EconWorks Podcast
Industrial organization insights on antitrust, digital platforms, and competition in ecosystem markets. blog.econworks.com
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SpaceX + Tesla: Would a Merger Harm Competition?
<p>What would really change if Tesla and SpaceX merge?</p><p>Rockets, vehicles, connectivity, energy storage, and AI. That sounds consequential. But the size and the technological reach are not evidence that the merger would harm competition.</p><p>In this episode of EconWorks we look at possible worries about blocking rivals, bundling products, and killing future competition—and why those theories don’t seem to have much support right now. We also discuss how common ownership might improve engineering, coordinate investment, and reduce costs.</p><p>The key question: What difference would ownership make that the companies cannot achi...
The Biggest Cartels You've Never Heard Of | Can AI Stop Them?
<p>How can a cartel survive for years when its customers are sophisticated firms with large buying power? Episode 8 of How Cartels Really Work looks at two big cases in history: automobile parts cartels and the international vitamins cartel. Both were suppliers selling to large businesses with professional purchasing departments. But some of these illegal deals lasted for a decade or more. Why didn't their customers see the cartels? Let's start with Costco's buying practices. Costco’s buyers look at the underlying costs when suppliers want to raise their prices and push back on any increases that don’t seem just...
When Is a Discount a Wall?
<p>A discount is usually the shape of competition. But can the structure of a discount render the purchase of a cheaper rival more expensive?</p><p>This episode starts with a classic pricing problem in FTC v. Syngenta & Corteva. A company may charge more for units with high willingness to pay and less for additional units. It can be done through quantity discounts or nonlinear pricing. There is nothing wrong with that per se.</p><p>The puzzle starts when the rebate depends on the customer’s proportion of purchases from the seller, rather than just the total amount bo...
Why Cartels Collapse—and Why AI May Change That
<p>Cartels are unstable by nature. Members cheat, managers change, companies are sold, and participants can get away with less punishment by reporting the cartel before everybody else.</p><p>When AI encounters that familiar process, what happens next? Join us for episode 7. We start with the European MCAA cartel. Clariant acquired Hoechst’s chemicals business in 1997; the cartel continued for a while, and Clariant later discovered the conduct and reported it to the European Commission. The announcement triggered an investigation by the Commission. That history reveals a new source of cartel instability that has been overlooked: the firms may re...
When Is a Discount a Wall? | FTC v. Syngenta & Corteva
<p>Discounts always feel like competition. Lower prices should help the customer and make rivals respond. But what if a big rebate is contingent not just on how much a customer buys from a company but on how little it buys from its competitors? </p><p>In this episode of EconWorks, we examine the economics of loyalty discounts through FTC v. Syngenta & Corteva. Let’s start from the perspective of a pricing specialist. Quantity discounts and nonlinear pricing are perfectly normal responses to differences in willingness to pay. </p><p>The problem is not price discrimination per se. Then a ge...
Why Cartels Collapse—and Why AI May Change That | Cartels Episode 7
<p>Why do cartels fall apart? The normal answer is cheat. A cartel member secretly cuts prices, another firm ratifies the deal, or someone runs to the authorities for leniency. But there’s another source of instability: organizations evolve. </p><p>In Episode 7 of *How Cartels Really Work* we examine the European MCAA cartel and Clariant’s takeover of Hoechst’s chemical business. The cartel survived the change of ownership for some time, but Clariant later uncovered the conduct through its compliance efforts and sought leniency, which sparked the European Commission’s investigation. And then, what if the same story has arti...
Why Is Everyone Moving Across the AI Stack?
<p>Why are AI companies moving across the stack?</p><p>Nvidia is moving toward developer platforms through Hugging Face.</p><p>AMD is moving toward model development through World Labs.</p><p>Cursor is moving upstream from the application layer toward the models and computation.</p><p>These moves all look like vertical integration, but the underlying economics may be entirely unique.</p><p>Nvidia may be trying to expand demand for compute. AMD may be trying to become a stronger competitor. Cursor may be trying to improve the application by controlling more of the technology underneath it.</p><...
Can AI Raise Prices Without Colluding?
<p>Suppose every business provides its AI with the same instruction: maximize our long-run profits, but obey the law.</p><p>The AI estimates demand, studies customer behavior, learns how competitors respond, and gradually discovers that some forms of aggressive competition are not very profitable.</p><p>A price cut may trigger another price cut. A promotion may trigger a competing promotion. Attempts to steal customers may provoke retaliation.</p><p>Eventually, each firm’s AI may independently decide to compete less aggressively.</p><p>But there is no agreement. The AIs never communicate. Nobody fixes a price.</p><p>In...
Why Is Everyone Moving Across the AI Stack?
<p>In this episode of EconWorks, we look at why some of the biggest AI companies are jumping across different layers of the AI stack. Nvidia transitions from compute to developer platforms via Hugging Face. World Labs is the pivot from compute to model development for AMD. Cursor sits near the application layer and flows upstream toward models and compute. All three moves look like vertical integration at first glance. But the economic logic is different in each of these cases. Nvidia may be trying to build demand for AI compute. Maybe AMD is trying to obtain better hardware, software...
What Happens When Every Firm Gets Better at Maximizing Profit?
<p>What if every business told an AI one simple thing: **maximize long-term profit without breaking the law**?</p><p>A company today needs economists, salespeople, marketers, lawyers, finance departments, and managers. They have different information, different incentives, and often conflicting advice.</p><p>AI could well embed a lot of those functions into a much more disciplined profit-maximizing system. The result raises an odd antitrust issue. An artificial intelligence can learn that aggressive price cuts tend to trigger competitive responses. It may discover that promotions, expansions of capacity, or efforts to lure away customers provoke retaliation. It may therefore...
