Dissertation Defense: Ryan Mansley

Candidate: Ryan Mansley

Major: Economics

Advisors: Nathan Miller, Ph.D. and John Rust, Ph.D.

Title: Essays in Oligopoly Pricing Behavior

This thesis has three chapters on the pricing behavior of firms in oligopoly. The first studies the use of price promotions in the consumer packaged goods market. The second examines alleged price-fixing in the canned tuna industry. The last develops a framework to understand pricing behavior in markets where price leadership is occurring.

In the first chapter, I examine practice of price promotions in consumer packaged goods markets. Using retail scanner data1, I find that manufacturers control the timing of promotions, while retailers exercise some control over the magnitude of the price decrease. I also find that observed promotional policy is more consistent with intertemporal price discrimination than with other explanations. I develop an model that is consistent with these facts and use it to show that promotions generally improve consumer surplus and total welfare relative to static pricing. I also find that the effects of market concentration on promotions are ambiguous; firms must have some degree of market power for promotions to occur, but there are also scenarios when an increase in market power can decrease the occurrence of promotions.

In the second chapter, joint with Minhae Kim, Nathan Miller, Marc Remer, and Matthew Weinberg, we examine price fixing allegations in the canned tuna industry. Beginning in December of 2014, the Department of Justice investigated possible collusion among the major producers of canned tuna. This led to several class action lawsuits and a criminal conviction for price fixing. This paper describes how these firms were alleged to have colluded and uses retail scanner data to document how prices and promotional activity changed while the cartel was in operation.

In the third chapter, joint with Nathan Miller, Gloria Sheu, and Matthew Weinberg, we provide a methodology to simulate the coordinated effects of a proposed merger using data commonly available to antitrust authorities. The model follows the price leadership structure in Miller et al. (2021) in an environment with logit or nested logit demand. Using this framework, we demonstrate how mergers can shift incentive compatibility constraints and thereby lead to adverse competitive effects.

1Researcher’s own analyses calculated (or derived) based in part on data from Nielsen Consumer LLC and marketing databases provided through the NielsenIQ Datasets at the Kilts Center for Marketing Data Center at The University of Chicago Booth School of Business. The conclusions drawn from the NielsenIQ data are those of the researcher(s) and do not reflect the views of Nielsen. Nielsen is not responsible for, had no role in, and was not involved in analyzing and preparing the results reported herein.

Index words: Price Discrimination, Price Promotions, Price-fixing, Price Leadership, Collusion, Mergers