do public schools hire the best applicants despite a surplus of candidates for most teaching jobs a strong academic record does little for an applicants job prospects this does not appear to result from lukewarm interest on the part of such applicants or choosiness about the positions they accept administrators lack of interest in these candidates may reflect the weakness of competitive pressures in public education policies intended to improve teacher quality need to consider incentives on both the demand and supply sides of the market

the new economics of teachers and education rapidly growing costs of elementary and secondary education are studied in the context of the rising value of women s time the dramatic increase in direct costs of education per student in the past 3 decades is empirically linked to increasing demand and utilization of teacher and staff inputs attributable to growing market opportunities for women and changes in the structure of families on the supply side the flexibility option that female teachers who take temporary leaves do not suffer subsequent wage loss upon reentry is shown to be an important attraction of the teaching profession to women

analyzing the welfare impacts of full line forcing contracts theoretical investigations have examined both anti competitive and efficiency inducing rationales for vertical bundling making empirical evidence important to understanding its welfare implications we use an extensive dataset on full line forcing contracts between movie distributors and video retailers to empirically measure the impact of vertical bundling on welfare we identify and measure three primary effects of full line forcing contracts market coverage leverage and efficiency we find that bundling increases market coverage and efficiency but has little impact on one distributor s gaining leverage over another as a result we estimate that full line forcing contracts increased consumer and producer surplus in this application

teacher quality in educational production tracking decay and student achievement growing concerns over the inadequate achievement of u s students have led to proposals to reward good teachers and penalize or fire bad ones the leading method for assessing teacher quality is value added modeling vam which decomposes students test scores into components attributed to student heterogeneity and to teacher quality implicit in the vam approach are strong assumptions about the nature of the educational production function and the assignment of students to classrooms in this paper i develop falsification tests for three widely used vam specifications based on the idea that future teachers cannot influence students past achievement in da ta from north carolina each of the vams exclusion restrictions are dramatically viola ted in particular these models indicate large effects of 5th grade teachers on 4th grade t est score gains i also find that conventional measures of individual teachers value added fade out very quickly and are at best weakly related to long run effects i discuss implic ations for the use of vams as personnel tools

the demand for teacher characteristics in the market for child care evidence from a field experiment abstract this paper sheds light on two key issues regarding the demand for teacher characteristics in the market for center based child care first we study the extent to which teacher qualifications often considered important inputs to classroom quality are valued by providers during the hiring process we then examine the impact of state regulations on hiring decisions to do so a resume audit study was administered in which job seeker characteristics were randomly assigned to resumes that were submitted in response to real child care job postings in 14 u s cities our results indicate that center based providers may not hire the most qualified applicants for example we find that although providers have a strong preference for individuals with previous work experience in early childhood education ece those with more ece experience are less likely to receive an interview than those with less experience we also find that individuals with bachelor s degrees in ece are no more likely to receive an interview than their counterparts at the associate s level our analysis of state regulations shows that they strongly influence teacher hiring decisions we find that providers advertised job requirements are largely in compliance with the state standards for teachers experience and education in addition providers are substantially more likely to interview job seekers who meet these requirements given that most providers voluntarily exceed the state regulations a tentative conclusion is that such rules have a limited effect on child care supply and prices

tying and innovation a dynamic analysis of tying arrangements this paper analyses the effects of tying arrangements on r d incentives it shows that tying is a means through which a firm can commit to more aggressive r d investment in the tied goods market tying also has the strategic effect of reducing rivals incentives to invest in r d the strategy of tying is a profitable one if the gains via an increased share of dynamic rents in the tied goods market exceed the losses that result from intensified price competition in the market the welfare implications of tying and consequently the appropriate antitrust policy are discussed

durable goods theory for real world markets the early 1970s witnessed three major advances in durable goods theory swan 1970 1971 and sieper and swan 1973 on optimal durability coase 1972 on time inconsistency and akerlof 1970 on adverse selection this paper surveys durable goods theory starting with these three contributions where much of the focus is on recent literature and on models that explain real world phenomena in addition to the ideas found in the contributions of swan coase and akerlof topics covered include why producers sometimes practice planned obsolescence the role of adverse selection in new car leasing and reasons for aftermarket monopolization

competition policy and property rights one of the most controversial general questions in current competition policy is when if ever should competition law require a firm with market power to share its property with its rivals the answer would seem to be very rarely in the view of the supreme court of the united states as expressed in the 2004 trinko case which concerned whether a telecommunications network provider is required by us antitrust law to provide network access to its competitors

repressed inflation queuing and the resale of goods in a centrally planned economy abstract the barro grossman repressed inflation model is reformulated incorporating the goods rationing scheme widely observed in centrally planned economies the informal queue we assume there are two types of individual differntiated by work ability this enables inclusion of another feature found in practice the private resale of goods less able individuals queue to buy goods both to consume and to resell to more able individuals the latter spend their time working for a relatively high wage rather than queuing among the comparative statics results is that the supply multiplier is negative positive if goods and leisure are gross substitutes complements

recruiting smarter teachers in recent years many states have raised teacher salaries to attract more capable teachers since teacher labor markets are typically in a state of excess supply success of such policies is contingent on containing perverse feedbacks which arise among exit decisions vacancy rates and the willingness of prospective teachers to invest in occupation specific human capital using sat scores as a measure of ability we find that an across the board raise produces modest improvements in the work force at best indeed under plausible parameter values it is possible for mean ability to decline

the effect of salaries and opportunity costs on duration in teaching evidence from michigan this paper demonstrates that salaries and opportunity costs have important influences on how long teachers stay in teaching the empirical work is based on a new longitudinal dataset providing information on the careers of 7800 michigan public school teachers the generalized least squares estimation technique accommodates censored observations time varying covariates and fixed effects one implication of the result is that predictions from the current generation of teacher supply and demand models are likely to be misleading copyright 1989 by mit press

on platforms incomplete contracts and open source software abstract we analyze investment incentives for a firm a owning a software platform and an application and a firm b deciding whether to develop a new application for the platform while b s entry helps the success of the platform b fears ex post expropriation by a and is hence reluctant to enter and invest we show that different platform governance structures prevalent in the information and communication technology industry integrated proprietary standardized open source platform serve to balance investment incentives for the platform and for the applications

task specific experience and task specific talent decomposing the productivity of high school teachers abstract we use administrative panel data to decompose worker performance into components relating to general talent task specific talent general experience and task specific experience we consider the context of high school teachers in which tasks consist of teaching particular subjects in particular tracks using the timing of changes in the subjects and difficulty levels to which teachers are assigned to provide identifying variation we show that a substantial part of the productivity gains to teacher experience are actually subject specific similarly while three quarters of the variance in the permanent component of productivity among teachers is portable across subjects and levels there exist non trivial subject specific and level specific components counterfactual simulations suggest that maximizing the test score contribution of task specific experience and task specific talent can increase student performance by as much as 04 test score standard deviations relative to random assignment of teachers to classrooms

tying in two sided markets with multi homing this paper analyzes the effects of tying on market competition and social welfare in two sided markets when economic agents can engage in multi homing by participating in multiple platforms to reap maximal network benefits the model shows that tying induces more consumers to multi home and makes platform specific exclusive content available to more consumers which is beneficial to content providers as a result tying can be welfare enhancing if multi homing is allowed even in cases where its welfare impacts are negative in the absence of multi homing the analysis thus can have important implications for recent antitrust cases in industries where multi homing is prevalent

bundling as an entry barrier in this paper we look at the case for bundling in an oligopolistic environment we show that bundling is a particularly effective entry deterrent strategy a company that has market power in two goods a and b can by bundling them together make it harder for a rival with only one of these goods to enter the market bundling allows an incumbent to credibly defend both products without having to price low in each the traditional explanation for bundling that economists have given is that it serves as an effective tool of price discrimination by a monopolist although price discrimination provides a reason to bundle the gains are small compared with the gains from the entry deterrent effect i introduction in this paper we look at the case for bundling in an oligopolistic environment we show that bundling is a particularly effective entry deterrent strategy a company that has market power in two goods a and b can by bundling them together make it harder for a rival with only one of these goods to enter the market bundling allows an incumbent to defend both products without having to price low in each while it is still possible to compete by offering a rival bundle a monopolist can significantly lower the potential profits of a one product entrant without having to engage in limit pricing prior to entry we also show that bundling continues to be an effective pricing tool even if entry deterrence fails or if there is already an existing one product rival a company with a monopoly in product a and a duopoly in product b makes higher profits by selling an a b bundle than by selling a and b independently leveraging market power from a into b and accepting some one product competition against the bundle is better than using the monopoly power in good a all by itself since bundling mitigates the impact of competition on the incumbent an entrant can expect the bundling strategy to persist even without any commitment the traditional explanation for bundling that economists have given is that it serves as an effective tool of price discrimination by a monopolist see stigler 1968 adams and yellen

would higher salaries keep teachers in high poverty schools evidence from a policy intervention in north carolina abstract for a three year time period beginning in 2001 north carolina awarded an annual bonus of 1800 to certified math science and special education teachers working in public secondary schools with either high poverty rates or low test scores using longitudinal data on teachers we estimate hazard models that identify the impact of this differential pay by comparing turnover patterns before and after the program s implementation across eligible and ineligible categories of teachers and across eligible and barely ineligible schools results suggest that this bonus payment was sufficient to reduce mean turnover rates of the targeted teachers by 17 experienced teachers exhibited the strongest response to the program finally the effect of the program may have been at least partly undermined by the state s failure to fully educate teachers regarding the eligibility criteria our estimates most likely underpredict the potential outcome of a program of permanent salary differentials operating under complete information

product bundling and incentives for mergers and strategic alliances this paper analyzes firms choice between a merger and a strategic alliance in bundling their product with other complementary product we consider a framework in which firms can improve profits only from product bundling while mixed bundling is not profitable pure bundling is because pure bundling reduces consumers choices and thus softens competition among firms firms benefit the most from this reduced competit ion if they form an alliance firms do not gain as much from a merger because internalizing the complementarity between the two products a merged firm is inclined to pursue aggressive pricing to gain market share yet firms may be motivated to choose a merger over an alliance because of foreclosure possibility as foreclosure is not possible under strategic alliance however in response unmerged rivals can use a strategic alliance to avert foreclosure hence the possibility of counter bundling via strategic alliance by rivals reduces the incentives for merger in equilibrium

tv wars exclusive content and platform competition in pay tv the article examines incentives for exclusive distribution of premium television programming static analysis shows that a vertically integrated operator with premium programming always supplies this content to the rival distributor using per subscriber fees to soften competition in a dynamic setting with switching costs exclusivity confers a market share advantage benefiting the operator in the future under certain conditions this future benefit outweighs the opportunity cost of forgone wholesale fees making exclusivity the preferred choice alternative dynamic mechanisms are explored identifying essential features the analysis explains the observed incidence of content exclusivity in pay tv and provides guidance for policy makers

exclusivity and tying in u s v microsoft what we know and don t know research on capital structure attempts to explain how corporations finance real investment with particular emphasis on the proportions of debt vs equity financing there is no universal theory of the debt equity choice and no reason to expect one but three useful conditional theories are reviewed in this paper the tradeoff theory says that firms seek debt levels that balance the tax advantages of additional debt against the costs of possible financial distress the pecking order theory says that the firm will borrow rather than issuing equity when internal cash flow is not sufficient to fund capital expenditures thus the amount of debt will reflect the firm s cumulative need for external funds the free cash flow theory says that dangerously high debt levels will increase value despite the threat of financial distress each of these theories works for some firms in some circumstances more general theories will require a deeper understanding of the financial objectives of corporate managers

innovation in vertically related markets we examine the impact of vertical industry structure on upstream process innovation we find that vertical integration vi generally enhances innovation under downstream cournot competition but can diminish innovation under downstream bertrand competition we also find that under bertrand competition vi can increase innovation when the direct incentives for innovation are limited but can reduce innovation when the direct incentives are pronounced

portfolio effects in conglomerate mergers the empirical evidence of leverage effects in korean liquor market in the article we implement an empirical test on the portfolio effects of conglomerate mergers using the data of korean liquor market during the period 1990 2008 in which there have been several important conglomerate mergers between beer and soju companies we find that the combined company could take the advantage of regional market dominance in the beer market in expanding regional market shares in the soju market such leverage effects are differentiated from the efficiency enhancing portfolio effects that result in the combined company s expanding shares over all regional soju markets regardless of the presence of dominance in the beer market the common distribution channels of liquor wholesalers seem to play a pivotal role in the combined firm s expansion of dominance in one market into another furthermore we implement separate empirical tests for two subsamples of regionally dominant and nondominant soju companies in order to differentiate the leverage effects of foreclosure from those of toeh

network effects aftermarkets and the coase conjecture a dynamic markovian approach this paper investigates the expansion of the network of a monopolist firm that produces a durable good and is also involved in the corresponding aftermarket we characterize the markov perfect equilibrium of the continuous time dynamic game played by the monopolist and the forward looking consumers under the assumption that consumers benefit from the subsequent expansion of the network the paper contributes to the theoretical discussion on the validity of the coase conjecture analyzing whether coase s prediction that the monopolist serves the market in a twinkling of an eye remains valid in our setup we conclude that the equilibrium network development may actually be gradual contradicting coase s conjecture we find that a necessary condition for such a result is the existence of aftermarket network effects that accrue at least partly to the monopolist firm

the economics of teacher quality abstract concern is often voiced about the quality of american schoolteachers this paper suggests that while the relative quality of teachers is declining this decline may be the result of technological changes that have raised the price of skilled workers outside teaching without affecting the productivity of skilled teachers growth in the price of skilled workers can cause schools to lower the relative quality of teachers and raise teacher quantity instead evidence from the national longitudinal survey of youth demonstrates that wage and schooling are good measures of teacher quality analysis of u s census microdata then reveals that the relative schooling and experience adjusted relative wages of u s schoolteachers have fallen significantly from 1940 to 1990 moreover class sizes have also fallen substantially the declines in class size and in relative quality seem correlated over time and space with growth in the relative price of skilled workers

teacher training teacher quality and student achievement abstract we study the effects of various types of education and training on the productivity of teachers in promoting student achievement previous studies on the subject have been hampered by inadequate measures of teacher training and difficulties in addressing the non random selection of teachers to students and of teachers to training we address these issues by estimating models that include detailed measures of pre service and in service training a rich set of time varying covariates and student teacher and school fixed effects we find that elementary and middle school teacher productivity increases with experience informal on the job training the largest gains from experience occur in the first few years but we find continuing gains beyond the first five years of a teacher s career in contrast we do not find a consistent relationship between formal professional development training and teacher productivity however this may be partly driven by estimation issues as we find more significant positive effects of formal training in the subject grade combination where estimates should be most precise middle school math there is no evidence that teachers pre service undergraduate training or college entrance exam scores are related to productivity

using performance on the job to inform teacher tenure decisions the notion that some high stakes need to be attached to direct measures of teachers class room performance as a control for quality in the work force is an idea gaining traction in public education one such proposal prescribes low ering the barriers to entry into teaching while simultaneously being more selective about which teachers are retained when they become eligible for tenure robert gordon thomas j kane and douglas o staiger 2006 eric a hanushek 2009

mergers of complements and entry in innovative industries abstract i study a merger between producers of complement inputs facing potential entry with investment by the incumbents in deterministic cost reduction and by the entrants in probabilistic innovation and then competition in prices the merger solves cournot complementarity problems in investment and pricing which is what makes it profitable but also potentially anti competitive when the demand is inelastic the merger harms consumers by reducing r d of the entrants if the incumbents are efficient enough always when bundling is adopted instead with a demand elastic enough the merger increases consumer surplus even with bundling

tying compatibility and planned obsolescence according to the hypothesis of planned obsolescence a durable goods monopolist without commitment power has an excessive incentive to introduce new products that make old units obsolete and this reduces its overall profitability in this paper i reconsider the above hypothesis by examining the role of competition in a monopolist s upgrade decision i find that when a system add on is competitively supplied a monopolist chooses to tie the add on to a new system that is only backward compatible even if a commitment of not introducing the new system is available and socially optimal tying facilitates a price squeeze

interfirm bundled discounts as a collusive device this paper investigates whether and how firms competing in price with homogeneous goods i e bertrand competitors can achieve supernormal profits using interfirm bundled discounts by committing to offering price discounts conditional on the purchase of a specific brand of other differentiated good the homogeneous good suppliers can separate consumers into distinct groups such brand specific discounts help the firms relax competition and attain a collusive outcome consumers become worse o due to higher effective prices our result shows that in oligopolies it is feasible to leverage other s market power without excluding rivals

examining the link between teacher wages and student outcomes the importance of alternative labor market opportunities and non pecuniary variation researchers using cross sectional data have failed to produce systematic evidence that teacher salaries affect student outcomes these studies generally do not account for non pecuniary job attribu

pulled away or pushed out explaining the decline of teacher aptitude in the united states logic suggests that a teacher s value added is related to her academic aptitude it is therefore troubling that teachers aptitude has declined significantly in the united states since 1960 as demonstrated by sean corcoran et al 2002 combining longitudinal surveys they find a marked fall in teachers propensity to be in the top achievement quartile there are two main hypotheses for the decline in teacher aptitude first greater pay parity with males in nonteaching occupations may have drawn able women out of teaching second unionization may have compressed pay benefits and nonmonetary returns to aptitude in teaching and thereby pushed out high aptitude people in short there is a pull hypothesis pay parity in alternative opportunities and a push hypothesis pay compression in teaching the hypotheses are not mutually exclusive we need not choose between them instead we try to apportion blame to do this we need variation in the timing and size of the pull and push factors fortunately such variation exists among u s states our econometric identification relies on variation in labor markets and unionization laws among states at a point in time and within each state over time

the failure of input based schooling policies in an effort to improve the quality of schools governments around the world have dramatically increased the resources devoted to them by concentrating on inputs and ignoring the incentives within schools the resources have yielded little in the way of general improvement in student achievement this paper provides a review of the us and international evidence on the effectiveness of such input policies it then contrasts the impact of resources with that of variations in teacher quality that are not systematically related to school resources finally alternative performance incentive policies are described

product improvement and technological tying in a winner take all market in a winner take all duopoly market for systems in which rms invest to improve their products a vertically integrated monopoly supplier of an essential system component may have an incentive to advantage itself by technological tying that is by designing the component to work better in its own system if the vertically integrated rm is prevented from technologically tying then there is an equilibrium in which the more e cient rm invests and serves the entire market however another equilibrium may exist in which the less e cient rm invests and captures the market technological tying enables a vertically integrated rm to foreclose its rival the welfare implications of technological tying are ambiguous and depend on the asymmetric qualities of the system suppliers and on equilibrium selection

do alternative opportunities matter the role of female labor markets in the decline of teacher quality abstract this paper documents the widely perceived but little investigated notion that teachers today are less qualified than they once were evidence of a marked decline in the quality of young women going into teaching between 1960 and 1990 is presented using standardized test scores undergraduate institution selectivity and positive assortative mating characteristics as indicators of quality in contrast the quality of young women becoming professionals increased the roy model of self selection highlights how occupational differences in the returns to skill determine teacher quality estimates suggest the significance of increasing professional opportunities for women in affecting the decline in teacher quality

tying in two sided markets and the honor all cards rule abstract payment card associations offer both debit and credit cards and sometimes engage in a tie in on the merchant side through the so called honor all cards hac rule this article analyzes the impact of the hac rule using a simple model with two types of transactions subject to different competitive pressures in the no hac rule benchmark model the interchange fee if the transfer from the merchant s bank to the cardholder s bank on the card subject to platform competition is socially too low and the if on the card protected from competition is either optimal or too high in either case the hac rule not only benefits the multi card platform but also raises social welfare due to a rebalancing effect the paper then investigates a number of extensions of the benchmark model including varying degrees of substitutability between the two cards merchant heterogeneity and platform differentiation while the hac rule may no longer raise social welfare under all values of the parameters the basic and socially beneficial rebalancing effect unveiled in the benchmark model is robust

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

bargining bundling and clout the portfolio effects of horizontal mergers we examine the output and profit effects of horizontal mergers between differentiated upstream firms in an intermediate goods market served by a downstream monopolist if the merged firm can bundle transfer pricing is efficient before and after the merger absent cost efficiencies consumer and total welfare do not change if the merged firm cannot bundle and its bargaining power is sufficiently high transfer pricing is inefficient after the merger absent cost efficiencies welfare typically falls we evaluate the profit effects of mergers for the case of two part tariff contracts rival firms gain lose from mergers that raise lower downstream prices contrary to conventional wisdom a merger that harms the retailer may increase welfare

bundling and competition for slots we consider competition between sellers selling multiple distinct products to a buyer having k slots under independent pricing a pure strategy equilibrium often does not exist and equilibrium in mixed strategy is never efficient when bundling is allowed each seller has an incentive to bundle his products and an efficient technology renting equilibrium always exists furthermore in the case of digital goods or when sales below marginal cost are banned all equilibria are efficient comparing the mixed strategy equilibrium with the technology renting equilibrium reveals that bundling often increases the buyer s surplus finally we derive clear cut policy

permanent income liquidity and expenditure on automobiles evidence from panel data several recent papers have tested the permanent income cum rational expectations hypothesis using data on nondurable or semidurable consumption we show how this approach can be extended to the case of durables an application to panel data on automobile expenditures reveals no evidence against the permanent income hypothesis this result is unchanged in subsamples segregated by family holdings of liquid assets

how does your kindergarten classroom affect your earnings evidence from project star in project star 11 571 students in tennessee and their teachers were randomly assigned to classrooms within their schools from kindergarten to third grade this article evaluates the long term impacts of star by linking the experimental data to administrative records we first demonstrate that kindergarten test scores are highly correlated with outcomes such as earnings at age 27 college attendance home ownership and retirement savings we then document four sets of experimental impacts first students in small classes are significantly more likely to attend college and exhibit improvements on other outcomes class size does not have a significant effect on earnings at age 27 but this effect is imprecisely estimated second students who had a more experienced teacher in kindergarten have higher earnings third an analysis of variance reveals significant classroom effects on earnings students who were randomly assigned to higher quality classrooms in grades k 3 as measured by classmates end of class test scores have higher earnings college attendance rates and other outcomes finally the effects of class quality fade out on test scores in later grades but gains in noncognitive measures persist

the use of full line forcing contracts in the video rental industry bundling is at the forefront of many policy debates as new technologies allow firms to implement more complex bundling arrangements realistic analyses of bundling particularly between suppliers and retailers require detailed data on both supply arrangements and consumer demand we analyze firms use of bundling as a vertical restraint known as full line forcing using extensive supply and demand data from the video rental industry our model captures key details of the market that determine firms contractual choices and sheds light on the implications of these decisions the empirical approach provides a model for how to analyze bundling when detailed data are available jel d86 l14 l81 l82

durable products time inconsistency and lock in many durable products cannot be used without a contingent consumable product e g printers require ink ipods require songs razors require blades etc for such products manufacturers may be able to lock in consumers by making their products incompatible with consumables that are produced by other firms we examine the effectiveness of such a strategy in the presence of strategic consumers who anticipate the future prices of both the durable product and the contingent consumable under a lock in strategy the manufacturer has pricing power over the contingent consumable which she can use to extract additional rents from higher valuation consumers but such pricing power may also reduce consumers willingness to pay for the durable because it subjects them to being held up with higher consumables prices in the future restricting our attention to linear pricing policies we find that if the manufacturer can commit to shutting down production of her durable after an initial one time sale then competition from another consumable of an appropriately degraded level of quality can benefit the manufacturer by mitigating consumers fears of being held up on the other hand when the manufacturer cannot commit to shutting down production of her durable then her own output of additional durables gives her an incentive to keep consumables prices low and competition in the consumables market is less beneficial this paper was accepted by pradeep chintagunta and preyas desai special issue editors this paper was accepted by pradeep chintagunta and preyas desai special issue editors

tying investment and the dynamic leverage theory the idea that an incumbent supplier may tie two complementary products to fend off potential entrants is popular among practitioners yet is not fully understood in formal economic theory this article makes sense of the argument by formally deriving a dynamic version of the old leverage doctrine we show that when an incumbent monopolist faces the threat of entry in all complementary components tying may make the prospects of successful entry less certain discouraging rivals from investing and innovating tie in sales may reduce consumer and total economic welfare copyright 2001 by the rand corporation

bundling entry deterrence and specialist innovators we examine a mechanism by which bundling may inefficiently deter entry into the market the model considers an incumbent monopolist in two complementary components that faces a series of entry attempts by rivals it is shown that the incumbent can practice bundling to buttress its monopoly position by keeping specialist innovators out of the market bundling prevents specialist rivals from coordinating in the dynamic entry process reducing the probability of an eventual displacement of the incumbent the specialization decisions of rivals are also distorted bundling may lead to lower customer and total economic welfare

the impacts of teacher working conditions and human capital on student achievement evidence from brazilian longitudinal data abstractwe use a new longitudinal matched student teacher data from brazil to examine the impacts of teacher human capital and working conditions on student learning controlling for student teache

profitability of product bundling using copulas to model the stochastic dependence of values this article establishes new general conditions for the profitability of product bundling a multiproduct monopolist generally achieves higher profit from mixed bundling than from separate selling if consumer values for two of its products are negatively dependent are independent or have sufficiently limited positive dependence the profitability of monopoly bundling also extends to situations where a multiproduct firm competes with a single product rival

macroeconomic planning and disequilibrium estimates for poland 1955 1980 the authors specify and estimate a four equation disequilibrium model of the consumption goods market in a centrally planned econo my this work is based on previous papers of r portes and d winter 1977 and w charemza and r quandt 1982 the model contains a household demand equation a planners supply equation a min condition and plan adjustment equation through which plan formation becomes endogenous the paper uses a unique new data set of time series for plans for the major macroeconomic variables in poland the overall framework is applicable to any large organization which plans economic variables coauthors are richard e quandt david winter and stephen yeo copyright 1987 by the econometric society

a dynamic model of teacher labor supply the labor supply decisions of certified elementary and high school teachers are examined using data from a general longitudinal survey a significant decrease in the teaching participation rate tak

competition in communication networks pricing and regulation by any measure the communication sector is important it is no surprise then that the communication sector has attracted the attention of both policy makers and economists in this paper we argue that four characteristics of the networks that deliver communication services make this area of particular interest we analyse the implications of networks cost structures the strong complementarity between their components the demand side externalities that arise from consumption of their services and the social obligations attached to them despite the attention that the communication sector has received many aspects of competition between networks are still poorly understood we identify some of the key issues that will continue to trouble regulators and interest academics

the dynamics of teacher quality abstract an extensive literature finds that while teachers vary considerably in initial quality there are limited teacher quality dynamics except for the first few years of teaching teacher quality does not improve over the course of a teacher s career this study evaluates the importance of various modeling restrictions to the key findings of this literature using data covering all 5th grade public school teachers from the state of north carolina i replicate the findings of the previous literature using their restrictive experience assumptions however using an unrestricted experience model i find that for mathematics achievement there are high returns to later career teaching experience about twice as much dispersion in initial teacher quality as previously estimated and a pattern of negative selection where high quality teachers are more likely to exit

upgrades switching costs and the leverage theory of tying this article investigates the role of product upgrades and consumer switching costs in the tying of complementary products previous analyses have found that a monopolist of one product will not increase its profits and reduce social welfare by tying and leveraging its monopoly position into a complementary market if the initial monopolised product is essential where essential means that all uses of the complementary good require the initial monopolised product we show that this is not true in settings characterised by product upgrades and consumer switching costs we also discuss various extensions including the role of the reversibility of tying

product boundary vertical competition and the double mark up problem we develop a model in which a main product called product a provides a performance quality z by itself whereas a complementary product called product b is useless by itself but enhances the main product s performance quality to q z this asymmetric complementarity gives rise to the following results first if z is relatively small then firms a and b behave as if the products are symmetrically complementary with the usual double marginalization problem second if z is sufficiently large then firms a and b price their products as if they are independent third over a certain range of intermediate z no pure strategy nash equilibrium exists

estimates of the disequilibria in poland s consumer markets 1965 1978 in the course of work on the development of the polish agricultural policy model the author has investigated the disequilibria in poland s consumer markets since an understanding of consumer behavior is critically important in formulating plans and designing policies that facilitate the realization of plans this is an important element in the polish agricultural policy model

computational controversies in disequilibrium and shortage modelling of centrally planned economies abstract most disequilibrium and shortage models of centrally planned economies fall into three categories testable excess demand the portes school disequilibrium indicators and kornai s economics of shortage these models have generated numerous controversies and conflicting empirical results however this paper argues that some disputes are not caused by the theoretical features of the models but rather by the utilisation of different estimation methods that are not directly comparable this suggests that several controversies are more apparent than real and can be resolved through the improvement of computational techniques and statistical hypothesis testing theory

should good patents come in small packages a welfare analysis of intellectual property bundling abstract intellectual property owners often hold the rights to several patents each of which is essential to make or use a product we compare the welfare properties of package licenses under which a licensee pays the same fee regardless of the number of technologies licensed with component licenses under which each technology is licensed separately and there is no quantity discount a central finding is that a long term package license can induce incentives to invent around patents and invest in complementary assets that are closer to their socially optimal levels than are those induced by a long term component license we also identify settings in which a short term license is a partial substitute for a package license and a prohibition on package licensing induces parties to adopt contracts that result in less efficient complementary investment because of hold up

how the source of the entrant s advantage limits entry deterring tying i revisit a simple model of entry deterring tyingexample 1 from whinston s 1990 seminal paperbut allow the potential entrant to have either a cost advantage or a willingness to pay wtp advantage relative to the incumbent i show that compared to the usual case in which the potential entrant is cost advantaged tying is less effective against an entrant with a wtp advantage because an entrant with a large wtp advantage may be able to induce the buyer to buy both the tied bundle and the entrant s product i also show that tying but failing to deter entry can be less costly when facing an entrant with a wtp advantage than when facing an entrant with a cost advantage for a firm facing uncertainty about for example the entrant s entry costs this makes tying a more attractive entry deterrence strategy against a wtp advantaged entrant these results shed light on the important policy question of which markets are most likely to be susceptible to entry deterring tying

pension spiking free riding and the effects of pension reform on teachers earnings in many states local school districts are responsible for setting the earnings that determines the size of pensions but are not required to make contributions to cover the resulting state pension fund liabilities in this paper i document evidence that this intergovernmental incentive inherent in public sector defined benefit pension systems distorts the amount and timing of income for public school teachers i use the introduction of a policy that required experience rating on earnings increases above a certain limit in a differences in differences framework to identify whether districts are willing to pay the full costs of their earnings promises because of the design of the policy overall earnings of teachers near retirement did not change instead districts that previously provided one time pay increases shifted to smaller increments spread out over several years in addition some districts that did not practice pension spiking prior to the reform appear to begin providing payments up to the new lower limit perhaps due to increased salience of the fiscal incentive therefore the policy was ineffective at decreasing pension costs

entry deterrence by non horizontal merger we study when and how pure non horizontal mergers whether cross product or vertical can deter new entry organizational mergers implicitly commit firms to more aggressive price competition because heightened competition deters entry mergers can occur in equilibrium even when absent entry considerations they do not we show that in order to prevent a flood of entrants mergers arise even when a marginal merger costs incumbent firms more than does a marginal entrant

productivity returns to experience in the teacher labor market methodological challenges and new evidence on long term career improvement abstract we present new evidence on the relationship between teacher productivity and job experience econometric challenges require identifying assumptions to model the within teacher returns to experience with teacher fixed effects we describe the identifying assumptions used in past models and in a new approach that we propose and we demonstrate how violations of these assumptions can lead to substantial bias consistent with past research we find that teachers experience rapid productivity improvement early in their careers however we also find evidence of returns to experience later in the career indicating that teachers continue to build human capital beyond these first years

leaving teaching in the uk a duration analysis in this paper the authors analyze the decision by teachers to leave the profession their results affirm the importance of relative earnings in the tenure and turnover decisions of teachers the econometric modeling approach used yields important insights into the appropriateness of adopting a flexible semiparametric specification of the duration dependence structure and of the unobserved heterogeneity distribution in duration models copyright 1995 by royal economic society