nep-ind New Economics Papers
on Industrial Organization
Issue of 2021‒01‒11
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Digital Platforms' Information Concentration: From Keystone Players to Gatekeepers By Frédéric Marty; Thierry Warin
  2. Storing Power: Market Structure Matters By Andrés-Cerezo, D., Fabra, N.; Fabra, N.
  3. Price matching and platform pricing By Bottasso, Anna; Marocco, Paolo; Robbiano, Simone
  4. Persuasion Produces the (Diamond) Paradox By Mark Whitmeyer
  5. Designing and Negotiating Agreements in a Digitalized Era – a qualitative analysis By Andrén, Daniela; Kellgren, Jan; Kristoffersson, Eleonor

  1. By: Frédéric Marty; Thierry Warin
    Abstract: This article demonstrates the inner relationship between gatekeepers and their complementors and the impact of information sharing on the overall market competition intensity and the economic surplus allocation. Several competition law-based cases are grounded on the incompleteness and information asymmetry in which complementors have to make their decisions. In this article, the situation of the complementors is all the more unfavourable when their partnership with the gatekeeper is a durable one. We use a game theory-based model to explain this trajectory. The informational imperfections undermine the bargaining power of the complementors and raise the potential cost of the exit option out of the ecosystem. In this perspective, we envisage regulatory remedies as data portability as proposed by the E.U. Commission Digital Markets Act.
    Keywords: Gatekeeper,Keystone Player,Market Dominance,Innovation,Kill Zones,
    JEL: L12 L41 L86
    Date: 2020–12–22
  2. By: Andrés-Cerezo, D., Fabra, N.; Fabra, N.
    Abstract: We asses how firms' incentives to operate and invest in energy storage depend on the market structure. For this purpose, we characterize equilibrium market outcomes allowing for market power in storage and/or production, as well as for vertical integration between storage and production. Market power reduces overall efficiency through two channels: it induces an inefficient use of the storage facilities, and it distorts investment incentives. The worst outcome for consumers and total welfare occurs under vertical integration. We illustrate our theoretical results by simulating the Spanish wholesale electricity market for different levels of storage capacity. The results are key to understand how to regulate energy storage, an issue which is critical for the deployment of renewables.
    Keywords: Storage, electricity, market structure, investment, vertical relations
    JEL: L22 L94
    Date: 2020–12–15
  3. By: Bottasso, Anna; Marocco, Paolo; Robbiano, Simone
    Abstract: In this study we investigate the effects of Price Matching Guarantees (PMGs) commercial policies on U.S. online consumer electronics daily prices. By applying a Diff-in-Diff identification strategy we find evidence in favor of price reductions occurring after the PMG policy is repealed. We further investigate if such effect is heterogeneous according to products characteristics, by exploiting User Generated Contents (UGCs, as products popularity and quality) and online search visibility measures (Google Search Rank). Estimates suggest that for high quality (visibility) products PMGs policies harms competition by keeping prices high, while for low quality (visibility) products, prices decrease during the policy validity period.
    Keywords: online platforms; price matching guarantees; platform pricing; user generated contents; policy evaluation; counterfactual evaluation
    JEL: L00 L10 L11 L41 L81
    Date: 2020–10
  4. By: Mark Whitmeyer
    Abstract: This paper extends the sequential search model of Wolinsky (1986) by allowing firms to choose how much match value information to disclose to visiting consumers. This restores the Diamond paradox (Diamond 1971): there exist no symmetric equilibria in which consumers engage in active search, so consumers obtain zero surplus and firms obtain monopoly profits. Modifying the scenario to one in which prices are advertised, we discover that the no-active-search result persists, although the resulting symmetric equilibria are ones in which firms price at marginal cost.
    Date: 2020–11
  5. By: Andrén, Daniela (Örebro University School of Business); Kellgren, Jan (Linköping University); Kristoffersson, Eleonor (Örebro University School of Law, Psychology and Social Work)
    Abstract: Digitalization is a reality that governs more and more both the society and the economy, facilitating new and more efficient ways of setting up business and business collaborations. Rational agreement routines and well thought through contracts help organizations to avoid legal disputes and thus maintain long-term relations with customers and suppliers. Therefore, a digitalized platform where non-lawyers (purchasers, sellers) in a user-friendly interface can draft individual contracts without lawyers is expected to both increase the companies’ labor productivity and to facilitate the evaluation of risks and opportunities over time. To our knowledge, there is very little known about the agreement routines and the firms’ interest of making them more efficient using digital solutions. Based on semi-structured interviews that we carried out in Sweden during the autumn 2019, we found that companies and authorities are not fully in control of their agreements, when it comes to for example the origin of the agreements, the agreement routines, the storage of agreement and authorized signatures and do not fully use the potential of digital tools for managing and negotiating contracts. Unexpectedly, organizations seem to be of the opinion that the current, a little bit unmodern, system actually works for them. Therefore, new digital tools and/or digital platforms must really meet the needs of the organizations to correspond to the investment for it. Our interviews suggest that new simple digital solutions might be appreciated and used.
    Keywords: digital services; negotiations of agreements; legal tech company; lawyers; contracts and reputation.
    JEL: D86 K10 K19 K20 L14 L24 L33
    Date: 2020–12–31

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