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on Industrial Organization |
| By: | Brianna Alderman (Harvard University); Roger Blair (University of Florida); Javier Donna (University of Miami) |
| Abstract: | We study the Microsoft-Activision acquisition through the lens of a complementary-product merger. When two complementary good producers consolidate, the merger is not horizontal because the two firms do not produce substitutable goods. Nor is the merger vertical, as neither firm supplies the other. We develop an economic model to study these types of mergers that allows for the possibility of rivals exiting the market. Three main conclusions flow from our analysis. (1) The welfare effects of the Microsoft-Activision acquisition are ambiguous; they depend on several industry factors. (2) One will not obtain the correct welfare effects using an incorrect vertical structure; harm to consumers will typically be larger in a complementary-product merger relative to a vertical one. (3) Consumer harm associated with rivals’ exit due to the merger might substantially reduce welfare even if it is a welfare-enhancing merger absent exit. Our analysis provides an analytical roadmap for the antitrust enforcement authorities regarding the theories of harm in complementary-good mergers. |
| Keywords: | Antitrust, Competition Policy, Regulation, Complementary Mergers, Vertical Mergers, Merger Identification. |
| JEL: | K21 K41 L13 L42 L44 L52 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:359 |
| By: | Adriana Alventosa (ERI-CES, Universitat de València); José Manuel Ordóñez-de-Haro (Departamento de Teoría e Historia Económica. Universidad de Málaga.); Javier Rodero Cosano (Smart Decision Lab, Departamento de Teoría e Historia Económica. Universidad de Málaga.) |
| Abstract: | This paper develops a dynamic discrete-time model of collusive behaviour in which firms can apply for leniency to reduce fines. We propose a sequential-move game inspired by the centipede game, capturing firms' incentives to be the first to self-report a cartel. The model examines cartel formation, stability, and recidivism, assuming that fines apply to the undiscovered record of collusion, not just current conduct. We find that when collusion is attractive but the leniency programme is not sufficiently generous, firms form a single cartel without self-reporting. However, when collusion is highly attractive and the leniency programme sufficiently generous, it can destabilize cartels but also foster recidivism: firms use leniency to ``clean the slate'' and restart collusion at a lower expected cost. This equilibrium behaviour may help explain the empirically observed prevalence of short-lived cartels and repeat offenders under existing leniency regimes. |
| Keywords: | Antitrust; Cartels; Recidivism; Leniency; Dynamic Games |
| JEL: | D43 K21 K42 L40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:mal:wpaper:2025-2 |
| By: | Hiroshi Kitamura; Noriaki Matsushima; Misato Sato; Wataru Tamura |
| Abstract: | We experimentally investigate exclusive-offer competition between two existing upstream firms. In theory, when upstream firms make exclusive offers to a downstream monopolist, both exclusion and non-exclusion can be equilibrium outcomes. By varying key parameters, we explore how bargaining power and product differentiation affect the likelihood of exclusion outcomes. We experimentally find that exclusion is more likely to be observed when the upstream firms have stronger bargaining power or when they produce more differentiated products; paradoxically, the higher upstream firms' profits from cooperatively offering unattractive exclusive contracts, the more likely they are to fall into intense exclusive-offer competition. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1281 |
| By: | Genakos, C.; Pagliero, M.; Sabatino, L.; Valletti, T. |
| Abstract: | Fixed book price (FBP) agreements are a form of resale price maintenance applied to books in various countries. FBP restricts retail price competition with the aim of promoting book production variety. Yet, despite its popularity and adoption in many countries, there is no empirical evidence on its effects. We offer systematic evidence on the impact of FBP on book variety and prices using a detailed new dataset from Italy that includes the universe of books published and bought, before and after the introduction of FBP. Our results indicate that FBP raises prices without significantly affecting the number of new books published in the marketplace. However, it also increases considerably the variety of books actually bought, especially from independent bookstores. We estimate a structural demand model that accounts for both effects, finding that consumers overall benefit from the regulation. |
| Keywords: | Cultural Goods, Resale Price Maintenance, Book Market, Ex-post Policy Evaluation |
| JEL: | L10 L40 L50 Z10 |
| Date: | 2025–03–18 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2514 |
| By: | Gagnepain, Philippe; Martimort, David |
| Abstract: | We explore empirically the impact of the market sharing collusive practices that were implemented in the French public transportation industry between 1994 and 1999. We build a structural model of bidding markets where innovating firms compete for the market and have the ability to spread the benefits of their innovation through all markets on which they are active. Each local competitive environment shapes the distribution of the prices (the bids) paid by public authorities to transport operators. We recover empirically the distribution of prices and innovation shocks and we show that collusive practices had overall a limited impact on prices. Firms were in reality more interested in avoiding significant financial risks inherent to the activity, as well as the high cost of preparing a tender proposal. As a by-product, we perform a counterfactual analysis that allows us to simulate how an increase in firms’ innovation reduces prices significantly. |
| Keywords: | Bidding Markets; Market Sharing; Collusion; Innovation; Public Transport |
| JEL: | D22 D44 K21 L9 |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130478 |