Hub-and-Spoke Conspiracies: the Vertical Expression of a Horizontal Desire?

Sahuguet, Nicolas; Walckiers, Alexis

doi:10.1093/jeclap/lpu096

Cited by 9 publications

(6 citation statements)

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“…The endogeneity of adoption decisions likely biases OLS estimates and attenuates estimated coefficients down. 46 To correct for this endogeneity problem, we turn to our IV/2SLS estimates. The 45 This is a conservative approach.…”

Section: Impact Of Adoption On Station Outcomesmentioning

confidence: 99%

Algorithmic Pricing and Competition: Empirical Evidence from the German Retail Gasoline Market

Assad¹,

Clark²,

Ershov³

et al. 2024

Journal of Political Economy

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Economic theory provides ambiguous and conflicting predictions about the association between algorithmic pricing and competition. In this paper we provide the first empirical analysis of this relationship. We study Germany's retail gasoline market where algorithmic-pricing software became widely available by mid-2017, and for which we have access to comprehensive, highfrequency price data. Because adoption dates are unknown, we identify gas stations that adopt algorithmic-pricing software by testing for structural breaks in markers associated with algorithmic pricing. We find a large number of station-level structural breaks around the suspected time of large-scale adoption. Using this information we investigate the impact of adoption on outcomes linked to competition. Because station-level adoption is endogenous, we use brand headquarter-level adoption decisions as instruments. Our IV results show that adoption increases margins by 9%, but only in non-monopoly markets. Restricting attention to duopoly markets, we find that market-level margins do not change when only one of the two stations adopts, but increase by 28% in markets where both do. These results suggest that AI adoption has a significant effect on competition.

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Section: Impact Of Adoption On Station Outcomesmentioning

confidence: 99%

Algorithmic Pricing and Competition: Empirical Evidence from the German Retail Gasoline Market

Assad¹,

Clark²,

Ershov³

et al. 2024

Journal of Political Economy

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“…Odudu (2011) discusses relevant early legal cases and gives some informal economic arguments about the logic of this type of agreements. In a companion paper, Sahuguet and Walckiers (2014) review some recent cases and analyze how hub-and-spoke collusion relates to traditional models of vertical and horizontal agreements. Van Cayseele (2014) also discusses the link between the legal and economic arguments surrounding hub-and-spoke collusion.…”

Section: Related Literaturementioning

confidence: 99%

“…The common supplier can also help retailers to coordinate price increases or serve as a category captain to organize marketing decisions. Competition authorities have analyzed these collusive practices quite extensively and have also prosecuted hub-and-spoke collusion in a number of jurisdictions, including the United States and the United Kingdom (see Odudu (2011) and Sahuguet and Walckiers (2014), for a recent review of the case law).…”

Section: Accepted Manuscript 1 Introductionmentioning

confidence: 99%

A theory of hub-and-spoke collusion

Sahuguet

Walckiers

2017

International Journal of Industrial Organization

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“…See alsoSahuguet and Walckiers (2014),Miegielsen (2014), andGarrod, Harrington, andOlczak (2020) for discussion.…”

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confidence: 99%

Hub-and-Spoke Cartels: Theory and Evidence from the Grocery Industry

Clark,

Horstmann,

Houde

2024

American Economic Review

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Numerous recently uncovered cartels operated along the supply chain, with firms at one end facilitating collusion at the other—hub-and-spoke arrangements. These cartels are hard to rationalize because they induce double marginalization and higher costs. We examine Canada’s alleged bread cartel and provide the first comprehensive analysis of hub-and-spoke collusion. Using court documents and pricing data, we make three contributions: (i) we show that collusion was effective, increasing inflation by about 50 percent; (ii) we provide evidence that collusion existed at both ends of the supply chain; and (iii) we develop a model explaining why this form of collusion arose. (JEL E31, K21, L12, L14, L22, L42, L81)

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Hub-and-Spoke Conspiracies: the Vertical Expression of a Horizontal Desire?

Cited by 9 publications

References 0 publications

Algorithmic Pricing and Competition: Empirical Evidence from the German Retail Gasoline Market

Algorithmic Pricing and Competition: Empirical Evidence from the German Retail Gasoline Market

A theory of hub-and-spoke collusion

Hub-and-Spoke Cartels: Theory and Evidence from the Grocery Industry

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