{"title":"Monopolistic Screening Under Mental Accounting: Applications to Loan Markets with Collateral","authors":"Byung-Cheol Kim","doi":"10.1515/rne-2023-0030","DOIUrl":"https://doi.org/10.1515/rne-2023-0030","url":null,"abstract":"Abstract This paper extends the standard model of monopolistic screening to allow for some consumers who engage in narrow framing, a prominent behavioral bias of mental accounting. Narrow framing generates a bias toward high quality-price ratios, which induces even high-type consumers to choose a menu that targets low-type consumers. To strategically account for narrow framing, when the monopolist induces the high-type consumers to stay with the more expensive menu, there arises a downward quality distortion even at the top and a smaller downward distortion at the bottom. Then, we apply this model to optimal loan contracts to screen heterogeneous borrowers with different default risks. We find that the lender optimally reduces the collateral requirement for low-risk borrowers when some high-risk borrowers are subject to narrow framing. This result empirically implies that narrow framing may lead to smaller credit rationing and lower monitoring intensity in the lending markets.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"20 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2023-07-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84668066","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Why Do Platforms Charge Proportional Fees? Commitment and Seller Participation","authors":"Johannes Muthers, Sebastian Wismer","doi":"10.1515/rne-2023-0020","DOIUrl":"https://doi.org/10.1515/rne-2023-0020","url":null,"abstract":"This paper deals with trade platforms whose operators not only allow third party sellers to offer their products to consumers, but also offer products themselves. In this context, the platform operator faces a hold-up problem if he uses classical two-part tariffs only as potential competition between the platform operator and sellers reduces platform attractiveness. Since some sellers refuse to join the platform, some products that are not known to the platform operator will not be offered at all. We find that revenue-based fees lower the platform operator’s incentives to compete with sellers, increasing platform attractiveness. Therefore, charging such proportional fees can be profitable, which may explain why several trade platforms indeed charge proportional fees.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"39 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2023-05-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138540297","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Estrella Gomez-Herrera, Nestor Duch-Brown, María C. Latorre
{"title":"EU-Mercosur Free Trade Agreement: Exploring the Impact on E-Commerce","authors":"Estrella Gomez-Herrera, Nestor Duch-Brown, María C. Latorre","doi":"10.1515/rne-2023-0018","DOIUrl":"https://doi.org/10.1515/rne-2023-0018","url":null,"abstract":"Abstract Recent technological changes have altered the way in which interactions take place between economic agents. One of the main advances is the possibility to broadly disseminate information at very low cost. E-commerce is a significant part of this change, becoming increasingly important within the EU. In this paper we analyze the impact of the recent trade agreement reached between EU and Mercosur countries on e-commerce flows. We take advantage of the political agreement announced on June 28, 2019 as a source for identification. We use data from SimilarWeb, a digital market intelligence company that provides information on worldwide Internet traffic. Our results show that the announcement of the Agreement has had a positive impact on Internet traffic between EU and Mercosur countries. To the best of our knowledge, this is the first empirical exercise to analyze the impact of this and other Agreements on e-commerce.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-04-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135836117","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Competition for Quality of Services under Net Neutrality and Prioritization","authors":"Jeong‐Yoo Kim","doi":"10.1515/rne-2022-0049","DOIUrl":"https://doi.org/10.1515/rne-2022-0049","url":null,"abstract":"Abstract This paper examines the effect of prioritization on competing CPs’ incentives to invest to improve their quality of service (QoS). We show that in the single-homing case, no CP makes a positive amount of investment under net neutrality because the effect of reducing delay is shared by both CPs, while the prioritized CP does not invest to improve QoS in the M/M/1 queuing model in which the effect is shared by the unprioritized CP and both CPs invest for QoS in the bandwidth subdivision model in which the effect is not shared. In the multi-homing case, however, CPs invest for QoS even under net neutrality, because CPs do not virtually compete against each other.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"371 1","pages":"51 - 81"},"PeriodicalIF":0.7,"publicationDate":"2022-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90495246","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Estrella Gomez-Herrera, Néstor Duch-Brown, M. Latorre
{"title":"EU-Mercosur Free Trade Agreement: Exploring the Impact on E-Commerce","authors":"Estrella Gomez-Herrera, Néstor Duch-Brown, M. Latorre","doi":"10.2139/ssrn.3967047","DOIUrl":"https://doi.org/10.2139/ssrn.3967047","url":null,"abstract":"Abstract Recent technological changes have altered the way in which interactions take place between economic agents. One of the main advances is the possibility to broadly disseminate information at very low cost. E-commerce is a significant part of this change, becoming increasingly important within the EU. In this paper we analyze the impact of the recent trade agreement reached between EU and Mercosur countries on e-commerce flows. We take advantage of the political agreement announced on June 28, 2019 as a source for identification. We use data from SimilarWeb, a digital market intelligence company that provides information on worldwide Internet traffic. Our results show that the announcement of the Agreement has had a positive impact on Internet traffic between EU and Mercosur countries. To the best of our knowledge, this is the first empirical exercise to analyze the impact of this and other Agreements on e-commerce.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"29 1","pages":"29 - 50"},"PeriodicalIF":0.7,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82658317","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Effect of E-Commerce on Grocery Store Choice and Retail Competition","authors":"Clara Etcheverry","doi":"10.1515/rne-2023-0017","DOIUrl":"https://doi.org/10.1515/rne-2023-0017","url":null,"abstract":"Abstract E-commerce continues its expansion, and most retail groups have opened online distribution channels in the French grocery market. Using purchasing data, I develop a store choice model and a supply model to estimate the effect of the online distribution channel on consumer welfare and retail competition. E-commerce leads to a small decrease in consumer surplus. Furthermore, only online leaders obtain more market shares and profits while the majority of retailers globally get lower market shares and profits with e-commerce.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"2 2 1","pages":"1 - 28"},"PeriodicalIF":0.7,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76315961","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Health Care Provider Networks: Are Insurers Better Off?","authors":"M. Mougeot, Florence Naegelen","doi":"10.1515/rne-2021-0038","DOIUrl":"https://doi.org/10.1515/rne-2021-0038","url":null,"abstract":"Abstract Certain health insurers offer a free choice of providers and an identical copayment regardless of the provider. Others build networks and use selective contracting and financial incentives to channel policyholders to contracted suppliers. In the case of unregulated prices, we compare these two policies when the off-network medical service is not covered. We show how policy ranking depends on the characteristics of demand. If demand is linear, a for-profit insurer and a not-for-profit insurer obtain a higher profit and utility under selective contracting than under uniform reimbursement. In the constant elasticity case, these results do not hold. Insurers prefer uniform reimbursement while consumers are better off under selective contracting in both cases.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"16 1","pages":"187 - 212"},"PeriodicalIF":0.7,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79640333","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Multimarket Contact and Profitability Implications for US Airlines","authors":"Jules O. Yimga","doi":"10.1515/rne-2022-0031","DOIUrl":"https://doi.org/10.1515/rne-2022-0031","url":null,"abstract":"Abstract Routine industrial analyses use internal market characteristics such as market shares to proxy for market power. However, recent studies argue that factors that are external to the market such as contact across multiple markets can be linked to tacit collusion. Using a structural demand and supply model for air travel, we quantify the variable profit effects of multimarket contact. We find that multimarket contact results in increases in variable profits ranging between $15,000 and $20,000 per contact in a quarter. Extrapolating this estimate across all contacts proves to be quite sizeable. These positive responses in profitability are especially stronger in less competitive markets. Our results, taken together, lend support to the mutual forbearance hypothesis.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"76 1","pages":"213 - 230"},"PeriodicalIF":0.7,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75037940","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Platform Pricing Choice: Exclusive Deals or Uniform Prices","authors":"Shiva Shekhar","doi":"10.1515/rne-2017-0016","DOIUrl":"https://doi.org/10.1515/rne-2017-0016","url":null,"abstract":"Abstract Platforms choose between offering exclusive deals or uniform prices to content providers in a setting where content providers can multi-home or single-home. We find that platforms offer exclusive deals for sufficiently large or sufficiently small values of standalone benefits. For sufficiently large or small standalone benefits, there are relatively large or small proportion of multi-homers to single-homers, exclusive deals allow to extract more efficiently from the content provider type that is relatively large in the market. Hence, it becomes more lucrative to employ exclusive deals regardless of the pricing strategy chosen by rival platform. We find that for standalone benefits being sufficiently small, exclusive deals equilibrium is also the industry profit enhancing outcome. On the other hand, when standalone benefits are large, exclusive pricing deals equilibrium leads to a prisoner’s dilemma type of outcome.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"14 1","pages":"159 - 186"},"PeriodicalIF":0.7,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76921788","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"On the Invariance Result of Net Neutrality","authors":"Jeong‐Yoo Kim","doi":"10.1515/rne-2022-0002","DOIUrl":"https://doi.org/10.1515/rne-2022-0002","url":null,"abstract":"Abstract In an influential paper, Choi and Kim (2010) established the invariance result that given a fixed network capacity, the average waiting times are identical regardless of net neutrality. In this paper, we argue that their result relies on the assumption that the distribution for content requests per end user is the same regardless of net neutrality. However, if the distribution is determined by the underlying utility maximization problem of users, users expect the contents they request to be transmitted faster if the contents have priority, implying that the request rate for prioritized contents is higher than the request rate for unprioritized contents under net neutrality. If the content request rates per user differ across the two regimes (net neutrality vs. no net neutrality), the invariance result may not be valid. We also discuss social welfare and the investment incentive of the Internet service provider in an extended model with variable content request rates.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"68 10 1","pages":"139 - 157"},"PeriodicalIF":0.7,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90253200","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}