|
on Industrial Competition |
| By: | OECD |
| Abstract: | Competition rules governing information sharing must balance two primary risks: permissive rules may facilitate tacit collusion or explicit cartel conduct, while overly restrictive frameworks can chill legitimate collaboration and create market inefficiencies. This paper reviews how different forms of information exchange affect firm incentives and market outcomes, drawing on recent economic literature. It also examines how competition authorities across OECD jurisdictions have approached the issue in practice, including through enforcement, case law and guidance. The paper aims to clarify the main factors that shape competitive risk and how those factors are reflected in current assessment and enforcement. |
| Keywords: | antitrust, cartels, collusion, competition, information exchange, information sharing |
| JEL: | D21 D43 D8 K21 L13 L44 C7 |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:335-en |
| By: | Celso Brunetti; Jeffrey H. Harris; Ioannis Spyridopoulos |
| Abstract: | No, in the mortgage market. Using confidential micro-level data combining mortgage contracts with credit and repayment records for 44 million loans spanning 5, 000 bank mergers over nearly three decades, we find no changes to mortgage rates, approval rates, or delinquency rates. Local mortgage markets remain remarkably competitive despite consolidation, averaging over 100 active lenders in each county every post-merger quarter. Our findings reveal significant merger selection motives: large acquiring banks target community banks with relationship-intensive, portfolio-lending business models, whereas community banks appear to merge together to gain scale and compete. Overall, our study challenges the view that bank mergers increase market concentration and create market power that harms household borrowers. |
| Keywords: | bank mergers; banking consolidation; mortgage lending; market power; competition; community banking; consumer welfare; credit access |
| Date: | 2026–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103337 |
| By: | Bingyao Liu; Yao Luo |
| Abstract: | Capacity constraints are central to oligopoly competition in many industries, yet existing multiproduct Bertrand theory does not characterize equilibrium when capacity binds across markets. We establish existence and uniqueness of Bertrand–Nash equilibrium in a multimarket, multiproduct oligopoly under multinomial logit demand, with both linear and convex costs. Capacity creates cross-market spillovers: pricing in one market affects the shadow value of capacity in others. Methodologically, we extend the aggregative-games framework to a nested fixed-point structure separating across-market capacity allocation from within-market pricing, using tools from nonsmooth analysis to handle kinks from binding constraints. The framework yields new insights for merger analysis: binding capacity dampens merger-induced price increases through shadow-cost relief, while post-merger reallocation of scarce capacity can raise consumer surplus. However, the merged firm's privately optimal reallocation generally differs from the social optimum, creating a role for merger remedies. |
| Keywords: | Differentiated Products; Capacity Constraints; Mergers; Aggregative Games; Cross-Market Spillovers; Equilibrium Uniqueness |
| JEL: | L13 D24 |
| Date: | 2026–05–22 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-821 |
| By: | Filip Premik; Paul Thambar; Chengsi Wang; Frank Yao; Dan Yu |
| Abstract: | Co-operatives are different from standard profit-maximizing firms. They instead maximize their members’ benefits. In this report, we examine their role across three key sectors in Australia: Retail, Care, and Farming. We lay out new economic theories about this less common type of firm organization. We discuss the implications of the existence and development of co-operatives on entry, competition, inclusion, and consumer welfare. Further discussion is devoted to evaluating policies regarding co-operatives. |
| Keywords: | Co-operatives, Ownership structure, Market entry, Regional and remote markets, Competition policy |
| JEL: | L31 L13 D21 |
| Date: | 2026–02–19 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:paper_1773636919735_919 |
| By: | Yuhang Wu; Assaf Zeevi |
| Abstract: | On a platform with many sellers, should a pricing algorithm explicitly model competitors' prices when learning demand? Classical learning arguments suggest an affirmative answer: ignoring competitors induces model misspecification and inefficiency. In contrast, recent work on algorithmic collusion suggests that strategic obliviousness -- deliberately ignoring competitor prices -- may facilitate collusive outcomes and improve profits. We study this modeling choice in a stylized competitive market with unknown noisy demand, in which multiple sellers repeatedly set prices and estimate demand via iterated least squares, and either incorporate competitors' prices into their demand models (informed) or ignore them (oblivious). We first show that, relative to a monopolist, an oblivious seller in a competitive market must explore more aggressively to compensate for the loss of dynamic competitor information. Building on this insight, we characterize market dynamics when all sellers are oblivious and show that prices converge to the competitive outcome under sufficient exploration, while a continuum of pseudo-equilibria arises when exploration decays. Analyzing the resulting price trajectories, we uncover an excursion phenomenon that gives rise to transient collusive patterns that dissipate as learning progresses. In markets with both oblivious and informed sellers, the informed strictly out-earn the oblivious. Read as a strategy game, the modeling choice has a unique Nash equilibrium: the all-informed market, in which prices converge to the competitive outcome efficiently. Overall, our results indicate that collusive patterns are not robust and are not sustained by oblivious modeling; therefore, incorporating competitor information, together with sufficient price exploration, remains a reliable strategy for sellers in competitive markets. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.05363 |
| By: | Noriaki Matsushima (Osaka School of International Public Policy, the University of Osaka) |
| Abstract: | This paper develops a model of two monopoly markets linked by a common consumer budget constraint. A data-rich firm can set personalized prices in one market, whereas a traditional firm in the other must charge a uniform price. Personalized pricing can expand demand in the data-rich firm's market, but because purchases come from a shared budget, it shrinks the residual demand facing the traditional firm and reduces its profit. When budgets are sufficiently tight, this adjacent-market distortion dominates same-market demand expansion, reducing total surplus. Thus, favorable same-market evidence alone is insufficient to support a benign assessment. |
| Keywords: | personalized pricing, competition law, cross-market effects, consumer budgets |
| JEL: | L13 D43 L41 K21 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:osp:wpaper:26e006 |
| By: | OECD |
| Abstract: | Digital markets have profoundly transformed the way consumers interact with businesses, offering new opportunities for innovative goods and services, greater choice, and enhanced convenience. These evolving dynamics create new challenges for both competition and consumer protection authorities, as practices that impact competition may also have an effect on consumer autonomy and choice, privacy, as well as trust, and vice versa. Traditional analytical frameworks based on price, output, information and transparency often fail to capture the full competition and consumer implications of conduct in digital environments. This note examines areas where the two policy areas converge, where gaps remain and how authorities can work together to address challenges arising from digitalisation. |
| JEL: | D12 D18 K21 L13 L40 L41 |
| Date: | 2026–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:332-en |
| By: | Cremer, Helmuth; Borsenberger, Claire; Joram, Denis; Lozachmeur, Jean-Marie; Malavolti, Estelle |
| Abstract: | We study environmental policy in imperfectly competitive markets where firms differ in their objectives. Alongside standard profit-maximizing firms, we consider welfareoriented firms that partially or fully internalize environmental externalities but are subject to financial viability constraints. Wedevelop a Cournot model in which production generates emissions and firms may differ in the extent to which they account for environmental damages. We characterize market equilibria and examine the effects of environmental taxes and output subsidies on emissions, output, profits, and welfare. Our analysis shows that standard Pigouvian prescriptions are modified by the presence of market power and by the break-even constraints faced by welfare-oriented firms. While emissions taxes reduce environmental damages, they may also exacerbate underproduction and threaten the viability of socially responsible firms. Conversely, output subsidies may improve welfare despite increasing emissions. The welfare ranking of policy instruments depends critically on the interaction between environmental externalities, imperfect competition, and firms’ financial constraints. These findings suggest that environmental policy design should account not only for emissions reduction, but also for the market structure and sustainability of firms with socially oriented objectives. |
| Keywords: | Environmental policy; imperfect competition; heterogeneous firm objectives; corporate social responsibility; Pigouvian taxation; break-even constraints. |
| JEL: | H23 L13 D62 Q58 |
| Date: | 2026–05–22 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131729 |
| By: | OECD |
| Abstract: | Competition can control costs and incentivise efficiency in the healthcare sector. This paper examines how regulation interacts with competition in healthcare markets and identifies areas where competition authorities can advocate for pro-competitive regulation. It presents a framework for identifying and reviewing regulatory barriers to competition, and it discusses empirical evidence and relevant experience by competition authorities. It finds that rules such as needs based entry restrictions, or incumbents’ involvement in licensing decisions, can limit entry and reduce capacity. Similar concerns arise in professional regulation, where restrictive definitions of tasks and limited portability of licences can exacerbate workforce shortages and reduce access. The development of digital services can also be slowed down by regulatory barriers, such as the lack of interoperability between electronic records systems. Finally, pro-competitive regulation can support patients and payers by providing them with usable information. |
| Keywords: | advocacy, competition, healthcare, pro-competitive reforms, professional licensing, regulatory barriers to competition |
| JEL: | I11 I18 L11 L4 L5 L8 L44 |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:334-en |
| By: | Huang, Hanwei; Manova, Kalina Bojidarova; Perello Perez, Oscar Ignacio; Pischz, Frank |
| Abstract: | How do global production networks and market structure interact to shape the welfare effects of trade and competition policy? We develop a model with two-sided firm heterogeneity, matching frictions, and imperfect supplier competition. More productive buyers match with more suppliers, inducing tougher competition among them, lower input costs, and higher profits. Entry upstream thus benefits primarily high-productivity buyers, while lower trade or matching costs favor mid-productivity buyers. Reduced-form evidence confirms that larger French and Chilean firms import higher quantities at lower prices as more Chinese suppliers enter, and that suppliers charge diversified buyers lower markups. We estimate the model by adapting recent methods for combinatorial, discrete-choice problems. Counterfactuals reveal that the interaction of endogenous networks and markups significantly amplifies the gains from policies that facilitate supplier entry or firm matching, as well as from modern trade agreements that combine trade cost cuts with such policies. |
| Keywords: | Production networks;Matching frictions;Imperfect competition;Gains from trade;Trade;Competition policy |
| JEL: | D24 F10 F12 F14 L11 L22 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14594 |
| By: | OECD |
| Abstract: | Given the limited resources available to competition authorities, decisions around case prioritisation and prosecutorial discretion play a fundamental role in shaping the effectiveness of competition policy. This paper, supported by original survey evidence, highlights how such decisions influence the actions that competition authorities take and reflect their strategy and overall priorities. Effective case prioritisation requires striking a balance between discretion, transparency and cost-benefit based decision making. Authorities should consider developing procedures and public guidance to provide clarity and transparency to these decisions, and develop healthy case pipelines to make the exercise meaningful. |
| Keywords: | case prioritisation, competition authority effectiveness, competition enforcement, competition policy, international cooperation, market studies, prosecutorial discretion |
| JEL: | K21 L4 L40 L41 L42 L49 |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:333-en |
| By: | Giacomo Bonanno (Department of Economics, University of California Davis) |
| Abstract: | Within the context of a symmetric duopoly with linear demand and costs, we construct a parameterized family of price-setting games, where the parameter $\gamma\in[0, 2]$ measures the degree or intensity of competition; $\gamma = 0$ corresponds to collusion, a particular value of $\gamma$ between 0 and 1 corresponds to the Cournot outcome, $\gamma=1$ corresponds to the Bertrand outcome and, in general, as $\gamma$ increases the intensity of competition increases. All the games within the parameterized family share the same strategic properties. We also construct a parameterized family of quantity-setting games, where the parameter $\beta\in[0, 2]$ measures the intensity of competition; $\beta = 0$ corresponds to collusion, $\beta=1$ corresponds to the Cournot outcome and a particular value of $\beta$ between 1 and 2 corresponds to the Bertrand outcome. As $\beta$ increases, the intensity of competition increases. As an example of the potential usefulness of this approach, we show that, contrary to the view first put forward by Schumpeter (but later challenged by Arrow), the incentive to introduce a cost-reducing innovation is an increasing function of the intensity of competition (that is, an increasing function of $\gamma$ in the price-setting case and of $\beta$ in the quantity-setting case). |
| Keywords: | Cournot game, Bertrand game, price competition, quantity competition, strategic substitute, strategic complement, degree of competition |
| JEL: | C7 L0 D4 |
| Date: | 2026–05–27 |
| URL: | https://d.repec.org/n?u=RePEc:cda:wpaper:381 |
| By: | OECD |
| Abstract: | National security considerations are becoming increasingly prominent in economic policymaking, reflecting geopolitical developments, technological change and growing attention to economic security, resilience and technological capability. As these considerations extend beyond traditional defence-related domains, they are intersecting more frequently with competition enforcement across a widening range of sectors, such as energy, telecommunications and advanced technologies. This paper examines the implications for competition authorities. It develops an analytical framework to distinguish between concerns that can be assessed using established competition law tools, where they can be expressed as competition-relevant effects, and those that fall outside the analytical remit of competition authorities and require assessment by governments or specialised bodies. Drawing on cross-jurisdictional experience, the paper analyses how national security considerations arise in the assessment of competitive constraints, merger control, co-ordinated conduct, unilateral conduct and remedy design. It identifies key considerations for preserving analytical boundaries, institutional roles, legal predictability and effective enforcement in an evolving policy environment. |
| Keywords: | competition, competition policy, defence capabilities, enforcement, national security, self-reliance, sovereignty, strategic autonomy, supply chain resilience |
| JEL: | D4 D47 F5 F52 F6 H5 H56 K21 L1 L4 L5 L78 L98 F1 |
| Date: | 2026–06–02 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:336-en |
| By: | Eleftherios Filippiadis (Department of Economics, University of Macedonia, Greece) |
| Abstract: | This paper studies how the distribution of preference intensity affects product survival. Consumers may have the same average valuation of a product attribute, yet differ sharply in how concentrated that valuation is across the population. I show that this distinction matters for market selection. In a differentiated-product economy with fixed operating costs, a product survives only if it attracts enough revenue to cover its fixed cost. When the revenue contribution of consumers is convex in preference intensity, concentrating a fixed aggregate valuation among fewer high-intensity consumers raises the revenue of high-attribute products. Thus, small groups of strongly attached consumers can sustain varieties that would fail under a more diffuse distribution of moderate preferences. In a ranked-attribute benchmark, this condition has a simple interpretation: the product benefits from concentration when it is sufficiently distant from the share-weighted center of the active product range. The paper also separates private survival from welfare and aggregate impact. Applications to green products and privacy-oriented digital services show that cleaner or more privacy-protective varieties improve aggregate outcomes only when they sufficiently displace dirtier or more data-intensive alternatives. |
| Keywords: | preference concentration; product survival; behavioral heterogeneity; differentiated products; green preferences; privacy preferences. |
| JEL: | D11 D43 L11 L13 Q56 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:mcd:mcddps:2026_09 |
| By: | Hong Lee (Korea Institute for Industrial Economics and Trade) |
| Abstract: | Digitization has enabled two-sided platforms to reshape search and access in professional service markets long coordinated by incumbent associations. This paper examines the decade-long conflict between LawTalk and the Korean Bar Association and places it in comparative perspective with similar disputes in real estate, tax services, telemedicine, and mobility.<p> Building on two-sided market theory, differentiated-product competition, and recent empirical evidence from Korea’s legal-services market, the paper argues that platform entry in credence-goods markets tends to expand demand by reducing search friction and widening the product space rather than merely reallocating existing demand. The LawTalk case demonstrates how a regulatory shift, from exclusion toward coexistence, can allow for lawful intermediation while maintaining core professional norms.<p> The paper concludes that policy should govern the interface through transparency, auditability, and a clear separation between advertising and professional services, instead of categorical restrictions that reduce access without welfare gains. |
| Keywords: | digital platforms; legal services; anti-competitive behavior; competition theory; competition policy; digitization |
| JEL: | D43 D45 D47 D61 D74 D82 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kieter:022560 |
| By: | Kossi Messanh Agbekponou; Iaria Fusacchia |
| Abstract: | Global valuechainshavemadefirmboundarydecisionscentraltoperformance, yet their implicationsforexportpricesandshocktransmissionremainpoorlyunderstood. Wedevelopaframeworkinwhichverticalintegrationandproductivityjointlyshape pricing andpass-throughviacostsandmarkupsunderNash-in-Nashbargaining.Inte- gration eliminatesdoublemarginalizationbutintroducesorganizationalcostfrictions, while productivityaffectsbothcostsandorganizationalchoices, generatingacounter- intuitivesortinginwhichlow-productivityfirmsintegrateandhigh-productivityfirms outsource. UsingFrenchcustomsdatamatchedtoAMADEUSbalance-sheetinfor- mation foragri-foodfirms(2002–2017), andaninstrumental-variablestrategybasedon exogenous foreignshocks, wefindthatintegrationreducesexportpricesmainlythrough cumulativemarkupcompression, whileproductivitylowerspricesviacostsbutincreases markups throughsorting.Shocktransmissionisheterogeneous:non-integratedfirms adjust throughmarkups, integratedfirmsthroughcosts, andproductivitydampensboth channels.Pass-throughthusemergesasanequilibriumoutcomeoffirmorganization and productivity. |
| Keywords: | Global Value Chains, Vertical Integration, Bargaining Power, Pass-through, Firm Competitiveness |
| JEL: | D21 D22 D43 F12 F14 L11 L22 L23 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:rtr:wpaper:0293 |
| By: | Elias Asproudis (Swansea University, School of Social Sciences, Department of Economics, UK); Eleftherios Filippiadis (Department of Economics, University of Macedonia, Greece) |
| Abstract: | We study a perpetual entry problem in which an entrant chooses both when to enter and whether to enter through price or quantity competition against an incumbent that has already committed to quantity. The two entry modes are mutually exclusive and differ in sunk cost and discounted operating-profit coefficient. We focus on the case in which price entry is cheaper, while quantity entry is more profitable. Although price entry may then have the lower stand-alone trigger, crossing that trigger need not justify immediate entry. We provide a sufficient condition under which there exists a nonempty interval above the lower stand-alone trigger on which immediate entry in either mode is suboptimal. The entrant waits because delay preserves the option of entering later through the more profitable quantity mode. Thus, in a Cournot Bertrand environment with uncertainty and irreversibility, the choice of strategic variable is part of the real-options timing problem itself. |
| Keywords: | real options; endogenous mode choice; Cournot–Bertrand competition; entry timing; uncertainty; strategic commitment. |
| JEL: | C41 D25 D81 L13 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:mcd:mcddps:2026_08 |
| By: | Robert M. Hunt; Konstantinos Serfes; Yin Zhang |
| Abstract: | This paper develops a two-sided model of the payment card market with elastic consumer demand, merchant and network market power, ad valorem interchange fees, cardholder rewards and cash as an alternative payment method. Drawing on insights from public finance, we define a credit card tax—an endogenous wedge between consumer and merchant prices generated by interchange fees, rewards, and credit card adoption. We show how this tax affects equilibrium prices, platform profits and welfare. Our analysis yields a novel and policy-relevant result: Contrary to conventional wisdom, capping interchange fees can increase equilibrium rewards when consumer demand is relatively inelastic. This, in turn, raises credit card adoption and intensifies cross-subsidization, benefiting card users, potentially at the expense of cash users. By contrast, when demand is more elastic, fee caps reduce rewards and card usage, improving outcomes for both groups. We also characterize the conditions under which interchange fee caps enhance allocative efficiency and encourage socially desirable payment choices. Overall, the paper offers new theoretical insights into the regulation of two-sided payment markets. |
| Keywords: | credit cards; two-sided networks; merchant competition; interchange fees; regulation |
| JEL: | L13 L40 G28 E42 |
| Date: | 2026–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpwp:103315 |
| By: | Bontems, Philippe; Calmette, Marie-Françoise; Martimort, David |
| Abstract: | This paper studies access pricing in a vertically separated railway sector where the in-frastructure manager sets access charges and chooses network quality, while downstream operators choose transport services. The model characterizes the inefficiencies of unregula-ted vertical separation and then derives optimal regulation with and without public transfers. When transfers are constrained, access charges follow a Ramsey logic modified by downs-tream market power and by cross-effects among long-distance operators. Under asymmetric information, the relevant access cost is no longer the physical marginal cost but a virtual cost that incorporates the information rents of the infrastructure manager and the traffic consequences of incentive constraints. |
| Keywords: | Access pricing ; railroad regulation ; vertical separation ; infrastructure quality ; asymmetric information ; mechanism design ; information rents |
| JEL: | D82 L51 L92 L43 H21 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131798 |
| By: | Cristiana Vitale; Rosamaria Bitetti |
| Abstract: | Professional services play a central role in modern economies, both as providers of high-skilled services and as key inputs into a wide range of downstream activities. While regulation of these services is commonly justified by information asymmetries and negative externalities, concerns persist that regulatory frameworks may exceed what is necessary to protect consumers and limit negative spillovers, thereby restricting entry, limiting competition, and reducing productivity. This paper examines how six professions - lawyers, notaries, accountants, architects, civil engineers, and real estate agents - are regulated across fifty countries, drawing on the OECD Product Market Regulation (PMR) database and indicators. It documents substantial cross-country and cross-profession variation in entry and conduct rules, with licensing remaining the dominant regulatory model and restrictive entry requirements more prevalent than conduct restrictions. The analysis shows that many regulatory approaches appear poorly aligned with the actual risks posed by professional activities and that demand-side tools remain underdeveloped. The findings suggest scope for reform through the recalibration of entry requirements, reduction in conduct restrictions, and stronger consumer-facing mechanisms. Aligning regulation more closely with market failures could expand access to professional services, support geographic and social mobility, increase competition, and generate productivity gains across the wider economy. |
| Keywords: | competition, licencing, occupational regulation, PMR indicators, professional services, regulation |
| JEL: | K20 L40 L84 |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1865-en |