Multiproduct mergers and quality competition

We investigate mergers in markets where quality dierences between products are central and rms may reposition their product lines by adding or removing products of dierent qualities following a merger. Such mergers are ma- terially dierent from those studied in the existing literature. Mergers without synergies may exhibit a product-mix eect which raises consumer surplus, but only when the pre-merger industry structure satises certain observable features. Post-merger synergies may lower consumer surplus. The level of, and changes in, the Herndahl-Hirschman Index may give a misleading assessment of how a merger aects consumers. A merger may benet some outsiders but harm others

Platform design when sellers use pricing algorithms

Using both economic theory and Artificial Intelligence (AI) pricing algorithms, we investigate the ability of a platform to design its marketplace to promote competition, improve consumer surplus, and even raise its own profits. We allow sellers to use Q-learning algorithms (a common reinforcement-learning technique from the computer-science literature) to devise pricing strategies in a setting with repeated interactions, and consider the effect of steering policies that reward firms that cut prices with additional exposure to consumers. Overall, the evidence from our experiments suggests that platform design decisions can meaningfully benefit consumers even when algorithmic collusion might otherwise emerge but that achieving these gains may require more than the simplest steering policies when algorithms value the future highly. We also find that policies that raise consumer surplus can raise the profits of the platform, depending on the platform’s revenue model. Finally, we document several learning challenges faced by the algorithms

Essays in microeconomic theory

Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, c1999.Includes bibliographical references (p. 70-72).Three essays are presented which explore how strategic decision-making on a micro level translates into macro effects. Careful attention is paid to how asymmetric information and free-riding exert strong influences on t.he behavior of individuals. In the first chapter, a simple model of open-source software development is presented. It is found that either too little development or redundant development effort can occur. While any redundant research effort grows slowly with the size of the community, projects for which user valuations arc sufficiently extreme, such as solutions to the Year 2000 Computer Problem (Y2K), will result in significant waste relative to a traditional closed-source environment. Correlations between value and cost are shown to resolve the empirical puzzle as to why some extremely useful and fairly simple software docs not get written while more complex software sometimes docs. It is shown that a modular design can improve or worsen the performance of an open-source community. In the second chapter, an industry is considered in which new firms require time to learn whether they have the "right stuff" to grow in size and profitability in the long run. The critical input market ( that for skilled labor) is imperfectly competitive. By extending the literate on nonstationary dynamic bargaining, analysis is performed on a set of intertemporal externalities exerted by future parties on today's parties, and vice versa. The results suggest why, even if firms are able to write detailed contingent contracts with their current employees, inefficient levels of firm entry will generally exist. The theory also sheds some light on the continuing debate over the contribution of small firms to economic growth. In the third and final chapter, players in a. war of attrition care about the identity of the winner, even when they lose. In particular, a three player war of attrition is considered . Two "team" players enjoy a. fraction of their valuation when their partner wins. The remaining, ''solo" player benefits only by winning the war. Imposing team symmetry, the solo player drops out more quickly then either team player. The incentive to avoid fighting costs by free riding on a teammate is outweighed by a strategic commitment effect. Team players thus continue to fight even when they have no chance of winning a subsequent two-player subgame with the solo player. Examining limiting results, when the "caring coefficient" between t.he team players is small, a selection result obtains: The solo player drops out immediately, allowing the team players to then compete in a standard two-player war of attrition.Justin Pappas Johnson.Ph.D

Multiproduct mergers and quality competition

We investigate mergers in markets where quality dierences between products are central and rms may reposition their product lines by adding or removing products of dierent qualities following a merger. Such mergers are ma- terially dierent from those studied in the existing literature. Mergers without synergies may exhibit a product-mix eect which raises consumer surplus, but only when the pre-merger industry structure satises certain observable features. Post-merger synergies may lower consumer surplus. The level of, and changes in, the Herndahl-Hirschman Index may give a misleading assessment of how a merger aects consumers. A merger may benet some outsiders but harm others

Platform design when sellers use pricing algorithms

We investigate the ability of a platform to design its marketplace to promote competition, improve consumer surplus, and increase its own payoff. We consider demand-steering rules that reward firms that cut prices with additional exposure to consumers. We examine the impact of these rules both in theory and by using simulations with artificial intelligence pricing algorithms (specifically Q-learning algorithms, which are commonly used in computer science). Our theoretical results indicate that these policies (which require little information to implement) can have strongly beneficial effects, even when sellers are infinitely patient and seek to collude. Similarly, our simulations suggest that platform design can benefit consumers and the platform, but that achieving these gains may require policies that condition on past behavior and treat sellers in a nonneutral fashion. These more sophisticated policies disrupt the ability of algorithms to rotate demand and split industry profits, leading to low prices.Agence Nationale de la Recherche12 month embargo; first published: 03 October 2023This item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at [email protected]

Antibacterial Envelope to Prevent Cardiac Implantable Device Infection

Background Infections after placement of cardiac implantable electronic devices (CIEDs) are associated with substantial morbidity and mortality. There is limited evidence on prophylactic strategies, other than the use of preoperative antibiotics, to prevent such infections. Methods We conducted a randomized, controlled clinical trial to assess the safety and efficacy of an absorbable, antibiotic-eluting envelope in reducing the incidence of infection associated with CIED implantations. Patients who were undergoing a CIED pocket revision, generator replacement, or system upgrade or an initial implantation of a cardiac resynchronization therapy defibrillator were randomly assigned, in a 1:1 ratio, to receive the envelope or not. Standard-of-care strategies to prevent infection were used in all patients. The primary end point was infection resulting in system extraction or revision, long-term antibiotic therapy with infection recurrence, or death, within 12 months after the CIED implantation procedure. The secondary end point for safety was procedure-related or system-related complications within 12 months. Results A total of 6983 patients underwent randomization: 3495 to the envelope group and 3488 to the control group. The primary end point occurred in 25 patients in the envelope group and 42 patients in the control group (12-month Kaplan-Meier estimated event rate, 0.7% and 1.2%, respectively; hazard ratio, 0.60; 95% confidence interval [CI], 0.36 to 0.98; P=0.04). The safety end point occurred in 201 patients in the envelope group and 236 patients in the control group (12-month Kaplan-Meier estimated event rate, 6.0% and 6.9%, respectively; hazard ratio, 0.87; 95% CI, 0.72 to 1.06; P<0.001 for noninferiority). The mean (+/- SD) duration of follow-up was 20.7 +/- 8.5 months. Major CIED-related infections through the entire follow-up period occurred in 32 patients in the envelope group and 51 patients in the control group (hazard ratio, 0.63; 95% CI, 0.40 to 0.98). Conclusions Adjunctive use of an antibacterial envelope resulted in a significantly lower incidence of major CIED infections than standard-of-care infection-prevention strategies alone, without a higher incidence of complications