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on Industrial Competition |
| By: | GHOSH, Arghya; HODAKA, Morita; SATO, Susumu |
| Abstract: | Firms compete in both product and labor markets by making decisions about hiring, training, and poaching workers. We develop a theoretical model in which firm-sponsored training links product and labor market competition. Changes in labor, product, or overall market power influence firms' incentives to invest in training, which can lead to clear-cut welfare improvements benefiting all relevant parties. The distinction between under- vs. overinvestment in training, a unique feature that emerges from the interaction between the two markets, plays a critical role in determining whether or not such welfare improvements are possible, enriching welfare and policy implications. |
| Keywords: | product market competition, oligopoly, market power, labor mobility, training, welfare, antitrust implications |
| JEL: | D21 L13 L40 M50 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hitcei:2025-04 |
| By: | Zhang, Chuyuan; Lee, Sang-Ho |
| Abstract: | This study considers a vertically related market where an upstream firm supplies an intermediate good to competing downstream firms that may adopt environmental corporate social responsibility (ECSR). When downstream firm owners, guided by common ownership, appoint green managerial delegation contract, we investigate strategic interaction between common ownership and ECSR, demonstrating that downstream firms may engage in ECSR, which can reduce intermediate prices, while common ownership may increase market competition through ECSR. Our analysis shows that Cournot firms adopt ECSR only when common ownership is sufficiently high or product substitutability is sufficiently low, whereas Bertrand firms always adopt ECSR. Cournot competition can yield higher welfare than Bertrand competition when the degree of common ownership is sufficiently high (low) and product substitutability is sufficiently low (high). As environmental damage increases, Cournot competition yields much higher welfare than Bertrand competition. Finally, we compare outcomes under discriminatory input prices and mandatory ECSR guidelines, and discuss the policy implications. |
| Keywords: | Common ownership; Environmental corporate social responsibility; Green managerial delegation; Vertically related market |
| JEL: | D43 L2 L21 L44 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128009 |
| By: | Samuel Dodini; Alexander Willen |
| Abstract: | Economic theory has long linked employer power to discrimination, but theory and empirical applications have seldom considered which form of power matters. We distinguish between labor market and product market power and design our study to isolate the role each plays in allowing discrimination to persist. Our setting leverages job displacements from mass layoffs and firm closures as a source of exogenous job search, combined with exact matching of native–immigrant worker pairs who held the same job at the same firm, in the same occupation, industry, location, tenure and wage prior to displacement. By tracking post-displacement outcomes across labor markets with differing levels of employer concentration, we identify the causal effect of labor market power on discriminatory behavior. We find that wage and employment discrimination against immigrants is amplified in concentrated labor markets and largely absent in highly competitive ones. Product market power has no independent effect, consistent with the idea that wage-setting power is necessary for discriminatory outcomes. Observed gaps fade with sustained employer–immigrant interactions, consistent with belief-based discrimination and employer learning. Together, these findings show that discrimination is not fixed, but shaped by market structure and firm-level dynamics, with implications for both theory and policy design. |
| Keywords: | discrimination; immigration; market power |
| JEL: | J7 J61 J42 J63 |
| Date: | 2026–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:fip:feddwp:103078 |
| By: | Dayin Zhang; Panle Jia Barwick; Lu Han; Jonathan Kroah |
| Abstract: | Despite intense competition among mortgage lenders, borrowers face substantial price dispersion. We argue that realtor–loan officer referral networks are a key source of lender market power: by steering homebuyers toward a small set of loan officers, these networks restrict effective borrower choice even in competitive markets. Using a novel dataset linking 81, 306 realtors to 102, 860 loan officers across 41 states, we document that such networks are pervasive and highly concentrated — 85% of realtors direct over 40% of their clients to fewer than four loan officers — and that this concentration persists and even increases in markets with more lenders. IV estimates indicate that borrowers using referred loan officers pay 18.6 basis points higher mortgage rates, equivalent to $2, 609 in upfront costs on the average loan of $306K. Referral lending raises rate spreads by 36.5% and accounts for half of the residual cross-sectional variation in spreads. The premium is nearly three times as large for Hispanic borrowers as for White borrowers, and is systematically higher for Black borrowers and financially constrained households. We identify two channels: referrals reduce borrowers' search intensity across lenders, and referred loan officers exercise pricing power relative to colleagues within the same institution. Efficiency gains from faster processing and reduced denial risk do not offset the additional costs. |
| JEL: | D40 G21 L14 L85 R31 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35015 |
| By: | Canta, Chiara; Madio, Leonardo; Mantovani, Andrea; Reggiani, Carlo |
| Abstract: | Online platforms connecting physicians and patients are increasingly com-mon and often operate in heavily regulated contexts. We consider a platform that provides cost-reducing services for physicians and quality-enhancing ser-vices for patients. The platform also improves the matching between patients and physicians, thereby increasing competition among the latter. When prices are unregulated, physicians charge different prices online and offline, yet not all join the platform, which is suboptimal in terms of social welfare. The platform may also under- or over-invest in the quality level offered to patients, making their participation suboptimal as well. We then analyze price regulation. Un-der a single regulated price for medical visits, regardless of the booking channel, all physicians join the platform. However, the first-best allocation cannot be implemented: patient participation remains inefficiently low because patients do not internalize the platform’s cost-reducing effect. In contrast, allowing two regulated prices, one for offline visits and one for platform bookings, re-stores the first best. Overall, our findings suggest that an optimal pricing or reimbursement mechanism should differentiate across booking channels. |
| Keywords: | Healthcare online platforms; Price regulation; Patient-physician matching. |
| JEL: | I11 I18 L51 H75 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131693 |
| By: | Francesco Amodio; Emanuele Brancati; Peter Brummund; Nicolás de Roux; Michele Di Maio |
| Abstract: | We estimate the labor market power of manufacturing firms in 82 low- and middle-income countries using over 13, 000 observations from a harmonized global dataset. Wage markdowns-the gap between a worker's marginal revenue product and their wage-vary widely across countries and show a robust hump-shaped association with the share of self-employed workers. We interpret this pattern using a simple oligopsonistic labor market model with frictions, in which self-employment and wage markdowns are jointly determined, and unemployment protection dictates whether their relationship is positive or negative. Consistent with the model, wage markdowns rise with self-employment in countries with such protection, but fall in those without it. These findings underscore how labor market frictions and regulations shape the link between self-employment and labor market power across countries. |
| Keywords: | labor market power, self-employment, development |
| JEL: | J20 J30 J42 L11 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2566 |
| By: | Jakob Beuschlein; Jósef Sigurdsson; Horng Chern Wong |
| Abstract: | We study the effects of corporate acquisitions on workers using Swedish administrative data and document substantial, persistent earnings losses following acquisitions. These losses reflect both displacement and wage cuts among stayers from target firms. We find no evidence that increased monopsony power accounts for these wage cuts. Instead, they are concentrated in acquisitions where the acquiring-firm CEO sat on the board of the target prior to the transaction. Such acquisitions increase acquiring-firm profits and CEO pay, without affecting total employment or revenue, consistent with rent redistribution. Overall, acquisitions reduce wages and disrupt employment, with profit gains partly extracted from workers. |
| Keywords: | Mergers and acquisitions, wages, layoffs, monopsony, firm performance, managers |
| JEL: | G34 J23 J31 J42 J63 L25 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2576 |
| By: | Fotis, Panagiotis; Polemis, Michael |
| Abstract: | In this study, we present the first systematic evidence of the impact of cartel recidivism on innovation. Combining data from an international price-fixing cartel database with the structural characteristics of the US manufacturing sectors at the six-digit NAICS level, we analyze how cartel recidivists influence subsequent innovation outcomes. Using a staggered difference-in-differences (DiD) framework for 110 US cartel cases over the period 1979-2016 and a novel heterogeneous estimator, we find that cartel recidivists lead to a significant and sustained decline in innovation progress. We argue that cartel recidivists, rather than single offenders, drive the negative impact of collusion on innovation. The results of this study are vigorous to several robustness tests, justifying the absence of pretreatment effects and endogeneity. |
| Keywords: | Cartel; Recidivism; Innovation; Antitrust; Difference in Differences |
| JEL: | D43 K21 L13 |
| Date: | 2026–02–20 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128115 |
| By: | Ohnishi, Kazuhiro |
| Abstract: | This study investigates a quantity-setting duopoly model in which two partially cooperating firms coexist. The following three-stage game is considered. In the first stage, each owner decides whether to hire a manager. In the second stage, the owners who hired managers select incentive parameters for them. In the third stage, the managers or, in their absence, the owners simultaneously and independently choose the firms’ outputs. The study adopts subgame perfection as an equilibrium concept and solves the game by backward induction. The study demonstrates that, in the subgame-perfect equilibrium, both firms hire managers. |
| Keywords: | Managerial delegation; Mixed duopoly; Cournot model; Partially cooperating firm |
| JEL: | C72 D21 D43 L13 |
| Date: | 2026–04–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128718 |
| By: | Volker Nocke; Nicolas Schutz |
| Abstract: | We develop a potential games approach to study multiproduct-firm pricing games.We introduce the new concept of transformed potential and characterize the classes of demand systems that give rise to pricing games admitting such a potential. The resulting demand systems may contain nests (of closer substitutes) or baskets (of products that are purchased jointly), or combinations thereof. These demand systems allow for flexible substitution patterns, and can feature product complementarities arising from joint purchases and substitution away from the outside option. Combining the potential games approach with a competition-in-utility approach, we derive powerful results on existence of pure-strategy Nash equilibria. |
| Keywords: | Multiproduct firms, potential game, oligopoly pricing, complementary goods, joint purchases, nests, equilibrium existence, equilibrium uniqueness |
| JEL: | L13 D43 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_644_v3 |
| By: | Pittman, Russell |
| Abstract: | Reform and restructuring of state-owned monopoly freight railways have generally followed one of two strategies. Each has had some success, but the European model of competing train operating companies over a monopoly track has suffered from a lack of reliable infrastructure funding, while the Americas model of competition among vertically integrated railways has suffered from the difficulty of protecting “captive” shippers. This paper proposes a third option that arguably addresses the weaknesses of both models: the “competitive rules joint venture” already observed in US, Canadian, and Mexican port and belt railroads. |
| Keywords: | Freight railways; restructuring; competition; infrastructure financing |
| JEL: | L51 L92 R42 |
| Date: | 2026–04–21 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128816 |
| By: | Elías Albagli; Francesco Grigoli; Emiliano Luttini; Dagoberto Quevedo; Marco Rojas |
| Abstract: | This paper documents five empirical facts about the role of strategic complementarities in firms’ price-setting behavior, using administrative data from Chilean firms. (1) Strategic complementarities play a dominant role in price setting, exerting a stronger influence than changes in marginal costs. (2) While the strength of strategic complementarities varies across sectors, they consistently outweigh the role of cost changes. (3) In high-inflation environments, firms become more responsive to changes in the prices of their competitors. (4) Firms respond more strongly to competitor price increases than to decreases, mirroring the ‘rockets and feathers’ phenomenon of costs. (5) Strategic complementarities are stronger among firms with fewer competitors, larger market shares, and broader customer bases. These findings suggest that strategic complementarities —a source of real rigidities—are sizable, state-dependent, asymmetric, and shaped by market structure. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:chb:bcchwp:1051 |
| By: | Olivia Bordeu; Gustavo González; Marcos Sorá |
| Abstract: | We study how banking market structure and branch networks shape the spatial mobility of capital. Using administrative loan-level data from Chile, we show that bank-level deposit shocks lead receiving banks to increase lending and lower interest rates relative to other banks. Interest rate reductions are concentrated in cities where the bank has a small market share, consistent with local market power. We develop and estimate a quantitative spatial model with multi-city banks, oligopolistic local credit markets and frictions in interbank lending. These channels lead to spatial dispersion in interest rates and the marginal productivity of physical capital, reducing GDP. Interbank frictions reduce steady-state GDP by 0.04%, while spatial variation in loan markups reduces GDP by 0.5%. Bank mergers improve financial integration between cities but reduce competition, generating heterogeneous welfare effects that depend on the merging banks’ geographic overlap. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:chb:bcchwp:1066 |
| By: | Lauren Falcao Bergquist; Danial Lashkari; Eric Verhoogen |
| Abstract: | This chapter takes stock of what has been learned from the recent micro-development literature about wedges - mechanisms generating dispersion in marginal revenue products of factors across firms, which are commonly interpreted as indicators of misallocation. We present a general theoretical framework that allows us to consider several different types of wedges simultaneously. We argue that it is important to distinguish between between technological wedges, which are present even in the efficient allocation that would be chosen by the social planner, and distortionary wedges, which are present in market equilibrium but not the social planner's allocation. Not all wedges, as we have defined them, are distortionary. We also argue that interactions among wedges are pervasive. We review empirical findings about different types of wedges - taxes, regulations, political connections, corruption, market power, contracting frictions, upgrading investments, and search - focusing on studies that present direct evidence on particular wedges and how they generate dispersion in marginal returns to factors. Throughout, we pay special attention to how wedges vary with firm size and whether the evidence supports the "large firms are constrained'" view of development. We conclude with thoughts about promising directions for the misallocation literature. |
| Keywords: | wedges, misallocation, distortions, direct approach, development |
| JEL: | O11 O12 O14 D21 H25 L11 L51 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26021 |
| By: | Ohnishi, Kazuhiro |
| Abstract: | This paper explores a Cournot duopoly model involving two firms that engage in partial cooperation. The paper reevaluates the effectiveness of using ambient charges as a policy tool to control industrial nonpoint-source pollution. The findings suggest that when the level of cooperation between the firms is relatively low, increasing ambient charges can serve as an effective means to reduce pollution. By analyzing the strategic interactions between the firms, the paper highlights how limited cooperation influences the success of environmental policies. These insights contribute to a better understanding of regulatory approaches in industries where firms have interdependent pollution outcomes. |
| Keywords: | Ambient charge; Cournot duopoly; Environmental regulation; partially cooperating firms; Pollution |
| JEL: | D21 L13 L20 |
| Date: | 2026–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128241 |
| By: | Yukihide Kurakawa (Kanazawa Seiryo University) |
| Abstract: | This study theoretically examines how electricity market structure affects total emissions. We define emissions attributable to imperfect competition, relative to a perfectly competitive benchmark. Im- perfect competition in the electricity market reduces emissions from electricity generation; however, higher prices discourage electrification in end-use sectors and increase the direct use of fossil fuels. When the emission factor of electricity is below a certain threshold, higher prices associated with imperfect competition lead to higher total emissions, whereas the effect reverses when the emission factor exceeds the threshold. This threshold can be indirectly identified through changes in electricity consumption under a carbon tax. These findings indicate that pro-competitive policies can reduce total emissions if (and only if) the emission factor of electricity is sufficiently low; otherwise, they may increase total emissions. Moreover, the emission reduction effect of such policies becomes even stronger as the electricity emission factor decreases. |
| Keywords: | electricity market structure, imperfect competition, electrification, carbon tax, total emissions |
| JEL: | D40 L13 L94 Q42 Q50 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:was:dpaper:2601 |
| By: | Boeri, Tito (Bocconi University); Crescioli, Tommaso (Prometeia); Garnero, Andrea (OECD); Luisetto, Lorenzo (Cleveland State University) |
| Abstract: | Can collective bargaining mitigate monopsony power? This paper addresses this question by examining how the regulation of noncompete agreements for employees by collective agreements affects firm-level markdowns in the French manufacturing sector. Using a staggered difference-in-differences approach, we find that the regulation of noncompetes set by collective agreements leads to a 1.3%-2.2% reduction in markdowns on average. The effect grows over time and is more pronounced for smaller, less productive firms that pay lower wages. Studying a landmark decision of the French Supreme Court that introduced the obligation to have a compensation to consider a noncompete enforceable, we find a significant complementarity between the regulation of noncompetes at the national level (e.g., via case law) and sectoral collective bargaining. By enhancing compliance or imposing further restrictions, collective bargaining can serve as an effective tool to regulate the use of noncompete agreements. |
| Keywords: | monoposony, unions, noncompetes |
| JEL: | J42 J51 J53 J58 J31 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18564 |
| By: | Debi Prasad Mohapatra; Vatsala Shreeti |
| Abstract: | Why would a market leader choose not to patent an innovation? We study Samsung's decision to forgo patent protection for dual SIM technology in the Indian mobile handset market. Using a structural model of demand and supply estimated on quarterly product-level data from the Indian mobile handset industry, we document that rival firms' dual SIM products generated a preference discovery externality. Rival firms' widespread adoption of the dual SIM technology allowed consumers to discover the value of the technology, also benefiting Samsung itself. Counterfactual simulations show that a patent would have suppressed this externality, reducing Samsung's equilibrium profits despite holding monopoly rights. Voluntary non-patenting was therefore privately optimal. Our findings shed light on wider debates about open-sourcing in software and other markets. |
| Keywords: | innovation, patenting, telecom, preference discovery |
| JEL: | L13 O33 O34 L63 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1344 |
| By: | Jeon, Doh-Shin; Drugov, Mikhail |
| Abstract: | This paper studies the incentives of a subscription-funded platform that offers both proprietary and third-party content to bias its recommendations about which con tent users should consume. Consistent with Netflix’s practice, we consider fixed-fee bargaining between the platform and a content provider, which eliminates any static incentive to bias recommendations. However, our dynamic model identifies two dis tinct incentives to bias recommendations: improving the platform’s future bargain ing position and increasing users’ expected surplus. The former favors first-party content, while the latter favors the ex ante superior content. As a result, biased recommendations may lead to either self-preferencing or third-party preferencing. |
| JEL: | D83 L42 |
| Date: | 2026–04–29 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131694 |
| By: | Lukas Delgado-Prieto; Álvaro Jáñez |
| Abstract: | Monopsony power may be particularly strong in certain hierarchical occupations within firms, and production complementarities between occupations may amplify its adverse effects. To quantify this phenomenon, we extend a general equilibrium oligopsony model to include firm organization. Adding a management layer increases production workers' productivity and overhead costs, so only high-productivity firms hire managers to expand production. Using Portuguese administrative data, we quantify the model and validate it against quasi-experimental evidence on demand-wage pass-through and minimum wage effects. Relative to the efficient economy, welfare losses from monopsony are 3.4 and 2.4 percent for managers and production workers, respectively. Monopsony is stronger over managers because they sort into larger firms, view firms' non-wage attributes as less substitutable, and are less likely to be bound by the minimum wage. Through production complementarities, managers' monopsony alone explains one-fifth of the overall earnings losses from monopsony for production workers. |
| Keywords: | Monopsony Power, Firm Organization, Welfare, Minimum Wages |
| JEL: | D21 J21 J31 J42 O40 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:25100 |