Collusion in Markets with Syndication

John William Hatfield; Scott Duke Kominers; Richard  Lowery; Jordan M. Barry

Article | Journal of Political Economy | October 2020

Collusion in Markets with Syndication

by John William Hatfield, Scott Duke Kominers, Richard Lowery and Jordan M. Barry

Abstract

Markets for IPOs and debt issuances are syndicated, in the sense that a bidder who wins a contract may invite losing bidders to join a syndicate that together fulfills the contract. We show that in markets with syndication, standard intuitions from industrial organization can be reversed: Collusion may become easier as market concentration falls, and market entry may in fact facilitate collusion. In particular, price collusion can be sustained by a strategy in which firms refuse to join the syndicate of any firm that deviates from the collusive price. Our results thus can rationalize the apparently contradictory empirical facts that the market for IPO underwriting exhibits seemingly collusive pricing despite its low level of market concentration.

Keywords: collusion; antitrust; IPO underwriting; Syndication; ＂Repeated games＂; Markets; Game Theory;

Format: Print

SSRN Find at Harvard

Citation:

Hatfield, John William, Scott Duke Kominers, Richard Lowery, and Jordan M. Barry. "Collusion in Markets with Syndication." Journal of Political Economy 128, no. 10 (October 2020).

Article | International Economic Review | November 2020

Taxation in Matching Markets

Arnaud Dupuy, Alfred Galichon, Sonia Jaffe and Scott Duke Kominers

We analyze the effects of taxation in two-sided matching markets, i.e., markets in which all agents have heterogeneous preferences over potential partners. In matching markets, taxes can generate inefficiency on the allocative margin by changing who is matched to whom, even if the number of workers at each firm is unaffected. While the allocative inefficiency of taxation need not be monotonic in the level of the tax when transfers flow in both directions, we show that it is weakly increasing in the tax rate for markets in which workers refuse to match without a positive wage. We introduce a renormalization that allows for an equivalence between markets with taxation and markets without taxation but with adjusted match values. We use our equivalence to show additional properties of matching markets with taxation and to adapt existing econometric methods to such markets. We then estimate the preferences in the college-coach U.S. football matching market and show through simulations of tax reforms that the true deadweight loss can differ dramatically from that measured without accounting for the preference heterogeneity of the matching market. In addition to highlighting the potential for allocative distortions from taxation, our model provides a continuous link between canonical models of matching with and without transfers.

Keywords: matching markets; labor markets; Taxation; Labor; Markets;

Citation:

Dupuy, Arnaud, Alfred Galichon, Sonia Jaffe, and Scott Duke Kominers. "Taxation in Matching Markets." International Economic Review 61, no. 4 (November 2020): 1591–1634. View Details

Cite View Details Find at Harvard Read Now

Faculty & Research

Collusion in Markets with Syndication

Abstract

Citation:

About the Author

More from the Author