Exclusive dealing with network effects

This paper explores the ability of an incumbent to use exclusive deals or introductory offers to dominate a market in the face of entry when network effects rather than scale economies are present. When consumers can only join one or other firm, the incumbent will make discriminatory o ers that are anticompetitive and ine cient. Allowing consumers to multihome, we find o ers that only require consumers to commit to purchase from the incumbent are not anticompetitive, while contracts which prevent consumers from also buying from the entrant in the future are anticompetitive and ine cient. The finding extends to two-sided markets, where the incumbent signs up "sellers" exclusively with attractive offers and exploits "buyers"

Double Auctions in Markets for Multiple Kinds of Goods

Motivated by applications such as stock exchanges and spectrum auctions, there is a growing interest in mechanisms for arranging trade in two-sided markets. Existing mechanisms are either not truthful, or do not guarantee an asymptotically-optimal gain-from-trade, or rely on a prior on the traders' valuations, or operate in limited settings such as a single kind of good. We extend the random market-halving technique used in earlier works to markets with multiple kinds of goods, where traders have gross-substitute valuations. We present MIDA: a Multi Item-kind Double-Auction mechanism. It is prior-free, truthful, strongly-budget-balanced, and guarantees near-optimal gain from trade when market sizes of all goods grow to $\infty$ at a similar rate.Comment: Full version of IJCAI-18 paper, with 2 figures. Previous names: "MIDA: A Multi Item-type Double-Auction Mechanism", "A Random-Sampling Double-Auction Mechanism". 10 page

A Structural Solution to Roaming in Europe

This paper suggests that international roaming markets suffer from structural flaws in the way that roaming agreements are established in Europe. The initial roaming interventions by the European Commission in 2007 have been very welfare enhancing and the transfer of producer surplus to consumers has brought significant benefits to end users. Nevertheless, there are clear opportunity costs of maintaining and/or extending the current roaming Regulation. The price for wholesale roaming services in a given country is driven principally by the amount of traffic that an operator is willing to send back to the country requesting a price offer and not on the basis of the roaming services requested. The paper suggests that by breaking the link between the prices offered in one country and the volume of returned traffic will enable the wholesale market for international roaming to operate competitively. It is further suggested that retail price regulation is unwarranted when the wholesale market can operate competitively irrespective of the issue of the retail elasticity of demand for these services. Preliminary, suggestions are put forward as to how policy makers could transition from the current regime to a future market based regime by putting a number of required enablers in place.Roaming regulation, mobile telephony, European single market

An Investigation Report on Auction Mechanism Design

Auctions are markets with strict regulations governing the information available to traders in the market and the possible actions they can take. Since well designed auctions achieve desirable economic outcomes, they have been widely used in solving real-world optimization problems, and in structuring stock or futures exchanges. Auctions also provide a very valuable testing-ground for economic theory, and they play an important role in computer-based control systems. Auction mechanism design aims to manipulate the rules of an auction in order to achieve specific goals. Economists traditionally use mathematical methods, mainly game theory, to analyze auctions and design new auction forms. However, due to the high complexity of auctions, the mathematical models are typically simplified to obtain results, and this makes it difficult to apply results derived from such models to market environments in the real world. As a result, researchers are turning to empirical approaches. This report aims to survey the theoretical and empirical approaches to designing auction mechanisms and trading strategies with more weights on empirical ones, and build the foundation for further research in the field

The future of the USO - Economic rationale for universal services and implications for a future-oriented USO

Universal service obligations (USO) in the postal sector currently enjoy considerable attention among politicians, practitioners and academics. The primary areas of interest have been the viability, costing and funding of the USO in a completely liberalized market. However, the purpose and the scope of the USO itself have so far not been questioned fundamentally. In this paper we first analyze the possible rationale for USO from an economic point of view. Then, we discuss the impact of converging postal and telecommunications markets on potential alternative means to provide USO in a more efficient way.Universal service, USO, covergence, postal sector

Screening, Competition, and Job Design

In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These “high-performance work systems” are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees

Two-sided Certification: The market for Rating Agencies

Certifiers contribute to the sound functioning of markets by reducing a symmetric information. They, however, have been heavily criticized during the 2008-09 financial crisis. This paper investigates on which side of the market a monopolistic profit-maximizing certifier offers his service. If the seller demands a rating, the certifier announces the product quality publicly, whereas if the buyer requests a rating it remains his private information. The model shows that the certifier offers his service to sellers and buyers to maximize his own profit with a higher share from the sellers. Overall, certifiers increase welfare in specific markets. Revenue shifts due to the financial crisis are also explained