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Working papers
Working Paper
SSRN Working Paper
Daniel Grodzicki, Alexei Alexandrov, Özlem Bedre-Defolie, Sergei Koulayev (2020)
Subject(s)
Economics, politics and business environment; Finance, accounting and corporate governance
JEL Code(s)
D12, D90, G50
Pages
46
Working Paper
Konkurrensverket Working Paper No. 2015:1
Özlem Bedre-Defolie, Linda Gratz (2015)
Subject(s)
Economics, politics and business environment
Keyword(s)
Payment card networks, interchange fees, two-sided markets
JEL Code(s)
L11, G21, L42, L51, K21
Pages
34
ESMT Working Paper
ESMT Working Paper No. 11-07
Özlem Bedre-Defolie, Stéphane Caprice (2011)
Subject(s)
Economics, politics and business environment
Keyword(s)
buyer mergers, non-linear supply contracts, merger efficiencies, size discounts, waterbed effects
JEL Code(s)
D43, K21, L42
This paper analyzes the welfare implications of buyer mergers, which are mergers between downstream firms from different markets. We focus on the interaction between the merger's effects on downstream efficiency and on buyer power in a setup where one manufacturer with a non-linear cost function sells to two locally competitive retail markets. We show that size discounts for the merged entity has no impact on consumer prices or on smaller retailers, unless the merger affects the downstream efficiency of the merging parties. When the upstream cost function is convex, we find that there are "waterbed effects," that is, each small retailer pays a higher average tariff if a buyer merger improves downstream efficiency. We obtain the opposite results, "anti-waterbed effects," if the merger is inefficient. When the cost function is concave, there are only anti-waterbed effects. In each retail market, the merger decreases the final price if and only if it improves the efficiency of the merging parties, regardless of its impact on the average tariff of small retailers.
Pages
26
ISSN (Print)
1866–3494
ESMT Working Paper
ESMT Working Paper No. 11-01
Alexei Alexandrov, Özlem Bedre-Defolie (2011)
Subject(s)
Economics, politics and business environment
Keyword(s)
tax competition, sales taxes, multinationals, decreasing marginal cost, economies of scale
JEL Code(s)
F12, F23, H25, H71
We examine a multinational firm which has a decreasing marginal cost, and the optimal sales tax policies of the regions where that firm operates. We show that the regions set higher sales taxes than those given by a cooperative equilibrium. Each region fails to fully internalize the effects of its tax level on another region's welfare and the incentives for that region's authority. Exponential cost functions which exhibit economies of scale (for example Cobb-Douglas) and linear demand functions satisfy our assumptions. Our results suggest the need to coordinate sales tax levels between countries and between smaller entities, like states in the United States. Smaller regions benefit more from such coordination. Lowering sales taxes in each region increases welfare for all regions, profits for firms, and consumer welfare.
Pages
22
ISSN (Print)
1866–3494
Subject(s)
Economics, politics and business environment
Working Paper
Alexei Alexandrov, Özlem Bedre-Defolie, Daniel Grodzicki
Subject(s)
Economics, politics and business environment
Keyword(s)
Credit card demand reactions to fees, late fee regulation, limited attention
Subject(s)
Economics, politics and business environment
Keyword(s)
buyer power, asymmetric retailers, waterbed effects
JEL Code(s)
L11, L13, L42