|
on Industrial Competition |
| By: | Sander Onderstal (University of Amsterdam and Tinbergen Institute); Ruben van Oosten (University of Amsterdam) |
| Abstract: | We analyze vertical integration in auction markets using a symmetric independent private-values model where the auctioneer invests in the auctioned object's quality. We find that the auctioneer invests more after integration. The integrated bidder enjoys a bidding advantage over other bidders. The merging parties benefit from integration, while non-merging bidders are worse off. In a platform setting where the auctioneer is an intermediary and the bidders are sellers on her platform, vertical integration has ambiguous effects on consumer surplus and total welfare. Our results contribute to the ongoing policy debate about platforms self-preferencing, effective competition policy, and digital market regulation. |
| JEL: | D44 G34 |
| Date: | 2025–08–26 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20250046 |
| By: | Masaki Miyashita |
| Abstract: | Building on the generalized hedonic-linear model of Pellegrino (2025), this paper studies optimal product differentiation when a representative consumer has preferences over product characteristics. Under multiproduct monopoly, the monopolist's choice of product characteristics is always aligned with the social planner's optimum, despite underproduction. By contrast, under oligopoly, multiple equilibria can arise that differ qualitatively in their patterns of characteristics design. We show that, while oligopoly equilibria exhibiting product differentiation yield higher welfare than those with product concentration, the degree of product differentiation under oligopoly remains below the socially optimal level. As a result, social welfare under oligopoly is typically lower than under monopoly, highlighting a key advantage of coordination in characteristics design. We extend the analysis to settings with overlapping ownership structures and show that common ownership can improve welfare by inducing firms to soften competition through increased product differentiation rather than output reduction. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.21573 |
| By: | Brian C. Albrecht; Mark Whitmeyer |
| Abstract: | How do cost shocks pass through to prices in markets with price dispersion? Pass-through analysis typically assumes a single equilibrium price, but empirical studies consistently document substantial price variation, even for homogeneous products. This paper develops a tractable framework that decomposes the pass-through problem into two distinct tiers. The first is a competition layer where consumers' \textit{consideration sets} determine equilibrium distributions of normalized margins. The second is a curvature layer where demand elasticity determines how these margins translate into prices and pass-through rates. The key theoretical innovation is showing that the strategic pricing game with arbitrary downward-sloping demand is order-isomorphic to a baseline unit-demand game once reformulated in terms of normalized effective margins. This decomposition yields closed-form pass-through formulas, robust bounds across demand specifications, and clear comparative statics linking market structure to incidence. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.17964 |
| By: | Mark Whitmeyer |
| Abstract: | I study symmetric competitions in which each player chooses an arbitrary distribution over a one-dimensional performance index, subject to a convex cost. I establish existence of a symmetric equilibrium, document various properties it must possess, and provide a characterization via the first-order approach. Manifold applications--to R&D competition, oligopolistic competition with product design, and rank-order contests--follow. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.22112 |
| By: | Esmat Sangari; Rajni Kant Bansal |
| Abstract: | We study mixed bundling and competitive price-matching guarantees (PMGs) in a duopoly selling complementary products to heterogeneous customers. One retailer offers mixed bundling while the rival sells only a bundle. We characterize unique pure-strategy Nash equilibria across subgames and compare them to a no-bundling benchmark. Mixed bundling strictly dominates whenever an equilibrium exists. Conditional on bundling, PMG adoption trades off strategic demand capture against margin losses on loyal customers and varies systematically with relative demand responsiveness to prices and complementarities. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.15350 |
| By: | Joseph Goodman; Lancelot Henry de Frahan; Justin E. Holz; John A. List; Niall MacMenamin; Evan C. McKay; Magne Mogstad; Sally Sadoff; Hal Sider |
| Abstract: | We leverage Becker’s time allocation theory to examine consumer demand and market competition for time-intensive goods. The Beckerian model predicts higher diversion ratios for goods with substantial time shares and those with high time costs relative to monetary prices. Applying this model to data from two field experiments, we analyze demand for Facebook and Instagram, focusing on substitution patterns across online activities and offline time use. Our findings indicate that users exhibit low elasticity to ad load, the primary user cost, and that time shares and time costs significantly influence diversion ratios. We explore the implications for user costs and benefits on these platforms and assess the potential impact of a Federal Trade Commission-proposed de-merger of Facebook and Instagram. |
| JEL: | C93 D11 D12 L4 L86 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34743 |
| By: | Viktor Mitevski (Association for Research and Analysis ZMAI, North Macedonia) |
| Abstract: | This paper examines market competition in North Macedonian public procurement using a novel dataset of all public contracts from 2021–2025. We focus on the number of offers (bids) per tender as a key indicator of competition, following models inspired by Fazekas and Kocsis (2017). The analysis explores how institutional factors, particularly the use of electronic procurement tools and the choice of procedure type, influence bidder participation. We find that the average tender in North Macedonia attracts only 2–3 bids, and over one-third of procedures have a single bidder, raising market competition concerns. Using regression analysis with the number of offers as the dependent variable, we show that fully open procedures and e-procurement usage are associated with modestly higher competition, whereas negotiated or restricted procedures reduce the number of bidders. The paper provides descriptive insights (e.g., variation by contracting institution type and by goods/services/works procurement) and discusses implications for public expenditure effectiveness. Our results underscore the importance of transparent, open, and digitalized tendering processes in increasing competition and improving the efficiency of public spending. |
| Keywords: | Public procurement, Competition, Number of bids; E-procurement; North Macedonia |
| JEL: | H57 D44 D73 |
| Date: | 2025–12–15 |
| URL: | https://d.repec.org/n?u=RePEc:aoh:conpro:2025:i:6:p:141-153 |
| By: | Vasilios Kanellopoulos |
| Abstract: | This paper examines a competition game whose key variables are the R&D efforts (e.g. R&D expenditures) and accumulated knowledge of firms located in a specific region. The most significant element of accumulated knowledge is knowledge spillovers. These are considered intra-industry as it is assumed that the firms operate within the same industry (i.e. similar types of firms) and competitors offer similar products. The present study identifies a Nash equilibrium based on firm cost minimisation. This is derived under the assumption that the firms under examination act rationally and are primarily concerned with achieving optimal outcomes - specifically, by minimising their total costs. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.13282 |
| By: | Yaonan Jin; Yingkai Li |
| Abstract: | We study revenue maximization when a seller offers $k$ identical units to ex ante heterogeneous, unit-demand buyers. While anonymous pricing can be $\Theta(\log k)$ worse than optimal in general multi-unit environments, we show that this pessimism disappears in large markets, where no single buyer accounts for a non-negligible share of optimal revenue. Under (quasi-)regularity, anonymous pricing achieves a $2+O(1/\sqrt{k})$ approximation to the optimal mechanism; the worst-case ratio is maximized at about $2.47$ when $k=1$ and converges to $2$ as $k$ grows. This indicates that the gains from third-degree price discrimination are mild in large markets. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.16488 |
| By: | Shipra Agrawal; Yiding Feng; Wei Tang |
| Abstract: | Quality information on online platforms is often conveyed through simple, percentile-based badges and tiers that remain stable across different market environments. Motivated by this empirical evidence, we study robust quality disclosure in a market where a platform commits to a public disclosure policy mapping the seller's product quality into a signal, and the seller subsequently sets a downstream monopoly price. Buyers have heterogeneous private types and valuations that are linear in quality. We evaluate a disclosure policy via a minimax competitive ratio: its worst-case revenue relative to the Bayesian-optimal disclosure-and-pricing benchmark, uniformly over all prior quality distributions, type distributions, and admissible valuations. Our main results provide a sharp theoretical justification for quantile-partition disclosure. For K-quantile partition policies, we fully characterize the robust optimum: the optimal worst-case ratio is pinned down by a one-dimensional fixed-point equation and the optimal thresholds follow a backward recursion. We also give an explicit formula for the robust ratio of any quantile partition as a simple "max-over-bins" expression, which explains why the robust-optimal partition allocates finer resolution to upper quantiles and yields tight guarantees such as 1 + 1/K for uniform percentile buckets. In contrast, we show a robustness limit for finite-signal monotone (quality-threshold) partitions, which cannot beat a factor-2 approximation. Technically, our analysis reduces the robust quality disclosure to a robust disclosure design program by establishing a tight functional characterization of all feasible indirect revenue functions. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.01066 |
| By: | Yueran Ma (University of Chicago – Booth School of Business); Mengdi Zhang (Northwestern University); Kaspar Zimmermann (Kiel Institute for the World Economy and University of Hamburg) |
| Abstract: | We collect new data to document the long-run evolution of the firm size distribution in ten marketbased economies in Asia, Europe, North America, and Oceania, where we can obtain comprehensive coverage of the population of firms. Around the world, we observe prevalent increases in the concentration of sales, net income, and equity capital over the past century. These trends hold in the aggregate and at the industry level. Meanwhile, employment concentration has been stable over the long run in most cases. The evidence shows that the rising dominance of large firms is a pervasive phenomenon, not limited to the recent decades or the United States, and that large firms often achieve greater scale without proportionally more workers. |
| JEL: | E01 L1 N1 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfi:wpaper:2026-13 |
| By: | Ahmed Chafai (University of Manouba); Rym Oueslati (University of Tunis); Hatem Salah (University of Manouba) |
| Abstract: | The objective of this study is to explore the curvilinear relationship between innovation and sustainable firm growth, as well as the moderating role of bank funding on research and development (R&D), institutional quality and bank market power on this nexus. To do this, we selected a sample of 424 companies listed in ten Arab countries (Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, and the United Arab Emirates) over the period 2010-2022. Using a systemic GMM model, the results show that there is a curvilinear (inverted U-shaped) link between innovation and sustainable firm growth. In addition, the outcome shows that bank funding on R&D, institutional quality and bank market power moderate the curvilinear nexus between innovation and sustainable firm growth. This study offers valuable insights into strategic innovation planning and elaboration of important implications by highlighting the role of bank funding on R&D, institutional quality and the power of the banking market in promoting firm sustainability. |
| Date: | 2025–12–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1819 |
| By: | YoungGak KIM; Hyeog Ug KWON |
| Abstract: | This paper examines the level and dynamics of firm-level markups in Japan using firm-level data from the Basic Survey of Japanese Business Structure and Activities and the Economic Census for Business Activity. We construct multiple markup measures—including cost-based, value-added–based, labor-based, and intermediate-input–based markups—using harmonized definitions to ensure comparability across datasets. We find that, unlike the upward trend documented for the United States, average markups in Japan have remained broadly flat or have declined slightly since the late 1990s. Changes in aggregate markups are driven mainly by within-firm adjustments, while between-firm reallocation and entry–exit effects play a limited role. Moreover, different markup measures exhibit systematically different patterns: labor-based markups are negatively associated with wage growth, suggesting that labor costs are difficult to pass through into prices, whereas non-labor costs are more readily reflected in prices. These findings indicate that the stagnant markup trends in Japan stem from sluggish dynamic reallocation and specific price pass-through mechanisms, rather than from a decline in competitive pressure. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rdpsjp:26002 |
| By: | Victor Aguirregabiria; Hui Liu; Yao Luo |
| Abstract: | We propose a fast algorithm for computing the GMM estimator in the BLP demand model (Berry, Levinsohn, and Pakes, 1995). Inspired by nested pseudo-likelihood methods for dynamic discrete choice models, our approach avoids repeatedly solving the inverse demand system by swapping the order of the GMM optimization and the fixed-point computation. We show that, by fixing consumer-level outside-option probabilities, BLP’s market-share–mean-utility inversion becomes closed-form and, crucially, separable across products, yielding a nested pseudo-GMM algorithm with analytic gradients. The resulting estimator scales dramatically better with the number of products and is naturally suited for parallel and multithreaded implementation. In the inner loop, outside-option probabilities are treated as fixed objects while a pseudo-GMM criterion is minimized with respect to the structural parameters, substantially reducing computational cost. Monte Carlo simulations and an empirical application show that our method is significantly faster than the fastest existing alternatives, with efficiency gains that grow more than proportionally in the number of products. We provide MATLAB and Julia code to facilitate implementation. |
| Keywords: | Random Coefficients Logit; Sufficient Statistics; Market Share Inversion; Newton-Kantorovich Iteration; Asymptotic Properties; LCBO |
| JEL: | C23 C25 C51 C61 D12 L11 |
| Date: | 2026–02–04 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-819 |
| By: | Douglas Cumming; Hisham Farag; Santosh Koirala; Danny McGowan |
| Abstract: | We study whether Fintech disrupts the banking sector by intensifying competition for scarce deposits funds and raising deposit rates. Using difference-in-difference estimation around the exogenous removal of marketplace platform investing restrictions by US states, we show the cost of deposits increase by approximately 11.5% within small financial institutions. However, these price changes are effective in preventing a drain of liquidity. Size and geographical diversification through branch networks can mitigate the effects of Fintech competition by sourcing deposits from less competitive markets. The findings highlight the unintended consequences of the growing Fintech sector on banks and offer policy insights for regulators and managers into the ongoing development and impact of technology on the banking sector. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.14071 |
| By: | Zongxia Liang; Jiayu Zhang; Zhou Zhou; Bin Zou |
| Abstract: | This paper develops a dynamic insurance market model comprising two competing insurance companies and a continuum of insureds, and examines the interaction between strategic underreporting by the insureds and competitive pricing between the insurance companies under a Bonus-Malus System (BMS) framework. For the first time in an oligopolistic setting, we establish the existence and uniqueness of the insureds' optimal reporting barrier, as well as its continuous dependence on the BMS premiums. For the 2-class BMS case, we prove the existence of Nash equilibrium premium strategies and conduct an extensive sensitivity analysis on the impact of the model parameters on the equilibrium premiums. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.12655 |
| By: | Yuichiro KUBO; Tomohito HONDA; Hirofumi UCHIDA |
| Abstract: | This study examines whether, when acting as sellers in M&A transactions, privately held firms set sales conditions and make buyer selection decisions that reflect stewardship considerations. Using unique data on M&A involving privately held small and medium-sized enterprises (SMEs), our analysis reveals that many set sales conditions which reflect their preferences for stewardship-orientation. However, we do not find that family firms are more likely to do so, nor to select buyers with less informational asymmetry, than non-family firms. These findings indicate that in M&A transactions, privately held firms behave as suggested by stewardship theory, but there are no significant differences between family and non-family firms. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26006 |
| By: | Alex Haag |
| Abstract: | Global competition in artificial intelligence (AI) has intensified in recent years. Some assessments emphasize US exceptionalism, while others argue that China is eroding US dominance. By contrast, the progress of other advanced foreign economies (AFEs) receives far less attention. |
| Date: | 2025–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfn:102359 |
| By: | Joshua McNamara (University of Waikato) |
| Abstract: | This paper examines whether retail fuel prices in New Zealand adjust asymmetrically to cost shocks, using the introduction and repeal of the Auckland Regional Fuel Tax (ARFT) as a natural experiment. The ARFT imposed a 10 cents-per-litre levy on fuel sold in Auckland from July 2018 to June 2024, while neighbouring regions remained untaxed. Exploiting these sharp and opposite policy changes, the analysis employs a difference-in-differences framework using daily, station-level fuel price data from Auckland, Northland, and Waikato. At the aggregate level, fuel prices increased by 10.8 cents per litre following the tax introduction and fell by 11.6 cents per litre after its repeal, indicating near-complete and symmetric pass-through on average. However, substantial spatial heterogeneity emerges when local competitive conditions are considered. Among stations located close to competitors operating under a different tax regime, prices rose almost fully after the tax was introduced but fell by only around three-quarters as much following its removal. Distance-based interaction estimates confirm that pass-through varies systematically with proximity to oppositely treated competitors, consistent with localised asymmetric price transmission driven by spatial competition. These findings show that while fuel prices may adjust symmetrically on average, asymmetric adjustment can persist in local markets, with important implications for the incidence of regional fuel taxes and their repeal. |
| Keywords: | asymmetric price transmission; price transmission; fuel tax; spatial competition; difference-indifferences; retail fuel prices |
| JEL: | L11 H22 Q41 R12 |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:wai:econwp:26/01 |