Agenda

Syed Ehsan Ali (Ca' Foscari University of Venice) - Strategically deciding what is available to the group

Luca Scotti (Ca' Foscari University of Venice) - Market Power and Network Structure

Abstract:

In an input-output economy a firm's relevance is shaped by its market share as much as that of all its direct and indirect customers. Likewise, its market power depends on its network of direct and indirect relationships with other firms. I investigate how the structure of the production network influences firms' pricing incentives, accounting for the multiple layers of substitution that affect demand for goods at different stages of production. Under certain conditions, equilibrium markups can be expressed as simple functions of input substitutability and cost-based Domar weights, parallelling conventional results from horizontal economies in which market shares determine markups. In particular, cost-based Domar weights provide a ranking of firms by their profit margins. Moreover, I show that the weights are equivalent to the weighted betweenness centrality computed over the set of paths connecting labor to final consumption. This result generalizes existing theoretical and experimental findings on intermediation networks, linking market power to firm criticality.

The seminar can be attended also remotely, connecting to ZOOM.

Link Zoom: bit.ly/insem-2425
ID riunione:  880 2639 9452
Passcode: InSem-2425