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Publications

2020

Complementary Monopolies with asymmetric information

Authors
Laussel, D; Resende, J;

Publication
Economic Theory

Abstract
We investigate how asymmetric information on final demand affects strategic interaction between a downstream monopolist and a set of upstream monopolists, who independently produce complementary inputs. We study an intrinsic private common agency game in which each supplier i independently proposes a pricing schedule contract to the assembler, specifying the supplier’s payment as a function of the assembler’s purchase of input i. We provide a necessary and sufficient equilibrium condition. A lot of equilibria satisfy this condition but there is a unique Pareto-undominated Nash equilibrium from the suppliers’ point of view. In this equilibrium, there are unavoidable efficiency losses due to excessively low sales of the good. However, suppliers may be able to limit these distortions by implicitly coordinating on an equilibrium with a rigid (positive) output in bad demand circumstances. © 2019, Springer-Verlag GmbH Germany, part of Springer Nature.

2020

Quality and price personalization under customer recognition: A dynamic monopoly model with contrasting equilibria

Authors
Laussel, D; Van Long, N; Resende, J;

Publication
JOURNAL OF ECONOMIC DYNAMICS & CONTROL

Abstract
We present a model of market hyper-segmentation, where a monopolist acquires within a short time all information about the preferences of consumers who purchase its vertically differentiated products. The firm offers a new price/quality schedule after each commitment period. Lower consumer types may have an incentive to delay their purchases until next period to obtain a better introductory offer. The monopolist counters this incentive by offering higher informational rents. Considering the dynamic game played by the monopolist and its customers, we find that there is always a Markov perfect equilibrium (MPE) in which the firm immediately sells the good to all customers, offering the Mussa-Rosen static equilibrium schedule to first time customers (and getting full commitment profits). However, if the commitment period between two offers is long enough, there is another MPE with gradual market expansion. Contrary to the Coasian result for a durable-good monopoly, we find that in both equilibria the profit of the monopolist increases (and the aggregate consumers surplus decreases) as the interval of commitment shrinks. The model yields policy implications for regulations on collection and storage of customers information.

2020

The curse of knowledge: having access to customer information can reduce monopoly profits

Authors
Laussel, D; Long, NV; Resende, J;

Publication
RAND JOURNAL OF ECONOMICS

Abstract
We show that a monopolist's profit is higher if he refrains from collecting coarse information on his customers, sticking to constant uniform pricing rather than recognizing customers' segments through their purchase history. In the Markov perfect equilibrium with coarse information collection, after each commitment period, a new introductory price is offered to attract new customers, creating a new market segment for price discrimination. Eventually, the whole market is covered. Shortening the commitment period results in lower profits. These results sharply differ from the ones obtained when the firm can uncover the exact willingness-to-pay of each previous customer.

2020

Introduction to the thematic issue on "Regulation in health, environmental and innovation sectors"

Authors
Amir, R; Resende, J; Sinclair Desgagne, B;

Publication
JOURNAL OF PUBLIC ECONOMIC THEORY

Abstract

2020

Marketplace or reselling? A signalling model

Authors
Belhadj, N; Laussel, D; Resende, J;

Publication
INFORMATION ECONOMICS AND POLICY

Abstract
This paper shows that the platforms' private information on demand may explain the empirical observation that platforms like Amazon resell high-demand products, while acting as marketplace for low-demand goods. More precisely, the paper examines the strategic interaction between a seller and a better informed platform within a signalling game. We consider that the platform may choose between two distinct business models: act as a reseller or work as a pure marketplace between the buyers and the seller. The marketplace mode, which allows to internalize the spillover between the platform's sales and the seller's direct sales is always preferred for a low-value good. The reselling mode, which allows the platform to take advantage of its private information, may be selected in the case of high-value goods provided that (i) the externalities between direct sales and platform sales are not too strong and (ii) the difference between consumers' willingness to pay for the high and the low-value goods is large enough. Under these conditions, the game displays a Least-Cost Separating Equilibrium in which the platform works as a marketplace for low-demand goods, while it acts as a reseller in the case of high-demand goods.