frictionless commerce a comparison of internet and conventional retailers there have been many claims that the internet represents a new nearly frictionless market our research empirically analyzes the characteristics of the internet as a channel for two categories of homogeneous products books and cds using a data set of over 8 500 price observations collected over a period of 15 months we compare pricing behavior at 41 internet and conventional retail outlets we find that prices on the internet are 9 16 lower than prices in conventional outlets depending on whether taxes shipping and shopping costs are included in the price additionally we find that internet retailers price adjustments over time are up to 100 times smaller than conventional retailers price adjustments presumably reflecting lower menu costs in internet channels we also find that levels of price dispersion depend importantly on the measures employed when we compare the prices posted by different internet retailers we find substantial dispersion internet retailer prices differ by an average of 33 for books and 25 for cds however when we weight these prices by proxies for market share we find dispersion is lower in internet channels than in conventional channels reflecting the dominance of certain heavily branded retailers we conclude that while there is lower friction in many dimensions of internet competition branding awareness and trust remain important sources of heterogeneity among internet retailers

women as policy makers evidence from a randomized policy experiment in india this paper uses political reservations for women in india to study the impact of women s leadership on policy decisions since the mid 1990 s one third of village council head positions in india have been randomly reserved for a woman in these councils only women could be elected to the position of head village councils are responsible for the provision of many local public goods in rural areas using a dataset we collected on 265 village councils in west bengal and rajasthan we compare the type of public goods provided in reserved and unreserved village councils we show that the reservation of a council seat affects the types of public goods provided specifically leaders invest more in infrastructure that is directly relevant to the needs of their own genders

contracts as a barrier to entry it is shown that an incumbent seller who faces a threat of entry into his or her market will sign long term contracts that prevent the entry of some lower cost producers even though they do not preclude entry completely moreover when a seller possesses superior information about the likelihood of entry it is shown that the length of the contract may act as a signal of the true probability of entry

specific experience household structure and intergenerational transfers farm family land and labor arrangements in developing countries data from indian rural household survey was used to test th hypothesis that the coexistence in traditional rural societies of extended intergenerational families infrequent land sales and high reliance on family members as farm laborers is the result of the economic advantages which accrue from the knowledge gained by farming a particular ploy of land over a long period of time the land specific experience of elderly members of a intergenerational household who farmed the land as a child and then as an adult are expecially critical in adverse weather years most previous investigators attributed the existence of multigenerational households the use of family members rather than hired laboreds and the infrequency of land sales to deficiencies in the market i e labor market imperfections and an absence of capital insurance and asset markets in the present investigations these same characteristics are viewed as having an economic advantages a model for estimating the contribution of the experience of the elderly household members to agricultural profits was developed and applied to data from a 3 year panel study of 2900 indian rural farm households the data was collected between 1968 71 by the national council of applied economic research the survey collected information on farm profits farm inputs demographic characteristics and the effects of weather conditions on profits a major limitation of the study was a lack of information on the duration of land ownership age of household members was substituted as a proxy for duration of ownership findings were consistent withe the hypothesis in poor agricultural years gross returns for households which contained an elderly household member were greater than the gross returns for comparable households which did not contain an elderly member the economic advantages of specific knowledge embodied in the experienced elderly farmer were comparable to the economic advantages which accrued to households whose members were more educated the hypothesis cannot fully explain the existence of intergenerational families since there is a relatively large proportion of such families among nonfarm families in many countries including india findings suggest that intergenerational families may provide for more occupational diversity and thereby reduce income risks the specific experience hypothesis has policy implications if technological changes are introduced the value of specific experience may be lost and the frequency of intergenerational households may decline the hypothesis may also explain why farmers are reluctant to agree to land redistribution and consolidation schemes this reluctance may disappear after sufficient technological change has occurred

an experimental examination of competitor based price matching guarantees we use experimental methods to demonstrate the anti competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies our findings establish that when costs are symmetric price matching guarantees significantly increase market prices in markets with cost asymmetries guaranteed prices remain high relative to prices without the use of guarantees but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference lesser use of guarantees combined with lower average prices and slower convergence to the collusive level suggest that the mere presence of cost asymmetries may curtail collusive behavior

price discrimination through offers to match price in this paper a firm discriminates between two classes of customer who have a different cost of information by coupling a list price with an offer to match the pr ice of any other shop if the list price elsewhere is lower the firm will be successful in discrimination the list price of each firm is increasing in the number of sellers and the total sales are decreasi ng in the number of sellers furthermore if sellers coordinate they discriminate more efficaciously and increase their profits by increa sing their total sales copyright 1987 by the university of chicago

an experimental and theoretical analysis of price matching refund policies abstract price matching refund policies or offers by firms to match competitor s prices are common in both consumer and industrial marketing much of the previous theoretical work in economics suggests that price matching refunds are associated with higher prices in contrast the trade press postulates that price matching policies are associated with lower prices given these inconsistent views regarding price matching policies the authors experimentally examine how consumers view and interpret such policies and then develop a model that incorporates these consumer interpretations as well as asymmetries across stores in the model the asymmetry across stores is the key to deriving the conditions under which a signaling equilibrium exists in the presence of price matching policies the critical point is that the competition reducing and price discrimination effects which seem to form the basis of most of the previous theoretical literature can be counteracted by the presence of differentiated firms

facilitating practices the effects of advance notice and best price policies even if firms in a market choose discount prices noncooperatively the use of most favored customer and meet or release contracts enables those firms to adopt quantity choice strategies consequently there can be a range of list prices that are impervious to unilateral nonselective discounts but this range does not include prices above the level determined in a cournot equilibrium the practice of advance public notification of list price increases can facilitate the establishment of such supracompetitive list prices as was argued in the recent ftc ethyl case the possibility of offering discounts selectively results in a much more competitive situation

guaranteed lowest prices do they facilitate collusion abstract the effects of a policy guaranteeing lowest price are analyzed in a two stage game where firms first decide whether to adopt such a policy and then choose prices symmetric and asymmetric games are solved to examine the extent to which prices can rise to collusive levels

price matching policy and the principle of minimum differentiation this paper shows that if duopolists are allowed to choose their product locations a price matching policy and their prices sequentially and independently both tacit collusion and minimum differentiation occur copyright 1995 by blackwell publishing ltd

price matching in a model of equilibrium price dispersion some sellers announce openly to prospective buyers that they will match any competitor s lower price on similar products this practice is visible among many retailers of consumer durables such as tv sets stereo components cameras and personal computers in more covert and informal forms price matching is ubiquitous it exists whenever individual sellers of a product are known to be generally willing to lower their prices when confronted by prospective buyers who can demonstrate information of lower prices elsewhere attempts to demonstrate and verify such information usually constitute part of the haggling process one often wonders will prices consumers ultimately pay indeed be lower with such haggling will apparently aggressive price matching strategies result in lower or higher equilibrium prices this paper deals with an environment in which information is not perfect and buyers engage in costly sequential search it will be shown that with price matching prices ultimately charged to consumers are higher the crucial assumption here is that buyers marginal search cost increases with the number of searches already performed with this assumption the main idea driving our results is as follows in the presence of increasing marginal search cost price matching encourages search therefore there will be more prospective buyers who will have performed a larger number of searches their marginal search cost will be higher on the average thus firms will be able to take advantage of this and charge higher prices but why would price matching encourage search if marginal search cost is increasing the answer lies in that price matching implies costless recall in sequential search models with consumers facing a known price distribution and constant marginal search cost whether recall is costless or costly is immaterial for then consumers optimal strategy is a constant reservationprice strategy implying that prices rejected earlier will never be acceptable the desire to recall never arises so that it does not matter to the searcher whether recall is costly or costless in such an environment firms do not have the incentive to offer price matching but as rothschild 7 has cautioned us the two assumptions of costly and costless recall are not always interchangeable they are not when marginal search cost is increasing for then if a consumer having a price

on the competitive effects of price matching policies abstract this paper challenges the conventional wisdom that price matching policies lead to supracompetitive prices by reducing firms incentives to undercut rivals i argue that price matching and price beating policies are more appropriately viewed as a means of price discrimination and develop a model that demonstrates their use as such analysis of this model shows that in contrast to the results of the existing literature price matching and price beating may raise or lower equilibrium prices relative to the equilibrium in which firms may not adopt such policies

transaction cost economics the natural progression abstract this manuscript provides the nobel laureate s reflections on transaction cost economics the overview section frames governance as the overarching concept and transaction cost economics as the means by which to breathe operational content into governance and organization the vertical integration section identifies efficiency factors associated with determining when a firm produces a good or service to its own needs rather than outsource a discussion of the rudiments of transaction cost analysis is subsequently provided puzzles and challenges that require pushing the logic of efficient governance to completion are examined and followed by concluding remarks

adaptation and vertical integration in the airline industry we explore patterns of vertical integration in the us airline industry major air lines subcontract portions of their network to regional partners which may or may not be owned we investigate if ownership economizes on ex post renego tiation costs we estimate whether airlines are more likely to use owned region als on city pairs with adverse weather which makes adaptation decisions more frequent and on city pairs that are more integrated into the major s network which raises the costs of having adaptation decisions resolved suboptimally our results suggest a robust empirical relationship between adaptation and vertical integration in this setting jel l14 l22 l24 l93 how do firms decide which transactions to carry out in house and which to procure through the market in response to this question a large theoretical literature has developed one branch of this literature transaction cost economics argues that integration may be a more efficient way to organize when contracts are incomplete and parties cannot easily switch trading partners oliver williamson 1975 1985 j under these conditions ex post renegotiation will be both nec essary and costly and as a result the transaction costs of market exchange may be substantial empirical studies testing this hypothesis have focused primarily on the effect of asset specific ity on vertical integration and have generally found a positive relationship 2 however as steven tadelis 2002 emphasizes holding asset specificity constant variation in transaction costs will also result from differences in transaction complexity complex transactions are associated with greater contractual incompleteness and in turn more costly haggling over ex post adaptation decisions yet relative to asset specificity the frequency of adaptation decisions as a determinant of vertical integration has received considerably less attention in the empirical literature 3

a retrospective impact evaluation of the tamil nadu empowerment and poverty alleviation pudhu vaazhvu project abstractcommunity based livelihood interventions which focus directly on increasing income and employment have become an increasingly important component of large scale poverty reduction programmes we evaluate the impact of a participatory livelihoods intervention the tamil nadu empowerment and poverty reduction pudhu vaazhvu project pvp using propensity score matching methods the paper explores the impact of pvp on its core goals of empowering women and the rural poor improving their economic welfare and facilitating public action we find significant effects of pvp on reducing the incidence of high cost debt and diversifying livelihoods we also find evidence of women s empowerment and increased political participation

vertical integration and firm boundaries the evidence since ronald h coase s 1937 seminal paper a rich set of theories has been developed that deal with firm boundaries in vertical or input output structures in the last twenty five years empirical evidence that can shed light on those theories also has been accumulating we review the findings of empirical studies that have addressed two main interrelated questions first what types of transactions are best brought within the firm and second what are the consequences of vertical integration decisions for economic outcomes such as prices quantities investment and profits throughout we highlight areas of potential cross fertilization and promising areas for future work

price matching guarantees are price matching guarantees anticompetitive we examine the incentives for price matching guarantees in markets where information about prices is costly the conventional explanation of price matching as facilitating cartel pricing finds some theoretical support but our model provides an additional explanation a price matching guarantee may be a credible and easily understood means of communicating to uninformed consumers that a firm is low priced the credibility of the signal is assured by the behavior of informed consumers we contrast the testable implications of our model with those arising from two theories of price matching as anticompetitive and show that available evidence supports the signalling theory

contractible contracts in common agency problems this article analyses contractual situations between many principals and many agents the agents have private information and the principals take actions principals have the ability to contract not only on the reports of the agents but also on the contracts offered by other principals contracts are required to be representable in a formal language the main result of the article is a characterization of the allocations that can be implemented as equilibria in our contracting game we then restrict attention to exclusive contracting environments in which the agent may select the contract of at most one principal in this setting our characterization result implies that principals can collude to implement the monopolist outcome finally in general equilibrium contracts turn out to be incomplete that is a contract will restrict the action space of a principal but will not necessarily determine a single action

price match announcements in a consumer search duopoly using a model of sequential search we show that announcements to price match raise prices by altering consumer search behavior first price matching diminishes firms incentives to lower prices to attract consumers who have no search costs second for consumers with positive search costs price matching lowers the marginal benefit of search inducing them to accept higher prices finally price matching can lead to asymmetric equilibria where one firm runs fewer sales and both firms tend to offer smaller discounts than in a symmetric equilibrium price increases grow in the proportion of consumers who invoke price matching guarantees and in the level of equilibrium asymmetry

on the incidence and variety of low price guarantees abstract this paper provides evidence of the incidence and variety of low price guarantees promises to match or beat a rival s price using data obtained from newspaper advertisements in 37 metropolitan areas in the united states we have a total of 515 low price guarantees in our sample we document their features and we infer firms motives and effects from these features the evidence suggests that the majority of low price guarantees are not consistent with their use as a facilitating device because they tend to apply only to rival firms advertised prices or they are associated with high hassle costs the evidence also suggests that price beating and price matching guarantees differ significantly in their features the former are associated with higher hassle costs apply disproportionately to rival firms advertised prices and are more likely to allow postsale search than are price matching guarantees

subcontracting and competitive bidding on incomplete procurement contracts this article examines the impact of incomplete contracts on subcontracting and the design of procurement auctions i estimate the effect of ex post contract revisions on unit costs for both subcontracted and in house performed work items on bridge projects procured by the california department of transportation i model a scoring auction showing how ex post revisions skew bidding decisions and estimate unit costs from bid data using the method of sieve estimation the results highlight the cost implications of incomplete contracting frictions subcontracting decisions and bidding distortions in conclusion i propose alternative auction mechanisms that could improve outcomes

how to deliver foreign aid the case of projects governed by the spanish international agency summary international agencies use two alternative modes of governance to deliver international aid projects under bilateral agreements with recipient governments in house or through incumbent ngos through the lenses of institutional and transaction cost economics this article examines 95 international aid projects delivered in morocco and ecuador by the spanish international agency finding that those projects delivered in house present different features than those projects outsourced through incumbent ngos specifically international aid projects delivered in house involve important investments in specific assets are much more complex and can turn the public agency into a hostage of its own disbursement

ex ante investment ex post adaptation and joint ownership abstract this study extends the property rights theory prt model by introducing an ex post adaptation to changes in trade circumstances we show that if uncertainty is sufficiently high joint ownership can facilitate both ex ante investment and ex post adaptation

community based development and poverty alleviation an evaluation of china s poor village investment program we conduct the first systematic evaluation of the world s largest community based development program china s flagship poverty alleviation program began in 2001 which finances public investments in designated poor villages based on participatory village planning we use matching methods and a panel household and village data set with national coverage to compare changes from 2001 to 2004 in designated poor villages that began plan investments and in designated poor villages that had yet to begin plan investments we find that the program significantly increased both government and village financed investments while the program did not increase the income or consumption of poorer households it did increase the income and consumption of richer households by 6 1 to 9 2 we also find suggestive evidence that governance matters in the distribution of program benefits relative gains were greater for richer households in villages with more educated leaders and higher quality village committees delivered greater benefits to both richer and poorer households

public good provision in indian rural areas the returns to collective action by microfinance groups self help groups shgs are the most common form of microfinance in india the authors provide evidence that shgs composed of women only undertake collective actions for the provision of public goods within village communities using a theoretical model this paper shows that an elected official whose aim is to maximize re election chances exerts higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods this effect occurs although government and private contributions are assumed to be substitutes in the technology of providing public goods using first hand data on shgs in india the paper tests the prediction of the model and shows that in response to collective action by shgs local authorities tackle a larger variety of public issues and are more likely to tackle issues of interest to shgs the findings highlight how the social behavior of shgs can influence the governance of rural indian communities

how low is a guaranteed lowest price a game based on the bertrand duopoly model is constructed to study the effects of price guarantee policies before it chooses a list price a firm can make a binding commitment to match or beat its competitor s price the effectiveness of these price guarantee policies in facilitating price collusion depends on the solution concept used furthermore there exists an equilibrium in which neither firm offers any price guarantees and each firm sets price equal to marginal cost

output decisions and price matching theory and experiment we study the effects of price matching in a setting in which each firm selects both its price and output simultaneously we show that the availability of a price matching option leads to the cournot outcome in this setting our experimental study confirms this result in the laboratory our finding is a stark contrast to the one obtained in the standard price competition that the most likely market price in the presence of a price matching option is the monopolistic price in addition we show that price matching benefits consumers in markets with a large number of firms if a market has a few firms then the effects of price matching on consumers depend on the market demand and cost functions thus our study suggests that the effect of price matching depends on the strategic variables of the firms data and the online appendix are available at https doi org 10 1287 mnsc 2017 2788 this paper was accepted by eric anderson marketing

the social impact of social funds in jamaica a participatory econometric analysis of targeting collective action and participation in community driven development qualitative data from a case study of the jamaica social investment fund reveal that the social fund process is elite driven and decision making tends to be dominated by a small group of motivated individuals however there is broad based satisfaction with the outcome quantitative data from 500 households mirror these findings by showing that ex ante the social fund does not address the expressed needs of the majority of individuals in the majority of communities by the completion of the project however 80 per cent of the community expresses satisfaction with the outcome an analysis of the determinants of participation reveals that better educated and better networked individuals dominate the process propensity score analysis demonstrates that jsif has had a causal impact on improvements in trust and the capacity for collective action but these gains are greater for elites

competitive price matching guarantees equilibrium analysis of the availability verification clause under demand uncertainty price matching guarantees involve a retailer matching the lower price of a competitor for an identical product in reality retailers often make such guarantees contingent on the verification of product availability at the competitor s location and decline a price match request if the product is not available there this creates certain consternation on the part of customers in this paper we investigate the availability contingency strategy from the perspectives of both the retailers and the customers our analysis shows that availability contingency clauses intensify inventory competition between retailers and reinstitutes price competition which is otherwise eliminated by unconditional price matching guarantees consequently despite what customers may think about the availability verification it actually increases their surplus on the other hand such a clause reduces profits and hence is not the equilibrium strategy for retailers subsequently we discuss how a likely customer behaviour pattern may be a plausible explanation regarding the use of the clause by the retailers in practice this paper was accepted by yossi aviv operations management

can low price guarantees deter entry abstract this paper examines the strategic use of low price guarantees lpgs as an entry deterrent the entire space of contemporaneous lpg messages is partitioned according to their ability to deter entry and or increase the incumbent s profits while most price matching and price beating guarantees cannot deter entry into a perfectly contestable market there do exist special classes of price beating guarantees that enable the incumbent to prevent entry interestingly both price matching and price beating can be a part of the incumbent s strategy in subgame perfect equilibria of the game where the firms choose lpgs from 14 classes defined in the paper

the role of accountants in indian self help groups a trade off between financial and non financial benefits summary self help groups shgs create a platform that allows women to meet on a weekly basis to save and to take loans if needed strict records of all saving and lending are important both to avoid conflicts in the group and to obtain access to bank loans accounting is either done by a group member internal accountant or by another villager external accountant using first hand data on shgs in northern india this paper studies whether economic and non financial returns differ depending on whether shgs meet as independent entities or with external involvement economic theory suggests that repeated interaction between individuals can help build social capital the presence of an external accountant hampers this process indeed repeated interaction is more likely to create non financial benefits in the form of mutual assistance and collective action when the accountant is a group member however these benefits come at a cost as shgs with internal accountants distribute financial benefits more unequally and the accountants themselves receive larger shares than the other members of the groups the analysis shows that the larger shares cannot be explained as a compensation for a better financial performance but that some form of elite capture occurs however other group members implicitly agree on the unequal distribution indeed members are not more likely to leave groups possibly because the loss in financial benefits is outweighed by the gain in non financial benefits

unilateral most favored customer pricing a comparison with stackelberg abstract if one firm in a price setting duopoly adopts a most favored customer pricing policy it can commit to a price which is higher than the bertrand price the equilibrium price however must be lower than the stackelberg leader price

reshaping institutions evidence on aid impacts using a pre analysis plan this brief summarizes the results of a gender impact evaluation study entitled reshaping institutions evidence on aid impacts using a pre analysis plan conducted between 2005 and 2009 in sierra leone the study observed the impact of pre analysis plan pap on local institutions by imposing participation requirements for marginalized groups including women and test for learning by doing effects in sierra leone on the individual and village level requiring women and young adults to take on leadership positions participate in project meetings and sign off on project finances does not have any persistent effect on their participation in local decision making or attitudes regarding leadership ability the project successfully established village organizations and tools to manage the project the distributions of the project s benefits were equitable and leakage was minimal there was a significant positive impact on the stock and quality of local public infrastructure however there are no detectible changes in the ability to raise funds for local public goods decision making process or social norms and attitudes funding for the study derived from the gobifo project the institutional reform and capacity building project ircbp the world bank development impact evaluation dime the horace w goldsmith foundation the international growth center 3ie and the national bureau of economic research nber african successes project

effective price matching a comment abstract corts economic lett 47 1995 417 showed that when allowing for price beating policies in addition to price matching policies the competitive outcome prevails in lieu of monopoly pricing i show by expanding the strategy set further to include effective price strategies the possibility of monopoly pricing is restored

on the use of low price guarantees to discourage price cutting abstract this paper formulates a novel test to assess whether and to what extent firms might be using low price guarantees to discourage their rivals from cutting prices the test is based on a comparison of paired observations of advertised prices that are set by competing firms at the same point in time on similar items where one price is set by a firm that has a low price guarantee and the other by a firm that does not have a low price guarantee using data on retail tire prices we find that the majority of paired observations involving firms that have price matching guarantees are consistent with what one would expect if firms were using them to discourage price cutting whereas the majority of paired observations involving firms that have price beating guarantees are not this suggests that price matching and price beating guarantees may be serving different purposes the evidence also suggests that guarantees that apply to advertised prices only may be serving different purposes than guarantees that apply to both advertised and selling prices

experimental duopolies under price guarantees in a symmetric differentiated experimental duopoly we test the ability of price guarantees pgs to raise prices above the competitive levels different types of pgs aggressive and soft price beating and price matching are implemented either as an exogenously imposed market rule or as a business strategy our results show that pgs may lead close to the collusive outcome depending on whether the interaction between duopolists is repeated and provided that the guarantee is not of the aggressive price beating type

regulation and contract design the impact of relationship specific investment a primary explanation for variation in contract structure is the extent to which contracting parties make investments specific to their transaction investment decisions are typically endogenous in contract choice however frustrating attempts at causal verification i analyze the impact of a major environmental regulation the clean air act amendment of 1990 on coal procurement strategies of u s utilities i exploit a key feature of the amendment s design to define a difference in difference model that is arguably less susceptible to endogeneity concerns i find wide support for the theoretical prediction reduced specificity leads to shorter length fixed price contracts

different selling strategies in bertrand oligopoly abstract i analyse a bertrand oligopoly game where firms can choose between selling strategies i price announcements ii price announcements and offers to price match i establish the set of nash equilibria and show that only the monopoly price nash equilibrium satisfies iterative dominance

matching own prices rivals prices or both many retailers promise that they will not be undersold by rivals and extend their promise to include their own future prices that is many retailers combine elements of both price matching guarantees and retroactive most favored customer clauses this is puzzling because the extant literature has shown that each practice independently has the potential to facilitate supracompetitive prices and thus one might think the two practices are substitutes in this paper we show that price matching guarantees and most favored customer clauses complement each other when offered unilaterally by a single firm and can lead to higher prices than either one could have facilitated by itself

price matching guarantees as a direct signal of low prices if consumers believe that stores offering price matching guarantees pmgs charge low prices high search cost consumers will purchase from pmg stores this leads pmg stores demand to be less pric

on the robustness of the argument that price matching is anti competitive abstract the existing literature suggests that price matching leads to monopoly prices i show that this argument relies on an arbitrary and unrealistic restriction of the firms strategies in particular if firms may adopt price beating policies the competitive outcome prevails

capturing knowledge within and across firm boundaries evidence from clinical development how do firm boundaries influence employees acquisition of information using detailed project level data and qualitative evidence i document that pharmaceutical firms are more likely to outsource the coordination of data intensive clinical trials while they are more likely to assign knowledge intensive trials to internal teams managers do not choose between market and hierarchy but between the hierarchy of the firm in which subjective performance evaluations are combined with flat explicit incentives and the hierarchy of its subcontractor whose virtue stems precisely from the ability to provide high powered incentives on a narrow set

four formal izable theories of the firm in this essay i define and compare elemental versions of four theories of the firm these elemental theories are distilled from important contributions by hart holmstrom klein williamson and others although these contributions have been widely cited and much discussed i have found it difficult to understand the commonalities distinctions and potential combinations of these seemingly familiar contributions in this essay therefore i attempt to clarify these issues in three steps i begin with informal summaries of the theories then turn to simple but formal statements of each elemental theory and finally nest the four elemental theories in an integrative framework

price matching guarantees and consumer search abstract this paper examines the effect of price matching guarantees pmgs on market outcomes in a sequential search model pmgs are simultaneously chosen with prices and some consumers shoppers know the firms decisions before buying while others non shoppers enter a shop before observing the price and whether or not the firm has a pmg in such an environment pmgs increase the value of buying the good and therefore increase consumers reservation prices this increase is so large that even after accounting for the possible execution of pmgs firms profits are larger in an equilibrium where pmgs are offered than in an equilibrium without pmgs we also consider the incentives of firms to choose pmgs and show that an equilibrium where all firms offer pmgs does not exist because of a free riding problem

the boundaries of the firm revisited why do firms exist what is their function and what determines their scope these remain the central questions in the economics of organization they are also central questions for business executives and corporate strategists the worldwide volume of corporate mergers and acquisitions exceeded 1 6 trillion in 1997 it is hard to imagine that so much time effort and investment bankers fees would be spent on adjusting firm boundaries unless there was some underlying economic gain indeed the exceptional levels of merger and acquisition activity over the past two decades are a strong indication that economically significant forces do determine organizational boundaries the study of firm boundaries originated with the famous essay by coase 1937 who raised the question of why we observe so much economic activity inside formal organizations if as economists commonly argue markets are such powerful and effective mechanisms for allocating scarce resources coase s answer was in terms of the costs of transacting in a world of imperfect information when the transaction costs of market exchange are high it may be less costly to coordinate production through a formal organization than through a market in large part thanks to the work of williamson 1975 1985 recent decades have seen a resurgence of interest in coase s fundamental insight that firm boundaries can be explained by efficiency considerations our understanding of firm boundaries has been sharpened by identifying more precisely the nature and sources of transaction costs in different circumstances in the process the focus of

the impact of group based credit programs on poor households in bangladesh does the gender of participants matter this paper estimates the impact of participation by gender in the grameen bank and two other group based micro credit programs in bangladesh on labor supply schooling household expenditure and assets the empirical method uses a quasi experimental survey design to correct for the bias from unobserved individual and village level heterogeneity we find that program credit has a larger effect on the behavior of poor households in bangladesh when women are the program participants for example annual household consumption expenditure increases 18 taka for every 100 additional taka borrowed by women from these credit programs compared with 11 taka for men

a model of duopoly and meeting or beating competition this paper analyzes the use of meeting and beating competition clauses in duopoly markets a differentiated products price setting model is considered in which firms have the option of precommitting themselves to contracts which bind their own price to be some prespecified function of their competitor s price the analysis establishes conditions under which these contracts facilitate oligopoly coordination under which they result in price discrimination and under which they can actually be procompetitive

the welfare losses from price matching policies several recent papers argue that price matching policies raise equilibrium prices we add to this literature by considering potential welfare losses which have two sources harberger triangles from high prices and posner rectangles from over entry we compare price matching markets with entry to monopoly and price matching markets without entry and find that price matching with entry creates greater welfare losses than monopoly in markets with a low ratio of fixed to marginal cost we illustrate this result using parameters from the us wholesale gasoline and air travel markets and relate our model to price matching among nasdaq market makers

pricing on the internet it is often claimed that e commerce has created a more competitive environment by encouraging the entry of new online firms and by enabling buyers to search easily for the lowest prices the limited evidence that exists paints a mixed picture many online markets are advertising and technology intensive creating a tendency towards growing concentration price search is imperfect and firms can dampen price competition by increasing product heterogeneity and switching costs in many sectors online firms may come to acquire some market power we look at the forms of pricing that are likely to emerge in such markets including the greater use of price discrimination and auction like trading arrangements copyright 2001 oxford university press

empowering women with micro finance evidence from bangladesh abstract this article examines the effects of men s and women s participation in micro credit programs on various indicators of women s empowerment using data from a special survey carried out in rural bangladesh these credit programs are well suited to studying how gender specific resources alter intrahousehold allocations because they induce differential participation by gender through the requirement that only one adult member per household can participate in any micro credit program empowerment is formalized as an unobserved latent variable reflecting common components of qualitative responses to a large set of questions pertaining to women s autonomy and decision making power the empirical methods are attentive to various sources of endogeneity and the results are consistent with the view that women s participation in micro credit programs helps to increase women s empowerment the effects of male credit on women s empowerment were generally negative

research note price matching guarantees retail competition and product line assortment price matching guarantees pmgs are offers to match a competitor s price on a specific item such guarantees are extremely common in u s retail practice and their impact has been studied in several published papers the existing analytic literature models each retailer as a single product seller most work assumes that each retailer s product is identical with or completely substitutable for the competitor s product in reality competing retailers often sell multiple products and these products do not always overlap or may overlap partially but not totally furthermore retailers that offer pmgs routinely exclude certain offerings from pmg coverage this raises the interesting question of how product variety and product stocking factors affect retailer decisions about offering pmgs in this paper we simultaneously consider three factors of retailing importance that imply results consistent with pmg use and nonuse the ability to choose to stock the same product as or a product differentiated from a competitor s offering the possibility of shelf space limitations on the ability to stock complete variety and the category demand enhancing effect of variety these are sensible and realistic descriptive factors shaping retailers product and pricing decisions and because they have not been considered jointly in the prior literature on pmgs their joint consideration helps to expand our understanding of the drivers of pmg implementation and impact in the presence of these three factors we examine retailers decisions about whether to offer a pmg what product s to stock and how to price the product s stocked our results show that shelf space limitations have an important influence on pmg provision in particular when retailers are shelf space constrained and product substitutability in the category is sufficiently large choosing to use pmgs which by definition also requires stocking identical products is strictly less profitable than enduring bertrand price competition but enjoying retail product differentiation the result that pmgs can be profit reducing relative to head to head retail competition is a novel one driven in our model by the opportunity costs of stocking identical products i e the inability to benefit from the demand enhancing effects of variety and the differential small or large between bertrand pricing and pmg pricing levels we further show that under asymmetric shelf space availability either product variety will be severely limited or retailers will offer a different array of products weak substitution between products leads to the latter with pricing between the differentiated products bertrand and monopoly levels strong substitution leads to the former with pricing at the monopoly level our results also show that with unlimited shelf space both competing retailers offer pmgs stock the entire available product line and enjoy monopoly pricing given our focus on product variety issues we also relate our results to the literature on branded variants our results demonstrate that the nature of product variety the availability of retail shelf space and the category demand enhancing effect of variety are key market characteristics that jointly and strongly affect the optimality of pmgs and the resulting pricing and profitability characteristics of the market

the most favored nation pricing policy and negotiated prices previous work has viewed the most favored nation mfn contract as a practice capable of facilitating collusion among sellers but this paper shows that even a monopoly seller may gain by including the mfn provision in sales contracts we consider a case in which the seller negotiates price separately with each of two buyers by including a mfn clause in her contract with the first buyer the seller raises her cost of granting price concessions to the second buyer this increases the seller s bargaining strength with respect to the second buyer thereby helping her negotiate a higher price

governance of adjustments the article proposes a research program to compare game forms in terms of their ability to govern ex post adjustments to ex ante contracts the comparisons can be based on direct implementation costs or the extent to which desirable adjustments are not implemented in several examples of the program i compare three game forms negotiation over each adjustment ex ante price lists and implicit contracts leaving the stipulation of adjustments to one player if the latter game form is defined as an employment relationship the theory of the firm becomes a special case of the program the article starts with a discussion of the nature and magnitude of adjustment costs followed by an exposition of four examples i then discuss the role of asset ownership review some empirical evidence and look at broader implications

do low price guarantees guarantee low prices evidence from competition between amazon and big box stores it has long been understood in theory that price match guarantees can be anticompetitive but to date scant empirical evidence is available outside of some narrow markets this paper broadens the scope of empirical analysis studying a wide range of products sold on a national online market using an algorithm that extracts data from charts i obtain a novel source of data from online price trackers i examine prices of goods sold on amazon before and after two big box stores target and best buy announced a guarantee to match amazon s prices employing both difference in difference and regression discontinuity approaches i robustly estimate a positive causal effect of six percentage points the effect was heterogeneous with larger price increases for initially lower priced items my results support anticompetitive theories which predict price increases for amazon a firm that did not adopt the guarantee and are consistent with plausible mechanisms for the heterogeneous impact

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

socio economic impacts of jeevika a large scale self help group project in bihar india summary policymakers have invested billions of dollars over the past two decades on projects which target poverty reduction by institutional mobilization of the poor unfortunately evidence on the efficacy of such projects is few and far between this is an outcome of the complexity of these projects we consider results from jeevika a large scale rural livelihoods program in bihar india we use a retrospective survey instrument coupled with psm techniques to find that jeevika has engendered some significant results in restructuring the debt portfolio of these households additionally there is evidence on women s empowerment as measured by various dimensions

the economics of governance the economics of governance is an effort to implement the study of good order and workable arrangements where good order includes both spontaneous order in the market which is a venerated tradition in economics adam smith 1776 friedrich hayek 1945 kenneth a arrow and gerard debreu 1954 and intentional order of a conscious deliberate purposeful kind chester irving barnard 1938 p 9 also i interpret workable arrangements to mean feasible modes of organization all of which are flawed in comparison with a hypothetical ideal avinash dixit 1996 pp 4 9 the object is to work out the efficiency logic for managing transactions by alternative modes of governance principally spot markets various long term contracts hybrids and hierarchies interest among social scientists economists included in the study and practice of good order and workable arrangements has been steadily growing in contrast with the orthodox lens of choice prices and output supply and demand the economics of governance is a lens of contract construction broadly in the spirit of james buchanan s 2001 p 29 observation that mutuality of advantage from voluntary exchange is the most fundamental of all understandings in economics the economics of governance as herein described is principally an exercise in bilateral private ordering by which i mean that the immediate parties to an exchange are actively involved in the provision of good order and workable arrangements to be sure the need for private ordering varies with the rules of the game as provided by the state distinctions between lawlessness where the state provides limited or unreliable protection for property and contract dixit 2004 and lawfulness where the state undertakes to protect property and enforce contracts in a principled way are pertinent the first of these applies mainly to primitive and transition economies the second is commonly associated with western democracies recourse to private ordering under conditions of lawlessness is altogether understandable given the absence of state support the walter a haas school of business university of california berkeley ca 94720 1900 the paper has benefited from workshop presentations at the university of california berkeley the university of valencia insead fountainebleau and the 2004 annual conference of the international society for new institutional economics an abbreviated version was also given as the horst claus recktenwald lecture at nuremburg on 4 november 2004 comments and suggestions from fred balderston ernesto dalbo avinash dixit robert gibbons witold henisz ian larkin steven tadelis and dean williamson are especially acknowledged 1 lon fuller s 1954 p 477 definition of eunomics as the science theory or study of good order and workable arrangements is very much in the spirit of what i refer to as governance 2 one of the immediate ramifications of insistently comparing feasible alternatives all of which are flawed is that the purported inefficiencies that are ascribed to failures to achieve first best optimality are not dispositive but invite the query as compared with what i return to this issue in section iv 3 excluding corporate governance the numbers of articles that used the word governance during the period 1998 2000 as compared with the period 1977 1979 in selected economics business management sociology organization and political science journals were 60 vs 1 76 vs 4 79 vs 18 and 60 vs 25 where the journals surveyed were the american economic review journal of political economy quarterly journal of economics rand journal of economics and journal of economic perspectives in economics strategic management journal management science academy of management journal and academy of management review in business management administrative science quarterly organization science american journal of sociology american sociological review and annual review of sociology in sociology organization and american political science review political science quarterly journal of politics and political research quarterly in political science combining these four categories articles using the word governance increased from 48 to 275 over this 20 year interval dixit 2004 pp 149 50 reports that the number of web pages that turn up under the search for governance is huge

research note consumer heterogeneity and competitive price matching guarantees price matching guarantees are widely used in consumer and industrial markets previous studies argue that they are a marketing tactic that facilitates implicit price collusion this is because once a store adopts this marketing tactic its rivals can no longer steal its customers by undercutting its price and hence they have little incentive to initiate price cuts while a store with price matching guarantees has no fear of losing customers to rivals price cuts it has every incentive to raise its own price to charge a higher price to its loyal consumers a growing body of legal literature uses this argument today to justify calls for antitrust actions against stores employing this marketing tactic however this theoretical conclusion baffles practitioners and industry experts in practice sellers typically embrace this marketing tactic in response to heavier competition and a growing bargain consciousness among shoppers the introduction of price matching guarantees by a store is frequently interpreted by industry observers as the initiation of a price war rather than a signal of price collusion this assertion is supported in many instances by the fact that stores that introduce price matching guarantees also roll back their prices and typically suffer subsequent loss of profits most ironically the favorite examples used by researchers to illustrate how price matching guarantees can enforce price collusion crazy eddie and nobody beats the wiz have subsequently either gone bankrupt or filed for federal bankruptcy protection in this study we show that price matching guarantees can indeed facilitate competition the expected prices and profits can be strictly lower when all stores adopt price matching guarantees than when they are not allowed to this is because the adoption of price matching guarantees generates not only a competition dampening effect which has been recognized in the literature but also a competition enhancing effect this latter effect comes from the fact that price matching guarantees encourage price search by those consumers who prefer to shop at a particular store but are mindful of saving opportunities these consumers will have incentives to obtain the rival store s price when their favorite store offers price matching guarantees to avail themselves of the lowest possible price at their favorite store as a result price matching guarantees reduce the number of purchases at the store from those consumers who would have paid the full price and thus prompt a store to price more aggressively to bid for more incremental sales this competition enhancing effect can more than offset the competition dampening effect in markets where consumers differ in their price search costs and store loyalty thus our study casts doubt on the advisability of blanket prohibition on price matching guarantees our argument relies only on consumer segmentation and on the phenomenon of periodic sales both of which are common in retail markets we arrive at our conclusion by incorporating bargain shoppers and opportunistic loyals into the standard sales promotion models in contrast the past literature on price matching guarantees ignores the ubiquitous phenomenon of sales in retail markets and overlooks those consumers who prefer to shop at a particular store but are alert to saving opportunities as a result it is troubled by two awkward conclusions on the one hand price matching guarantees simply remove rivals incentives to undercut in price and hence also their incentives to run sales this implies that the adoption of price matching guarantees in a market will eliminate the phenomenon of sales which is obviously counterfactual on the other hand in equilibrium no consumer actually invokes price matching guarantees as each player has incentives to close any price gap in the market this is obviously false based on our casual observations and our conversations with store managers theoretical research on the subject thus far has been overwhelmingly one sided and empirical or experimental studies are conspicuously lacking we hope that our conclusion will spark further research in both directions a healthy debate will broaden our perspective on an issue of great importance in formulating public policies and in managerial decision making

platform monopolization by narrow ppc bpg combination booking et al abstract the price parity clauses ppcs that online booking platforms impose have come under antitrust scrutiny wang and wright 2017 show how by preventing showrooming a narrow ppc can reduce search costs and benefit consumers under between platform competition in response to having to give up its wide ppc to hotels booking com emphasized its best price guarantee bpg to customers we observe that a narrow ppc combined with a low hassle costs bpg leaves only wang and wright s price parity and monopoly equilibrium ppme in which consumers are worse off than with no platform operating at all a more efficient incumbent platform can deter entry with the bpg while the narrow ppc eliminates competition from direct sales channels an equally efficient platform could enter and compete consumer prices down because of the existence of hassle costs yet this equilibrium is fragile to network effects if sellers have incentives not to price differentiate between platform s and their direct sales channel a narrow ppc alone suffices to sustain the ppme in both cases the detrimental pricing contract combination that we point out calls for different platform competition policy