The Intensive Margin in Trade: How Big and How Important?

By Ana M. Fernandes, Peter J. Klenow, Sergii Meleshchuk, Martha Denisse Pierola, and Andrés Rodríguez-Clare

American Economic Journal: Macroeconomics, July 2023

In benchmark trade models that feature a constant trade elasticity, bilateral exports vary entirely on the intensive margin (exports per firm) or entirely on the extensive margin (number of firms). Our empirical analysis documents that roughly one-half of...

A Buyer Power Theory of Exclusive Dealing and Exclusionary Bundling

By Claire Chambolle and Hugo Molina

American Economic Journal: Microeconomics, August 2023

We develop a unified theory of exclusive dealing and exclusionary bundling. In a framework with two competing manufacturers that supply their product(s) through a monopolist retailer, we show that buyer power restores the profitability of such practices i...

Disclosure in Markets for Ratings

By Ran Weksler and Boaz Zik

American Economic Journal: Microeconomics, August 2023

We study the implications of the disclosure regime of ratings on the level of information released to the public. Specifically, we compare mandatory and voluntary disclosure. We analyze a model where the potential issuers are initially endowed with homoge...

Regulation Design in Insurance Markets

By Dhruva Bhaskar, Andrew McClellan, and Evan Sadler

American Economic Review, October 2023

Regulators often impose rules that constrain the behavior of market participants. We study the design of regulatory policy in an insurance market as a delegation problem. A regulator restricts the menus of contracts an informed firm is permitted to offer,...

Multihoming and Oligopolistic Platform Competition

By Tat-How Teh, Chunchun Liu, Julian Wright, and Junjie Zhou

American Economic Journal: Microeconomics, November 2023

We provide a general framework to analyze competition between any number of symmetric two-sided transaction platforms, in which buyers and sellers can multihome. We show how key primitives such as the number of platforms, the fraction of buyers that find ...

Monopolistic Competition and Efficiency under Firm Heterogeneity and Nonadditive Preferences

By Kyle Bagwell and Seung Hoon Lee

American Economic Journal: Microeconomics, November 2023

We consider the single-sector version of the Melitz-Ottaviano model of monopolistic competition with heterogeneous firms. We characterize the first-best and market allocations. We find that the market provides the first-best level of entry but too little ...

Slope Takers in Anonymous Markets

By Daniel Quint and Marek Weretka

American Economic Journal: Microeconomics, November 2023

We present a learning-based selection argument for Linear Bayesian Nash equilibrium in a Walrasian auction. Endowments vary stochastically; traders model residual supply as linear, estimate its slope from past trade data, and periodically update these est...

Competing to Commit: Markets with Rational Inattention

By Carlo M. Cusumano, Francesco Fabbri, and Ferdinand Pieroth

American Economic Review, January 2024

Two homogeneous-good firms compete for a consumer's unitary demand. The consumer is rationally inattentive and pays entropy costs to process information about firms' offers. Compared to a collusion benchmark, competition produces two effects. As in standa...

Exit Dilemma: The Role of Private Learning on Firm Survival

By Doruk Cetemen and Chiara Margaria

American Economic Journal: Microeconomics, February 2024

We study the exit of duopolists from a stochastically declining market. Firms privately learn about the market conditions from observing the stochastic arrival of customers, while exit decisions are publicly observed. A larger firm is more likely to have ...

Coordination in the Fight against Collusion

By Elisabetta Iossa, Simon Loertscher, Leslie M. Marx, and Patrick Rey

American Economic Journal: Microeconomics, February 2024

While antitrust authorities strive to detect, prosecute, and thereby deter collusive conduct, entities harmed by that conduct are also advised to pursue their own strategies to deter collusion. The implications of such delegation of deterrence have largel...

Anticompetitive Bundling When Buyers Compete

By Alexandre de Cornière and Greg Taylor

American Economic Journal: Microeconomics, February 2024

We study the profitability of bundling by an upstream firm that licenses technologies to downstream competitors and that faces competition for one of its technologies. In an otherwise standard "Chicago-style" model, the existence of downstream competition...

A Theory of Monopolistic Competition with Horizontally Heterogeneous Consumers

By Sergey Kokovin, Alina Ozhegova, Shamil Sharapudinov, Alexander Tarasov, and Philip Ushchev

American Economic Journal: Microeconomics, May 2024

Our novel approach to modeling monopolistic competition with heterogeneous firms and consumers involves spatial product differentiation, in either a geographical space or a space of characteristics. In addition to price, each firm chooses location in spac...

Personalized Pricing and Competition

By Andrew Rhodes and Jidong Zhou

American Economic Review, July 2024

We study personalized pricing in a general oligopoly model. The impact of personalized pricing relative to uniform pricing hinges on the degree of market coverage. If market conditions are such that coverage is high (e.g., the production cost is low or th...

The Dynamic Effects of Recycling on Oligopoly Competition: Evidence from the US Paper Industry

By Eddie Watkins

American Economic Journal: Microeconomics, August 2024

Consumer recycling generates new intermediate inputs. If some of the inputs are used to manufacture a substitute for the original product, the primary seller faces an incentive to reduce current output and raise rivals' future costs. I find that firms in ...

Monopolization with Must-Haves

By Enrique Ide and Juan-Pablo Montero

American Economic Journal: Microeconomics, August 2024

An increasing number of monopolization cases have been constructed around the notion of "must-have" items: products that distributors must carry to "compete effectively." Motivated by these cases, we consider a multiproduct setting where upstream supplier...

Dynamic Oligopoly Pricing with Asymmetric Information: Implications for Horizontal Mergers

By Andrew Sweeting, Xuezhen Tao, and Xinlu Yao

American Economic Journal: Microeconomics, August 2024

We model repeated pricing by differentiated product firms when each firm has private information about its serially correlated marginal cost. In a fully separating equilibrium of the dynamic game, signaling incentives can lead equilibrium prices to be sig...

Noncompete Agreements and the Welfare of Consumers

By Michael Lipsitz and Mark J. Tremblay

American Economic Journal: Microeconomics, November 2024

Employee spin-offs harm incumbent firms by increasing competition (benefiting consumers) and preventing firm owners from making beneficial investments in workers who may later spin off (harming consumers). We model noncompete agreements (NCAs) as solution...

Product Differentiation and Oligopoly: A Network Approach

By Bruno Pellegrino

American Economic Review, April 2025

I present a new theory of oligopoly and markups in general equilibrium, based on an innovative, scalable hedonic demand system, which I take to the data for the universe of US public firms. In my model, firms compete in a network of product market rivalri...

Weighted Linear Discrete Choice

By Christopher P. Chambers, Yusufcan Masatlioglu, Paulo Natenzon, and Collin Raymond

American Economic Review, April 2025

We introduce a new model of stochastic choice that assigns each choice option a utility, along with a salience parameter reflecting economic frictions. We characterize our model behaviorally and investigate its comparative statics properties. We show that...

Complementary Bidding and the Collusive Arrangement: Evidence from an Antitrust Investigation

By Robert Clark, Decio Coviello, and Adriano De Leverano

American Economic Journal: Microeconomics, May 2025

Clustered bids and a missing mass of nearly tied bids have both been proposed as markers of collusion. We present causal empirical evidence from an actual procurement cartel that bidding involves both clustering and a gap around the winning bid. We suppor...