Working papers:
- Screening contracts for information products in oligopoly (2020) (Job Market Paper)
Abstract: In this paper, I study the design of screening contracts for information products that are sold to a group of buyers who have strategic interactions with one another. An information provider offers a menu of information structures (i.e. experiments) to firms that compete in a downstream market. Firms can also obtain their own signals privately. The precision of own signals obtained is the firm's private information (i.e. type). I first identify properties of a feasible menu under different strategic environments. A feasible menu will always provide as accurate or more accurate information to low types (i.e. low precision of own signals) than to high types. When firms face strategic complementarities, their expected net gain of the additional information is non-increasing in types and, thus, high types may be excluded from the market. When firms face strategic substitutes, a feasible menu may exclude intermediate types. I then study how the nature of competition between firms affects the information provider's optimal menu. Compared to an environment with no strategic interactions, the presence of strategic complementarities leads the information provider to perfectly correlate the information structures and provide the most accurate information available. When firms face a game of strategic substitutes, the market may be partitioned into two segments and the information provided to `high type' segment is degraded. - Explicit collusion in oligopoly (submitted) (2019) slides
Abstract: This paper studies the enforcement of a cartel with private information about production cost under a static setting. We first consider the problem of a cartel authority to implement the ex-post efficient production when facing a non-cooperative threat game (either Bertrand or Cournot). We show that, to implement an ex-post efficient allocation, paying a minimum ex-ante subsidy forces the individual rationality constraint to be binding at an interior point under Cournot environment and binding at the lowest point under Bertrand environment. When marginal cost is drawn from a uniform distribution and market demand is large, this minimum ex-ante subsidy is higher in a Cournot environment than in a Bertrand environment. - Selling separately as a robust mechanism for a multi-product monopoly (2018)
Abstract: This paper proposes selling separately as a robust mechanism for a multi-product seller who faces uncertainty of the correlations between product values. In the model, a deterministic mechanism, i.e. price schedule, is offered by a seller to a buyer which has private information about product values. We prove that in the two-item case with continuous consumer types, to maximize the worst-case expected profit, the best strategy is to sell independently if the seller only knows the marginal distribution of each item's valuation. The proof consist of two parts. The first part proves that for any mechanism that demands bundle premium, there exists a joint distribution, especially independent distribution applying for all mechanisms, that generates expected profit no more than that of optimally selling each item separately. This shows that if the valuations are independently distributed and known by the seller, offering bundling premium is always dominated by selling separately. The second part proves that for any mechanism that offers bundle discounts, there also exists a joint distribution that generates expected profit no more than that of optimally selling each item separately.
Work in Progress
- Selling information in oligopoly, with Ting Liu
- Regulation of a two-sided market under adverse selection