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on Industrial Organization |
| By: | Buchholz, Wolfgang; Hattori, Keisuke |
| Abstract: | This paper studies how an outsider can strategically induce a merger between rival firms. The outsider's anticipated post-merger output expansion lets it capture part of the gains from the merger but can also make the merger unprofitable for the insiders. We show that the outsider can make the merger profitable by committing in advance to a weaker competitive position, while the softer competition following the merger can more than compensate it for its self-imposed handicap. A general framework identifies conditions under which the outsider optimally chooses the minimum merger-inducing handicap. Three Cournot models show that voluntary capacity reduction, withdrawal from a profitable market, and a credible increase in marginal cost can each strictly raise the outsider's profit above the no-handicap, no-merger benchmark. Merger synergies can also benefit the outsider by reducing the handicap required to induce the merger. The analysis highlights the need to account for endogenous outsider constraints in ex ante assessments of mergers. |
| Keywords: | horizontal mergers, strategic commitment, self-handicapping, merger paradox, Cournot competition |
| JEL: | D43 L13 L41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:343613 |
| By: | Laurenz Marstaller (University of Bonn) |
| Abstract: | This paper studies how platforms jointly choose fees and recommendations and their implications for fee regulation. A platform charges sellers a commission rate and ranks products based on price and match-value. The analysis shows that price-sensitive rankings intensify seller competition, allowing the platform to extract more surplus. Commission-rate caps constrain fees, but platforms may respond by making recommendations less price-sensitive, attenuating consumersurplus gains. By contrast, capped nominal fees can be more effective because they shift the platform’s incentives toward transaction volume rather than transaction value. Effective fee regulation must therefore account for how platforms adjust their recommendation policies in response. |
| Keywords: | Algorithm Design, DMA, Platform Regulation, Platforms, Recommendations, Search |
| JEL: | D43 D83 L13 L51 L86 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:430 |
| By: | Jens-Uwe Franck; Martin Peitz |
| Abstract: | Digital platforms allocate scarce attention through rankings, recommendations, defaults, and prominence. This article develops the concept of recommendation power as the point of intersection between two established concepts: information power and intermediation power, which is the capability to actively steer user choice by a platform that is a bottleneck for effective access. We propose a taxonomy of the objectives that typically guide platforms’ recommendation design, distinguishing an independent-advice benchmark from fifteen other objectives that may motivate systematic departures from it, grouped into direct commercial and data objectives, indirect and strategic objectives, and objectives relating to influence, welfare, and integrity. We then analyze how the EU’s Digital Markets Act (DMA) constrains recommender design, though it does not regulate recommendation power as such. Through obligations on ranking and data and transparency duties as well as through its anticircumvention provisions, the DMA protects certain user choices and access rights from the exercise of recommendation power. |
| Keywords: | recommender systems, recommendation bias, ranking, self-preferencing, gatekeepers, Digital Markets Act, platform regulation, steering |
| JEL: | K21 L15 L40 L51 L86 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_781 |
| By: | Fazliddin Shermatov; Stephane Robin; Aldo Geuna |
| Abstract: | Whether artificial intelligence pays off for the firms that build it into their products is hard to establish, because AI innovation is itself hard to observe. The medical technology sector is a rare exception: an AI-enabled device must obtain clearance from a national health authority before it can reach a patient, leaving a dated, firm-attributable record of AI innovation output that can be observed directly rather than proxied. We exploit this setting with a three-stage recursive model estimated on a novel firm-level dataset linking FDA premarket clearances, USPTO patents, Scopus publications, and Orbis financials, tracing the full innovation chain from external collaboration through AI device introduction to firm performance. We find that external AI research collaboration is a robust driver of AI device introduction across firm sizes and estimators, with a larger effect for small firms, consistent with external knowledge ties substituting for limited internal R&D capacity. Decomposing by partner type, the effect is largest for industry and clinical collaborations and smallest for academic ties, consistent with the former being closer to the regulatory and commercialisation process. Firms that bring AI devices to market display higher labour productivity, an effect robust for small firms and the full sample that holds under both sequential and joint maximum-likelihood estimation and accumulates across successive device introductions. Effects on profit margins are present but weaker and do not survive all specifications, a pattern consistent with competitive entry eroding pricing power as AI devices diffuse through the sector. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.08485 |
| By: | Sebastien Rouillon (Department of Economics, University of Bordeaux); Marc-Alexandre Senegas (Department of Economics, University of Bordeaux) |
| Abstract: | We analyse the determinants of commercial satellite launch prices and the structure of the global launch market over 1996–2025 using a new database combining launch records, expert cost estimates, and regional industry revenue data. This approach provides more granular launch price estimates than previous studies. Econometric results show that payload mass and target altitude are the main determinants of launch prices, while real prices declined by 3.3% annually, reflecting technological progress. Market segmentation identifies three distinct service categories with differentiated price tiers, suggesting that competition is driven by provider specialisation across market segments rather than within a single global market. |
| Keywords: | Economics of space; Launch market; Hedonic regression. |
| JEL: | C23 L11 L93 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bhw:wpaper:10-2026 |
| By: | Imenkamp, Nico; Wey, Christian |
| Abstract: | We analyze resale price maintenance (RPM) in a successive monopoly framework. When the retailer faces decreasing average costs or shelf-space opportunity costs while the manufacturer's marginal costs increase, linear pricing forces wholesale prices below marginal cost, potentially causing trade to collapse. Minimum RPM restores efficiency if trade fails, but reduces welfare if trade remains viable. Under the Colgate doctrine, the manufacturer's right to refuse to deal sustains trade even under price-floor bans. Finally, incomplete contracts induce retailer opportunism, including pocketing trade allowances without supporting the product, or exploiting inflated margins to push sales. Strategic contract combinations minimize both margins simultaneously. |
| Keywords: | Successive Monopoly, Resale Price Maintenance, Trade Allowance, Retailer Opportunism |
| JEL: | L42 D86 L12 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dicedp:343592 |