Berlin IO Day

Registration

The workshop is fully booked!

Program

Program (PDF, 185.41 KB)

Speakers & papers

Heski Bar-Isaac (Rotman School of Management, University of Toronto):

Ranking Algorithms, Learning, and Pricing
(with Sandro Shelegia)
PDF (PDF, 0.75 MB)
Abstract: We evaluate platform ranking algorithms that determine product exposure when sellers can set distinct prices for on-platform and off-platform transactions. Initial uncertainty regarding product desirability is learned through sales experience. We contrast algorithms and platform policies (notably the price parity clause) that use information on off-platform prices to those that do not. We find that neglecting off-platform prices in ranking decisions can lead platforms to distort the efficient level of product exposure to consumers as sellers look to boost on-platform sales and exposure. Explicitly conditioning on off-platform prices (including through price parity clauses) can enhance welfare relative to the profit maximizing algorithm that does not use off-platform prices.

Claire Chambolle (INRAE (Paris Saclay Applied Economics) & Ecole Polytechnique):

Markups, Markdowns, and bargaining in a Vertical Supply Chain
(with Rémi Avignon, Etienne Guigue and Hugo Molina)
Abstract: This article bridges monopoly, monopsony, and countervailing power theories to analyze their welfare implications in a vertical supply chain. We develop a bilateral monopoly model with bargaining that accommodates upstream monopsony and downstream monopoly power. In equilibrium, the “short-side rule” applies: the quantity exchanged is determined by the firm willing to trade less. Welfare is maximized when each firm’s bargaining power exactly countervails the other’s market power. Otherwise, double marginalization arises in the form of double markdownization under excessive downstream bargaining power, or double markupization under excessive upstream bargaining power. We offer novel insights for price regulation and competition policy.

Ulrich Doraszelski (Wharton School, University of Pensylvania):

Production Function Estimation without Invertibility: Imperfectly Competitive Environments and Demand Shocks
(with Lixiong Li)
Abstract: We advance the proxy variable approach to production function estimation. We show that the invertibility assumption at its heart is testable. We characterize what goes wrong if invertibility fails and what can still be done. We show that rethinking how the estimation procedure is implemented either eliminates or mitigates the bias that arises if invertibility fails. In particular, a simple change to the first step of the estimation procedure provides a first-order bias correction for the GMM estimator in the second step. Furthermore, a modification of the moment condition in the second step ensures Neyman orthogonality and enhances efficiency and robustness by rendering the asymptotic distribution of the GMM estimator invariant to estimation noise from the first step.

Jesper Rüdiger (Universidad Carlos III de Madrid):

Design and Sale of Market Segments
(with Jacopo Bizzotto and Stefan Terstiege)
Abstract: A platform segments a market and runs auctions in which firms bid for the access to market segments. Segmenting the market more finely allows firms to extract more profits from consumers but can decrease competition in the auctions. We first characterize extremal markets: markets that cannot be segmented further without reducing auction revenue. Second, we employ this result to characterize optimal segmentations in a Hotelling environment. Our results give an insight into the welfare losses and consumer surpluses resulting from for-profit market segmentation.

Anna Sanktjohanser (Toulouse School of Economics):

Competition and Consumer Search
(with James Dana and Johannes Hörner)
Abstract: We study dynamic buyer-seller interactions in an imperfectly competitive market with search frictions. Prices are publicly observable, but consumers must engage in costly search to discover their firm-specific match value. In equilibrium, firms initially sell for free to attract consumers, but as search frictions gradually weaken outside options, firms gain market power and randomly hike their prices. This process generates persistent price dispersion and firm size heterogeneity, even when firms and consumers are ex ante identical. Our model explains staggered price hikes, long-run price differences, and endogenous firm growth patterns.

Host of the 19th Berlin IO Day

Many thanks to Sebastian Schweighofer-Kodritsch and Daniel Guhl from Humboldt-Universität zu Berlin, who are the local organizers this time.

About Berlin IO Day

The Berlin IO Day is a one-day workshop sponsored by the Berlin Centre for Consumer Policies (BCCP) and the Society of Friends of DIW Berlin (VdF) and supported by the Berlin's leading academic institutions, including DIW Berlin, ESMT Berlin, Freie Universität Berlin, Humboldt-Universität zu Berlin, and Technische Universität Berlin which takes place twice a year, in the Spring and in the Fall.

For each Berlin IO Day, we will invite four or five speakers to present their recent work on a variety of IO topics, followed by a general discussion. The aim is to create an international forum for high quality research in Industrial Organization in the heart of Berlin, one of Europe's most vibrant and intellectually lively cities.

Organizers:

• Tomaso Duso, Jo Seldeslachts, Hannes Ullrich (DIW Berlin)
• Michał Grajek, David Ronayne (ESMT Berlin)
• Andreas Asseyer (Freie Universität Berlin)
• Daniel Guhl, Daniel Klapper, Sebastian Schweighofer-Kodritsch, Roland Strausz (Humboldt-Universität zu Berlin)
• Radosveta Ivanova-Stenzel (Technische Universität Berlin)