 I am an Assistant Professor of Economics at European School of Management and Technology, in Berlin. From January 2009 until January 2010, I had been a Post Doctoral Research Fellow at Ecole Polytechnique, Department of Economics, in Palaiseau. Under the supervision of Prof. Patrick Rey, I obtained a PhD in Economics, at Toulouse School of Economics, in France, on September 23, 2009. Before coming to Toulouse, I got a BA in Economics and BSc in Mathematics at Bogazici University, in Istanbul, Turkey. During the fall of 2008, I had been visiting at Simon Graduate School of Business, University of Rochester to work with Prof. Greg Shaffer. My research interests are mainly topics in industrial economics and competition policy (in particular, vertical relationships, two-sided markets, the payment card industry, contract theory, and antitrust issues related to buyer power). "Pricing Payment Cards", with Dr. Emilio Calvano. Abstract: Payment card networks, such as Visa, require merchants' banks to pay substantial "interchange" fees to cardholders' banks, on a per transaction basis. This paper shows that a network's profit-maximizing fee induces an inefficient price structure, over-subsidizing card usage and over-taxing merchants. In contrast to the literature we show that this distortion is systematic and arises from the fact that consumers make two distinct decisions (membership and usage) whereas merchants make only one (membership). These findings are robust to competition for cardholders and/or for merchants, network competition, and strategic card acceptance to attract consumers. Abstract: This paper develops a framework of sequential bilateral negotiations on supply contracts between one monopoly manufacturer and two competing retailers, where the parties have balanced and differentiated bargaining power. In this setup, multi-part supply contracts usually do not suffice to coordinate pricing decisions of competing retailers, i.e., to implement the fully integrated monopoly outcome since the manufacturer and the first negotiating retailer may deviate from the monopoly price to get a larger share of a smaller pie. I show that supply contracts including negative upfront payments (i.e., slotting fees paid by the manufacturer to the retailer) combined with quantity discounts, e.g., two-part tariffs conditional on the purchase of a positive quantity, yield the monopoly outcome in every equilibrium of two contracting environments: when the contract signed with the first retailer is no longer valid and renegotiated if there is a disagreement with the second retailer and when contracts involve exclusive dealing provisions. I thereby show that renegotiation clauses of supply contracts could be an alternative to exclusive dealing provisions in order to eliminate downstream competition. The parties' bargaining power only affects the sharing of the monopoly profits. In particular, in contrast to the results of Marx and Shaffer (2008), slotting allowances do not lead here to the exclusion of a retailer, but are in fact the means to obtain common agency, where both retailers are active. "Inefficient Buyer Mergers To Obtain Size Discounts", with Dr. Stéphane Caprice.
Abstract: This paper analyzes the welfare implications of buyer mergers and buyer power focusing on non-linear supply contracts negotiated bilaterally between one monopoly manufacturer and many locally competitive retailers. As in Chipty and Snyder (1999), a larger buyer gets size discounts from the manufacturer which has convex costs, i.e., it has a higher buyer power than smaller retailers. Contrary to the conventional argument that more buyer power reduces retail prices, we show that the larger retailer does not pass on size discounts to consumer prices. Moreover, size discounts for the larger buyer do not lead to higher tariffs for smaller buyers, i.e., there is no waterbed effect. We next illustrate that size discounts might result in inefficient buyer mergers decreasing the consumer surplus. This is found to be the case when independent stores want to merge to improve their bargaining power vis-à-vis the supplier, and thus get size discounts, even if the merger deteriorates their downstream efficiency. For policy concerns, we show that inefficient buyer mergers are more likely to occur when retail competition is weaker, for instance, due to strict commercial zoning rules.
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