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on Industrial Organization |
| By: | Andrew Rhodes (Toulouse School of Economics); Jidong Zhou (Yale University); Junjie Zhou (Tsinghua University) |
| Abstract: | This paper provides a framework in which a multiproduct ecosystem competes with many single-product firms in both price and innovation. The ecosystem is able to use data collected on one product to improve the quality of its other products. We study the impact of data regulation which either restricts the ecosystem's cross-product data usage, or which requires it to share data with small firms. Each policy induces small firms to innovate more and set higher prices; it also dampens data spillovers within the ecosystem, reduces the ecosystem's incentive to collect data and innovate, and potentially increases its prices. As a result, data regulation has an ambiguous impact on consumers, and is more likely to benefit consumers when small firms are relatively more efficient in innovation. A data cooperative among small firms, which helps them to share data with each other, does not necessarily benefit small firms and can even harm consumers. |
| Date: | 2025–02–14 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2426 |
| By: | Dirk Bergemann (Yale University); Rahul Deb (Boston College) |
| Abstract: | We study the robust sequential screening problem of a monopolist seller of multiple cloud computing services facing a buyer who has private information about his demand distribution for these services. At the time of contracting, the buyer knows the distribution of his demand of various services and the seller simply knows the mean of the buyerÕs total demand. We show that a simple Òcommitted spend mechanismÓ is robustly optimal: it provides the seller with the highest profit guarantee against all demand distributions that have the known total mean demand. This mechanism requires the buyer to commit to a minimum total usage and a corresponding base payment; the buyer can choose the individual quantities of each service and is free to consume additional units (over the committed total usage) at a fixed marginal price. This result provides theoretical support for prevalent cloud computing pricing practices while highlighting the robustness of simple pricing schemes in environments with complex uncertainty. |
| Date: | 2025–02–10 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2423 |
| By: | Pablo Casas; Asis Martinez-Jerez; Helena Perrone |
| Abstract: | We show evidence of retailers using stockouts to steer demand towards products with higher retailer margins. We consider a unique setting where regulation limits the use of vertical agreements that could weaken steering incentives, prices are set by manufacturers, and product assortment is fixed in the short run. Using data on cigarette vending machines, we find empirical evidence consistent with retailers making strategic product re-stocking decisions. They exert less re-stocking effort for low-margin products, prompting consumers to shift purchases toward high-margin products. In a setting where prices vary infrequently, we exploit variation in product availability as a source of identification to recover preference parameters. Estimated diversion ratios are high across products within the same vending machine and low towards outside retailers. We also recover manufacturers' marginal costs. Counterfactual exercises based on our model parameter estimates measure the welfare effects of demand steering for consumers and manufacturers. On average, welfare losses are economically relevant; however, some manufacturers are better off under strategic stockouts. |
| Keywords: | stockouts, demand steering, demand estimation, vending machine |
| JEL: | L1 L4 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_641 |
| By: | Casacuberta, Carlos; Gandelman, Néstor |
| Abstract: | This paper examines the relationship between wages and market power at the firm level. We derive firm-specific measures of labor market power and present a natural decomposition of wage changes into shifts in labor market power and labor productivity. Our findings indicate that 50-60 percent of the variation in nominal wages is attributable to price changes, while the remaining portion, reflecting changes in real wages, is explained mainly by changes in market power and, to a lesser extent, by changes in labor productivity. Moreover, we show that firms with greater market power tend to pay higher wages, suggesting rent-sharing between employers and employees, at the cost of higher prices for consumers. |
| Keywords: | Price Markups;Labor market power |
| JEL: | L10 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13987 |
| By: | Lluberas, Rodrigo |
| Abstract: | The functioning of the banking sector is key for economic growth. In this paper, we first gather banks' balance sheet monthly regulatory information in a consistent manner for seven Latin American countries. Second, we estimate lending markups and deposits markdowns in each country over time. Third, with the estimated markups and markdowns in the different countries we study how they relate with banks' profitability, the cost of credit, credit risk and credit supply. Finally, we explore whether there are differences in markups on lending rates and markdowns on deposit rates between international and domestic banks. |
| Keywords: | Banking;Markups;markdowns;Market concentration |
| JEL: | E44 L11 L16 G21 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13988 |