Published articles (in refereed journals)
This paper examines the impact of most favored nation (MFN) clauses on retail prices, taking advantage of two natural experiments that changed vertical contracting between hotels and major digital platforms. First, a broad E.U. intervention narrowed the breadth of “price parity clause” obligations between hotels and major Online Travel Agencies (OTAs). Second, France and Germany went further and eliminated all price-parity agreements for top OTAs. Using transaction data from different hotel chains, we find direct sales by hotels to customers became relatively cheaper than OTA sales for mid- level and luxury hotels. Comparisons with hotel pricing outside the E.U. confirm the relative reduction in prices for mid-level and luxury hotels, while finding an opposite pattern for budget hotels. Overall, regulating MFNs resulted in significantly cheaper direct channel sales in two out of three hotel segments. Primary effects come from the narrow price-parity intervention and not from complete elimination of MFNs.
In developing countries, the penetration of Liquefied Petroleum Gas (LPG) is still high, and hence the entry of Natural Gas (NG) networks coexists with the use of LPG by an important fraction of households. A relevant policy question is whether the degree of horizontal integration between NG and LPG providers has an influence on the level of retail prices. Using self-reported retail prices of the largest LPG provider in Chile during years 2013 and 2014, we estimate that the presence of a competing NG network generates an average decrease of LPG retail prices within the range [-4%,-2%]. This result suggests that the degree of horizontal integration between NG and LPG providers should matter, in particular for policy interventions such as merger control by competition authorities and the granting of concessions for deploying NG networks by sectoral regulators.
This article assesses the effectiveness of outlet divestitures as remedies in a merger between two large gasoline retailers. Results show that divestitures are effective in disciplining the increase in margins generated by the merger, but only for competing gas stations located within a 1 kilometer radius and only in municipalities with a low density of stations impacted by the merger. Interestingly, this density indicator is a good predictor of both the anticompetitive effect of the merger and the effectiveness of divestitures. Finally, prices of one merging party decreased in locations unaffected by higher concentration, evidencing the presence of efficiency gains.
This paper aims at evaluating the coordinated effects of horizontal mergers by simulating their impact on firms’ critical discount factors. We consider a random coefficient model on the demand side and heterogeneous price-setting firms on the supply side. Results suggest that mergers strengthen the incentives to collude of the merged firm, but weaken the incentives of non-merging parties, with the former effect being stronger. To assess the magnitudes of these effects, we introduce the concepts of Asymmetry in Payoffs and Change in Payoffs effects, which allow us to identify appropriate screening tools according to the relative pre-merger payoffs of merging parties.
Other Publications
Ivaldi, Marc and Vicente Lagos (2018), "How Accurate is the Coordinate Price Pressure Index to Predict Mergers' Coordinated Effects?", Concurrences (Frédéric Jenny Liber Amicorum: Standing Up for Convergence and Relevance in Antitrust).
The Coordinate Price Pressure Index (CPPI) measures the incentives of two competitors to engage in a particular type of Parallel Accommodating Conduct (PAC). Specifically, it measures the incentives of a leader firm to initiate a unilateral percentage price increase, with the expectation that a follower firm will match it. Using a large set of simulated markets, we measure the accuracy of the index in terms of predicting the impact of a merger on firms’ incentives to engage in PAC. Results suggest that the CPPI only displays a fair performance when predicting an increase in firm’s incentives to engage in PAC, and only in mergers in which the diversion ratio between the target and the acquiring firm is low. However, the index displays a poor performance when predicting mergers with a significant anticompetitive effect.
Working papers
In this paper we empirically assess the impact of the deployment of Uber on the incidence of drunk-driving fatal traffic accidents and fatalities in Chile. Based on observational data about accidents and the fact that Uber entered first the Metropolitan Region (Santiago), we are able to exploit differences in entry dates and availability of the service across municipalities to identify the effects of Uber’s entry by using a difference-in-differences approach. We contribute to the literature by assessing whether there is a differentiated effect between male and female fatalities and according to their role in the accident (i.e., driver or passenger). In particular, the presence of a mobility bias against women in the traditional transport sector may imply that Uber brings greater benefits for them. Our results suggest that Uber’s entry has significantly decreased the number of drunk-driving fatal accidents and fatalities, mainly during nighttime. We show that this effect is mainly driven by a reduction in the number of female passengers’ fatalities and the number of nighttime male drivers’ fatalities in these types of accidents. The results are robust to the inclusion of different sets of controls and exposure measures.
Arnaud-Joufray, Enrick and Vicente Lagos (2022), "Entry and upstream competition in the Chilean telecommunications market," Working Paper (draft available upon request).
We explore the strategic relations between integrated incumbents and a new entrant in the Chilean mobile telecom market. Upon entering the market, the entrant relied on network access contracts to provide sufficient quality to consumers. The entrant’s agressive pricing strategy dramatically affected the established firms. We study how asymmetric cannibalization affects incentives to provide access. We further investigate how providing access to the entrant affects an incumbent’s pricing strategy in the downstream market. We use an empirical oligopoly model to rationalize the intensified competition in the upstream market and a sudden decrease in retail prices that resulted from a change in access supplier.