Aleksandr Yankelevich

Asymmetric Sequential Search

This note explores asymmetries in the way consumers sample prices in a simple variation of Stahls (1989) seminal model of sequential search. In the note, we characterize a unique equilibrium in which a firm that caters to more local consumers selects prices from a distribution which first order stochastically dominates that of its rival and contains mass at the upper bound of firm price distributions. Both firms exhibit higher prices as the proportion of consumers local to one firm rises, though surprisingly, at the limit, the Diamond paradox may not manifest.

Price-Match Announcements in a Consumer Search Duopoly

Using a model of sequential search, we show that announcements to price-match raise prices by altering consumer search behavior. First, price-matching diminishes firms’ incentives to lower prices to attract consumers who have no search costs. Second, for consumers with positive search costs, price-matching lowers the marginal benefit of search, inducing them to accept higher prices. Finally, price-matching can lead to asymmetric equilibria where one firm runs fewer sales and both firms tend to offer smaller discounts than in a symmetric equilibrium. Price increases grow in the proportion of consumers who invoke price-matching guarantees and in the level of equilibrium asymmetry.

Reaching beyond the Wire: Challenges Facing Wireless for the Last Mile

Purpose This paper aims to provide a critical perspective on the major opportunities and challenges facing the future of wireless access to broadband internet services in the USA. In particular, it seeks to develop realistic expectations for new entrants and existing wireline broadband providers, hoping to diversify into wireless to extend the reach of broadband to previously underserved markets. Design/methodology/approach The paper synthesizes a series of empirical case studies of efforts to develop wireless projects across the USA. Cases were chosen to reflect variations in recent initiatives related to spectrum used, housing density, topography, types of services provided and the type of entity providing them. Findings are supplemented by a thorough review of applicable sections of the Code of Federal Regulations, Federal Communications Commission Orders and state and local regulations. Findings Although developments in wireless technology and regulation have permitted novel approaches for using wireless to extend the reach of broadband, myriad challenges must be addressed for successful expansion. These include limitations on throughput, infrastructure and equipment hurdles, regulatory uncertainty and relatively low revenue potential in underserved markets. Practical implications This study can serve as a guide to the nuances that wireless broadband providers must take into account when extending service in different settings. Because social and regulatory contexts are critical, the authors anchor their findings in a study of US cases and regulations. Nonetheless, the opportunities and challenges that are explored can be of relevance for practitioners considering wireless access in other countries where comparable situations may arise. Originality/value Existing scholarship generally focuses on the opportunities of wireless technologies for extending the reach and quality of broadband without methodically exploring potential hurdles. In this paper, the authors carefully consider both, paying attention to the social, financial, policy and technical challenges that must be addressed to successfully design and implement different wireless initiatives.

A Note of Caution on Using Hotelling Models in Platform Markets

We study a Hotelling framework in which customers first pay a monopoly platform to enter the market before deciding between two competing services on opposite ends of a Hotelling line. This setup is common when modeling competition in Internet content provision. We find that standard taken-for-granted solution methods under full market coverage break down, and that in the unique full-coverage equilibrium, the competing service providers set substantially lower prices. Standard methods and prices are restored by giving service providers the first move.

COLLABORATE OR CONSOLIDATE: ASSESSING THE COMPETITIVE EFFECTS OF PRODUCTION JOINT VENTURES: COLLABORATE OR CONSOLIDATE

We analyze collaborations in which two firms facing external competition reorganize to form an input joint venture as an alternative to horizontal merger. Under standard regularity conditions, the collaboration can lead to higher profits than a horizontal merger, though the effect on prices, quantities, and welfare depends on the form of downstream competition. In light of our results regarding profits, we provide reasons why firms might still wish to merge: imperfect information, cost synergies, and organizational asymmetries. We further consider how our comparisons change with the managerial structure of the joint venture (i.e., by delegation of input pricing).

Collaborate or Consolidate: Assessing the Competitive Effects of Production Joint Ventures

We analyze a symmetric joint venture in which firms facing external competition collaborate in input production. Under standard regularity conditions, the collaboration leads to higher profits than a horizontal merger, whereas the effect on prices and quantities depends on the form of downstream competition. When firms compete in prices, downstream prices for all firms are higher following a symmetric joint venture than following a merger. The reverse result may obtain under quantity competition. In light of our results regarding profits, we provide reasons why firms might still wish to merge: imperfect information, cost synergies, and organizational asymmetries.