|
on Industrial Organization |
| By: | Zhengyang Liu; Haolin Lu; Liang Shan; Zihe Wang |
| Abstract: | In this paper, we consider the dynamic oscillation in the Cournot oligopoly model, which involves multiple firms producing homogeneous products. To explore the oscillation under the updates of best response strategies, we focus on the linear price functions. In this setting, we establish the existence of oscillations. In particular, we show that for the scenario of different costs among firms, the best response converges to either a unique equilibrium or a two-period oscillation. We further characterize the oscillations and propose linear-time algorithms for finding all types of two-period oscillations. To the best of our knowledge, our work is the first step toward fully analyzing the periodic oscillation in the Cournot oligopoly model. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.09435 |
| By: | Jay Pil Choi; Heiko Gerlach |
| Abstract: | This paper analyzes private and social incentives to levy an ad valorem licensing fee in a supply chain governed by the legal principle of patent exhaustion. With perfect competition at the upstream and downstream stage, the choice of the licensing segment is irrelevant for the patent holder and consumers. When exactly one segment of the value chain is monopolistic while the other one is competitive, the patent holder prefers licensing at the monopolistic stage leading to an alignment of private and social incentives. With imperfect competition at both stages, excessive downstream licensing can arise. We demonstrate that charging licensing fees at both stages of the supply chain (“double-dipping”) can be profitable for the patent holder and beneficial for consumers. We discuss the implications of this result for the application of the patent exhaustion principle. |
| Keywords: | patent licensing, supply chain, first sale doctrine, patent exhaustion, double-dipping |
| JEL: | D43 L41 L44 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11313 |
| By: | Anna D'Annunzio; Antonio Russo; Shiva Shekhar |
| Abstract: | The adtech industry plays a key role in facilitating connections between digital publishers and advertisers. This paper studies the impact of vertical integration between an intermediary and a major publisher on the online advertising ecosystem and the provision of content. We find that vertical integration enables the intermediary to leverage exclusive access to data, leading to dominance in the intermediation market. As a result, the integrated intermediary is able to collect a larger ad-tech tax from independent publishers by shading its bid for impressions. This practice reduces investments in content by independent publishers, while the integrated publisher increases its investment. Therefore, the net effect of vertical integration on consumer welfare and total welfare can be positive or negative. We discuss potential policy interventions that restore the outcome as under vertical separation. |
| Keywords: | online advertising, intermediaries, vertical integration, adtech tax, content quality |
| JEL: | D43 D62 L82 M37 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11400 |
| By: | Gordon Jochem Klein; Ralph Bernd Siebert; Ralph Siebert |
| Abstract: | Our study provides empirical insights into the extent to which differential market demographics and differential competition environments affect product prices. Using big data, we find that price variations are caused mainly by differential competitive environments. More specifically, we find that Brand Competition Within Stores exerts the largest downward pressure on prices. A 10 percent increase in the number of brands reduces prices by about 10 percent. Product Competition Within Stores exerts the second-largest price effect, followed by Store Competition Within Local Markets. Moreover, retailers operating multiple stores in a local market coordinate prices to attenuate competitive downward pressure on prices. |
| Keywords: | anti-inflammatory drugs, competition, market determinants, price effects, pain killers |
| JEL: | D40 D90 L10 L20 M20 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11344 |
| By: | Jing Cai; Wei Lin; Adam Szeidl |
| Abstract: | We make randomized firm-to-firm referrals between 700 supplier and client firms in the industry producing the Chinese writing brush. Subsidized referrals lead to subsequent transactions and a partial crowding out of prior partners; information-only referrals have no effect. The referrals increase revenue, profit, and hours worked in supplier firms and growth-oriented client firms. Treated suppliers increase product quality, while treated clients expand product variety into higher-quality products, suggesting that the referrals enable complementary upgrading. Treated firms increase beliefs about the value of partners, search for partners, and the number of non-referred partners, suggesting that pessimistic beliefs is a key partnering friction. The referrals generate very large private and social returns. |
| JEL: | D22 L20 O12 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33082 |
| By: | Hennessy, David; Lapan, Harvey |
| Abstract: | Market concentration ratios are popular statistics for characterizing the extent of market dominance in an imperfectly competitive market, but these ratios may not agree when comparing two markets. Neither do they necessarily agree with the Herfindahl-Hirschman or entropy indices. This letter compares two Cournot oligopoly markets in which firms have constant unit costs. It is shown that the majorization pre-ordering on normalized marketing margin vectors is both necessary and sufficient for all aforementioned indices to agree on which is the more concentrated market. |
| Date: | 2024–10–29 |
| URL: | https://d.repec.org/n?u=RePEc:isu:genstf:202410291651270000 |
| By: | Gomes, Renato; Lefouili, Yassine |
| Abstract: | This paper explores the pricing of ancillary payment services by platforms and its implications for welfare. We distinguish between two types of platforms: vertical platforms that operate their own closed payment schemes, and stacked platforms that offer payment services through open schemes operated by third parties. We analyze the impact of a regulation mandating platforms to provide access to third-party payment services and examine the regulation of interchange fees within the context of stacked platforms. |
| Keywords: | platforms, payment services, ancillary services, regulation, interoperability, interchange fee |
| JEL: | L51 L86 E42 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129914 |
| By: | Luca Macedoni; John Morrow; Vladimir Tyazhelnikov |
| Abstract: | Which products are potentially produced together? When demand for a product increases, which firms will supply it? Using multi-product production patterns within and across firms, we recover a continuous cost-based distance between firms and unproduced products. Higher product distance implies decreasing adoption frequency. When export demand induces domestic product adoption, closer firms provide this supply. Potential costs imply measures of Revenue and Competition Potential. These predict firm sales and scope growth. If all firms produced all products linked by co-production, consumer welfare could increase by 16-30% under constant markups, rising to 46-86% under variable markups. |
| Keywords: | multi-product firms, firm capabilities, product classification, product space, growth paths |
| JEL: | F10 D20 L10 L23 L25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11398 |
| By: | Dehez, Pierre (Université catholique de Louvain, LIDAM/CORE, Belgium); Ferey, Samuel (University of Lorraine) |
| Abstract: | Leniency programs in antitrust investigations exist in Europe since the late nineties. They cover secret agreements and concerted practices between companies, and provide total or partial immunity to companies reporting evidence. This raises the question of assessing correctly the contribution of each company that take part in a leniency program. This question is formalized within a cooperative game with transferable utility. The resulting game being convex, its core is nonempty and contains the Shapley value in its center. It defines a reference allocation that treats the participants symmetrically. In practice, companies report sequentially leading to allocations that are vertices of the core. |
| Keywords: | Competition law ; leniency programs ; core ; Shapley value |
| JEL: | L40 K21 C71 |
| Date: | 2024–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:cor:louvco:2024008 |
| By: | Ralph Siebert; Xiaoyan Zhou |
| Abstract: | This study provides a test for measurement of spatial competition in residential real estate markets. Several alternative spatial competition measures are tested. We employ a Bertrand oligopoly model with differentiated products and adopt a Spatial Autoregressive model using a two stage least squares estimator. Our results show that commonly used count-based measures using the number of competitors in specific geographic radii are outperformed by price-based measures using prices of nearest competing neighbors. The main reason is that the latter measure accounts for heterogeneous neighborhood density of competitors. The measure captures the decaying pattern of spatial price competition over distance. The measure also stands out in capturing het-erogeneous spatial price competition effects. We find that spatial price competition is more intense among high-value homes within the five nearest competing houses. |
| Keywords: | price effects, real estate market, spatial competition, spatial econometrics, spatial markets |
| JEL: | D40 R10 R30 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11380 |
| By: | Lars Hornuf; Matthias Mattusch |
| Abstract: | Fintech startups have set out to revolutionize the financial world. However, little is known about how successful and innovative these firms actually are. This paper investigates firm failure, funding success, and innovation capacity using a hand-collected dataset of 892 German fintechs founded between 2000 and 2021. We find that founders with a business degree and entrepreneurial experience have a better chance of obtaining funding, while founder teams with science, technology, engineering, or mathematics backgrounds file more patents. Early third-party endorsements and foreign partnerships substantially increase firm survival. We also establish the following stylized facts: (1) fintechs focusing on business-to-business models and which position themselves as technical providers prove to be more effective; and (2) fintechs competing in segments traditionally reserved for banks are generally less successful and less innovative. These results have important implications for the early-stage success management of fintech firms and the investment decisions of venture capital funds and government startup programs. |
| Keywords: | Fintech industry, firm funding, firm failure, innovation capacity |
| JEL: | G24 M13 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11301 |
| By: | Altenburg, Tilman |
| Abstract: | Industrial policy is firmly back on the international agenda and it comes in new forms. The general attitude of governments around the world has gone through phases: from outright rejection in some countries during the neoliberal phase to light-handed interventions in the early 2000s, and, increasingly, to deeper interventions over the last 10 to 15 years. Two trends are driving industrial policymaking of late, especially in the United States, China and Europe: decarbonization, which requires deep, government-led restructuring of various industries; and increasing geopolitical rivalry and supply chain disruptions, which raise concerns about strategic autonomy and economic resilience. Both trends result in heavy-handed market interventions, including unprecedented subsidies to firms, protectionism and control of foreign direct investment (FDI) flows. This study explores how these trends are changing industrial policy in Germany by examining three industries: solar and wind energy, hydrogen and digital technologies. It concludes with a discussion of the implications of these shifts for Latin America and the Caribbean, in light of its need to position itself in a changing geopolitical environment. In doing so, the region can learn from the successes and failures of Germany and other countries. |
| Date: | 2024–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col022:80836 |
| By: | Payal Malik (Indian Council for Research on International Economic Relations (ICRIER)); Bhargavee Das; Harishankar Thayyil Jagadeesh |
| Abstract: | Cloud computing is the engine powering the Artificial Intelligence (AI) revolution and several other emerging technologies. While current demand and expected market growth have enabled the entry of new players, the market remains highly concentrated, with a few large cloud service providers who enjoy first-mover advantage and leverage certain common characteristics of digital markets such as economies of scale, network effects and conglomerate effects. This report examines these economic characteristics in the context of cloud computing and provides a comprehensive analysis of the competitive landscape of the market in India and worldwide. A key focus of the report is on the competition concerns that have been highlighted by competition authorities across jurisdictions, such as egress fees, committed spending discounts, tying and bundling, limited interoperability, and application portability. This report undertakes a discussion of these technical and financial market barriers within the Indian context through secondary research and stakeholder consultations. It highlights the ways in which the Indian market follows global trends. Finally, the report explores possible options for enhancing competition. |
| Keywords: | Cloud Computing, Competition, Digital Markets, Digital Public Infrastructure, icrier |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:report:24-r-04 |