employers recruitment behaviour and vacancy duration an empirical analysis for the dutch labour market the functioning of labour markets from a demand side perspective is examined in particular the determinants of vacancy duration are studied in the context of a model of employers search behaviour a model for the choice of the recruitment strategy at the start of the search process and the corresponding recruitment duration is developed in which allowance is made for different patterns of duration dependence for each recruitment strategy this model is applied to data on employers search behaviour in the dutch labour market it is found that employers prefer advertisements as the first recruitment channel when applicants are required to have work experience moreover employers prefer to start searching via the labour exchange office when jobs in the secondary segment of the labour market have to be filled it is also found that when advertisements are used as the first recruitment strategy employers need some time to acquire a pool of applicants and to select candidates from this pool it is inte

the impact of unemployment insurance on job search evidence from google search data job search is a key choice variable in theories of labor markets but is difficult to measure directly we develop a job search activity index based on google search data the google job search index gjsi we validate the gjsi with both survey and web based measures of job search unlike those measures the gjsi is high frequency geographically precise and available in real time we demonstrate the gjsi s utility by using it to study the effects of unemployment insurance policy changes between 2008 and 2014 we find no evidence of an economically meaningful effect of these changes on aggregate search

on the optimal spacing of currency denominations abstract existing theoretical evidence on optimal currency spacing is fragmentary and to some extent contradictory this note brings together the pieces and tries to solve the puzzle it shows that if the spacing of denominations is uniform then the average number of notes and coins exchanged in a transaction can be minimized by spacing denominations apart by a factor of two even when allowing for overpayment and the return of change

modeling regional economic dynamics spatial dependence spatial heterogeneity and nonlinearities abstract spatial modeling of economic phenomena requires the adoption of complex econometric tools which allow us to deal with important methodological issues such as spatial dependence spatial unobserved heterogeneity and nonlinearities in this paper we describe some recently developed econometric approaches i e spatial autoregressive semiparametric geoadditive models which address the three issues simultaneously we also illustrate the relative performance of these methods with an application to the case of house prices in the lucas county

social networks and new product choice to successfully market new products in a social network it is essential to identify influential individuals whose product recommendations influence the consumption choices of their peers in this study we use spatial econometric methods to determine how individuals revise their preferences for product attributes when exposed to product recommendations from peers and how different individuals who vary in their degree of network connectedness exert influence on the product choices of others we find evidence that consumers look to others for guidance from peers in their preference for subjective taste specific parameters but tend not to respond to peer price choices our spatial methods allow us to empirically determine the influence exerted by individual members on the consumption choices of other members of the social network we find that connected members of the social network are not always the most influential in revising the consumption choices of others our estimates reveal that network proximity explains only 8 8 of influence

the effects of changes of the job offer arrival rate on the duration of unemployment generally it is acknowledged that changing the job offer arrival rate has two opposite effects on unemployment duration for a basic job search model sufficient conditions on the wage offer distribution have been derived ensuring that one of the effects dominates however these are not satisfied for the popular families of wage offer distributions here i show that the conditions can be weakened at virtually no cost the set of distributions satisfying the new conditions is considerably larger than the set previously established in particular it includes all wage offer distribution families that are popular in structural empirical research

estimating markups and market conduct with multidimensional product attributes we demonstrate how to estimate a model of oligopoly pricing when products are multi dimensionally differentiated we provide an empirical counterpart to recent theoretical work on product differentiation using specifications informed by economic theory we estimate price cost margins for products differentiated in many dimensions

exchange rates and cash flows in differentiated product industries a simulation approach how do exchange rate changes impact firms cash flows we extend a simulation method developed in industrial organization to answer this question we use prices quantities and product characteristics for differentiated products coupled with a discrete choice framework and an assumption of price competition to estimate marginal costs for all producers using a monte carlo approach we generate counterfactual prices and profits for different levels of exchange rates we illustrate the method using the market for bottled water our results stress that even in a relatively simple market such as this one different brands face very different exchange rate risks consider a firm that produces a good in france using mainly local inputs and sells it abroad in locations that have a floating exchange rate vis a vis the euro profits and in turn the value of the firm are potentially exposed to exchange rate changes if the euro appreciates profits when measured in euros are likely to decrease how large is the decrease in profits similarly what is the impact of such an exchange rate change on the profits of an import competing firm these are the questions that a large literature on exchange rate exposure attempts to answer

wage posting evidence from job ads recent studies of search theory examine how employers use a wage setting mechanism either by bargaining or through the posting of a non negotiable wage offer in a job ad to facilitate search we contribute to this literature by examining wage posting in job ads in the us the uk and slovenia despite considerable differences in the incidence of wage posting employers in all three markets are less likely to post a wage offer when searching for skilled workers the decision on whether or not to post a wage offer is only weakly related to the outcomes of employers search des etudes recentes de la theorie de la recherche d employes examinent comment les employeurs utilisent le mecanisme de determination des salaires soit par marchandage soit en mentionnant une offre de salaire non negociable dans l annonce de l offre d emploi pour faciliter le processus de recherche on examine les salaires mentionnes dans les annonces d offre d emplois aux etats unis au royaume uni et en slovenie malgre des differences considerables dans l incidence de l annonce du salaire les employeurs dans ces trois marches sont moins susceptibles d annoncer un salaire quand ils cherchent des travailleurs qualifies la decision d annoncer un salaire ou non est seulement faiblement reliee aux resultats de la recherche des employeurs

an empirical analysis of euro cash payments abstract if the denominational structure of the euro is used in an optimal way there should be no preferences for certain coins and notes when making cash payments in kippers et al 2003 an empirical study of cash payments statistica neerlandica 57 484 508 it is documented that the dutch public did have certain preferences concerning the dutch guilder in the sense that a few notes and coins were used less often than they should have been with the advent of the euro which changed the denominational structure from 1 2 1 2 5 guilder to 1 2 5 euro it is of interest to examine whether there are any preferences for euro coins and notes in this paper we use a unique dataset for the netherlands to empirically examine if the euro range is used in an optimal way we find that there are no preferences for certain euro denominations

successful employer search an empirical analysis of vacancy duration using micro data this paper provides the first estimates of the determinants of the duration of employer search in the uk we model duration until a vacancy is either successfully filled or withdrawn from the market the econometric techniques deal with multiple vacancies and unobserved heterogeneity dependent risks using flexible and parametric baseline hazards the hazards to filling and withdrawing exhibit negative and positive duration dependence respectively implying that the conditional probability of successful employer search decreases with duration we also find that nonmanual vacancies are less likely to fill consistent with there being skill shortages in the sample period

privatizing the mint during the 1 970s and 1 980s interest in the concept of privatization increased among both economists and policymakers numerous studies have suggested that production in the private sector is significantly more efficient than production in the government sector l following the publication of hayek s 1976 seminal work on the denationalization of money a number of proposals for allowing private currency issue have been advanced 2 the free banking literature however has generally focused on the implications of free banking for the financial system or its impact on the conduct of monetary policy this paper will examine a system in which the production and issue of currency both coins and notes is transferred to the private sector while monetary policy is conducted solely by the monetary authority 3 it will be shown that the potential benefits from privatization would exceed the gain in productive efficiency that might be expected from the production cost savings private firms could achieve the general accounting office gao 1990 has estimated that replacing the dollar bill with a dollar coin would save the federal government an average of 318 million per year over thirty years surprisingly savings in production costs accounted for only 41 4 million of this total most of the estimated savings would result from fact that demand for a dollar coin would exceed the demand for the dollar bill by an amount sufficient to increase seigniorage by 284 million per year

beer and the tie did divestiture of brewer owned public houses lead to higher beer prices in 1989 the united kingdom monopolies and mergers commission mmc recommended measures that eventually led brewers to divest themselves of 14 000 public houses the mmc claimed that their recommendations would lower retail prices and increase consumer choice since that time however retail prices have risen this paper contains an econometric analysis of the transition period the analysis is based on a model of the relationship between retail price and retail organisational form that emphasises how exclusive dealing clauses and strategic factors interact in 1989 in an important decision the united kingdom monopolies and mergers commission mmc recommended measures that eventually led brewers to divest themselves of 14 000 public houses the mmc claimed that their recommendations would lower retail prices and increase consumer choice there is considerable doubt however that their objectives were achieved indeed since the time that the recommendations were implemented retail prices have risen it is not clear however if prices would have increased in the absence of divestiture one goal of my research is to provide an answer to this question the mmc s recommendations created an exceptional opportunity to assess the effects that different contractual arrangements have on retail prices indeed one would like to investigate this relationship ceteris paribus unfortunately however the choice of vertical market structure is normally endogenous and it is impossible to condition on all of the factors that affect the contracting decision in the uk beer industry in contrast the government ordered changes in the type and terms of the contracts under which national brewers could operate their licensed premises increased separation between brewer and publican therefore was not due to changes in economic conditions moreover some premises the free houses that were not owned by a brewer were not affected by the beer orders the existence of a control group facilitates the analysis by strengthening the conclusions that one can draw in recent years economists have moved away from simple theories of vertical

rivalry in price and location by differentiated product manufacturers in this article we estimate a model of strategic rivalry between food manufacturers in product design and pricing we derive a spatial structural model in which food manufacturers jointly select prices and the optimal attribute composition of their product lines we find that manufacturers have an incentive to locate yogurt products nearby others in attribute space and that products with the most similar attribute compositions enjoy the widest price cost margins our findings explain the observation that most consumer package goods tend to be very similar yet manufacturers appear to earn above normal profits copyright 2013 oxford university press

spatial differentiation and vertical mergers in retail markets for gasoline this paper studies an empirical model of spatial competition applied to gasoline markets the main feature is to specify commuting paths as the locations of consumers in a hotelling style model as a result spatial differentiation depends in an intuitive way on the structure of the road network and the direction of traffic flows the model is estimated using panel data on the quebec city gasoline market and used to evaluate the consequences of a recent vertical merger difference in difference and counterfactual simulation methods are compared and the results to a large extent validate the assumptions of the demand model jel g34 l13 l42 l81 q41 r41

market power and joint dominance in u k brewing market power and joint dominance are examined in u k brewing i assess unilateral and coordinated effects where the latter is equated with joint dominance and show how one can distinguish between the two econometrically the application makes use of two demand equations the nested logit of mcfadden 1978a and the distance metric of pinkse slade and brett 2002 the two equations yield very different predictions concerning elasticities and markups nevertheless although there is evidence of market power using either demand model that power is due entirely to unilateral effects in other words neither model uncovers evidence of coordinated effects tacit collusion

employer search training and vacancy duration we develop a model of optimal employer search strategy when information about match quality is endogenous the model is tested using four data sets two of which have not previously been used as theory predicts we find that when filling positions requiring more training employers search more intensively and extensively employers also search more extensively when hiring workers with more education and with prior experience these findings provide strong evidence of systematic variation in search strategies based on the characteristics of the positions and job applicants factors that influence employer search also affect the duration of a vacancy

toward a theory of vacancies we attempt to further characterize the search strategies of the employer in the article we discuss how characteristics of the employer or conditions that the employer faces affect the optimal search strategies and the probability of filling a vacancy in each period semiparametric and parametric methods are used to estimate hazard rates of filling vacancies the results suggest that for the given sample of vacancies the general form of the hazard function is nonmonotonic additionally the results suggest that those employers who have advance notice of the vacancy may search longer than those employers who do not

marketplaces and matching this paper models equilibrium trading patterns when marketplaces exist and goods are differentiated when first visiting the market a buyer samples a stock of goods if fortunate the buyer matches with and purchases one of these goods and then exits the market if an initial match does not exist the buyer can now only match with the flow of new goods for sale the previous stock has been sampled and rejected in a steady state the current stock of unmatched traders on one side of the market is trying to match with the flow of new traders on the other side it is shown that this market behaviour describes matching patterns between unemployed job seekers and vacancies in uk job centres

mergers with differentiated products the case of the ready to eat cereal industry traditional merger analysis is difficult to implement when evaluating mergers in industries with differentiated products i discuss an alternative which consists of demand estimation and the use of a model of postmerger conduct to simulate the competitive effects of a merger i estimate a brand level demand system for ready to eat cereal using supermarket scanner data and use the estimates to 1 recover marginal costs 2 simulate postmerger price equilibria and 3 compute welfare effects under a variety of assumptions the methodology is applied to five mergers two of which occurred and for which i compare predicted to actual outcomes

number of sellers average prices and price dispersion abstract a variety of models provide differing predictions regarding the effect of an increase in the number of competitors in a market seller density on prices and price dispersion we review different approaches to generating equilibrium price dispersion and then empirically estimate the relationship between seller density average product price and price dispersion in the retail gasoline industry using four unique gasoline price data sets controlling for station level characteristics we find that an increase in station density consistently decreases both price levels and price dispersion across four geographical areas

dynamic pricing in retail gasoline markets supergame models of tacit collusion show that supportable price cost margins increase with expected future collusive profits ceteris paribus as a result collusive margins will be larger when demand is expected to increase or marginal costs are expected to decline using panel data on sales volume and gasoline prices in 43 cities over 72 months we find behavior consistent with tacit collusion in retail gasoline markets controlling for current demand and cost current margins increase with expected next month demand and decrease with expected next month cost the results are not consistent with intertemporal l inkages due to inventory behavior or customer loyalty

divestiture requirements as a tool for competition policy a case from the swedish beer market we investigate the effect of divestitures on prices and welfare following the carlsberg pripps merger in the swedish beer market both difference in difference estimation and simulations using a random coefficients logit model suggest that divestitures are important for dampening price increases prices of divested brands fall by around 3 and the predicted price increase for carlsberg falls from 3 to 1 6 as a result of the divestitures to guide practice on divestitures we investigate the role of the recipient and the number and characteristics of the divested products by simulating post merger outcomes for all relevant cases we find that in this setting with large multiproduct firms the competition authority s most effective means to dampen adverse post merger outcomes are to aim for a small recipient firm and attain a large number of divested products enforcing larger divestitures in terms of market share and raising the average cross price elasticity between the merging parties divested and retained products strengthen the dampening effect further

price competition in u s brewing this study utilizes a brand level dataset that captures a unique natural experiment a 100 increase in the excise tax to evaluate different pricing models in the u s beer industry to assess the plausibility of different models the increase in marginal cost resulting from the tax increase is exploited observed prices in the post increase period are compared to the prices that should be observed under various pricing models three types of models are analyzed bertrand nash leadership and collusion results indicate that extreme cases of collusion can be confidently ruled out while several models may explain the observed prices equally well

measuring market power in the ready to eat cereal industry the ready to eat cereal industry is characterized by high concentration high price cost margins large advertising to sales ratios and numerous introductions of new products previous researchers have concluded that the ready to eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense nonprice competition this paper empirically examines this conclusion in particular i estimate price cost margins but more importantly i am able empirically to separate these margins into three sources i that which is due to product differentiation ii that which is due to multi product firm pricing and iii that due to potential price collusion the results suggest that given the demand for different brands of cereal the first two effects explain most of the observed price cost margins i conclude that prices in the industry are consistent with noncollusive pricing behavior despite the high price cost margins leading firms are able to maintain a portfolio of differentiated products and influence the perceived product quality it is these two factors that lead to high price cost margins

monopolistic competition and preference diversity approach our model is especially attractive because it starts from economic primitives a specification of the set of possible individual preference patterns it shows how specific properties of the distribution of preferences translate into properties of aggregate demand this allows us to understand the relationship between the distribution of preferences and the degree to which the market introduces biases in product selection this paper presents a general model of the demand for differentiated products which has as special cases two of the most popular approaches used to analyse welfare and competition in monopolistically competitive markets the model of spatial competition on the circle and the model of symmetric aggregate demand the circle model is attractive because both demand and costs have a definite and easy to visualize physical foundation and because it is tractable salop 1979 provides an exemplary modem analysis with this model one can analyze the relationship between the optimal amount of product variety and the amount which a monopolistically competitive market will support in many plausible cases competition produces too much variety such a strong conclusion raises questions of robustness almost simultaneously spence 1976 and dixit and stiglitz 1977 developed an alternative approach to monopolistic competition based upon the chamberlinian assumption of symmetry see also shubik 1959 rather than specifying a distribution of preferences and deriving demand through aggregation as did salop and his predecessors these authors started by specifying a symmetric aggregate benefit function indicating how social welfare depends on the amounts of the various products supplied both spence and dixit stiglitz were able to show that the welfare conclusions from the circle model were not robust depending on the functional form of the benefit function equilibrium may entail either excessive or insufficient product variety 1 the assumption of symmetric demand has proven fruitful in the analysis of many economic problems it is therefore natural to ask what distribution of tastes would give

mergers brand competition and the price of a pint abstract mergers in the uk brewing industry have reduced the number of national brewers from six to four the number of brands in contrast has remained relatively constant we analyze the effects of mergers on brand competition and pricing brand level demand equations are estimated from a panel of draft beers to model brand substitution possibilities we estimate the matrix of cross price elasticities semiparametrically our structural model is used to assess the strength of brand competition along various dimensions and to evaluate the mergers in particular we compute equilibria of pricing games with different numbers of players

vacancy durations a model for employer s search this paper investigates a dutch data set on vacancy durations and numbers of applicants to enquire employers search strategies a nonsequential search process assumes that most vacancies are filled from a pool of applicants which is formed shortly after the posting of the vacancy the time spent on recruiting applicants and the duration of the selection process are estimated with a proportional hazard model via the arrival and attrition rates of applicants

tiered co payments pricing and demand in reference price markets for pharmaceuticals health insurance companies curb price insensitive behavior and the moral hazard of insureds by means of cost sharing such as tiered co payments or reference pricing in drug markets this paper evaluates the effect of price limits below which drugs are exempt from co payments on prices and on demand first using a difference in differences estimation strategy we find that the new policy decreases prices by 5 percent for generics and increases prices by 4 percent for brand name drugs in the german reference price market second estimating a nested logit demand model we show that consumers appreciate co payment exempt drugs and calculate lower price elasticities for brand name drugs than for generics this explains the different price responses of brand name and generic drugs and shows that price related co payment tiers are an effective tool to steer demand to low priced drugs

demand for differentiated products price and advertising evidence from the u s beer market abstract this paper employs a nation wide sample of supermarket scanner data to estimate a large brand level demand system for beer in the u s using the distance metric method of pinkse slade and brett pinkse j slade m brett c 2002 spatial price competition a semiparametric approach econometrica 70 1111 1155 unlike previous studies this work estimates the own and cross advertising elasticities in addition to price elasticities positive and negative cross advertising elasticities imply the presence of both cooperative and predatory effects of advertising expenditures across brands however the former effect appears to dominate suggesting that advertising increases the overall demand for beer we discuss the implications of these results in this industry

search behaviour transitions to non participation and the duration of unemployment using longitudinal micro data on unemployed individuals for 1983 85 a structural job search model is estimated the model allows for transitions from unemployment to nonparticipation an extended version of the model deals with the influence of on the job search and prospective wage increases on search behavior of the unemployed the empirical results show that the probability of accepting a job offer is almost one for most unemployed individuals a large portion of unemployment spells ends in a transition out of the labor force the effects of changes in benefits on duration appear to be extremely small copyright 1990 by royal economic society

quantifying the coordinated effects of partial horizontal acquisitions abstract recent years have witnessed an increased interest by competition agencies in assessing the competitive effects of partial acquisitions we propose an empirical structural methodology which can deal with settings involving all types of owners and ownership rights to quantify the coordinated effects of partial horizontal acquisitions on differentiated products industries by evaluating the impact of such acquisitions on the minimum discount factors for which coordination can be sustained we also provide an empirical application of the methodology to several acquisitions in the wet shaving industry that give rise to cross and common ownership structures the results are as follows i the incentives to coordinate of the firms that the acquiring party is pre acquisition able to influence are non decreasing with any acquisition ii the incentives to coordinate of the acquired firm are non decreasing with acquisitions involving full or partial both financial and corporate control rights but non increasing with acquisitions involving full or partial solely financial rights and iii the incentives to coordinate of the remaining firms in the industry are non increasing with any acquisition this implies that the coordinated effects of partial horizontal acquisitions are in general ambiguous which illustrates the importance of an empirical structural methodology

a spatial merger estimator with an application to school district consolidation abstract this paper develops a spatial merger estimator to explain political integration generally and then applies this method to a wave of school district mergers in the state of iowa during the 1990s our estimator is rooted in the economics of matching and thus accounts for three important features of typical merger protocol two sided decision making multiple potential partners and spatial interdependence rather than simply explaining when a particular region is likely to experience a wave of political integration our method allows us to explore the factors driving which specific subregional mergers take place this allows us to explore how those districts that merge choose with which of their neighbors to do so our results highlight the importance of state financial incentives for consolidation economies of scale diseconomies of scale and a variety of heterogeneity measures in this particular application we also demonstrate the power of our estimator relative to existing estimators to detect a statistically significant role for heterogeneity factors while our application is limited to school district consolidation our method can be adapted to include the salient features of many spatial integration problems

competition and collusion in the american automobile industry the 1955 price war movements in total quantity and in quality adjusted price suggest a supply side shock in the american automobile market in 1955 this paper tests the hypothesis that the shock was a transitory change in industry conduct a price war the key ingredients of the test are alternative equilibrium models of oligopoly under product differentiation in nonnested cox tests of hypotheses a collusive solution is sustained in 1954 and in 1956 while a competitive solution holds in 1955 the result does not appear to be an artifact since it is robust in tests against alternative specifications copyright 1987 by blackwell publishing ltd

measuring unilateral effects in partial horizontal acquisitions recent years have witnessed an increased interest by competition agencies in assessing the competitive effects of partial acquisitions we propose an empirical structural methodology to examine quantitatively the unilateral impact of partial horizontal acquisitions the acquisitions may be direct or indirect and may or may not correspond to control the proposed methodology simulates the effects on prices market shares firm profits and consumer welfare it can deal with differentiated product industries and nest full mergers as a special case we provide an empirical application to several acquisitions in the wet shaving industry

exogeneity tests of market boundaries applied to petroleum products us antitrust law makes market definition and the calculation of marketshare statistics an integral part of the determination of the anticompetitive impact of a merger because markets frequently overlap however market definition is rarely an easy task a statistical test that can be used as an aid in defining markets is proposed here time series techniques are used to test if price in one region is exogenous to the process that determines price in another the rejection of exogeneity can be an indication that the two regions are economically linked and thus may belong to a common geographic market the test is applied to petroleumproduct prices from various regions of the united states time series techniques have long been appreciated by macroeconomists the uses to which they have been put range from testing for the exogeneity of variables used in the construction of macroeconomic models sims 1972 for example to discovering empirical regularities in macroeconomic data without imposing a priori structure on the observations ashenfelter and card 1982 for example in contrast these techniques have not been so

an empirical assessment of the welfare effects of reciprocal dumping abstract can two way trade in similar products lead to lower welfare than if such trade was banned theory answers yes to empirically investigate this proposition we examine swedish imports of bottled water assuming one shot bertrand and cournot competition we can use the estimates from a structural model of demand to uncover marginal costs we simulate the effect on consumer and producer surplus of banning imports we do not find convincing evidence that banning imports would increase overall welfare given our choice of market this suggests we should not be overly concerned with the welfare effects of two way trade in consumer goods that are close to homogenous

flexible parametric estimation of duration and competing risk models in this paper we specify and estimate a flexible parametric proportional hazards model the model specification is flexibly parametric in the sense that the baseline hazard is non parametric while the effect of the covariates takes a particular functional form we also add parametric heterogeneity to the underlying hazard model specification we specify a flexible parametric proportional competing risks model which permits unrestricted correlation among the risks unemployment duration data are then analysed using the flexible parametric duration and competing risks specifications we find an important effect arising from the exhaustion of unemployment insurance and significantly different hazards for the two types of risks new jobs and recalls

mismatch in local labour markets in central scotland the neglected role of demand this paper presents a model of mismatch unemployment in two local labour markets in scotland a total of seven possible sources of such unemployment are identified and examined within the context of a predominantly urban area and a mixed urban rural area these are contiguous travel to work areas ttwas the paper attempts to identify what causes recruitment difficulties and discusses the extent to which the problem is demand induced a survey of employer practices and attitudes is followed up by multiple regression analysis to determine the effect of these practices on vacancy duration the analysis shows that there are certain recruitment practices and inherent characteristics of employers which result in job offers that are either unattractive or inaccessible to the unemployed it is argued that design of policy for implementation at the local level needs to take account more explicitly of the demand side of the local labour market than has so far been evident in the uk approach to the skill mismatch issue

on the extent of the market wholesale gasoline in the northeastern united states this paper develops the classical view of the extent of markets by introducing explicitly in the analysis the concept of arbitrage costs arbitrage or transaction costs imply that market boundaries are essentially stochastic while a set of products or regions may have binding arbitrage conditions i e may be in the same market at a given point in time they may not at another thus in defining a market the probability that a set of agents or regions would h3ve binding arbitrage conditions has to be assessed this paper develops an econometric methodology to estimate the transaction costs required to arbitrage among a given set of products as well as the probability that that set of products would be bound by binding arbitrage condi tions finally the methodology is applied to wholesale gasoline in the northeastern part of the united states address for communications pablo t spiller herbert hoover memorl l bldg 9348 stanford ca 94305

optimal denominations for coins and currency abstract let all denominations have the same cost let transactions be any amount between 1 and 3 k 1 1 2 since one can make change the least expensive set of weights requires denominations that are powers of 3 from 1 to k

what happens when demand is estimated with a misspecified model we conduct monte carlo experiments to investigate the biases of assuming a misspecified demand model we study continuous models linear log linear and aids and discrete choice models logit in the context of differentiated products and aggregate data estimating demand with the wrong model yields varying degrees of bias in estimated elasticities but the logit model can yield unbiased estimates for a certain size of the assumed market potential merger simulations confirm the key importance of market potential in logit estimation suggesting that a discrete choice model may be preferable even when the discreteness of the purchase decision is questionable

spatial price competition a semiparametric approach we investigate the nature of price competition among firms that produce differentiated products and compete in markets that are limited in extent we propose an instrumental variables series estimator for the matrix of cross price response coefficients demonstrate that our estimator is consistent and derive its asymptotic distribution our semiparametric approach allows us to discriminate among models of global competition in which all products compete with all others and local competition in which products compete only with their neighbors we apply our semiparametric estimator to data from u s wholesale gasoline markets and find that in this market competition is highly localized

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

demand estimation and merger simulations for drugs logits v aids abstract we use adhd drugs sales data from 2000 2003 and compare estimates of elasticities and merger simulations from three different demand models models include logit random coefficients logit and conditional aids demand model with multistage budgeting the magnitude of cross price elasticities is larger in the third model in comparison to the first two and some of the cross price elasticities are estimated to be negative hypothetical merger simulations show larger price effects for the multistage aids model in comparison to the discrete choice models

search method use by unemployed youth this article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions the empirical evidence then shows that the most frequently used search methods i e friends and relatives and direct applications without referral are also the most productive in generating offers and acceptances the number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs specific methods are chosen in a manner that generates positive average effects on outcomes for those using them

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

the establishment level behavior of vacancies and hiring this paper is the first to study vacancies hires and vacancy yields at the establishment level in the job openings and labor turnover survey a large sample of u s employers to interpret the data we develop a simple model that identifies the flow of new vacancies and the job filling rate for vacant positions the job filling rate moves counter to aggregate employment but rises steeply with employer growth rates in the cross section it falls with employer size rises with worker turnover rates and varies by a factor of four across major industry groups we also develop evidence that the employer level hiring technology exhibits constant returns and that at the employer level and that employers rely heavily on other instruments in addition to vacancies as they vary hires we also develop evidence that effective recruiting intensity per vacancy varies over time accounting for about 41 of movements in aggregate hires in the 2007 to 2009 period our evidence and analysis provide useful inputs for assessing developing and calibrating theoretical models of search matching and hiring in the labor market

the role of spatial demand on outlet location and pricing abstract in this article the authors consider the problem of outlet pricing and location in the context of unobserved spatial demand the analysis constitutes a scenario in which capacity constrained firms set prices conditional on their location demand and costs this enables firms to develop maps of latent demand patterns across the market in which they compete the analysis further suggests locations for additional outlets and the resultant equilibrium effect on profits and prices using bayesian spatial statistics the authors apply their model to seven years of data on apartment location and prices in roanoke va they find that spatial covariation in demand is material in outlet choice the 95 spatial decay in demand extends 3 6 miles in a region that measures slightly more than 9 5 miles they also find that capacity constraints can cost complexes upward of 100 per apartment as they predict price elasticities and costs are biased downward when spatial covariance in demand is ignored costs a

demand for differentiated products discrete choice models and the characteristics approach we propose a specific characteristics framework in order to construct linkages between alternative conceptual approaches to modelling product differentiation first it is shown that a demand system which satisfies the gross substitutes property imposes specific requirements on the locations of products in particular the dimension of the characteristics space must be larger than or equal to the number of products minus one we then identify a method for casting a given demand system subject to certain restrictions into our characteristics framework this is illustrated for the logit probit and linear probability models of discrete choice theory finally we find a characteristics representation of the ces representative consumer

markets beer in germany and the united states between 1950 and 2000 the four firm producer concentration ratio for beer increased from 22 to 95 in the united states and anheuser busch s share of domestic output ballooned from 6 to 54 percent in germany concentration has risen but it remains low in 2000 the four firm producer concentration ratio was just 29 and the eight firm ratio in germany was smaller than the one firm ratio in the united states in 2005 after five years of important mergers involving big brewers the german beer industry was still much less concentrated than its american counterpart in this article i discuss several candidate explanations for the failure of beer producer concentration to rise as much in germany as in the united states the relevance of the new technologies to german brewers the preferences of german consumers the rules for advertising on german television and other factors largely absent from the consensus interpretation of american experience i find that market structure depends on a remarkably broad range of factors extending well beyond technological opportunity and market size

product differentiation and oligopoly in international markets the case of the u s automobile industry this paper develops and estimates a model of the u s automobile industry on the demand side a discrete choice model is adopted that is estimated using micro data from the consumer expenditure survey the estimation results are used in conjunction with population weights to derive aggregate demand on the supply side the automobile industry is modelled as an oligopoly with product differentiation equilibrium is characterized by the first order conditions of the profit maximizing firms the estimation results are used in counterfactual simulations to investigate two trade policy issues the effects of the ver and exchange rate pass through

cyclical variation in vacancy durations and vacancy flows an empirical analysis abstract this paper presents an empirical analysis of vacancy durations and vacancy flows in the netherlands over the years 1980 1988 we distinguish vacancies according to required occupation and educational levels we derive estimates of average vacancy durations and we use these to derive estimates of vacancy flows we find that vacancy durations generally increase with the required educational level moreover vacancy flows tend to be more responsive to the business cycle at lower educational levels while vacancy durations are more responsive at higher educational levels the number of vacancies generated by employers has not decreased during the recession in the early 80s which points to a dominant role of the supply of applicants in explaining the cyclical pattern of vacancy durations

consolidation by merger the uk beer market this paper examines the determinants of market structure in the uk brewing industry over 1949 1969 sutton sunk costs and market structure price competition advertising and the evolution of concentration 1991 points to technology and advertising races as two key drivers of market concentration this study uses an own built longitudinal data set of the population of firms and breweries and reveals the importance of institutional factors in explaining the dynamics of market structure the practice of tying outlets to brewers and legal restrictions on opening retail outlets together with a permissive policy towards mergers made acquisition of medium sized firms and brewery closure shortly after acquisition the main driving mechanism towards industry consolidation during this period the number of firms and plants fell sharply by 74 and 60 respectively and production rose by about 25 with no firm entry and just one new brewery opening as a result concentration increased and the market transformed from a highly fragmented one into a stable oligopoly