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on Industrial Organization |
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Issue of 2018‒04‒30
six papers chosen by |
| By: | Benito Arruñada; Luis Garicano |
| Abstract: | By allowing networks to split, decentralized blockchain platforms protect members against hold up, but hinder coordination, given that adaptation decisions are ultimately decentralized. The current solutions to improve coordination, based on “premining” cryptocoins, taxing members and incentivizing developers, are insufficient. For blockchain to fulfill its promise and outcompete centralized firms, it needs to develop new forms of “soft” decentralized governance (anarchic, aristocratic, democratic, and autocratic) that allow networks to avoid bad equilibria. |
| Keywords: | blockchain, platforms, networks, hold‐up, coordination, relational capital, incomplete contracts, decentralized governance |
| JEL: | D23 L12 L22 L86 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1608&r=ind |
| By: | Sara Calligaris (OECD); Chiara Criscuolo (OECD); Luca Marcolin (OECD) |
| Abstract: | This paper examines the evolution of firm mark-ups across 26 countries for the period 2001-14. It also discusses and investigates empirically how this can be related to the degree of digital transformation in sectors. Four main facts emerge: i) mark-ups are increasing over the period, on average across country; ii) this result is driven by firms at the top of the mark-up distribution, while the bottom half of the distribution exhibits a flat trend over time; (iii) mark-ups are higher in digital-intensive sectors than in less-digitally intensive sectors; (iv) mark-up differentials between digitally-intensive and less-digitally-intensive sectors have increased significantly over time. |
| Keywords: | Digitalization, Mark-Ups, Market Power, Technological Change |
| JEL: | D2 L1 L2 O33 |
| Date: | 2018–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaaa:2018/10-en&r=ind |
| By: | Deniz O Igan; Ali Mirzaei; Tomoe Moore |
| Abstract: | We examine the extent to which regulations of entry and credit access are related to competition using data on 28 manufacturing sectors across 64 countries. A robust finding is that bureaucratic and costly entry regulations tend to hamper competition, as proxied by the price-cost margin, in the industries with a naturally high entry rate. Rigid entry regulations are also associated with a larger average firm size. Conversely, credit information registries are associated with lower price-cost margin and smaller average firm size in industries that rely heavily on external finance—consistent with access to finance exerting a positive effect on competition. These results suggest that incumbent firms are likely to enjoy the rent and market share arising from strict entry regulations, whereas regulations enhancing access to credit limit such benefits. |
| Date: | 2018–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:18/84&r=ind |
| By: | Maarten Janssen; Sandro Shelegia |
| Abstract: | This paper studies vertical relations in a search market. As the wholesale arrangement between a manufacturer and its retailers is typically unobserved by consumers, their beliefs about who is to be blamed for a price deviation play a crucial role in determining wholesale and retail prices. The common assumption in the consumer search literature is that consumers exclusively blame an individual retailer for a price deviation. We show that in the vertical relations context, predictions based on this assumption are not robust in the sense that if consumers assign just a small probability to the event that the upstream manufacturer is responsible for the deviation, equilibrium predictions are qualitatively di erent. For the robust beliefs, the vertical model can explain a variety of observations, such as retail price rigidity (or, alternatively, low cost pass-through), non-monotonicity of retail prices in search costs, and (seemingly) collusive retail behavior. The model can be used to study a monopoly online platform that sells access to final consumers. |
| Keywords: | Vertical relations, consumer search, double marginalization, product differentiation, price rigidities |
| JEL: | D40 D83 L13 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1605&r=ind |
| By: | Kevin J. Boudreau |
| Abstract: | Platforms often have “crowds” of amateurs working on them as complementors, in other cases professional entrepreneurs—or both. What can a platform owner do to implement these outcomes? I document evidence on mobile app developers showing that just small, incremental changes in platform design—related to the bare minimum costs required to build an app and factors affecting non-pecuniary payoffs—can lead the “bottom-to-fall-out” of the market to amateurs. Where the bottom-falls-out, there is a flood of lowest-quality developers who nonetheless are long-lived on the platform and engage in relatively high development activity. I find no evidence that amateurs crowd-out development activity of top developers in this context. Moreover, the bottom-falling-out is associated with the generation of significantly greater numbers of highest-quality products. I discuss several interpretations. |
| JEL: | D04 E26 J4 L1 L8 O3 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24512&r=ind |
| By: | Hakan Yilmazkuday (Department of Economics, Florida International University) |
| Abstract: | The farmer share of retail prices is shown to be about 16 percent, corresponding to about 84 percent of a distribution share, on average across agricultural products and regions within Turkey. The share of transportation costs in retail prices is only about 7 percent, while the share of retail margins is about 77 percent of retail prices. The dispersion of retail prices across regions is shown to be mostly due to local wages and variable markups, while the contribution of traded-input prices is relatively small. Accordingly, the high dispersion of farmer prices across locations is not reflected in the dispersion of retail prices due to the high contribution of retail margins. These retail margins are also shown to account for about one third of the consumer welfare dispersion across regions and more than half of the consumer welfare dispersion across products. |
| Keywords: | Agricultural Prices, Farmer Share, Distribution Share, Retail Margins, Consumer Welfare Dispersion |
| JEL: | L81 Q11 R12 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:1802&r=ind |