Cédric Argenton
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I have a background in law and public policy but was trained as a professional economist at Boston University and the Stockhom School of Economics, where I defended my dissertation under the supervision of Jörgen Weibull.
I specialize in industrial organization, the branch of economics which studies market outcomes. I have an interest in competition policy (especially exclusionary practices associated to predatory pricing or the use of vertical restraints), quality regulation and law and economics. |
Research coordinator, Tilburg Law and Economics Center (TILEC)
Publications
Exclusive quality, accepted at the Journal of Industrial Economics
Abstract: In the case of vertically differentiated products, Bertrand competition at the retail level does not prevent an incumbent upstream firm from using exclusivity contracts to deter the entry of a more efficient rival, contrary to what happens in the homogenous product case. Indeed, because of differentiation, the incumbent's inferior product is not eliminated upon entry. As a result, a retailer who considers rejecting the exclusivity clause expects to earn much less than the incumbent's monopoly rents. Thus, in equilibrium, the incumbent can offer high enough an upfront payment to induce all retailers to sign on the contract and achieve exclusion.
JEL Classifications: L12, L42
Keywords: vertical differentiation, exclusive dealing, contracts, naked exclusion, monopolization
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Bertrand competition with convex costs in symmetric and asymmetric markets : results from a pilot study (with Wieland Müller), forthcoming in Werner Güth and Manfred Stadler (eds.), Experimentelle Wirtschaftforschung, Tübingen: Mohr Siebeck Verlag.
Abstract: We report the results of a series of experimental Bertrand duopolies where firms have convexcosts. These duopolies are theoretically characterized by a multiplicity of Nash equilibria. Using a 2×2 design, we analyze price choices in symmetric and asymmetric markets under two information conditions (complete versus incomplete information about profits). We find that information has no effect in symmetric markets with respect to market prices and the time it takes for markets to stabilize. However, in asymmetric markets, complete information leads to higher market prices and quicker convergence of price choices.
JEL Classifications: L13, C72, C92.
Keywords: Bertrand competition, convex costs, collusion, coordination, experimental economics
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Working papers
Exclusivity as inefficient insurance (with Bert Willems)
Abstract: It is well established that an incumbent firm may use exclusivity contracts so as to monopolize an industry or deter entry. Such an anticompetitive practice could be tolerated if it were associated with sufficiently large efficiency gains, e.g. insuring buyers against price volatility. In this paper we study the trade-off between positive effects (risk sharing) and negative effects (exclusion) of exclusivity contracts. We revisit the seminal model of Aghion and Bolton (1987) under risk-aversion and show that although exclusivity contracts induce optimal risk-sharing, they can be used not only to deter the entry of a more efficient rival on the product market but also to crowd out financial investors willing to insure the buyer at competitive rates. We further show that in a world without financial investors, purely financial bilateral instruments, such as forward contracts, achieve optimal risk sharing without distorting product market outcomes. Thus, there is no room for an insurance defense of exclusivity contracts.
JEL Classifications:D43; D86; L12; L42
Keywords: exclusivity, contracts, monopolization, risk-aversion, risk-sharing, damages
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Producers bargaining about a quality standard
Abstract: We study an asymmetric information model in which two firms are active on a market where buyers only observe the average quality supplied. Quantities and cost structures are exogenously given and firms compete in quality. Before choosing their qualities, they bargain over a perfectly enforcable minimum quality standard. The bargaining outcome is given by the Kalai-Smorodinsky (KS) solution. Agreement on a binding standard is possible only if the firms are sufficiently similar with respect to their production costs. The agreed-upon standard always falls short of the joint-profit-maximizing (or, for that matter, the efficient) level. It is decreasing in the high-cost producer's cost of production. Yet, it first increases then decreases with the low-cost producer's cost of production, showing that the latter's bargaining position can be enhanced by seemingly adverse cost changes.
JEL Classifications:D43; D82; L13; L15
Keywords: asymmetric information; minimum quality standard; duopoly; bargaining; free riding
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The market for melons: Cournot competition with unobservable qualities
Abstract: Two firms produce different qualities at possibly different, constant marginal costs. They compete in quantities on a market where buyers only observe the average quality supplied. The model is a generalization of the standard Cournot duopoly, which corresponds to the special case where the two qualities are equal. When the quality differential is large, the firms' output levels are not always strategic substitutes. There can be no, or up to three pure-strategy equilibria. Yet, as long as the cost differential is not extreme, there always exists a stable duopolistic equilibrium. In that sense, strategic quantity-setting helps prevent market unraveling.
JEL Classifications:D43; D82; L13; L15
Keywords: Cournot competition; quality; duopoly; asymmetric information; Nash equilibrium
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Works in progress
A cost-augmented model of vertical differentiation
Bertrand-Edgeworth competition under vertical differentiation
Horizontal and vertical differentiation: a tractable Launhardt model
Pricing in the nio
Colluding to prey (and vice-versa?)
Liability rules and endogenous quality choice: product liability revisited (with Kebin Ma)
Exclusion through speculation (with Bert Willems)
Price competition and strategic uncertainty (with Ola Andersson and Jörgen W. Weibull
Links
Boston University Dept of Economics
Stockholm School of Economics
Sciences Po, Paris
Wieland Müller (Tilburg University)
Stefan Napel (Bayreuth University)
Jörgen Weibull (Stockhom School of Economics)
Bert Willems (Tilburg University)
See also:
Contact:
CentERPO Box 90153
5000 LE Tilburg
The Netherlands