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on Industrial Competition |
| By: | Ashvin Gandhi; YoungJun Song; Prabhava Upadrashta |
| Abstract: | This paper studies how product market competition shapes the impact of private equity (PE) acquisitions on consumers. We examine nursing home buyouts and observe that PE-owned facilities exhibit greater competitive sensitivity: competing more aggressively when competitive incentives are strong and exploiting market power more aggressively when competitive incentives are weak. We find that PE-owned facilities are more sensitive to local market competition—even when comparing effects only across facilities purchased as part of the same acquisition—and are more responsive to a pro-competitive policy helping consumers compare facilities. This suggests that the competitive sensitivity of acquirers and the concentration of markets where acquisitions occur are important factors contributing to the effects of a merger, as well as that pro-competitive polices can reshape the effects of PE ownership on consumers. |
| JEL: | G3 G32 G34 G38 I1 I11 I18 L1 L11 L15 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34306 |
| By: | Shota Ichihashi (Department of Economics, Queen's University, Kingston, ON, Canada) |
| Abstract: | I study a model of platform-enabled algorithmic pricing. Sellers offer identical products, to which consumers have heterogeneous values. Sellers can post a uniform price outside the platform or join the platform and delegate their pricing decision to the platform's algorithm. I show that the platform can offer a pricing algorithm to attract sellers, stifle off-platform competition, and earn a positive profit. Prohibiting the platform from using consumer data for its algorithm increases consumer surplus but decreases total surplus. A transparency requirement, which mandates the platform to share its data and algorithms with sellers, restores the first-best outcome for consumers. |
| Keywords: | price discrimination, algorithmic pricing, competition, collusion, algorithm |
| JEL: | D43 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2503 |
| By: | Muxin Li (IGIER, Bocconi University, Milan, Italy); Ksenia Shakhgildyan (Economics Department and IGIER, Bocconi University, Milan, Italy) |
| Abstract: | We study the competitive effects of the 2018 Apple–Amazon brand-gating agreement, which restricted sales of Apple products on Amazon to a small set of authorized resellers while granting Amazon privileged access to Apple’s portfolio. Using cross-country panel data and dynamic difference-in-difference and triple-differences designs, we document three main findings: (i) a sharp decline in seller participation and product variety, (ii) a substantial increase in Amazon’s Buy Box share and prices, and (iii) no significant improvement in product quality or evidence of counterfeit removal. The results suggest that the agreement reduced intra-brand competition and consumer welfare while reinforcing Amazon’s gatekeeping position, raising concerns for antitrust enforcement and digital platform regulation. |
| Keywords: | Digital Platforms, Brand Gating, Vertical Restraints, Exclusive Dealing. |
| JEL: | L42 D22 L51 L1 L2 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2506 |
| By: | Yumin Hu; Luca Macedoni; Mingzhi (Jimmy) Xu |
| Abstract: | Using barcode-level data from the NielsenIQ Homescan Consumer Panel, we study how income inequality affects the prices of identical goods across US counties. We find that higher inequality reduces prices for products with low market shares but increases prices for products with high market shares. With higher inequality, larger firms, which sell more high-market-share goods, tend to raise prices, while smaller firms lower them. We find a similar pattern using Chinese export data across countries. To interpret these findings, we develop a model where a mean-preserving spread in income affects pricing through the convexity of demand and the convexity of the price derivative of demand with respect to income. We derive conditions under which inequality raises the price elasticity for low-market-share products and lowers it for high-market-share products, matching our empirical results. |
| Keywords: | consumer heterogeneity, income inequality, prices, markups |
| JEL: | L11 D31 D43 F14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12181 |
| By: | Matteo Bizzarri (Università di Napoli Federico II, Napoli, Italy); Fernando Vega-Redondo (The Chinese University of Hong Kong, Hong Kong) |
| Abstract: | We quantify a parsimonious model of oligopolistic competition with common ownership in input–output networks. Using Spanish data on demand, ownership, and input–output linkages, we estimate the overall welfare effect of common ownership. Input–output linkages introduce a theoretical channel through which common ownership could improve welfare. We find that this channel exists but is not strong enough to offset the reduction in competition: common ownership has a negative welfare effect, though weaker than in the absence of input–output linkages. Finally, we introduce a parameterized ownership separation to compute a firm-level index of the anti-competitiveness of common ownership. |
| Keywords: | production networks, network games, common ownership, oligopoly |
| JEL: | D43 D57 D85 L13 L16 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:25-05 |
| By: | Harim Kim (University of Connecticut) |
| Abstract: | Energy transition from coal to gas is reshaping the power sector to rely more on gas generation, which is cleaner but has more variable input costs. Using counterfactual analysis, I study the competitive effects of this transition, considering several transition paths that differ in the types of firms involved in retiring coal plants and investing in gas plants. I show that the variable nature of the marginal cost of gas generation creates an environment in which market power could increase after the transition. However, the transition’s impact on competition depends on the characteristics of the firms investing in new gas generation; the adverse impact is mitigated under a well-planned transition that leads to a more competitive industry structure. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:uct:uconnp:2025-08 |
| By: | Anton A. Cheremukhin; Paulina Restrepo-Echavarria |
| Abstract: | We develop a tractable model of monopsony power based on information frictions in job search. Workers and firms choose probabilistic search strategies, with information costs limiting how precisely they can target matches. Firms post wages strategically, anticipating application behavior and exploiting a first-mover advantage. The model nests both directed and random search as limiting cases and yields a closed-form wage equation that shows the effects on wage-setting power of search frictions, labor market tightness, and sorting. Wage markdowns in equilibrium arise not only from limited labor supply elasticity but also from sorting patterns and demand-side frictions. In highly assortative environments, the absence of wage competition allows firms to capture nearly the full surplus, even when labor supply is elastic. Numerical results replicate markdowns of 30-40% and suggest that constrained-efficient wages would be approximately 20% higher. Our framework unifies the analysis of monopsony, sorting, and wage posting, and provides a computationally efficient method for evaluating directed search equilibria. |
| Keywords: | monopsony |
| JEL: | J42 |
| Date: | 2025–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedlwp:101867 |
| By: | Anna D’Annunzio (Tor Vergata University of Rome, CSEF and Toulouse School of Economics. Email:); Antonio Russo (Institut Mines-Telecom Business School.; University of Naples Federico II, Department of Economics and Statistics, and CSEF) |
| Abstract: | The adtech industry plays a key role in connecting digital publishers and advertisers. This industry is dominated by integrated ecosystems. We study how integration between an adtech intermediary and a major digital publisher affects the ad market and content production. Integration enables the intermediary to leverage exclusive access to data to monopolize the intermediation market and inflate the adtech taxon independent publishers. This depresses investment in content by independent publishers, but boosts the integrated firm’s investment. The net impact of integration on consumer surplus and welfare depends on which effect prevails. Prohibiting data sharing between firms within the ecosystem is not sufficient to restore the market outcome under vertical separation. |
| Keywords: | Online advertising, intermediaries, vertical integration, adtech tax, content quality |
| JEL: | D43 D62 L82 M37 |
| Date: | 2025–09–05 |
| URL: | https://d.repec.org/n?u=RePEc:sef:csefwp:758 |
| By: | Lasio Laura (European Commission, Joint Research Centre, Ispra, Italy); Jack (Peiyao) Ma (University of Oxford, Oxford, UK); Andrea Mantovani (TBS Business School, Toulouse, France); Carlo Reggiani (European Commission JRC, Seville, Spain and Department of Economics, University of Manchester, Manchester, UK); Néstor Duch-Brown (European Commission, Joint Research Centre, Seville, Spain) |
| Abstract: | This paper examines the impact of online travel agencies on hotel pricing strategies, consumer behavior, and market dynamics within the hospitality sector. Using channel-level proprietary data from major hotel chains across eight European countries, we adopt a structural approach to estimate demand and supply, and simulate policy counterfactuals. Our findings reveal that online travel agencies expand demand without exerting significant competitive pressure on market prices, due to limited substitutability between sales channels. We assess potential regulatory interventions. A fee cap would benefit hotels in the sample and consumers, while hurting outside competitors. Provisions that facilitate direct communication between hotels and customers, in the spirit of the disintermediation allowed by the DMA, would be successful in shifting some sales from the platform to the hotel website while reducing margins overall. |
| Keywords: | Online Travel Agents, Platform Regulation, Hotel Pricing |
| JEL: | D40 K20 K21 L10 L50 L86 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2507 |
| By: | Aliya Turegeldinova; Bakytzhan Amralinova; Mate Miklos Fodor; Akerkin Eraliyeva; Chen Dayou; Aidos Joldassov |
| Abstract: | Generative AI does more than cut costs. It pulls products toward a shared template, making offerings look and feel more alike while making true originality disproportionately expensive. We capture this centripetal force in a standard two-stage differentiated-competition framework and show how a single capability shift simultaneously compresses perceived differences, lowers marginal cost and raises fixed access costs. The intuition is straightforward. When buyers see smaller differences across products, the payoff to standing apart shrinks just as the effort to do so rises, so firms cluster around the template. Prices fall and customers become more willing to switch. But the same homogenization also squeezes operating margins, and rising fixed outlays deepen the squeeze. The combination yields a structural prediction. There is a capability threshold at which even two firms cannot both cover fixed costs, and in a many-firm extension the sustainable number of firms falls as capability grows. Concentration increases, and prices still fall. Our results hold under broader preference shapes, non-uniform consumer densities, outside options, capability-dependent curvatures, and modest asymmetries. We translate the theory into two sufficient statistics for enforcement. On the one hand, a conduct statistic and a viability statistic. Transactions or platform rules that strengthen template pull or raise fixed access and originality costs can lower prices today yet push the market toward monoculture. Remedies that broaden access and promote template plurality and interoperability preserve the price benefits of AI while protecting entry and variety. The paper thus reconciles a live policy paradox. AI can make prices lower and entry harder at the same time. It prescribes what to measure to tell which force is dominant in practice. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.08337 |
| By: | Emilie Dargaud (Université Lumière Lyon 2, CNRS, Université Jean Monnet Saint Etienne, EMLyon Business School, GATE, 69007 Lyon, France); Mickaël Lallouche (Université Lumière Lyon 2, Université Claude Bernard Lyon 1, ERIC, 69007, Lyon, France); Petros G. Sekeris (TBS Business School, 1 Place A. Jourdain, 31000 Toulouse, France) |
| Abstract: | We analyze corporate groups managing horizontally differentiated, substitutable firms that share cost externalities yet compete strategically. Using a model with two groups each owning two firms producing goods under distinct brands, we study the choice between centralized and decentralized management. Our results show that when cost externalities are low, decentralization can emerge as equilibrium despite centralization being Pareto superior, due to strategic incentives resembling the “merger paradox”. With stronger cost synergies, centralization dominates, though product differentiation creates multiple equilibria. The findings refine our understanding of corporate organizational design in imperfectly competitive markets. |
| Keywords: | Organizational design, Strategic delegation, Horizontal differentiation |
| JEL: | L13 L22 L25 D21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:gat:wpaper:2520 |
| By: | Nicola Meccheri |
| Abstract: | In an international duopoly involving two countries (markets) and two ports, this paper examines how unilateral and passive port cross-ownership interacts with the degree of port privatization and the presence of tariff protection in shaping port performance and welfare outcomes. Port cross-ownership affects the usage fees set by ports in the two countries in different ways but consistently reduces their overall level. Under free trade, this fosters international trade and intensifies product market competition, thereby increasing consumer surplus while reducing firm profits. However, domestic welfare rises only in the country whose port holds a stake in the foreign port. Under tariff protection, by contrast, port cross-ownership induces countries to differentiate their tariff policies, with the country whose port holds a stake in the other setting a lower tariff. As a result, firm profits increase substantially in the other country, while consumers are not excessively disadvantaged. Depending on the degree of privatization, cross-ownership can enhance welfare in both countries, and, counterintuitively, tariff protection may improve welfare only for the country with a foreign port stake. |
| Keywords: | port cross-ownership, privatization, tariff protection, international duopoly |
| JEL: | F13 L13 L33 R48 |
| Date: | 2025–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:pie:dsedps:2025/325 |
| By: | Antonio Cozzolino (NYU Stern, New York University, New York, NY, USA); Cristina Gualdani (School of Economics and Finance, Queen Mary University of London, London, UK); Ivan Gufler (Department of Economics and Finance, University of Bonn, Bonn, Germany); Niccolò Lomys (CSEF and Department of Economics and Statistics, University of Naples Federico II, Naples, Italy); Lorenzo Magnolfi (Department of Economics, University of Wisconsin-Madison, Madison, WI, USA) |
| Abstract: | We develop an econometric framework for recovering structural primitives---such as marginal costs---from price or quantity data generated by firms whose decisions are governed by reinforcement-learning algorithms. Guided by recent theory and simulations showing that such algorithms can learn to approximate repeated-game equilibria, we impose only the minimal optimality conditions implied by equilibrium, while remaining agnostic about the algorithms’ hidden design choices and the resulting conduct---competitive, collusive, or anywhere in between. These weak restrictions yield set identification of the primitives; we characterise the resulting sets and construct estimators with valid confidence regions. Monte~Carlo simulations confirm that our bounds contain the true parameters across a wide range of algorithm specifications, and that the sets tighten substantially when exogenous demand variation across markets is exploited. The framework thus offers a practical tool for empirical analysis and regulatory assessment of algorithmic behaviour. |
| Keywords: | Algorithms; Reinforcement Learning; Repeated Games; Coarse Correlated Equilibrium; Partial Identification; Incomplete Models |
| JEL: | C1 C5 C7 D8 L1 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2504 |
| By: | Tushar Shankar Walunj; Veeraruna Kavitha; Jayakrishnan Nair; Priyank Agarwal |
| Abstract: | We study a recommendation system where sellers compete for visibility by strategically offering commissions to a platform that optimally curates a ranked menu of items and their respective prices for each customer. Customers interact sequentially with the menu following a cascade click model, and their purchase decisions are influenced by price sensitivity and positions of various items in the menu. We model the seller-platform interaction as a Stackelberg game with sellers as leaders and consider two different games depending on whether the prices are set by the platform or prefixed by the sellers. It is complicated to find the optimal policy of the platform in complete generality; hence, we solve the problem in an important asymptotic regime. The core contribution of this paper lies in characterizing the equilibrium structure of the limit game. We show that when sellers are of different strengths, the standard Nash equilibrium does not exist due to discontinuities in utilities. We instead establish the existence of a novel equilibrium solution, namely `$\mu$-connected equilibrium cycle' ($\mu$-EC), which captures oscillatory strategic responses at the equilibrium. Unlike the (pure) Nash equilibrium, which defines a fixed point of mutual best responses, this is a set-valued solution concept of connected components. This novel equilibrium concept identifies a Cartesian product set of connected action profiles in the continuous action space that satisfies four important properties: stability against external deviations, no external chains, instability against internal deviations, and minimality. We extend a recently introduced solution concept equilibrium cycle to include stability against measure-zero violations and, by avoiding topological difficulties to propose $\mu$-EC. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.13462 |
| By: | Holmberg, Pär; Willems, Bert; Ruddell, Keith |
| Abstract: | We characterize Nash equilibria in multi-product markets in which producers commit to vectors of supply functions contingent on all prices. The framework accommodates (dis)economies of scope in production, and goods may be substitutes or complements in demand. We show that equilibrium allocations of underlying goods and payoffs are invariant under bundling. With quadratic costs and linear demand, this invariance reduces the multi-product problem to an equivalent set of single-product markets that can be analyzed independently. We introduce Lerner and pass-through matrices to capture markups and welfare losses; their eigenvalues summarize fundamental market properties, remain invariant under bundling, and lend themselves to comparative statics analysis. |
| Keywords: | Supply function equilibrium; multi-product pricing; divisible-good auction;; bundling; pass-through; welfare |
| JEL: | C62 C72 D43 D44 L94 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130961 |
| By: | Francesc Dilmé (University of Bonn); Aaron Kolb (Kelley School of Business, Indiana University) |
| Abstract: | We revisit the classic chain-store paradox by introducing a novel element: the arrival of exogenous, public signals about the incumbent’s private type over time. As the horizon lengthens, two opposing forces come into play. On one hand, standard reputational incentives grow stronger; on the other, the increasing availability of information makes it more difficult to sustain a reputation. We show that full deterrence can still emerge as the horizon grows arbitrarily long, though not always, and we provide a complete characterization of the conditions under which it arises. |
| Keywords: | Entry deterrence, reputation, chain-store paradox |
| JEL: | C72 C73 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:374 |
| By: | Tin Cheuk Leung (Department of Economics, Wake Forest University, Winston-Salem, NC, USA); Shi Qi (Department of Economics, College of William and Mary University, Williamsburg, VA, USA); Koleman Strumpf (Department of Economics, Wake Forest University, Winston-Salem, NC, USA) |
| Abstract: | Self-preferencing by dominant digital platforms has become a focal point for antitrust scrutiny, yet little empirical work has examined this behavior in the context of video streaming. This paper provides the first systematic analysis of self-preferencing on a subscription-based streaming platform, focusing on Netflix. We assemble a novel dataset that combines a weekly panel of Netflix’s U.S. catalog from 2016 to 2025, official Top 10 rankings since 2021, Wikipedia page views as an external proxy for popularity, and device-level streaming data from tens of millions of U.S. smart TVs. We begin by showing that the exit of licensed series significantly increases the likelihood of subscriber churn, whereas the effect of movie exits is small and even slightly negative. This underscores the risks of dependence on non-original serialized content and motivates Netflix’s incentives to promote Originals. We then document that Netflix Originals are substantially more likely to appear in the Top 10 rankings than non-originals, conditional on popularity and availability. The magnitude of this self-preferencing effect is comparable to the influence of popularity itself, especially for serialized content. Finally, using a difference-in-differences design with matched titles, we show that Top 10 inclusion has a significant causal impact on subsequent viewer engagement, with stronger effects for Originals. Taken together, our findings suggest that Netflix leverages interface prominence to steer attention toward its proprietary content while insulating itself from the risks associated with expiring licenses, raising important implications for content competition and platform governance in the streaming era. |
| Keywords: | Self-Preferencing; Netflix; Digital Platforms; Platform Bias |
| JEL: | D22 K21 L40 L82 M21 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2508 |
| By: | Celine Bonnet; Fabrice Etile; Sebastien Lecocq |
| Abstract: | Reforming alcohol price regulations in wine-producing countries is challenging, as current price regulations reflect the alignment of cultural preferences with economic interests rather than public health concerns. We evaluate and compare the impact of counterfactual alcohol pricing policies on consumer behaviors, firms, and markets in France. We develop a micro-founded partial equilibrium model that accounts for consumer preferences over purchase volumes across alcohol categories and over product quality within categories, and for firms' strategic price-setting. After calibration on household scanner data, we compare the impacts of replacing current taxes by ethanol-based volumetric taxes with a minimum unit price (MUP) policy of 0.50 Euro per standard drink. The results show that the MUP in addition to the current tax outperforms a tax reform in reducing ethanol purchases (-15% vs. -10% for progressive taxation), especially among heavy drinking households (-17%). The MUP increases the profits of small and medium wine firms (+39%) while decreasing the profits of large manufacturers and retailers (-39%) and maintaining tax revenues stable. The results support the MUP as a targeted strategy to reduce harmful consumption while benefiting small and medium wine producers. This study provides ex-ante evidence that is crucial for alcohol pricing policies in wine-producing countries. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.14116 |
| By: | Andrea Di Giovan Paolo; Jose Higueras |
| Abstract: | We study information disclosure in competitive markets with adverse selection. Sellers privately observe product quality, with higher quality entailing higher production costs, while buyers trade at the market-clearing price after observing a public signal. Because sellers' participation in trade conveys information about quality, the designer faces endogenous constraints in the set of posteriors that she can induce. We reformulate the designer's problem as a martingale optimal transport exercise with an additional condition that rules out further information transmission through sellers' participation decisions, and characterize the optimal signals. When the designer maximizes trade volume, the solution features negative-assortative matching of inefficient and efficient sellers. When the objective is a weighted combination of price and surplus, optimal signals preserve this structure as long as the weight on the price is high enough, otherwise they fully reveal low-quality types while pooling middle types with high-quality sellers. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.01413 |