Pub Date : 2025-09-01DOI: 10.1016/j.ijindorg.2025.103173
Natalia Fabra, Gerard Llobet
This paper examines the limitations of spot markets in providing adequate investment incentives to support zero-carbon investments in electricity markets. In contrast, properly designed long-term contracts have the potential to mitigate price volatility and facilitate the funding of the investments. A theoretical model is developed to analyze contract design under conditions of moral hazard and adverse selection, emphasizing the trade-offs that arise when exposing firms to price and quantity risk. The findings inform optimal contract design for nuclear and renewable energy projects, offering policy recommendations to enhance investment incentives while minimizing productive inefficiencies and excessive rents.
{"title":"Designing contracts for the energy transition","authors":"Natalia Fabra, Gerard Llobet","doi":"10.1016/j.ijindorg.2025.103173","DOIUrl":"10.1016/j.ijindorg.2025.103173","url":null,"abstract":"<div><div>This paper examines the limitations of spot markets in providing adequate investment incentives to support zero-carbon investments in electricity markets. In contrast, properly designed long-term contracts have the potential to mitigate price volatility and facilitate the funding of the investments. A theoretical model is developed to analyze contract design under conditions of moral hazard and adverse selection, emphasizing the trade-offs that arise when exposing firms to price and quantity risk. The findings inform optimal contract design for nuclear and renewable energy projects, offering policy recommendations to enhance investment incentives while minimizing productive inefficiencies and excessive rents.</div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"102 ","pages":"Article 103173"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145049857","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01DOI: 10.1016/j.ijindorg.2025.103186
Ralf Martin , Jenniffer Solorzano Mosquera , Catherine Thomas , Dennis Verhoeven
We examine the relationship between firms' markups and the economic value of their innovation, including both the private value captured by the innovating firm and the knowledge spillovers that benefit other firms. Using a sample of over 14,500 EU firms and 2,400 US firms granted patents between 2005 and 2014, we find that innovation by high-markup firms is more valuable privately and also creates more external value. These associations are robust to controlling for the stock of past innovation and to estimating innovation value in various ways.
{"title":"Firm markups and the economic value of innovation","authors":"Ralf Martin , Jenniffer Solorzano Mosquera , Catherine Thomas , Dennis Verhoeven","doi":"10.1016/j.ijindorg.2025.103186","DOIUrl":"10.1016/j.ijindorg.2025.103186","url":null,"abstract":"<div><div>We examine the relationship between firms' markups and the economic value of their innovation, including both the private value captured by the innovating firm and the knowledge spillovers that benefit other firms. Using a sample of over 14,500 EU firms and 2,400 US firms granted patents between 2005 and 2014, we find that innovation by high-markup firms is more valuable privately and also creates more external value. These associations are robust to controlling for the stock of past innovation and to estimating innovation value in various ways.</div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"102 ","pages":"Article 103186"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145049859","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01DOI: 10.1016/j.ijindorg.2025.103172
Dirk Bergemann , Alessandro Bonatti , Nicholas Wu
In digital advertising, auctions determine the allocation of sponsored search, sponsored product, or display advertisements. The bids in these auctions for attention are largely generated by auto-bidding algorithms that are driven by platform-provided data.
We analyze the equilibrium properties of a sequence of increasingly sophisticated auto-bidding algorithms. First, we consider the equilibrium bidding behavior of an individual advertiser who controls the auto-bidding algorithm through the choice of their budget. Second, we examine the interaction when all bidders use budget-controlled bidding algorithms. Finally, we derive the bidding algorithm that maximizes the platform revenue while ensuring that all advertisers continue to participate.
{"title":"Bidding with budgets: Data-driven bid algorithms in digital advertising","authors":"Dirk Bergemann , Alessandro Bonatti , Nicholas Wu","doi":"10.1016/j.ijindorg.2025.103172","DOIUrl":"10.1016/j.ijindorg.2025.103172","url":null,"abstract":"<div><div>In digital advertising, auctions determine the allocation of sponsored search, sponsored product, or display advertisements. The bids in these auctions for attention are largely generated by auto-bidding algorithms that are driven by platform-provided data.</div><div>We analyze the equilibrium properties of a sequence of increasingly sophisticated auto-bidding algorithms. First, we consider the equilibrium bidding behavior of an individual advertiser who controls the auto-bidding algorithm through the choice of their budget. Second, we examine the interaction when all bidders use budget-controlled bidding algorithms. Finally, we derive the bidding algorithm that maximizes the platform revenue while ensuring that all advertisers continue to participate.</div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"102 ","pages":"Article 103172"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145049858","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01DOI: 10.1016/j.ijindorg.2025.103177
Michael Rubens , Yingjie Wu , Mingzhi Xu Jimmy
Factor price markdowns are a key object of interest when studying monopsony power. In this article, we test the performance of “production approaches” to estimate factor price markdowns, which have been used increasingly often in the literature. We evaluate the performance of these estimators under various data-generating processes using Monte Carlo simulations. We discuss the commonly made assumptions in this class of estimators, and we address the methodological challenges involved with relaxing these assumptions, such as departing from Hicks neutrality, allowing for nonsubstitutable inputs, and allowing for various types of labor market conduct.
{"title":"Estimating factor price markdowns using production models","authors":"Michael Rubens , Yingjie Wu , Mingzhi Xu Jimmy","doi":"10.1016/j.ijindorg.2025.103177","DOIUrl":"10.1016/j.ijindorg.2025.103177","url":null,"abstract":"<div><div><span>Factor price markdowns are a key object of interest when studying monopsony power. In this article, we test the performance of “production approaches” to estimate factor price markdowns, which have been used increasingly often in the literature. We evaluate the performance of these estimators under various data-generating processes using </span>Monte Carlo simulations<span>. We discuss the commonly made assumptions in this class of estimators, and we address the methodological challenges involved with relaxing these assumptions, such as departing from Hicks neutrality, allowing for nonsubstitutable inputs, and allowing for various types of labor market conduct.</span></div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"102 ","pages":"Article 103177"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145049856","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-09-01DOI: 10.1016/j.ijindorg.2025.103170
Eugenio J. Miravete , María J. Moral
The Spanish government pursued an aggressive, decades-long, autarkic policy that effectively banned automobile imports in most of Spain between 1939 and 1986. We take advantage of the Canary Islands' unique institutional fiscal regime to evaluate the effect of this autarkic industrial policy on domestic sales of automobiles produced in Spain. The archipelago's centuries old free-port regime allowed Canarian islanders access to imports. This resulted in a very different composition of automobile sales in the Canary Islands relative to other Spanish regions. Canarians' loyalty to Spanish domestic brands only converged to those of the rest of Spain years after Spain joined the European Union, once the tariff differential across regions was phased-out. Our analysis using historical provincial automobile registration data shows that import restrictions are responsible for 33% of additional domestic sales in Spain between 1972 and 1986.
{"title":"Shaping preferences through industrial policy: The Canary Islands in autarkic Spain","authors":"Eugenio J. Miravete , María J. Moral","doi":"10.1016/j.ijindorg.2025.103170","DOIUrl":"10.1016/j.ijindorg.2025.103170","url":null,"abstract":"<div><div>The Spanish government pursued an aggressive, decades-long, autarkic policy that effectively banned automobile imports in most of Spain between 1939 and 1986. We take advantage of the Canary Islands' unique institutional fiscal regime to evaluate the effect of this autarkic industrial policy on domestic sales of automobiles produced in Spain. The archipelago's centuries old free-port regime allowed Canarian islanders access to imports. This resulted in a very different composition of automobile sales in the Canary Islands relative to other Spanish regions. Canarians' loyalty to Spanish domestic brands only converged to those of the rest of Spain years after Spain joined the European Union, once the tariff differential across regions was phased-out. Our analysis using historical provincial automobile registration data shows that import restrictions are responsible for 33% of additional domestic sales in Spain between 1972 and 1986.</div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"102 ","pages":"Article 103170"},"PeriodicalIF":1.4,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145049860","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-19DOI: 10.1016/j.ijindorg.2025.103190
Chia-Lun Liu , Shin-Yi Chou , Hsien-Ming Lien , Mary E. Deily
This paper studies the effects of universal health insurance reform on health care supply by examining how the implementation of National Health Insurance (NHI) in Taiwan affected the structure of the hospital sector. The massive increase in insurance coverage increased demand but also greatly reduced price differentials among hospitals. We use regional differences in the proportion of uninsured elderly before the reform to identify how these consequences of NHI affected hospitals. We find the reform resulted in a significant decrease in the number of hospitals, and that most of those exiting were small hospitals that offered fewer services and employed fewer doctors. Examination of the input choices and utilization rates of individual hospitals shows that large hospitals increased staffing levels and other inputs, and experienced higher utilization rates, while small hospitals did not; instead, many became clinics. The results suggest that the introduction of universal health insurance caused large hospitals to expand and prosper while small hospitals remained the same size or exited.
{"title":"How do hospital markets respond to universal health insurance?","authors":"Chia-Lun Liu , Shin-Yi Chou , Hsien-Ming Lien , Mary E. Deily","doi":"10.1016/j.ijindorg.2025.103190","DOIUrl":"10.1016/j.ijindorg.2025.103190","url":null,"abstract":"<div><div>This paper studies the effects of universal health insurance reform on health care supply by examining how the implementation of National Health Insurance (NHI) in Taiwan affected the structure of the hospital sector. The massive increase in insurance coverage increased demand but also greatly reduced price differentials among hospitals. We use regional differences in the proportion of uninsured elderly before the reform to identify how these consequences of NHI affected hospitals. We find the reform resulted in a significant decrease in the number of hospitals, and that most of those exiting were small hospitals that offered fewer services and employed fewer doctors. Examination of the input choices and utilization rates of individual hospitals shows that large hospitals increased staffing levels and other inputs, and experienced higher utilization rates, while small hospitals did not; instead, many became clinics. The results suggest that the introduction of universal health insurance caused large hospitals to expand and prosper while small hospitals remained the same size or exited.</div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"103 ","pages":"Article 103190"},"PeriodicalIF":1.4,"publicationDate":"2025-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144908879","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-19DOI: 10.1016/j.ijindorg.2025.103187
Saara Hämäläinen , Yi Zheng
Our paper analyzes lobbying contests in which firms can enhance their competitiveness in the eyes of a decision-maker and stakeholders through both traditional lobbying (e.g., political contributions and information campaigns) and responsible lobbying (e.g., sustainability programs and consumer advocacy). We establish that increasing demand for various Corporate Social Responsibility (CSR) investments can incentivize firms to shift from traditional to responsible lobbying. Harnessing CSR for lobbying purposes obfuscates firm comparisons for the decision-maker and stakeholders, thereby reducing the intensity of lobbying competition and lowering equilibrium lobbying expenditures. This reallocation is generally welfare-improving and could occur even when traditional lobbying is somewhat more cost-efficient than responsible lobbying. Our results suggest that a transition to responsible lobbying—a “pro-consumer lobbying agenda”—can represent a move toward a more efficient lobbying standard.
{"title":"Socially responsible lobbying","authors":"Saara Hämäläinen , Yi Zheng","doi":"10.1016/j.ijindorg.2025.103187","DOIUrl":"10.1016/j.ijindorg.2025.103187","url":null,"abstract":"<div><div>Our paper analyzes lobbying contests in which firms can enhance their competitiveness in the eyes of a decision-maker and stakeholders through both <em>traditional lobbying</em> (e.g., political contributions and information campaigns) and <em>responsible lobbying</em> (e.g., sustainability programs and consumer advocacy). We establish that increasing demand for various Corporate Social Responsibility (CSR) investments can incentivize firms to shift from traditional to responsible lobbying. Harnessing CSR for lobbying purposes obfuscates firm comparisons for the decision-maker and stakeholders, thereby reducing the intensity of lobbying competition and lowering equilibrium lobbying expenditures. This reallocation is generally welfare-improving and could occur even when traditional lobbying is somewhat more cost-efficient than responsible lobbying. Our results suggest that a transition to responsible lobbying—a “pro-consumer lobbying agenda”—can represent a move toward a more efficient lobbying standard.</div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"103 ","pages":"Article 103187"},"PeriodicalIF":1.4,"publicationDate":"2025-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144925951","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-14DOI: 10.1016/j.ijindorg.2025.103189
Wen Wang , Qi Pan , Xiaoming Xie
We examine China's Green Credit Policy, a green finance instrument that incentivizes firms' environmental performance through conditional financial support. Using firm-level longitudinal data and a difference-in-differences design, we find that while regulated enterprises experienced a 2.3% annual increase in the ratio of green to total patents, their average patent citations decreased by 0.079 per year. Low-quality green innovations, despite securing financial support, caused negative spillover effects by crowding out other innovations and realigning green innovators. Analyzing the policy's effects across firms at varying distances from the green technology frontier, we identify misalignment and inefficiency in green credit allocation. Firms with stronger green innovation capabilities experienced a more pronounced decline in both the quantity and quality of their green innovations.
{"title":"Lost green leaders: Is China's green financial regulation efficient?","authors":"Wen Wang , Qi Pan , Xiaoming Xie","doi":"10.1016/j.ijindorg.2025.103189","DOIUrl":"10.1016/j.ijindorg.2025.103189","url":null,"abstract":"<div><div>We examine China's Green Credit Policy, a green finance instrument that incentivizes firms' environmental performance through conditional financial support. Using firm-level longitudinal data and a difference-in-differences design, we find that while regulated enterprises experienced a 2.3% annual increase in the ratio of green to total patents, their average patent citations decreased by 0.079 per year. Low-quality green innovations, despite securing financial support, caused negative spillover effects by crowding out other innovations and realigning green innovators. Analyzing the policy's effects across firms at varying distances from the green technology frontier, we identify misalignment and inefficiency in green credit allocation. Firms with stronger green innovation capabilities experienced a more pronounced decline in both the quantity and quality of their green innovations.</div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"103 ","pages":"Article 103189"},"PeriodicalIF":1.4,"publicationDate":"2025-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144865990","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-24DOI: 10.1016/j.ijindorg.2025.103185
David Bounie , Antoine Dubus , Patrick Waelbroeck
This article analyzes how take-it-or-leave-it offers (TIOLI) and auctions impact the selling strategy of a data intermediary, the price of information and the amount of consumer data collected. TIOLI leads to a higher consumer surplus compared to auctions, but encourages the intermediary to collect more consumer information than auctions, which is detrimental to consumer privacy. We discuss regulatory measures to protect at the same time consumer surplus and privacy.
{"title":"Collecting and selling consumer information: Selling mechanisms matter","authors":"David Bounie , Antoine Dubus , Patrick Waelbroeck","doi":"10.1016/j.ijindorg.2025.103185","DOIUrl":"10.1016/j.ijindorg.2025.103185","url":null,"abstract":"<div><div>This article analyzes how take-it-or-leave-it offers (TIOLI) and auctions impact the selling strategy of a data intermediary, the price of information and the amount of consumer data collected. TIOLI leads to a higher consumer surplus compared to auctions, but encourages the intermediary to collect more consumer information than auctions, which is detrimental to consumer privacy. We discuss regulatory measures to protect at the same time consumer surplus and privacy.</div></div>","PeriodicalId":48127,"journal":{"name":"International Journal of Industrial Organization","volume":"103 ","pages":"Article 103185"},"PeriodicalIF":1.4,"publicationDate":"2025-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144826969","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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