Research
Research
Exclusive Strategic Collaboration and Competition, with Alessandro de Chiara and Ester Manna (New version forthcoming!)
We model a disruptive technology firm that decides whether to compete or collaborate with the incumbents. We find that collaboration is an equilibrium outcome only when the entrant’s threat of competition is credible. An exclusive contract between the entrant and a single incumbent maximizes their joint profits but reduces competition. Critically, while exclusive agreements are privately optimal, they are not always socially desirable, as they may be dominated by direct entry or a non-exclusive, open-market arrangement. This suggests a compelling need for regulatory scrutiny of exclusive dealings in markets where innovative inputs confer a significant competitive edge.
Online Entry vs Offline Investment: Strategic Investment to Deter Online Entry
I consider the impact of the entry of an online retailer on traditional retailers’ investment behaviour. I find that traditional retailers have no incentive to invest to reduce the transport cost when no online retailer is present. However, with the entry of an online retailer, traditional retailers face new incentives for investment. The interplay of entry costs and traditional retailers’ investments significantly influences market entry. Lastly, I look at welfare analysis and provide policy recommendations.
Consumer Activism, Competition, and Collusion, with Alessandro de Chiara and Ester Manna (Draft coming soon!)
We study a market with heterogeneous consumers who purchase horizontally differentiated products. Firms can make costly investments to appear socially responsible, which creates vertical differentiation valued only by a subset of “activist” consumers, while passive consumers value products solely on the horizontal dimension. We develop a model to examine how the presence of activists affects competition and the incentives to collude. In non-cooperative equilibrium, activists induce all firms to exert high effort. We show that firms are more likely to exercise care under competition than under monopoly. Furthermore, we analyze whether firms have incentives to collude when activists are present, as collusion can allow firms to avoid costly effort and raise profits. We find that the number of the activists in the market determines how sustainable collusion can be among firms.