Fondazione GRINS
Growing Resilient,
Inclusive and Sustainable
Galleria Ugo Bassi 1, 40121, Bologna, IT
C.F/P.IVA 91451720378
Finanziato dal Piano Nazionale di Ripresa e Resilienza (PNRR), Missione 4 (Infrastruttura e ricerca), Componente 2 (Dalla Ricerca all’Impresa), Investimento 1.3 (Partnership Estese), Tematica 9 (Sostenibilità economica e finanziaria di sistemi e territori).
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This paper studies competition among firms connected in an input-output network, where firms have multilateral market power, that is, they can potentially affect prices both on input and output markets, to an extent that is endogenously determined. In equilibrium, the price impact is proportional to the number of cycles in the network whose links measure the strength of the input-output connection across each good pair. Considering multilateral market power affects the model’s predictions in two key areas: the quantification of distortions due to market power, and the evaluation of the welfare impact of mergers.
Keywords: production networks, oligopoly, double auction, supply function equilibrium
JEL Classification: L13, D43, D44, D57
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AKNOWLEDGEMENTS
This study was funded by the European Union - NextGenerationEU, in the framework of the GRINS - Growing Resilient, INclusive and Sustainable project (GRINS PE00000018). The views and opinions expressed are solely those of the authors and do not necessarily reflect those of the European Union, nor can the European Union be held responsible for them.
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