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on Industrial Competition |
| By: | Zexin Ye |
| Abstract: | When the current demand shock is observable, with a high discount factor, Q-learning agents predominantly learn to implement symmetric rigid pricing, i.e., they charge constant prices across demand states. Under this pricing pattern, supra-competitive profits can still be obtained and are sustained through collusive strategies that effectively punish deviations. This shows that Q-learning agents can successfully overcome the stronger incentives to deviate during the positive demand shocks, and consequently algorithmic collusion persists under observed demand shocks. In contrast, with a medium discount factor, Q-learning agents learn that maintaining high prices during the positive demand shocks is not incentive compatible and instead proactively charge lower prices to decrease the temptation for deviating, while maintaining relatively high prices during the negative demand shocks. As a result, the countercyclical pricing pattern becomes predominant, aligning with the theoretical prediction of Rotemberg and Saloner (1986). These findings highlight how Q-learning algorithms can both adapt pricing strategies and develop tacit collusion in response to complex market conditions. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.15084 |
| By: | Garcia Santana, Manuel Jose; Santamaría, Marta |
| Abstract: | Are governments locally biased when buying goods and services Can this home bias explain the low integration of procurement markets Using one million procurement contracts awarded in France and Spain, this paper explores whether the home bias follows the government's geographical scope: national governments have a national bias, while subnational governments have a local bias. The relative home bias across governments is estimated by comparing how local and non-local establishments sell the same product to national and subnational governments in the same destination. This paper finds that the governments’ home bias explains a big part of the high local concentration in procurement. |
| Date: | 2023–02–21 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10311 |
| By: | Yuichiro Kamada; Shunya Noda |
| Abstract: | We develop a dynamic model of the Bitcoin market where users set fees themselves and miners decide whether to operate and whom to validate based on those fees. Our analysis reveals how, in equilibrium, users adjust their bids in response to short-term congestion (i.e., the amount of pending transactions), how miners decide when to start operating based on the level of congestion, and how the interplay between these two factors shapes the overall market dynamics. The miners hold off operating when the congestion is mild, which harms social welfare. However, we show that a block reward (a fixed reward paid to miners upon a block production) can mitigate these inefficiencies. We characterize the socially optimal block reward and demonstrate that it is always positive, suggesting that Bitcoin's halving schedule may be suboptimal. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.15505 |
| By: | Lucifora, Claudio (Università Cattolica del Sacro Cuore); Origo, Federica (University of Bergamo) |
| Abstract: | We investigate how firms adjust to demand shocks when wages and employment determination are regulated. Using firm-level data for the Italian metal engineering industry from 2009 to 2021, we estimate the elasticity of the wage bill to changes in firm's real sales. We disentangle the effect on wage components (base wage and wage cushion) and labour inputs (permanent or temporary employment and working hours). Results show that the elasticity of the wage bill to demand shocks mainly works through adjustment of working hours (especially via short-time work) and partly employment, while wages are less sensitive. Unions at the workplace reduce employment adjustment through a more intensive use of short-time work schemes. The lower employment adjustment to changes in sales in unionized firms does not depend on past investments or innovation, and it is associated to higher responsiveness of profits to declining sales only in weakly unionized firms. |
| Keywords: | labour adjustment, product demand shock, short-time work, unions, collective bargaining |
| JEL: | J30 J58 C81 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17670 |
| By: | World Bank |
| Keywords: | Finance and Financial Sector Development-Capital Markets and Capital Flows Macroeconomics and Economic Growth-Economic Growth Macroeconomics and Economic Growth-Investment and Investment Climate International Economics and Trade-Trade Finance and Investment |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:42649 |
| By: | Kodama, Naomi (Meiji Gakuin University); Kambayashi, Ryo (Musashi University); Izumi, Atsuko (University of Tokyo) |
| Abstract: | Non-Compete Agreements (NCAs) restrict workers from joining or forming rival companies, which impacts labor market dynamics. Theoretical perspectives on NCAs are varied: they can lead to increased employer investment and higher wages by reducing labor turnover, or they might simply raise wages to compensate for the restriction on workers' post-employment choices. Alternatively, NCAs could reduce workers' outside options, leading to unfavorable terms and lower wages. This paper empirically examines the relationship between NCAs and factors such as firm profit, average wages, and training provisions using a firm-level survey in Japan. Estimation results indicate that firms that use NCAs are more likely to invest in their workers, particularly in off-the-job training. In addition, NCAs are positively associated with firm sales, average wages, and labor productivity. These results support the theory that NCAs encourage firms to invest more in their human capital, leading to higher wages and productivity. Our results also align with previous studies on the Japanese labor markets, highlighting the role of employers in investing in human capital. In general, the study adds evidence to the debate on the fairness and economic impact of NCAs. |
| Keywords: | Non-Compete Agreement, wages, human capital investment |
| JEL: | J24 J41 K31 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17685 |
| By: | Wamalwa, Peter; Tiriongo, Samuel; Mulindi, Hillary |
| Abstract: | East African countries have vibrant telecommunications and banking sectors that have encouraged innovation and digitization of financial services. As a result, the cost of financial services has declined, making them more affordable and accessible to more segments of the population. The relevance of financial services has also improved, thereby contributing to increased uptake of services. Increased access and utilization of relevant financial services contributed to alleviating poverty, growth in incomes and gender parity in wealth. Despite East African countries having a competitive banking sector and strong synergy between telecommunications, banks, and financial technology firms, as well as achieving gains in digital financial inclusion, gender inequalities persist. Despite increasing competition in the banking sector, the gender gap in access to and utilization of financial services remains, particularly among women in rural areas, those engaged in farming or trade, and dependents, who together form the majority in East Africa. Women with lower educational attainment and those living in poverty have significantly less access to digital financial services compared to men. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:aer:wpaper:a6bc6eca-0402-4c0a-9b73-6020e207e362 |