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on Industrial Organization |
| By: | Robin Ng |
| Abstract: | This paper examines how two-sided platforms develop their recommender systems to be precise about value-for-money. On each platform, more precise recommendations generate ranking and screening effects: they steer demand toward high value-for-money products, intensifying price competition among firms which drives out lower-quality firms. Thus, more precise recommendations benefit consumers but reduce platform’s per-transaction revenue. A monopolist platform still prefers precise recommendations, as this expands demand. Competing platforms choose even more precise recommendations. However, when consumers search across platforms or recommender systems are overly complex, recommendations become less precise. This shows that market power is only one potential explanation for 'ensh*ttification'. |
| Keywords: | Digital economy, Recommender systems, Two-sided platforms |
| JEL: | D21 L10 L86 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_718 |
| By: | Xiao Ling; Sourav Ray; Daniel Levy |
| Abstract: | Much like small ripples in a stream, which get lost in the larger waves, small changes in retail prices often fly under the radar of public perceptions, while large price changes appear as marketing moves associated with demand and competition. Unnoticed, these could increase consumers’ out-of-pocket expenses. Indeed, retailers could boost their profits by making numerous small price increases or by obfuscating large price increases with numerous small price decreases, thereby bypassing the consumer’s full attention and consideration, and triggering consumer fairness concerns. Yet only a handful of papers study small price changes. Extant results are often based on a single retailer, limited products, short time span, and legacy datasets dating back to the 1980s and 1990s – leaving their current practical relevance questionable. Researchers have also questioned whether the reported observations of small price changes are artifacts of measurement errors driven by data aggregation. In a series of analyses of a large dataset (almost 79 billion weekly price observations from 2006 to 2015, covering 527 products, and about 35, 000 stores across 161 retailers), we find robust evidence of asymmetric pricing in the small (APIS), where small price increases outnumber small price decreases, but no such asymmetry is present in the large. We also document the reverse phenomenon (APIS-R), where small price decreases outnumber small price increases. Our results are robust to several possible measurement issues. Importantly, our findings indicate a greater current relevance and generalizability of such asymmetric pricing practices than the existing literature recognizes. |
| Keywords: | Asymmetric pricing, Asymmetric Price Adjustment, Dynamic pricing, Rational inattention, Consumer inattention, Price rigidity, Price flexibility, Rigid prices, Sticky prices, Small price changes, Small price increases, Small price decreases, Inflation |
| JEL: | E31 L16 L11 D91 M31 M21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:333236 |
| By: | Davide Del Prete (the University of Naples Parthenope); Aminur Rahman (Asian Development Bank); Edoardo Tolva (University of Lisbon ISEG) |
| Abstract: | This paper studies how international buyers’ market power and transport mode shape the pass-through of exchange rate shocks to export prices. Using transaction level customs data from the Bangladeshi garment sector, we first document substantial buyer market power and the concentration of export activity in key trade hubs that shape transport decisions. We then show that large buyers leverage both their market power and their reliance on air freight to mitigate the impact of exchange rate fluctuations. Taken together, our findings highlight how buyer characteristics shape exporters’ adjustment to external shocks, with broader implications for regional economic resilience. |
| Keywords: | Bangladesh;exchange rate;global value chain;market power;transport mode |
| JEL: | D22 D43 E31 F10 L14 L22 |
| Date: | 2025–11–28 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:021792 |
| By: | Anna Ignatenko; Pierre Cariou; Haiying Jia; Francois-Charles Wolff |
| Abstract: | We separate the effects of market power and capacity constraints in transportation. A simple model shows imperfect competition—not capacity constraints—generates differential freight price changes across buyers following a demand shock. Consistent with this, difference-in-differences estimates reveal, after COVID-19 demand surge, freight forwarders faced a 30 pp larger increase in base freight rates than direct shippers despite identical contract terms. This reflects rising carrier markups that disproportionately burden smaller firms and explain at least 35% of freight price growth and 16% of U.S. import price inflation. Thus, competition in transportation is crucial for supplychain resilience and macroeconomic stability |
| Keywords: | market power, transportation, price discrimination, trade costs, inflation, intermediaries |
| JEL: | F1 L2 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12293 |