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on Industrial Organization |
| By: | Mehmet Selman Colak; Abdullah Kazdal; Unal Seven; Muhammed Hasan Yilmaz |
| Abstract: | This paper presents a comprehensive panorama of the markup-setting behavior of Turkish non-financial firms from 2009 to 2022, using firm-level administrative datasets. The markup indicators, constructed following the methodology of De Loecker and Warzynski (2012), reveal an increasing trend in firm markups, particularly after recent inflationary shocks and deterioration in pricing behavior. The analysis indicates that higher markups are driven by large, foreign trade-oriented, and highly leveraged firms when the overall sample period is considered. Additionally, we observe significant sectoral heterogeneity in markup changes, indicating that sector-level factors play a crucial role in markup formation. We also conduct empirical analyses to examine the effect of sectoral competition on firm markups. Although the overall sample does not reveal a conclusive relationship, our estimations for the highinflation period (2020-2022) indicate a statistically significant co-existence between the deterioration of sectoral competition and increasing markups under excessive inflation. Our findings are evaluated with respect to alternative competition and markup definitions as well as certain robustness checks. We try to mitigate the potential endogeneity concerns with coarsened exact matching and instrumental variable analyses. Although the results remain intact under most cases, significance is susceptible to the inclusion of sector-specific trends. Our estimationsfor the high-inflation interval (post-2020)show that the association of market concentration and markups is only relevant for small firms, while the association is higher for firms that have a higher likelihood of receiving state subsidies. Regarding the social externalities, we find that increased markups during inflationary episodes lead to higher investment but lower labor expenses, with a rather limited economic significance. |
| Keywords: | : Firm Markups, Market Concentration, Pricing Behavior, Inflationary Shocks |
| JEL: | E31 D40 C55 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2501 |
| By: | Panova, Elena |
| Abstract: | This paper extends reputational cheap-talk model to study the effect of competition in the media on quality of news. We find that competition helps sustaining informative reporting when it covers is-sues on which the follow-up quality assessment is likely to be possible, such as various forecasts. However, it increases the elasticity of demand and thereby creates the incentives to confirm the common priors on controversial issues, such as politics. |
| Keywords: | quality of news; competition; reputational cheap-talk |
| JEL: | L82 L10 D82 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129948 |
| By: | Andrew Hodge; Mr. Roberto Piazza; Fuad Hasanov; Xun Li; Maryam Vaziri; Mr. Atticus Weller; Yu Ching Wong |
| Abstract: | European countries are increasingly turning to industrial policy to address the challenge of geopolitical fragmentation, enhance productivity, and accelerate the green transition. Well-targeted industrial policy has the potential to correct market failures and support production efficiency by exploiting scale effects and internalizing knowledge externalities. But even the most carefully designed unilateral industrial policies risk generating negative production externalities in other countries, and, under certain conditions, may not even be welfare-enhancing for the implementing country. The reason is that negative externalities of unilateral industrial policy can drive European and international production patterns away from underlying comparative advantages, create regional or global over-supply, and result in changes in terms of trade that reduce domestic welfare. This suggests significant benefits from coordination. Structural modeling and case studies show that a coordinated approach within the European Union and with international trading partners on a narrowly defined and carefully designed set of industrial policies could unlock untapped benefits. Closer European integration would facilitate the adjustment of firms and workers to coordinated and well-targeted industrial policies and amplify their benefits. |
| Keywords: | Industrial policy; European Single Market; State Aid |
| Date: | 2024–12–16 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/249 |
| By: | Molina, Hugo (Université Paris-Saclay, INRAE); Wang, Ao (University of Warwick) |
| Abstract: | We develop an empirical framework to analyze vertical relationships with manufacturer-retailer bargaining. Our key innovation is the introduction of a novel Nash-in-Nash bargaining model that incorporates uncertainty in retailers’ pricing responses to wholesale prices. This model extends existing Nash-in-Nash frameworks by relaxing assumptions about the timing of wholesale and retail price setting. We show that our model can be microfounded by a two-stage noncooperative game with delegated negotiations. We propose a two-step strategy that separably identifies bargaining and responsiveness parameters and implies a Generalized Method of Moments estimation procedure. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1534 |
| By: | Robert Minton; Casey B. Mulligan |
| Abstract: | Markets, likened to an invisible hand, often appear to contradict econometric assumptions that rule out spillovers of one person’s treatment on another’s outcomes. This paper provides a simple statistical framework highlighting that controls are indirectly affected by the treatment through the market. Further, the effect of the treatment on the treated reveals only part of the consequence for the treated of treating the entire market. When combined with economic theory, our framework leads to a new application of Marshall’s Laws of Derived Demand that relates econometric estimates of treatment effects in the marketplace to the substitution and scale effects of demand theory. We show how treatment-effect estimators can diverge – both in magnitude and direction – from the causal effects of treatment on the treated or counterfactual policies treating all market participants. The framework shows how the consequences of targeted treatments reveal the effects of marketwide treatments, and the role of market frictions in that inference. Examples from labor, public finance, economic geography, development, and the macro literature on the “missing intercept” are provided. |
| Keywords: | Treatment effects; Spillovers; Difference-in-differences |
| JEL: | D41 L11 C21 |
| Date: | 2024–12–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2024-96 |
| By: | Ines Chaieb (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute); Vihang R. Errunza (McGill University - Desautels Faculty of Management); Lucie Y. Lu (University of Melbourne, Faculty of Business and Economics) |
| Abstract: | We construct a comprehensive database of public firm ownership in 49 countries and study the investment scope and preferences of different types of investors. Aggregate home bias has declined but is still much higher in emerging markets (EMs). Institutions have become more globally diversified but invest in a limited number of stocks. Retail investors remain highly home-biased. Institutions of different domiciles and types continue to show a strong preference for larger, more liquid, and more visible firms in both pooled regressions and country-level analyses but exhibit considerably heterogeneous preferences for other firm characteristics. Retail investors are mostly present in small and illiquid firms. |
| Keywords: | Institutional investors, emerging markets, international diversification |
| JEL: | G15 G23 G32 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2472 |
| By: | Happ, Marina; Harpenau, Franziska; Wiewiorra, Lukas |
| Abstract: | Pornographic websites represent a significant component of the digital ecosystem; however, comparatively limited research has been conducted on this subject in comparison to other websites. This paper aims to gather and enrich the extant literature on the subject. For this purpose, a comprehensive analysis of the diverse business models is conducted, regarding factors such as their design, content uploaded and revenue generation. Furthermore, an analysis of the market structure of the various companies operating within this sector is undertaken, which reveals a high degree of vertical and horizontal integration, with several tube websites as well as websites employing interactive models demonstrating particular significance. The utilisation of such services is frequent across the population, which raises several societal concerns. These include the presence of illegal content such as copyright-infringing material, child sexual abuse material (CSAM) and non-consensually shared intimate material (NCSM), potential issues regarding the protection of privacy, potential negative effects due to harmful material, access by minors and potential negative effects on the mental health. Several potential mitigation measures are presented and current approaches outlined, including age verification, verification of uploaders and performers, content moderation and changes in functionality. Especially tube websites appear to have little intrinsic motivation to remove illegal content and should therefore be examined more closely. |
| Abstract: | Pornografische Websites stellen eine signifikante Komponente des digitalen Ökosystems dar, jedoch wurde im Vergleich zu anderen Websites nur eine vergleichsweise geringe Menge an Forschung zu ihnen betrieben. Das Ziel dieses Papiers besteht darin, die vorhandene Literatur zu diesem Thema zu sammeln und zu ergänzen. Zu diesem Zweck wird eine umfassende Analyse der verschiedenen Geschäftsmodelle in Bezug auf Faktoren wie Design, hochgeladene Inhalte und Umsatzgenerierung durchgeführt. Darüber hinaus wird eine Analyse der Marktstruktur der verschiedenen in diesem Sektor tätigen Unternehmen vorgenommen, die ein hohes Maß an vertikaler und horizontaler Integration erkennen lässt, wobei mehrere Tube-Websites sowie Websites mit interaktiven Modellen von besonderer Bedeutung sind. Die Nutzung solcher Dienste ist in der Bevölkerung weit verbreitet, wodurch sich mehrere gesellschaftliche Bedenken ergeben. Dazu gehören das Vorhandensein illegaler Inhalte wie urheberrechtsverletzendes Material, Kindesmissbrauchsmaterial und nicht einvernehmlich geteiltes intimes Material, potenzielle Fragen des Schutzes der Privatsphäre, potenzielle negative Auswirkungen aufgrund von schädlichem Material, der Zugang von Minderjährigen und potenzielle negative Auswirkungen auf die psychische Gesundheit. Es werden mehrere potenzielle Abhilfemaßnahmen vorgestellt und die derzeitigen Vorgehensweisen skizziert, darunter Altersverifizierung, Überprüfung von Uploadern und Darstellern, Inhaltsmoderation und Änderungen der Funktionalität. Insbesondere Tube-Websites scheinen wenig intrinsische Motivation, illegale Inhalte zu entfernen, zu haben und sollten daher genauer untersucht werden. |
| Keywords: | Online Pornography, Adult Entertainment, Societal Issues, Digital Services Act (DSA) |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wikwps:308077 |
| By: | Jin Liu |
| Abstract: | Multinational firms colocate production and innovation by offshoring them to the same host country or region. In this paper, I examine the determinants of multinational firms’ production and innovation locations. Exploiting plausibly exogenous variations in tariffs, I find complementarities between production and innovation within host countries and regions. To evaluate manufacturing reshoring policies, I develop a quantitative multicountry offshoring location choice model. I allow for rich colocation benefits and cross-country interdependencies and prove supermodularity of the model to solve this otherwise NP-hard problem. I find the effects of manufacturing reshoring policies are nonlinear, contingent upon firm heterogeneity, and they accumulate dynamically. |
| Keywords: | multinational firms, colocation of production and innovation, offshoring |
| JEL: | F14 F23 L23 O32 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:24-64 |
| By: | Walter Engert; Oleksandr Shcherbakov; André Stenzel |
| Abstract: | We investigate the introduction of a central bank digital currency (CBDC) into the market for payments. Focusing on the point of sale, we develop and estimate a structural model of consumer adoption, merchant acceptance and usage decisions. We counterfactually simulate the introduction of a CBDC, considering a version with debit-like characteristics and one encompassing the best of cash and debit, and characterize outcomes for a range of potential adoption frictions. We show that, in the absence of adoption frictions, CBDC has the potential for material consumer adoption and merchant acceptance, along with moderate usage at the point of sale. However, modest adoption frictions substantially reduce outcomes along all three dimensions. Incumbent responses required to restore pre-CBDC market shares are moderate to small and further reduce the market penetration of CBDC. Overall, this implies that an introduction of CBDC into the market for payments is by no means guaranteed to be successful. |
| Keywords: | Bank notes; Digital currencies and fintech; Econometric and statistical methods; Financial services |
| JEL: | C51 D12 E42 L14 L52 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocawp:24-52 |
| By: | Pascal Heid; Kevin Remmy; Mathias Reynaert |
| Abstract: | The transition to electric vehicles (EVs) shifts the complementary market for passenger transport from oil to electricity. We develop and estimate a joint equilibrium model of the German electricity and automobile markets, emphasizing the timing of EV charging, as electricity generation costs and pollution vary intraday. Our results show that under Germany’s current electricity pricing scheme, EVs create a significant pecuniary externality: electricity expenses rise by €0.66 for every €1 spent charging. Exposing charging to wholesale price variation eliminates the pecuniary externality, makes EVs greener, and increases adoption—a triple dividend. |
| Keywords: | electric vehicles, electricity markets, charging, complementary markets |
| JEL: | L5 L6 L9 Q4 Q5 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_615 |