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123 Results

Testing Collusion and Cooperation in Binary Choice Games

Staff Working Paper 2023-58 Erhao Xie
This paper studies the testable implication of players’ collusive or cooperative behaviour in a binary choice game with complete information. I illustrate the implementation of this test by revisiting the entry game between Walmart and Kmart.

Identifying Nascent High-Growth Firms Using Machine Learning

Staff Working Paper 2023-53 Stephanie Houle, Ryan Macdonald
Firms that grow rapidly have the potential to usher in new innovations, products or processes (Kogan et al. 2017), become superstar firms (Haltiwanger et al. 2013) and impact the aggregate labour share (Autor et al. 2020; De Loecker et al. 2020). We explore the use of supervised machine learning techniques to identify a population of nascent high-growth firms using Canadian administrative firm-level data.

Intermediary Market Power and Capital Constraints

Staff Working Paper 2023-51 Jason Allen, Milena Wittwer
We examine how intermediary capitalization affects asset prices in a framework that allows for intermediary market power. We introduce a model in which capital-constrained intermediaries buy or trade an asset in an imperfectly competitive market, and we show that weaker capital constraints lead to both higher prices and intermediary markups.

Competition for Exclusivity and Customer Lock-in: Evidence from Copyright Enforcement in China

Staff Working Paper 2023-43 Youming Liu
This paper studies the music streaming industry and argues that having exclusive rights granted by copyright law drives firms to offer exclusive content to lock in customers. I employ theoretical and descriptive empirical analysis, along with a dynamic structural model, to support the argument and explore policies for improving competition.

Flagship Entry in Online Marketplaces

Staff Working Paper 2023-41 Ginger Zhe Jin, Zhentong Lu, Xiaolu Zhou, Lu Fang
In this paper, we empirically study how flagship entry in an online marketplace affects consumers, the platform, and various sellers on the platform. We find flagship entry may benefit consumers by expanding the choice set, by intensifying price competition within the entry brand, and by improving consumer perception for parts of the platform.

The contribution of firm profits to the recent rise in inflation

Staff Analytical Note 2023-12 Panagiotis Bouras, Christian Bustamante, Xing Guo, Jacob Short
We measure the contribution to inflation from the growth in markups of Canadian firms. The dynamics of inflation and markups suggest that changes in markups could account for less than one-tenth of inflation in 2021. Further, they suggest that peak inflation was driven primarily by changes in the costs of firms.

Markups and inflation during the COVID-19 pandemic

Staff Analytical Note 2023-8 Olga Bilyk, Timothy Grieder, Mikael Khan
We find that prices and costs for consumer-oriented firms moved roughly one-for-one during the COVID-19 pandemic. This means firms fully passed rising costs through to the prices they charged. However, our results are suggestive, given data limitations and the uncertainty associated with estimating markups.
Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Inflation and prices JEL Code(s): D, D2, D4, E, E2, E3, L, L1

Cost Pass-Through with Capacity Constraints and International Linkages

How are regional cost shocks passed through into global prices? We investigate the role of short-run capacity constraints and show that they can induce stark non-linearities in the pass-through. We highlight this effect for the market for ammonia, a commodity produced largely from natural gas.
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