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Leslie M. Marx

Robert A. Bandeen Distinguished Professor of Business Administration
Fuqua School of Business
Box 90120, Fuqua School of Business, Durham, NC 27708-0120
A411 Fuqua Sch of Bus, Durham, NC

Selected Publications


Coordination in the Fight against Collusion

Journal Article American Economic Journal: Microeconomics · January 1, 2024 While antitrust authorities strive to detect, prosecute, and thereby deter collusive conduct, entities harmed by that conduct are also advised to pursue their own strategies to deter collusion. The implications of such delegation of deterrence have largely ... Full text Cite

Bilateral Trade with Multiunit Demand and Supply

Journal Article Management Science · February 1, 2023 We study a bilateral trade problem with multiunit demand and supply and one-dimensional private information. Each agent geometrically discounts additional units by a constant factor. We show that when goods are complements, the incentive problem-measured a ... Full text Cite

Asymptotically optimal prior-free asset market mechanisms

Journal Article Games and Economic Behavior · January 1, 2023 We develop a prior-free mechanism for an asset market that is dominant-strategy incentive compatible, ex post individually rational, constrained efficient, and asymptotically optimal—as the number of agents grows large, the designer's profit from using thi ... Full text Cite

Double Markups, Information, and Vertical Mergers

Journal Article Antitrust Bulletin · September 1, 2022 In vertical contracting models with complete information and linear prices, double markups that arise between independent firms provide an efficiency rationale for vertical mergers since these eliminate double markups (EDM). However, the double markups van ... Full text Cite

On the misuse of regressions of price on the HHI in merger review

Journal Article Journal of Antitrust Enforcement · July 1, 2022 The article explains why regressions of price on HHI should not be used in merger review. Both price and HHI are equilibrium outcomes determined by demand, supply, and the factors that drive them. Thus, a regression of price on the HHI does not recover a c ... Full text Cite

Incomplete Information Bargaining with Applications to Mergers, Investment, and Vertical Integration

Journal Article American Economic Review · February 1, 2022 We provide an incomplete information bargaining framework that captures the effects of differential bargaining power in markets with multiple buyers and multiple suppliers. The market is modeled as a mechanism that maximizes the expected weighted welfare o ... Full text Cite

To sell public or private goods.

Journal Article Review of economic design · January 2022 Traditional analysis takes the public or private nature of goods as given. However, technological advances, particularly related to digital goods such as non-fungible tokens, increasingly make rivalry a choice variable of the designer. This paper addresses ... Full text Cite

Coordinated Effects in Merger Review

Journal Article Journal of Law and Economics · November 1, 2021 Coordinated effects are merger-related harms that arise because a subset of postmerger firms modify their conduct to limit competition among themselves, particularly in ways other than explicit collusion. We provide a measure of the risk of such conduct by ... Full text Cite

Digital monopolies: Privacy protection or price regulation?

Journal Article International Journal of Industrial Organization · July 1, 2020 Increasing returns to scale in data gathering and processing give rise to a new form of monopoly, referred to here as digital monopoly. Digital monopolies create new challenges for regulators and antitrust authorities. We address two in this paper: market ... Full text Cite

Asymptotically optimal prior-free clock auctions

Journal Article Journal of Economic Theory · May 1, 2020 Clock auctions have a number of properties that make them attractive for practical purposes. They are weakly group strategy-proof, make bidding truthfully an obviously dominant strategy, and preserve trading agents' privacy. However, optimal reserve prices ... Full text Cite

A dominant-strategy asset market mechanism

Journal Article Games and Economic Behavior · March 1, 2020 Asset markets—institutions that reallocate goods among agents with heterogeneous endowments, demands, and valuations—abound in the real world but have received little attention in mechanism and market design. Assuming constant marginal, private values and ... Full text Cite

Merger review with intermediate buyer power

Journal Article International Journal of Industrial Organization · December 1, 2019 Buyer power features prominently in antitrust cases and debates, particularly as it relates to the potential for a merger among suppliers to harm a buyer. Using a Myersonian mechanism design approach, Loertscher and Marx (2019b) provide a framework for mer ... Full text Cite

Merger review for markets with buyer power

Journal Article Journal of Political Economy · December 1, 2019 We analyze the competitive effects of mergers in markets with buyer power. Using mechanism design arguments, we show that without cost synergies, mergers harm buyers, regardless of buyer power. However, buyer power mitigates the harm to a buyer from a merg ... Full text Cite

Mix-and-match divestitures and merger harm

Journal Article Japanese Economic Review · September 1, 2019 We consider the effects of a merger combined with a divestiture that mixes and matches the assets of the two pre-merger suppliers into one higher-cost and one lower-cost post-merger supplier. Such mix-and-match transactions leave the number of suppliers in ... Full text Cite

Two-sided allocation problems, decomposability, and the impossibility of efficient trade

Journal Article Journal of Economic Theory · January 1, 2019 Previous literature has shown that private information is a transaction cost that prevents efficient reallocation in two-sided setups with bilateral trade or homogeneous goods. We derive conditions under which the impossibility of efficient trade extends t ... Full text Cite

Auctions with bid credits and resale

Journal Article International Journal of Industrial Organization · November 1, 2017 Bid credits favoring subsets of bidders are routinely imposed on auctions and procurement auctions. These bid credits result in inefficient auction outcomes, which create pressure for post-auction resale or, in a procurement context, for subcontracting. We ... Full text Cite

Club good intermediaries

Journal Article International Journal of Industrial Organization · January 1, 2017 The emergence and ubiquitous presence in everyday life of digital goods such as songs, movies, and e-books give renewed salience to the problem of providing public goods with exclusion. Because digital goods are typically traded via intermediaries like iTu ... Full text Cite

A long way coming: Designing centralized markets with privately informed buyers and sellers

Journal Article Journal of Economic Literature · December 1, 2015 We discuss the economics literature relevant to the design of centralized two-sided market mechanisms for environments in which both buyers and sellers have private information. The existing literature and the history of spectrum auctions, including the in ... Full text Cite

Coordination in the Fight against Collusion

Journal Article American Economic Journal: Microeconomics · January 1, 2024 While antitrust authorities strive to detect, prosecute, and thereby deter collusive conduct, entities harmed by that conduct are also advised to pursue their own strategies to deter collusion. The implications of such delegation of deterrence have largely ... Full text Cite

Bilateral Trade with Multiunit Demand and Supply

Journal Article Management Science · February 1, 2023 We study a bilateral trade problem with multiunit demand and supply and one-dimensional private information. Each agent geometrically discounts additional units by a constant factor. We show that when goods are complements, the incentive problem-measured a ... Full text Cite

Asymptotically optimal prior-free asset market mechanisms

Journal Article Games and Economic Behavior · January 1, 2023 We develop a prior-free mechanism for an asset market that is dominant-strategy incentive compatible, ex post individually rational, constrained efficient, and asymptotically optimal—as the number of agents grows large, the designer's profit from using thi ... Full text Cite

Double Markups, Information, and Vertical Mergers

Journal Article Antitrust Bulletin · September 1, 2022 In vertical contracting models with complete information and linear prices, double markups that arise between independent firms provide an efficiency rationale for vertical mergers since these eliminate double markups (EDM). However, the double markups van ... Full text Cite

On the misuse of regressions of price on the HHI in merger review

Journal Article Journal of Antitrust Enforcement · July 1, 2022 The article explains why regressions of price on HHI should not be used in merger review. Both price and HHI are equilibrium outcomes determined by demand, supply, and the factors that drive them. Thus, a regression of price on the HHI does not recover a c ... Full text Cite

Incomplete Information Bargaining with Applications to Mergers, Investment, and Vertical Integration

Journal Article American Economic Review · February 1, 2022 We provide an incomplete information bargaining framework that captures the effects of differential bargaining power in markets with multiple buyers and multiple suppliers. The market is modeled as a mechanism that maximizes the expected weighted welfare o ... Full text Cite

To sell public or private goods.

Journal Article Review of economic design · January 2022 Traditional analysis takes the public or private nature of goods as given. However, technological advances, particularly related to digital goods such as non-fungible tokens, increasingly make rivalry a choice variable of the designer. This paper addresses ... Full text Cite

Coordinated Effects in Merger Review

Journal Article Journal of Law and Economics · November 1, 2021 Coordinated effects are merger-related harms that arise because a subset of postmerger firms modify their conduct to limit competition among themselves, particularly in ways other than explicit collusion. We provide a measure of the risk of such conduct by ... Full text Cite

Digital monopolies: Privacy protection or price regulation?

Journal Article International Journal of Industrial Organization · July 1, 2020 Increasing returns to scale in data gathering and processing give rise to a new form of monopoly, referred to here as digital monopoly. Digital monopolies create new challenges for regulators and antitrust authorities. We address two in this paper: market ... Full text Cite

Asymptotically optimal prior-free clock auctions

Journal Article Journal of Economic Theory · May 1, 2020 Clock auctions have a number of properties that make them attractive for practical purposes. They are weakly group strategy-proof, make bidding truthfully an obviously dominant strategy, and preserve trading agents' privacy. However, optimal reserve prices ... Full text Cite

A dominant-strategy asset market mechanism

Journal Article Games and Economic Behavior · March 1, 2020 Asset markets—institutions that reallocate goods among agents with heterogeneous endowments, demands, and valuations—abound in the real world but have received little attention in mechanism and market design. Assuming constant marginal, private values and ... Full text Cite

Merger review with intermediate buyer power

Journal Article International Journal of Industrial Organization · December 1, 2019 Buyer power features prominently in antitrust cases and debates, particularly as it relates to the potential for a merger among suppliers to harm a buyer. Using a Myersonian mechanism design approach, Loertscher and Marx (2019b) provide a framework for mer ... Full text Cite

Merger review for markets with buyer power

Journal Article Journal of Political Economy · December 1, 2019 We analyze the competitive effects of mergers in markets with buyer power. Using mechanism design arguments, we show that without cost synergies, mergers harm buyers, regardless of buyer power. However, buyer power mitigates the harm to a buyer from a merg ... Full text Cite

Mix-and-match divestitures and merger harm

Journal Article Japanese Economic Review · September 1, 2019 We consider the effects of a merger combined with a divestiture that mixes and matches the assets of the two pre-merger suppliers into one higher-cost and one lower-cost post-merger supplier. Such mix-and-match transactions leave the number of suppliers in ... Full text Cite

Two-sided allocation problems, decomposability, and the impossibility of efficient trade

Journal Article Journal of Economic Theory · January 1, 2019 Previous literature has shown that private information is a transaction cost that prevents efficient reallocation in two-sided setups with bilateral trade or homogeneous goods. We derive conditions under which the impossibility of efficient trade extends t ... Full text Cite

Auctions with bid credits and resale

Journal Article International Journal of Industrial Organization · November 1, 2017 Bid credits favoring subsets of bidders are routinely imposed on auctions and procurement auctions. These bid credits result in inefficient auction outcomes, which create pressure for post-auction resale or, in a procurement context, for subcontracting. We ... Full text Cite

Club good intermediaries

Journal Article International Journal of Industrial Organization · January 1, 2017 The emergence and ubiquitous presence in everyday life of digital goods such as songs, movies, and e-books give renewed salience to the problem of providing public goods with exclusion. Because digital goods are typically traded via intermediaries like iTu ... Full text Cite

A long way coming: Designing centralized markets with privately informed buyers and sellers

Journal Article Journal of Economic Literature · December 1, 2015 We discuss the economics literature relevant to the design of centralized two-sided market mechanisms for environments in which both buyers and sellers have private information. The existing literature and the history of spectrum auctions, including the in ... Full text Cite

Buyer resistance for cartel versus merger

Journal Article International Journal of Industrial Organization · January 1, 2015 Abstract Procurement practices are affected by uncertainty regarding suppliers' costs, the nature of competition among suppliers, and uncertainty regarding possible collusion among suppliers. Buyers dissatisfied with bids of incumbent suppliers can cancel ... Full text Cite

Antitrust leniency with multiproduct colluders

Journal Article American Economic Journal: Microeconomics · January 1, 2015 We use a global games approach to model alternative implementations of an antitrust leniency program as applied to multiproduct colluders. We derive several policy design lessons; e.g., we show that it is possible that linking leniency across products incr ... Full text Cite

Tacit Collusion in Oligopoly

Chapter · November 19, 2014 Merger Review: How Much of Industry Is Affected in an International Perspective? Journal of Industry, Competition and Trade 8:1–19. Easterbrook, Frank H. 1983. Antitrust and the Economics of Federalism. Journal of Law and Economics 26: ... ... Cite

An Oligopoly Model for Analyzing and Evaluating (Re)-Assignments of Spectrum Licenses

Journal Article Review of Industrial Organization · September 27, 2014 The Communications Act requires the Federal Communications Commission to assess whether proposed spectrum license transactions serve the public interest, convenience, and necessity. We review the FCC’s implementation of this component of the Act. We provid ... Full text Cite

Section 1 Compliance from an Economic Perspective

Chapter · September 9, 2014 In the wake of William E. Kovacic Liber Amicorum - An Antitrust Tribute - Volume I, this Volume II provides, in the European tradition of Liber Amicorum, 27 contributions from 37 prominent authors spanning various antitrust topics across ... ... Cite

Effects of antitrust leniency on concealment effort by colluding firms

Journal Article Journal of Antitrust Enforcement · April 1, 2014 We provide an economic analysis of the incentives created by an antitrust leniency programme, with particular attention to incentives created for effort directed at the concealment of collusion. The results point to a need for competition authorities to co ... Full text Cite

Plus factors and agreement in antitrust law

Journal Article Michigan Law Review · December 1, 2011 Plus factors are economic actions and outcomes, above and beyond parallel conduct by oligopolistic firms, that are largely inconsistent with unilateral conduct but largely consistent with explicitly coordinated action. Possible plus factors are typically e ... Cite

Cartels as Two-Stage Mechanisms: Implications for the Analysis of Dominant-Firm Conduct

Journal Article Chicago Journal of International Law · November 9, 2011 Cite

Bidder collusion at first-price auctions

Journal Article Review of Economic Design · September 1, 2011 We show that in simple environments, a bidding ring operating at a first-price sealed-bid auction cannot achieve any gains relative to non-cooperative bidding if the ring is unable to control the bids that its members submit at the auction. This contrasts ... Full text Cite

Coordinated Effects in the 2010 Horizontal Merger Guidelines

Journal Article Review of Industrial Organization · August 1, 2011 Recent research has highlighted the quantitative contribution to merger analysis from extending unilateral effects models to understand the payoffs to future potential coordinated effects. Some of the emphasis of this research appears to have made its way ... Full text Cite

The economics of contingent re-auctions

Journal Article American Economic Journal: Microeconomics · May 1, 2011 We consider an auction environment where an object can be sold with usage restrictions that generate benefits to the seller but decrease buyers' valuations. In this environment, sellers such as the FCC have used "contingent re-auctions,"offering the restri ... Full text Cite

Carbon allowance auction design: An assessment of options for the United States

Journal Article Review of Environmental Economics and Policy · January 1, 2011 Carbon allowance auctions are a component of existing and proposed regional cap-and-trade programs in the United States and are also included in recent proposed bills in the U.S. Congress that would establish a national cap-and-trade program to regulate gr ... Full text Cite

Break-up fees and bargaining power in sequential contracting

Journal Article International Journal of Industrial Organization · September 1, 2010 When a buyer negotiates in sequence with two potential sellers of a good, the outcome of each negotiation depends on all three players' bargaining powers. Assuming all parties are symmetrically informed, we find that the first seller's payoff is increasing ... Full text Cite

Slotting allowances and scarce shelf space

Journal Article Journal of Economics and Management Strategy · September 1, 2010 Slotting allowances are payments made by manufacturers to obtain retail shelf space. They are widespread in the grocery industry and a concern to antitrust authorities. A popular view is that slotting allowances arise because there are more products than r ... Full text Cite

Individual accountability in teams

Journal Article Journal of Economic Behavior and Organization · October 1, 2009 We consider a model of team production in which the principal observes only the team output, but agents can monitor one another (at a cost) and provide reports to the principal. We consider the problem faced by a principal who is prevented from penalizing ... Full text Cite

The 'Google effect' in the FCC's 700 MHz auction

Journal Article Information Economics and Policy · June 1, 2009 We describe and interpret bidding behavior in FCC Auction 73 for the C-block licenses. These licenses were initially offered subject to an open platform restriction, which was highly valued by firms such as Google. Google entered bids until its bids reache ... Full text Cite

The vulnerability of auctions to bidder collusion

Journal Article Quarterly Journal of Economics · May 1, 2009 Previous work has addressed the relative vulnerability of different auction schemes to collusive bidding. The common wisdom is that ascending-bid and second-price auctions are highly susceptible to collusion. We show that the details of ascending-bid and s ... Full text Cite

Quantitative analysis of coordinated effects

Journal Article Antitrust Law Journal · January 1, 2009 Cite

Cartel price announcements: The vitamins industry

Journal Article International Journal of Industrial Organization · May 1, 2008 The primary manufacturers of vitamins admitted to participating in international market-share-agreement cartels for several years during the 1990s. Their announced price increases appeared in leading trade journals. We show that price announcements during ... Full text Cite

Rent shifting and the order of negotiations

Journal Article International Journal of Industrial Organization · October 1, 2007 When two sellers negotiate terms of trade with a common buyer, the order in which the negotiations occur can affect the buyer's payoff. This suggests that the buyer may have preferences over which seller to negotiate with first. We find that when the effic ... Full text Cite

Economics at the federal communications commission: 2006-2007

Journal Article Review of Industrial Organization · September 1, 2007 This article focuses on media ownership and spectrum auction design. These two issues have not only been particularly important at the Federal Communications Commission (FCC) over the last year, but also are being informed by economic analysis either compl ... Full text Cite

Bidder collusion

Journal Article Journal of Economic Theory · March 1, 2007 We analyze bidder collusion at first-price and second-price auctions. Our focus is on less than all-inclusive cartels and collusive mechanisms that do not rely on auction outcomes. We show that cartels that cannot control the bids of their members can elim ... Full text Cite

Lessons for competition policy from the vitamins cartel

Journal Article Contributions to Economic Analysis · January 1, 2007 Mergers have the potential for negative social welfare consequences from increased likelihood or effectiveness of future collusion. This raises the question of whether there are meaningful thresholds for the post-merger industry that should trigger signifi ... Full text Cite

Upfront payments and exclusion in downstream markets

Journal Article RAND Journal of Economics · January 1, 2007 Although upfront payments are often observed in contracts between manufacturers and retailers, little is known about their competitive effects or the role retailers play in securing them. In this article, we consider a model in which two competing retailer ... Full text Cite

Economics at the Federal Communications Commission

Journal Article Review of Industrial Organization · 2006 This article reviews several issues confronted by the Federal Communications Commission (FCC) over the past year and discusses some of the economic analysis employed by the FCC in examining these issues. The article also identifies areas in which future ac ... Full text Cite

Inefficiency of Collusion at English Auctions

Journal Article The B.E. Journal of Theoretical Economics · June 2005 In its attempts to deter and prosecute big rigging, U.S. antitrust authorities have focused on sealed-bid procurements, rather than on ascending-bid auctions. One possible justification for this focus is the idea, supported by the existing theoretical lite ... Cite

Inefficiency of collusion at english auctions

Journal Article Contributions to Theoretical Economics · January 1, 2005 In its attempts to deter and prosecute big rigging, U.S. antitrust authorities have focused on sealed-bid procurements, rather than on ascending-bid auctions. One possible justification for this focus is the idea, supported by the existing theoretical lite ... Full text Cite

Opportunism and menus of two-part tariffs

Journal Article International Journal of Industrial Organization · December 1, 2004 We show that a menu of two-part tariffs can solve the opportunism problem identified by McAfee and Schwartz (1994) [McAfee, R.P., Schwartz, M., 1994. Opportunism in multilateral vertical contracting: nondiscrimination, exclusivity, and uniformity. American ... Full text Cite

The joint determination of leverage and maturity

Journal Article Journal of Corporate Finance · January 1, 2003 We examine theories of leverage and debt maturity, focusing on the impact of firms' investment opportunity sets and regulatory environments in determining these policies. Using results on strategic complementarities, we identify sufficient conditions for t ... Full text Cite

Insurer Ownership Structure and Executive Compensation as Complements

Journal Article Journal of Risk and Insurance · January 1, 2001 The authors apply results on complementarities to theories of insurance companies' choices of ownership structure and executive compensation. They identify minimal restrictions on the interaction between firm policies and exogenous characteristics for theo ... Full text Cite

Adverse specialization

Journal Article Journal of Political Economy · January 1, 2001 We analyze a multiple-activity, principal-agent model in which the activities are naturally substitutable for the agent and complementary for the principal. A basic result is that the optimal compensation must cause the agent to view the activities as comp ... Full text Cite

Dynamic Voluntary Contribution to a Public Project

Journal Article The Review of Economic Studies · April 2000 Cite

Process variation as a determinant of bank performance: Evidence from the retail banking study

Journal Article Management Science · January 1, 1999 This paper explores the relation between retail banks' branch-based processes and financial performance. There are 11 processes included in this study, which represent the bulk of the activities performed in a typical retail branch (e.g., opening checking ... Full text Cite

Predatory accommodation: Below-cost pricing without exclusion in intermediate goods markets

Journal Article RAND Journal of Economics · January 1, 1999 We show that below-cost pricing can arise in intermediate goods markets when a monopolist retailer negotiates sequentially with two suppliers of substitute products. Below-cost pricing by one supplier allows the retailer to extract rents from the second su ... Full text Cite

Adaptive Learning and Iterated Weak Dominance

Journal Article Games and Economic Behavior · January 1, 1999 This article addresses the idea that rational players should not play iteratively weakly dominated strategies by showing that when a particular type of adaptive learning process converges, then players must have learned to play strategy profiles equivalent ... Full text Cite

Payments for order flow on Nasdaq

Journal Article Journal of Finance · January 1, 1999 We present a model of Nasdaq that includes the two ways in which marketmakers compete for order flow: quotes and direct payments. Brokers in our model can execute small trades through a computerized system, preferencing arrangements with marketmakers, or v ... Full text Cite

Odd-eighth avoidance as a defense against SOES bandits

Journal Article Journal of Financial Economics · January 1, 1999 We model the behavior of Nasdaq momentum traders, also known as SOES bandits. We show, all things being equal, that the profitability of SOES bandits decreases in the bid-ask spread, but increases in the effective tick size. The patterns we observe in the ... Full text Cite

The effects of transaction costs on stock prices and trading volume

Journal Article Journal of Financial Intermediation · January 1, 1998 We study the effects of changes in bid-ask spreads on the prices and trading volumes of stocks that move from Nasdaq to the NYSE or Amex and stocks that move from Amex to Nasdaq. When stocks move from Nasdaq to an exchange, their spreads typically decrease ... Full text Cite

Efficient venture capital financing combining debt and equity

Journal Article Review of Economic Design · January 1, 1998 I present a model of venture capital contracting in which contracts that involve a mixture of both debt and equity are efficient and dominate pure-equity and pure-debt financing. The optimal contract balances the venture capitalist's incentive to intervene ... Full text Cite

Order independence for iterated weak dominance

Journal Article Games and Economic Behavior · February 1, 1997 In general, the result of the elimination of weakly dominated strategies depends on order. We define nice weak dominance. Under nice weak dominance, order does not matter. We identify an important class of games under which nice weak dominance and weak dom ... Full text Cite

Nasdaq market structure and spread patterns

Journal Article Journal of Financial Economics · January 1, 1997 Because of its institutional features, the Nasdaq market does not fit the standard competitive model. We construct a model that reflects the distinguishing characteristics of the Nasdaq market. This model implies that in dealer markets with a minimum price ... Full text Cite