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on Industrial Competition |
| By: | Martin Gaynor; Amanda Starc |
| Abstract: | The United States relies primarily on private health insurance markets, yet these markets are highly concentrated and becoming more so over time. We document concentration across commercial, Medicare Advantage, and Medicaid markets. We then examine how asymmetric information—particularly adverse selection—interacts with market power to shape premiums, plan design, and consumer welfare. Empirical evidence confirms that insurer consolidation raises premiums. We discuss how antitrust enforcement, risk adjustment, regulation, and informational interventions shape competition and consumer welfare in these markets. |
| JEL: | I11 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34928 |
| By: | Tarush, Akshat (Daikin India) |
| Abstract: | India’s online food delivery market has consolidated into a stable duopoly following the exits of Uber Eats and Amazon Food. Standard Bertrand competition predicts that such a market structure should result in aggressive price discounting and persistent margin erosion. However, the observed trajectory of Zomato and Swiggy diverges from this prediction. This paper argues that the Indian food delivery duopoly is better understood through the framework of Nash equilibrium and repeated game theory rather than static price competition. Drawing on financial disclosures, regulatory developments and strategic investments across adjacent verticals, the analysis shows that both firms have shifted capital allocation toward quick commerce and dining and entertainment services. These investments reduce direct confrontation in the core food delivery segment and function as a structural analogue to mixed strategy behavior. Instead of committing exclusively to price based competition, each firm distributes resources across multiple business lines, generating strategic unpredictability and limiting profitable unilateral deviation. The stability of this equilibrium is reinforced by public market discipline that constrains explicit coordination while allowing tacit adjustment. The paper contributes to the understanding of platform competition in emerging digital markets by demonstrating how vertical differentiation can stabilize outcomes in environments where pure price rivalry would otherwise destroy value. |
| Date: | 2026–03–03 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:4m7yr_v1 |
| By: | Thibault Schrepel (Vrije Universiteit Amsterdam, Netherlands); Godefroy de Boiscuillé (Université Côte d'Azur, CNRS, GREDEG, France) |
| Abstract: | This article questions the legal validity of the Digital Markets Act ("DMA") in light of its enforcement practice. Adopted on the basis of Article 114 TFEU as an internal market harmonization measure, the DMA is administered by the Commission as a standing regime of unilateral conduct control that operates alongside, and in close normative proximity to, Article 102 TFEU. The resulting functional equivalence between the two instruments raises structural doubts as to the DMA's compatibility with the constitutional framework of the Treaties. |
| Keywords: | Digital Markets Act; Article 102 TFEU; European Union law; Competition law; Digital platforms; Gatekeepers |
| JEL: | K21 K23 L40 L86 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-07 |
| By: | Johnen, Johannes (Université catholique de Louvain, LIDAM/CORE, Belgium); Shekhar, Shiva |
| Abstract: | This paper proposes a simple yet useful framework for evaluating vertical mergers in digital markets by distinguishing between product-specific and ecosystem-specific network effects. Vis-a-vis no network effects, product-specific network effects amplify foreclosure and steering incentives, as a rival’s growth directly undermines the platform’s product value. Conversely, ecosystem-specific effects dampen foreclosure incentives, since rivals contribute to the overall value of the platform ecosystem. We develop a formal model illustrating how this distinction shapes platform behavior and competitive outcomes. We apply this distinction to real-world examples to illustrate its potential usefulness. Our distinction implies that regulators may want to adopt a stricter standard with no presumption of efficiencies where product-specific effects dominate. In contrast, when ecosystem-specific effects prevail, merger evaluation should mirror traditional vertical merger analysis. Thus, offering a more nuanced approach to merger evaluation by presenting a practical screening tool to identify problematic vertical mergers in markets featuring network effects. |
| Keywords: | Network Externalities ; Platforms ; Vertical Integration |
| JEL: | L22 L41 L51 |
| Date: | 2025–07–30 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2025015 |
| By: | Joshua D. Gottlieb; Sean Nicholson |
| Abstract: | We describe competition in the physician market, focusing on how entry barriers and substitution possibilities have changed in recent decades. Regulatory caps on medical school seats and residency slots—especially for high-paying specialties—continue to ration entry, generate high returns for those who gain these slots, and direct the most academically accomplished trainees toward lucrative fields. But trained physicians increasingly compete with nurse practitioners, physician assistants, and other mid-level practitioners in the market for patients. Training of these substitutes has expanded far more rapidly than physician supply. We present key facts about the physician pipeline, a conceptual framework linking specialty earnings to entry barriers, and describe the rise of mid-level providers. These facts mean that effective competition policy in physician markets must look beyond conventional concentration measures and focus on the institutions and laws that govern who can provide medical care. |
| JEL: | I11 J44 L13 L50 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34955 |
| By: | Gokan, Toshitaka; Thisse, Jacques-François (Université catholique de Louvain, LIDAM/CORE, Belgium); Zhu, Xiwei |
| Abstract: | We develop a model in which offline and online transportation costs, online shopping disutility cost and consumer taste heterogeneity, and online and offline retailers' pricing policies interact to determine the equilibrium retail format that emerges from firms' and consumers' choices. This is done by combining spatial pricing and discrete choice theory within a unified game-theoretic framework. We study the industry equilibrium, as well as the corresponding consumer surplus and total welfare. Our results show that firms' choices of a retail format and consumers' decision to buy from an offline or online firm often depend on consumers' locations relative to firms'. Comparing aggregate consumer surpluses shows that consumers prefer online to alternative channels when they are sufficiently heterogeneous, but this need not be so when heterogeneity is weak. When consumers' tastes are heterogenous enough, the retail format maximizing total welfare depends on the value of the distaste costs of online purchase. Thus, the nature of products supplied by retailers is likely to affect the socially desirable retailing system through the degree of product differentiation. |
| Keywords: | Offline retailing ; online retailing ; spatial price policies |
| JEL: | L13 L81 R10 |
| Date: | 2025–03–13 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2025008 |
| By: | Holmberg, Pär; Ruddell, Keith; Willems, Bert (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| 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: | 2025–09–24 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2025018 |
| By: | Sharat Ganapati; Colin J. Hottman |
| Abstract: | Transaction-level quantity discounts are a pervasive feature of US trade, shaping both price variation and tariff incidence. Using administrative microdata, we show that these discounts reflect transaction-level scale economies rather than market power. Accounting for these micro-level economies resolves a key puzzle: while observed import prices rose one-for-one with 2018-2019 US tariffs, we show this was driven by the loss of scale economies as transaction sizes collapsed. Controlling for this scale effect, the strategic pass-through of tariffs to scale-free prices falls to 60 percent, implying foreign exporters absorbed a significant share of the burden through reduced markups. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-17 |
| By: | Dehez, Pierre (Université catholique de Louvain, LIDAM/CORE, Belgium); Drèze, Jacques (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | The purpose of the present paper is to challenge the standard textbook analysis of perfect competition based on profit maximisation and the associated "price equal marginal cost" rule leading to an increasing market supply curve. |
| Keywords: | Competitive equilibrium ; increasing returns to scale ; pricing rule |
| JEL: | D21 D41 |
| Date: | 2026–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2026002 |
| By: | Luca Macedoni; Ariel Weinberger |
| Abstract: | Do firms uniformly oppose regulations that increase production costs, or might industry leaders strategically support stricter standards as a competitive tool? We identify a specific mechanism through which large firms strategically support regulations to enhance their competitive position. Extending the Melitz-Chaney model of firm heterogeneity to incorporate government regulations and lobbying following Grossman-Helpman, we derive conditions under which regulations disproportionately burden smaller competitors while benefiting larger survivors through reduced competition. The model predicts that firm size is positively correlated with support for stringent regulations, but that larger sunk investments push firms to oppose such policies. To test these predictions, we develop a text-as-data approach using large language models to classify firm regulatory preferences from lobbying disclosures—a measurement challenge that has limited prior systematic analysis. Applying guided machine learning to over 20, 000 U.S. lobbying reports, we confirm that larger firms are significantly more likely to support stricter regulations, especially in concentrated industries. Capital-intensive firms with high leverage and less redeployable assets tend to oppose regulations, suggesting that operational flexibility is crucial for extracting strategic benefits from regulatory changes. |
| Keywords: | strategic lobbying, product standard regulations, firm heterogeneity, machine learning |
| JEL: | F12 D22 D72 L11 L51 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12536 |
| By: | Alexander Erlei; Lukas Meub |
| Abstract: | As AI agents increasingly act on behalf of human stakeholders in economic settings, understanding their behavior in complex market environments becomes critical. This article examines how Large Language Models coordinate on markets that are characterized by information asymmetries and in which providers of services have incentives to exploit that asymmetry for their own economic gain. To that end, we conduct simulations with GPT-5.1 agents in credence goods markets, manipulating the institutional framework (free market, verifiability, liability), LLM agent's social preferences (default, self-interested, inequity-averse, efficiency-loving), and reputation mechanisms across one-shot and repeated 16-round interactions. In one-shot settings, LLM agents largely fail to establish cooperation, with markets breaking down except under liability rules or when experts have efficiency-loving preferences. Repeated interactions solve consumer participation through competitive price reduction, but expert fraud remains entrenched absent explicit other-regarding preferences. LLM consumers focus narrowly on price levels rather than understanding strategic incentives embedded in markups, making them vulnerable to exploitation. Compared to human experiments, LLM markets exhibit substantially higher consumer participation but much greater market concentration, lower prices, and more polarized fraud patterns. The effect of institutions like verifiability and reputation is also much more ambiguous. Surplus shifts dramatically toward consumers under social-preference objectives. These findings suggest that institutional design for AI agent markets requires fundamentally different approaches than those effective for human actors, with social preference alignment emerging as the primary determinant of market efficiency. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.08853 |
| By: | Mercy, Phil (Freelance); Neil, Martin |
| Abstract: | The theory of microeconomics is revisited to gain insight into the underlying mechanics of sub-optimal systems in general. It challenges the prevailing view that efficient markets naturally arise from free competition and instead reformulates the market to reveal mechanisms whereby inefficient operation can naturally emerge. In particular, it shows how individual influence or power, and market scarcity inevitably lead to biased markets for emergent system operation that is anything but efficient. The paper concludes by incorporating these insights into a game-theoretic treatment of market interactions and proves this is simply a special case of the biased interaction game. |
| Date: | 2026–03–14 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:qge3k_v1 |
| By: | Germain, Antoine (Université catholique de Louvain, LIDAM/CORE, Belgium) |
| Abstract: | This paper studies the consequences of working time reductions when labor markets may be monopsonistic. A toy model shows that the marginal utility of a small working time reduction is negative when workers control schedules but positive when firms set hours. However, the policy increases wage rates in perfect competition but decreases monopsonistic wage rates. I test these predictions empirically by evaluating the first-ever working time reduction in Belgium: the maximum 9h workday in 1910’s coal mines. I find that the policy had sizable negative effects on profits, employment and earnings. To assess welfare, I build a directed search model with matching frictions where firms have heterogeneous productivity and post wages and hours. Utilitarian welfare is expressed in terms of a sufficient statistic whose application to the 1910 reform suggests that the value of leisure was particularly large. |
| Date: | 2025–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2025010 |
| By: | Catherine Bobtcheff (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Raphaël Lévy (HEC Paris - Ecole des Hautes Etudes Commerciales); Thomas Mariotti (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Firms receiving independent signals on a common‐value risky project compete to be the first to invest. When firms are symmetric and competition is winner‐take‐all, rents are fully dissipated in equilibrium and the extent to which signals are publicly disclosed is irrelevant for welfare. When disclosure of signals is asymmetric, welfare is highest when firms are most asymmetric, and policies that uniformly promote disclosure may backfire, especially when competition is severe. When firms strategically select their disclosure policies, a moderate subsidy for disclosure induces a low correlation between firms' policies, and thus maximizes welfare. |
| Date: | 2025–02–18 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05475414 |
| By: | Bartelsman, Eric (Vrije Universiteit Amsterdam); Dobbelaere, Sabien (Vrije Universiteit Amsterdam); Zona Mattioli, Alessandro (Universiteit van Amsterdam) |
| Abstract: | This paper develops a micro-founded framework linking price-cost and wage markups to intangible assets. Intangible assets, once created, are a source of firm rents. Owing to limits to enforceable ownership and the non-rival nature of knowledge, these rents can be both retained by the origin firm and transferred to a competitor through poaching of workers. Search and matching frictions affect labor mobility and result in bargaining over rents between the firm and the worker. This environment generates hold-up in intangible asset creation and motivates rent sharing. Under non-compete agreements, poached workers face start delays that weaken outside options. Using microdata from the Netherlands, we document higher price-cost and wage markups in more intangible-intensive firms and lower wages for workers with non-compete agreements, consistent with the model. |
| Keywords: | price-cost markups, wage markups, rent sharing, intangibles, non-compete agreements |
| JEL: | J41 L10 O30 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18440 |
| By: | Aaron Bodoh-Creed; Brent Hickman; John List; Ian Muir; Gregory Sun |
| Abstract: | Nonlinear pricing theory predicts that firms can extract surplus by inducing heterogeneous consumers to self-sort across price contract offers that are ex-post optimal for them. We study subscription pricing when the frictionless sorting assumption fails. Using large-scale subscription experiments conducted by Lyft, we document systematic deviations from optimal self-selection: many high-demand consumers decline subscriptions that would have saved them money, while some subscribers fail to break even. We develop a structural model of intensive-margin demand in which consumers may exhibit salience failures, forecast errors about future demand, or impulsivity. We show that subscription uptake can be recast as one-sided noncompliance in a binary-instrument framework, allowing us to leverage LATE methods to identify counterfactual outcome distributions and a novel "uptake function" linking baseline outcomes to compliance behavior. Combining experimental price variation with this identification strategy, we recover utility primitives, demand heterogeneity, and behavioral parameters. Salience failures and forecast errors play quantitatively important roles. Counterfactual analyses show that optimal subscription pricing generates substantial gains relative to linear pricing, but these gains are highly sensitive to consumer deviations from ex-post optimal choice. Implementing nonlinear pricing therefore requires not only optimal contract design for consumer screening, but also coordinated efforts to mitigate behavioral frictions. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:feb:natura:00834 |
| By: | Ilona Dielen (Université Côte d'Azur, CNRS, GREDEG, France; Université Paris-Est Créteil, ERUDITE, France); Patrice Bougette (Université Côte d'Azur, CNRS, GREDEG, France); Christophe Charlier (Université Côte d'Azur, CNRS, GREDEG, France) |
| Abstract: | This study examines how the cartel of European truck manufacturers coordinated the timing of compliance with emission standards, generating additional air pollution without violating environmental regulations. Although firms formally complied with environmental law, collusion restricted competition over cleaner technologies, highlighting that anticompetitive agreements can have significant environmental and health consequences. First, we quantify the volume of particulate emissions attributable to cartel behavior by constructing two plausible counterfactual scenarios for truck fleet composition, identifying substantial excess emissions of approximately 119 thousand tonnes of fine particulate matter (PM2.5). Second, we estimate the health impact of traffic-related PM2.5 emissions on infant respiratory outcomes using a panel of 199 European subregions observed over an 18-year period. To address endogeneity concerns, we exploit exogenous variation in EURO emission standards through a shift-share instrumental-variable strategy. The resulting elasticity allows us to compute the number of infant respiratory hospital admissions attributable to the cartel under counterfactual competitive conditions. We estimate that earlier, competition-driven adoption of cleaner technologies could have reduced average yearly infant hospital admissions by 12–18 cases per 1, 000 births at the NUTS 2 level. |
| Keywords: | Air pollution; Truck cartel; Anticompetitive agreement; Environmental damage; EURO standards; European Commission |
| JEL: | I18 K21 L41 Q51 Q52 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-06 |
| By: | Harrison Katz |
| Abstract: | Tourism demand forecasting is methodologically mature, but it typically treats accommodation supply as fixed or exogenous. In platform-mediated short-term rentals, supply is elastic, decision-driven, and co-evolves with demand through pricing, information design, and interventions. I reframe the core issue as endogenous stock-out censoring: realized booked nights satisfy B_{k, t} |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.00422 |
| By: | Burak Uras (Williams College); Niccolo Zaccaria (Tilburg University); Sigrid Suetens (Tilburg University); |
| Abstract: | "This paper investigates the impact of misconfidence on price stickiness in markets charac- terized by strategic complementarities. Misconfidence denotes the tendency of cognitively able individuals to underestimate the cognitive ability of others. In an experiment, we first measure cognitive ability and misconfidence, and then have participants make price choices in a market. We find that prices in markets with at least one misconfident participant de- viate significantly more from equilibrium levels than in markets composed exclusively of confident, cognitively able agents. Importantly, misconfident individuals are no more prone to self-assessment errors than others, indicating that misconfidence constitutes a distinct cognitive bias—fundamentally different from conventional forms of overconfidence or un- derconfidence." |
| Keywords: | Price stickiness, strategic complementarity, controlled experiments, beliefs |
| JEL: | E71 |
| Date: | 2026–02–13 |
| URL: | https://d.repec.org/n?u=RePEc:wil:wileco:2026_103 |
| By: | Luca Di Corato (Department of Economics, Ca’ Foscari University of Venice); Michele Moretto (Department of Economics and Management, University of Padova) |
| Abstract: | This paper studies a continuous-time regulatory problem in which a firm holds persistent private information about demand and is subject to a flow limited-liability constraint. The regulator regulates prices through a dynamic mechanism that ensures truthful reporting of the evolving type. Limited liability imposes a state-dependent lower bound on the firm’s instantaneous utility, inducing a reflecting boundary in continuation utility and giving rise to a tractable singular-control representation. We derive closed-form expressions for the optimal pricing rule and the associated continuation-utility function, and we characterize the optimal up-front transfer required to induce truthful revelation of the firm’s initial type. The resulting contract is fully explicit and highlights how limited liability shapes information rents and regulatory distortions over time. |
| Keywords: | Dynamic regulation, Limited liability, Adverse selection, Continuous-time contracting, Reflecting boundary, Singular control |
| JEL: | D82 D86 L51 H54 C61 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2026.09 |
| By: | Toikka, Max; Saxell, Tanja; Siikanen, Markku |
| Abstract: | We examine the effects of private sector expansion on local labor markets for social and health care workers using comprehensive administrative data and a difference-in-differences design based on the staggered entry of private providers. Entry increases private sector employment, crowding out public employment with little change in total employment. Public sector wages remain largely unchanged, while private sector wages rise modestly. Public providers mitigate staffing shortages by purchasing more services from private providers without raising workloads for remaining workers. The decline in the public wage bill largely offsets higher private service spending, leaving total public expenditure on social and health services almost unchanged. |
| Keywords: | local labor markets, entry, mixed markets, social and health care, outsourcing, wage rigidity, labor scarcity, H44, L33, I11, J21, J44, C23, fi=Kunnat ja hyvinvointialueet|sv=Kommuner och välfärdsområden|en=Municipalities and wellbeing services counties|, fi=Terveyspalvelut|sv=Hälsovårdstjänster|en=Healthcare services|, fi=Työmarkkinat|sv=Arbetsmarknad|en=Labour markets|, |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:184 |
| By: | Sean S. Cao; Itay Goldstein; Jie He; Yabo Zhao |
| Abstract: | How do firms make decisions on investments in emerging technologies? We find that firms adjust AI/green investments in response to market reactions to announcements of such emerging-technology investment plans. Through a battery of tests, we show that this pattern is more likely due to active managerial learning from the market than alternative explanations such as a passive reflection of underlying fundamentals that drive both market reactions and corporate actions. Firms are more likely to act on feedback about emerging technologies than about other investments, particularly when market participants have more expertise in these areas and when firms face greater uncertainty. |
| JEL: | D22 E22 G14 G31 J23 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34940 |
| By: | Wei Cai; Andrea Prat; Jiehang Yu |
| Abstract: | Incomplete contract theory, supported by anecdotal evidence, suggests that when a firm is acquired, workers may be adversely affected in non-contractible aspects of their work experience. This paper empirically investigates this prediction by combining M\&A events from the Refinitiv database and web-scraped Glassdoor review data. We find that: (a) Controlling for pre-trends, mergers lead to lower satisfaction, especially on non-contractible dimensions of the employee experience (about 6% of a standard deviation); (b) The effect is stronger in the target firm than in the acquiring firm; (c) Text analysis of employee comments indicates that the decline in satisfaction is primarily associated with perceived breaches of implicit contracts. Our findings indicate that mergers may reduce workers' job utility through non-monetary channels. |
| JEL: | D23 G34 J31 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34920 |