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MICROECONOMICS SEMINAR 2015-2016

Mercredi 8 juin 2016

17 – 18h30

CREST MK2 salle S018

Markus REISINGER (Frankfurt School of Finance) (with Emanuele Tarantino)

«Patent Pools with Vertical Integration»

We show that, differently from the common wisdom, pools between perfectly complementary patents on intermediate inputs are anticompetitive when a pool-member licensor is integrated with a manufacturer. The intuition is that if a pool member is vertically integrated, the pool serves as a coordination device that allows licensors to soften competition. Our conclusions are robust to the number of licensors and manufacturers. We also propose the use of price caps as screening device of procompetitive patent pools.

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Mercredi 25 mai 2016

17 – 18h30

CREST MK2 salle S018

Martin O’CONNELL (IFS) (with Rachel Griffith and Kate Smith)

«Corrective taxes and consumer heterogeneity in the alcohol market»

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Mercredi 20 avril 2016

16h30 – 18h

CREST MK2 salle S018

Pierre DUBOIS (TSE) (with Morten Saethre)

«On the Role of Parallel Trade on Manufacturers and retailers Profits in the Pharmaceutical Sector»

We study how cross-national differences in regulated pharmaceutical prices within the EU lead to arbitrage decisions by pharmacy retailers through parallel imports of versions of drugs originally marketed in other countries by the same company. Such strategic decisions can affect the distribution of profits in markets for prescription drugs, including the profitability of innovating pharmaceutical companies even before patents expire and generic competition enters. Before patent expiry, parallel trade is the unique source of upstream competition from the perspective of a pharmacy retailer. We develop a model where retailers can alter the set of goods which the consumer can choose from, in response to differences in profitability across products. Estimating our model with rich data on a pharmaceutical market featuring parallel imports, we  find that retailer incentives play a significant role for the observed outcome. Our counterfactual simulations show that parallel imports of drugs has small effects on average consumer welfare, while it has large implications for the distribution of industry profits. In particular, retailers gain at the expense of pharmaceutical companies, while parallel traders only attain modest profits.

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Mercredi 13 avril 2016

16h30 – 18h

CREST MK2 salle S018

Dezsö SZALAY (U. Bonn) (with Inga Deimen, BGSE)

«Information, Authority, and Smooth Communication in Organizations»

Two divisions of a firm, overarched by a headquarters, are engaged in a decision problem.

Division one obtains information and informs division two who has the formal authority to make the decision. Headquarters guides the decision process by affecting the quality of information that division one obtains. In equilibrium, division one honestly communicates the inferences drawn from its observations, but not the underlying observations themselves and division two takes the advice at face value. The communication equilibrium involves smooth strategies and is outcome equivalent to delegation: the informed party gets its way, regardless of the allocation of formal authority.

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Mercredi 9 mars 2016

16h30 – 18h

CREST MK2 salle S018

Fabian HERWEG (U. Bayreuth) (with Marco A. Schwarz)

«Optimal Cost Overruns Procurement Auctions with Renegotiation»

Cost overrun is ubiquitous in public procurement. We argue that this can be the result of a constraint optimal award procedure when the procurer cannot commit not to renegotiate. If cost differences are more pronounced for more complex designs, it is optimal to fix a simple design ex ante and to renegotiate to a more complex and costlier design ex post. Specifying a simple design initially enhances competition in the auction. Moreover, the procurer cannot benefit from using a multi-dimensional auction, as the optimal scoring rule depends only on the price..

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Mercredi 16 décembre 2015

17 – 18h30

CREST MK2 salle S018

Wilfried SAND- ZANTMAN (TSE) (with Rodrigo Montes and Tommaso Valletti)

«The value of personal information in markets with endogenous privacy»

We investigate the effects of price discrimination on prices, profits, and consumer surplus when at least one competing  firm can use consumers' private information to price discriminate yet consumers can prevent this by paying a \privacy cost". Unlike a monopolist, competing duopolists do not always benefit from higher privacy costs because each   firm's profit decreases while consumer surplus increases with the privacy cost. We also show that, under such competition, the optimal strategy for an owner of consumer data is selling to only one  firm, thereby maximizing the stakes for rival buyers. We argue that the resulting inefficiencies imply that policy makers should devote more attention to discouraging exclusivity deals and less to ensuring that consumers can easily protect their privacy..

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Mercredi 9 décembre 2015

15 – 16h30

CREST MK2 salle S018

Tommaso VALLETTI (Imperial College) (with Alessandro Gavazza and Mattia Nardotto)

«Internet and Politics : Evidence from U.K. Local Elections and Local Government Policies»

We empirically study the effects of broadband internet diffusion on local election outcomes and on local government policies using rich data from the U.K. Our analysis suggests that the internet has displaced other media with greater news content (i.e., radio and newspapers), thereby decreasing voter turnout, most notably among less-educated and younger individuals. In turn, local government expenditures (and taxes) are lower in areas with greater broadband diffusion, particularly expenditures targeted at lower-income voters. Our  findings corroborate the idea that voters' information plays a key role in determining electoral participation, government policies and government size.

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Mercredi 2 décembre 2015

17 – 18h30

CREST MK2 salle S018

Elisabetta IOSSA (U. Roam 2) (with Yeon-Koo Che and Patrick Rey)

«Prizes Versus Contracts as Incentives for Innovation»

The procurement of an innovation involves motivating a research effort to generate a new idea and then implementing that idea efficiently. If research efforts are unverifiable and implementation costs are private information, a trade-off arises between the two objectives. The optimal mechanism resolves the tradeoff via two instruments: a monetary prize and a contract to implement the project. The optimal mechanism favors the innovator in contract allocation when the value of innovation is above a certain threshold, and handicaps the innovator in contract allocation when the value of innovation is below that threshold. A monetary prize is employed as an additional incentive but only when the value of innovation is sufficiently high.

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Mercredi 18 novembre 2015

16h30 – 18h

CREST MK2 salle S018

Bruno JULLIEN (TSE) (with Hanna Halaburda and Yaron Yehezkel)

«Dynamic Competition with Network Externalities : Why History Matters»

This paper considers dynamic platform competition in a market with network externalities. A platform that dominated the market in the previous period becomes "focal" in the current period, in that agents play the equilibrium in which they join the focal platform whenever such equilibrium exists. We ask whether a low-quality but focal platform can maintain its focal position along time, when it faces a higher quality competitor. Under  finite horizon, we  find that when platforms are patient enough, the unique equilibrium is efficient. With infinite horizon, however, there are multiple equilibria in which either the low or the high quality platform dominates. If qualities are stochastic, the more platforms care about the future, the platform with the better average quality wins more often than the other. As a result, social welfare can decrease when platforms become more forward-looking.

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Mercredi 4 novembre 2015

16h30 – 18h

CREST MK2 salle S018

Matthew GENTRY (LSE)

«Simultaneous First-Price Auctions with Preferences over Combinations : Identification, Estimation and Application»

Motivated by the empirical prevalence of simultaneous bidding across a wide range of auction markets, we develop and estimate a structural model of strategic interaction in simultaneous  first-price auctions when objects are heterogeneous and bidders have preferences over combinations. We specialize this model to an empirical framework in which bidders have stochastic private valuations for each object and stable incremental preferences over combinations; this immediately reduces to the standard separable model when incremental preferences over combinations are zero. We establish non-parametric identification of the resulting model under standard exclusion restrictions, thereby providing a basis for both testing on and estimation of preferences over combinations.

We then apply our model to data on Michigan Department of Transportation highway procurement auctions, we quantify the magnitude of cost synergies and assess possible efficiency losses arising from simultaneous bidding in this market.