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Platform price parity clauses and market segmentation
Joan Calzada, Ester Manna, and Andrea MantovaniPrice parity clauses (PPCs) are widely adopted by online platforms to force client sellers not to lower their prices elsewhere. We investigate under what conditions online travel agencies (OTAs) decide to apply PPCs, and how this affects hotels' listing decisions on OTAs.
Behavior-based price discrimination with nonuniform distribution of consumer preferences
Rosa-Branca Esteves, Qihong Liu, and Jie ShuaiExisting theories of competition with behavior-based price discrimination typically assume that consumer valuations are distributed uniformly. This assumption implies that the availability of BBPD creates a prisoner's dilemma in which firms are worse off and consumers better off in equilibrium, relative to uniform pricing. In this paper, we consider a wider class of consumer distributions and show that profit and welfare results change qualitatively.
Decentralizing investment: Evidence from municipal organization after close elections
Gabriel NatividadI use close municipal elections in a nonparametric regression discontinuity framework to study the organizational dimension of local public investment following a decentralization reform in Peru.
Consumer informedness: A key driver of differentiation
Amit Pazgal, David Soberman, and Raphael ThomadsenMinimum Differentiation is the equilibrium in spatial models with fixed prices, while firms move apart to reduce the intensity of competition when firms set prices. Nevertheless, firms collocate in many industries where marketing-active firms compete on price. This puzzle is called the Hotelling paradox. We offer a resolution of this puzzle by noting that imperfect information about the availability of all products can soften competition, allowing firms to produce similar products without engaging in intense price competition.
Designing relational sanctions in buyer–supplier relationships
Juan-José Ganuza and Fernando GomezThis paper explores the role of supplier performance measures (scorecards and others) in the internal design of relational contracts. We analyze a simple supplier–buyer repeated interaction in which incentives arise by the threat of terminating the relationship—temporarily or permanently.
Price competition online: Platforms versus branded websites
Oksana LoginovaThe focus of this theoretical study is price competition when some firms operate their own branded website while others sell their products through an online platform, such as Amazon Marketplace. I derive the equilibrium prices and profits, analyze the firms' behavior in the long run, and compare the equilibrium outcome with the social optimum.
Does female labor scarcity encourage innovation? Evidence from China’s gender imbalance
Taoran Chen, Zhibo Tan, and Xiaobo ZhangThis paper studies how the scarcity of different types of workers in a region shapes firm innovation across industries, using the unbalanced regional sex ratios in China as a source of identification strategy. The empirical results show that the shortage of female workers has spurred firms in female-intensive industries to innovate more, particularly in industries with low substitution between female and male workers, consistent with the price effect of the directed technical change theory.
A theory of maximalist luxury
Zhenqi (Jessie) Liu, Pinar Yildirim, and Z. John ZhangThe availability of high-quality, low-price counterfeits in many luxury markets threatens the role of luxury goods as a status symbol. If those counterfeits look and feel the same as the authentic counterparts, as many professional authenticators observe, and they are available at a fraction of the price of authentic goods, why would self-interested consumers purchase authentic luxury goods? In this paper, we propose that the presence of high-quality, low-price counterfeits can, surprisingly, motivate the wealthy consumers to pursue what we term as the “maximalist luxury” strategy.
Firm-level investment under imperfect capital markets in Ukraine
Oleksandr ShcherbakovThis paper develops and estimates a model of firm-level fixed capital investment where firms may be unable to invest optimally due to liquidity and borrowing constraints. The estimation results suggest significant heterogeneity across industries, with 8%–29% of firms facing binding constraints on investment. These constraints are persistent over time. To make optimal investments, 24%–64% of firms must borrow to complement their own resources. The characteristics of constrained firms and the relationship between industry institutions and the level of financial constraints are discussed.
Performance feedback in a group contest: A field experiment on electricity conservation
Chia-Wen Chen, Josie I. Chen, and Min-Jen LinWe conduct a field experiment on electricity conservation to study whether revealing both the competitive state and the social state in a group contest affects individual beliefs and efforts. We find that contestants without feedback about relative performance had difficulty assessing their group's competitive status, and laggards within a group tended to be overconfident about their relative contribution.
Air pollution and CEO compensation: Evidence from China
Kam C. Chan, Tao Chen, Baohua Liu, and Junfeng WuThis paper complements the literature on green finance by probing whether air pollution matters for CEO compensation. Using a sample covering 240 cities in 31 provinces in China from 2005 to 2017, we document a positive association between air pollution and CEO compensation. These findings indicate that firms headquartered in areas with unhealthy air compensate their CEOs with higher pay than those headquartered in areas with better air quality.
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