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on Industrial Organization |
| By: | Bos, Iwan; Cesi, Berardino; Marini, Marco A. |
| Abstract: | This note examines cartel stability in a vertically differentiated duopoly with quality-anchored buyers. It is shown that such buyers are a facilitating factor for collusion. |
| Keywords: | Captive Consumers, Cartel Stability, Collusion, Quality-Anchored Buyers, Ver- tical Product Differentiation. |
| JEL: | C7 C71 C72 D4 D43 L1 L13 |
| Date: | 2025–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125064 |
| By: | Rabah Amir (University of Iowa); Adriana Gama (El Colegio de Mexico) |
| Abstract: | This paper provides a thorough characterization of the properties of Cournot’s complementary monopoly model (or oligopoly with perfect complements) in a general setting, including existence, uniqueness and the comparative statics effects of entry. As such, this serves to unify various results from the extant literature that have typically been derived with limited generality. In addition, several studies have suggested that Cournot’s complementary monopoly model is the dual problem to the standard Cournot oligopoly model. This result crucially relies on the assumption that the firms have no production costs. This paper shows that if the production costs of the firms are different from zero, the nice duality between these two oligopoly settings breaks down. One implication of this breakdown is that, in contrast to the Cournot model, oligopoly with perfect complements can be a game of strategic complements in a global sense even in the presence of production costs. |
| Keywords: | oligopoly with perfect complements, price competition, horizontal integration, supermodularity |
| JEL: | C72 D43 L13 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:emx:ceedoc:2025-04 |
| By: | Jihwan Do (Yonsei University); Nicolas Riquelme (Universidad de los Andes) |
| Abstract: | We revisit Cournot competition with asymmetric demand information by introducing a common input supplier. We characterize a unique equilibrium where information spills over through screening and signaling in vertical contracting. The equilibrium outcomes either coincide with those under complete information or involve quantity distortions. Compared to the independent-supplier case, the presence of the common supplier enhances both consumer and producer surplus under mild downstream competition. Under intense competition, producer surplus can decline, although consumer surplus may still increase. Our findings reveal informational efficiency gains of upstream mergers and the possibility of a welfare improvement even when direct efficiency gains are absent. |
| Keywords: | Cournot competition; Asymmetric information; Common agency; Information transmission; Vertical contracting; Screening; Signaling. |
| JEL: | D82 D86 L13 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2025rwp-251 |
| By: | Crémer, Jacques |
| Date: | 2025–07–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130643 |
| By: | Jihwan Do (Yonsei University); Jeremy Kettering (Alvernia University) |
| Abstract: | We examine a model of imperfect competition characterized by endogenous entry, where two firms decide whether to enter the market or remain out and subsequently determine their output upon entry. A key aspect of the model is the presence of uncertain market demand, with one firm possessing an informational advantage over its competitor. It is shown that in the unique equilibrium with endogenous entry, informational asymmetry distorts the entry incentives for the better-informed firm, potentially causing it to earn lower profits than its rival. Moreover, market entry may be excessive from a consumer surplus viewpoint, and more precise information can have non-monotonic effects on welfare due to the entry distortions. Within this framework, we also analyze various regulatory measures and policies aimed at enhancing consumer welfare. |
| Keywords: | Oligopoly; Market entry; Asymmetric information; Competition policy; Strategic disadvantage of information |
| JEL: | D43 D82 L13 L50 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:yon:wpaper:2025rwp-253 |
| By: | Rik Rozendaal |
| Abstract: | This paper studies the relationship between climate policy, market power and innovation. Using data on patenting and firms' balance sheets, I document that firms with a higher degree of market power are, on average, more invested in dirty technologies than their direct competitors. I then develop a model of directed technical change with strategic innovation incentives, incorporating the empirical evidence. A carbon tax affects market power and both the intensity and the direction of innovation. In the calibrated model, a carbon tax lowers aggregate markups and increases clean innovation while also increasing dirty innovation by some firms. |
| Keywords: | climate policy, market power, innovation, directed technical change |
| JEL: | O30 O44 Q55 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11938 |
| By: | Qiuyu Lu (Ph.D. in Economics, Graduate School of Economics, the University of Osaka); Noriaki Matsushima (Osaka School of International Public Policy, the University of Osaka); Shiva Shekhar (Tilburg School of Economics and Management, Tilburg University) |
| Abstract: | This study explores the welfare impact of personalized pricing for consumers in a duopolistic two-sided market, with consumers single-homing and developers affiliating with a platform according to their outside option. Personalized pricing, which is private in nature, cannot influence expectations regarding the network sizes, inducing the platforms to offer lower participation fees for developers. Those lower fees increase network benefits for consumers, allowing the platforms to exploit these benefits through personalized pricing. Personalized prices are higher when the network value for developers is high, benefiting competing platforms at the expense of consumers. These findings offer policy insights on personalized pricing. |
| Keywords: | Personalized pricing, Uniform prices, Two-sided market, Content developers |
| JEL: | L13 D43 M21 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:osp:wpaper:25e003 |
| By: | Philipp Strack (Yale University); Kai Hao Yang (Yale University) |
| Abstract: | A monopolist offers personalized prices to consumers with unit demand, heterogeneous values, and idiosyncratic costs, who differ in a protected characteristic, such as race or gender. The seller is subject to a non-discrimination constraint: consumers with the same cost, but different characteristics must face identical prices. Such constraints arise in regulated markets like credit or insurance. The setting reduces to an optimal transport, and we characterize the optimal pricing rule. Under this rule, consumers may retain surplus, and either group may benefit. Strengthening the constraint to cover transaction prices redistributes surplus, harming the low-value group and benefiting the high-value group. |
| Date: | 2025–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2447 |
| By: | James R. Boohaker |
| Abstract: | When competitors compete in more than one market they are said to have multi-market contact (MMC). Firms with MMC are more likely collude to avoid cross-market retaliation. This paper investigates the impact of MMC among U.S. battery exporters on the prices they set in foreign markets using confidential export transaction data provided by the U.S. Census Bureau. The ability of firms to exploit MMC for collusive gain in international markets can be both detrimental to import-dependent consumers and harder for anti-trust authorities to detect. Motivated by litigation finding evidence of collusive behavior by multi-national battery manufacturers, MMC has an upward effect on export prices set by U.S. battery exporters. These results are robust across different panel regression specifications using different measures of MMC. |
| Keywords: | multi-market contact, oligopoly, export prices, collusion |
| JEL: | D43 F12 F13 F14 L13 L14 L40 L63 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-32 |
| By: | Durrmeyer, Isis; D'Haultfoeuille, Xavier; Fournel, Jean-François; Iaria, Alessandro |
| Abstract: | We investigate the welfare consequences of introducing an online distribution channel in the French car industry, where most sales take place in person through car dealers relying on third-degree price discrimination. We estimate a structural model of demand with unobserved third-degree price discrimination and transportation costs related to visiting car dealers. In counterfactuals, we introduce an online distribution channel in which prices are uniform and consumers benefit from lower transportation costs. When both distribution channels are available, firms charge low online prices to attract internet-savvy consumers online, while continuing to price discriminate the less internet-savvy consumers in person. The online channel is profitable for firms, and the more it reduces transportation costs, the more profitable it is. However, the costs and benefits of the online channel are unevenly distributed among consumers, with older, wealthier, and internet-savvy consumers obtaining most of the benefits. |
| Date: | 2025–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130672 |
| By: | Song, Myungkoo (Korea Institute for Industrial Economics and Trade) |
| Abstract: | Roughly speaking, blockchain is a digital ledger that records transactions in a distributed database spread across multiple computers. Its decentralized nature enhances security, making blockchain-based platforms or applications highly resilient. In addition, by enabling a permanent, immutable, and transparent record of transactions, blockchain has the potential to foster trust without the need for intermediaries, especially in environments where trusted third parties are scarce. There is also growing interest in blockchain in the manufacturing sector. Manufacturers worldwide are currently navigating a complex landscape of challenges, including intense global competition, supply chain disruptions, and increasing demands for sustainability. South Korean manufacturers in particular are facing substantial headwinds due to the rise of Chinese manufacturers, global trade tensions, and a demographic crisis driven by low birth rates and an aging population. To address these challenges, firms are looking intensely at adopting emerging technologies such as blockchain, artificial intelligence (AI), and quantum computing. Manufacturing interest in blockchain owes to the technology’s ability to enhance data integrity and foster trust among parties. Firms also view the technology as a key to unlocking innovative solutions to the aforementioned industry challenges. In this paper, I explore the growth of the blockchain industry in South Korea and examine the potential of blockchain technology in the country’s manufacturing sector. First, I examine the current state of the country’s blockchain industry and its adoption in the manufacturing sector. Next, I analyze use cases and assess how blockchain can improve competitiveness in the sector. Finally, I discuss the role of government policy in facilitating blockchain integration to strengthen the competitiveness of the manufacturing sector further. |
| Keywords: | blockchain; ICT; digital technology; cryptocurrency; industrial blockchain; Bitcoin; manufacturing; decentralization; digital ledger; South Korea; Korean blockchain; advanced digital industry; Korea Institute for Industrial Economics and Trade; KIET |
| JEL: | L60 L63 L86 O25 O30 |
| Date: | 2025–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kieter:2025_012 |
| By: | Hanming Fang; Ming Li; Guangli Lu |
| Abstract: | We decode China’s industrial policies from 2000 to 2022 by employing large language models (LLMs) to extract and analyze rich information from a comprehensive dataset of 3 million documents issued by central, provincial, and municipal governments. Through careful prompt engineering, multistage extraction and refinement, and rigorous verification, we use LLMs to classify the industrial policy documents and extract structured information on policy objectives, targeted industries, policy tones (supportive or regulatory/suppressive), policy tools, implementation mechanisms, and intergovernmental relationships, etc. Combining these newly constructed industrial policy data with micro-level firm data, we document four sets of facts about China's industrial policy that explore the following questions: What are the economic and political foundations of the targeted industries? What policy tools are deployed? How do policy tools vary across different levels of government and regions, as well as over the phases of an industry's development? What are the impacts of these policies on firm behavior, including entry, production, and productivity growth? We also explore the political economy of industrial policy, focusing on top-down transmission mechanisms, policy persistence, and policy diffusion across regions. Finally, we document spatial inefficiencies and industry-wide overcapacity as potential downsides of industrial policies. |
| JEL: | C55 L52 O25 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33814 |