This article develops a model in which market structure is determined endogenously by the choice of intermediation mode. There are two representative modes of intermediation that are widely used in real-life markets: one is a middleman mode where an intermediary purchases inventory from the wholesale market and resells to buyers; the other is a market-making mode where an intermediary offers a platform for buyers and sellers to meet and trade. We show that a marketmaking middleman, who adopts a mixture of these two intermediation modes, can emerge in a directed search equilibrium and discuss implications for the market structure.
{"title":"Marketmaking Middlemen","authors":"Pieter Gautier, Bo Hu, Makoto Watanabe","doi":"10.1111/1756-2171.12431","DOIUrl":"https://doi.org/10.1111/1756-2171.12431","url":null,"abstract":"This article develops a model in which market structure is determined endogenously by the choice of intermediation mode. There are two representative modes of intermediation that are widely used in real-life markets: one is a middleman mode where an intermediary purchases inventory from the wholesale market and resells to buyers; the other is a market-making mode where an intermediary offers a platform for buyers and sellers to meet and trade. We show that a marketmaking middleman, who adopts a mixture of these two intermediation modes, can emerge in a directed search equilibrium and discuss implications for the market structure.","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2023-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134921903","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}
{"title":"Management, productivity, and technology choices: evidence from U.S. mining schools","authors":"M. Rubens","doi":"10.1111/1756-2171.12434","DOIUrl":"https://doi.org/10.1111/1756-2171.12434","url":null,"abstract":"","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"63248883","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}
This paper analyzes the effects of mergers and acquisitions on the markups of non-merging rival firms across a broad set of industries. We exploit expert market definitions from the European Commission's merger decisions to identify relevant competitors in narrowly defined product markets. Applying recent methodological advances in the estimation of production functions, we estimate markups as a measure of market power. Our results indicate that rivals significantly increase their markups after mergers relative to a matched control group. Consistent with increases in market power, the effects are particularly pronounced in markets with few players, high initial markups and concentration. We also provide evidence that merger rivals reduce their employment, sales and investment, while their profits increase around the time of a merger.
{"title":"Mergers and market power: evidence from rivals' responses in European markets","authors":"Joel Stiebale, Florian W Szücs","doi":"10.1111/1756-2171.12427","DOIUrl":"https://doi.org/10.1111/1756-2171.12427","url":null,"abstract":"This paper analyzes the effects of mergers and acquisitions on the markups of non-merging rival firms across a broad set of industries. We exploit expert market definitions from the European Commission's merger decisions to identify relevant competitors in narrowly defined product markets. Applying recent methodological advances in the estimation of production functions, we estimate markups as a measure of market power. Our results indicate that rivals significantly increase their markups after mergers relative to a matched control group. Consistent with increases in market power, the effects are particularly pronounced in markets with few players, high initial markups and concentration. We also provide evidence that merger rivals reduce their employment, sales and investment, while their profits increase around the time of a merger.","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2022-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44176956","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}
{"title":"On advance payments in tenders with budget constrained contractors","authors":"Oleksii Birulin, S. Izmalkov","doi":"10.1111/1756-2171.12428","DOIUrl":"https://doi.org/10.1111/1756-2171.12428","url":null,"abstract":"","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2022-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46405140","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}
David Dranove, Craig L. Garthwaite, Manuel Hermosilla
{"title":"Does consumer demand pull scientifically novel drug innovation?","authors":"David Dranove, Craig L. Garthwaite, Manuel Hermosilla","doi":"10.1111/1756-2171.12422","DOIUrl":"https://doi.org/10.1111/1756-2171.12422","url":null,"abstract":"","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2022-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47096093","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}
We study the interplay between quality provision and consumer search in a search market where firms may design products of inferior quality to promote them to naive consumers who fail to fully understand product characteristics. We derive an equilibrium in which both superior and inferior quality is offered and show that as search frictions vanish, the share of firms offering superior goods in the market goes to zero. The presence of inferior products harms sophisticated consumers, as it forces them to search longer to find a superior product. We argue that policy interventions that reduce search frictions such as the standardization of price and package formats may harm welfare. In contrast, reducing the number of naive consumers through transparency policies and education campaigns as well as a minimum quality standard can improve welfare.
{"title":"Competition in search markets with naive consumers","authors":"Tobias Gamp, Daniel Krähmer","doi":"10.1111/1756-2171.12410","DOIUrl":"https://doi.org/10.1111/1756-2171.12410","url":null,"abstract":"We study the interplay between quality provision and consumer search in a search market where firms may design products of inferior quality to promote them to naive consumers who fail to fully understand product characteristics. We derive an equilibrium in which both superior and inferior quality is offered and show that as search frictions vanish, the share of firms offering superior goods in the market goes to zero. The presence of inferior products harms sophisticated consumers, as it forces them to search longer to find a superior product. We argue that policy interventions that reduce search frictions such as the standardization of price and package formats may harm welfare. In contrast, reducing the number of naive consumers through transparency policies and education campaigns as well as a minimum quality standard can improve welfare.","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2022-05-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"63248770","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}
{"title":"Prioritization vs. congestion on platforms: evidence from Amazon's Twitch.tv","authors":"José Tudón","doi":"10.1111/1756-2171.12409","DOIUrl":"https://doi.org/10.1111/1756-2171.12409","url":null,"abstract":"","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2022-05-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41725194","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}
{"title":"An experimental test of the Coase conjecture: Fairness in dynamic bargaining","authors":"Jack Fanning, Andrew Kloosterman","doi":"10.1111/1756-2171.12403","DOIUrl":"https://doi.org/10.1111/1756-2171.12403","url":null,"abstract":"","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2022-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41452803","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}
Sophia Li, J. Mazur, Yongjoon Park, James W. Roberts, Andrew Sweeting, Jun Zhang
We estimate a model of route-level competition between airlines who choose whether to offer nonstop or connecting service before setting prices. Airlines have full information about all quality, marginal cost, and fixed cost unobservables throughout the game, so that service choices will be selected on these residuals. We conduct merger simulations that allow for repositioning and account for the selection implied by the model and the data. Accounting for selection materially affects the predicted likelihood of repositioning and the predicted magnitude of post-merger price changes, and it allows us to match what has been observed after consummated mergers.
{"title":"Repositioning and market power after airline mergers","authors":"Sophia Li, J. Mazur, Yongjoon Park, James W. Roberts, Andrew Sweeting, Jun Zhang","doi":"10.1111/1756-2171.12404","DOIUrl":"https://doi.org/10.1111/1756-2171.12404","url":null,"abstract":"We estimate a model of route-level competition between airlines who choose whether to offer nonstop or connecting service before setting prices. Airlines have full information about all quality, marginal cost, and fixed cost unobservables throughout the game, so that service choices will be selected on these residuals. We conduct merger simulations that allow for repositioning and account for the selection implied by the model and the data. Accounting for selection materially affects the predicted likelihood of repositioning and the predicted magnitude of post-merger price changes, and it allows us to match what has been observed after consummated mergers.","PeriodicalId":51342,"journal":{"name":"Rand Journal of Economics","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2022-02-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47777443","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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