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on Industrial Organization |
| By: | Peter Achim (York University); Roland Strausz (HU Berlin) |
| Abstract: | In modern information markets, buyers routinely combine signals from multiple sellers. We develop a model of ``portfolio competition'' to analyze this distinctive feature. We show that the combinability of information overturns standard oligopoly intuition. Unlike traditional markets, competitive pressure does not necessarily protect buyers: when signals are complements, sellers can leverage the buyer's desire for the joint portfolio to extract the full social surplus, regardless of the number of competitors. We characterize the precise conditions for rent extraction, which reduce to a simple geometric test for symmetric sellers. Furthermore, we find that the canonical logic of market entry fails. Entry is never socially excessive because efficient portfolio choices eliminate business-stealing effects. Paradoxically, entry can reduce competitive pressure: when entrants provide strong complementarities, they shift the buyer's threat point, allowing all sellers to extract higher rents. |
| Keywords: | information markets; portfolio competition; market entry; data economy; complementarity; |
| Date: | 2025–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:554 |
| By: | Jamison, Mark A. |
| Abstract: | This paper suggests that antitrust authorities should focus on harmful competitive advantages. These are largely Porterian and Smithian advantages created by firms seeking to disadvantage rivals, governments inadvertently hindering competition, and governments protecting favored stakeholders and partisans without corresponding improvements in economic efficiency. The proposed approach is intended to enable antitrust to get to the heart of market power rather than address symptoms, address market power concerns in dynamic situations, and to make up for antitrust's tendency to ignore competition problems created by governments. This approach would reorient some antitrust resources away from investigating and prosecuting cases and towards investigations that identify problems and develop solutions before harms occur. |
| Keywords: | antitrust, market definition, competitive advantage, regulation |
| JEL: | K21 L12 L22 L4 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itse25:331279 |
| By: | Takeshi Fukasawa (Waseda Institute for Advanced Study, Waseda University); Hiroshi Ohashi (Faculty of Economics, the University of Tokyo) |
| Abstract: | This paper evaluates long-run effects of a horizontal merger and its remedies in a capital-intensive industry. It estimates a dynamic oligopoly model with continuous investment, enabled by a computationally efficient simulation algorithm. A decomposition of investment incentives shows that static forces dominated dynamic considerations. The merger, despite raising prices, increased social welfare, primarily through efficiency gains. The analysis also finds that divestiture remedies had persistent effects lasting nearly two decades, and that optimal remedy design differs markedly depending on whether consumer or social welfare is used as the evaluative standard. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:tky:fseres:2025cf1264 |
| By: | Maryam Farboodi; Nima Haghpanah; Ali Shourideh |
| Abstract: | We study how a monopolist’s use of consumer data for price discrimination affects welfare. To answer this question, we develop a model of market segmentation subject to residual uncertainty. We fully characterize when data usage monotonically increases or decreases welfare or when the effect is non-monotone. The characterization reduces the problem to one with only two demand curves, and gives a condition for the two-demand-curves case that highlights that information affects welfare in three distinct ways. In the non-monotone case, we provide tight bounds on the welfare effects of information and identify the best local direction for providing additional information. |
| JEL: | D42 D83 L12 L15 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34514 |
| By: | Dongsoo Shin (Santa Clara University); Roland Strausz (HU Berlin) |
| Abstract: | We study a manufacturer's demand-investment decisions in distribution channels subject to double marginalization. Casting this as a mechanism design problem, we show that demand-enhancing investments strengthen retailers' incentives to exploit market power, forcing manufacturers to concede greater rents. Manufacturers therefore optimally restrict product quality or market coverage. We fully characterize which demand parameters create these perverse incentives: increases benefit manufacturers in segments where they control pricing but harm them in segments with binding incentive constraints. This reveals fundamental limits to demand-side investment in vertical relationships. |
| Keywords: | demand; investment incentives; distribution channels; double marginalization; |
| JEL: | D21 D82 L11 |
| Date: | 2025–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:553 |
| By: | C. Lanier Benkard; Nathan H. Miller; Ali Yurukoglu |
| Abstract: | De Loecker et al. (2020) (DEU) estimate that markups increased significantly in the United States from 1955 to 2016. We find this result is sensitive to unreported sample restrictions that drop 27% of the available observations. Applying the methodology as described in the article to the full sample, markup increases are more muted until late in the sample period, and are almost entirely driven by Finance and Insurance firms. If these firms are removed, markup increases are modest. We conclude that the DEU methodology and data, as they are described in the article, do not support the conclusion that broad-based increases in market power have occurred in recent decades. |
| JEL: | D22 L1 L40 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34513 |
| By: | HARA, Yasushi |
| Abstract: | This study revisits the impact of customer concentration on the performance and survival of Small and Medium-sized Enterprises (SMEs) by proposing an integrated “Quantity-Quality-Structure” framework. Utilizing a large-scale panel dataset of Japanese manufacturing SMEs, we employ rigorous empirical methods—including two-way fixed-effects models with controls for export status, Cox proportional hazards models, and dynamic event studies—to disentangle the complex effects of inter-firm relationships. While the static relationship between customer concentration (Quantity) and sales growth is found to be inconsistent across industries, our survival analysis reveals a robust and critical finding: high concentration significantly increases the risk of firm exit, supporting the vulnerability tenet of Resource Dependency Theory. Conversely, simple network connectivity (Degree Centrality) acts as a powerful buffer, significantly reducing exit risk and functioning as “structural insurance, ” whereas network brokerage (Betweenness Centrality) can exacerbate risks in certain assembly industries. Furthermore, dynamic analyses of strategic change reveal that firms “decoupling” from major customers face a multiyear “danger zone” of increased vulnerability before achieving diversification. Successful growth strategies are shown to be driven not by expanding existing B2B ties, but by a strategic pivot to new market types, specifically direct-to-consumer (B2C) segments. These findings reframe the debate on customer concentration from one of performance optimization to one of existential risk management and dynamic adaptation. |
| Keywords: | Customer Concentration, Firm Survival, Inter-firm Networks, Strategic Adaptation, SMEs |
| JEL: | L14 L25 M10 C23 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:hit:tdbcdp:e-2025-02 |
| By: | Kristina Pitman (Department of Economics and Business, Colorado School of Mines); Ben Gilbert (Department of Economics and Business, Colorado School of Mines) |
| Abstract: | In recent years, fossil fuel power plants have increasingly adjusted their operations to balance variability in renewable output. These balancing activities alter plant emissions in ways that may not be evenly distributed. We capture the distribution of the effect of exogenous wind and solar variation on emissions from criteria pollutants across fossil fuel plants. Most plants experience a small reduction in emissions in response to variation in renewable output. However, a minority of outlier plants change their emissions output significantly, with responses that maybe either positive or negative. Positive emissions responses are driven by increases in fuel intensity or emissions rates for some plants, particularly in response to solar variation. We find that outlier plants are more likely to be in smaller Balancing Authorities, without access to electricity markets, and with higher shares of wind and solar output. The socioeconomic characteristics of communities hosting outlier power plants depend on whether the plant is wind- or solar-responsive. Notably, communities with higher asthma incidence, which are more sensitive to pollution, experience the most extreme negative emissions responses to wind, but the most extreme positive emissions responses to solar. |
| Keywords: | renewable energy, thermal power plant operations, emissions, electricity sector, ramping behavior, distributional impacts |
| JEL: | L1 L2 L94 Q Q42 Q52 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:mns:wpaper:wp202501 |
| By: | Marco Duarte; Meilin Ma; Francisco Scott |
| Abstract: | We leverage a fire outbreak that caused a large but temporary capacity loss at the largest U.S. beef packer to study how firm conduct shapes the pass-through of supply disruptions along the supply chain. Despite evidence of industry-wide increases in processing costs, retail prices for the affected packer’s products fell. To rationalize this pattern, we develop a model of bilateral retailer-packer bargaining that accounts for reliability of product delivery. The model highlights how disruptions alter bargaining leverage and shift margins between buyer and seller. Counterfactual simulations demonstrate that the sign and magnitude of pass-through are highly sensitive to the magnitude of capacity loss and perceived reliability. |
| Keywords: | cost pass-through; supply chain disruptions; Beef cattle; Meat processing |
| JEL: | Q14 Q18 L13 D81 |
| Date: | 2025–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedkrw:102167 |