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on Industrial Organization |
| By: | Koharu Nakao (Graduate School of Economics, Kwansei Gakuin University) |
| Abstract: | This study focuses on the e-commerce market and analyzes the pricing behavior of a peer-to-peer platform that intermediates transactions between consumers (individuals). We consider two types of fee rates charged by a platform to consumers. Each consumer type is represented by two vectors, and consumers act depending on the values of these vectors. We investigate how the platform's profit, price of goods, and fee rate are affected by whether the platform charges the fee rate to sellers or buyers. The results indicate that, first, the platform's equilibrium profit is equivalent regardless of whether a fee rate is imposed on sellers or buyers. Second, consumer surplus and social welfare are also equivalent. Finally, the equilibrium price and equilibrium fee rate result in contrasting ones depending on whether sellers or buyers pay the fee. Specifically, when the cost of supply on the seller side increases, the fee rate falls in both cases; however, the price of goods increases more if a platform charges a fee rate to the buyers rather than the sellers. |
| Keywords: | sharing economy, peer-to-peer, e-commerce, fee, platform |
| JEL: | L81 L11 D21 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:kgu:wpaper:277 |
| By: | Martimort, David; Pouyet, Jérôme |
| Abstract: | A retailer may boost demand for a manufacturer’s product through unobservable promotional efforts. Fixed fees cannot be used to freely allocate profit within the vertical structure. When manufacturers have market power, the equilibrium wholesale contract features a retail price below cost together with a rebate for incremental units bought by the retailer when effort has succeeded in boosting sales. Loss leading emerges as an incentive device in such an incomplete contracting scenario. A ban on below-cost pricing leads to a higher retail price and a lower promotional effort. |
| Keywords: | Vertical restraints; loss leading; promotional allowances; below-cost; pricing |
| JEL: | L11 L42 L81 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129692 |
| By: | Andrew Koh; Sivakorn Sanguanmoo |
| Abstract: | We analyze how uncertain technologies should be robustly regulated. An agent develops a new technology and, while privately learning about its harms and benefits, continually chooses whether to continue development. A principal, uncertain about what the agent might learn, chooses among dynamic mechanisms (e.g., paths of taxes or subsidies) to influence the agent's choices in different states. We show that learning robust mechanisms -- those which deliver the highest payoff guarantee across all learning processes -- are simple and resemble `regulatory sandboxes' consisting of zero marginal tax on R&D which keeps the agent maximally sensitive to new information up to a hard quota, upon which the agent turns maximally insensitive. Robustness is important: we characterize the worst-case learning process under non-robust mechanisms and show that they induce growing but weak optimism which can deliver unboundedly poor principal payoffs; hard quotas safeguard against this. If the regulator also learns, adaptive hard quotas are robustly optimal which highlights the importance of expertise in regulation. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.17398 |
| By: | Federico Fabio Frattini (Fondazione Eni Enrico Mattei); Francesco Vona (University of Milan and Fondazione Eni Enrico Mattei); Filippo Bontadini (Luiss University and SPRU – University of Sussex) |
| Abstract: | What are the consequences of green industrialization on the labour market and industry dynamics? This paper tackles and quantifies this question by employing observable and reliable data on green manufacturing production for an extensive set of EU countries and 4-digit manufacturing industries for over a decade. First, at a descriptive level, this paper documents that potentially green industries outperform the others in terms of employment, average wages, value added and productivity, net of controlling for other drivers of the labour market and industry dynamics. Second, employing a shiftshare instrument to purge the analysis from possible endogeneity within green potential industries, this paper finds that an expansion of green production implies an increase in employment and value added. In contrast, average wages and labour productivity remain unchanged. These results hold in the short and long term, are heterogeneous depending on the countries considered, and are amplified by existing industry specialization and by accounting for input-output linkages. |
| Keywords: | Green transition, Employment, Manufacturing, Shift-share |
| JEL: | J21 J31 L6 O14 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2024.23 |
| By: | Hernán Bejarano (Division of Economics, CIDE); Pedro Hancevic (Division of Economics, CIDE); Héctor Núñez (Division of Economics, CIDE) |
| Abstract: | In this paper, we analyze the impact of the COVID-19 pandemic on the sales and expenditures of small and medium-sized businesses in Mexico. Using a novel survey that captures the economic conditions and expectations before and during the pandemic, we also incorporate electricity billing data as a proxy for economic activity and as a revealed measure of firms' flexibility in reducing costs. We examine these variables in relation to firms' characteristics, adaptation strategies, and expectations during the pandemic. Our analysis employs non-parametric tests and a set of econometric models, revealing a significant decline in sales alongside limited flexibility in expenditures. The effects vary depending on the strategies firms adopt to cope with the crisis and their negative expectations regarding a quick return to normality. Consequently, most SMEs face a precarious economic situation, highlighting the need for new policies and strategies to enhance their survival prospects in emerging economies such as Mexico. |
| Keywords: | COVID-19, small and medium-sized enterprises (SME), activity restrictions, electricity consumption, emerging countries |
| JEL: | D22 L20 Q41 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:emc:wpaper:dte639 |
| By: | Xin Du; Xiaoxia Shi |
| Abstract: | What impact does import competition have on firms' production organizational choices? Existing literature has predominantly focused on the relationship between import competition and firms' global production networks, with less attention given to domestic. We first develop a Nash-bargaining model to guide our empirical analysis, then utilize tariff changes as an exogenous shock to test our theoretical hypotheses using a database of Chinese listed firms from 2000 to 2023. Our findings indicate that a decrease in downstream tariffs lead to an increase in vertical integration. In our mechanism tests, we discover that a reduction in upstream tariffs also enhances this effect. Moreover, the impact of tariff reductions on vertical integration is primarily observed in industries with high asset specificity, indicating that asset-specificity is a crucial mechanism. We further explore whether import competition encourages vertical integration for technological acquisition purpose, the effect is found only among high-tech firms, while it's absent in non-high-tech firms. Our research provides new perspectives and evidence on how firms optimize their production organization in the process of globalization. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.13706 |
| By: | Gianluca Antonecchia (KU Leuven); Ajay Bhaskarabhatla (Erasmus School of Economics); Enrico Pennings (Erasmus School of Economics) |
| Abstract: | This paper develops a novel theory linking quantity discounts to bargaining power in scenarios where retailers, organized as a trade association, negotiate uni- form wholesale prices with suppliers. Our theory predicts that suppliers offer greater quantity discounts in regional markets where they possess relatively less bargaining power, as a counterbalance to the higher national wholesale prices negotiated by the retailer trade association. We test these predictions using detailed product-level data from the Indian pharmaceutical industry, where significant geographic variations in quantity discounts are observed. Our findings provide empirical support for the proposed theory. |
| Keywords: | quantity discounts, bargaining power, pharmaceuticals, India |
| JEL: | L11 L42 D22 |
| Date: | 2024–07–19 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20240048 |