JOB MARKET PAPER
Do Consumers Care? Collusion, Inattention, and the Power of Information [Link]
What shapes consumer behavior under competitive misconduct? This paper examines how consumers react to price changes driven by collusion and how these reactions are influenced by additional information, particularly news reports, in the context of consumer inattention. Using detailed consumer data linked to cartel activity in the United States, I find that consumers generally do not respond to collusion in the short term, despite its price-raising effects. Instead, they rely on external information to mitigate the information asymmetry. To investigate this, I incorporate news reports into the analysis and show that media coverage significantly reduces demand for cartelized products. Lower-income consumers react more strongly to price changes and news reports, while higher-income consumers become attentive primarily when exposed to negative news. A sentiment analysis further reveals that more negative news have a pronounced effect in the post-cartel period, leading to substantial reductions in demand across all consumer types. These findings underscore the critical role of media in reducing consumer inattention and addressing information asymmetries in markets affected by collusion.
PEER-REVIEWED
The Impact of Consumer Protection in the Digital Age: Evidence from the European Union
with Justus Haucap & Ulrich Heimeshoff
We investigate the effect of an EU-wide consumer protection regulation on consumer trust as well as consumer behavior. The Unfair Commercial Practice Directive (UCPD) was implemented by EU member states between 2007 and 2010. We utilize data from the Special and Flash Eurobarometer for the years between 2006 and 2014 and experts' evaluation on consumer protection levels before the introduction of the regulation. This rich data set allows us to apply a difference-in-difference estimator with multiple time periods. We find a significant relationship between the introduction of the UCPD and consumer trust and cross-border purchases for countries with a low consumer protection level before the introduction of the UCPD. The relationship increases over time and stays then relatively constant.
OTHER PUBLICATIONS
Competition and Sustainability: Economic Policy and Options for Reform in Antitrust and Competition Law [Link]
This book critically examines how the market economy can be preserved without compromising the Sustainable Development Goals of the UN. Serving as a useful overview of the problems and solutions found in one of the most controversial issues in current antitrust doctrine, this topical book offers concrete policy options for EU competition law. How can concerns over climate change, the supply chain, or animal welfare be integrated into antitrust? What can competition agencies do to help transform the market economy to a more sustainable one? Renowned experts in competition economics, law and sustainability answer these questions, and in doing so dissect issues such as cartels, exemptions, monopolisation, the environmental, social, and governance transformation, and merger control. Problems with government intervention in markets, quantification, and the danger of greenwashing are confronted with a thorough examination of the options for policy reform.
English title: Competition and Sustainability: Options for the Reform of Competition Law
with Justus Haucap, Rupprecht Podszun, Rüdiger Hahn, Charlotte Kreuter-Kirchhof, Tristan Rohner, Philipp Offergeld & Alexandra May
English title: Competition and Sustainability in Germany and the EU
Summarizes paper: "Consumer Protection in the Digital Age: Evidence from the European Union"
English title: Consumer Protection in the Digital Age
Conference Debriefing
English title: How dangerous are big data, artificial intelligence and algorithms for competition?
WORKING PAPERS
Do Managerial Incentives Facilitate Anti-Competitive Behavior? Evidence from Collusion [Link]
with Marek Giebel
We investigate the relationship between management incentives and collusion. This is particularly important as the manager acts on behalf of the owner and determines the firm strategy. Compensation schemes, intended to overcome the principle-agent problem between shareholders and managers, generally determine their managerial actions. While this is beneficial by aligning managers’ interests with those of the firm’s shareholders, the means to achieve this goal could be detrimental from a social welfare perspective. Our empirical analysis is based on a combination of firm, manager, and cartel data to identify managers' remuneration schemes and cartels within the United States. We show that a higher degree of managers' long-term incentives indeed facilitates and stabilizes collusion. Further analyzing the remuneration schemes of various management positions, we find that the impact is particularly pronounced for non-CEOs and CFOs. Additional results imply that firms run by managers with a higher share of equity compensation or more equity-based risk-taking incentives are more likely to behave anti-competitive.
Overconfidence and Collusion [Link]
We explore whether there is a relationship between CEO overconfidence and collusion. Overconfidence may make managers compete if they expect to be able to outperform their competitors, or it may push them to collude if they expect not to be caught/convicted or if their expected sanction is low. On the other hand, there may be a feedback effect in the sense that CEO overconfidence may increase during the duration of the cartel while the cartel remains undetected. Further, this growth in overconfidence may lead to the cartels being discovered. Overconfidence is defined, as in Malmendier and Tate (2005), as the tendency to hold too much firm risk, in a "habitual" (longholder, and net buyer) or short-term (holder 67) manner. We document that: (1) there is a positive and highly significant relationship between overconfidence and collusion, and (2) overconfidence granger causes cartel participation (net buyer) (and not the other way around). We then examine the mechanisms underlying this relationship.
Reaching for the Society: The Commercializing Effects of NASA Technology Transfer [Link]
with Marek Giebel
How does technology transfer of government inventions affect follow-on innovation? Being aware of the importance of technology development and commercialization, the United States enacted a group of policies in the 1980s that aimed at promoting the commercializing of government-funded research by licensing. It, however, remains questionable whether patenting and licensing are appropriate tools to spur welfare-improving follow-on innovation. We exploit technology-related information from the NASA Technology Transfer Program that fosters the licensing of NASA technologies by third parties and combine it with United States patent data. We find that NASA technologies in the licensing portfolio show a similar follow-on innovation pattern as those that are not. Leveraging the information about the licensing status, we find that an exclusive licensing agreement facilitates subsequent technological developments. Consequently, our results imply that commercialization by licensing government inventions is an important policy tool to increase the benefits for society.
WORK IN PROGRESS
(selected)
Competition in the Food Delivery Market
Mental Health of Employees
Single-authored
Green Transition and Economic Outcomes
with Marek Giebel & Dario Pozzoli
Impact of Generative Artificial Intelligence on Fraudulent Firm Behavior
with Marek Giebel & Benjamin Schröder
Uncertainty and Patenting
with Marek Giebel
Fraudulent Firm Behavior and Consumer Response
Single-authored
Public Enterprises and Collusion
with Justus Haucap