nep-com New Economics Papers
on Industrial Competition
Issue of 2025–09–08
eighteen papers chosen by
Russell Pittman, United States Department of Justice


  1. Public Procurement vs. Regulated Competition in Selection Markets By José Ignacio Cuesta; Pietro Tebaldi
  2. When is Minimum and Maximum RPM Competitive?: Demand Uncertainty and Retailer Competition By Kawaguchi, Kohei; Qiu, Jeff; Yi, Zhang
  3. Sequential pricing on multisided platforms By Bontems, Philippe; Hamilton, Stephen F.; Lepore, Jason
  4. Designing Vertical Differentiation with Information By Christoph Carnehl; Anton Sobolev; Konrad Stahl; André Stenzel
  5. Labor and Product Market Power, Endogenous Quality, and the Consolidation of the US Hospital Industry By Bradley Setzler
  6. Common Ownership with Downstream Firm's Voluntary Investment By Qing Hu; Ryo Masuyama; Tomomichi Mizuno
  7. Serial Acquisitions in Tech By Ginger Zhe Jin; Mario Leccese; Liad Wagman; Yunfei Wang
  8. Oligopoly, Complementarities, and Transformed Potentials By Volker Nocke; Nicolas Schutz
  9. Misinformation and Mistrust: The Equilibrium Effects of Fake Reviews on Amazon.com By Ashvin Gandhi; Brett Hollenbeck; Zhijian Li
  10. Two-Sided Market Power in Firm-to-Firm Trade By Alviarez Vanessa; Fioretti Michele; Kikkawa Ken; Morlacco Monica
  11. Partial Cartels and Ringleaders: An Experimental Study By Lisa Bruttel; Holger A. Rau; Vasilisa Werner
  12. Vertical Integration and Consumer Choice: Evidence from a Field Experiment By Chiara Farronato; Andrey Fradkin; Alexander MacKay
  13. Contesting fake news By Daniel Rehsmann; B\'eatrice Roussillon; Paul Schweinzer
  14. Detection of Collusive Networks in Multistage Auctions By Bruno Baránek; Leon Musolff; Vitezslav Titl
  15. Market Size in Pricing Problems on Multi-sided Matching Platforms By Jorge Arenas M.
  16. Durable Goods Monopoly with Free Disposal: A Folk Theorem By Zihao Li
  17. Bank Competition and Investment Costs across Space By Olivia Bordeu; Gustavo González; Marcos Sorá
  18. A Model of Triple-Channel Interaction Dynamics in Pharmaceutical Retailing in Emerging Economies By Koushik Mondal; Balagopal G Menon; Sunil Sahadev

  1. By: José Ignacio Cuesta; Pietro Tebaldi
    Abstract: A common approach to markets with adverse selection is to regulate competition to minimize inefficiencies, while preserving consumer choice among firms. We study the role of procurement auctions—leading to sole provision by the winning firm—as an alternative market design. Relative to regulated competition, auctions affect product variety, quality, markups, and remove cream-skimming incentives. We develop a framework to study this comparison and apply it to individual health insurance in the US. We find that procurement auctions would increase consumer welfare in most markets, mainly by limiting inefficiencies from adverse selection and market power, and by increasing quality.
    JEL: H42 I13 L13
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:34141
  2. By: Kawaguchi, Kohei; Qiu, Jeff; Yi, Zhang
    Abstract: This paper analyzes how retailer competition affects the welfare implications of resale price maintenance (RPM) under demand uncertainty. We extend the classic model of Deneckere et al. (1997) by introducing imperfect competition among retailers, which creates tension between double marginalization and business-stealing effects. Our analysis reveals four distinct regimes determined by demand uncertainty and market concentration. In highly uncertain, competitive markets, minimum RPM enhances efficiency by encouraging inventory holding. However, in markets with lower uncertainty or more concentrated retail sectors, maximum RPM better promotes competition by mitigating double marginalization. The effectiveness of each RPM type depends on whether retailers optimize for all demand states or focus primarily on high-demand scenarios. These findings suggest that antitrust authorities should evaluate RPM cases by considering both the level of demand uncertainty and the degree of retail competition, as different market conditions may call for different forms of vertical price restrictions. For managers, our results provide actionable guidance on selecting the appropriate RPM strategy based on market structure and demand predictability.
    Date: 2025–09–01
    URL: https://d.repec.org/n?u=RePEc:osf:socarx:7tcha_v1
  3. By: Bontems, Philippe; Hamilton, Stephen F.; Lepore, Jason
    Abstract: Multisided platforms have emerged as an increasingly important market structure with the rise of the digital economy. In this paper, we consider sequential price setting behavior by platforms and demonstrate sequential pricing outcomes Pareto dominate simultaneous pricing outcomes in terms of firm and industry profits. We compare policy implications and find prices are more balanced across the platform and average prices are higher under sequential pricing than under simultaneous pricing. We also demonstrate that pricing power can be considered independently on each side of the market under multihoming behavior.
    Keywords: Network Effects; Two-Sided Markets; Platform Competition
    JEL: D43 L13 L40 L86
    Date: 2025–07
    URL: https://d.repec.org/n?u=RePEc:tse:wpaper:130858
  4. By: Christoph Carnehl; Anton Sobolev; Konrad Stahl; André Stenzel
    Abstract: We study information design in a vertically differentiated market. Two firms offer products of ex-ante unknown qualities. A third party designs a system to publicly disclose information. More precise information guides consumers toward their preferred product but increases expected product differentiation, allowing firms to raise prices. Full disclosure of the product ranking alone suffices to maximize industry profits. Consumer surplus is maximized, however, whenever no information about the product ranking is disclosed, as the benefit of competitive pricing always dominates the loss from suboptimal choices. The provision of public information on product quality becomes questionable.
    Keywords: Information Design, Vertical Product Differentiation, Quality Rankings, Competition
    JEL: D43 D82 L13 L15
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_700
  5. By: Bradley Setzler
    Abstract: Existing structural analyses of the harmful effects of market consolidation focus on either product or labor markets in isolation, ignoring that product market competitors often compete for workers as well. This paper develops a unified framework for merger evaluation, finding that firms' simultaneous exercise of oligopoly power in the product market and oligopsony power in the labor market amplifies the harm from mergers to both consumers and workers. The model also demonstrates how merger-induced gains in labor market power incentivize firms to reduce product quality, highlighting an additional channel for consumer harm. The model's predictions are tested and quantified in the context of the recent consolidation of the US hospital industry. Linking panel data from several sources on all US hospitals from 1996-2022, a difference-in-differences design is estimated for nearly 150 high-concentration within-market mergers. Hospital mergers significantly reduce patient volume, increase prices, reduce employment, lower wages, and deteriorate quality of care, resulting in higher patient mortality. After recovering the structural parameters, the estimated model replicates observed merger impacts. Counterfactual exercises reveal that ignoring increased labor (product) concentration would lead one to under-predict the harm of mergers to consumers (workers).
    JEL: I11 J42 L41
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:34180
  6. By: Qing Hu (Kansai University); Ryo Masuyama (Kushiro Public University of Economics); Tomomichi Mizuno (Kobe University)
    Abstract: It is well known that common ownership lessens competition, which tends to decrease consumer and total surpluses. This study challenges this well known result by introducing downstream firms' voluntary investment. We consider a vertical market with one upstream firm and two downstream firms, where the downstream firms engage in voluntary investment that can reduce the upstream firm's marginal cost. We show that common ownership may increase the consumer and total surpluses if the upstream marginal cost without investment is sufficiently high and the investment is sufficiently efficient. We also find our results are robust even in the market with two supply chains.
    Date: 2025–09
    URL: https://d.repec.org/n?u=RePEc:koe:wpaper:2520
  7. By: Ginger Zhe Jin; Mario Leccese; Liad Wagman; Yunfei Wang
    Abstract: We examine serial acquisitions in the technology sector from 2010 to 2023. Defining serial acquisitions based on a granular S&P industry taxonomy, we find that they account for 24–37% of majority-control tech M&A, with over half completed by public firms. Followon targets in a series are generally larger and older than the initial acquisition, and among public acquirers, starting a series is associated with higher market value and greater innovation value, but not with significant changes in market competitiveness. Among deals with valid transaction values, over half of serial deals exceed the reporting threshold of the U.S. Hart–Scott–Rodino (HSR) Act. However, in below-threshold acquisitions, acquirers primarily target their core business category. Accounting for the cumulative value of a series would, in most cases, keep the timing of HSR review unchanged or modestly accelerate it, but when it does accelerate it, review could occur several deals or years earlier, potentially yielding important benefits in markets with long acquisition sequences. Finally, while Google/Alphabet, Amazon, Facebook/Meta, Apple and Microsoft (GAFAM) stand out from the rest of the sample for more frequent serial acquisitions, some other large acquirers display similar patterns.
    JEL: G34 L10 L40 O38
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:34178
  8. By: Volker Nocke; Nicolas Schutz
    Abstract: We adopt a potential games approach to study multiproduct-firm pricing games.We introduce the new concept of transformed potential and characterize the classes of demand systems that give rise to pricing games admitting such a potential. The resulting demand systems may contain nests (of closer substitutes) or baskets (of products that are purchased jointly), or combinations thereof. These demand systems allow for flexible substitution patterns, and can feature product complementarities arising from joint purchases and substitution away from the outside option. Combining the potential games approach with a competition-in-utility approach, we derive powerful results on existence of pure-strategy Nash equilibria.
    Keywords: Multiproduct firms, potential game, oligopoly pricing, complementary goods, joint purchases, nests
    JEL: L13 D43
    Date: 2025–02
    URL: https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_644_v2
  9. By: Ashvin Gandhi; Brett Hollenbeck; Zhijian Li
    Abstract: Fake product reviews—and the manipulation of reputation systems by sellers more broadly—are a widespread issue for two-sided platforms. We study two primary channels through which such manipulation can affect market outcomes: (i) creating misinformation about the reviewed product, and (ii) breeding mistrust in ratings system overall. To examine these in the Amazon.com marketplace, we measure misinformation by observing products purchasing fake reviews and measure mistrust by eliciting shoppers’ beliefs about the prevalence of fake reviews on Amazon through an incentivized survey experiment. We incorporate these into a structural model of demand in which consumers form beliefs about product quality based on observed reviews and perceptions about their trustworthiness. Counterfactual policy simulations indicate that fake reviews reduce consumer welfare, shift sales from honest to dishonest sellers, and ultimately harm the platform. Welfare losses arise primarily from misinformation that leads to worse purchases. While mistrust also leads to purchasing mistakes, the consumer harms of mistrust are largely offset by increased price competition under a weakened ratings system. Finally, we identify key limitations in platforms’ incentives to police manipulation and evaluate enforcement alternatives.
    JEL: L00 L1 L10 L11 L15 M3 M31 M38
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:34161
  10. By: Alviarez Vanessa; Fioretti Michele; Kikkawa Ken; Morlacco Monica
    Abstract: This paper develops a theory of bargaining in firm-to-firm trade with two-sided market power. The framework accommodates flexible market structures, yielding analytical expressions for pair-specific markups and pass-through elasticities. In U.S. import data, we estimate strong importer bargaining power and an upward-sloping export supply curve, consistent with oligopsony power. Pass-through of the 2018 tariffs in firm-to-firm relationships is incomplete, in contrast to product-level studies, primarily due to exporter cost reductions driven by falling demand from dominant buyers. Our study highlights how bargaining and network rigidities shape price outcomes, with implications for markup dispersion and shock propagation in global value chains.
    Date: 2025–07
    URL: https://d.repec.org/n?u=RePEc:arx:papers:2507.12848
  11. By: Lisa Bruttel (University Potsdam, CEPA); Holger A. Rau (University Duisburg-Essen, University Göttingen); Vasilisa Werner (University Potsdam)
    Abstract: This paper investigates partial cartels, which laboratory studies have neglected despite their empirical prevalence. We conduct two laboratory experiments to understand how they function compared to all-inclusive cartels and respond to antitrust policies. First, we compare partial cartel formation with all-inclusive settings typically studied experimentally. Second, we test how ringleader discrimination policies perform within partial cartel environments. Our first study reveals that partial cartels create opposing effects: while individual willingness to communicate decreases due to free-riding incentives, communication occurs more frequently overall and prices are higher when sufficient firms participate. We find that all-inclusive cartels prove essential for achieving high prices. Our second study discovers that ringleader discrimination policies can backfire by facilitating cartel formation through leading-by-example effects. These findings highlight distinct coordination mechanisms of partial cartels and demonstrate the need for careful antitrust policy design.
    Keywords: (partial) cartel, collusion, communication, experiment, ringleader discrimination
    JEL: C92 D43 L41
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:pot:cepadp:92
  12. By: Chiara Farronato; Andrey Fradkin; Alexander MacKay
    Abstract: Platforms, retailers, and other firms often offer their own products alongside products sold by competitors. We study the effects of this practice by combining a field experiment that hides brands owned by Amazon (i.e., private labels) from shoppers on Amazon.com with model-based counterfactuals and welfare analysis. In the absence of private labels, consumers substitute toward products that are similar along most observable dimensions. Removing Amazon brands does not change consumers' search effort or their propensity to shop at other retail websites. Despite the ample availability of observably similar alternatives, our welfare estimates imply that, for the categories we study, removing Amazon brands would reduce consumer surplus by 5.5 percent in the short run, with approximately 10 percent of the impact due to equilibrium price increases by other sellers. The effects are heterogeneous, with consumer surplus reductions exceeding 10 percent in some categories, while other categories realize much smaller decreases when Amazon brands are removed. Demoting private labels in search results to counteract potential self-preferencing does not lead to gains in consumer surplus. This outcome arises because a subset of consumers derive greater utility from private labels and benefit from their high placement in search results.
    JEL: C93 D12 K21 L13 L40 L81
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:nbr:nberwo:34135
  13. By: Daniel Rehsmann; B\'eatrice Roussillon; Paul Schweinzer
    Abstract: We model competition on a credence goods market governed by an imperfect label, signaling high quality, as a rank-order tournament between firms. In this market interaction, asymmetric firms jointly and competitively control the aggregate precision of a label ranking the competitors' qualities by releasing individual information. While the labels and the aggregated information they are based on can be seen as a public good guiding the consumers' purchasing decisions, individual firms have incentives to strategically amplify or counteract the competitors' information emission, thereby manipulating the aggregate precision of product labeling, i.e., the underlying ranking's discriminatory power. Elements of the introduced theory are applicable to several (credence-good) industries that employ labels or rankings, including academic departments, ``green'' certification, movies, and investment opportunities.
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:arx:papers:2508.19837
  14. By: Bruno Baránek; Leon Musolff; Vitezslav Titl
    Abstract: We develop a method for detecting cartels in multistage auctions. Our approach allows a firm to be collusive when facing members of its cartel yet competitive when facing others. Intuitively, as initial bids are shaded, close initial bids not only imply similar costs but also provide an incentive to undercut. We detect firm pairs that ignore this incentive when facing each other. Our algorithm predicts Ukraine’s Antimonopoly Committee’s sanctions: firm pairs classified as collusive are 8.98 times more likely (standard error 2.65 times) to be sanctioned. It also uncovers additional collusion: 1, 857 collusive firms participate in 15.57% of auctions, increasing costs by 1.95%.
    Keywords: public procurement, collusion, online markets
    JEL: H57 D44
    Date: 2025
    URL: https://d.repec.org/n?u=RePEc:ces:ceswps:_12073
  15. By: Jorge Arenas M.
    Abstract: In this paper, I analyze pricing problems of a monopolistic platform that offers matching services to agents with heterogeneous preferences in multi-sided markets. First, I extend the Marx and Schummer (2021) model to multi-sided markets and show that its main result holds: the allocation of the price level across the sides of the market is not affected by the size imbalance across these sides. I then use preference simulations to address the price level problem in two-sided markets. I find that the optimal price level depends positively on: (i) the size of the market when it is balanced; and (ii) the imbalance of the market when it is unbalanced. The simulations also yield important implications for the relationship between the percentage of unmatched agents and market size and imbalance.
    Date: 2024–12
    URL: https://d.repec.org/n?u=RePEc:chb:bcchwp:1033
  16. By: Zihao Li
    Abstract: We study a model of dynamic monopoly with differentiated goods that buyers can freely dispose of. The model extends the framework of Coasian bargaining to situations in which the quantity or quality of the good is endogenously determined. Our main result is that when players are patient, the seller can sustain in equilibrium any payoff between the lowest possible buyer valuation and (approximately) the highest payoff achievable with commitment power, thus establishing a folk theorem. We apply our model to data markets, where data brokers sell marketing lists to producers. Methodologically, we leverage the connection between sequential bargaining and static mechanism design.
    Date: 2025–07
    URL: https://d.repec.org/n?u=RePEc:arx:papers:2507.13137
  17. By: Olivia Bordeu; Gustavo González; Marcos Sorá
    Abstract: Using detailed loan-level data from Chile, we document significant geographic differences in interest rates for firm loans. Firms in cities with high borrowing costs pay around 280 basis points more than firms in low-cost cities. While these estimates account for differences in firm and loan characteristics across cities, we find evidence that they are related to the level of concentration in the local loan market. We examine the pass-through of monetary policy to lending rates and find that banks with higher local market shares exhibit stronger pass-through, aligning with oligopolistic models of branch competition.
    Date: 2025–05
    URL: https://d.repec.org/n?u=RePEc:chb:bcchwp:1042
  18. By: Koushik Mondal; Balagopal G Menon; Sunil Sahadev
    Abstract: The survival of unorganized pharmacies is increasingly challenging in the face of growing competition from organized and e-pharmaceutical retail channels in emerging economies. A theoretical model is developed to capture the triple-channel interactions among unorganized, organized and e-retailing in emerging markets, taking into account the essential features of the pharmaceutical retail landscape, consumers, retailers and pharmaceutical products. Given the retailer and customer-specific factors, the price-setting game between the triple-channel retailers yielded the optimal prices for these retailers. The analysis found that the product category level demand has no influence on optimal pricing strategies of the retailers. The analysis also reveals counterintuitive results, for instance, (i) an increase in customer acceptance of unorganized retailers will result in a decrease in profits of both unorganized and organized retailers; (ii) as the distance and transportation cost to unorganized retailers increases for the consumers, the profit of the unorganized retailer increases; and (iii) consumers marginal utility of money has no influence on the optimal price, but have an influence on the profit of the three retail channels. Our research findings offer valuable insights for policymakers facing challenges in achieving a balanced growth among the organized, unorganized, and e-pharmaceutical retail sectors in emerging economies. Keywords: Unorganized, Organized, and Online E-Retail; Nanostores; Emerging Markets; Game Theory.
    Date: 2025–08
    URL: https://d.repec.org/n?u=RePEc:arx:papers:2508.17992

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