Michael D. Noel's research while affiliated with University of California, San Diego and other places
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Publications (16)
In a retail gasoline market exhibiting Edgeworth Price Cycles, prices change asymmetrically with many small decreases interrupted by occasional large increases. The result is a de facto menu of prices from which consumers can choose based on exactly when they buy. This article introduces four classes of purchase timing strategies designed to system...
This volume collects a series of essays that I have written over the last decade on multi-sided platform businesses that create value by providing products that enable two or more different types of customers to get together, find each other, and exchange value. Part I presents background pieces on the economics of multi-sided platforms and industr...
Retail gasoline prices are known to respond fairly slowly to wholesale price changes. This does not appear to be true for markets with Edgeworth price cycles. Recently many retail gasoline markets in the midwestern United States and other countries have been shown to exhibit price cycles in which competition generates rapid cyclical retail price mo...
Asymmetric price cycles similar to Edgeworth Cycles are appearing in increasingly many retail gasoline markets in the United States and worldwide. The asymmetry in the cycles can give rise to a finding of asymmetric price responses to cost shocks (asymmetric passthrough). This article estimates asymmetric passthrough for the market of Toronto, whic...
Retail gasoline prices are known to respond fairly slowly to wholesale price changes. This does not appear to be true for markets with Edgeworth price cycles. Recently, many retail gasoline markets in the midwestern U.S. and in other countries have been shown to exhibit price cycles, in which competition generates rapid cyclical retail price moveme...
A multisided platform (MSP) serves as an intermediary for two or more groups of customers who are linked by indirect network
effects. Recent research has found that MSPs are significant in many industries and that some standard economic results—such
as the Lerner Index—do not apply to them, in material ways, without some significant modification to...
"Motivated by the apparent discovery of Edgeworth Cycles in many retail gasoline markets, this article extends the theory of Edgeworth Cycles along several key dimensions, including models of fluctuating marginal costs, differentiation, capacity constraints and triopoly. A computational approach to search for Markov perfect equilibria is taken. Edg...
A multi-sided platform (MSP) serves as an intermediary for two or more groups of customers who are linked by indirect network effects. Recent research has found that MSPs are significant in many industries and that some standard economic results, such as the Lerner Index, do not apply to them, in material ways, without some significant modification...
We analyze the effect of Wal-Marts entry into the grocery market using a unique store-level price panel data set. We use OLS and two IV specifications to estimate the effect of Wal-Marts entry on competitors prices of 24 grocery items across several categories. Wal-Marts price advantage over competitors for these products averages approximately 10%...
Asymmetric price cycles which look similar to Edgeworth Cycles are appearing in increasingly many retail gasoline markets in the U.S. and worldwide. The cycles can give the appearance of asymmetric prices responses to cost shocks under traditional methodologies. This article shows how to remove the confounding effect of the cycles and test for any...
We analyze the effect of Wal-Mart's entry into the grocery market using a unique stor-level price panel data set. We use OLS and two IV specifications to estimate the effect of Wal-Mart's entry on competitors' prices of 24 grocery items across several categories. Wal-Mart's price advantage over competitors for these products averages approximately...
I exploit a new station-level, twelve-hourly price dataset to examine the strong retail price cycles in the Toronto gasoline market. The cycles appear similar to theoretical Edgeworth Cycles: strongly asymmetric, tall, rapid, and highly synchronous across stations. I test a series of predictions made by the theory about how firm behaviors would dif...
This paper examines dynamic pricing behavior in Canadian retail gasoline markets. I find three distinct pricing patterns: cost-based pricing, sticky pricing, and sharp asymmetric retail price cycles that resemble the Edgeworth cycles of Maskin and Tirole (1988). I use a Markov-switching regression to estimate the prevalence of the regimes and the s...
The SSNIP test and Critical Loss Analysis are widely used tools for determining market definition in merger and sometimes other antitrust matters. However, the standard techniques used to test for a relevant antitrust market are incorrect when the firms in question operate two-sided platforms. When a two-sided platform raises price on one side of i...
In this article, I exploit a new station-level, twelve-hourly price dataset to examine the strong retail price cycles in the Toronto gasoline market. The cycles are visually similar to the theoretical Edgeworth Cycles of Maskin & Tirole [1988]: strongly asymmetric, tall, rapid, and highly synchronous across stations. I test a series of predictions...
Motivated by the discovery of apparent Edgeworth Cycles in many retail gasoline markets, this paper extends the Maskin & Tirole [1988] theory Edgeworth Cycles to a wide range of more complicated and realistic settings. Taking a computational approach to search for Markov Perfect Equilibria, I examine models involving duopoly and triopoly, different...
Citations
... It has been more than three decades since Wal-Mart disrupted the food-retailing industry with the entry of their Supercenter format and questions regarding their impact on incumbents and suppliers do not have definitive answers despite the topic having spurred a line of academic literature. 1 Whereas some studies find that Wal-Mart Supercenters' (WMS') entry lowered prices at incumbent supermarkets (Cleary and Lopez 2014;Basker and Noel 2009;Volpe and Lavoie 2008;Hausman and Leibtag 2007), others have found a limited price response (Matsa 2011;Ailawadi et al. 2010). These studies use different sets of products to investigate price effects and do not discuss the relative strategic importance of the products for retailers. ...
... In online markets, both perishable goods (e.g., food products [42], event tickets [40], and seasonal pieces of clothing [14]) and durable goods (e.g., electronic devices [12] and licenses for software [11]) are subject to automated price adjustment strategies. Oftentimes, these strategies follow a periodically recurring pattern over time (e.g., Edgeworth cycles) [29,30]. In the case of a duopoly, where two market participants are competing against each other, Edgeworth cycles entail that both market participants undercut each other until one market participant's lower bound is reached (e.g., the profit yields zero), and the market participant raises the price to secure future profits. ...
... D. S. Evans and Noel (2008) defined Multi-Sided Platforms as: "[platforms that] provide goods and services to several distinct groups of customers who need each other in some way, and who rely on platforms to intermediate transactions between them." ...
... e theoretical economics literature on multisided platforms focuses on competition (differentiation) between antitrust and multisided platforms serving the same customer group. According to Evans and Noel [25], various platforms face a more complex competitive environment. e existence of the "cross-group network externality" of the platform has led to mutual reciprocity on both sides, and platform enterprises have grown up at an extremely rapid rate. ...
Reference: The Literature Review of Platform Economy
... The main OLCB-platform operational features, such as the cross-knowledge of the public types of agents in the context of risk-related services, determine the need to include possible credit risk data in the set of dependent variables. An OLCB platform's dependency on the network externality effect (Banerjee et al. 2017;Evans et al. 2011) determines the need to include dependent variables that describe the number and qualities of creditors participating in a contest. As transaction prices are determined by agents, and the setting of unfavourable prices for a customer is one of the main risks in OLCB platform operations, variables describing the pricing aspects of provided loan offers should also be included in the model's dependent variables. ...
... However, some other studies find no evidence of asymmetric price behavior due to a different model or data sources, for example, (Godby et al. 2000), (Galeotti et al. 2003), (Bachmeier and Griffin 2003). Finally, recent research conducted with large datasets of daily or weekly data has been exploring the relationship between dynamic pricing and Edgeworth cycles, such as (Eckert and West 2004), (Lewis and Noel 2011), (Zimmerman et al. 2013), and (Noel 2019). Again, the focus of these studies is independent of the rockets and feathers hypothesis. ...
... Bonnet and Villas-Boas (2016) find that customers in the French coffee market react differently to positive and negative price changes; demand for coffee is less elastic to price increases than to price decreases. For Canada Noel (2009) concludes that gasoline prices tend to react more quickly to crude oil increase than to decreases. Borenstein et al. (1997) test and confirm that gasoline prices respond asymmetrically to increases and decreases in crude oil prices. ...
... By so doing, they "facilitate the realization of indirect network" effect. 182 For the sake of profit maximization or even profit making, platforms need to manipulate the price structure to internalize the existing network effect. Accordingly, one side, with higher price elasticity of demand which values the presence of the other side less or even nil, is charged lower or even zero, and vice versa. ...
... The second prediction is consistent with the empirical result from Eckert (2003) and Noel (2007a) that markets with large shares of small non-chain firms are more likely to exhibit price cycles. Noel (2008) introduces various extensions into the Maskin and Tirole (1988) framework, including cost shocks, capacity constraints, product differentiation, and triopoly. He finds Edgeworth cycles equilibria exist under many parameterisations of the model. ...
Reference: Petrol Price Cycles
... After that, we measured how quickly (and if) the price effects dissipate over the weeks -if consumers can benefit from increased competition only in the short-run. Based on findings of Van Meerbeeck (2003), Lewis and Noel (2011) and Hastings (2004) we also wonder how branding could impact spatial price competition. Does the fact that the incumbent is an unbranded retailer increase the price response due to the entry of new competitors? ...
