cult wines, on average, do not underprice. Moreover, in contrast to cult wines, there is no statistically significant relationship between the lagged price gap and the average secondary market price across all model specifications for non-cult wines. |
| Keywords: | Agricultural and Food Policy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:361161 |
| By: | Anderson, Andrew; Zhang, Yuan; Thompson, Jada |
| Abstract: | Between 2022 and 2025, highly pathogenic avian influenza (HPAI) affected more than 130 million commercial table egg laying hens in the United States, causing large and sudden decreases in supply and dramatic price increases. Consumer loss aversion may amplify the welfare impact of sudden price increases. This study evaluates the impact of egg price changes on consumer welfare, comparing loss aversion models with baseline results. Using data from the USDA Food-at-Home Monthly Area Price data, we fit a standard and modified almost ideal demand system (AIDS) to estimate demand elasticities which are used in an equilibrium displacement model. Results show baseline consumer surplus losses of $xxxx and $xxxx for the 2022 and 2025 price spike, respectively. When the modified AIDS model is used, results are consistent with loss aversion, and welfare losses increase by X%. Diagnostic testing shows the loss aversion model has superior performance. This study helps policy makers better understand the true welfare impact of HPAI. |
| Keywords: | Marketing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360849 |
| By: | Dirk Bergemann (Yale University); Marek Bojko (Yale University); Paul DŸtting (Google Research); Renato Paes Leme (Google Research); Haifeng Xu (University of Chicago and Google Research); Song Zuo (Google Research) |
| Abstract: | We study mechanism design in environments where agents have private preferences and private information about a common payoff-relevant state. In such settings with multi-dimensional types, standard mechanisms fail to implement efficient allocations. We address this limitation by proposing data-driven mechanisms that condition transfers on additional post-allocation information, modeled as an estimator of the payoff-relevant state. Our mechanisms extend the classic Vickrey-Clarke-Groves framework. We show they achieve exact implementation in posterior equilibrium when the state is fully revealed or utilities are affine in an unbiased estimator. With a consistent estimator, they achieve approximate implementation that converges to exact implementation as the estimator converges, and we provide bounds on the convergence rate. We demonstrate applications to digital advertising auctions and AI shopping assistants, where user engagement naturally reveals relevant information, and to procurement auctions with consumer spot markets, where additional information arises from a pricing game played by the same agents. |
| Date: | 2025–12–23 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2418r2 |
| By: | Ayres, Andrew B.; Bruno, Ellen M. |
| Abstract: | Concerns about ownership consolidation and sectoral reallocation resulting from the privatization and trade of water are predominant barriers that inhibit the adoption of water markets. However, systematic empirical evaluation of these processes is lacking. We study trends in ownership shares and trading behavior in one of the world’s largest and most liquid groundwater markets, located in California’s Mojave Desert. Adoption of volumetric property rights allowed for trading to begin in the mid 1990s. Previous open-access water use and the initial allocation were both highly unequal, with the top 10% of water rights holders extracting more than half of pumpable water. We document that trading in the Mojave market over the course of 25 years mildly increased ownership consolidation and that top ownership shares were influenced by differential application of pumping ramp-down policies designed to achieve long-term sustainability. A few public water supply systems dominate the top ownership shares, but a test for market power finds no evidence of anti-competitive behavior. We find that those who sold out of the market completely were on average smaller agricultural users, but that they received payouts thatwere not statistically different from price received by those remaining in the market. |
| Keywords: | Production Economics |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360733 |
| By: | Matěj Bajgar (Charles University, CERGE-EI); Petr Janský (Charles University, CERGE-EI); Tijmen Tuinsma (Tax Justice Network, Charles University) |
| Abstract: | We study whether stronger tax compliance among multinationals can reduce industry concentration. Exploiting the 2016 introduction of country-by-country reporting in the European Union as a natural experiment, we implement a difference-in-differences design comparing large multinational groups subject to the reform with unaffected firms. We find that increased tax compliance led to a significant decline in multinationals’ consolidated global sales, with a one-percentage-point rise in effective tax rates associated with a 1.8% reduction in sales. Sales of the affected multinationals’ subsidiaries also declined, and industry concentration fell in sectors where top firms were subject to the reform. The results suggest that curbing profit-shifting can reduce the competitive advantage of large multinationals and, consequently, industry concentration. |
| Keywords: | tax compliance; tax avoidance; multinational; corporate tax; effective tax rate; industry concentration; European Union |
| JEL: | F23 H26 L11 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:038 |
| By: | Milena Wittwer; Jason Allen |
| Abstract: | We explore how traders' equity capitalization influences asset prices in a framework that accounts for market power. In our model, traders with capital constraints engage in transactions in an imperfectly competitive market. We demonstrate that looser capital constraints elevate both asset prices and price impact, the latter diminishing market liquidity. Using Canadian Treasury auction data, we illustrate how to apply our model to quantify these effects. We estimate the shadow costs of capital constraints by leveraging a temporary policy exemption during 2020-2021. We show that while these constraints are only infrequently binding, their relative impact when activated can be sizable. |
| JEL: | D40 D44 G12 G18 G20 L10 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34645 |
| By: | Atsushi KAWAKAMI; Yasuhiro KIUCHI; Tsutomu MIYAGAWA |
| Abstract: | Product diversification is an important issue in management science and industrial organization. Many studies have argued that product diversification is related to the scale of headquarters, and productivity studies find that multi-product firms have higher productivity than single-product firms. Our study examines the role of headquarters in product diversification using the Business Survey of Japanese Business Structure and Activities (BSJBSA). We focus not only on the scale of headquarters but also on their efficiency, which varies across industries. In manufacturing sectors such as electric appliance equipment, electric measuring instruments, and computer industries, many firms have highly efficient headquarters. Our empirical results show that headquarters efficiency contributes to product diversification in firms with higher TFP. Although increasing headquarters scale induces product diversification, its effect becomes negative once it exceeds a certain level. Our findings imply that government support for product innovation or diversification should consider not only the growth of new products but also the capacity and efficiency of headquarters. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rdpsjp:25031 |
| By: | Hamilton, Stephen; Ouvrard, Benjamin |
| Abstract: | Growing global concern on the link between international trade of agricultural products and deforestation in developing countries is underscored by EU deforestation regulations in 2024 that prominently include agricultural products such as cocoa, coffee, and oilseed products that are commonly sold as fair trade . We consider the potential for a fair pricing standard to cause structural excess farm supply conditions that can lead to food waste and unnecessary land development. We demonstrate that fair pricing decouples farm supply from the retailer’s optimization problem, resulting in revenue maximizing behavior in the consumer market. This decoupling of cost from profit can cause the agricultural product market to be structurally oversupplied even for small increments in pricing fairness. We confirm these results in a laboratory experiment that endogenizes the fair pricing standard as an equilibrium outcome of private politics between a retailer and eco-certifier. Our experiment generates excess supply that is an order of magnitude larger, in equilibrium, when retailers accept the fair pricing demands of eco-certifiers than when they reject them prior to setting prices. |
| Keywords: | Agricultural and Food Policy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360647 |
| By: | Gafarov, Bulat; Gong, Tengda; Hilscher, Jens |
| Abstract: | Fresh produce is the largest category of organic food sales in the U.S. This paper studies the relative price dynamics of organic versus conventional produce from 2006 to 2023. Using retail scanner data, we find that the revenue-weighted average price of organic produce declined relative to conventional produce across major grocery markets beginning in 2017, with the exception of a brief uptick following the onset of COVID-19. Prior to 2017, the relative price exhibited substantial fluctuations without a clear trend. Our analyses show that macroeconomic and market factors—real interest rate, housing prices, unemployment, product supply and variety as well as retailer concentration—account for a substantial share of this variation, especially the post-2016 downward trend. In addition, weather conditions in major fruit- and vegetable-producing states—precipitation and temperature—contribute significantly to short-term price fluctuations and place upward pressure on the relative price. |
| Keywords: | Consumer/Household Economics |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360596 |
| By: | Cho, Sung Ick |
| Abstract: | Applying the current regulatory framework for abuse of superior bargaining position to abusive conduct (gapjil in Korean) by digital platforms presents two key challenges: identifying harmed parties (victims) and incorporating efficiency considerations. Requiring the identification of each harmed party imposes significant procedural burdens in handling platform abuse cases and may be inadequate to remedy actual harm. In addition, given the intermediary nature of platform services, unfair trading practices may yield direct benefits for other user groups besides victims. Therefore, it is necessary to improve the relevant systems to reduce the burden of identifying victims and to examine possibilities for efficiency gains. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kdifoc:334582 |
| By: | Zaccaria, Niccolò (Tilburg University, Center For Economic Research); Suetens, Sigrid (Tilburg University, Center For Economic Research); Uras, Burak (Tilburg University, Center For Economic Research) |
| Keywords: | Price stickiness; strategic complementarity; controlled experiments; beliefs |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tiu:tiucen:00f43201-caf3-4ee0-be17-1784b2634749 |