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on Industrial Organization |
| By: | Christos Genakos; Themistoklis Kampouris |
| Abstract: | This paper examines the “right” geographic definition of relevant markets by analyzing how excise tax pass-through varies with local competition in the retail gasoline market of a large metropolitan city. Using a natural experiment from three unanticipated and exogenous fuel tax hikes and detailed station-level price data, we show that average pass-through is invariant to the number of nearby competitors across various geographic definitions. This contrasts with theoretical predictions and prior island-based evidence, suggesting that the entire metropolitan area functions as a single market. Our findings challenge standard isodistance- or isochrone- based market delineations used in academic research and competition policy. |
| Keywords: | Geographic market definition, gasoline market, competition, pass-through, market structure |
| JEL: | H22 L1 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2154 |
| By: | Martin Beraja; Francisco J. Buera |
| Abstract: | Are competition policies designed for static industries suitable for innovative industries where dynamic competition for the market is key? If not, how should policies differ? We develop a model of the life-cycle of an oligopolistic industry: a version of Jovanovic and MacDonald (1994) with a finite number of firms. The equilibrium features a period of intense entry, followed by a shakeout and eventual industry concentration as some firms scale through innovation while most exit. We analyze the second-best problem of a government subsidizing small firms to promote competition. Innovation and dynamic competition do not necessarily justify intervention, as the equilibrium can still be second best. In general, the optimal policy depends on the nature of competition. Firms primarily compete for the market when innovation leads to large differences in scale. The government can wait to intervene in this case; committing to do whatever it takes to promote competition if and when the industry concentrates excessively. Subsidies early in the life-cycle are unnecessary. These results contrast with calls for aggressive ex-ante regulation in highly innovative industries, suggesting a wait-and-see approach may be preferable. We apply these insights to digital and AI industries in the U.S. using data on venture-backed firms. |
| JEL: | E0 L0 O3 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34770 |
| By: | Schmal, W. Benedikt |
| Abstract: | Can monopoly rents fuel innovation or do they entrench dominance? This paper explores the tension between two competing visions of antitrust: the US model, which rewards entrepreneurial disruption through monopoly rents, and the EU model, which aims to prevent gatekeeping by preserving structural competition. At the heart of this debate lies the distinction between circumvention innovation, where challengers bypass incumbents with radical new paradigms, and gatekeeper regulation, which enforces contestability within existing markets. While the US approach has produced breakthrough innovations, it depends on open access to capital, talent, and markets, i.e., conditions increasingly threatened by geopolitical fragmentation and economic decoupling. In contrast, the EU's more restrained model may lack raw disruptive power, but appears more resilient in the face of shocks. This paper argues that antitrust must evolve: resilient innovation requires not just market incentives, but institutional frameworks capable of withstanding a more fractured global economy. |
| Abstract: | Können Monopolrenten Innovation fördern oder zementieren sie lediglich Marktmacht? Dieser Beitrag untersucht die Spannungen zwischen zwei konkurrierenden wettbewerbspolitischen Modellen: dem US-amerikanischen Ansatz, der unternehmerische Disruption durch Monopolgewinne belohnt, und dem europäischen Modell, das durch strukturelle Wettbewerbssicherung gezielt Gatekeeping verhindern will. Im Zentrum steht der Gegensatz zwischen Umgehungsinnovation, bei der Herausforderer etablierte Firmen mit radikal neuen Ansätzen umgehen, und Gatekeeper-Regulierung, die Wettbewerb innerhalb bestehender Märkte durchsetzt. Während der US-Ansatz disruptive Innovationen hervorgebracht hat, beruht er auf offenen Kapital-, Personal- und Absatzmärkten, also Voraussetzungen, die zunehmend durch geopolitische Fragmentierung und wirtschaftliche Entkopplung bedroht sind. Demgegenüber mag das europäische Modell weniger auf Durchbruchsinnovationen ausgerichtet sein, scheint jedoch widerstandsfähiger gegenüber externen Schocks. Der Beitrag argumentiert, dass sich die Wettbewerbspolitik weiterentwickeln muss: Resiliente Innovation benötigt nicht nur Marktanreize, sondern auch institutionelle Rahmenbedingungen, die in einer fragmentierten Weltwirtschaft tragfähig bleiben. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:lefpps:336634 |
| By: | Patrice Bougette (Université Côte d'Azur, CNRS, GREDEG, France); Frédéric Marty (CNRS, GREDEG, Université Côte d'Azur, France) |
| Abstract: | This article examines the Structure-Conduct-Performance (SCP) paradigm that dominated U.S. antitrust policy until the 1970s, before being displaced by the Chicago School and, from the 1980s onwards, by Post-Chicago analysis, i.e., modern industrial organization. Long portrayed as indifferent to firms' conduct and to economic efficiency, structuralism has been subject to a persistent "black legend." This contribution reassesses that critique by examining: (i) the evolution of structuralism between the 1940s and the 1970s; (ii) the influence of a deconcentrationist perspective embedded in a particular legal interpretation of U.S. antitrust rules; (iii) the implications of the digital economy for contemporary analyses of market structures; and (iv) the SCP paradigm's legacy in Neo-Brandeisian and conservative antitrust thought. |
| Keywords: | Structure-Conduct-Performance (SCP) paradigm; Structuralism; U.S. antitrust; Chicago School; Post-Chicago industrial organization; Merger control; Digital markets; Neo-Brandeisian antitrust; Market structure; Structural remedies |
| JEL: | L10 L12 L13 L41 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-03 |
| By: | Imke Reimers; Joel Waldfogel |
| Abstract: | With the diffusion of LLMs between 2022 and 2025, new book releases have tripled, raising a question of AI's impact on book quality. We develop a ratings-based usage measure that is comparable across book release vintages, and we find that the vintages from the AI influx period have lower average quality. Yet, the top 1, 000 monthly releases per category - albeit not the top 100 - have higher quality than before; and the effect is larger in categories with faster growth in new titles. Authors entering since the LLM influx produce predominantly low-quality work; and the higher-quality output of pre-LLM authors entrants has risen. A nested logit calibration shows that LLM-enhanced book production could, in steady state, raise the surplus that consumers derive from book markets by a quarter to a half. |
| JEL: | L16 L82 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34777 |
| By: | Ruibing Su; Chenyu Yang; Andrew Sweeting |
| Abstract: | We estimate a dynamic model of the U.S. space launch industry. The model allows past launches to improve rocket reliability and lower launch costs. It also allows the government to make forward-looking procurement choices. We use the model to analyze policy-relevant issues in the recent history of the industry: the 2006 United Launch Alliance “merger-to-monopoly” and the effects of efficiencies in the form of learning synergies; innovations, such as SpaceX's Falcon 9 and ULA's recent introduction of Vulcan Centaur; the costs and benefits of forward-looking procurements; and, the trade-offs between the advantages of centralized control and possible inefficiencies. |
| JEL: | C73 D21 D43 L13 L41 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34766 |
| By: | Rocco Macchiavello (LSE); Josepa Miquel Florensa (Toulouse School of Economics.); Nicolás de Roux (Universidad de los Andes); Eric Verhoogen (Columbia University); Mario Bernasconi (University of Basel); Patrick Farrell (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 highquality 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, both the lack of pass-through of quality premia under normal circumstances and the possibility of a buyer-driven solution through a vertical restraint. Calibration of the model suggests that one-third to two-thirds of the (substantial) gains from the program accrue to farmers, with the vertical restraint playing a critical role. 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: | Quality Upgrading, Relational Contracts, Vertical Restraints, Buyer-Driven Voluntary Standards |
| JEL: | O12 F61 L23 Q12 Q13 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:022173 |