market structure and market outcomes in deregulated rail freight markets abstract using cross section data on a national sample of city pair markets for rail freight i examine correlations between prices quantities and the number of single line and interline firms serving markets i estimate the reduced form of a structural model in which rail rates and quantities depend on the number of firms i find that rates increase as the number of firms serving the market falls and quantities shipped rise as the number of firms falls the result is consistent with market power for rail freight shippers that causes markups to rise when fewer firms serve the market and is not consistent with other explanations of the relationship between number of firms and rates and quantities interline shipment is much more costly than single line suggesting that mergers may be desirable even if they exacerbate market power problems

the relevant market for production and wholesale of electricity in the nordic countries an econometric study we apply cointegration analysis to daily averages of nord pool prices covering the period 2001 2007 in order to empirically characterize the geographical dimension of the relevant market for production and wholesale of electricity we reach the following econometric conclusions i price areas finland sweden and norway 3 unambiguously belong to the same relevant market ii denmark 2 belongs to this same market except for the subsample 2004 2007 iii norway 1 and denmark 1 define separate markets on their own we find that the stochastic trends in nord pool prices originate in countries abundant in capacity to generate hydro power

distinguishing between equilibrium and integration in spatial price analysis this article introduces a new spatial price analysis methodology based on maximum likelihood estimation of a mixture distribution model incorporating price transfer cost and trade flow data this method permits differentiation between market integration and competitive market equilibrium and derivation of intuitive measures of intermarket tradability competitive market equilibrium perfect integration segmented equilibrium and segmented disequilibrium one can also use these estimates to derive semiparametric measures of time varying regime probabilities to track changing market conditions an application to trade in soybean meal among pacific rim economies demonstrates the usefulness of the method copyright 2002 oxford university press

are judges leading economic theory sunk costs the threat of entry and the competitive process in this paper we attempt to bring theoretical form to a particular entry argument that has found favor in the courts we suggest that sunk costs may not be a major impediment to entry when a group of customers can commit to an entry enhancing strategy buyers have strong incentives to adopt such strategies because they benefit directly from the resulting lower prices the simplest example involves a large buyer that is able to guarantee an entrant a market for its product long term contracts or even informal purchase commitments backed by customer reputation may also allow the entrant to obtain a guarantee of sufficient business to make the entry profitable once entry is thought likely to occur the existing competitors may be unwilling to attempt a price increase of any magnitude thus the threat of entry can maintain competitive prices even in the presence of sunk costs in section ii we motivate the analysis by discussing the current controversy over the role entry conditions play in an antitrust merger review then we discuss the necessary assumptions for a model of how the threat of entry can deter any price increase in the presence of sunk costs we note that these conditions are different from those commonly used in the economic literature

determination of the international maize price what is the growing role of brazil and ukraine this paper examines the relationships among maize prices for four countries to determine if newly emerging exporters brazil and ukraine influence the international price of maize our work focuses on each market s participation in the price discovery process rather than trying to determine a price leader we find that the united states plays the largest role in price discovery followed by argentina brazil and ukraine we also search for export thresholds and find that ukraine s contribution to price discovery rises slightly when an export threshold of 2 3 million tons is reached no export thresholds were found for brazil export thresholds for argentina were found but only have a minor impact on price relationships we also found that price relationships vary considerably across seasons of the year

investigating diesel market integration in france evidence from micro data abstract we use station level daily price observations collected over a period of eight years to study the extent of diesel market integration in france the empirical analysis starts off by examining the time series properties of diesel price ratios and then assesses how geographical separation and petrol station characteristics affect the speed of adjustment of prices to exogenous shocks our findings reveal that the great majority of diesel price ratios maintain stable long run relationships we also find that while price ratios take longer to adjust for pairs of petrol stations that are farther apart adjustment is quicker when pairs of petrol stations provide the same range of services and when they belong to the same owner

foreign exchange market reactions to sovereign credit news abstract we analyse the reaction of the foreign exchange spot market to sovereign credit signals by fitch moody s and s p during 1994 2010 we find that positive and negative credit news affects both the own country exchange rate and other countries exchange rates we provide evidence on unequal responses to the three agencies signals fitch signals induce the most timely market responses and the market also reacts strongly to s p negative outlook signals credit outlook and watch actions and multiple notch rating changes have more impact than one notch rating changes considerable differences in the market reactions to sovereign credit events are highlighted in emerging versus developed economies and in various geographical regions

futures trading market interrelationships and industry structure futures markets arise as a response to economic uncertainty one goal of this paper is to measure how futures trading in existing contracts changes in response to changes in uncertainty caused by inflation a difficult issue that other researchers have addressed is why only a small handful of all markets have successful futures markets see e g telser and higginbotham although we do not provide a complete answer to this question we make progress toward an answer by investigating the covariance structure of various futures prices this allows us to predict which markets are the least needed and to see whether

oil industry consolidation and refined product prices evidence from us wholesale gasoline terminals abstract our objective in this paper is to quantify the impact of petroleum industry consolidation on refined product prices controlling for other important factors that could also impact prices our empirical analysis focuses on the us petroleum refining industry using data on industry consolidation and wholesale gasoline prices collected over the interval 2000 2008 we match refinery units to wholesale city terminal gasoline markets and then estimate pooled cross section time series regressions to quantify the impact of petroleum industry consolidation on wholesale gasoline prices at city specific terminals the results of the empirical analysis of mergers are mixed showing that some petroleum industry mergers resulted in statistically significant increases in refined product prices others resulted in statistically significant declines and still others had no statistical impact at all our analysis of the effects of measures of market concentration one at the level of city specific wholesale terminals and another at the level of regional spot markets found evidence that less concentrated markets are associated with lower price levels

estimating the degree of market integration existing tests of spatial market integration are commonly based on statistical criteria without an explicit link to an economic model of price determination this article proposes new measures of market integration defined directly in terms of a well known spatial price determination model and develops an econometric methodology for estimating these measures due to the intractability of the conditional density function of prices we use indirect inference to estimate the model parameters and market integration measures the methodology is illustrated with simulated data and is applied to soybean price data for the united states brazil and the eu copyright 2008 oxford university press

market structure and import share a regional market analysis in this paper we analyze the relationship between domestic market structure and cement importation into the united states we do this by examining the impact of concentration technology scale costs and demand on imports into twenty independent united states regional cement markets for a number of years by looking at only one industry as opposed to importation across several diverse industries we hope to remove inter industry effects that may mask the relationship between import share and selected structural characteristics the use of time series data allows us to examine import response to variations in demand over the business cycle this paper is divided into six sections the next describes the united states portland cement industry including its geographically segmented nature production methods demand conditions and incentives for importation section iii contains a model that relates import shares to market structure the data to estimate this model are discussed in section iv section v contains

spatial market efficiency and policy regime change seemingly unrelated error correction model estimation we investigate the degree to which the wheat markets of france germany and the united kingdom are in spatial equilibrium and how reforms to the cap affect the speed of convergence to the longrun relationship due to the interrelationship among these markets and the nonstationarity of our data we introduce a seemingly unrelated regression augmented dickey fuller and error correction methodology we argue this methodology is more efficient than ordinary cointegration and error correction models empirically we find strong evidence of efficient spatial markets and conformity to the law of one price market liberalization reforms in the eu increased the comovement of domestic and world wheat prices our post uruguay round price transmission elasticity was 0 183

impact of sovereign rating changes on stock market co movements the case of latin america abstractwe aim to determine if long term foreign currency sovereign rating assessments from s p moody s and fitch for the advanced emerging latin american countries brazil mexico and chile have any significant effect on the correlation between their stock market returns in the last decade with that purpose in mind we obtain the time varying correlation by cdcc modeling using arx aparch filtered returns the analysis shows that the rating changes do not have a significant effect on the correlations in general after testing for robustness we reveal that an upgrade to an investment grade level for a country is more likely to positively diversify it from others in the region instead of creating a common positive regional investment environment results have important implications for investors and policymakers

a graphical exposition of the economic theory of regulation i introduction historically many if not most economic theories have advanced in three fairly distinct stages progressing from descriptive to graphical to mathematical formulations generally in that sequence the economic theory of regulation however has been an exception to this normal order of progression the fundamental corpus of this theory was laid out initially in the descriptive discussions provided by stigler 1971 posner 1974 and others from these early presentations however the theory was subsequently formalized mathematically by peltzman 1976 and becker 1983 without passing through the graphical stage of its development 1 regardless of the chronological order of the progression of this theory however we believe that a fully developed graphical exposition is likely to be of considerable value even now at least two considerations support this view specifically by making this theory more accessible to a wider audience and by better illustrating the basic underlying mechanics behind it the likelihood of significant future advancement we believe is enhanced indeed currently there remain a number of observed regulatory phenomena that have yet to be satisfactorily explained by the existing theory e g the deregulation movement and the specific pattern of observed cross subsidies 2 an improved understanding of the fundamental components of the theory should facilitate its further advancement and lead to an expanded ability to explain a broader range of regulatory practices we illustrate this point through a variety of applications to provide an improved understanding of inter alia the markets likely to be chosen for regulation the propensity of regulatory benefits to be spread across interest groups the symbiotic nature of regulation and cross subsidization and the economics of deregulation we also are able to depict graphically the relationship between the economic theory of regulation and the traditional normative model of regulation which assumes that regulators maximize social welfare the article is organized as follows in section ii we briefly describe the regulator s general optimization problem viz what precisely is being maximized and what constraints apply to that maximization problem the latter topic the constraints will be of primary interest here section iii presents the formal graphical analysis of these constraints by deriving what we label the regulator s benefits budget constraint as its name suggests the benefits budget constraint defines the locus of maximum benefits the regulator is able to deliver to the affected interest groups importantly that constraint is determined by the prior unregulated market equilibrium price and output and by general market parameters such as demand elasticity costs and so on section iv describes the resulting regulatory equilibrium section v then applies the graphical tools developed in sections ii iv to explain a number of commonly observed regulatory phenomena here both the ability to provide new insights and the pedagogical value of the graphical approach are illustrated finally section vi concludes ii the regulator s general optimization problem the economic theory of regulation postulates that regulators will attempt to maximize some objective function most generally the regulator s utility by implementing regulatory policies that benefit and by necessity harm particular interest groups 3 the benefits provided to these groups are then used to purchase from them the objects that are directly valued by the regulator that is the direct arguments contained in the regulator s objective function the distribution of these benefits and harms across the affected groups which is determined by the regulator s choice of a particular regulatory policy is selected to maximize the value of the regulator s objective function the ability of any specific interest group to curry regulatory favor then will depend on the capacity of that group to deliver the objects of value to the regulator in exchange for the benefits provided by the regulatory process

a comment on efficient propagation of shocks and the optimal return on money lotteries are introduced into cavalcanti and erosa 2008 2 a version of trejos and wright 1995 4 with aggregate shocks lotteries improve welfare and eliminate the two notable features of the optimum with deterministic trades over production and history dependence moreover the optimum can be supported by buyer take it or leave it offers

search bargaining money and prices the goal of this paper is to extend existing search theoretic models of fiat money which until now have assumed that the price level is exogenous by explicitly incorporating bilateral bargaining this allows us to determine the price level endogenously and leads to additional insights concerning the role of money for example we find that monetary equilibria are generally inefficient in the sense that output and prices differ from the solution to a social planner s problem although the difference can become small as the discount rate or search friction vanishes we also find that there exist nonstationary inflationary equilibria

railroads competition the santa fe southern pacific merger proposal in september of 1983 the santa fe and southern pacific railroads announced their long rumored long negotiated plan to merge this merger would combine two primarily parallel operations along the southern corridor of southwestern united states the merger was opposed by the antitrust division of the justice department and was turned down by the interstate commerce commission this paper uses the framework provided by the u s department of justice merger guidelines and more recent data to analyze the competitive implications of the merger the author finds that a serious loss of competition would likely have followed from the merger resulting in large gross deadweight losses and much larger transfers from shippers to the merging railroads his analysis demonstrates the critical importance of three factors in evaluating the impact of a merger such as this one a careful location and commodity specific analysis of the loci of likely competitive harm an unbiased estimate of those operating savings promised by the merger which could not be obtained through means less anticompetitive and a careful judgment as to the importance or lack of importance of transfers in the calculation of welfare losses thus an overall welfare calculus requires not only an accurate estimate of the efficiencies resulting from the merger but also a judgment as to the welfare relevance of wealth transfers

do credit rating agencies provide valuable information in market evaluation of sovereign default risk abstract we assess the marginal information value of credit rating announcements on market pricing of sovereign risk as measured by cds spreads we demonstrate that accurate assessment of the effect of credit rating changes must be conditioned on relevant information known prior to the rating change to this end we include macroeconomic conditions and the watch or outlook status of the bond immediately prior to the rating change in our information set the empirical work employs a dynamic panel macroeconomic model with 56 countries using monthly data from january 2004 through august 2012 we find that watch outlook status plays a critical role in accurately determining the information value of credit rating changes with point estimates in some cases changing by a factor of eight cds spreads respond most strongly to credit rating changes when bonds are on stable status but also respond significantly when bonds are on outlook status the least response is found for bonds on watch status at the time of the downgrade the downgrades in these cases are largely anticipated and the information value incorporated at the time of the negative watch announcements

market integration in us gasoline markets this paper analyses the degree of market integration in the retail gasoline markets in the united states after it was completely deregulated in 1981 the monthly average prices of unleaded regular gasoline excluding taxes from january 1983 to december of 1998 for five us petroleum administration defense districts were considered in the analysis there is evidence of a high degree of market integration in the gasoline markets as evidenced by the engel and granger and johansen cointegration tests but perfect market integration is rejected in all but a few cases

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

market definition in antitrust analysis a regression based approach alleged violations of either sherman 2 s antimonopoly strictures or clayton 7 s proscriptions against anticompetitive mergers necessarily involve a particular product and must occur in a particular place that is the plaintiff in either a 2 or 7 suit must define a relevant market within which the violation alleged has occurred even in the most mundane antitrust analysis however market definition is rarely readily accomplished and unaccompanied by a series of caveats and the possibility of the opposing parties in an antitrust suit failing to contest each other s proffered definition is virtually nil 2 because economists from

estimating policy effects on spatial market efficiency an extension to the parity bounds model the standard parity bounds model pbm is extended to allow for dynamic shifts in regime probabilities in response to changes in marketing policy the approach allows estimation of the length of the adjustment period and a statistical test for no policy effects the extended pbm is applied to maize and wheat markets in ethiopia evidence of a dynamic adjustment path is found and grain marketing reforms are found to have improved spatial efficiency in a few markets worsened it in a few others but generally to have had little effect on the spatial efficiency of ethiopian grain markets

simulating the effects of railroad mergers the purpose of the study reported in this paper is to add to the empirical literature concerning market power and competition between railroads in particular the paper examines the effect of railroad mergers on railroad market power this is achieved through a case study of the transportation market for the export of kansas wheat to houston texas the models techniques and general conclusions of the study can be applied to similarly situated regional transportation markets for homogeneous goods such as coal ores field crops and lumber two models are developed to achieve the objectives of the study a network model of the wheat logistics system is used to identify the least cost transportation routes from the kansas study area to the market at houston a profit improvement algorithm which identifies nash equilibrium prices is developed to measure the amount by which railroads can profitably raise their prices above variable cost the results of the study have implications for united states railroad merger policy the paper indicates that railroad mergers do not necessarily increase railroad market power or make railroad shippers worse off instead the study demonstrates that the impact of railroad mergers on shippers and railroads depends on factors that vary geographically such as the degree of intrarailroad and intermodal competition in the area

tying foreclosure and exclusion in recent years the leverage theory of tied good sales has faced heavy and influential criticism in an important sense though the models used by its critics are actually incapable of addressing the leverage theory s central concerns here the author reconsiders the leverage hypothesis and argues that tying can indeed serve as a mechanism for leveraging market power the mechanism through which this leverage occurs its profitability and its welfare implications are discussed in detail copyright 1990 by american economic association

the credit signals that matter most for sovereign bond spreads with split rating abstract we investigate how split ratings influence the information content of credit rating events on the sovereign bond markets during 2000 2012 we find that market reactions are far stronger for negative events on the inferior ratings and for positive events on the superior ratings such evidence suggests aversion of market participants to the ambiguity inherent in split ratings sovereign credit spreads are particularly responsive to negative events by s p the more conservative agency in the sample moody s positive events have a significant impact only when moody s assigns superior pre event ratings compared with s p there is little evidence that split ratings involving fitch have any market implication

efficient propagation of shocks and the optimal return on money abstract we study optimal allocations in an environment in which money is essential due to lack of commitment and anonymity of individuals because the economy features aggregate preference shocks we apply a notion of implementability that allows for allocations with non trivial business cycle dynamics for the propagation of shocks we show that history dependence is predicted by the theory of second best and becomes necessary for optimality when the degree of patience is neither too low nor too high our analysis concludes with a discussion of whether there is a role for the propagation of shocks in alternative economic environments

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

time varying threshold cointegration and the law of one price a theoretical model of the law of one price which allows for seasonality in transaction costs and supply and demand conditions between markets is developed bivariate three regime threshold vector error correction models are applied to natural gas markets to examine seasonality in threshold levels results indicate that there are nonlinear adjustments to the law of one price in seven pair wise markets chicago is used as the base market in the natural gas sector dynamic threshold effects relative to the chicago market vary depending on season geographical location and whether the market is an excess producing or consuming market

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

equilibrium vertical foreclosure the authors formulate a complete but analytically simple equilibrium model of vertical mergers to evaluate the logic of standard vertical foreclosure claims and the criticisms made of those claims the model includes incentives of the integrated firm and unintegrated input suppliers to exclude rivals and the potential holdout problem in this fully specified model vertical foreclosure can emerge in equilibrium copyright 1990 by american economic association

terminal railroad revisited foreclosure of an essential facility or simple horizontal monopoly rollowing the supreme court s 1986 decision in aspen ski there has been a renewed interest in the essential facilities doctrine the doctrine as we understand it is inconsistent with economic theory broadly stated the doctrine says that if assets cannot be economically reproduced by another firm but are economically essential to all producers of some good then all producers of that good should have equal access to the assets the doctrine presumes that the firm controlling such assets will not provide access equally to all firms this problem is thought to be particularly acute in cases where the firm owning the asset is one among a group of competitors needing that asset to produce some other good the case that has been cited as establishing the doctrine and the classic essential facilities case 2 is united states v terminal railroad association of st louis 3 several recent articles4 on this case detail three important propositions

horizontal concentration and anticompetitive behavior in the central canadian cement industry testing arbitrage cost hypotheses abstract consider a market with a small number of firms attempting to collude if they successfully act as a dominant firm they will raise price this in turn will expand output by any fringe firms and thus reduce the market share of the colluding group thus higher prices will decrease concentration over time here we test this hypothesis using a modification of spiller and huang 1986 and data from the post 1974 toronto cement market the weight of the evidence indicates that market price has a negative effect on concentration implying that the firms in this market act with significant though limited success as a cartel

accounting for choice set endogeneity in random utility models of recreation demand abstract modeling the choice among a discrete set of recreation alternatives is driven by the possible patterns of substitution among sites researchers typically assume that the individual s choice set is the same as the set of alternatives included in the recreation survey instrument our endogenous choice set model is a generalization of the standard multinomial logit random utility model which allows for the possibility of heterogeneous choice sets that are endogenously determined in the model using two examples we show that parameter and compensating variation estimates differ greatly between the endogenous choice set model and the traditional logit model

modelling trends in food market integration method and an application to tanzanian maize markets abstract pushed by increasing availability of price data and extensive market liberalisation efforts in many developing countries research on food market integration has evolved rapidly over the last two decades empirical methods to measure market integration diverged in two directions on the one hand there is the parity bounds model pbm using a switching regressions technique while on the other hand the use of threshold autoregressive tar models has been proposed this article provides a discussion on the two methods and argues that tar models are better able to capture the dynamics of the arbitrage process underlying interconnected markets furthermore we extend the standard tar model to include a time trend in both the threshold and the adjustment parameter using weekly maize price data on seven selected markets in tanzania we illustrate how both transaction cost and the speed of adjustment have changed during the nineties

is there anti competitive behaviour in the central canadian cement industry testing arbitrage cost hypotheses allegations of anticompetitive behavior in the central canadian cement industry have focused around the effects of cement producers buying their downstream distributors if indeed vertical integration is causing cement prices to rise the relevant economic theories imply that the arbitrage cost of shipping cement to central canada is greater than the cost of shipping cement from this region the authors investigate this theory by econometrically estimating the relevant arbitrage costs their analysis supports the hypothesis that vertical integration has increased barriers to entry for cement in toronto but it fails to support a similar hypothesis for montreal

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

indirect competition with spatial product differentiation although two markets may appear to be separate sometimes one firm participates in both of them that firm provides a link between the two markets such a straddling firm transmits indirect competition from each market to the other since its actions reflect competitive conditions in both markets in a model of spatial product differentiation the author shows that indirect competition may make a market perform significantly better than the number of firms would indicate moreover total consumer surplus increases if two previously distinct markets are linked by a straddler finally the author considers implications of these results for antitrust analysis copyright 1989 by blackwell publishing ltd

market emergence and transition arbitrage transaction costs and autarky in china s grain markets using trimonthly chinese provincial grain prices from 1988 to 1995 we estimate a parity bounds model of interregional trade for four subperiods to characterize how multiple aspects of market performance change during the process of economic transition for each period we estimate the extent to which arbitrage opportunities are realized by traders the transaction costs between location pairs and the likelihood that regions do not trade trade restrictions cannot explain the pattern of uneven market development over time infrastructure bottlenecks managerial incentive reforms and production specialization policies all were likely important factors affecting market performance

arbitrage during the dollar sterling gold standard 1899 1908 an econometric approach the gold standard as instituted in the late nineteenth and early twentieth centuries has recently become the center of public policy and academic scrutiny recently a controversy over the efficiency of the gold standard has developed see clark 1984 officer 1986 in short clark following morgenstern 1959 finds that the gold standard was inefficient because it exhibited many violations of the gold points officer however attempts to show that the gold standard was efficient in that few gold point violations are observed when proper methods are used to calculate the relevant gold points 2

the contractual nature of the firm for their helpful comments i am grateful to armen a alchian yoram barzel keith leffler john s mcgee and dean worcester 1 ronald h coase the nature of the firm 4 economica 386 1937 the paper however was written several years earlier see note 3 infra 2 the social sciences citation index provides the following information breaking down the period of 1966 80 into three five year periods the total citations of coase s firm paper for each subperiod are 1966 70 17 citations 1971 75 47 citations and 1976 80 105 citations

competition and rail rates for the shipment of corn soybeans and wheat this article investigates the extent and importance of rate competition among railroads for the export shipment of three narrowly defined agricultural commodities since passage of the staggers rail act of 1980 which increased the railroads freedom to set rates i construct measures of intermodal and intramodal competition and find that each has strong impacts on rail rates the farther a shipper is from competing water transportation the more considerably rates rise rates fall as railroad competition in a region increases there appears to be some interaction between intermodal and intramodal competition i find that the competitive effects of two proposed rail mergers depend on the vigor of intermodal competition from truck and water transport and on the change in interrailroad competition that results from the reduced number of competing rail systems

imperfect competition in multiproduct food industries with application to pear processing agricultural product markets often involve relatively few firms processing a farm product into multiple processed products this market structure prompts concern that processing firms may exercise both oligopsony and oligopoly power the present paper develops and applies a methodology to test simultaneously for market power in both the raw input market and multiple processed output markets application of the methodology to california pear processing indicates the industry has exerted power in both its farm input market and the markets for canned pears and fruit cocktail

transfer costs spatial arbitrage and testing for food market integration conventional tests for food market integration ask often misleadingly whether prices in different locations move together in this paper an alternative methodology the parity bounds model pbm is developed which uses information on transfer costs in addition to food prices to assess the efficiency of spatial arbitrage monte carlo experiments using data generated by a point space spatial price equilibrium model show the pbm to be statistically reliable an application to philippine rice markets demonstrates that the pbm detects efficient arbitrage when other tests do not

market integration efficiency of arbitrage and imperfect competition methodology and application to u s celery this paper develops and applies a methodology to test for efficiency of interregional commodity arbitrage application of the methodology requires only time series data on prices for alternative cities regions countries or product forms yet the approach is capable of generating evidence on a number of market parameters including market integration arbitrage efficiency the magnitude of marketing margins product substitutability and competitiveness of markets estimation is based on a switching regression model with three regimes efficient arbitrage relative shortage and relative glut results from application of the model to u s celery marketing indicated significant departures from efficient arbitrage for both california and florida celery

are currency crises predictable abstract this paper studies whether exchange rate expectations and overvaluations are predictors of currency crises the results suggest that overvaluation has predictive power in explaining the crises however although expected depreciation obtained from survey data partially takes different exchange rate misalignment measures into consideration expectations fail to anticipate currency crises

the regulatory transition a number of regulated industries particularly in transportation and communications have recently undertaken the transition from a regime of rigid price and entry controls to that of a more competitive market structure while the different industries have experienced somewhat different fates the responses to this transition do have certain common underlying characteristics to start demands for some form of temporary or continuing regulation during the transition to deregulation can be explained almost entirely as a response to the strength of the entry threat relative to the magnitude of sunk costs incurred by the affected parties in the previous regulatory regime where the obstacles to entry are low the incumbent firms and labor ordinarily seek protective conditions during the transition to permit them to recover some or all of their sunk costs when the obstacles to entry are high customers are likely to make similar demands for protective conditions designed to do the same particularly when the customers own sunk costs severely restrict their competitive options after deregulation pleas for protective conditions during the transition are widely regarded as introducing market imperfections that should be resisted in the name of regulatory reform this view however naively equates the market results during the transition when choices are constrained by the presence of sunk costs to the results that would prevail in a long run equilibrium where deregulated prices and quantities are established in the absence of most or any sunk costs the regulatory problem during the transition is to define a set of residual hopefully self terminating economic constraints that will satisfy the equity and other considerations created by the shortto medium term continuation of some sunk costs without creating insurmountable obstacles to approaching an efficient competitive outcome in the long run any transition mechanism must thus come to grips with the essence of the transition problem from a political as well as an economic perspective who is to bear the consequences of the overhang of sunk costs note that we are not making a generalized plea for the compensation of losers from deregulation especially for windfall gains conferred by the regulatory process itself see kenneth gordon 1981 rather the transition problem is defined here to be a limited period in which participants in the regulatory game are permitted to amortize financial commitments made under the prior set of rules while other participants are constrained in their ability to exploit the presence of those sunk costs during the transition misunderstanding or failing to recognize this transition problem can pose substantial dangers specifically premature application of economic concepts that while arguably valid in some future regime in which all sunk costs are amortized decidedly do not account for the effect of these sunk costs on the marketplace in the short run misunderstandings of the transition problem may also encourage false conclusions about the eventual results of deregulation that is the long run competitive equilibrium and industry structure that will emerge as a consequence policy recommendations designed to address the problems of the transition may tdiscussants robert willig princeton university thomas moore hoover institution

the extent of information its relevance for random utility models this paper examines the effect of the researcher s definition of a recreator s choice set on the parameter and welfare estimates from standard random utility models three choice set definitions are compared choice sets based on all alternatives within the survey those alternatives within a specified distance from the respondents home and alternatives familiar to the individual we show that parameter and welfare estimates are sensitive to the definition of the choice set welfare measures of site closures differ in varying ways depending on the familiarity level of the sites in question

federal timber restrictions and interregional arbitrage in u s lumber harvesting restrictions to protect the habitat of the northern spotted owl on federal forests in the pacific northwest pnw substan tially reduced timber available for processing by the forest products industry we consider the ex tent to which these restrictions may have altered the degree of integration of the pnw and u s south in a national market for lumber descrip tive statistics and econometric analysis of monthly price data suggest that a structural break occurred in the relationship between the two re gions product prices around the time of the har vest restrictions leading to a more integrated market after the restrictions were imposed jel q23

open access and the evolution of the u s spot market for natural gas federal regulations promoting open access transportation dramatically altered the organizational structure of the u s market for natural gas in the 1980s generally unbundling the merchant and transport functions of interstate pipelines an empirical analysis of wellhead spot prices is undertaken to examine the effect of open access on the geographic scope of the spot market using monthly spot price data from 1984 91 three statistical tests are applied and compared price correlations granger causality and cointegration we find that open access integrated the regional wellhead markets into a national competitive market for natural gas the effects of unbundling on contracts for natural gas are then investigated incentives for long term contracts between pipelines and producers are shown to be effectively removed by the introduction of competitive buying and selling of gas at the wellhead through open access

the influence of rating levels and rating convergence on the spillover effects of sovereign credit actions abstract this paper assesses contagion and competition as alternative types of stock market spillovers arising from sovereign rating actions our research design is based on the premise that the type of spillover effects within and between groups of countries will be influenced by the sovereign rating level split ratings and the extent of rating convergence i e specific types of rating action will induce different and or stronger effects the results reveal a clear pattern whereby downgrades of high rated countries induce contagion to both high and low rated countries while downgrades of low rated countries reveal the opposite i e they induce competitive effects split ratings are found to intensify stock market spillover effects rating convergence divergence across similarly rated sovereigns has a meaningful influence on the spillover effects for the downgrades of high rated countries rating convergence mitigates the contagion effect to other high rated countries in the region but has very limited effect on the contagion to low rated countries for downgrades of low rated countries rating convergence strengthens the competitive effect on other low rated countries but has little effect on the competitive impact on high rated countries

thinking creatively about markets abstract the paper takes a broad view of how economists identify market boundaries three types of definition are distinguished trading markets anti trust markets and strategic markets the first is based on the familiar law of one price while the second follows us dij guidelines and is designed to identify positions of market power neither of these definitions suits the needs of one of the more recent and fastest growing users of economics namely those responsible for corporate strategy decisions inside firms the paper reviews why market definitions are a fundamental part of strategy decisions and identifies several ways that such users might define market boundaries

testing for food market integration revisited this article considers the statistical performance of four commonly used econometric tests for market integration the law of one price the ravallion model cointegration and granger causality a spatial price equilibrium spe model that is subject to both production shocks and general price inflation and mimics many of the key characteristics of integrated food markets is constructed the model is used to generate food price time series of lengths that are typical of the short sample sizes available in most developing countries for both instantaneously integrated and independent markets a series of monte carlo experiments on these artificial food price time series are performed which show that all four of the conventional tests for market integration are statistically flawed

rating the rating agencies anticipating currency crises or debt crises abstract we revisit the question whether sovereign ratings predict financial crises in line with previous studies we find that ratings do not predict currency crises and are instead downgraded ex post however the likelihood of currency crisis and the implied probability of sovereign default are not closely linked in emerging markets post 1994 when debt crises are defined as sovereign distress when spreads are higher than 1000 basis points or 10 percentage points we find that access to international capital markets is reduced by half in addition although sovereign distress events last for typically 5 2 consecutive months they can persist for longer periods up to nine quarters finally lagged ratings and ratings changes including negative outlooks and credit watches are useful in anticipating sovereign distress

multiple regime spatial price transmission with an application to maize markets in southern africa conventional threshold models of price transmission allow for different speeds of adjustment to equilibria depending on the magnitude of price differentials between markets however these models typically assume only one underlying long run equilibrium price relationship in this article we develop a framework for allowing multiple equilibria and multiple speeds of adjustment with regime separation depending on the magnitude of trade flows between regions rather than the magnitude of price differentials applying this framework to maize price transmission between south africa and zambia shows no transmission during periods of high imports when the government was heavily involved in maize importation but stronger transmission during periods of low imports when the government was not importing copyright 2012 oxford university press

indivisibilities lotteries and monetary exchange we introduce lotteries randomized trading into search theoretic models of money in a model with indivisible goods and fiat money we show goods trade with probability 1 and money trades with probability where 1 iff buyers have sufficient bargaining power with divisible goods a nonrandom quantity q trades with probability 1 and again money trades with probability where 1 iff buyers have sufficient bargaining power moreover q never exceeds the efficient quantity not true without lotteries we consider several extensions designed to get commodities as well as money to trade with probability less than 1 and to illuminate the efficiency role of lotteries