Fighting brands and mobile phone plans

[Research Highlight]

January 25, 2022

How do incumbent companies react to a new competitor?

Market Entry, Fighting Brands, and Tacit Collusion: Evidence from the French Mobile Telecommunications Market

By Marc Bourreau, Yutec Sun, and Frank Verboven

American Economic Review, November 2021

We study a major new entry in the French mobile telecommunications market, followed by the introduction of fighting brands by the three incumbents. Using an empirical oligopoly model, we find that the incumbents' fighting brand strategies are difficult to...

Smoking bans and compensating differentials

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How do workers’ wages react to a sudden improvement in conditions?

CSWEP: Helping Faculty Help Students get into PhD Programs in Economics

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CSMGEP: Sarah Jacobson

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CSMGEP: Luisa Blanco

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CSMGEP: Neville Francis

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CSMGEP: Neil Ericsson

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Front Matter

American Economic Journal: Microeconomics, February 2022

Cultural Affinity, Regulation, and Market Structure: Evidence from the Canadian Retail Banking Industry

By Hector Perez-Saiz and Hongyu Xiao

American Economic Journal: Microeconomics, February 2022

We estimate a perfect information static entry game to study the effect of cultural entry barriers on entry and competition in the retail banking industry. Canada provides a favorable setting for analysis due to its high linguistic diversity, concentrated...

Dynamic Regret Avoidance

By Michele Fioretti, Alexander Vostroknutov, and Giorgio Coricelli

American Economic Journal: Microeconomics, February 2022

In a stock market experiment, we examine how regret avoidance influences the decision to sell an asset while its price changes over time. Participants know beforehand whether they will observe the future prices after they sell the asset or not. Without fu...

Trust Building in Credence Goods Markets

By Yuk-Fai Fong, Ting Liu, and Xiaoxuan Meng

American Economic Journal: Microeconomics, February 2022

We study trust building in credence-goods markets in a dynamic setting. When consumers' expected loss is low and it is efficient to fix only the more severe problem, there is no trade in the one-shot game. In the repeated game, an expert's honesty is moni...

Stochastic Equilibria: Noise in Actions or Beliefs?

By Evan Friedman

American Economic Journal: Microeconomics, February 2022

We introduce noisy belief equilibrium (NBE) for normal-form games in which players best respond to noisy belief realizations. Axioms restrict belief distributions to be unbiased with respect to and responsive to changes in the opponents' behavior. The axi...

Optimal Arrangements for Distribution in Developing Markets: Theory and Evidence

By William Fuchs, Brett Green, and David Levine

American Economic Journal: Microeconomics, February 2022

A large literature examines demand-side barriers to product adoption. In this paper, we examine supply-side barriers in a setting with limited contract enforcement. We model the relationship between a distributor and its credit-constrained vendors. We s...

Negotiations with Limited Specifiability

By Satoshi Fukuda and Yuichiro Kamada

American Economic Journal: Microeconomics, February 2022

We study negotiations with limited specifiability⁠—each party may not be able to fully specify a negotiation outcome. We construct a class of negotiation protocols to conduct comparative statics on specifiability as well as move structures. We find th...

The Anticompetitive Effect of Minority Share Acquisitions: Evidence from the Introduction of National Leniency Programs

By Sven Heim, Kai Hüschelrath, Ulrich Laitenberger, and Yossi Spiegel

American Economic Journal: Microeconomics, February 2022

We address the growing concern that minority shareholding (MS) in rival firms may lessen competition, using the introduction of national leniency programs (LPs) as a shock that destabilizes collusive agreements. Based on data from 63 countries, we find a ...

Paths to the Frontier

By Avidit Acharya and Juan Ortner

American Economic Journal: Microeconomics, February 2022

We construct a model of collective search in which players gradually approach the Pareto frontier. The players have imperfect control over which improvements to the status quo will be considered. Inefficiency takes place due to the difficulty in finding i...

On the Experimental Robustness of the Allais Paradox

By Pavlo Blavatskyy, Andreas Ortmann, and Valentyn Panchenko

American Economic Journal: Microeconomics, February 2022

The Allais Paradox, or the common consequence effect, is a well-known behavioral regularity in individual decision-making under risk. Data from 81 experiments reported in 29 studies reveal that the Allais Paradox is a fragile empirical finding. The Allais...