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on Microeconomics |
| By: | de Cornière, Alexandre; Jerath, Kinshuk; Taylor, Greg |
| Abstract: | This paper analyzes seller-side tying on digital platforms, where access to a core intermediation service is conditioned on sellers using an ancillary service (e.g., fulfillment or payments). We model a monopoly platform matching consumers and competing sellers across many product categories, with consumers valuing the ancillary service heterogeneously. When adoption is voluntary, sellers under adopt because asymmetric adoption creates vertical differentiation that softens price competition, raising prices and reducing platform participation. Tying restores high adoption, intensifies competition, and increases consumer surplus. A ban on tying or structural separation lowers adoption and can harm consumers. |
| Date: | 2026–04–09 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131671 |
| By: | Sebastiano Della Lena; Alessio Muscillo; Paolo Pin |
| Abstract: | Consumers discover their preferences through experience, yet the sequence and composition of those experiences are often designed by firms, digital platforms, or policymakers. We introduce a ``data-design'' framework for preference discovery, in which the structure of consumption data shapes learning. Bundling generates correlated exposure across goods, so utility surprises propagate through the co-consumption network. When estimation errors are known, bias-targeted design can shut down learning and amplify misperceptions. Conversely, robust design uses only the geometry of past co-consumption: popularity-biased bundles slow learning, while correlation-breaking bundles accelerate preference discovery. The framework thus explains how dominant platforms can sustain biased demand through exposure design, and why effective regulation may need to intervene on the structure of exposure itself rather than only on prices or market shares. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.14260 |
| By: | Alex A. T. Rathke |
| Abstract: | We show that a rational agent with true and refinable knowledge of events cannot know if she knows everything or not. This epistemic limitation is not resolved by introspection about tautologies or by learning about new events. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.15264 |
| By: | Panagiotis Kyriazis |
| Abstract: | Economic institutions often influence market outcomes not by directly controlling sellers' menus, but by shaping the market composition sellers face. We study this problem in the canonical monopoly screening model. An upstream actor chooses the distribution of buyer valuations, after which a monopolist offers the optimal quality-price menu. We characterize the optimal market composition and the efficient frontier of consumer surplus and profit. If the upstream actor places at least as much weight on profits as on consumer surplus, the optimal market collapses to the top type. If the weight on consumer surplus is larger than the weight on profits, the optimal market exhibits no exclusion, no interior bunching, and a positive mass at the highest valuation. Under a mild curvature condition, the optimum is unique. As the weight on consumer surplus rises, the optimal market becomes more heterogeneous and less concentrated at the top: the interior expands while the top segment shrinks. Consumer surplus rises, profit falls, and total surplus declines. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.09340 |
| By: | Panagiotis Kyriazis; Edmund Lou |
| Abstract: | We investigate the relationship between product offerings, information dissemination, and consumer decision-making in a monopolistic screening environment in which consumers lack information about their valuation of quality-differentiated products. An intermediary, who is driven by the objective of maximizing consumer surplus but is also biased towards high-quality products, provides recommendations after the monopolist announces the menu of product choices. We characterize the monopolist's profit-maximizing finite-item menu. Our results show that as intermediaries place greater emphasis on consumer surplus over product quality, sellers are prompted to strategically expand their product range. Intriguingly, this augmented product variety decreases economic efficiency compared to scenarios where direct seller-to-consumer information provision is the norm. The role of information intermediaries proves pivotal in shaping consumer welfare, market profitability, and overarching economic efficiency. Our insights underscore the complexities introduced by these intermediaries that policymakers and market designers must consider when designing policies centered on consumer learning and market information transparency. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.09343 |
| By: | Aditya Kuvalekar; Anna Sanktjohanser |
| Abstract: | We analyze a reputational bargaining game in which a central player negotiates simultaneously with two peripheral players. Each player is either rational or a commitment type who never concedes and insists on a fixed share, and concessions are publicly observed. The central player's type is global, so actions in one dispute update beliefs in the other and generate reputational spillovers. The game admits a unique equilibrium, enabling a sharp comparison with the bilateral benchmark of Abreu and Gul (2000). Spillovers are payoff-relevant if and only if a peripheral is uniquely the most reputable player initially. In that case, spillovers overturn the bilateral prediction that toughness pays: the central player is never strictly better off and can be strictly worse off; the strongest peripheral loses; and the weakest peripheral can benefit, especially when the center's higher-stakes dispute is with the other peripheral. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.08616 |
| By: | Wilfried Youmbi Fotso; Xun Chen |
| Abstract: | We study Bayesian persuasion when information design is delegated to an intermediary who privately chooses the experiment subject to convex costs and would be incentivized by the principal via outcome-dependent transfers. We provide a sharp characterization of first-best implementability: implementing the first-best requires local affine alignment between the principal's and intermediary's reduced-form payoff indices on the posteriors induced by the target experiment, while a stronger global alignment condition guarantees implementability. Outside the global alignment condition, moral hazard typically prevents first-best implementation. We then characterize the second best: the principal's problem admits a virtual Bayesian persuasion representation in which the objective is distorted by a shadow cost proportional to the intermediary's valuation of posteriors. Under entropy costs, moral hazard compresses posterior dispersion relative to the first-best benchmark. In two-state environments with a binary-action receiver, the optimal second-best experiment has a tractable two-posterior form with explicit formulas for posterior endpoints and mixing weights, and the optimal transfer schedule is characterized in closed form as a triangular system in the shadow price, transfer gap, and participation constraint. A numerical example quantifies the compression: moral hazard reduces posterior spread by approximately 28 percent relative to first best under the baseline parameterization. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.10006 |
| By: | Thomas Pitz; Vinicius Ferraz |
| Abstract: | When time-to-contract is payoff-relevant, how should a matching platform choose between a descending-clock (Dutch) mechanism and posted prices? We introduce a timing--entry--volume (TEV) framework that traces the causal chain from mechanism format through contracting speed, participation incentives, match volume, and revenue. Against immediate posted prices, dominance depends on the earnings and timing gaps and may hold for all waiting costs, only above a floor~$\lambda^*$, only below a ceiling~$\lambda^{**}$, or not at all. Against a batch-clearing benchmark, Dutch dominates through both timing and payment channels. In the two-sided extension, cross-side complementarity amplifies a one-sided advantage into equilibrium dominance on both sides, with welfare gains when match surplus is sufficiently large. All dominance conditions are stated in estimable quantities. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.10638 |
| By: | Marc Deschamps (Université Marie et Louis Pasteur); Dongshuang Hou (Department of Applied Mathematics, Northwestern Polytechnical University); Aymeric Lardon (Université Jean Monnet Saint-Étienne, CNRS, Université Lyon 2, GATE Lyon Saint-Étienne); Christian Trudeau (Department of Economics, University of Windsor) |
| Abstract: | We consider a homogeneous Cournot oligopoly where the inverse demand function is obtained by the utility maximization of a representative consumer, and firms may operate at different marginal costs. Assuming that some firms make a cartel while others remain independent, we introduce three new classes of TU-games, referred to as welfare TU-games, each corresponding to consumer surplus, total profit, and total welfare, respectively. Our results show that the games associated with consumer surplus and total welfare are monotonically decreasing and concave, highlighting a snowball effect of cartel formation on these two welfare measures. In contrast, the game associated with total profit is never superadditive, but it is monotonically increasing and concave when the number of firms is sufficiently small. Furthermore, we apply allocation methods, including the Shapley value and the serial method, to determine ex ante fair fines that firms must pay for participating in the cartel, allowing to differentiate fines both on the order of arrival in the cartel and on the technologies of the firms. For instance, in certain scenarios, some inefficient firms may receive lower fines for joining the cartel due to cost synergies. |
| Keywords: | Cournot competition; Cartel; Welfare; Shapley value; Antitrust. |
| JEL: | C71 D43 K21 L40 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:wis:wpaper:2601 |
| By: | Frank Huettner |
| Abstract: | For networks with externalities, where each component's worth may depend on the full network structure, balanced contributions and fairness lead to distinct component-efficient allocation rules. We characterize the unique component-efficient allocation rule satisfying balanced contributions -- the BCE rule. Existence is the main challenge: balanced contributions must hold on every edge, but the construction uses only spanning-tree edges. A cycle-sum identity bridges this gap by reducing balanced contributions on non-tree edges to relations in proper subnetworks. The BCE rule coincides with the Myerson value for TU games and with its generalization by Jackson--Wolinsky for network games without externalities, it recovers the externality-free value on the complete network, and -- unlike the fairness-based FCE rule -- it does not reduce to a graph-free formula applied to the graph-restricted game. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.13794 |
| By: | Yuchen Hu; Martin J. Wainwright; Stephen Bates |
| Abstract: | We study statistical parameter estimation in the setting of data markets. A buyer seeks to estimate a parameter based on samples that can be purchased from competing providers that differ in their data quality and provision costs. When quality is known ex ante, we define a cost-per-information score that summarizes each provider's provision cost per unit of information about the buyer's estimation objective. We describe second-score procurement mechanism that ranks providers by this score, and endogenously chooses both a provider and a sample size while making truthful cost reports optimal. We then turn to the more realistic setting where data quality is private, and can only be indirectly observed via the delivered data. In this setting, we propose a simple mechanism that augments the second-score rule with a lenient ex post statistical test of the reported quality. We prove that under mild conditions, there exists an equilibrium in which sellers report costs truthfully and report quality up to deviations that vanish as the procured sample size grows. Our analysis highlights how the choice of verification test and the buyer's accuracy-cost tradeoff jointly shape participation and misreporting incentives in data markets. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.08821 |
| By: | S. Nageeb Ali; Ce Liu |
| Abstract: | We show that in Greenberg (1989)'s coalitional repeated game situation, every nondiscriminating Conservative Stable Standard of Behavior is a subset of the set of Perfect Coalitional Equilibrium (Ali and Liu 2026) paths. Moreover, the set of Perfect Coalitional Equilibrium paths itself is a nondiscriminating Conservative Stable Standard of Behavior. The set of Perfect Coalitional Equilibrium paths is therefore the maximal nondiscriminating Conservative Stable Standard of Behavior. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.09460 |
| By: | Felix J. Bierbrauer (University of Cologne); Pierre C. Boyer (CREST, Ecole Polytechnique, Institut Polytechnique de Paris); Andreas Peichl (ifo Munich, LMU Munich, CESifo, IHS & IZA); Daniel Weishaar (University of Cologne) |
| Abstract: | The key question in multi-dimensional screening problems is how prices, incentives, or marginal tax rates in one economic activity should vary with other activities. We develop a theory of tax reforms in a setting with multidimensional heterogeneity amongst agents who take two economic decisions. Our leading application is the taxation of couples who choose an earnings level for each spouse. In our theoretical analysis, we characterize the conditions under which reforms of a given tax system yield Pareto- or welfare improvements. In an empirical application to the US, we quantify the welfare implications of such reforms. We also prove an impossibility result: under assumptions common in the tax perturbation literature, the hypothesis that the given status quo tax is optimal leads to a contradiction. Thus, the perturbation approach cannot be used to characterize a fully optimal tax system. |
| Keywords: | Tax reforms, Multi-dimensional screening, Taxation of Couples, Optimal taxation |
| JEL: | C72 D72 D82 H21 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:401 |
| By: | Nigar Hashimzade; Haoran Sun |
| Abstract: | Industrial policy has returned to the centre of economic governance, particularly in the high-tech sectors where positive network externalities in demand make market dominance self-reinforcing. This paper studies the welfare effects of an industrial policy targeting a sector with network externalities in a two-country model with strategic trade and R&D investment. We show how the welfare consequences of this policy are determined by the interaction between the strength of the externality, the type of R&D, and the degree of product differentiation between the home and the imported goods. When externalities are weak or the goods are close substitutes, the business-stealing effect produces a race to the bottom that dissipates more surplus than it creates. Under sufficiently strong externalities and weak substitutability or complementarity of the goods, industrial policy competition can make both countries simultaneously better off compared to the laissez-faire outcome because of the mutual business-enhancement effect. The case is stronger for the product innovation than for the process innovation, as the former directly affects the demand and triggers a stronger network effect than the latter which operates indirectly through the supply. Thus, network externalities create an opportunity for win-win industrial policies, but its realisation depends on the market structure and the nature of innovation. |
| Keywords: | industrial policy, network externalities, R&D subsidies, strategic trade, Cournot competition |
| JEL: | F13 H25 L13 O38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12592 |
| By: | Ryo Arawatari (Faculty of Economics, Doshisha University); Tetsuo Ono (Graduate School of Economics, The University of Osaka) |
| Abstract: | This paper analyzes the optimal supermajority threshold for approving fiscal rule suspensions within a two-period political turnover model. Faced with the potential loss of power, the incumbent party aims to secure preferred expenditures by increasing public debt. To counteract this, an expenditure rule requiring legislative approval for suspension is introduced. The analysis shows that the voting threshold in parliament should exceed a simple majority, making a simple majority rule suboptimal. A stricter supermajority is necessary when fiscal expenditure rules are more flexible, as it allows for more effective responses to economic fluctuations. Moreover, while higher initial debt levels call for stricter expenditure rules, the optimal supermajority threshold remains unaffected by the debt level. Finally, as political polarization among voters intensifies, the optimal threshold decreases, increasingly aligning with the incumbent party’s preferences. |
| Keywords: | Fiscal rules, Government debt, Political turnover |
| JEL: | D72 D78 H62 H63 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:osk:wpaper:2605 |
| By: | Yin, Xiuxia; Dietzenbacher, Bas (RS: GSBE other - not theme-related research, QE Math. Economics & Game Theory) |
| Abstract: | This paper studies the allocation of a perfectly divisible good among agents with a status quo payoff. The aggregate status quo payoff may exceed the total amount to be shared or fall short. We introduce and analyze the uniform rule which divides as equally as possible provided that either all agents lose or all agents win with respect to their status quo payoff. We provide several axiomatic characterizations based on contraction and expansion properties. On the domains of claims problems and surplus problems, our results offer some new characterizations of the constrained equal awards rule and the constrained equal welfare rule, respectively. |
| Keywords: | resource allocation, status quo, uniform rule, axiomatic analysis |
| Date: | 2026–04–09 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2026002 |