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 (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.