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on Regulation |
| By: | Bontems, Philippe; Hamilton, Stephen F.; Lepore, Jason |
| Abstract: | Multisided platforms have emerged as an increasingly important market structure with the rise of the digital economy. In this paper, we consider sequential price setting behavior by platforms and demonstrate sequential pricing outcomes Pareto dominate simultaneous pricing outcomes in terms of firm and industry profits. We compare policy implications and find prices are more balanced across the platform and average prices are higher under sequential pricing than under simultaneous pricing. We also demonstrate that pricing power can be considered independently on each side of the market under multihoming behavior. |
| Keywords: | Network Effects; Two-Sided Markets; Platform Competition |
| JEL: | D43 L13 L40 L86 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130858 |
| By: | José Ignacio Cuesta; Pietro Tebaldi |
| Abstract: | A common approach to markets with adverse selection is to regulate competition to minimize inefficiencies, while preserving consumer choice among firms. We study the role of procurement auctions—leading to sole provision by the winning firm—as an alternative market design. Relative to regulated competition, auctions affect product variety, quality, markups, and remove cream-skimming incentives. We develop a framework to study this comparison and apply it to individual health insurance in the US. We find that procurement auctions would increase consumer welfare in most markets, mainly by limiting inefficiencies from adverse selection and market power, and by increasing quality. |
| JEL: | H42 I13 L13 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34141 |
| By: | Burtraw, Dallas (Resources for the Future); Roy, Nicholas (Resources for the Future) |
| Abstract: | States can lead on climate policy while shielding households from the affordability impacts of rising policy uncertainties.Energy affordability is a concern to households across the country. Buchsbaum and Kahn-Lang (2025) summarize data from the US Energy Information Administration to illustrate that national average real electricity prices have risen over the past four years after nearly two decades of flat or decreasing real prices. Inflationary pressure in the electricity sector is especially salient with the rapid expansion of data centers and an anticipated increase in electricity demand resulting from electrification of other sectors (Robertson and Palmer 2025). The concern about energy affordability has been turbocharged in light of changes in federal regulations withdrawing support for clean energy investments.This issue brief considers an opportunity for state governments to respond to this challenge by enhancing electricity affordability for households and concurrently boosting environmental outcomes. Investments in renewable energy and energy efficiency would reduce electricity costs. With the loss of federal support for these investments, we explore the potential introduction of a price on carbon dioxide (CO2) emissions in the electricity sector at the state level, via a cap or limit on power sector emissions sources, and coupling that price with a policy to direct program revenues to reduce residential electricity rates (Meng and Prasad 2025). An example of this approach is embodied in recently proposed legislation in Pennsylvania (House Bill 503), which would introduce an electricity-sector carbon market and direct 70 percent of the auction proceeds to paying rebates to electric ratepayers, calculated on a per-kilowatt-hour basis. In California, under the state’s existing carbon market, residential electricity and natural gas customers receive an equal per-customer-account payment every six months. Recent research considers revising this program to direct proceeds to reduce volumetric electricity prices (Meng and Prasad 2025). The scenario examines the implementation of the policy in eight leadership states that have previously pursued clean energy policies such as renewable portfolio standards but do not currently have carbon pricing in place. Electricity-sector emissions are already subject to carbon pricing in the 10 currently participating Northeast and mid-Atlantic states Regional Greenhouse Gas Initiative (with two other observer states) and in California and Washington. Oregon has a regulatory cap on emissions. We model an electricity-sector carbon price implemented through an emissions cap in Arizona, Colorado, New Mexico, Illinois, Michigan, Minnesota, Wisconsin, and North Carolina. |
| Date: | 2025–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-25-11 |
| By: | Nathan Engelman Lado; Richard Chen; Saurabh Amin |
| Abstract: | Time-varying electricity pricing better reflects the varying cost of electricity compared to flat-rate pricing. Variations between peak and off-peak costs are increasing due to weather variation, renewable intermittency, and increasing electrification of demand. Empirical and theoretical studies suggest that variable pricing can lower electricity supply costs and reduce grid stress. However, the distributional impacts, particularly on low-income consumers, remain understudied. This paper develops a theoretical framework to analyze how consume heterogeneity affects welfare outcomes when electricity markets transition from flat-rate to time-varying pricing, considering realistic assumptions about heterogeneous consumer demand, supply costs, and utility losses from unmet consumption. We derive sufficient conditions for identifying when consumers lose utility from pricing reforms and compare welfare effects across consumer types. Our findings reveal that consumer vulnerability depends on the interaction of consumption timing, demand flexibility capabilities, and price sensitivity levels. Consumers with high peak-period consumption and inflexible demand, characteristics often associated with low-income households, are most vulnerable to welfare losses. Critically, we demonstrate that demand flexibility provides welfare protection only when coincident with large price changes. Our equilibrium analysis reveals that aggregate flexibility patterns generate spillover effects through pricing mechanisms, with peak periods experiencing greater price changes when they have less aggregate flexibility, potentially concentrating larger price increases among vulnerable populations that have a limited ability to respond. These findings suggest that variable pricing policies should be accompanied by targeted policies ensuring equitable access to demand response capabilities and pricing benefits. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.01499 |
| By: | Kawaguchi, Kohei; Qiu, Jeff; Yi, Zhang |
| Abstract: | This paper analyzes how retailer competition affects the welfare implications of resale price maintenance (RPM) under demand uncertainty. We extend the classic model of Deneckere et al. (1997) by introducing imperfect competition among retailers, which creates tension between double marginalization and business-stealing effects. Our analysis reveals four distinct regimes determined by demand uncertainty and market concentration. In highly uncertain, competitive markets, minimum RPM enhances efficiency by encouraging inventory holding. However, in markets with lower uncertainty or more concentrated retail sectors, maximum RPM better promotes competition by mitigating double marginalization. The effectiveness of each RPM type depends on whether retailers optimize for all demand states or focus primarily on high-demand scenarios. These findings suggest that antitrust authorities should evaluate RPM cases by considering both the level of demand uncertainty and the degree of retail competition, as different market conditions may call for different forms of vertical price restrictions. For managers, our results provide actionable guidance on selecting the appropriate RPM strategy based on market structure and demand predictability. |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:7tcha_v1 |
| By: | Bruno Baránek; Leon Musolff; Vitezslav Titl |
| Abstract: | We develop a method for detecting cartels in multistage auctions. Our approach allows a firm to be collusive when facing members of its cartel yet competitive when facing others. Intuitively, as initial bids are shaded, close initial bids not only imply similar costs but also provide an incentive to undercut. We detect firm pairs that ignore this incentive when facing each other. Our algorithm predicts Ukraine’s Antimonopoly Committee’s sanctions: firm pairs classified as collusive are 8.98 times more likely (standard error 2.65 times) to be sanctioned. It also uncovers additional collusion: 1, 857 collusive firms participate in 15.57% of auctions, increasing costs by 1.95%. |
| Keywords: | public procurement, collusion, online markets |
| JEL: | H57 D44 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12073 |
| By: | Lisa Bruttel (University Potsdam, CEPA); Holger A. Rau (University Duisburg-Essen, University Göttingen); Vasilisa Werner (University Potsdam) |
| Abstract: | This paper investigates partial cartels, which laboratory studies have neglected despite their empirical prevalence. We conduct two laboratory experiments to understand how they function compared to all-inclusive cartels and respond to antitrust policies. First, we compare partial cartel formation with all-inclusive settings typically studied experimentally. Second, we test how ringleader discrimination policies perform within partial cartel environments. Our first study reveals that partial cartels create opposing effects: while individual willingness to communicate decreases due to free-riding incentives, communication occurs more frequently overall and prices are higher when sufficient firms participate. We find that all-inclusive cartels prove essential for achieving high prices. Our second study discovers that ringleader discrimination policies can backfire by facilitating cartel formation through leading-by-example effects. These findings highlight distinct coordination mechanisms of partial cartels and demonstrate the need for careful antitrust policy design. |
| Keywords: | (partial) cartel, collusion, communication, experiment, ringleader discrimination |
| JEL: | C92 D43 L41 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:pot:cepadp:92 |
| By: | Jonathan Brandt; Astrid Bensmann; Richard Hanke-Rauschenbach |
| Abstract: | Following years of controversial discussions about the risks of market-based redispatch, the German transmission network operators finally installed regional redispatch markets by the end of 2024. Since water electrolysers are eligible market participants, the otherwise downwards redispatched renewable energy can be used for green hydrogen production in compliance with European law. To show how different price levels in regional redispatch markets affect green hydrogen production cost and thus the incentive for electrolyser market participation, we use historic redispatch time series and evaluate various power purchase scenarios. Our results show that low price levels can lead to notable production cost reductions, potentially counteracting uncertainties in redispatch power availability and thus incentivising system-beneficial electrolyser siting. In contrast, the possibility of high price levels can nullify an increase in the competitiveness of German and European green hydrogen through production cost reductions and discourage market participation. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.06500 |
| By: | Ashvin Gandhi; Brett Hollenbeck; Zhijian Li |
| Abstract: | Fake product reviews—and the manipulation of reputation systems by sellers more broadly—are a widespread issue for two-sided platforms. We study two primary channels through which such manipulation can affect market outcomes: (i) creating misinformation about the reviewed product, and (ii) breeding mistrust in ratings system overall. To examine these in the Amazon.com marketplace, we measure misinformation by observing products purchasing fake reviews and measure mistrust by eliciting shoppers’ beliefs about the prevalence of fake reviews on Amazon through an incentivized survey experiment. We incorporate these into a structural model of demand in which consumers form beliefs about product quality based on observed reviews and perceptions about their trustworthiness. Counterfactual policy simulations indicate that fake reviews reduce consumer welfare, shift sales from honest to dishonest sellers, and ultimately harm the platform. Welfare losses arise primarily from misinformation that leads to worse purchases. While mistrust also leads to purchasing mistakes, the consumer harms of mistrust are largely offset by increased price competition under a weakened ratings system. Finally, we identify key limitations in platforms’ incentives to police manipulation and evaluate enforcement alternatives. |
| JEL: | L00 L1 L10 L11 L15 M3 M31 M38 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34161 |
| By: | Yukihide Kurakawa (Kanazawa Seiryo University.); Makoto Tanaka (National Graduate Institute for Policy Studies.) |
| Abstract: | This paper shows how demand-side energy use efficiency affects demand response (DR) and total CO2 emissions. The marginal cost of DR corresponds to the marginal utility of electricity consumption. Thus, improved energy efficiency increases the marginal cost of DR and increases thermal power generation in balancing markets. We analyze a model consisting of a day-ahead and balancing market and examine CO2 emissions from each market. Improved energy efficiency decreases emissions from the day-ahead market while increasing emissions from the balancing market. The analysis reveals that improved energy efficiency could increase total emissions when the emission factor of the marginal plant in the day-ahead market is sufficiently small. Raising the carbon tax rate as energy efficiency improves will be necessary to deter such perverse effects, expanding the use of DR in the balancing market. |
| Keywords: | Day-ahead Market, Balancing Market, Carbon Tax, Incentivebased Demand Response, Demand-side Energy Efficiency |
| JEL: | D02 Q41 Q58 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:was:dpaper:2501 |
| By: | Teddy Mekonnen |
| Abstract: | This paper examines how a profit-maximizing monopolist competes against a free but capacity-constrained public option. The monopolist strategically restricts its supply beyond standard monopoly levels, thereby intensifying congestion at the public option and increasing consumers' willingness-to-pay for guaranteed access. Expanding the capacity of the public option always reduces producer welfare and, counterintuitively, may also reduce consumer welfare. In contrast, introducing a monopolist to a market served only by a capacity-constrained public option unambiguously improves consumer welfare. These findings have implications for mixed public-private markets, such as housing, education, and healthcare. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.12779 |
| By: | Chiara Farronato; Andrey Fradkin; Alexander MacKay |
| Abstract: | Platforms, retailers, and other firms often offer their own products alongside products sold by competitors. We study the effects of this practice by combining a field experiment that hides brands owned by Amazon (i.e., private labels) from shoppers on Amazon.com with model-based counterfactuals and welfare analysis. In the absence of private labels, consumers substitute toward products that are similar along most observable dimensions. Removing Amazon brands does not change consumers' search effort or their propensity to shop at other retail websites. Despite the ample availability of observably similar alternatives, our welfare estimates imply that, for the categories we study, removing Amazon brands would reduce consumer surplus by 5.5 percent in the short run, with approximately 10 percent of the impact due to equilibrium price increases by other sellers. The effects are heterogeneous, with consumer surplus reductions exceeding 10 percent in some categories, while other categories realize much smaller decreases when Amazon brands are removed. Demoting private labels in search results to counteract potential self-preferencing does not lead to gains in consumer surplus. This outcome arises because a subset of consumers derive greater utility from private labels and benefit from their high placement in search results. |
| JEL: | C93 D12 K21 L13 L40 L81 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34135 |
| By: | Qing Hu (Kansai University); Ryo Masuyama (Kushiro Public University of Economics); Tomomichi Mizuno (Kobe University) |
| Abstract: | It is well known that common ownership lessens competition, which tends to decrease consumer and total surpluses. This study challenges this well known result by introducing downstream firms' voluntary investment. We consider a vertical market with one upstream firm and two downstream firms, where the downstream firms engage in voluntary investment that can reduce the upstream firm's marginal cost. We show that common ownership may increase the consumer and total surpluses if the upstream marginal cost without investment is sufficiently high and the investment is sufficiently efficient. We also find our results are robust even in the market with two supply chains. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:koe:wpaper:2520 |
| By: | Ginger Zhe Jin; Mario Leccese; Liad Wagman; Yunfei Wang |
| Abstract: | We examine serial acquisitions in the technology sector from 2010 to 2023. Defining serial acquisitions based on a granular S&P industry taxonomy, we find that they account for 24–37% of majority-control tech M&A, with over half completed by public firms. Followon targets in a series are generally larger and older than the initial acquisition, and among public acquirers, starting a series is associated with higher market value and greater innovation value, but not with significant changes in market competitiveness. Among deals with valid transaction values, over half of serial deals exceed the reporting threshold of the U.S. Hart–Scott–Rodino (HSR) Act. However, in below-threshold acquisitions, acquirers primarily target their core business category. Accounting for the cumulative value of a series would, in most cases, keep the timing of HSR review unchanged or modestly accelerate it, but when it does accelerate it, review could occur several deals or years earlier, potentially yielding important benefits in markets with long acquisition sequences. Finally, while Google/Alphabet, Amazon, Facebook/Meta, Apple and Microsoft (GAFAM) stand out from the rest of the sample for more frequent serial acquisitions, some other large acquirers display similar patterns. |
| JEL: | G34 L10 L40 O38 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34178 |
| By: | Jorge Arenas M. |
| Abstract: | In this paper, I analyze pricing problems of a monopolistic platform that offers matching services to agents with heterogeneous preferences in multi-sided markets. First, I extend the Marx and Schummer (2021) model to multi-sided markets and show that its main result holds: the allocation of the price level across the sides of the market is not affected by the size imbalance across these sides. I then use preference simulations to address the price level problem in two-sided markets. I find that the optimal price level depends positively on: (i) the size of the market when it is balanced; and (ii) the imbalance of the market when it is unbalanced. The simulations also yield important implications for the relationship between the percentage of unmatched agents and market size and imbalance. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:chb:bcchwp:1033 |
| By: | Volker Nocke; Nicolas Schutz |
| Abstract: | We adopt a potential games approach to study multiproduct-firm pricing games.We introduce the new concept of transformed potential and characterize the classes of demand systems that give rise to pricing games admitting such a potential. The resulting demand systems may contain nests (of closer substitutes) or baskets (of products that are purchased jointly), or combinations thereof. These demand systems allow for flexible substitution patterns, and can feature product complementarities arising from joint purchases and substitution away from the outside option. Combining the potential games approach with a competition-in-utility approach, we derive powerful results on existence of pure-strategy Nash equilibria. |
| Keywords: | Multiproduct firms, potential game, oligopoly pricing, complementary goods, joint purchases, nests |
| JEL: | L13 D43 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_644_v2 |
| By: | Rawadee Jarungrattanapong; Therese Lindahl |
| Abstract: | Artisanal fisheries are significant for poverty alleviation, but they are severely threatened by overfishing and climate change effects. Governance solutions can be hard to find when their implementation and success depend on both social and ecological contexts. In this study, our objective is to increase our understanding of behavioral strategies adopted by artisanal fisheries under different types of regulations using a field experiment in the form of a so-called common-pool resource (CPR) experiment with 540 artisanal fishers in Nakorn Si Thammarat province, Thailand. Our results reveal that: (i) a quota treatment provide higher overall efficiency and leads to more sustainable management compared to the treatment with an unregulated fishery. (ii) the higher probability of punishment in the quota treatment promotes more equal sharing of payoffs from the experiment among group members compared to a quota treatment with a low probability of punishment; and (iii) a higher degree of monitoring in the quota system prevents resource depletion. Our results suggest that the community empowerment in these artisanal fishery communities is not strong enough to make fishers cooperate effectively without regulation and that a quota system may be one plausible solution. Our results also suggest, however, that the design of the monitoring and punishment systems may need careful consideration to ensure a sustainable solution. |
| Keywords: | Quota; Self-governance; Total allowance catches; Artisanal fisheries; Lab-in-the-field experiment |
| JEL: | Q22 Q28 C93 D70 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:pui:dpaper:237 |
| By: | Joshua S. Gans |
| Abstract: | When should travellers leave for the airport? This paper develops a model for optimal airport arrival timing when travellers face uncertain travel times and can potentially board earlier flights. We show that access to earlier flights creates a ``recourse option" that fundamentally changes optimal behaviour. While earlier flights always reduce the probability of missing one's scheduled departure, they may paradoxically increase expected waiting time when travellers adjust their arrival strategies. Using renewal theory, we establish that with frequent service, the expected waiting time converges to half the headway between flights—a fundamental limit that cannot be improved through better planning. We connect the problem to newsvendor theory, showing how the fixed penalty for missing flights (rather than linear costs) leads to distinct optimality conditions. Our results explain why rational travellers should occasionally miss flights and provide practical guidelines for airlines designing standby policies and for travellers making departure decisions. |
| JEL: | C44 D81 L93 R41 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34169 |