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on Industrial Competition |
| By: | Arve, Malin (Dept. of Business and Management Science, Norwegian School of Economics); Dyskeland, Ole Kristian (Dept. of Business and Management Science, Norwegian School of Economics); Foros, Øystein (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | We analyze competition between two digital platforms selling subscriptions for unlimited access to their content catalogs (e.g., streaming and TV broadcasting platforms). A content provider offers additional content to the platforms. The content provider chooses between offering a revenue sharing contract and a per-consumer wholesale pricing contract towards the platforms, thereby endogenously determining whether its content will be distributed non-exclusively (on both platforms) or exclusively (on one platform). Our model yields clear predictions: In markets with low initial exclusivity, the content provider and both platforms prefer per-consumer wholesale pricing to endogenously promote non-exclusive distribution. Platforms set subscription prices that lead to full consumer singlehoming. Conversely, in markets with high initial exclusivity, all market players prefer a revenue-sharing contract that induces exclusive distribution, with platforms setting prices that encourage some consumers to multihome. |
| Keywords: | Multihoming; incremental pricing; content provision |
| JEL: | L13 L14 L82 |
| Date: | 2025–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhhfms:2025_017 |
| By: | Bracco, Jessica; Brambilla, Irene; Cerimelo, Manuela; César, Andrés; Falcone, Guillermo |
| Abstract: | This paper studies concentration and market power in Chile and Colombia and the role that globalization and automation have had in shaping these two phenomena. Using panels of firm surveys, we compute firm-level markups and industry-level concentration measures. Applying a difference in differences methodology that relies on variation across industries in exposure to robotization technology, import competition from China and tariff declines in US markets due to the signature of free trade agreements, we study the causal effects of these shocks on market power and concentration. We find that, while robotization technology has reduced markups on average, it has increased markups and total factor productivity of top industry firms; that the pro-competitive effect of Chinese imports has indeed led to a decrease in market power of domestic firms; and that increased export opportunities due to free trade agreements have led to an increase in market power, with interesting heterogeneities across the two countries. |
| Keywords: | Mark-ups;Market concentration;trade agreements;Robotization |
| JEL: | L11 F14 F61 O33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14099 |
| By: | Enrico De Monte; Bertrand Koebel |
| Abstract: | This paper characterizes the short- and long-run Cournot equilibrium with heterogeneous firms and stochastic technological change. In our model, firms have different technologies with heterogeneous fixed and variable costs and various degrees of markups. In a framework with homogeneous firms, Mankiw and Whinston (1986) show that the long-run Cournot equilibrium may be inefficient due to too many entries. We extend their result to the case of heterogeneous firms and show that higher industrial concentration of production is welfare improving. Using administrative data for French manufacturing firms, we estimate a wide degree of unobserved heterogeneity in both fixed and variable costs, and find a negative correlation between both. Our simulation results show that markups surprisingly only induce slight inefficiencies in the allocation of output, implying that it is almost compatible with welfare maximisation. Instead, firms’ choice to employ heterogeneous and often inefficient technologies turns out to harm more substantially welfare and aggregate output. |
| Keywords: | cost function, fixed cost, marginal cost, returns to scale, technological change, misallocation, markups, nonlinear least squares, panel data. |
| JEL: | L11 L60 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ulp:sbbeta:2025-01 |
| By: | Ørpetveit, Andreas (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | Despite extensive evidence of how competition in the mutual fund industry affects fees and performance outcomes, less is known about its effect on the incentives of market participants. This paper examines how competition drives product development in mutual fund families. The results show that greater industry competition encourages fund families to focus more on enhancing product quality than altering the fund base. Quality development increases performance across family-affiliated funds, ultimately benefiting investors. Based on these results, I argue that competition helps mitigate conflicts of interest associated with the family-based structure of the industry. |
| Keywords: | Mutual funds; mutual fund families; competition; product development |
| JEL: | G11 G20 L10 |
| Date: | 2025–05–07 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhhfms:2025_013 |
| By: | Galindo da Fonseca, JoaÞo; Santarrosa, Rogerio |
| Abstract: | We test whether firms react to changes in the wages and size of their competitors. We use a unique institutional feature of public procurement auctions in Brazil: the moment in which the auction ends is random. For close auctions, winner and runner-up are as good as randomly assigned. We first show that firm-specific demand shocks lead to increases in the size and wages of the firm receiving the shock. Then, we document that these firm-specific demand shocks lead to increased wages of other (competing) firms in the same local labor market. We do not find negative effects on competitors' firm size. The effects are driven by competing firms responding to demand shocks from firms with high labor market share. |
| JEL: | J01 J23 J30 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14084 |
| By: | Junjie Chen; Takuro Yamashita |
| Abstract: | An information broker incentivizes consumers to share their information, while designing an information structure to shape the market segmentation. The information broker is a metaphor for an Internet platform that matches consumers with retailers. We are interested in a market with heterogeneous retailers and heterogeneous consumers. The optimal broking mechanism consists of a simple threshold-based structure where consumers with strong preferences are assigned to the efficient retailer while consumers with weaker preferences are assigned to the inefficient retailer stochastically. Our analysis suggests that the privacy protection policy may have a stronger impact on less competitive retail markets. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.19539 |
| By: | Andrews, Dan (OECD); Garnero, Andrea (OECD) |
| Abstract: | Restraints clauses that prevent workers from joining (or starting) a competing firm (non-compete clauses), the disclosure of confidential information or the poaching of former co-workers or clients are traditionally justified to protect legitimate business interests (e.g. trade secrets, investments in training). Yet, there are increasing concerns that such clauses may be deployed to suppress job mobility and competition. This paper reviews the international evidence base and finds that non-compete clauses are more prevalent than anticipated, with up to one-quarter of employees subject to such clauses in some countries. These clauses extend beyond highly paid professionals to include low-wage and elementary workers, often bundled with other restrictions, further diminishing workers’ bargaining power. The balance of evidence suggests that non-compete clauses suppress job mobility, firm entry, innovation, wages and productivity, which more than offset any gains from enhanced incentives for firm-specific investment. Regulatory efforts to limit non-compete clauses are gaining traction in some countries but comprehensive empirical evidence remains scarce outside the United States, underscoring the need for more research. |
| Keywords: | non-compete clauses, monopsony, earnings, knowledge diffusion, mobility |
| JEL: | J31 J41 J42 L40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17865 |
| By: | Scott Duke Kominers (Harvard Business School Harvard University; Harvard Business Becker Friedman Institute for Research in Economics University of Chicago; Department of Economics Harvard University); Piotr Dworczak (Northwestern University; Group for Research in Applied Economics (GRAPE)) |
| Abstract: | We propose an economic definition of price gouging: Price gouging occurs in a competitive market when lowering the price from the market-clearing level would increase total Utilitarian welfare. We then use price-theoretic tools to characterize determinants of price gouging in a setting with income heterogeneity and non-quasi-linear preferences that induce a motive to redistribute across agents. The circumstances under which price gouging occurs in our framework align with the contexts covered by existing anti‒price gouging laws. By proposing a definition of price gouging that does not appeal to any non-economic notions of (un)fairness or excess, we hope to provide a pathway for follow-up theoretical and empirical research. |
| Keywords: | price gouging, price control, market design |
| JEL: | D47 D63 D82 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:fme:wpaper:104 |
| By: | Boulieris, Petros; Carballa-Smichowski, Bruno; Fourka, Maria Niki; Lianos, Ioannis |
| Abstract: | Following a period during which the two fields evolved separately, a consensus has emerged that competition and industrial policy are not inherently incompatible. This reflects broader intellectual shifts. Industrial policy is now viewed more favorably, not only for traditional development goals but also to strengthen technological capabilities for national security and secure global economic dominance. "Techno-nationalist'' approaches to industrial policy may conflict with global technology diffusion efforts addressing issues like climate change ("techno-globalism''). Despite recent developments in the intersection of competition and industrial policy, there is a lack of evidence on how techno-nationalist and techno-globalist approaches interact with competition policy goals. This article fills this gap by empirically assessing the competitive effects of policy measures. We use a text-as-data approach, combining AI-driven document analysis with structured classification criteria. The data show that techno-globalist industrial policies are generally more pro-competitive than techno-nationalist ones, due to their broader scope and ability to lower entry costs. Moreover, we find that certain policy instruments are primarily associated with anti-competitive criteria, while others tend to exhibit predominantly pro-competitive features. Our results provide a fine-grained characterization of new industrial policy design in light of competition policy goals. |
| Keywords: | Industrial policy, competition, techno-globalism, techno-nationalism, text-as-data, large language models, data analysis. |
| JEL: | D02 L0 L50 O25 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124187 |
| By: | Kiemo, Samuel |
| Abstract: | The paper examines the nexus between capital, competition and stability in the Kenya banking sector. This is achieved by applying a panel data analysis model on annual bank level data for the period 2001 to 2022. The paper estimated H-Statistics and Bank Stability Index to measure evolution of banking sector competition and stability respectively. The results revealed four key findings. First, Kenya banking sector competition conditions is monopolistic with few large banks dominating. Secondly, on average the banking sector remains stable, with considerable gain in long-term resilience. Thirdly, increase in capital promotes competition first, however significant increase in capital reduces competition. Fourth, increase in capital promotes banking sector stability. The paper concludes that, capital positively effects both banking sector competition and stability. However, significant increase in bank capital reduce competition. The paper recommends appropriate capital regulation reforms should be implemented taking cognizance of the adverse implication on significant increase in capital on banking sector competition. |
| Keywords: | Capital, Competition, Stability, Panel |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:316420 |
| By: | Giovanni Compiani; Ilya Morozov; Stephan Seiler |
| Abstract: | We propose a demand estimation method that leverages unstructured text and image data to infer substitution patterns. Using pre-trained deep learning models, we extract embeddings from product images and textual descriptions and incorporate them into a random coefficients logit model. This approach enables researchers to estimate demand even when they lack data on product attributes or when consumers value hard-to-quantify attributes, such as visual design or functional benefits. Using data from a choice experiment, we show that our approach outperforms standard attribute-based models in counterfactual predictions of consumers' second choices. We also apply it across 40 product categories on Amazon and consistently find that text and image data help identify close substitutes within each category. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.20711 |
| By: | Amarendra Sharma |
| Abstract: | This paper introduces economists to quantum-inspired approaches for modeling firm behavior in a Cournot Duopoly, designed for accessibility and pedagogical use. We present key quantum concepts -- superposition, entanglement, and quantum search algorithms (Grover's and D\"{u}rr-H\o{}yer's) -- in an intuitive manner, tailored for those without a quantum physics background. These concepts are applied to represent uncertainty, interdependence, and optimization in novel ways, offering fresh perspectives on firm decision-making. By incorporating numerical examples, we illustrate how quantum-inspired models differ from classical Cournot outcomes, highlighting potential advantages in capturing complex strategic interactions. The paper aims to bridge quantum computing and economic theory, providing a foundation for teaching and exploring advanced modeling techniques. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2504.19420 |