The implications of supplier encroachment via an online platform

E-commerce provides suppliers with the flexibility to operate an online arm via a platform in addition to their pre-existing physical stores. Although such supplier encroachment is becoming increasingly prevalent in e-commerce markets, the literature on supplier encroachment traditionally assumes that suppliers sell products to consumers directly and argues that supplier encroachment can mitigate double marginalisation problems that can secure Pareto improvements. This paper narrows this gap by investigating the implications of the supplier encroachment with an online platform under two scenarios (i.e., the platform owner forgoing or retaining its entry options). A central result obtained is that, unlike supplier-owned direct channels and in addition to the ‘win-win’ outcomes for the supplier and the traditional retailer, supplier encroachment with an online platform may also lead to ‘win-lose’ and ‘lose-lose’ outcomes. Furthermore, when the platform owner retains its entry option, such encroachment is always detrimental for the traditional retailer but beneficial for the supplier.

‘International Paretianism’ and the Question of ‘Feasible’ Climate Solutions

Proponents of International Paretianism (IP)—the principle that international agreements should not make any state worse-off and should make some at least better off—argue that it is the only feasible approach to reducing the harms of climate change (see, especially, Posner and Weisbach 2010). They draw on some key assumptions regarding the meaning of ‘feasibility’ and the nature of the Pareto improvements associated with coordinated action on climate change. This chapter challenges these assumptions, in effect weakening the case for IP and allowing for broader thinking about what counts as a ‘feasible’ climate solution.

Dynamic inefficiency and fiscal interventions in an economy with land and transaction costs

The paper contributes to the discussion on whether real interest rates below real growth rates can be taken as evidence of dynamic inefficiency so that some fiscal intervention may be called for. A seemingly killing objection points to land, a non-produced durable asset in positive supply, as a reason why dynamic inefficiency can be ruled out. If real interest rates were expected to be below real growth rates forever, the value of land would be unbounded, which is incompatible with equilibrium. The paper shows that this objection is not robust to the presence of an arbitrarily small per-unit-of-value transaction cost. The paper also specifies fiscal interventions that provide for Pareto improvements even though they involve a resource cost. For the debate about public debt policy, the land argument is a red herring because it is incompatible with the presence of fiat money and debt denominated in units of fiat money.

Pareto Improvements and Feasible Climate Solutions

Proponents of International Paretianism (IP)—the principle that international agreements should not make any state worse off and should make some at least better off—argue that it is the only feasible approach to reducing the harms of climate change. They draw on some key assumptions regarding the meaning of ‘feasibility’ and the nature of the Pareto improvements associated with coordinated action on climate change. This chapter challenges these assumptions, in effect weakening the case for IP and allowing for broader thinking about what counts as a ‘feasible’ climate solution.

Minimally unstable Pareto improvements over deferred acceptance

We investigate efficient and minimally unstable Pareto improvements over the deferred acceptance (DA) mechanism—a popular school choice mechanism that is stable but not efficient. We show that there is no Pareto improvement over the DA mechanism that is minimally unstable among efficient assignments when the stability comparison is based on counting the number of blocking pairs. Our main result characterizes the priority profiles for which there exists a Pareto improvement over the DA assignment that is minimally unstable among efficient assignments. We further consider an alternative natural stability comparison based on the set of blocking students who are involved in at least one blocking pair, show that the impossibilities remain, and characterize the possibility domain of priority profiles.

Decentralized Matching Markets of Various Sizes: Similarly Stable Solutions with High Proportions of Equal Splits

In two-sided matching markets where direct negotiations take place over the division of profits between the partners, the appropriate solution concept is the core. Only a minority of the experimentally observed bargaining results are within the core, and the number of core solutions further decreases with an increase in market complexity. For differently-sized matching markets, two adjustments to the core requirements are introduced. Projected cores from smaller markets (partial condition core) are confirmed in larger markets. The possibility of Pareto improvements from the perspective of individual players (individual condition core) does not vanish but may even increase with market size. In all the investigated experimental markets, a high percentage of equal profit splits between matching partners in face-to-face bargaining was found, especially in larger, decentralized matching markets.

Predatory Short Sales and Bailouts

This paper extends the literature on predatory short selling and bailouts through a joint analysis of the two. We consider a model with informed short sales, as well as uninformed predatory short sales, which can trigger the inefficient liquidation of a firm. We obtain several novel results: A government commitment to bail out insolvent firms with positive probability can increase welfare because it selectively deters predatory short selling without hampering desirable informed short sales. Contrasting a common view, bailouts can be optimal ex ante but undesirable ex post. Furthermore, bailouts in our model are a better policy tool than short selling restrictions. Welfare gains from the bailout policy are unevenly distributed: shareholders gain while taxpayers lose. Bailout taxes allow ex ante Pareto improvements.