Browsing by Author "Fabra, Natalia"

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    Product Lines and Price Discrimination in Markets with Information Frictions
    (2022) Fabra, Natalia; Montero, Juan-Pablo
    A well-known principle in economics is that firms differentiate their product offerings in order to relax competition. However, in this paper we show that information frictions can invalidate this principle. We build a duopolistic competition model of seconddegree price discrimination with information frictions in which (i) an equilibrium always exists with overlapping product qualities, whereas (ii) an equilibrium with nonoverlapping product qualities exists only if both information frictions and the cost of providing high quality are sufficiently small. As a consequence, reasons other than an attempt to soften competition should explain why firms in some cases carry nonoverlapping product lines.
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    Technology-Neutral Versus Technology-Specific Procurement
    (2023) Fabra, Natalia; Montero, Juan-Pablo
    An imperfectly informed regulator needs to procure multiple units of some good (e.g., green energy, market liquidity, pollution reduction, land conservation) that can be produced with heterogeneous technologies at various costs. How should she optimally procure these units? Should she run technology-specific or technology-neutral auctions? Should she allow for partial separation across technologies? Should she instead post separate prices for each technology? What are the trade-offs involved? We find that one size does not fit all: the preferred instrument depends on the costs of the available technologies, their degree of substitutability, the extent of information asymmetry and the costs of public funds. We illustrate the use of our theory for policy analysis with an ex ante evaluation of Spain's recent renewable auction.