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on Industrial Competition |
| By: | She, Huixin |
| Abstract: | Digital platforms display sellers' prices and collect ad valorem commissions. We study how these roles shape sellers' disclosure choices and a platform's incentives to regulate them. Sellers offer a base good and an avoidable add-on, which some consumers overlook when choosing sellers. Because commissions apply to the base good but not off-platform add-ons, add-on profit is passed through more than one-for-one into lower base-good prices, creating a competition multiplier. Hidden add-on prices can reduce efficiency while raising consumer surplus through this mechanism. A platform regulates disclosure to protect commission revenue, while mandatory transparency can improve efficiency but reduce consumer surplus. |
| Keywords: | Platform governance; add-on pricing; consumer myopia; market transparency;; ad-valorem commissions; shrouding, information disclosure |
| JEL: | D11 D21 D82 L12 L15 L81 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:132263 |
| By: | Khachatryan, Rubik; Lukyanov, Georgy |
| Abstract: | This paper studies how learning about an incumbent affects the scope of entry when competitive responses use resources shared across markets. An entrant chooses whether to launch in neither, one, or both of two markets. Entry into the second market reduces the incumbent’s cost-reducing response in the first and can make one-market entry unattractive. The entrant learns about the incumbent’s capability from a record of its response to an earlier rival. More frequent publication encourages a less capable incumbent to imitate a more capable one. An observed response then becomes less informative, and entry after that record expands. We compare publication of conduct with a public audit of capability. For an open set of parameters with uniform setup costs, full publication maximizes total surplus within the specified policy class when publication costs are low. Removing the interaction between response costs across markets reverses this choice, while preserving all early and singleton-market payoffs. A capability audit is dominated in both economies. Expected entry scope is constant across the considered policies within each technology, although productive investment and the allocation of entry change. |
| Keywords: | reputation; entry scope; information disclosure; competitive response; multimarket competition |
| JEL: | D82 L13 L15 |
| Date: | 2026–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:132292 |
| By: | Martin Bichler; Philip Hierhager; Kassian K\"ock; Fabian Pieroth |
| Abstract: | Repeated Bertrand competition is a stringent benchmark for algorithmic pricing: in homogeneous-goods markets, standard learning procedures typically select the stage-game Nash outcome with prices near marginal cost. We show that LLM pricing agents can escape this benchmark, depending on deployment decisions. LLMs outperform standard online learners through faster adaptation, but this advantage largely disappears against full-information learners. An extracted surrogate algorithm illustrates how LLMs in specific deployments profit from regularly undercutting slower learners. Agents that post one price every period from raw market histories that include rival prices can sustain supracompetitive regimes in self-play. Agents that periodically emit probability distributions from summarized histories of their own profits instead move toward the competitive region in self-play. Markets mixing these interfaces can generate dynamic regimes in which LLMs establish a high-price anchor and regularly undercut it to capture demand. These regimes can keep both competitors' prices above marginal cost. Deployment choices shape these outcomes, shifting the focus from stationary equilibria to dynamic pricing regimes. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.21711 |
| By: | Aris Avgousti (Central Bank of Cyprus); Stephanie Michael (Central Bank of Cyprus) |
| Abstract: | The Working Paper is available in Greek only. |
| Keywords: | Banking competition; Market power; Interest rate pass-through; Monetary policy transmission; Euro area banking sector; Cyprus banking sector |
| JEL: | G21 L11 D43 E52 E43 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cyb:wpaper:2026-1 |
| By: | Hexiao Liu; Lijian Lu; Mingzheng Wang |
| Abstract: | Digital marketplaces increasingly earn revenue from transaction commissions and seller-facing data services. Sellers may purchase data to increase revenue or avoid competing with an informed rival. We examine how consumer disclosure rights shape these motives and the platform's incentive to provide data. We develop a game-theoretic model of a commissioned platform, two differentiated sellers, and privacy-sensitive consumers. Data generates value through bilateral sales-revenue gains and competition threats arising from asymmetric access. Under mandatory collection, the platform can monetize defensive adoption, even when bilateral personalization reduces seller revenue. Under voluntary disclosure, anonymous purchasing and strictly positive privacy costs make unilateral disclosure unattractive in the baseline. Exclusive access thus yields no usable information, restores sellers' no-data rejection payoffs, and eliminates defensive fees. Profitable provision therefore requires nonnegative bilateral revenue gains. Under full fee extraction, sellers retain their no-data net profits. This revenue alignment does not guarantee welfare gains: additional transactions may benefit consumers, whereas segmentation in an already covered market can raise anonymous prices and reduce welfare. Capping anonymous offers at their no-data benchmark protects individual consumers and limits positive-mass provision to the transaction-creation region. Extensions consider access choice, heterogeneous privacy costs, imperfect identification, and limited contractual credibility. Platforms should evaluate data services based on both bilateral-use and seller-rejection outcomes, and sellers should distinguish revenue-enhancing from defensive investments. Regulators should distinguish equal-access rules from effective consumer control and monitor pricing in anonymous channels. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.22864 |
| By: | Paolo Bertoletti |
| Abstract: | Alternative market allocations are compared in a linear setting with product differentiation. With two commodities, assuming that both Ramsey and Cournot quantities are positive, the Cournotian quantities are shown to be not larger than their Bertrand counterparts, regardless of product substitutability. It also turns out that the case of a Bertrand price exceeding its Cournotian counterpart (which requires product complementarity) and the existence of a "subordinate" commodity receiving a negative price-cost margin à la Ramsey are equivalent conditions. |
| Keywords: | Bertrand vs Cournot; Ramsey pricing; subordinate commodity; product differentiation |
| JEL: | D11 D43 L13 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:mib:wpaper:582 |
| By: | Rey, Patrick; Iossa, Elisabetta |
| Abstract: | We study how the precision of merger review a¤ects rmsincentives to generate merger-specific efficiencies. Before the review, merging parties can invest in a project combining complementary assets; the project can be implemented only if the merger is approved. The merger control authority observes a noisy signal about these efficiencies and approves if the evidence satises a consumer-surplus standard. In a binary-investment benchmark with exogenous signal threshold, greater signal precision fosters investment incentives. The same holds locally with continuous investment and holds as well with Bayesian approval. Better information can therefore strengthen, rather than weaken, incentives to generate merger efficiencies. |
| Keywords: | merger control; investment; innovation; e¢ ciencies; information; antitrust |
| JEL: | L13 L41 O31 D82 |
| Date: | 2026–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:132272 |
| By: | Durrmeyer, Isis; Fournel, Jean-François; Samano, Mario |
| Abstract: | Grocery loyalty programs record purchase histories that retailers do not use to personalize prices. We measure how much they forgo with a structural model of demand and pricing in which a Bayesian seller learns preferences from past purchases and personalizes prices. Profits rise by 7.1% with one-year histories, capturing two thirds of the gains under perfect knowledge of preferences. Most consumers (84.1%) gain, but the losses of the minority outweigh these gains, and aggregate consumer surplus falls. An optimal loyalty program charges a membership fee, yet most consumers enroll, because opting out signals price insensitivity. |
| Keywords: | personalized pricing; behavior-based price discrimination; purchase histories;; Bayesian learning; loyalty programs; value of information |
| JEL: | D42 D83 L11 L81 D12 |
| Date: | 2026–10–12 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:132271 |
| By: | Giannakas, Konstantinos |
| Abstract: | This paper develops a multi-market framework of analysis of vertical relationships in pork production and game theoretic models of heterogeneous firms to examine the economic, market and welfare impacts of abolishing vertical integration in the US pork sector. Different scenarios on the causes of vertical integration and the potential states of nature that can emerge after the removal of this vertical market arrangement are considered within this framework. Analytical results are consistent across the different scenarios and forms of strategic interactions between pork producers and indicate that the abolishment of vertical integration in the US pork sector will hurt pork consumers, integrated pork producers and the hog producers involved. The only beneficiaries of this policy/change will be the non-integrated pork producers. However, the gains of these non-integrated pork producers are less than the consumer, hog producer and integrated pork producer losses, resulting in net social welfare losses from this policy. |
| Keywords: | Livestock Production/Industries |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:nbaesp:413438 |
| By: | Luca Macedoni; John Morrow; Vladimir Tyazhelnikov |
| Abstract: | Which firms supply which products? Modeling multi-product firms under heterogeneous markups, we recover firms' costs for produced products and develop an algorithm inspired by recommender systems to predict costs for unproduced products. Lower predicted costs imply increased product adoption and identify which firms enter when export demand rises, including firms crossing broad product classifications. We use these counterfactual costs to quantify how reductions in fixed and marginal costs induce product entry and lower price indices. In a price-stabilization exercise following a cost shock, entry subsidies can cost less than subsidies to incumbents, particularly for smaller shocks when capable potential entrants remain available. |
| Keywords: | multi-product firms, firm capabilities, classification, industrial policy |
| JEL: | F1 F6 D2 L1 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13044 |
| By: | Barış Kaymak |
| Abstract: | This paper compares equilibrium bidding strategies in a first-price sealed-bid auction with two asymmetric bidders who have dependent private valuations. Modeling bidder strength via a stochastic asymmetry condition – where one bidder is systematically more likely to hold the maximum valuation – I show that the globally weak bidder, facing a competitive disadvantage at all top valuation levels, bids more aggressively at every valuation. Conversely, the stronger bidder wins more frequently, generalizing Maskin and Riley (2000) to dependent private-value environments. When the stochastic asymmetry flips once, so that each bidder is stronger over a different range, the bid distributions cross once, with each bidder bidding more aggressively where their competitive disadvantage is most acute. In both environments, allocative inefficiency is an inherent feature of the equilibrium, driven by the stronger bidder's heightened incentives to shade bids relative to their valuation. The results translate to procurement auctions and wage competition between employers, and extend to interdependent-value auctions and the war of attrition under modified conditions. |
| Keywords: | asymmetric auctions; bid shading; first price auctions; dependent valuations |
| JEL: | D44 C72 D82 |
| Date: | 2026–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:103917 |
| By: | Mitsuru Katagiri (Waseda University and TDB-CAREE. (E-mail: mitsuru.katagiri@waseda.jp)); Naoki Wakamori (Keio University and TDB-CAREE. (E-mail: nwakamo@keio.jp)) |
| Abstract: | This paper examines how geographic distance between bank branches and firms affects firms' borrowing costs. Building on descriptive evidence that highlights the role of nearby competing banks in determining loan rates, we develop a model where firms choose their lenders and banks compete in loan rates, and we structurally estimate the model using matched firm- and bank-branch-level microdata from Japan. The estimates suggest that distance affects loan rates by increasing both banks' and borrowers' costs. Counterfactual simulations indicate that the impact of branch closures on small businesses' borrowing costs depends on local banking market conditions. |
| Keywords: | Banking, Loan pricing, Spatial price discrimination |
| JEL: | G21 L13 L14 D43 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:ime:imedps:26-e-11 |
| By: | Neil Bhutta; Benjamin J. Keys; Adithya Raajkumar |
| Abstract: | Market power may arise not only from firms, but also from individual salespeople who can exploit informational advantages over consumers. We explore this phenomenon in the mortgage market by examining a Fannie Mae/Freddie Mac fee waiver targeted at lower-income first-time homebuyers. We estimate that mortgage intermediaries capture over 60% of $1.5 billion in total fee waivers during 2023–2024, rather than fully passing these savings through to borrowers. Pass-through varies substantially across loan officers: those with a track record of originating expensive mortgages (independent of lender pricing) pass through less than 20% of the waiver. Our evidence suggests that loan officers retain incentives to steer borrowers into higher-rate mortgages, despite post-crisis regulations designed to limit such practices. |
| JEL: | D14 G18 G21 G51 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35907 |
| By: | Yichen Huang |
| Abstract: | We study simple auctions for one additive buyer whose values for $m$ items are independent. Write $\mathrm{REV}$ for optimal revenue, $\mathrm{SREV}$ and $\mathrm{BREV}$ for the revenues from separate selling and grand bundling, and $\mathrm{BSPA}_2$ for grand-bundle second-price revenue with two independent bidders. For independent regular items, we prove $\mathrm{REV}\le\mathrm{BSPA}_2\le2\mathrm{BREV}$. This establishes tight approximation and competition guarantees for bundling under regularity and answers an open question from Beyhaghi et al. (EC 2025). For general independent items, we prove $\mathrm{REV} \le \mathrm{SREV} + \frac{\pi^2}{6}\mathrm{BREV} \le 2.645 \max\{\mathrm{SREV}, \mathrm{BREV}\}$. This improves the previous approximation factors of $6$ from Babaioff, Immorlica, Lucier, and Weinberg (FOCS 2014, JACM 2020) and $5.2$ from Ma and Simchi-Levi (AISTATS 2021). On the lower bound side, we construct an instance in which prices for three disjoint bundles earn more than $2.11\max\{\mathrm{SREV}, \mathrm{BREV}\}$, improving the previous lower bound of $2$ from Rubinstein (ITCS 2016). We also show that exact recovery of one buyer's optimal revenue by the better of separate selling and bundling requires $\Theta(\log m)$ bidders in the worst case. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.24973 |
| By: | Takanori ADACHI |
| Abstract: | We examine per-unit cost pass-through in a two-type screening model of monopolistic nonlinear pricing. We show that per-unit pass-through for the small package is necessarily positive when the low type’s participation constraint binds. Under isoelastic preferences, pass-through is higher for the small package than for the large package. This ranking, however, is not a general implication of screening. We derive a local curvature condition governing the pass-through gap and show that shifted-isoelastic preferences can reverse the ranking. A numerical illustration demonstrates that such reversals can also occur away from the local limit. Thus, screening restricts the sign of per-unit pass-through at the bottom of the menu, but not its ranking across contracts. |
| Keywords: | Pass-through; Nonlinear pricing; Screening. |
| JEL: | D42 D82 H22 L11 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:kue:epaper:e-26-004 |
| By: | Maryam Farboodi; Péter Kondor; Pablo Kurlat |
| Abstract: | We study equilibrium market structure in a model of credit-market competition with correlated or uncorrelated screening errors and endogenous screening technologies. A pool externality arises because rejected borrowers reapply elsewhere, so lenders’ screening and pricing choices affect competitors’ applicant pools. With independent errors, a single market segment emerges, with rates rising smoothly as lenders who choose better technologies lend to more adversely selected borrowers. With correlated screening errors, potentially stemming from similar AI systems and overlapping financial-sector data, ex-ante identical lenders instead specialize across qualitatively distinct segments, generating a hockey-stick interest-rate schedule: segments with uniform rates but heterogeneous borrower quality coexist with segments featuring uniform quality but dispersed rates, echoing traditional banking, fintech, and high-rate indiscriminate lending. We show how technological and regulatory changes affecting screening costs, including frontier AI innovation and various forms of open banking, unevenly affect financial access and can either benefit or harm financially excluded borrowers. |
| JEL: | D82 D83 G19 O33 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35905 |
| By: | Xiaoming Cai; Pieter A. Gautier |
| Abstract: | How does buyers’ search for bundles generate sorting among heterogeneous sellers? We study competitive search in which buyers assemble bundles through separate transactions, where prices direct search and determine congestion. With two seller types, buyers choose only same-type bundles below a single threshold in cross-type value and cross-type bundles above it. The threshold lies strictly between geometric and arithmetic means of same-type values, so search produces cross-type matching even when types are complements. With a continuum of types, log-supermodularity and submodularity yield unique stable equilibria with positive and negative assortative matching. Positive sorting extends to any fixed number of visits. |
| Keywords: | competitive search, search for bundles, assortative matching, seller heterogeneity |
| JEL: | C78 D83 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13058 |
| By: | Omar Barbiero; Alvaro Silva; Hillary Stein |
| Abstract: | We develop a multisector open-economy model that maps border price shocks into US producer and consumer prices through imported inputs, domestic production networks, and competition with foreign suppliers. The framework, which we apply to the 2025 US tariffs, accommodates pass-through in either levels or logs and maps directly to public data on input–output linkages, trade, and prices. Allowing firms to respond to the prices of competing imported varieties substantially improves the model’s fit to producer prices, and the resulting model is also consistent with the consumer-price response. Aggregating the estimated price effects across the full consumption basket, the February–October 2025 tariff increases imply a first-order contribution of 0.91 percentage points to headline PCE inflation, including 0.10 percentage points from the foreign competition channel. |
| Keywords: | tariffs; inflation; import prices; indirect imports |
| JEL: | E31 E65 F40 |
| Date: | 2026–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbwp:103943 |
| By: | Bühler, Benno; Fischer, Dominik; Ganglmair, Bernhard |
| Abstract: | We develop a licensing-litigation model to analyze how different injunction frameworks affect bargaining behavior, equilibrium royalties, and litigation outcomes in standard-essential patent (SEP) disputes. Motivated by recent developments in German case law, we compare two legal frameworks that differ only in whether the patent holder's licensing offer conditions the availability of injunctive relief. We show that removing the patent holder's offer from the injunction analysis raises equilibrium royalties and the risk of patent hold-up when courts are sufficiently imprecise in assessing FRAND compliance; when courts are predictable, the two frameworks coincide. Higher royalties arise because SEP holders make more aggressive, non-FRAND, licensing offers, while implementers respond with higher counteroffers to reduce the risk of an injunction. The same mechanism, however, can reduce the incidence of injunctions, so injunction frequency is an imperfect measure of hold-up. Whether the higher royalties raise or lower welfare depends on where the socially optimal royalty lies relative to the rates the two frameworks produce. |
| Keywords: | bargaining, FRAND, hold-up, injunction, legal uncertainty, licensing negotiations, litigation, standard-essential patents (SEP) |
| JEL: | C78 K21 K41 L24 O31 O34 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:344104 |
| By: | Justin Wiltshire (Department of Economics, University of Victoria); Sergio Pinto; Alaa Abdelfattah (Occidental College); Marshall Steinbaum |
| Abstract: | We leverage consumer credit panel data covering 2011–2019 to examine how hospital consolidation impacts individual medical debt. In our preferred event study specifications, exposure to hospital mergers causes significant increases in the likelihood of having medical debt in collections, the flow of new debt generated over the previous twelve months, and the total outstanding stock. These effects amplify over time: five years after treatment, the effects on our outcomes of interest range from 11% to 20%. We also find evidence that additional balances are carried on credit cards. In a placebo test, we find no effect of merger exposure on analogous outcomes for non-medical debt in collections. Using comprehensive county-level healthcare spending and utilization data from the Institute for Health Metrics and Evaluation’s Disease Expenditure Project (ultimately sourced to insurance claims), we investigate the mechanisms underlying these effects. We identify three complementary channels: hospital mergers raise the price of commercially insured care, expand the set of healthcare encounters for which patients bear out-of-pocket financial responsibility, and shift the local payer mix away from Medicare and toward commercial insurance. Together, these channels increase both the cost and the breadth of patients’ financial exposure to healthcare. |
| Keywords: | hospital mergers, consumer debt, health insurance, medicaid |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:vic:vicddp:2601 |