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 (New version forthcoming!)
I study how the potential entry of an online retailer affects the investment incentives of traditional retailers (incumbents). Using a Hotelling framework with two incumbents and an online entrant facing a fixed entry cost, I analyse a sequential game in which incumbents can invest to reduce consumers’ transportation costs prior to the entry decision. I find that they have no incentive to invest in the absence of online competition, but the threat of entry changes these incentives. Depending on the level of the entry cost, equilibrium outcomes feature entry with investment, entry deterrence through investment, or no entry and no investment. On the welfare side, consumer surplus decreases monotonically with higher entry costs, while total welfare is generally non-monotone. The results imply that high entry barriers systematically harm consumers, and that welfare-based regulation must explicitly account for both entry costs and investment responses.
Consumer Activism, Competition, and Collusion, with Alessandro de Chiara and Ester Manna (New version forthcoming!)
We develop a model to study a market with heterogeneous consumers who purchase horizontally differentiated products. Firms can make costly investments to appear socially responsible, which is valued by activist consumers, while passive consumers choose a product solely based on how well it fits their personal taste. We examine how the presence of activists affects competition and the incentives to collude. We find that competition fosters higher care than a monopoly when the number of activists is either small or large. In the middle range, a monopolist invests more because its higher profit margins provide a stronger incentive to attract activists, while competitive price wars erode these incentives. Furthermore, we show that activism acts as a powerful anti-collusive force in repeated games: the temptation to capture activists, by offering high care, makes cartels harder tosustain.