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on Industrial Competition |
| By: | Ryo Masuyama (Kushiro Public University of Economics and Kobe University) |
| Abstract: | This study evaluates personalized pricing in supply chain competition. We consider two supply chains, each comprising an upstream firm with Corporate Social Responsibility (CSR) and a downstream firm investing in quality. A downstream firm's quality investment has two effects: it raises its own consumers' utility and induces the rival downstream firm to lower its price, consequently benefiting the rival's consumers. As personalized pricing is exploitative, the former effect is entirely captured. First, we find that under personalized pricing, a downstream firm's investment benefits only the rival's consumers. In response, the upstream firm with CSR sets a higher input price to expand the rival's market share and increase consumer surplus, which weakens downstream investment incentives and moderates quality competition. Second, we find that personalized pricing may harm consumers while remaining profitable for downstream firms. |
| Keywords: | personalized pricingï¼› uniform pricingï¼› Corporate Social Responsibilityï¼› quality investmentï¼› supply chain management |
| JEL: | D43 L10 L13 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:koe:wpaper:2607 |
| By: | Bardey, David |
| Abstract: | This paper studies competition between television channels in a two-sided market with asymmetric firms. Motivated by a competition case in Colombia, we consider an oligopoly with three channels—two large and one small—that compete for viewers and advertisers. Advertising affects viewers both directly and indirectly through content quality, which is endogenously determined by the share of revenues that channels reinvest rather than distribute to shareholders. We first characterise the equilibrium of the subgame between viewers and advertisers and derive comparative statics linking audience levels to prices and payout policies. We then analyse the equilibrium of the game between channels, which jointly choose advertising prices and payout rates. While equilibrium prices are characterised implicitly, the model delivers closed-form solutions for payout decisions. Our main result is that asymmetries in audience size translate into asymmetric competitive pressure on the advertising side, which weakens the smaller channel. This effect is amplified when advertisers are restricted to single-homing, as in the presence of exclusivity clauses. By concentrating advertising demand on dominant channels, exclusivity reduces the smaller channel’s revenues and its incentives to invest in content quality, thereby limiting its ability to compete. These findings provide a novel mechanism through which exclusivity can generate exclusionary effects in two-sided media markets by affecting both demand allocation and endogenous investment decisions. We find that exclusivity reduces social welfare, mainly due to a decline in advertisers’ surplus that is not offset by improvements on the viewers’ side. |
| Keywords: | Two-sided markets; free-TV; ad-financed business model; competitive bottleneck; exclusivity contracts |
| JEL: | D43 L11 L13 L82 L86 M37 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131679 |
| By: | David Wasser |
| Abstract: | The recent literature on the role of labor market power has highlighted the importance of labor market concentration, a proxy for market power, in wage determination. The most commonly used measure of labor market concentration used in this literature is the Herfindahl-Hirschmann Index (HHI). This technical note discusses the construction of HHIs using Longitudinal Employer-Household Dynamics (LEHD) and Longitudinal Business Database (LBD) data and the relative strengths of each source. |
| Keywords: | LBD, LEHD ECF |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cen:tnotes:26-09 |
| By: | Juan Sebastián Ivars (University of Balearic Islands) |
| Abstract: | This paper investigates how market competition shapes the design and provision of incentive contracts for managers. We study a moral hazard setting where two principals each employ a risk neutral agent (manager). Each agent makes a decision on effort leading stochastically to an outcome. These outcomes are observable for each principal and used to design incentives based on their joint realizations. We isolate the effect of market competition in two channels: market information and market structure. First, market information captures the correlation between the outcomes generated by the agents. Second, market structure indicates the profits that each principal obtains from a given realization of agents’ outcomes. As a result, the incentive schemes that are optimal from an informational perspective need not be used in equilibrium when competition reduces the returns to effort. This framework provides a unified explanation for variation in incentive design across competitive environments and clarifies how competition affects managerial discipline through the profitability of incentive provision rather than through the design of performance measures. |
| Keywords: | Moral Hazard, Principal-Agent, Competition, Managerial Incentives |
| JEL: | D21 D43 D86 M12 L13 J33 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:392 |
| By: | Jolian McHardy (School of Economics, University of Sheffield, Sheffield S10 2TU, UK) |
| Abstract: | Network oligopolies with sequential or multi-part consumption face double marginalisation across complementary components, motivating constraints on inter-firm pricing. Building on regulatory provisions permitting coordinated pricing for composite or multi-firm products, we study pricing rules that benchmark cross-firm prices against firms’ standalone or bundled prices. Coordination is not inherently welfare improving: discount-based benchmarks can generate equilibrium surcharges. By contrast, a no-discount rule, NDB, ties cross-firm pricing to own-firm bundles, internalising complementarities without propagating markups and raising welfare across a wide range of market sizes and demand parameterisations. However, private and social incentives need not align, so welfare-improving coordination need not arise endogenously. Whilst these results apply broadly to coordinated pricing in network industries, a calibration to the UK bus market illustrates quantitative relevance. NDB delivers substantial consumer-surplus gains (around 20%) and increases ridership, generating external benefits comparable in magnitude to current operating subsidies, up to £0.5 billion p.a. |
| Keywords: | network pricing; coordination regimes; complementary components; pricing benchmarks; competition policy; network industries. |
| JEL: | L13 L51 D43 D62 R48 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:shf:wpaper:2026003 |
| By: | Jullien, Bruno; Bedre Defolie, Özlem; Biglaiser, Gary |
| Abstract: | We study a startup’s choice of its “direction of innovation, ” how well the technology fits alternative acquirers, and the effects on acquisition outcomes and market dominance. Two horizontally differentiated firms bid to acquire the innovation and then compete in the product market. Firms differ in initial quality stock and in “absorption capabilities, ” how effectively the acquired innovation is integrated into their stock. The innovator designs the innovation to intensify bidding by putting firms on a more equal footing, thereby favoring the initially lower-quality firm. As a result, “increasing dominance” is less likely than under exogenous fit. The winner of the innovation is driven primarily by relative absorption capabilities rather than initial quality: the f irm with higher absorption capability is more likely to win. The equilibrium innovation direction minimizes industry profit and consumer surplus. In a two-period model, decreasing dominance becomes more likely when the low-quality firm has stronger absorption capabilities. |
| Date: | 2026–04–20 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131684 |
| By: | David N. Wasser |
| Abstract: | I investigate whether the effects of UI extensions are different for workers exposed to higher levels of local labor market concentration, a potential source of employer market power. I exploit measurement error in state unemployment rates that led to quasi-random assignment of UI durations in the U.S. during the Great Recession. Using matched employer-employee data from the Longitudinal Employer-Household Dynamics program, I find that UI extensions lengthen nonemployment durations by one week and cause economically meaningful but not statistically significant increases in earnings. The UI-earnings effect is significantly lower at higher levels of concentration, while there is no difference in the UI-duration effect. The lower UI-earnings effect is driven by the extremes of the distribution of concentration. My results suggest that match improvements from UI are attenuated at higher levels of concentration. |
| Keywords: | Unemployment insurance, labor market concentration, local labor markets, earnings, nonemployment duration |
| JEL: | J31 J42 J65 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-24 |
| By: | Paul S. Koh |
| Abstract: | This paper studies cost pass-through in differentiated-product oligopoly. I derive a general representation of the pass-through matrix that decomposes equilibrium price responses into the roles of demand curvature, substitution, and multiproduct ownership. This extends the classic insight in single-product monopoly to multiproduct settings in which diversion and ownership also matter. I then develop a tractable first-order approximation that yields a sufficient-statistics characterization for empirically relevant demand systems. Finally, I characterize the small-share limit and show how common demand specifications impose tail restrictions that shape pass-through. The results provide a practical framework for applied work on tax incidence, merger analysis, and related questions in imperfect competition. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.21423 |
| By: | Philipp Denter |
| Abstract: | Motivated by Germany's April 2026 fuel price regulation, in this note I study a two-period pricing problem with demand uncertainty and a rule that prohibits more than one price increase during the day. Under flexible pricing, the firm chooses the static monopoly price in each period. Under the regulation, by contrast, it may price strategically high in period 1 to preserve flexibility in period 2. I show that the regulation weakly raises expected average prices. The increase is strict when future high demand is sufficiently likely and the gap between high and low demand is large; otherwise, expected average prices are unchanged. Consumer surplus rises when expected prices do not, and decreases otherwise. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.17576 |
| By: | Kevin Michael Frick |
| Abstract: | Artificial intelligence algorithms are increasingly used by firms to set prices. Previous research shows that they can exhibit collusive behaviour, but how quickly they can do so has so far remained an open question. I show that a modern deep reinforcement learning model deployed to price goods in a repeated oligopolistic competition game with continuous prices converges to a collusive outcome in an amount of time that matches empirical observations, under reasonable assumptions on the length of a time step. This model shows cooperative behaviour supported by reward-punishment schemes that discourage deviations. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.15825 |
| By: | Suzhen Liang (Rennes SB - Rennes School of Business); Adilson Borges (Rennes SB - Rennes School of Business); Junsong Bian (Rennes SB - Rennes School of Business); Guanghui Zhou (UCAS - University of Chinese Academy of Sciences [Beijing] - CAS - Chinese Academy of Sciences [Beijing]) |
| Abstract: | This study analyzes vertical channel integration versus decentralization with products of different environmental quality under supply chain competition. We first examine the strategic impact of different channel structures on environmental quality, firms' profits, and welfare. Specifically, we analyze and compare different channel structures: no integration (decentralization), ordinary product channel integration, green product channel integration, and full channel integration. It is found that more channel integration will cause more intense competition in terms of environmental quality decisions between the manufacturers and thus lower profits. Therefore, the manufacturers always prefer decentralization over integration in equilibrium, which also constitutes a win-win distribution channel strategy compared to integration. Moreover, compared to vertical decentralization, channel integration does not necessarily increase the products' environmental quality in the market. Furthermore, we include two practical applications of the main model to study the interaction between channel strategies and production emissions with common emission regulation policies in practice: emission tax and emission reduction subsidy, as well as generalize the main model to examine multiple extensions including different consumer density, different efficiencies, sequential market competition, balanced objectives, crossselling, and partial market coverage. |
| Keywords: | Green products, Channel competition and integration, Production emissions, Environmental quality, Supply chain management Environmental |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05582790 |
| By: | Mark Meiselbach; Matthew Eisenberg |
| Abstract: | This project investigated two potential drivers of diminishing generosity in employer-sponsored insurance markets. Using the 2002-2019 Medical Expenditure Panel Survey – Insurance/Employer Component (MEPS-IC), we evaluated how (1) labor market concentration and (2) health care costs affected the provision of employer-sponsored insurance. |
| Keywords: | LBD, MEPS-IC |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cen:tnotes:26-07 |
| By: | Duha T. Altindag; Nabamita Dutta; John M. Nunley; R. Alan Seals; Adam Stivers |
| Abstract: | Between 2005 and 2019, U.S. business applications rose 40 percent while conversion to employer firms fell by nearly half. We study whether boundary redrawing helps explain this pattern. Structured routine-cognitive work can be governed through deliverables and thinner buyer and supplier interfaces. When such work remains place-bound, outsourcing creates demand for domestic specialist suppliers. Across 722 commuting zones, a one percentage-point higher baseline routine employment share raises applications by 27.8 per 100, 000 residents. Realized entry concentrates in micro-establishments, with no startup quality gains. Contract and industry evidence point to local supplier entry, not routine-manual displacement. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.19987 |
| By: | Hutschenreiter, Dennis |
| Abstract: | Firms increasingly rely on markets for technology to acquire innovations developed outside their boundaries, yet acquiring intellectual property rights alone often does not guarantee successful implementation. Many technologies depend on tacit know- how that must be supplied by the provider after the transaction is completed. This paper examines whether common ownership between a technology provider and a potential adopter mitigates this implementation problem. I develop a model in which overlapping institutional investors cause the provider to partially internalize the adopter's gains from successful implementation, strengthening incentives to transfer tacit know-how. This mechanism operates only when know-how is unverifiable - absent this friction, common ownership leaves matching and outcomes unchanged. Under moral hazard, the model predicts that common ownership increases the likelihood of technology transfer to a given adopter, that this effect is stronger when tacit know-how is more important, and that common ownership improves post-transfer outcomes conditional on adoption. I test these predictions using U.S. patent reassignments between publicly traded firms. Using within-deal variation across competing potential adopters and plausibly exogenous variation from passive index-fund holdings, I show that common ownership increases the likelihood that a firm acquires a technology, particularly when the transferred bundle is more tacit. Common ownership predicts stronger subsequent innovation and higher future firm value, especially when ownership overlap is concentrated among investors with stronger incentives to monitor the provider. These findings show how ownership structure shapes interfirm technology transfer by affecting not only who acquires a technology, but also how much value is created. |
| Keywords: | common ownership, institutional investors, moral hazard, patent reassignments |
| JEL: | C78 D82 G23 L24 O34 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:340107 |
| By: | Schulz, Wolfgang H. |
| Abstract: | Dieses Arbeitspapier analysiert die mikroökonomischen Konsequenzen der Open-Source-Freigabe des autonomen Fahrstacks von NVIDIA (Drive AV, Halos, CUDA-X AV) für die deutsche Automobilindustrie. Die Freigabe wird in drei theoretische Schichten eingebettet: (i) eine Plattformstrategie, die indirekte Netzwerkeffekte und die Kippdynamik zweiseitiger Märkte nutzt, (ii) eine Anwendung von Spolskys „commoditize your complements"-Strategie, bei der NVIDIA die Softwareschicht verschenkt, um die Rente auf der komplementären Hardwareschicht (GPU, DRIVE SoC) zu maximieren, und (iii) ein ökonomisches Regime fallender Grenzkosten durch AI-Factory-Effekte. Auf Basis einer erweiterten Kostenfunktion wird gezeigt, dass das gewinnmaximierende Cournot-Ergebnis bei fallenden Grenzkosten durch höheren Output und niedrigere Preise gekennzeichnet ist als das klassische natürliche Monopol, bei zugleich stärkerer Marktkonzentration. Das Papier schlägt eine Gerschenkron-inspirierte Latecomer-Lösung vor: eine zeitlich begrenzte Adoptionsphase als „Rent-Seeking-Brücke zur Unabhängigkeit", flankiert von europäischen Dateninfrastrukturen (GAIA-X, moveID), regulatorischen Leitplanken gegen Plattform-Lock-in und einer Investitionsstrategie in Richtung souveräner KI-Mobilitätsinfrastruktur. |
| Abstract: | This paper analyses the microeconomic consequences of NVIDIA's open-source release of its autonomous driving stack (Drive AV, Halos, CUDA-X AV) for the German automotive industry. The release is embedded in three theoretical layers: (i) a platform strategy leveraging indirect network effects and the tipping dynamics of two-sided markets, (ii) a textbook application of Spolsky's "commoditize your complements" strategy, whereby NVIDIA gives away the software layer to maximise the rent extracted on the complementary hardware layer (GPU, DRIVE SoC), and (iii) an economic regime of falling marginal costs driven by AI-factory effects. Based on an extended cost function, the profit-maximising Cournot outcome under falling marginal costs is characterised by higher output and lower prices than the classical natural monopoly, while market concentration is even more pronounced. The paper proposes a Gerschenkron-style latecomer resolution of the dilemma: a time-limited adoption phase as a "rent-seeking bridge to independence", flanked by European data infrastructures (GAIA-X, moveID), regulatory guardrails against platform lock-in, and an investment strategy toward sovereign AI mobility infrastructure |
| Keywords: | Autonomes Fahren, Open Source, Plattformökonomie, AI-Factory, Deutsche Automobilindustrie, Gerschenkron, NVIDIA, Institutionelle Rollenmodelle |
| JEL: | L13 L62 L86 O33 O38 D42 F14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:340040 |
| By: | Joshua S. Gans |
| Abstract: | When should a founder act on a strong belief about an opportunity, knowing that rivals assessing the same opportunity may hold very different views? This paper studies entry decisions when entrepreneurs hold heterogeneous beliefs about an opportunity's value and each founder knows only the range of views rivals might hold. In equilibrium, a founder enters only when their conviction exceeds a threshold set by anticipated rival optimism. The relationship between belief dispersion and entry is surprisingly rich: depending on the founder's conviction and the cost of entry, there may be no level of dispersion that supports entry, all levels may support it, or only a middle range may, so that an outside observer may see the most entry at intermediate levels of belief dispersion. When founders can delay, high dispersion that deters immediate entry need not prevent it altogether: the absence of rival action gradually reveals that competitors are less bullish than feared. Finally, not all conviction-building is equal. Validation that only the founder sees strengthens entry incentives fully, whereas validation visible to the whole market partly backfires by encouraging rivals. The paper formalises the intuition that entrepreneurial value comes not from optimism alone but from optimism that the founder anticipates rivals will not share, and derives predictions linking belief dispersion to entry patterns. |
| JEL: | D81 D83 L13 L21 O36 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35091 |