how does advertising depend on competition evidence from u s brewing the relationship between market structure and advertising has been extensively studied but has generated sharply opposing theoretical predictions as well as inconclusive empirical findings likely because of severe endogeneity concerns we exploit the 2008 merger of miller and coors in the u s brewing industry to examine how changes in local concentration affect firms advertising behavior well established regional preferences over beer brands and the sharp increase in concentration from the merger make this an excellent setting to analyze this question we find a significant positive effect of local market concentration on advertising expenditures a 100 point increase in the herfindahl hirschmann index measure of concentration increases advertising per capita by about 5 our findings shed light on how and when firms choose to deploy advertising the online appendix is available at https doi org 10 1287 mnsc 2017 2889 this paper was accepted by eric anderson marketing

movements towards free trade and domestic market performance with imperfect competition this paper studies the response of a dominant domestic oligopoly to the reduction in the rate of a protective tariff the issue here is whether domestic market performance is improved through a movement toward free trade alone put another way is free trade always a substitute for competition policy we find that the lower tariff may lead to inferior domestic market performance the direction of the change and its magnitude are functions of the shape of the import supply function the degree of competition between oligopolists and whether or not entry is possible thus there is reason to believe that a strong competition policy may in some markets be complementary to freer trade

barriers to trade and the import vulnerability of us manufacturing industries while it is widely recognized that imports can discipline markets the strength of that disciplinary power surely varies across industries the determinants and extent of this interindustry variation in the disciplinary force for foreign trade flows is however relatively unexplored this article investigates the microeconomic determinants of changing import shares at the industry level for u s manufacturing industries based upon this investigation the authors are able to create an index that measures the relative vulnerability of the various manufacturing industries to foreign competition and test a number of hypotheses concerning the underlying causes of observed variations in import vulnerability copyright 1990 by blackwell publishing ltd

does an endogenous relationship exist between environmental and economic performance a resource based view on the horticultural sector the aim of this paper is to analyse the relationship between environmental and economic performance from the resource based theory within firms of the fresh fruit and vegetables sector this study considers that the adoption of environment friendly practices has a greater influence on firms opportunities and abilities in the agricultural sector than in manufacturing sectors and leads to closer links between performance variables the reference for this empirical analysis is a panel data of horticultural farming marketing firms in spain the voluntary environmental programmes and the heterogeneity of their application lead us to regard acquiring a competitive advantage as a relevant driver to improve environmental performance in this sector a simultaneous equations model is suggested reflecting the differential environmental effect and the assumption of endogeneity among variables the results show a positive impact of environmental differentiation on profitability and market share also suggesting that the perception of this positive experience implies greater environmental performance

assessment of public acceptance and willingness to pay for renewable energy sources in crete abstract the aim of this study is to analyse and to evaluate the citizens public acceptance and willingness to pay wtp for renewable energy sources res in crete for this purpose a contingent valuation study was conducted using a double bound dichotomous choice format to elicit people s wtp and factors affecting it residents of 1440 households all over crete were interviewed face to face major conclusions can be used as a basis for sustainable energy planning for policies and the formulation of awareness campaigns and for res investment programs and projects in order to prepare implementation conditions and enhance public acceptance of renewable energy investments and programmes mean wtp per household was found to be 16 33 to be paid quarterly as an additional charge on the electricity bill larger willingness to pay was reported by those with high family income and residence size those having a higher level of energy information and awareness concerning climatic change those who have invested in some energy saving measures and those who suffer from more electricity shortages than others

a re examination of the relationship between industry structure and economic performance the objective of this study is to develop a simultaneous equations model of profitability concentration advertising expenditures and research and development outlays the data used in the estimation are subjected to regression diagnostics in an effort to determine the importance to the estimation results of a subset of the data that can have a disproportionate influence the estimation results especially for the advertising expenditures relationship and the research and development outlays equation do change when a truncated data sample based on the omission of the outliers is used this serves partly to explain why there is some disagreement in the literature on market structure and economic performance with regard to the impact of several economic factors

trade foreign direct investment and industry performance abstract this paper investigates the us margins effect of imports and fdi using a panel of 448 manufacturing industries for 1982 1990 in the single equation two way fixed effects regressions greenfield fdi has no significant effect on margins while there is some indication that non greenfield fdi affect margins and the effect is found to depend on the level of industry concentration when potential endogeneity among variables are taken into account both types of fdi are found to increase margins however for non greenfield fdi the effect appears with a lag of two periods for the most part the results indicate that the positive effect on margins holds for industries with low levels of concentration beyond some critical level the competitive effect of fdi predominates

price movements and price discovery in futures and cash markets r isk transfer and price discovery are two of the major contributions of futures markets to the organization of economic activity working 1962 evans 1978 p 80 and silber 1981 risk transfer refers to hedgers using futures contracts to shift price risk to others price discovery refers to the use of futures prices for pricing cash market transactions working 1948 wiese 1978 p 87 and lake 1978 p 161 the significance of both contributions depends upon a close relationship between the prices of futures contracts and cash commodities this paper examines the characteristics of price movements in cash or spot markets and futures markets for storable commodities section ii presents an analytical model of simultaneous price dynamics which suggests that over short intervals of time the correlation of price changes is a function of the elasticity of arbitrage between the physical commodity and its counterpart futures contract greater elasticity fosters more highly correlated price changes and thereby facilitates the risk transfer function the elasticity of supply of arbitrage services is constrained by among other things storage and transaction costs thus futures contracts will not in general provide perfect risk transfer facilities over short time horizons the essence of the price discovery function of futures markets hinges on whether new information is reflected first in changed futures prices or in changed cash prices hoffman 1932 pp 258259 the model in section ii provides a framework for analyzing whether one market is dominant in terms of information flows and price discovery in section iii we develop a model based on section ii which is appropriate for estimating the lead lag relationship between cash prices and futures prices section iv presents empirical estimates of the parameters of the model for seven different storable commodities wheat corn oats frozen orange juice concentrates copper gold and silver the cost of arbitrage between cash and futures differs across these commodities for this reason we are not surprised to find inter commodity differences in the correlation of short run price changes and in the substitutability of futures contracts for cash market positions with respect to the price discovery function of futures markets we find that while futures markets dominate cash markets cash prices do not merely echo futures prices there are reverse information flows from cash markets to futures markets as well

a simultaneous equation analysis of advertising concentration and profitability nearly two decades of econometric research have been completed in testing relationships between industrial market structure and performance recently a number of authors have reexamined these studies and cautioned on a number of conceptual difficulties which subject the results and interpretation of previous empirical work to question one primary criticism of previous research has been the failure to account for the simultaneous nature of the interrelation among elements of industry structure conduct and performance 2 4 5 11 22 25 30 while the determinants of variables such as profits advertising and concentration have been examined separately within the context of single equation models the underlying theory suggests that these variables are more properly considered as jointly determined within a system of simultaneous equations estimation of single equation models when a simultaneous system is appropriate leads to parameter estimates that are both biased and inconsistent previous empirical studies of the structure performance relationship have also suffered due to the omission of certain critical variables first the role of international trade as an element of market structure has yet to be generally incorporated into empirical studies in spite of recent theoretical work that has demonstrated its potential importance 3 20 21 second interindustry differentials in the price elasticity of demand have been neglected even though theoretical analysis clearly underscores the necessity of explicity accounting for

specifying the dynamics of industry concentration previous studies generally explain changes in concentration by its initial determinants or by changes in its determinants little attention is paid to the dynamic structure of the model this study provides a framework to sort out adjustment effects in a systematic manner the empirical model distinguishes long term from short term effects and estimates the rate of adjustment when concentration deviates from its long term equilibrium level considerable attention has focused on industry concentration as a key element of market structure while earlier empirical studies examined determinants of the level of industry concentration a more recent literature focuses on changes in concentration these more recent papers typically explain intertemporal changes in concentration by the past levels of industry growth concentration advertising intensity and minimum efficient plant size however the dynamic relationship between changes in concentration and the levels of the independent variables has not been explicitly specified caves and porter 1980 have argued that explaining changes in concentration by past levels of market structure variables is tantamount to assuming that the sampled industries are in the process of adjusting to a disequilibrium situation as an alternative they adopt a long term equilibrium approach whereby changes in concentration are explained by lagged changes in the relevant market conditions they find that this approach as a whole was unsuccessful exhibiting low levels of significance and a lack of robustness when the cross section regressions were shifted to different time periods

trade liberalisation and plant exit in new zealand manufacturing data on new zealand manufacturing plants are used to examine the impact of trade liberalization on plant exit recent theories suggest that the prospect of a declining market might cause firms to adopt strategic behavior that causes low cost plants to exit first this hypothesis is generally unsupported surviving plants were larger lower cost and were owned by specialized firms with few plants plant costs were more important than firm size for explaining the plant closing behavior of single plant firms diversified multiplant firms were more likely to close plants and were influenced by plant size but not plant costs copyright 1996 by mit press

residential consumers in the cape peninsula s willingness to pay for premium priced green electricity a number of studies have explored the willingness i e stated willingness as opposed to actual willingness of consumers to pay a premium for green electricity in developed countries however little is known about how this translates into an emerging economy context this study investigates the level of willingness of residential households in south africa s cape peninsula to pay a premium for electricity from renewable energy it methodologically drew on recent contributions in the literature on norm motivated behaviour used to identify testable factors that could influence residential consumers willingness to pay wtp interestingly the study found a significant positive link between household income and wtp for green electricity contrary to the findings of some previous studies not only are higher income households more likely to pay a premium but typically they are also willing to pay a bigger premium it was also further established that the view that green electricity is reliable involvement in the recycling of waste and the belief that everyone should contribute to green electricity generation drive the wtp

cost differences and survival in declining industries a case for picking winners abstract in this paper we examine the relationship between firms cost structures and the order of exit from declining industries we distinguish between two fundamental causes of demand decline namely a shrinkage of the consumer base and a decrease in consumers willingness to pay we show that it is not necessarily best to be small and flexible the order of exit in a market driven outcome depends on the manner in which demand shrinks we find that from a welfare perspective the order of exit determined by market forces is not necessarily desirable however simple rules for picking winners based on current unit cost profitability or productive efficiency do not provide sound guidance for policy

an investigation of the determinants of profitability in new zealand manufacturing industries in 1986 87 the empirical investigation of the structure condust performance relationship has had to grapple with the problem that higher than usual profitability might arise from superior production efficiency or alternatively from markets subject to lower competitive pressures as such the nature of investigation has evolved over time to include the market power efficiency debate and the new industrial organisation emphasis on the joint determination of profitability and market structure the purpose of this paper is to present some new zealand evidence with a unique feature being to include a measure of firm level efficiency in a disaggregated model estimated using firm level data the results suggest both market power and efficiency play a role in determining profitability although efficiency dominates

social costs from proximity to hydraulic fracturing in new york state the study reports data from an economic choice experiment to determine the likely welfare impacts of hydraulic fracturing in this case using natural gas extracted by hydraulic fracturing for household electricity data were collected from an internet survey of 515 residents of new york state the welfare analysis indicated that on average households incur a welfare loss from in state hydraulic fracturing as the source of their electricity the evidence suggests that households in shale counties bear more costs from hf electricity than households out of shale counties the average welfare loss is substantive estimated at 40 46 of average household electric bills in shale counties and 16 20 of bills in counties without shale the evidence also suggests that relative proximity to hf well sites also increases cost borne by households

profitability and product differentiation in greek food industries this paper explains the increasing difference between the profit margins of differentiated and undifferentiated greek food manufacturing industries between 1988 and 1994 using panel data the 2sls results for the fixed effects model show important differences across the high medium and low differentiated industry groups the increasing difference between the margins of the highly differentiated group which includes the most profitable industries and the other groups can be mainly attributed to the greater sensitivity of margins in differentiated industries to advertising and demand changes

willingness to pay for renewable energy primary and discretionary choice of british households for micro generation technologies this paper documents the policy context of renewable energy production in the european union the research adopts a choice experiment approach to investigate households wtp for these renewable energy technologies in the uk the micro generation technologies comprise solar photovoltaic micro wind solar thermal heat pumps and biomass boilers and pellet stoves the study compares the results from conditional and mixed logit models which estimate the distribution of utility coefficients and then derives wtp values as a ratio of the attribute coefficient to the price coefficient with a model in which the wtp distribution is estimated directly from utility in the money space the results suggest that whilst renewable energy adoption is significantly valued by households this value is not sufficiently large for the vast majority of households to cover the higher capital costs of micro generation energy technologies

intergenerational occupational choice comparisons the case of teachers in the uk this paper examines how u k graduate occupational choices have changed since 1970 with reference to the choice of becoming a teacher using two cohorts of data remuneration morale status and image of the teaching profession have been altered dramatically the sensitivity of the teacher choice to relative wage changes is examined and compared for men and women separately the paper presents a counterfactual prediction of the decisions that each cohort would have made had they experienced the market conditions of the other and estimates a decomposition of the changes in the average probabilities due to remunerative and other factors copyright 1994 by royal economic society

firm and industry effects in industrial economics the traditional view in industrial economics suggests that high concentration leads to tacit collusion poor performance and elevated profit followers of the traditional view relied upon the empirical relationship between profit rates and market concentration to justify the highly activist antitrust policy of the 1945 1980 period the activist antitrust era reached its zenith with the nearly per se prohibition of horizontal mergers as outlined in the 1968 merger guidelines issued by the justice department s antitrust division the 1980s have witnessed the emergence of the revisionist school as the dominant view in the field of industrial economics the revisionists contend

domestic market power and foreign trade abstract this paper develops a conjectural variation model to include foreign trade and applies it to the swedish industry the main conclusions emerging from the empirical application are that the degree of implicit collusion is generally very low in sweden and further that while high seller concentration exerts a positive influence on this degree there is strong and counteracting competitive pressure from foreign trade a more general conclusion is that it is important to include foreign trade in analyses of market power in open economies

error correction mechanisms the interface between economic theory and applied econometrics is often one of uneasy compromise with the pragmatic justification for many accepted procedures resting on a theoretical base this paper examines the surprisingly strong arguments that exist in terms of economic theory for the use of error correction mechanisms in the specification of short run dynamic adjustment a common heresy exists that while economic theory provides a detailed analysis of comparative static equilibria it can offer no guidance as to the appropriate specification of dynamic adjustment towards an equilibrium perhaps in consequence it is not uncommon to find examples where the necessary dynamic specification is achieved by tacking onto an existing equilibrium specification some relatively ad hoc short run adjustment scheme the intercession of stochastic arguments in this process is confused and critical implications are frequently ignored in practice but perhaps more importantly there will typically be no guarantee that the dynamic specification is consistent with the prescribed equilibrium consistency in this sense requires that the short run dynamic adjustment be directed by the perceived disequilibrium and that eventual convergence to the equilibrium position be ensured that two separate theoretical arguments co exist within the final specification is the root cause of many difficulties both theoretical and empirical this abstract was borrowed from another version of this item

the profitability concentration relation market power or efficiency industrial economists have been studying the relationship between profitability and concentration using cross industry samples for many years now however as sometimes happens once it appeared that some consensus had been achieved with few exceptions market concentration and industry profitability are positively correlated peltzman i977 p 229 people began to question the interpretation of those results in particular demsetz e g i973 i974 and others suggested that rather than concentration market power leading to higher prices and profits the causal direction in fact ran from greater efficiency to both higher profits and incidentally to higher concentration our purpose here is to subject these conflicting hypotheses to cross industry empirical test using u k data in order to do this we first develop a model which is sufficiently general to allow for both alternative explanations of a positive concentration profitability correlation in the light of this model we then examine the implications for the within industry relation between market share and firm level profitability more specifically we explore demsetz s claim that the empirical form of this relationship should signal which of the alternative hypotheses is consistent with the between industry profitability concentration correlation our model suggests that in certain special circumstances this claim is partly justified in that it should be possible to assess the relative strengths of the market power and efficiency effects from the within industry relation more generally however factors such as product differentiation and scale economies may seriously impair the information content of the relation with at least a strong suspicion that the estimates will tend to exaggerate the evidence in favour of the efficiency hypothesis in the event our results tend to confirm that for most industries the within industry data offer little conclusive support for either hypothesis but for a not insignificant minority of industries the evidence suggests some support for the view that both efficiency and market power are at work simultaneously our model is detailed in section ii and estimated on u k data in section iii after which we offer a few comments in section iv first however we drovide a backcloth to the later analysis

households willingness to pay for safeguarding security of natural gas supply in electricity generation abstract security of energy supply is a major issue for all eu member states due to europe s increasing dependence on imported fossil fuel sources and the continuous rise in energy demand the latter is of particular importance in electricity sector given the continuously increasing use of gas for electricity generation in order to properly tackle with the problem concerted actions are required by the eu member states in several levels i e legislative political etc nevertheless these actions will come at an additional cost paid by the society either through increased electricity bills or through public financing for energy security investments thus such policies should be justified on the basis of cost benefit analysis towards this direction it may be necessary to take into account non market costs and benefits i e the value that consumers place on interruptions avoided in order to explore households perceptions and willingness to pay for securing gas supply for electricity production an empirical study was conducted by means of the contingent valuation method the results indicate that consumers are willing to pay a premium on their electricity bills in order to internalize the external costs of electricity production in terms of energy security which are caused from imported fuels

the cyclical behavior of price elasticity of demand the mark up of price above marginal cost can vary either procyclically or countercyclically across the business cycle depending upon competitive variations among industries the nature of aggregate demand growth international trade market elasticities and other factors the influence of the business cycle and changes in industry growth on market elasticities can in turn impact market performance via the inverse relationship of market elasticity of demand to price cost margin this paper provides evidence on the cyclical behavior of domestic price elasticity of demand for a panel of 38 four digit u s food manufacturing industries from 1972 to 1987 this is a sector that has been found in earlier studies to exhibit countercyclical price cost margins over this period recent theoretical work on business cycles under imperfect competition suggests that one reason for countercyclical profit margins is that elasticities of demand may become less elastic during recessions estimates of price elasticities of demand are used as the dependent variable in a regression model examining the influence of the business cycle and other variables on demand elasticity

foreign trade elasticities and import discipline this paper provides new evidence on the trade as discipline7rsquo hypothesis by considering the determination of price cost margins with a panel of 41 four digit us food manufacturing industries from 1972 to 1987 following the empirical specification suggested by competitive fringe oligopoly models we include estimated domestic demand elasticities and cross price elasticities of import demand as explanatory variables and the empirical results confirm the importance of these variables in assessing the hypothesis

i can hear my neighbors fracking the effect of natural gas production on housing values in tarrant county tx abstract in this study we estimate the effect of hydraulically fractured natural gas wells on residential real estate prices we exploit variation in distance to nearby gas wells in home sale prices to estimate this effect in contrast to previous studies we focus on a relatively densely populated area a section of the dallas ft worth arlington urban area using a dataset of 127 556 observations from tarrant county texas over the period 2005 2011 we find robust evidence that increased proximity to a well leads to reduced home sale prices existence of wells within 3500 ft of a property reduces property values by approximately 1 5 3 we demonstrate that the reduction seems to be driven by unconventional rather than conventional wells and that well construction causes an added 1 2 reduction in home value

price cost margins and imports in an oligopolistic market abstract in a recent letter in this journal urata 1979 found an unexpected positive and significant association between price cost margins and import to domestic shipment ratio for the u s textile and apparel industries in the present letter a theoretical explanation for this phenomenon is presented by extending a conjectural variation oligopoly model

technological progress and change in market concentration in the u s 1963 77 what effect does r d induced technological progress have on market structure do the concentration ratios the most used indices of market structure increase or decrease in an industry that is faced with a high level of technological opportunity and exploits it through a high rate of r d this paper focusses on a model by nelson and winter as a theoretical starting point to deal with this question in the nelson and winter model concentration increases as a result of dynamic competition in the technologically progressive industries but their model does not allow entry and the effect on concentration may be reversed if the possibility of entry is considered empirically this paper shows that concentration ratios in the high r d industries have decreased in the united states during 1963 77

cartel stability and tariff policy abstract in this paper we investigate the effect that tariff policy has on the ability of firms to collude in oligopolistic industries we find that small tariff rates lead to an industry structure more conducive to collusive behavior while large tariff rates weaken cartels there exists a critical tariff rate which has no effect on the cartel s stability this critical value is found to be a decreasing function of n the number of firms in the industry and n d n the proportion of firms that are domestic

structure conduct and performance a simultaneous equations investigation for the brazilian manufacturing industry the article investigated structure conduct performance scp relationships in the context of the brazilian manufacturing industry in 1996 for that purpose it considered a system with four equations pertaining concentration advertising r d and profitability that was estimated with simultaneous equation models in addition to the usual explanatory variables proxying barriers to entry and demand conditions the article considered organizational practices and incentive schemes variables the evidence indicated an important role for variables related to barriers to entry in affecting market structure an important and nonlinear effect of concentration on advertising a relevant impact of firm size on the propensity to exert r d effort and finally a significant positive impact of concentration on profitability and were similar to the previous evidence for developed countries additionally no important roles were detected for organizational practices and incentive schemes on the scp relationships

buyer market structure and r d effort a simultaneous equations model the theoretical and empirical investigations of the relationship between market structure and the firm s incentive to invent and innovate have concentrated on the effects of the structure of the supply side of the market this focus on the supply side originated in schumpeter s controversial hypothesis that current market power provided the necessary conditions and future market power provided the incentive for technical change schumpeter 1950 this hypothesis stimulated a vast number of theoretical refinements and empirical tests of relations between research and development activity r d and supply side characteristics such as concentration firm size and diversification this literature has been well summarized by kamien and schwartz 1975 and scherer 1980 the analysis of the effects of the buyer market structure on the selling industry conduct and performance has been limited both theoretically and empirically stigler 1964 modeled the effects of the size distribution of buyers on price competition in oligopoly telser 1964 devel oped a theory of advertising messages in which he suggested that advertising would increase when buyers were many and small lustgarten 1975 tested the effects of buyer market structure on price cost margins and advertising and found the relations suggested by stigler and telser invention and innovation are forms of competition which like price and advertising will be affected by both buyer market structure and seller market structure however unlike price and advertising competition there have not been explicit attempts to establish theoretical and empirical relations between buyer market structure and inventive and innovative activity the effects of buyer market structure on the selling industry s incentive to invent and innovate is relevant to interpreting the effects of seller market structure on this effort a number of previous studies of the effects of seller market structure on technical change have found that seller concentration may have a slight positive impact on inventive and innovative effort kamien and schwartz 1975 p 20 even this weak relation may be due to not controlling for buyer market structure if galbraith s 1952 countervailing power hypothesis is correct lustgarten 1975 p 128 concentration in the buyer and seller markets may be positively correlated if buyer market concentration is positively related to inventive and innovative effort in the selling industry the empirical estimate of the partial effect of seller concentration will be biased upward this paper investigates the effect of buyer market structure on r d effort section ii draws together the literature that is relevant to the issue of the relation between buyer market structure and seller inventive and innovative activity section iii develops a simultaneous equation model of r d activity where r d advertising and concentration are endogenous variables section iv uses data on scientific and engineering inputs to test this model section v summarizes these results

inter industry variations in the effect of trade on industry performance this paper develops an empirical model to measure the strength of import discipline across industries allowing it to vary sys tematically with various features of industry market structure the m odel is applied to a panel of data for eighty two belgian three digit industries for the period 1973 78 and the results suggest that the parameters of the structural model are stable over time that the ext ent of discipline is endogenous and that about 70 percent of the ind ustries in the sample experience significant trade induced competitiv e discipline copyright 1988 by blackwell publishing ltd

the elasticity of labor supply at the establishment level monopsonistic wage setting power requires that the supply of labor directed toward individual establishments is upward sloping this study utilizes institutional features to identify the supply curve the elasticity of labor supply is estimated using data for the norwegian teacher labor market in a period where the only variation in the wage level was determined centrally and with information on whether there is excess demand or not at the school level in fixed effects models the supply elasticity faced by individual schools is estimated to about 1 4 and is in the range 1 0 1 9 in different model specification

teacher quality in public and private schools under a voucher system the case of chile chile is unusual in having long term experience with nationwide school vouchers a key criticism of school voucher systems is that they make it easier for private schools to attract better teachers to the detriment of public schools this paper uses longitudinal data from chile to estimate a discrete choice dynamic programming dcdp model of teacher and nonteacher labor supply decisions and to explore how wage policies affect the composition of the teacher labor force in public and private schools in the model individuals first decide whether to get a teaching degree and then choose annually from among five work home sector alternatives empirical results show that private voucher schools attract better teachers than public schools however the existence of the private voucher sector also draws higher productivity individuals into the teaching profession

teacher sorting teacher quality and student composition abstract using panel data for norwegian schools we establish a two equation supply and demand model for teachers with approved education taking into account nationally determined teacher pay and a strict teacher appointment rule the data enable us to separately estimate supply and demand functions for certified teachers the results clearly indicate that the student body composition and in particular students belonging to ethnic minorities influences both teacher supply and teacher demand the implied negative relationship between excess demand for certified teachers and the share of minority students is likely to be important for teacher quality

us consumers willingness to pay for green electricity abstract we analyze us consumers demand for environmental attributes of deregulated residential electricity services using results from a survey designed to elicit consumers willingness to pay for such attributes and using results from a hedonic analysis of actual price premiums charged for green electricity in several deregulated markets survey results suggest that many population segments are willing to pay for decreased air emissions even if there is no alteration in fuel source furthermore several groups are willing to pay significantly more when emissions reductions stem from increased reliance upon renewable fuels the hedonic analysis suggests that several product features not considered in the survey help explain real price premiums including fuel mix from newly created renewable generation capacity green e certification brand name and state of offer while survey and hedonic results are not easily compared due to limitations of the survey both point to similar values for key environmental attributes though the survey results are likely to overstate actual willingness to pay in sum the results suggest that consumer driven purchases can in part support the future of renewable generation capacity in the united states though reliance upon other policy alternatives may be needed if energy prices spike

the measurement of profitability and the diagnosis of market power this paper develops a model which yields the specification of an empirical test for the difference between price and marginal revenue which will be significantly positive if a firm exercises market power the test can be carried out with any of a number of commonly used measures of accounting profitability and embodies a specific functional form for the consideration of nonconstant returns to scale the model is estimated for four firms in the medical surgical supply industry and four firms in the motor vehicle industry the results are consistent with the hypothesis that product differentiation is an important basis for firm specific market power import quotas are shown to increase market power in the motor vehicle industry claims that accounting data cannot be used to analyze market power are rejected

international trade and industrial organization this survey reviews recent contributions to the interface between international trade and industrial organization import competition places a substantial limit on domestic market power in the short run competitive conditions can influence the speed and efficiency of a domestic market s adjustment to international disturbances exports effects on competition among national sellers are unclear and depend on the scope for price discrimination models of trade with monopolistic competition explain intra industry trade and also the widely observed sensitivity of firm size to market size exposure to trade also increases the technical efficiency of production diverse policy issues turn on the distinction between national and global welfare and the scope for commitment

random preferences towards bioenergy environmental externalities a case study of woody biomass based electricity in the southern united states article i nfo this paper contrasts alternate methodological approaches of investigating public preferences the random parameter logit rpl where tastes and preferences of respondents are assumed to be heterogeneous and the conditional logit cl approach where tastes and preferences remain fixed for individuals we conducted a choice experiment to assess preferences for woody biomass based electricity in arkansas florida and virginia reduction of co2 emissions and improvement of forest habitat by decreasing risk of wildfires and pest outbreaks were presented to respondents as attributes of using green electricity the results indicate that heterogeneous preferences might be a better fit for assessing preferences for green electricity all levels of both attributes were positive contributors to welfare but they were no statistically significant respondents expressed a positive mean marginal willingness to pay wtp for each attribute level the total wtp for green electricity per kilowatt hour was 0 049 kwh or 40 5 per capita year 1 when converted into future total annual expenditures

critical import supply elasticities and the imports as market discipline hypothesis abstract this paper formally examines the factors underlying how responsive imports must be to domestic prices the import supply elasticity in order to thwart an anticompetitive domestic price increase stemming from a merger an issue that frequently arises in many antitrust reviews domestic firms face a fringe comprised of foreign firms who import their products into the domestic market in the eyes of domestic consumers these imports are viewed as imperfect substitutes in demand to the output produced by the domestic firms the model is solved in terms of the critical import supply elasticity that can then be used evaluate the ability of imports to constrain an anticompetitive price increase post merger numerical simulations are conducted to consider the magnitude of perturbations in the model s exogenous parameters potential empirical extensions of the model are also considered

testable competing hypotheses from structure performance theory efficient structure versus market power this paper provides a structure performance theory that can accommodate leading firm efficiency as well as several competing market power hypotheses the author derive s testable implications distinguishing the simple collusion product differentiation and scale economy hypotheses from the innovative lea ding firm alternative it is shown that recent evidence of a positive market share price cost margin pcm relationship and a nonpositive concentration pcm relationship can reject the scale economy and simpl e collusion hypotheses in homogeneous product markets unfortunately this same evidence cannot reject the product differentiation hypothe sis in favor of leading firm efficiency copyright 1988 by blackwell publishing ltd

market structure and price cost margins in a paper that has become a standard reference in the structure conductperformance approach to industrial economics cowling and waterson 1976 developed a theoretical rationale for expecting industry profitability to be positively correlated with the level of concentration their model based on a simple algebraic description of oligopoly behaviour has been interpreted as providing a justification for the common empirical practice of cross industry regression analysis of price cost margins in terms of concentration levels in the present paper we show that on further examination this model implies a joint determination of margins and concentration this provides some interesting comparative static results of relevance to inter industry differences in concentration levels equally however it leads to various cautionary insights concerning the meaning of price cost margin versus concentration regressions

using choice experiments to value the environment this paper we outline the choice experiment approach to environmental valuation this approach has its roots in lancaster s characteristics theory of value in random utility theory and in experimental design we show how marginal values for the attributes of environmental assets such as forests and rivers can be estimated from pair wise choices as well as the value of the environmental asset as a whole these choice pairs are designed so as to allow efficient statistical estimation of the underlying utility function and to minimise required sample size choice experiments have important advantages over other environmental valuation methods such as contingent valuation and travel cost type models although many design issues remain unresolved applications to environmental issues have so far been relatively limited we illustrate the use of choice experiments with reference to a recent uk study on public preferences for alternative forest landscapes this study allows us to perform a convergent validity test on the choice experiment estimates of willingness to pay

market structure and research intensity in high technological opportunity industries where the cost and uncertainty of r d are high and conditions favor speedy imitation by competitors concentration has a statistically significant and substantial positive impact on research intensity but its impact is clearly negative when r d cost and uncertainty are low and where high barriers to imitation exist a sample of 160 business unit observations for 1978 was drawn from the pims data base all the sample business units industries recently experienced major technological changes research intensity was measured by non government financed r d expenditures as a percentage of sales

unionization and plant closure in canada this paper examines for the first time the role of unionization as a determinant of plant closings in canada using the 1999 to 2001 canadian workplace and employee survey the paper contributes to the north american evidence by showing that the share of a plant s workers covered by collective bargaining has a robust positive partial correlation with the probability of larger plants closing for smaller plants the extent of unionization tends to be much lower and its variation plays no role in plant closure the study highlights the theoretical and statistical importance of examining closure separately for large and small plants ce memoire examine pour la premiere fois le role de la syndicalisation en tant que determinant de la fermeture d usines au canada a l aide des resultats de l enquete sur le milieu de travail et les employes de 1999 et de 2001 emte le texte contribue a enrichir le dossier qui montre qu il y a correlation positive partielle robuste entre la portion des travailleurs d usines couverts par une convention collective et la probabilite de fermeture des grandes usines pour les plus petites usines le degre de syndicalisation tend aetre plus faible et sa variation ne joue pas de role dans le processus de fermeture d usines cette etude montre l importance theorique et pratique qu il y a aetudier separement les fermetures des grandes et des petites usines

specification induced uncertainty in the estimation of trade union wage differentials from industry level data at a more specific level the paper is concerned with the estimation of union non union wage differentials from industry level data for the uk manufacturing sector metcalf 1977 reviewing the evidence from such industry level studies concludes that they suggest that a figure of 20 per cent may not be dreadfully in error for the average earnings differential received by manual workers who are covered by a collective agreement a more recent study at the individual level for union membership stewart 1983 suggests that a figure of below 10 per cent may be more appropriate however metcalf s summary figure remains representative of the industrylevel evidence this paper concentrates on two particular problems inherent in these industry level studies and in studies in other areas using such cross section data the first of these concerns the potential industry specificity of parameter values in the case of union wage differentials the marshallian laws of derived demand provide theoretical grounds for expecting the differential to vary across industries failure to take proper account of this will in general result in biased estimation even of the average differential in addition interpreting the estimated average differential as if it were that to be found in a typical industry may be a highly misleading representation of the impact of collective bargaining on the wage structure section i of this paper is concerned with this inter industry variation in the differetial and in particular with modelling how the differential varies with the extent of coverage in the industry our finding is that there is a large inter industry variation in the differential with the average being made up of a large differential in a small group of industries and a much smaller and insignificant differential in the majority of industries in such circumstances the estimated average differential is not representative of that prevailing in either group

the effects of a natural gas boom on employment and income in colorado texas and wyoming improvements in technology have made it profitable to tap unconventional gas reservoirs in relatively impermeable shale and sandstone deposits which are spread throughout the u s mostly in rural areas proponents of gas drilling point to the activity s local economic benefits yet no empirical studies have systematically documented the magnitude or distribution of economic gains i estimate these gains for counties in colorado texas and wyoming three states where natural gas production expanded substantially since the late 1990s i find that a large increase in the value of gas production caused modest increases in employment wage and salary income and median household income the results suggest that each million dollars in gas production created 2 35 jobs in the county of production which led to an annualized increase in employment that was 1 5 of the pre boom level for the average gas boom county comparisons show that ex ante estimates of the number of jobs created by developing the fayetteville and marcellus shale gas formations may have been too large

exit from the hospital industry we study the exit of hospitals from the market for inpatient services more generous hospital reimbursement significantly reduces the probability of exit throughout the 1990s conditional on reimbursement levels hospital efficiency was not a significant determinant in the early 1990s but in the mid to late 1990s less efficient hospitals were significantly more likely to exit throughout the period high tech services increased the probability of survival and for profit hospitals were more likely to exit the role of medicare as a determinant of exit became less important in the latter half of the 1990s

investigating the cause of death industrial relations and plant closures in australia this is the first study to focus on how unions affect the likelihood of plant closures in australia australia is of special interest in this connection the authors argue because of its unique industrial relations institutions which at the time of the study 1990 95 limited the capacity of established unionized firms to remove unions except through plant closure an analysis of australian workplace industrial relations survey data shows that two of three measures of unionization had a robust positive influence on the probability of plant closure and the third had a weaker positive influence depending on the specification for example a 10 percentage point increase in union density one of the two measures found to have strong influence was associated with a 1 3 1 7 percentage point increase in the probability of plant closure representing a substantial increment since the mean closure probability among these plants was about 16

profitability concentration imports and exports the case of taiwan s midstream petrochemical industries based on an open economy oligopoly model causalities among domestic firms price cost margin pcm domestic concentration import and export shares are derived and a simultaneous equation system is established by utilizing the 1989 1997 data of taiwan s midstream petrochemical industries three stage least squares is used to estimate the system the empirical results confirm the derived results and demonstrate 1 there exist simultaneous relationships among domestic pcm domestic concentration import and export shares 2 import concentration affects domestic concentration positively but affects domestic pcm import and export shares negatively 3 diversifying international markets improves domestic firms pcm 4 domestic firms seem to be in a situation of collusion

union relative wage effects a survey of macro estimates this paper surveys union wage effect estimates drawn from empirical cross section wage equations fitted to macro aggregated data in 34 post 1963 studies containing such equations each estimate is the partial derivative of the dependent wage variable in logarithmic units with respect to the extent of unionism fraction unionized variable in the equation this paper shows that these estimates contain a mixture in uncertain ratio of the union nonunion wage differential or wage gap on the one hand and an extent of unionism effect on the other therefore the macro estimates should not be interpreted as wage gap estimates

concentration and profitability in a dichotomous economy the case of taiwan this paper is an attempt to apply a two regime and a recursive structure performance analysis to one of the newly industrializing countries taiwan a two regime approach is employed because taiwan s market structure is hypothesized as being dichotomous the export oriented sector being distinct with the domestic oriented sector a recursive system is used because industry concentration is not only a determinant of profitability but is itself determined by other variables

the potential benefits and costs of an increase in us gasoline tax abstract this paper examines the impact that an increase in the tax on gasoline would have on the us economy that is in the context of a general equilibrium model the effect that a 15 gallon increase in the tax on gasoline would have on producing sectors consuming sectors households and the government is estimated the results suggest that there will be a reduction in output by all producing sectors by about 9 4 billion there will be a fall in the consumption of goods and services by about 9 6 billion and there will be a decline in aggregate social welfare measured as utility by about 15 0 billion the government will realize an increase in revenue of about 8 0 billion

a new view of the market structure performance debate ion typically considered in market structure performance studies data on cross sections of firms or industries are unlikely to be sufficiently 2 the question of data selection has been discussed fairly thoroughly by weiss 44 and demsetz i 5 among others although there appears to be little agreement on the direction of bias in the most commonly used samples the question of exogeneity has been less thoroughly discussed although in specific instances e g schmalensee 37 martin 27 it has been dealt with explicitly this content downloaded from 157 55 39 35 on sat 03 sep 2016 05 57 53 utc all use subject to http about jstor org terms 400 james l bothwell thomas f cooley and thomas e hall informative to make such empirical analysis useful it may therefore be more productive to return to industry specific analysis there will undoubtedly be some who are unconvinced by this argument and for them we offer the observation that further empirical studies based on weak deductive foundations are likely to be convincing only to the extent that they account explicitly for the role of prior beliefs and specification uncertainty ii determinants of profitability the conventional market structure conduct performance paradigm has guided vast amounts of empirical research in the field of industrial organization for the past three decades like empirical research in other areas of economics the maintained hypotheses that are considered reflect to a large extent the prior beliefs of the researchers the result is that there is always a suspicion that what is being engaged in is more advocacy than objective empirical analysis in the market structure performance literature the most important alternative prior beliefs maintained hypotheses appear to fall into six categories which we characterize as follows i seller concentration explains profits high rates of return are thought to be caused by monopoly power conferred by high degrees of seller concentration this is the basic collusion specification of bain i 2 seller concentration and entry barriers explain profits high rates of return are thought to reflect monopoly power resulting from both high seller concentration and high barriers to entry this prior comes from the traditional market structure performance paradigm of industrial organization and accounts for the peristence of collusive gains it is prevalent in the work of mann 26 weiss 45 46 comanor and wilson i i qualls 34 1j35 and many other researchers 3 absolute or relative firm size explain profits this prior reflects the demsetz i4 i5 and peltzman 133 notion that high rates of return result from superior firm efficiency or innovativeness and not from oligopolistic collusion and joint profit maximization this prior has also been adopted by others e g shepherd 39 gale i7 who assume that high market shares indicate high barriers to entry 4 risk differentials explain profitability differences this reflects the notion that high rates of return reflect neither monopoly power nor superior efficiency but the payment of positive risk premiums to risk averse investors it underlies much of the work of stigler 4i fisher and hall i6 cootner and holland i3 and many others there are however considerable differences in beliefs about which measure of risk variability of return over time financial leverage or nondiversifiable risk is relevant this content downloaded from 157 55 39 35 on sat 03 sep 2016 05 57 53 utc all use subject to http about jstor org terms the market structure performance debate 40i 5 advertising intensity explains profits this reflects the notion of bloch 4 and others that differences in reported accounting profit rates result from differences in the amounts of omitted intangible capital resulting from advertising expenditures because advertising is assumed by some to be a source of product differentiation this prior also may reflect the belief that the extent of product differentiation is a major determinant of profitability comanor i o schmalensee 13 7 6 growth explains profits this reflects brozen s 6 7 disequilibrium hypothesis that profitability differences result not from monopoly power but from adjustments in capacity lagging behind changes in demand given a particular maintained hypothesis about the most important determinant of profitability there remains uncertainty about the rest of the specification of the model if the results are not robust with respect to uncertainty about the conditioning set of variables then it cannot be concluded that the data are very informative about the hypothesis in question the next section discusses the methodology used to determine whether the results are robust to such specification uncertainty iii specification uncertainty the hypotheses discussed in the previous section all specify the primary determinants of profitability in each case however the investigator must have in mind a set of possible conditioning variables that may or may not belong in the regression although uncertainty about the inclusion or exclusion of such variables is not often explicitly acknowledged it is an inevitable and important aspect of virtually all empirical investigations the primary concern for the problem at hand is the extent to which this specification uncertainty leads to uncertainty in the estimated parameters of primary interest consider the regression model

recruiting and retaining teachers in the uk an analysis of graduate occupation choice from the 1960s to the 1990s this paper examines the market for teachers in the uk from 1960 to 2002 using six graduate cohort data sets we find that while there is no strong evidence that teachers are underpaid the relative wages in teaching compared with alternative professions have a significant impact on the likelihood of graduates choosing to teach this wage effect is strongest at times of low relative teachers wages or following a period of decline in those wages it is also strongest for those individuals who have more recently graduated and for men

collusion versus differential efficiency testing alternative hypotheses the predictions of collusion and efficiency based static equilibrium explanations of interindustry profitability differences are formally developed and tested using appropriate econometric techniques with intraindustry data on seventy u s internal revenue service minor manufacturing industries in 1963 and 1972 none of the explanations has much explanatory power the 1963 data are consistent with collusion based models while the 1972 data are inconsistent with all non null hypotheses considered patterns of profitability are sharply different in the two years in complex ways apparently unrelated to cyclical forces or the phase ii price controls implications of these results are discussed copyright 1987 by blackwell publishing ltd

sources of concentration related profits the relationship between industry structure and market performance plays a central role in the development and implementation of antitrust laws the overwhelming majority of economic studies reveal a positive though generally weak correlation between concentration a structure index and profitability a performance index however two radically different interpretations as to the causality of this relationship have resulted in diametrically opposite recommendations for antitrust policy the structural view asserts that the positive concentration profits correlation is evidence of collusive behavior by firms in oligopolistic industries it also maintains that larger firms do not have a substantial efficiency advantage over their smaller rivals for example in an exhaustive but limited sample study f m scherer et al 7 found that concentration across industries is considerably greater than required by scale economies 2 such findings have led structuralists to suggest that an antitrust policy which deconcentrates industries will not create a serious loss of productive efficiency the structural view is challenged by a group of economists led by harold demsetz who are skeptical that monopoly power can be sustained without government sanctions demsetz 3 argues that the positive relationship between industry concentration and profitability reflects the superior performance in a welfare sense of large firms a firm captures a large market share and earns above average profits by establishing a cost advantage over its rivals the cost advantage can be due to scale economies and or a downward shift of a positively sloped marginal cost curve consequently economists agreeing with demsetz believe a deconcentration policy will produce more inefficiency than it eliminates resulting in a net welfare loss to society there have been two basic methodologies employed to test the efficiency based explanations of the profits concentration relationship peltzman 4 has found a negative significant correlation between changes in concentration and unit cost changes for 165

simultaneous equations models of the structure performance paradigm abstract this paper is concerned with determining the dimension of the simultaneous equations model surrounding the basic profits concentration relationship a very general model is considered and then simplified using a simple test for exogeneity and it is concluded that the model is nonlinear in concentration and that simultaneous interaction occurs between profits and foreign competition variables

on the specification of structure performance relationships this paper argues that most estimated structure profitability equations in industrial economics have not been derived from a single coherent view of the behaviour of firms the independent variables in such equations have often been derived on the basis of a literature search and by appeal to conflicting approaches e g constrained and unconstrained profit maximisation the use of a coherent approach indicates that structure performance equations are likely to be highly non linear and that simultaneous equation estimation is neither required nor appropriate in some cases single equation estimation is adequate and in other cases reduced form equations are needed

a comparison of stated preference methods for environmental valuation this paper presents an empirical comparison of contingent valuation cvm and choice experiments which are used to value environmental quality changes both of these methods require individuals to state their preferences for environmental qualities however choice experiments differ from cvm in that environmental attributes are varied in an experimental design which requires respondents to make repeated choices between bundles of attributes the empirical application involved the effect of environmental quality changes arising from forest management practices on recreational moose hunting values significant differences were found between the values derived from the two methods however detailed examination of the implied choice behaviour suggested that respondents ignored substitute recreation areas in the cvm question restricting the choice experiment model to consider only the one site where quality was varied resulted in welfare estimates similar to the cvm model this highlights the importance of substitutes in environmental valuation and suggests that choice experiments may be more appropriate than cvm in some cases