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on Industrial Organization |
| By: | Carballa-Smichowski, Bruno; Lefouili, Yassine; Mantovani, Andrea; Reggiani, Carlo |
| Abstract: | Data combination and analytics can generate valuable insights for firms and society as a whole. Firms can seize these opportunities by joining platforms that either allow them to access the data contributed by other firms or provide the result of the analytics performed on such data, depending on whether the platform adopts ''data sharing'' or "analytics sharing" technologies. The former technology enables firms to exploit their data endowment together with the data contributed by others, whereas the latter offers advantages in terms of privacy and security by reducing data transmission. We present a model that allows us to study the economic and managerial incentives generated by these technologies for both firms and a platform. First, we find that the platform chooses analytics sharing only when the security advantage of this technology is sufficiently large. Second, we show that analytics sharing results in a higher total data contribution than data sharing under general and reasonable conditions. Third, we determine the optimal data-combination technology from the perspective of consumers and discuss potential misalignments between the platform's and consumers' preferred technology. Our findings carry relevant policy and managerial implications, offering a pathway to enhance both data provision and security. |
| Keywords: | Data sharing; analytics sharing; data platforms |
| JEL: | D43 K21 L11 L13 L41 L86 M21 M31 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130300 |
| By: | Lefouili, Yassine; Madio, Leonardo |
| Abstract: | In this paper, we review recent studies on the impact of mergers on investments. First, we examine how mergers among competing incumbents influence firms' incentives to develop new products and undertake cost-reducing or quality-enhancing investments. Second, we analyze how an incumbent's acquisition of an innovative entrant affects the investment incentives of both parties. Third, we discuss the effects of vertical mergers on the investment decisions of both upstream and downstream firms. Finally, we outline a few directions for future research. |
| Keywords: | Competition; Investments; Innovation; Mergers, Entry |
| JEL: | D43 L13 L40 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130332 |
| By: | Hunt Allcott; Juan Camilo Castillo; Matthew Gentzkow; Leon Musolff; Tobias Salz |
| Abstract: | We evaluate the economic forces that contribute to Google’s large market share in web search. We develop a model of search engine demand in which consumer choices are influenced by switching costs, quality beliefs, and inattention, and estimate it using a field experiment with US desktop internet users. We find that (i) requiring Google users to make an active choice among search engines increases Bing’s market share by only 1.1 percentage points, implying that switching costs play a limited role; (ii) Google users who accept our payment to try Bing for two weeks update positively about its relative quality, with 33 percent preferring to continue using it; and (iii) after changing the default from Google to Bing, many users do not switch back, consistent with persistent inattention. In our model, correcting beliefs and removing choice frictions would increase Bing’s market share by 15 percentage points and increase consumer surplus by $6 per consumer-year. Policies that expose users to alternative search engines lower Google’s market share more than those requiring active choice. We then use Microsoft search logs to assess the impact of additional data on search result relevance. The results suggest that sharing Google’s click-and-query data with Microsoft may have a limited effect on market shares. |
| JEL: | L4 L86 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33410 |
| By: | Xie, Haitian; Zhu, Ying; Shishkin, Denis |
| Abstract: | The classic third degree price discrimination (3PD) model requires the knowledge of the distribution of buyer valuations and the covariate to set the price conditioned on the covariate. In terms of generating revenue, the classic result shows that 3PD is at least as good as uniform pricing. What if the seller has to set a price based only on a sample of observations from the underlying distribution? Is it still obvious that the seller should engage in 3PD? This paper sheds light on these fundamental questions. In particular, the comparison of the revenue performance between 3PD and uniform pricing is ambiguous overall when prices are set based on samples. This finding is in the nature of statistical learning under uncertainty: a curse of dimensionality, but also other small sample complications. |
| Keywords: | Economics, Applied Economics, Economic Theory, Applied economics, Economic theory |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:ucsdec:qt4xt2c4ts |
| By: | Volker Nocke; Nicolas Schutz |
| Abstract: | We adopt a potential games approach to study multiproduct-firm pricing games where products can be local complements or substitutes. We show that any such game based on an IIA demand system admits an ordinal potential, giving rise to a simple proof of equilibrium existence. We introduce the concept of transformed potential, and characterize the class of demand systems that give rise to multiproduct-firm pricing games admitting such a potential, as well as the associated transformation functions. The resulting demand systems allow for substitutability or complementarity patterns that go beyond IIA, and can resemble those induced by "one-stop shopping" behavior. |
| Keywords: | Multiproduct firms, potential game, oligopoly pricing, IIA demand, complementary goods |
| JEL: | L13 D43 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_644 |
| By: | Ayoze Alfageme |
| Abstract: | This paper establishes a connection between non-financial corporate mergers and acquisitions (M&A) and the rise of large firms, decline productive investment, concentration of markets and profits, and rising markups. First, using Refinitiv M&A deals data, I briefly recount the history of corporate M&A deal making in the last four decades in which this study focuses (1980-2020), with special attention to its sector dynamics. Second, the paper presents a literature review highlighting the gap for the type of study presented here, in terms of both methods and time scope. An articulation of the process from which M&A are linked to the new corporate environment is presented in the form of 6 hypothesis. Third, using Compustat firm-level data I present stylised evidence poiting towards the potential validation of those 6 hypothesis. I found that M&A has become an important corporate growth strategy (hypothesis 1). A steeper drop in capital expenditure among firms with the highest acquisition spending points to scrapping capex for M&A (hypothesis 2). Fed’s flow of funds data suggests corporate funds are redirected to the household sector for M&A payments, potentially depleting corporate funds. A micro-macro tension arises (hypothesis 3), where individual firms grow larger in total assets through M&A to achieve corporate growth goals, while their capex declines, dampening aggregate corporate investment. M&A is also connected to the rise in market concentration (hypothesis 4) and the accumulation of intangibles that create barriers to entry (hypothesis 5). Finally, firms with the most acquisitions, account for 40% of total profits and have higher markups (hypothesis 6). In a period where efforts are aimed at curbing M&A deals, these findings highlight the implications of leaving the M&A market unrestricted. |
| Keywords: | Mergers and Acquisitions, Market Concentration, Corporate Investment, Firm Growth |
| JEL: | D22 G34 L11 L40 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2505 |
| By: | Park, Ji Hye (Korea Institute for Industrial Economics and Trade) |
| Abstract: | In 2022, South Korea exported USD 12.5 billion worth of cultural content, a 4.4 percent increase compared to the previous year, and good for 7th place worldwide. Key to this performance were profitable intellectual properties (IPs) in music (K-Pop), online comics (webtoons), television series (dramas), and film. Global over-the-top (OTT) streaming powerhouse Netflix has made and continues to make large-scale investments in original Korean IP to grow its subscriber base and recently has focused these investments on securing video game and webtoon IPs. Recently, players in the content industry are paying increasingly more attention to trends in subculture and are now looking to secure IPs related to various subcultures to preempt the market as competition for IPs between existing market players intensifies. Subcultures have formed around webtoons and virtual novellas, games, animations, and internet stars (content creators and streamers), and this buzz has piqued the mainstream content industry’s interest. In this paper, I examine some major subcultures active in Korea and explore how industry players could leverage them for export and continued growth. |
| Keywords: | K-Pop; K-Drama; hallyu; 한류; Korean wave; manwha; webtoons; cartoons; manga; video games; phone games; streaming; Netflix; subculture; indie culture; otaku; V-Tubers; Genshin Impact; fandom; South Korea; China; content industry; KIET |
| JEL: | L82 L86 L88 |
| Date: | 2024–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kieter:2024_031 |