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on Industrial Organization |
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Issue of 2023‒05‒15
eight papers chosen by |
| By: | Merino Troncoso, Carlos |
| Abstract: | The book is intended to be a reference book of Competition Economics for economists, consultants and/or practitioners. It is a modern review of demand and supply estimation, market structure, merger analysis, damage estimation, welfare loss, abuse of dominance, network effects, and a math and statistics review. Faced with potential multibillion fines, and thousands of damage claims firms are hiring and paying high fees to comply, defend or claim in antitrust cases. Complex economic and statistical issues appear in most cases and all the parties involved in cases are expected to have a good knowledge of them. This book tries to cover a demand of practitioners for a compact introductory level book on this field. |
| Keywords: | antitrust, competition policy, merger simulation, demand estimation |
| JEL: | L10 L11 L13 L16 L4 L40 |
| Date: | 2023–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115999&r=ind |
| By: | Simon Cowan |
| Abstract: | The conditions for monopolization to be good for social welfare are examined. Social welfare can be higher when a monopoly sells to a monopoly, with double margins, than when a competitive industry sells to a downstream Cournot oligopoly with differing efficiency levels. This requires inverse demand to be sufficiently concave, and cannot hold when demand is convex. When there are no vertical issues an efficient monopoly can yield higher social welfare than an asymmetric Cournot duopoly as long as demand is logconcave. In general greater demand concavity increases the relative importance of the benefit of redistributing output to the efficient firm. |
| Date: | 2023–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:1006&r=ind |
| By: | Seppälä, Timo; Mucha, Tomasz; Mattila, Juri |
| Abstract: | Abstract The ever-progressing digitalization of the economy and society is unlocking new opportunities for organizations engaging in services. We are in the middle of a transformation of the service sector that can be likened to the advent of mass production in the 1940s. Based on recent advances and developments in artificial intelligence, digital platforms, and blockchain systems, we are witnessing the emergence of new digitalization phenomena of metahuman systems, artificial intelligence platforms, and meta-organizations. Jointly, these forces are shaping now, or will be in the near future, the service activities of organizations around the world. They enable mass hyper-personalized services and mass servitization – new types of high variety and high-volume service processes. Artificial intelligence applications like search and recommendation engines, and artificial intelligence platforms such as Google Maps, Chat GPT, BloombergGPT and Stable Diffusion can be perceived as early manifestations of the ongoing transformation. Already in the present day, applications and platforms such as these can be adopted in a wide range of downstream tasks, thus enabling personalized service experiences for audiences of one. While increasing the value of service offerings, mass hyper-personalization and mass servitization also have the potential to increase the productivity of service operations and the entire service sector, especially in the context of knowledge-intensive work. This working paper reflects and provides an up-to-date synthesis of key emerging concepts on digitalization, services and research directions grounded in our current research. See also the book The Fifth Wave – BRIE-ETLA Collection of Articles (ETLA B281). |
| Keywords: | Artificial intelligence, Artificial intelligence platforms, Blockchain systems, Digital platforms, Hyper-personalized services, Mass hyper-personalization, Mass services, Mass servitization, Metahuman systems, Meta-organizations, Operations, Productivity, Professional services, Service productivity, Service shops |
| JEL: | L8 L84 |
| Date: | 2023–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:106&r=ind |
| By: | Ginger Zhe Jin; Mario Leccese; Liad Wagman |
| Abstract: | We examine how public firms listed in North American stock exchanges acquire technology companies during 2010-2020. Combining data from S&P, Refinitiv, Compustat, and CRSP, and utilizing a unique S&P taxonomy that classifies tech M&As by tech categories and business verticals, we show that 13.1% of public firms engage in any tech M&A in the S&P data, while only 6.75% of public firms make any (tech or non-tech) M&A in Refinitiv. In both datasets, the acquisitions are widespread across sectors of the economy, but tech acquirers in the S&P data are on average younger, more investment efficient, and more likely to engage in international acquisitions than general acquirers in Refinitiv. Within the S&P data, deals in each M&A-active tech category tend to be led by acquirers from a specific sector; the majority of target companies in tech M&As fall outside the acquirer’s core area of business; and firms are, in part, driven to acquire tech companies because they face increased competition in their core areas. |
| JEL: | D04 D22 L1 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31126&r=ind |
| By: | Dirk Bergemann; Alessandro Bonatti |
| Abstract: | We analyze digital markets where a monopolist platform uses data to match multiproduct sellers with heterogeneous consumers who can purchase both on and off the platform. The platform sells targeted ads to sellers that recommend their products to consumers and reveals information to consumers about their values. The revenue-optimal mechanism is a managed advertising campaign that matches products and preferences efficiently. In equilibrium, sellers offer higher qualities at lower unit prices on than off the platform. Privacy-respecting data-governance rules such as organic search results or federated learning can lead to welfare gains for consumers. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2304.07653&r=ind |
| By: | Jos Jansen (Department of Economics and Business Economics, Aarhus University) |
| Abstract: | I study the incentives of Cournot duopolists to share their technologies with their competitor in markets where intellectual property rights are absent and imitation is costless. The trade-off between a signaling effect and an expropriation effect determines the technology-sharing incentives. In equilibrium, there tends to be at most one firm that shares technologies. For similar technology distributions, there exists an equilibrium in which nobody shares. If the technology distributions are skewed towards efficient technologies, then there may exist equilibria in which one firm shares all technologies, only the best technologies, or only intermediate technologies. Further, I consider several extensions. |
| Keywords: | Cournot duopoly, strategic disclosure, indivisibility, innovation, trade secret, open source, skewed distribution |
| JEL: | D82 L13 L17 O32 O34 |
| Date: | 2023–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2023-04&r=ind |
| By: | Vivek Bhattacharya; Gastón Illanes; David Stillerman |
| Abstract: | We document the effects of a comprehensive set of US retail mergers. On average, prices increase by 1.5% and quantities decrease by 2.3%, with significant heterogeneity in outcomes across mergers. Price changes correlate with the screens codified in the Horizontal Merger Guidelines. Through a model of enforcement, we find that agencies challenge mergers they expect would increase average prices more than 8–9%. Modest increases in stringency reduce prices and the prevalence of approved anti-competitive mergers, with minimal impacts on blocked pro-competitive mergers, at a significantly greater agency burden. Our findings inform the debate over whether antitrust enforcement has been lax. |
| JEL: | D43 K21 L13 L41 |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31123&r=ind |
| By: | Lucie Gadenne (QMUL); Tushar K. Nandi (Indian Institute of Science Education and Research (IISER); CREST and CEPR) |
| Abstract: | Do tax systems distort firm-to-firm trade? This paper considers the effect of tax policy on supply chains in a large developing economy, the state of West Bengal in India. Using administrative panel data on firms, including transaction data for 4.8 million supplier clientpairs, we first document substantial segmentation of supply chains between firms paying Value-Added Taxes (VAT) and non-VAT-paying firms. We then develop a model of firms’ sourcing and tax decisions within supply chains to understand the mechanisms through which tax policy interacts with supply networks. The model predicts partial segmentation in equilibrium because of both supply-chain distortions (taxes affect how much firms trade with each other) and strategic complementarities in firms’ decision to pay VAT. Finally, we test the model’s predictions using variations over time within firm and within supplier-client pairs. We find that the tax system distorts firms’ sourcing decisions, and evidence of strategic complementarities in firms’ tax choices within supplier networks. A hypothetical reform exempting all firm-to-firm transactions from the VAT would lead to growth of small- and medium-sized firms at the cost of a smalldecrease in tax revenues. |
| JEL: | O23 H25 L14 |
| Date: | 2023–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:947&r=ind |