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on Industrial Competition |
| By: | Mohapatra, Debashrita; Lopez, Rigoberto; Steinbach, Sandro |
| Abstract: | This article investigates the effects of a merger between food retailers on grocery store revenue and employment. One major concern with mergers is the potential increase in market power for the merging firms, which could lead to higher prices. However, merging firms and competitors might also reorganize their store locations and workforce to save costs and avoid cannibalization. We assess the implications of such mergers and look into store revenue and employment based on market dynamics. By analyzing a hypothetical merger between Albertsons and Kroger, our findings shed light on how store revenue and employment would have changed if the merger had been approved. Potential reductions in the store network lead to changes in revenue and, further, substantial job cuts resulting from the merger. |
| Keywords: | Industrial Organization, Demand and Price Analysis |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360970 |
| By: | Joshua S. Gans |
| Abstract: | This paper shows that income effects create an endogenous barrier to arbitrage, allowing price discrimination to survive costless resale. A monopolist sells an indivisible good to consumers with heterogeneous incomes who can freely resell. When the good is strictly normal, a consumer's reservation price to resell increases as the purchase price decreases—lower prices leave buyers wealthier and raise their valuation of the good. The monopolist exploits this by subsidising low-income consumers to raise their reservation prices to a target that high-income consumers must also pay. The optimal schedule increases dollar-for-dollar with income in the subsidised segment, weakly dominates uniform pricing, and achieves the first-best allocation when the entire market is served. We show the mechanism extends beyond income effects: low substitutability with market alternatives generates large reservation-price responses even when income sensitivity is modest. Sustaining discrimination requires market power at the individual level—consumer-specific quantity limits—not merely aggregate output restrictions. Extensions examine multiple monopolists and endogenous privacy choices. |
| JEL: | D11 D42 L12 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34669 |
| By: | Bouvard, Matthieu; Jullien, Bruno; Martimort, David |
| Abstract: | We study how the organizational structure of producers affects competition between systems. We model systems as differentiated bundles of complementary components, where components within each system are produced either by a single firms (integration) or by two distinct firms (disintegration). When information about buyers' preferences is symmetric, disintegration typically increases prices and reduces total welfare as the less efficient system gains market share relative to integration. In addition, when buyers' preferences are private information, disintegration magnifies the quality distortions suppliers introduce to screen buyers and further reduces the market share of the more efficient system. Overall, the analysis suggests that technological standards that facilitate the combination of components from different suppliers can have adverse effects. |
| Keywords: | Composite goods; suppliers organization; competition; double; marginalization. |
| JEL: | D82 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131250 |
| By: | Philippe Légé (IDHES - Institutions et Dynamiques Historiques de l'Économie et de la Société - UP1 - Université Paris 1 Panthéon-Sorbonne - UP8 - Université Paris 8 - UPN - Université Paris Nanterre - UEVE - Université d'Évry-Val-d'Essonne - CNRS - Centre National de la Recherche Scientifique - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay, ISST - Institut des Sciences Sociales du Travail - UP1 - Université Paris 1 Panthéon-Sorbonne) |
| Abstract: | The purpose of this chapter is to explain how the evolutionary philosophies of Herbert Spencer (1820–1903) and Friedrich A. Hayek (1899–1992) justify economic competition. By studying the analogies between biology and society, as well as Hayek's use of the concept of "selection", we will show that his thinking contains echoes of Spencer's "social Darwinism". This will lead us to question the plight of the losers in the "market order" under Hayekian liberalism. |
| Abstract: | L'objet de ce chapitre est d'exposer la façon dont les philosophies évolutionnistes de Herbert Spencer (1820-1903) et de Friedrich A. Hayek (1899-1992) justifient la concurrence économique. En étudiant les analogies entre le biologique et le social, ainsi que l'usage du concept de « sélection » dans la pensée de Hayek, nous montrerons que celle-ci contient des résurgences du « darwinisme social » spencérien. Cela nous conduira à nous interroger sur le sort que le libéralisme hayékien réserve aux perdants de « l'ordre de marché ». |
| Keywords: | Spencer, Hayek, Selection, Evolutionism, competition, sélection, évolutionnisme, concurrence |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05414504 |
| By: | Gierens, Jakob |
| Abstract: | Despite driving the recent resurgence of music industry revenue, digital streaming platforms (DSPs) face persistent criticism over the fairness of their pro-rata royalty payout systems, sparking legislative initiatives in the EU, US, and UK. This article asks how much of the perceived unfairness in DSPs’ pro-rata payouts can be ascribed to platforms offering disparate types of music consumption without any organizational separation, and how the status quo could be improved. DSPs offer access to large libraries of records that users can browse and play from, as well as “programmed” listening features, e.g. editorial or algorithmic playlists. The latter channel constitutes 40% of Spotify streams by now, and pays at the same rate per stream as the former channel. Since DSPs pay by streams market share, boosting the streams of some artists via algorithmic or editorial promotion diminishes the payout for all others. I develop empirical and theoretical arguments for why paying every stream the same price is suboptimal, by presenting disconnects between the pure number of streams and consumers’ level of engagement with content. This suggests that under the pro-rata model, the payment distribution does not accurately reflect consumers’ preferences. I further show how a stream-source weighted pro-rata system aka active engagement model can increase the pay rate for active streams by up to 67% depending on the choice of the weighting factor, hereby diminishing the financial impact of platforms’ promotion choices and rewarding artists for creating music that consumers want to actively seek out. |
| Keywords: | Remuneration Policies; Music Streaming; Platforms; Music Industry; Fair Division |
| JEL: | Z11 |
| Date: | 2026–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127101 |
| By: | Shengyu Cao; Ming Hu |
| Abstract: | We study how delegating pricing to large language models (LLMs) can facilitate collusion in a duopoly when both sellers rely on the same pre-trained model. The LLM is characterized by (i) a propensity parameter capturing its internal bias toward high-price recommendations and (ii) an output-fidelity parameter measuring how tightly outputs track that bias; the propensity evolves through retraining. We show that configuring LLMs for robustness and reproducibility can induce collusion via a phase transition: there exists a critical output-fidelity threshold that pins down long-run behavior. Below it, competitive pricing is the unique long-run outcome. Above it, the system is bistable, with competitive and collusive pricing both locally stable and the realized outcome determined by the model's initial preference. The collusive regime resembles tacit collusion: prices are elevated on average, yet occasional low-price recommendations provide plausible deniability. With perfect fidelity, full collusion emerges from any interior initial condition. For finite training batches of size $b$, infrequent retraining (driven by computational costs) further amplifies collusion: conditional on starting in the collusive basin, the probability of collusion approaches one as $b$ grows, since larger batches dampen stochastic fluctuations that might otherwise tip the system toward competition. The indeterminacy region shrinks at rate $O(1/\sqrt{b})$. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.01279 |
| By: | Moschini, GianCarlo; Smith, T. Jake |
| Abstract: | This paper analyzes a Hotelling duopsony model with location-based price discrimination and procurement contracts pegged to the average spot-market price. This setup captures key features of US beef processors’ procurement of cattle supplies, which relies heavily on (controversial) spot-price contracts known as Alternative Marketing Arrangements. We show that use of these contracts increases the equilibrium price markdown in the market; and, as spot-price contracts become more prevalent, the markdown increases at an increasing rate. Both of these conclusions also apply to the standard case of uniform mill pricing. |
| Keywords: | Marketing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360825 |
| By: | Srinivas Tunuguntla; Carl F. Mela; Jason Pratt |
| Abstract: | Digital advertising platforms and publishers sell ad inventory that conveys targeting information, such as demographic, contextual, or behavioral audience segments, to advertisers. While revealing this information improves ad relevance, it can reduce competition and lower auction revenues. To resolve this trade-off, this paper develops a general auction mechanism -- the Information-Bundling Position Auction (IBPA) mechanism -- that leverages the targeting information to maximize publisher revenue across both search and display advertising environments. The proposed mechanism treats the ad inventory type as the publisher's private information and allocates impressions by comparing advertisers' marginal revenues. We show that IBPA resolves the trade-off between targeting precision and market thickness: publisher revenue is increasing in information granularity and decreasing in disclosure granularity. Moreover, IBPA dominates the generalized second-price (GSP) auction for any distribution of advertiser valuations and under any information or disclosure regime. We also characterize computationally efficient approximations that preserve these guarantees. Using auction-level data from a large retail media platform, we estimate advertiser valuation distributions and simulate counterfactual outcomes. Relative to GSP, IBPA increases publisher revenue by 68%, allocation rate by 19pp, advertiser welfare by 29%, and total welfare by 54%. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.09541 |
| By: | Seula Kim; Michael Navarrete |
| Abstract: | We study how inflation varies across regions with different income levels and the role of retailer market structure. Using NielsenIQ Retail Scanner and Business Dynamics Statistics data, we document new stylized facts of spatial heterogeneity in food inflation and retailer market structure. From 2006 to 2020, poorer metropolitan statistical areas experienced annualized food inflation that was 0.46 percentage points higher than that of richer ones—amounting to a cumulative difference of 8.8 percentage points over the period. Poorer areas also had fewer goods, fewer retailers, and higher market concentration. Using a triple-difference estimator during the 2014–15 bird flu outbreak, we identify a causal link between market concentration and inflation. |
| Keywords: | inflation; retailer market structure; market concentration; spatial inequality |
| JEL: | E31 I31 L11 L81 R12 |
| Date: | 2025–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedawp:102337 |
| By: | Haibo Wang; Takeshi Tsuyuguchi |
| Abstract: | Major bank mergers and acquisitions (M&A) transform the financial market structure, but their valuation and spillover effects remain open to question. This study examines the market reaction to two M&A events: the 2005 creation of Mitsubishi UFJ Financial Group following the Financial Big Bang in Japan, and the 2018 merger involving Resona Holdings after the global financial crisis. The multi-method analysis in this research combines several distinct methods to explore these M&A events. An event study using the market model, the capital asset pricing model (CAPM), and the Fama-French three-factor model is implemented to estimate cumulative abnormal returns (CAR) for valuation purposes. Vector autoregression (VAR) models are used to test for Granger causality and map dynamic effects using impulse response functions (IRFs) to investigate spillovers. Propensity score matching (PSM) helps provide a causal estimate of the average treatment effect on the treated (ATT). The analysis detected a significant positive market reaction to the mergers. The findings also suggest the presence of prolonged positive spillovers to other banks, which may indicate a synergistic effect among Japanese banks. Combining these methods provides a unique perspective on M&A events in the Japanese banking sector, offering valuable insights for investors, managers, and regulators concerned with market efficiency and systemic stability |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.06550 |
| By: | Kartiki Verma (Department of Economics, Delhi School of Economics, University of Delhi); Sunil Kanwar (Department of Economics, Delhi School of Economics, University of Delhi) |
| Abstract: | This paper examines the impact of the strengthening of intellectual property rights (IPR) on industry-level outcomes such as sales, innovation, and profitability in India, for the period 1990-2020. We first construct a novel industry-specific IPR implementation index that reflects de facto enforcement across 27 two-digit industries. Industry outcomes are then modelled using industry data at the two-digit level. The empirical results reveal significant heterogeneity in the effects of IPR regimes. Stronger IPR protection disproportionately benefits firms with higher R&D intensity, amplifying both R&D investment and profitability, with robustness checks confirming consistency across alternative specifications. However, the gains from IPR protection are less pronounced for firms heavily engaged in innovation. This interaction may also reflect a strategic shift in firm behavior rather than a decline in performance. IPR reform positively affect R&D and profitability, particularly in pharmaceuticals and advanced manufacturing. The strengthening of IPR is a powerful driver of performance when paired with internal innovation capacity, highlighting the critical role of absorptive capacity |
| Keywords: | Intellectual property rights, enforcement, de facto index, industry JEL codes: O34, C43, K11, L16 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cde:cdewps:360 |
| By: | Chang, Hung-Hao; Meyerhoefer, Chad D. |
| Abstract: | We investigate the spillover effects of agri-food product sales during livestream promotions aired on Facebook Live to sales on a linked e-commerce platform. Using instrumental variables estimation to account for selection of the products chosen for livestream promotion, we find moderate spillover effects on platform sales and profits. Specifically, livestream sales of the same product category increase platform sales by 2 percent, while livestream sales of other products increase platform sales by 3.9 percent. Indirect spillovers are larger than direct spillovers due to the higher volume of promotional sales of other products. Our results suggest that livestreaming is an effective means of price discriminating and increasing agri-food e-commerce sales. |
| Keywords: | Marketing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360841 |
| By: | Phillips, Owen R.; Bastian, Christopher T.; Cook, Benjamin R.; Menkhaus, Dale J.; Gao, Shen |
| Abstract: | We analyze behavior and market outcomes when agents face an endogenous choice of trading in either English auction or private negotiation. We develop a theoretical model to illustrate agent value for a trading institution. We then conduct market experiments with stable supply and demand conditions and sequentially linked English auction then negotiation (or auction then negotiation) institutions, allowing agents transaction institution choice. Linked prices converge to levels between those observed in auction or negotiation alone. Quantities sold and total welfare increases in these linked markets. Our results extend the literature and offer insights for both fed and feeder cattle markets. |
| Keywords: | Marketing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360827 |
| By: | Timothy Christensen; Giovanni Compiani |
| Abstract: | Empirical models of demand for differentiated products rely on low-dimensional product representations to capture substitution patterns. These representations are increasingly proxied by applying ML methods to high-dimensional, unstructured data, including product descriptions and images. When proxies fail to capture the true dimensions of differentiation that drive substitution, standard workflows will deliver biased counterfactuals and invalid inference. We develop a practical toolkit that corrects this bias and ensures valid inference for a broad class of counterfactuals. Our approach applies to market-level and/or individual data, requires minimal additional computation, is efficient, delivers simple formulas for standard errors, and accommodates data-dependent proxies, including embeddings from fine-tuned ML models. It can also be used with standard quantitative attributes when mismeasurement is a concern. In addition, we propose diagnostics to assess the adequacy of the proxy construction and dimension. The approach yields meaningful improvements in predicting counterfactual substitution in both simulations and an empirical application. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.05374 |
| By: | McLaughlin, Patrick W.; Okrent, Abigail M. |
| Abstract: | Have consumers become more price sensitive in light of elevated food inflation in the post-pandemic era? This study uses beverages, a large category of food expenditure in the United States, as a case study to examine whether consumers shifted consumption from national brands to cheaper PLs or had higher price elasticities of demand for these products. We draw on near “real-time” brand-level beverage sales data from Circana’s Liquid Data Unify platform for retail scanner data. We find little evidence that consumers' price sensitivity increased in the post-pandemic era. |
| Keywords: | Marketing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360837 |