ICEF Research Seminar by David Ronayne (University of Oxford)

On Thursday, September 14 at 4.40 pm, room 3211 (Shabolovka str. 26) ICEF held the Research Seminar.
Speaker: David Ronayne (University of Oxford)
Theme: "The Balance of Power in Markets
with Competitive and Direct Sales Channels" joint with Greg Taylor

Abstract: We model strategic interactions in a market where producers sell to consumers directly as well as via a competitive channel (CC) such as a broker, online marketplace or price comparison website. Equilibrium falls into one of two regimes: either the CC charges low commission and accommodates producers, or it charges high commission and faces strong competition from producers’ direct sales channel. We show how the size of the competitive channel can influence market outcomes. Seemingly pro-competitive developments can have a non-monotonic effect on prices. Specifically, increasing the number of prices consumers check can increase prices and decrease total consumer surplus. We extend the model to examine endogenously-determined compositions of market power between direct and competitive channels. We also use the model to study some active policy issues, including an analysis of which channels should be allowed access to consumers’ data where that data facilitates future sales.

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