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on Industrial Organization |
| By: | Chengcheng Wang; Zexin Ye |
| Abstract: | As firms increasingly adopt AI-powered pricing algorithms, a key and urgent policy concern is how to regulate the potential algorithmic collusion. This paper approaches the regulatory question through the lens of information design and examines how different disclosure rules, committed to by a third-party intermediary, shape learning outcomes when firms delegate pricing to Q-learning algorithms under stochastic demand. We analyze three disclosure rules: no disclosure, full disclosure, and upper censorship. Upper censorship, which truthfully reveals low-demand states while pooling high-demand ones, delivers higher profits than full disclosure, consistent with theoretical predictions. However, we uncover a profit reversal: when the discount factor is high, no disclosure yields higher profits than full disclosure, whereas when the discount factor is low, full disclosure performs better. This pattern is exactly the opposite of what classical collusion theory predicts. Overall, these findings show that Q-learning agents respond systematically to the information structure and further suggest that restricting information sharing may backfire when algorithms are sufficiently patient, highlighting the need to reassess regulatory approaches in AI-mediated markets. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.04345 |
| By: | Jennifer Zou |
| Abstract: | We study how a representative sample of United States adult AI-assistant users (n=1, 999; June 2026) choose among platforms, allocate tasks across them, evaluate provider trustworthiness, and value data-handling features. Estimates are weighted to the AI-user population using external adoption benchmarks. Four patterns emerge. The market is concentrated but internally differentiated: ChatGPT is the primary assistant for 58% of users and Gemini for 25%, yet smaller platforms hold defensible task niches--Claude captures a third of coding tasks despite a 7% overall share. Task allocation is thus organized by platform far more than by user, and technical use falls steeply with age. Trust is earned through use rather than reputation: Claude is ranked most trustworthy in every head-to-head among users of both platforms, and shows by far the largest gap between how its users and non-users rate it. Finally, privacy concern is near-universal but action is gated by knowledge, not concern; in a choice experiment users pay most to keep humans--not models--out of their conversations ($11.20/month), with valuations rising in task sensitivity. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.15134 |
| By: | Xavier Lambin; Emil Palikot |
| Abstract: | On a large French ridesharing platform, new minority drivers earn 11.6% less revenue than otherwise similar nonminority drivers; the gap nearly vanishes as they accumulate reviews. Reviews drive the convergence: when a railway strike exogenously raised demand and sped up review accumulation, minority entrants gained the most. We explain the pattern with an estimated model of passenger choice and driver career concerns. Passengers hold overly pessimistic priors about minority entrants - expecting substantially lower quality before the ride than they report after it. As a result, minority drivers cut introductory prices and exert extra effort to overturn those beliefs quickly. Counterfactuals show the cost of incorrect priors is high, and the reputation system strictly benefits minority drivers. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.05627 |
| By: | Berfin Kardaslar; Alexander S. Kritikos; Lukas Menkhoff |
| Abstract: | In this study, we examine the relationship between personality traits, captured by risk tolerance and the Big Five traits, and firm size, as measured by the number of employees. We show that the personality of entrepreneurs matters for the size of their firm they operate. We use a novel add-on to the German Socio-Economic Panel that includes a sub-sample of owner-managers running larger firms. High levels of risk tolerance – associated with an increased likelihood of firm exit in existing research – is positively associated with firm size for entrepreneurs in the market. High scores in extraversion are also associated with larger firms. However, a high level of openness for experience, a main driver of founding ventures, is negatively related to firm size. Overall, we show that running larger firms is associated with traits that are partially different from those that increase the likelihood of entrepreneurial entry or survival. |
| Keywords: | Entrepreneurship, risk tolerance, Big Five personality traits, firm size |
| JEL: | L26 D81 J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2173 |
| By: | Jarkko Harju; Ida Kankaanranta; Kaisa Kotakorpi |
| Abstract: | We study the effects of taxi market deregulation in Finland, which removed price controls and lowered barriers to entry. The reform led to a surge in firm entry and a modest increase in exit, indicating substantial changes in market structure. Average taxi prices increased slightly according to price indices, while monthly firm-level reported sales and VAT declined by over 10 percent. Operating costs and mileage remained largely unchanged, suggesting limited demand responses. These findings point to increased tax evasion following deregulation. Consistent with this interpretation, we document a small rise in property crime, with no effects on other criminal offenses. |
| Keywords: | taxi market, deregulation, prices, sales, mileage, exit, entry, tax evasion, crime |
| JEL: | L52 L91 L98 H26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12819 |
| By: | Tian, Yixin; Shanoyan, Aleksan |
| Abstract: | Economic theory suggests that processor concentration typically harms agricultural producers through buyer monopoly power. However, long-run models indicate that highly concentrated processors may act as a buffer during severe supply chain disruptions. The low water levels on the Mississippi River in the fall of 2022 led to a significant decline in barge capacity, disrupting export channels for inland farms. This provided a natural experiment to test this theoretical trade-off. Using weekly county-level panel data on corn basis differentials across seven U.S. states during harvest weeks from 2018 to 2024, we employ a difference-in-differences approach to isolate the impact of local ethanol processor concentration, represented by the Herfindahl-Hirschman Index (HHI), during the shock period. The model strictly controls for distance from the Mississippi River and local drought severity to ensure that the HHI mechanism operates independently. We find strong evidence of a buffering effect: during the crisis, a 5, 000-point increase in the HHI was associated with an increase of approximately $0.04 per bushel in the basis. This effect exhibits significant spatial heterogeneity: it is dominant in states deep inland (Kansas, NorthDakota, SouthDakota, Nebraska); in river in estates (Missouri, Oklahoma, Texas), the basis is primarily influenced by distance from the river. However, tests of the transmission mechanism using farm-level panel data from Kansas indicate that this loca lprice buffer did not translate into higher net farm income. In particular, for corn-dependent farms, drought-induced yield losses ultimately offset the price gains from the basis phase. Ultimately, these findings provide key parameters regarding the benefits of price buffering that are currently missing from the antitrust framework. This suggests that highly concentrated processors in inland regions actually serve as a critical regional buffer. Antitrust policymakers should consider the positive impact of processor concentration on supply chain resilience, especially in the inland states. |
| Keywords: | Agribusiness |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea26:404321 |
| By: | Willem Boshoff (University of Stellenbosch) |
| Abstract: | South African competition policy has long pursued industrial-policy objectives alongside its core competition mandate. Public-interest considerations were embedded in merger control from 1998, and the 2018 amendments gave them equal legal status with the competition assessment. These developments preceded the current European debate on using competition policy to advance innovation and other industrial policy objectives in the EU. This paper examines how industrial-policy objectives have been pursued in South African competition policy over the past thirty years. In merger control, these are often advanced through conditions involving ESOPs, HDP ownership commitments, and supplier and enterprise-development funds, as well as through potential-competition theories of merger harm. They are also advanced by similar types of remedies following market inquiries and, increasingly, abuse and cartel investigations. |
| Keywords: | competition policy, industrial policy, merger control, public interest, ownership transformation, market inquiries, South Africa, potential competition |
| JEL: | L40 K21 O25 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:rza:ersawp:360 |