This study examines the effects of termination rate regulation on retail outcomes and competition in Botswana’s mobile market. Using quarterly operator level data for 2006Q1–2016Q2, estimates from panel instrumental variable approach show that a 10
The most profitable collusive arrangement need not be the one that firms can most easily sustain. We study this issue in a repeated Bertrand duopoly in which market-sharing agreements are infeasible. We compare profit-sharing collusion with side payments, which maximizes joint profits, with uniform-price collusion without transfers, which sacrifices joint profits under cost asymmetry. With positive cost asymmetry and equal bargaining power, profit-sharing is more sustainable when firms are equally patient, but uniform pricing may be the only sustainable arrangement when the efficient firm is sufficiently more patient. Asymmetric bargaining power creates a second channel: sufficiently uneven bargaining power can make uniform pricing more sustainable even when firms have identical discount factors. The findings suggest that uniform-price collusion may arise not only from concealment or detection concerns, but also because its rigidity limits distributive imbalances that undermine self-enforcement.
This paper examines the effects of formal and informal competition, as well as adoption of digitalization, on firm-level innovation. Using firm-level data from the World Bank Enterprise Surveys (WBES) covering 160 countries between 2006 and 2024, we estimate extended probit models to address potential endogeneity in the relationship between competition and innovation, applying a set of instrumental variables. The analysis controls for firm heterogeneity by country, region, year, and industry, as well as for firm-specific characteristics and reverse causality. The findings show that digitalization tools are positively and strongly associated with firm innovation across multiple dimensions. Formal competition and informal competition, however, affect innovation differently. Formal competition displays a non-linear relationship with innovation: while moderate competition encourages innovation, intense competition does not. In contrast, informal competition consistently stimulates innovation, likely because it pressures formal firms to adapt and remain competitive. At the regional level, results reveal that formal competition tends to hinder innovation, while informal competition acts as a positive force. Digitalization shows a strong positive association with innovation across all regions, particularly in MENA region. Based on these results, the paper derives key policy recommendations for innovation strategies, competition policies, and regulatory reforms.
This paper examines endogenous Corporate Social Responsibility (CSR) in a Cournot duopoly with congestion externalities. Modelling the interaction as a three-stage game (capacities → CSR weight → quantities), we first analyze a unilateral-CSR configuration in which one firm engages in CSR while its rival remains purely profit-maximizing. We show that CSR acts as a strategic differentiation device: even under identical congestion conditions, the CSR firm produces more, induces a lower equilibrium price, and earns a higher monetary profit than its conventional rival. The optimal CSR commitment decreases with the firm’s own congestion cost, while its response to the rival’s congestion is non-monotonic and governed by an endogenous threshold. Relative to a no-CSR benchmark, unilateral CSR raises total output, consumer surplus, and social surplus for all positive congestion levels, even after accounting explicitly for delay disutility. We then extend the model to bilateral CSR and show that consumer and social surplus increase further, although intensified competition reduces firms’ profits. Finally, when the decision to engage in CSR is itself endogenized, CSR is a strictly dominant adoption strategy for each firm, yielding bilateral CSR as the unique adoption equilibrium.
Congestion driven by overtourism not only lowers tourists’ utility but also reduces the destination-government’s marginal gains from additional tourist inflows. In this context, the paper develops a multi-stage duopoly framework using a Hotelling spatial competition model that incorporates the dual role of congestion. The paper examines how congestion influences tourism taxes, promotional expenditure, tourism-package quality and prices, tourist demand, consumer surplus, producer surplus, socio-environmental value creation and social welfare under three institutional settings: a benchmark no-tax regime, a social welfare-maximizing tax regime, and a revenue-maximizing tax regime. Results show that greater congestion sensitivity—on the part of both tourists and destinations—reduces the attractiveness of the already crowded destination, leading to lower demand, service quality, prices, consumer surplus, producer surplus and socio-environmental value creation, while the relatively less crowded destination benefits from redirected tourist inflows. At the crowded destination, tourist outflow makes the effect of congestion on social welfare ambiguous due to the trade-off between reduced congestion damages and lower tourism demand, quality and profitability. Comparing regimes, we find that: excessive promotion under the social welfare-maximizing tax regime intensifies congestion and induces lower service-quality, whereas the no-tax regime sustains the highest service quality and tourist demand. Overall, social welfare is higher under the revenue-maximizing tax regime than under the social-welfare maximizing tax regime. Our findings suggest that governments need to balance tourism taxation and promotional expenditure carefully to manage congestion without weakening service-quality and long-run destination competitiveness.
