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on Industrial Organization |
| By: | Ling, Xiao; Ray, Sourav; Levy, Daniel |
| 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; Dynamic pricing; Rational inattention; Consumer inattention; Price rigidity; Price flexibility; Sticky prices; Rigid prices; Retailing; Small price changes; Small price increases; Small price decreases; inflation |
| JEL: | E31 L11 L16 M21 M31 |
| Date: | 2025–12–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127108 |
| By: | Andersson, Jonas (Dept. of Business and Management Science, Norwegian School of Economics and Business Administration); Nilsen, Øivind Anti (Dept. of Economics, Norwegian School of Economics and Business Administration); Skaug, Hans Julius (Dept. of Mathematics, University of Bergen) |
| Abstract: | We develop a model to estimate price-adjustment behavior when prices are observed more frequently than key explanatory variables such as wage costs. We propose a mixedfrequency stochastic (S, s)-model that accommodates infrequently observed costs and allows for plant-, product-, and season-specific heterogeneity. The model is estimated using a likelihood-based nonlinear state-space approach, enabling estimation as if all variables were observed at the same frequency. Applied to monthly price survey data matched with plant-level annual cost data for manufacturing producers, the model yields precise estimates of both cost pass-through and price-inaction thresholds, and reduces the blurring of intermittent price changes. |
| Keywords: | Latent Variables; Pass-Through; Panel Data |
| JEL: | C34 D43 E31 E37 L16 |
| Date: | 2025–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:nhheco:2025_021 |
| By: | David Argente; Salomé Baslandze; Douglas Hanley; Sara Moreira |
| Abstract: | We match patents to products using natural language methods applied to detailed product descriptions and patent texts in the consumer goods sector. While more than half of product innovations originate from non-patenting firms, patent filings are on average followed by subsequent product introductions. Yet this relationship weakens with firm size. Patents held by market leaders also yield revenue premiums beyond what can be explained by their own product introductions and are associated with stronger deterrence of competitors’ innovations. To interpret these findings, we develop a simple growth model in which larger firms have stronger incentives to engage in strategic patenting—filing for protection rather than market innovation—which dampens innovation and slows creative destruction. |
| JEL: | L1 O3 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34592 |
| By: | Henrekson, Magnus (Research Institute of Industrial Economics); Persson, Lars (IFN - Research Institute of Industrial Economics) |
| Abstract: | The European football (soccer) market increasingly funnels rents to superstar players and intermediaries while weakening competitive balance. We trace this dynamic to two forces: (a) technological innovation that globalized broadcasting and magnified superstar returns, and (b) legal rulings boosting player mobility and causing bidding wars. The 2024 Diarra ruling by the Court of Justice of the European Union further loosens transfer constraints and will likely intensify talent concentration at “superclubs”. The result is soaring salaries and transfer fees, persistent financial fragility among non-elite clubs, and growing predictability of match outcomes. We evaluate reform options that preserve Europe’s open-league tradition yet borrow from North American competitive-balance tools: greater revenue sharing, hard/soft salary caps, and draft-like mechanisms. These should be complemented by a “cartel tax” to fund youth sport, and club-governance codes plus credible financial-sustainability rules. |
| Keywords: | sports industry, market integration, Diarra ruling, competitive balance, Bosman ruling, talent development |
| JEL: | D33 D43 D63 J44 L50 L83 Z28 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18354 |
| By: | Zaccaria, Niccolò (Tilburg University, School of Economics and Management); Suetens, Sigrid (Tilburg University, School of Economics and Management); Uras, Burak (Tilburg University, School of Economics and Management) |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tiu:tiutis:00f43201-caf3-4ee0-be17-1784b2634749 |
| By: | Dumont, Michel; Rayp, Glenn |
| Abstract: | We attempt to map out as comprehensively as possible the Belgian companies that offer goods or services with an AI component. The 744 Belgian AI start-ups that we identified (founded since 2010) appear, in comparison with non-AI start-ups, to focus primarily on revenue growth, which is often accompanied by a sharp increase in the number of employees. On the other hand, many of the AI start-ups are not yet profitable, especially those with venture capital. AI start-ups without venture capital are overrepresented in the very small group of the most successful Belgian start-ups, which have high turnover, many employees and are very profitable. |
| Keywords: | Artificiak Intelligence, start-ups, Belgium |
| JEL: | D22 D83 L25 L26 O14 O33 |
| Date: | 2025–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126994 |
| By: | Macchiavello, Rocco (University of Warwick); Miquel-Florensa, Josepa (Toulouse School of Economics); de Roux, Nicolás (Universidad de los Andes); Verhoogen, Eric (Columbia University); Bernasconi, Mario (University of Basel); Farrell, Patrick (Columbia University) |
| Abstract: | Do the returns to quality upgrading pass through supply chains to primary producers? We explore this question in the context of Colombia’s coffee sector, in which market outcomes depend on interactions between farmers, exporters (which operate mills), and international buyers, and contracts are for the most part not legally enforceable. We formalize the hypothesis that quality upgrading is subject to a key hold-up problem: producing high-quality beans requires long-term investments by farmers, but there is no guarantee that an exporter will pay a quality premium when the beans arrive at its mills. An international buyer with sufficient demand for high-quality coffee can solve this problem by imposing a vertical restraint on the exporter, requiring the exporter to pay a quality premium to farmers. Combining internal records from two exporters, comprehensive administrative data, and the staggered rollout of a buyer-driven quality-upgrading program, we find empirical support for the key theoretical predictions. The results are consistent with the hypotheses that quality upgrading can provide a path to higher incomes for farmers, but also that it is unlikely to be viable under standard market conditions in the sector. |
| Keywords: | buyer-driven voluntary standards, vertical restraints, relational contracts, quality upgrading |
| JEL: | O12 F61 L23 Q12 Q13 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18335 |
| By: | Gorecki, Paul |
| Abstract: | Ireland’s national competition authority has recently increased scrutiny of mergers using Assessments (aka Statement of Objections). Despite using this approach, the authority’s 2023 determination of the proposed acquisition by Q-Park of Tazbell is fatally flawed. The authority had competition concerns in three local markets for the supply of off-street car parking spaces to the public. The transaction was cleared with remedies. The paper argues that there was no substantial lessening of competition. The remedies were inadequate. Why? Contributing factors include lack of coherence reflecting confirmation bias. Merger control can be improved by, inter alia: increasing the number of CCPC executive board members to reduce governance overload; and encouraging diverse internal views and peer review through the appointment of a chief economist. The paper forms part of a broader critical narrative of merger control in Ireland. |
| Keywords: | mergers; structural remedies; substantial lessening of competition; critical loss analysis; and Competition Act 2002; car parking. |
| JEL: | D22 D43 K21 L41 R4 |
| Date: | 2025–12–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127352 |
| By: | Benedikt Heid; Laura Márquez-Ramos; Harry Wardana |
| Abstract: | Industrial policy is on the rise. A key instrument used by governments is import licensing to protect domestic industries. However, evidence of its effectiveness is limited. Using customs and firm level data, we estimate the effects of the introduction of import licensing for iron and steel products in Indonesia in 2009. While we find that the number of incoming shipments of protected products is reduced, and that imports are sourced from fewer countries, the overall value or quantity of imports is not affected. At the same time, while domestic iron and steel producers increase their sales in the short run, we do not find long-lasting positive effects on their sales. Our results suggest that while import licensing imposes costs on importers who have to adjust their supply chains, sustained gains for domestic producers are limited. This suggests that import licensing is ineffective as an industrial policy. |
| Keywords: | trade restrictions, import licensing, industrial policy, Indonesia, iron and steel |
| JEL: | F13 F14 L52 L61 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12346 |
| By: | Yu Hao |
| Abstract: | This paper examines how regulation can push an oligopoly from one pricing regime to another. It uses rich data from Chilean pharmacy chains to study a ban on comparative price advertising. Before the ban, ads created demand spillovers across products, making aggressive loss-leader pricing profitable. Once these spillovers were removed, selling below cost became unattractive for any firm, and prices quickly shifted to a coordinated, higher level. A structural demand model shows that the ban reduced both price elasticity and cross-product spillovers, and counterfactuals indicate that the loss of spillovers, rather than just lower elasticity, mainly explains the move to the new coordinated pricing regime. The results show how well intentioned regulation can unintentionally promote price coordination by weakening the mechanisms that support competitive outcomes. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.22917 |