Pub Date : 2023-11-17DOI: 10.1007/s11151-023-09928-8
Kyle Wilson
I investigate the effect of competition on quality in the internet service provision industry: I examine both local competition within markets and multimarket contact among firms across markets. This industry offers an ideal setting, as quality is both objective and measurable. I use data from speedtest.net from 2008 to 2014 to estimate a reduced-form model of the effects of local competition and multimarket contact on realized consumer download speeds. I find that increased multimarket contact leads to decreased download speeds, which is consistent with the mutual forbearance hypothesis. I also find that duopolies lead to faster download speeds than do monopolies, but that further increases in the number of competitors decrease speeds.
{"title":"Local Competition, Multimarket Contact, and Product Quality: Evidence From Internet Service Provision","authors":"Kyle Wilson","doi":"10.1007/s11151-023-09928-8","DOIUrl":"https://doi.org/10.1007/s11151-023-09928-8","url":null,"abstract":"<p>I investigate the effect of competition on quality in the internet service provision industry: I examine both local competition within markets and multimarket contact among firms across markets. This industry offers an ideal setting, as quality is both objective and measurable. I use data from speedtest.net from 2008 to 2014 to estimate a reduced-form model of the effects of local competition and multimarket contact on realized consumer download speeds. I find that increased multimarket contact leads to decreased download speeds, which is consistent with the mutual forbearance hypothesis. I also find that duopolies lead to faster download speeds than do monopolies, but that further increases in the number of competitors decrease speeds.\u0000</p>","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2023-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138520278","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-17DOI: 10.1007/s11151-023-09924-y
Ricardo D. Brito, Eduardo Correia de Souza, Rodrigo Moita
We demonstrate that R&D intensity is an appropriate measure of vertical differentiation, while the Rauch (J Int Econ 48:7–35, 1999) classification mainly captures horizontal differentiation. Product market characteristics vary considerably across R&D intensity-based “technology levels” of the OECD-STI taxonomy, as well as across categories of the Rauch classification. Both high technology and differentiated products display lower price elasticity of demand and longer quality ladders than do low technology and homogeneous products. However, variety proliferation decreases with the technology level and increases with the Rauch category, while price dispersion increases with technology but not with the Rauch. Additionally, Rauch categories do not differ in factor intensities, while higher tech industries are more capital intensive than lower tech ones.
我们证明研发强度是垂直分化的适当衡量标准,而Rauch (J Int Econ 48:7-35, 1999)分类主要捕捉水平分化。产品市场特征在OECD-STI分类中基于研发强度的“技术水平”之间以及Rauch分类的不同类别之间差异很大。高技术和差异化产品都比低技术和同质化产品表现出更低的需求价格弹性和更长的质量阶梯。品种扩散随技术水平而降低,随劳赫类别而增加;价格分散随技术水平而增加,但不随劳赫类别而增加。此外,Rauch分类在要素强度上没有差异,而高技术产业比低技术产业的资本密集程度更高。
{"title":"Separating Vertical from Horizontal Differentiation","authors":"Ricardo D. Brito, Eduardo Correia de Souza, Rodrigo Moita","doi":"10.1007/s11151-023-09924-y","DOIUrl":"https://doi.org/10.1007/s11151-023-09924-y","url":null,"abstract":"<p>We demonstrate that R&D intensity is an appropriate measure of vertical differentiation, while the Rauch (J Int Econ 48:7–35, 1999) classification mainly captures horizontal differentiation. Product market characteristics vary considerably across R&D intensity-based “technology levels” of the OECD-STI taxonomy, as well as across categories of the Rauch classification. Both high technology and differentiated products display lower price elasticity of demand and longer quality ladders than do low technology and homogeneous products. However, variety proliferation decreases with the technology level and increases with the Rauch category, while price dispersion increases with technology but not with the Rauch. Additionally, Rauch categories do not differ in factor intensities, while higher tech industries are more capital intensive than lower tech ones.</p>","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2023-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138520282","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-11DOI: 10.1007/s11151-023-09929-7
Qiwen Sheng, Tomislav Vukina
{"title":"Public Communication as a Mechanism for Collusion in the Broiler Industry","authors":"Qiwen Sheng, Tomislav Vukina","doi":"10.1007/s11151-023-09929-7","DOIUrl":"https://doi.org/10.1007/s11151-023-09929-7","url":null,"abstract":"","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135043058","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-05DOI: 10.1007/s11151-023-09927-9
James M. MacDonald
{"title":"Introduction: The Industrial Organization of Food and Agriculture","authors":"James M. MacDonald","doi":"10.1007/s11151-023-09927-9","DOIUrl":"https://doi.org/10.1007/s11151-023-09927-9","url":null,"abstract":"","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135725114","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-01DOI: 10.1007/s11151-023-09925-x
Arijit Mukherjee, Uday Bhanu Sinha
Abstract Cooperation among rival firms raises serious skepticism among economists, policymakers, and legal experts, since it generally hurts consumers. We show that this may not be the case in an open economy with strategic foreign direct investment (FDI). Under Cournot competition, increased cooperation among firms reduces the domestic welfare, but it may benefit the consumers by attracting FDI. Under Bertrand competition with differentiated goods, increased cooperation may increase consumer surplus, and it may increase or decrease the domestic welfare by attracting FDI.
{"title":"Product Market Cooperation, Foreign Direct Investment and Consumer Welfare","authors":"Arijit Mukherjee, Uday Bhanu Sinha","doi":"10.1007/s11151-023-09925-x","DOIUrl":"https://doi.org/10.1007/s11151-023-09925-x","url":null,"abstract":"Abstract Cooperation among rival firms raises serious skepticism among economists, policymakers, and legal experts, since it generally hurts consumers. We show that this may not be the case in an open economy with strategic foreign direct investment (FDI). Under Cournot competition, increased cooperation among firms reduces the domestic welfare, but it may benefit the consumers by attracting FDI. Under Bertrand competition with differentiated goods, increased cooperation may increase consumer surplus, and it may increase or decrease the domestic welfare by attracting FDI.","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135273337","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-20DOI: 10.1007/s11151-023-09926-w
Lauren Chenarides, Miguel I. Gómez, Timothy J. Richards, Koichi Yonezawa
Abstract “Hard discounters” are retail formats that set retail food prices even lower than existing discount formats, such as Walmart and Target. Offering limited assortments and focusing on store-brands, these formats promise to change the competitive landscape of food retailing. In this paper, we study the effect of entry of one hard-discount format on markups earned by existing retail stores, focusing on several important grocery markets across the Eastern U.S. Focusing on establishment-level profitability, we estimate store-level markups using the production-side approach of De Loecker and Warzynski (Am Econ Rev 102(6):2437–2471). We find that hard-discounter entry reduced markups for incumbment retailers by 7.3% relative to markups in non-entry markets. These results indicate that the net effect of hard-discounter entry reduces the overall level of store profitability—despite the somewhat higher sales realized by incumbent retailers.
{"title":"Retail Markups and Discount-Store Entry","authors":"Lauren Chenarides, Miguel I. Gómez, Timothy J. Richards, Koichi Yonezawa","doi":"10.1007/s11151-023-09926-w","DOIUrl":"https://doi.org/10.1007/s11151-023-09926-w","url":null,"abstract":"Abstract “Hard discounters” are retail formats that set retail food prices even lower than existing discount formats, such as Walmart and Target. Offering limited assortments and focusing on store-brands, these formats promise to change the competitive landscape of food retailing. In this paper, we study the effect of entry of one hard-discount format on markups earned by existing retail stores, focusing on several important grocery markets across the Eastern U.S. Focusing on establishment-level profitability, we estimate store-level markups using the production-side approach of De Loecker and Warzynski (Am Econ Rev 102(6):2437–2471). We find that hard-discounter entry reduced markups for incumbment retailers by 7.3% relative to markups in non-entry markets. These results indicate that the net effect of hard-discounter entry reduces the overall level of store profitability—despite the somewhat higher sales realized by incumbent retailers.","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135513763","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-05DOI: 10.1007/s11151-023-09923-z
Tina L. Saitone, K. Aleks Schaefer, Daniel Scheitrum, Shawn Arita, Vince Breneman, Rebecca Nemec Boehm, Josh G. Maples
{"title":"Consolidation and Concentration in U.S. Meat Processing: Updated Measures Using Plant-Level Data","authors":"Tina L. Saitone, K. Aleks Schaefer, Daniel Scheitrum, Shawn Arita, Vince Breneman, Rebecca Nemec Boehm, Josh G. Maples","doi":"10.1007/s11151-023-09923-z","DOIUrl":"https://doi.org/10.1007/s11151-023-09923-z","url":null,"abstract":"","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134947437","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-04DOI: 10.1007/s11151-023-09922-0
Guojun He, Jeffrey T. LaFrance, Jeffrey M. Perloff, Richard Volpe
{"title":"How do Everyday-Low-Price Supermarkets Adjust Their Prices?","authors":"Guojun He, Jeffrey T. LaFrance, Jeffrey M. Perloff, Richard Volpe","doi":"10.1007/s11151-023-09922-0","DOIUrl":"https://doi.org/10.1007/s11151-023-09922-0","url":null,"abstract":"","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-10-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135548093","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-12DOI: 10.1007/s11151-023-09921-1
Muxin Li
Abstract Intermediaries—such as Amazon, Alibaba Group, and Walmart—play critical roles in digital markets: This paper proposes a model for analyzing how search cost affects their market outcomes. Distinguished from existing search literature, we introduce network effects to the market by allowing buyers to have positive preferences for product variety. In addition, we relax the exogenous demand and supply assumptions in the conventional search literature to study how search affects participation on both sides of the market. Through the model, we focus on studying and comparing two important types of intermediary: the two-sided platform; and the one-sided retailer. We find that reducing search costs does not necessarily increase the profit of both intermediary types. Furthermore, its influences are highly varied—depending on both the type of intermediary and its buyers’ preferences for variety.
{"title":"Do Lower Search Costs Benefit Intermediaries?","authors":"Muxin Li","doi":"10.1007/s11151-023-09921-1","DOIUrl":"https://doi.org/10.1007/s11151-023-09921-1","url":null,"abstract":"Abstract Intermediaries—such as Amazon, Alibaba Group, and Walmart—play critical roles in digital markets: This paper proposes a model for analyzing how search cost affects their market outcomes. Distinguished from existing search literature, we introduce network effects to the market by allowing buyers to have positive preferences for product variety. In addition, we relax the exogenous demand and supply assumptions in the conventional search literature to study how search affects participation on both sides of the market. Through the model, we focus on studying and comparing two important types of intermediary: the two-sided platform; and the one-sided retailer. We find that reducing search costs does not necessarily increase the profit of both intermediary types. Furthermore, its influences are highly varied—depending on both the type of intermediary and its buyers’ preferences for variety.","PeriodicalId":47454,"journal":{"name":"Review of Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135880329","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}