measuring program impacts on earnings and employment do unemployment insurance wage reports from employers agree with surveys of individuals this article attempts to determine whether wage records reported by employers to state unemployment insurance ui agencies provide a valid alternative to more costly retrospective sample surveys o

labor market returns to two and four year college the paper examines labor market returns to a two and four year college education analysis of the 1972 national longitudinal survey of youth observation that the average person who attended a two year college earned about 10 percent more than those without any college education comparison with the wages of those who attended a four year college education

combining cartel penalties and private damage actions the impact on cartel prices abstract in many countries antitrust enforcement by competition authorities through prosecution and the imposition of penalties is complemented in price fixing cases by private damage actions which should affect both cartel deterrence and the prices set by those cartels that do form we show that the impact of combining penalties and damages on cartel prices is not clearcut and depends on both the nature of the penalty regime and the way that damages are calculated we demonstrate this by focusing on two ways of calculating damages that have been advocated in practice and two different forms of the widely used revenue based penalty regime when the simple form of revenue based penalties is in force the standard method of calculating damages worsens its harmful pricing effects whereas the proposed alternative method of calculating damages can overturn them when a more sophisticated form of revenue based penalties is in operation imposing damages will improve its beneficial pricing effects under both methods of damage calculation but the alternative method is more effective in all cases combining penalties and damages improves deterrence

the role of application assistance and information in college decisions results from the h r block fafsa experiment growing concerns about low awareness and take up rates for government support programs like college financial aid have spurred calls to simplify the application process and enhance visibility we present results from a randomized field experiment in which low income individuals receiving tax preparation help were also offered immediate assistance and a streamlined process to complete the free application for federal student aid fafsa for themselves or their children treated participants were also provided with aid estimates that were compared against tuition cost amounts for nearby colleges the combined assistance and information treatment substantially increased fafsa submissions and ultimately the likelihood of college attendance persistence and aid receipt in particular high school seniors whose parents received the treatment were 8 percentage points more likely to have completed two years of college going from 28 to 36 during the first three years following the experiment families who received aid information but no assistance with the fafsa did not experience improved outcomes the findings suggest many other opportunities for using personal assistance to increase participation in programs that require filling out forms to become eligible jel codes i2 h4 j24 copyright 2012 oxford university press

competition policy and cartel size this article examines endogenous cartel formation in the presence of a competition authority competition policy is shown to make the most inclusive stable cartels less inclusive in particular small firms that might have been cartel members in the absence of a competition authority are no longer members regarding the least inclusive stable cartels competition policy can either decrease or increase their size and in the latter case the collusive price can rise

evaluating the reliability of current value estimates abstract the papers by muller and abk aboody barth and kasznik provide evidence on the reliability of estimates of assets current or market values muller finds that the decision to capitalize estimates of acquired brand values is influenced by contracting incentives suggesting that the reliability of these estimates is compromised by managerial manipulation abk find that estimates of fixed asset revaluations have a statistically significant association with both contemporaneous stock prices and future operating performance it is difficult to assess the implications of abk s results for the reliability of the revaluations because stock prices and operating performance are influenced by many other factors

price setting supergames with capacity constraints this paper examines the role of industry capacity in enforcing collusion in the context of repeated games for a fixed capacity per firm it is shown that changes in the number of firms have a non monotone effect on the best enforceable cartel price this is due to the fact that while an additional firm lowers the share that each of the other firms enjoys at the collusive price it also increases the losses to each firm should the cartel fail

capacity constraints mergers and collusion abstract the objective of this paper is two fold to contribute to the analysis of tacit collusion in bertrand supergames with asymmetric capacity constraints and from a more applied perspective to bring a new light on merger analysis and provide useful guidelines for competition policy taking into account dynamic aspects of competition it is well known that capacity constraints affect tacit collusion as they limit both incentives to deviate e g to undercut rivals and retaliation possibilities however most studies have so far focused on symmetric situations where all firms have the same capacity which leads to ambiguous and unintuitive results and also considerably limits the scope of application studying asymmetric situations makes it possible to analyse the impact of changes in the distribution of these capacities expansions but also mergers split offs transfers etc and to provide guidelines for competition policy and particularly for merger policy these guidelines which differ substantially from those inspired by more static analyses such as the herfindahl or other standard concentration tests are applied to a famous merger that took place in the french bottled water market the nestle perrier merger case

the economic consequences of discrete recognition and continuous measurement abstract discrete recognition is a long standing and ubiquitous accounting practice but it has been widely criticized for suppressing information and inducing accounting motivated transactions we study a model to examine the economic consequences of shifting away from discrete recognition to a continuous measurement approach without manipulation discrete recognition is less informative than the continuous approach however the continuous regime induces more manipulation the equilibrium informativeness is determined by both the accounting standard and endogenous manipulation discrete recognition is more informative than its continuous counterpart precisely when manipulation is a severe threat we respond to the recent call in kothari ramanna and skinner 2010 for using positive accounting theory to explain certain long standing accounting practices we also discuss the model s implications for fair value accounting

long run competition in capacity short run competition in price and the cournot model in this article we investigate the nature of equilibrium in markets in which firms choose the scale of operation before they make pricing decisions we analyze a duopoly model in which firms choose their capacities before engaging in bertrand like price competition we demonstrate that the cournot outcome is unlikely to emerge in such markets and that the equilibrium tends to be more competitive than the cournot model would predict in addition our results indicate a tendency toward asymmetric firm sizes and price dispersion that results from the mixed strategies firms use in equilibrium

endogenous cartel formation with heterogeneous firms in the context of an infinitely repeated capacity constrained price game we endogenize the composition of a cartel when firms are heterogeneous in their capacities when firms are sufficiently patient there exists a stable cartel involving the largest firms a firm with sufficiently small capacity is not a member of any stable cartel when a cartel is not all inclusive colluding firms set a price that serves as an umbrella with non cartel members pricing below it and producing at capacity contrary to previous work our results suggest that the most severe coordinated effects may come from mergers involving moderate sized firms rather than the largest or smallest firms

tacit collusion in the presence of cyclical demand and endogenous capacity levels abstract we analyze tacit collusion in an industry characterized by cyclical demand and long run scale decisions firms face deterministic demand cycles and choose capacity levels prior to competing in prices our focus is on the nature of prices we find that two types of price wars may exist in one collusion can involve periods of mixed strategy price wars in the other consistent with the rotemberg and saloner 1986 definition of price wars we show that collusive prices can also become counter cyclical we also establish pricing patterns with respect to the relative prices in booms and recessions if the marginal cost of capacity is high enough holding current demand constant prices in the boom are generally lower than the prices in the recession this reverses the results of haltiwanger and harrington 1991 in contrast if the marginal cost of capacity is low enough then prices in the boom are generally higher than the prices in the recession for costs in an intermediate range numerical examples are calculated to show specific pricing patterns

the labor market returns to community college degrees diplomas and certificates this article provides one of the first rigorous estimations of the labor market returns to community college certificates and diplomas as well as estimations of the returns to the more commonly studied associate s degrees using administrative data from kentucky we estimate panel data models that control for differences among students in precollege earnings and educational aspirations associate s degrees and diplomas have quarterly earnings returns of nearly 2 400 for women and 1 500 for men compared with much smaller returns for certificates there is substantial heterogeneity in returns across fields of study degrees diplomas and for women certificates correspond with higher levels of employment

excess capacity and collusion in this paper the authors analyze a restricted class of equilibria in the dynamic model of j p benoit and v krishna 1987 in which firms choose their scale of operation before engaging in a repeated game of price competition benoit and krishna established that all firms carry excess capacity in all collusive equilibria as the authors are interested in the relationship between excess capacity and collusion in price they examine equilibria in which firms tacitly collude in price but not in investment decisions copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

horizontal mergers and collusive behavior abstract in the industrial organization literature it is generally felt that mergers hurt consumers not only because of the increased industrial concentration they effect but also because collusion becomes more likely in this paper we show that at least in one important case this intuition is misguided if a tacitly collusive agreement enforced by trigger strategies is not initially sustainable mergers will tend to reduce the chance that it becomes sustainable in the future this is so because the threat point implicit in the agreement becomes more favorable for outsiders

all stage strong correlated equilibrium abstract a strong correlated equilibrium is a strategy profile that is immune to joint deviations different notions of strong correlated equilibria were defined in the literature one major difference among those definitions is the stage in which coalitions can plan a joint deviation before ex ante or after ex post the deviating players receive their part of the correlated profile in this paper we show that an ex ante strong correlated equilibrium is immune to deviations at all stages thus the set of ex ante strong correlated equilibria of moreno wooders games econ behav 17 1996 80 113 is included in all other sets of strong correlated equilibria

endogenous mergers and collusion in asymmetric market structures recent empirical evidence shows that cartels are often asymmetric while cartel theory suggests that firm symmetry is conducive to collusion including an indivisible cost of cartelization we show that medium asymmetric market structures are more conducive to collusion since they balance the small firms incentives to stay in the cartel against the need to cover the cartel leaders indivisible cartelization cost using an endogenous merger model we also show that forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with a higher risk of collusion current antisymmetry merger policy can thus be counterproductive

to commit or not to commit revisiting quantity vs price competition in a differentiated industry previous studies have shown that quantity commitment by all firms in an industry mitigates price competition this paper shows that when firms have a choice asymmetric outcomes can arise with some firms choosing to commit to a quantity and other firms choosing not to to study the commitment decision we analyze a multistage game within a duopoly of differentiated firms a la hotelling in the first stage of the game firms choose whether or not to commit to a quantity in the second stage each firm that chose to commit sets a quantity which represents an upper bound on how much it can sell to consumers in the third stage both firms set prices strategically regardless of whether or not they committed in the final stage demand is allocated as consumers maximize their utilities firm s that chose not to commit to a quantity in the first stage can fulfill any quantity that consumers demand at the equilibrium prices we find that if product differentiation is sufficiently low both firms choose to co

the effects of school spending on educational and economic outcomes evidence from school finance reforms since the coleman report many have questioned whether public school spending affects student outcomes the school finance reforms that began in the early 1970s and accelerated in the 1980s caused dramatic changes to the structure of k 12 education spending in the united states to study the effect of these school finance reform induced changes in public school spending on long run adult outcomes we link school spending and school finance reform data to detailed nationally representative data on children born between 1955 and 1985 and followed through 2011 we use the timing of the passage of court mandated reforms and their associated type of funding formula change as exogenous shifters of school spending and we compare the adult outcomes of cohorts that were differentially exposed to school finance reforms depending on place and year of birth event study and instrumental variable models reveal that a 10 increase in per pupil spending each year for all 12 years of public school leads to 0 31 more completed years of education about 7 higher wages and a 3 2 percentage point reduction in the annual incidence of adult poverty effects are much more pronounced for children from low income families exogenous spending increases were associated with notable improvements in measured school inputs including reductions in student to teacher ratios increases in teacher salaries and longer school years jel codes j10 i20 h7

the pre programme earnings dip and the determinants of participation in a social programme implications for simple programme evaluation strategies the key to estimating the impact of a programme is constructing the counterfactual outcome representing what would have happened in its absence this problem becomes more complicated when agents such as individuals firms or local governments self select into the programme rather than being exogenously assigned to it this paper uses data from a major social experiment to identify what would have happened to the earnings of self selected participants in a job training programme had they not participated in it we investigate the implications of these earnings patterns for the validity of widely used before after and difference in differences estimators

the discontent cartel member and cartel collapse the case of the german cement cartel we hypothesize a particular source of cartel instability and explore its relevance to understanding cartel dynamics the cartel instability is rooted in the observation that upon cartel formation the relative positions of firms are often fixed which may lead some growthconscious members to be discontent this incongruity between a cartel member s allocated market share and its desired market share may result in systematic deviations and the eventual collapse of the cartel this hypothesis is then taken to the german cement cartel of 1991 2002 we argue that readymix was such a discontent cartel member and using a rich pricing data set are able to characterize how readymix deviated how other firms responded and how it led to the collapse of the cartel

how important are fixed effects and time trends in estimating returns to schooling evidence from a replication of jacobson lalonde and sullivan 2005 a substantial and rapidly growing literature has developed around estimating earnings gains from 2 year college degrees using administrative data these papers almost universally employ a person level fixed effects strategy to estimate earnings premia net of fixed attributes we note that the seminal piece on which these papers build jacobson lalonde sullivan journal of econometrics 2005 125 1 2 271 304 provides theoretical and empirical evidence for the importance of additionally differencing out individual time trends the subsequent literature has not followed suit through replication we ask whether this matters we show that it does and further that these person level time trends need not be computationally burdensome in large administrative data we recommend them as a unifying econometric standard for future work

the reliability of investment property fair value estimates abstract we investigate the reliability of mandatory annual fair value estimates for uk investment property we find that appraisal estimates understate actual selling prices and are considerably less biased and more accurate measures of selling price than respective historical costs investigations of managerial discretion over fair value reporting reveal that managers select among permissible accounting methods to report higher earnings time asset sales to smooth reported earnings changes smooth reported net asset changes and boost fair values prior to raising new debt finally we find that the reliability of appraisal estimates increases when monitored by external appraisers and big 6 auditors

partial coordination and mergers among quantity setting firms we analyze horizontal mergers in a collusive environment by using an infinitely repeated game where i a subset of collusive firms is exogenously given and ii partially collusive arrangements are allowed for we show that in our model there is no clear relation between the existence of mergers and full collusion at equilibrium however we demonstrate that the presence of mergers generally leads to a price increase also we show that cartel firms have less incentives to merge than firms in a cournot oligopoly and that collusion increases fringe firms incentives to merge 2007 elsevier b v all rights reserved jel classification l13 l40 l41

ringleaders in larger number asymmetric cartels the concept of a cartel ringleader has specific legal meaning but has received relatively little attention in the economic literature of cartels this article draws on a sample of 89 european cartels to identify how often ringleaders exist who they are and what they do it argues that ringleaders are more likely where the traditional cartel problems are likely to be most acute i e with larger numbers of members exhibiting substantial size asymmetries this is confirmed for price fixing and bid rigging cartels and is especially pronounced where the ringleader displays aggressive as opposed to merely organisational behaviour

quantile treatment effects of college quality on earnings we use administrative data from texas to estimate how graduating from a state flagship or a community college relative to a nonflagship university affects the distribution of earnings we control for the selection of students across sectors using a rich set of observable ability and background characteristics and find evidence of substantial heterogeneity in the returns to quality returns increase with earnings among ut austin graduates but decline among texas a m graduates for community colleges returns are negative for lower earners but go to zero for higher earners our estimates also point to differences in the distribution of returns by race ethnicity

on the workings of a cartel evidence from the norwegian cement industry using the institutional set up of the norwegian cement industry in particular its sharing rule we are able to identify the workings of a cartel in some detail given data on prices production and exports we are able to identify marginal costs as well as the effectiveness of the cartel we compare our marginal cost estimates which are derived from an equilibrium condition to detailed cost accounting data and find that our estimate of marginal cost is very much in line with the data we then show that the cement cartel has been ineffective in the sense that the sharing rule induces overproduction and exporting below marginal costs in this sense it is consumers not firms that benefi tf rom the sharing rule we find that the ineffectiveness of the cartel is becoming so large that domestic welfare of a merger to monopoly would in fact be positive at around 1968 which is exactly when the merger actually took place however we also show that competition would have resulted in even higher welfare gains over the entire sample

a tip of the iceberg the probability of catching cartels summary reliable estimates of crime detection probabilities could help in designing better sanctions and improve our understanding of the efficiency of law enforcement for cartels we only have limited knowledge on the rate at which these illegal practices are discovered in comparison to previous works this paper offers a more parsimonious and simple to use method to estimate time dependent cartel discovery rates while allowing for heterogeneity across firms it draws on capture recapture methods that are frequently used in ecology to make inferences on various wildlife population characteristics an application of this method provides evidence that less than a fifth of cartelising firms are discovered copyright 2013 john wiley sons ltd

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

coalition proof implementation abstract a new condition is shown to be necessary and sufficient for coalition proof nash equilibrium cpne implementation in environments with complete information this result implies that all choice functions are cpne implementable when individuals utility functions are bounded with respect to all variables except for money and are either analytic or quasi linear journal economic literature classification numbers c72 d72 d78

education decisions and labour market outcomes the financial return to a college degree is an increasing concern amid rising tuition costs and stagnant wages using the education longitudinal study of 2002 els 2002 i analyse the effect of po

what determines cartel success following george stigler 1964 many economists assume that incentive problems undermine attempts by firms to collude to raise prices and restrict output but the potential profits from collusion can create a powerful incentive as well theory cannot tell us a priori which effect will dominate whether or when cartels succeed is thus an empirical question we examine a wide variety of empirical studies of cartels to answer the following questions 1 can cartels succeed 2 if so for how long 3 what impact do cartels have 4 what causes cartels to break up we conclude that many cartels do survive and that the distribution of duration is bimodal while the average duration of cartels across a range of studies is about five years many cartels break up very quickly i e in less than a year but there are many others that last between five and ten years and some that last decades limited evidence suggests that cartels are able to increase prices and profits to varying degrees cartels can also affect other non price variables including advertising innovation investment barriers to entry and concentration cartels break up occasionally because of cheating or lack of effective monitoring but the biggest challenges cartels face are entry and adjustment of the collusive agreement in response to changing economic conditions cartels that develop organizational structures that allow them the flexibility to respond to these changing conditions are more likely to survive price wars that erupt are often the result of bargaining issues that arise in such circumstances sophisticated cartel organizations are also able to develop multipronged strategies to monitor one another to deter cheating and a variety of interventions to increase barriers to entry

denying leniency to cartel instigators costs and benefits abstract a large number of countries have introduced successful leniency programs into their competition law enforcement to encourage colluding firms to come forward with evidence that will help detect cartels and punish price fixers this paper studies a feature of some of these programs that has received relatively little attention in the literature the inclusion of no immunity for instigators clauses niics these provisions deny leniency benefits to parties that instigate cartel behavior or function as cartel ringleaders our results show that niics can lead to increased or decreased levels of cartel conduct by removing the instigator s benefit from cooperating with the authorities a niic undoes some of the destabilizing benefit the leniency program was intended to generate and thereby furthers cartel stability on the other hand the instigator faces an asymmetrically severe punishment under a niic and this can reduce the incentive to instigate in the first place

vertical integration raising rivals costs and upstream collusion abstract this paper analyzes the impact vertical integration has on upstream collusion when the price of the input is linear as a first step the paper derives the collusive equilibrium that requires the lowest discount factor in the infinitely repeated game when one firm is vertically integrated it turns out this is the joint profit maximum of the colluding firms the discount factor needed to sustain this equilibrium is then shown to be unambiguously lower than the one needed for collusion in the separated industry while the previous literature has found it difficult to reconcile raising rivals costs strategies following a vertical merger with equilibrium behavior in the static game they are subgame perfect in the repeated game studied here

discussion of revalued financial tangible and intangible assets association with share prices and non market based value estimates barth and clinch 1998 henceforth bc like easton eddey and harris 1993 henceforth eeh examine the relation between asset revaluation data in the financial statements of australian firms and various value metrics a principal difference between the two studies is the choice of value metrics and the formulation of the regression models relating the revaluation data and these metrics the value metrics used by bc are price per share and a measure of intrinsic value per share most of this discussion will focus on the possible effects of scale in regressions that have price or value per share as the dependent variable my main point is that statistical associations between price balance sheet data and income statement data in these regressions may be a spurious effect of scale other issues raised at the conference included the expected magnitudes of the coefficient estimates from the regression analyses management motives for asset revaluations econometric issues associated with pooling a time series and cross section of data and reasons for use of independent valuations versus valuations by company directors since these issues were addressed in eeh and in the discussion of eeh by bernard 1993 i pay less attention to them in this discussion

collusion with capacity constraints over the business cycle this paper investigates the efiect of capacity constraints on the sustainability of collusion in markets subject to cyclical demand uctuations in the absence of capacity constraints i e a limiting case of our model haltiwanger and harrington 1991 show that flrms flnd it more di cult to collude during periods of decreasing demand we flnd that this prediction can be overturned if flrms capacities are su ciently small capacity constraints imply that punishment proflts move procyclically so that periods of increasing demand may lead to lower losses from cheating even if collusive proflts are rising haltiwanger and harrington s main prediction remains valid for su ciently large capacities

fair value accounting and managers hedging decisions real effect of fair value accounting we conduct two experiments with experienced accountants to investigate how fair value accounting affects managers real economic decisions in experiment 1 we find that participants are more likely to make suboptimal decisions e g forgo economically sound hedging opportunities when both the economic and fair value accounting impact information is presented than when only the economic impact information is presented or when both the economic and historical cost accounting impact information is presented this adverse effect of fair value accounting is more likely when the price volatility of the hedged asset is higher which is a situation where paradoxically hedging is more beneficial we find that the effect is mediated by participants relative considerations of economic factors versus accounting factors e g earnings volatility experiment 2 shows that enhancing salience of economic information or separately presenting net income not from fair value remeasurements reduces the adverse effect of fair value accounting our findings are informative to standard setters in their debate on the efficacy of fair value accounting

minimum wage policy and community college enrollment patterns in this article the author studies the effect of the minimum wage on community college enrollment using cross border variation in state minimum wages to address spatial correlation in local labor

general education vocational education and labor market outcomes over the life cycle policy proposals promoting vocational education focus on the school to work transition but with technological change gains in youth employment may be offset by less adaptability and diminished employment later in life to test for this tradeoff we employ a difference in differences approach that compares employment rates across different ages for people with general and vocational education using microdata for 11 countries from ials we find strong and robust support for such a tradeoff especially in countries emphasizing apprenticeship programs german microcensus data and austrian administrative data confirm the results for within occupational group analysis and for exogenous variation from plant closures respectively

career technical education and labor market outcomes evidence from california community colleges career technical education cte programs at community colleges are increasingly seen as an attractive alternative to four year colleges yet little systematic evidence exists on the returns to specific certificates and degrees we estimate returns to cte programs using administrative data from the california community college system linked to earnings records we employ estimation approaches including individual fixed effects and individual specific trends and find average returns to cte certificate and degrees that range from 14 to 45 percent the largest returns are for programs in the healthcare sector estimated returns in non health related programs range from 15 to 23 percent end page 986 abstract from author

cooperative equilibria in finite horizon noncooperative supergames abstract it is well known that cooperative outcomes can be supported by noncooperative equilibrium strategy combinations in games that are infinitely repeated however the example of the repeated prisoner s dilemma has led people to conclude that such cooperative outcomes cannot be sustained if the game is repeated finitely often in this paper it is proved that the belief about finitely repeated games is false conditions are given that allow the existence of cooperative outcomes in finitely repeated games that are supported by subgame perfect noncooperative equilibrium strategies

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

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

a model of collusion timing abstract i develop a dynamic model of collusion affording a substantial role to entry heterogeneous firms make collusion entry exit and investment decisions within an evolving environment the collusive agreement adopted is a rule of thumb motivated by the details of collusion in the lysine market it is found that an entrant will wait until it has a market share comparable to its competitors before agreeing to collude allowing for collusive possibilities tends to yield a less concentrated industry with reduced consumer welfare the model characterises events in the lysine market and could provide insights into markets with the potential for collusion and entry and uncertainty about the characteristics of potential entrants

collusion and heterogeneity of firms we examine the impact of heterogeneous discounting on collusion in dynamic bertrand competition we show exactly when collusion can be sustained and how collusion would be organized efficiently with heterogeneous discounting first we show that collusion is possible if and only if the average discount factor exceeds a certain threshold with or without capacity constraints next we identify a dynamic pattern of market share that characterizes efficient collusion and obtain the unique long run prediction despite the presence of multiple equilibria in the long run the most patient firm and the most impatient firm tend to dominate the market

equilibrium vertical differentiation in a bertrand model with capacity precommitment both quality differentiation and capacity commitment have been shown to relax price competition however their joint influence on the outcome of price competition has not yet been assessed in this article we consider a three stage game in which firms choose quality then commit to capacity and finally compete in price when the cost of quality is negligible we show that firms do not differentiate their products in a subgame perfect equilibrium in other words capacity precommitment completely eliminates the incentive to differentiate by quality

market power and rents in global supply chains market power and competition policy in food supply chains has emerged as an important economic issue in economics and a highly sensitive item on the policy agenda consolidation is taking place in the food industry both in high income countries and in emerging economies but the impact of concentration in global food chains on efficiency and rent distribution is more nuanced and complex than often claimed we review the literature and extend it by developing a model which explicitly takes into account market imperfections and contract enforcement problems in supply chains increased competition benefits farms by improving contract conditions but contract enforcement becomes more complicated

lumpy capacity investment and disinvestment dynamics capacity addition and withdrawal decisions are among the most important strategic decisions made by firms in oligopolistic industries in this paper we develop and analyze a fully dynamic model of an oligopolistic industry with lumpy capacity and lumpy investment disinvestment we use our model to suggest answers to two questions first what economic factors facilitate preemption races second what economic factors facilitate capacity coordination with a series of examples we show that low product differentiation low investment sunkness and high depreciation tend to promote preemption races the same examples also show that low product differentiation and low investment sunkness tend to promote capacity coordination although depreciation removes capacity it might impede capacity coordination finally our examples show that multiple equilibria arise over at least some range of parameter values the distinct structures of these equilibria suggest that firms expectations play a key role in determining whether or not industry dynamics are characterized by preemption races and capacity coordination taken together our results suggest that preemption races and excess capacity in the short run often go hand in hand with capacity coordination in the long run

dynamic price competition with capacity constraints and a strategic buyer we analyze a simple dynamic durable good model two incumbent sellers and potential entrants choose their capacities at the start of the game we solve for equilibrium capacity choices and the necessarily mixed pricing strategies in equilibrium the buyer splits the order with positive probability to preserve competition making it possible that a high and low price seller both have sales sellers command a rent above the value of unmet demand by the other seller a buyer benefits from either a commitment not to make future purchases or by hiring an agent to always buy from the lowest priced seller

upstream capacity constraint and the preservation of monopoly power in private bilateral contracting this article presents a model of private vertical contracting with a capacity constrained monopolistic supplier i consider full capacity beliefs that are consistent with an upstream capacity constraint and are wary when the constraint is tight or production is costless i show that facing a capacity constraint the supplier may preserve its monopoly power in equilibrium this result stands in sharp contrast to the standard result that the supplier cannot preserve its monopoly power which holds under the usual implicit assumption of an infinite production capacity

collusion in a price quantity oligopoly abstract in the context of an infinitely repeated oligopoly game we study collusion among firms that simultaneously choose prices and quantities we compare a price cartel with a price quota cartel and analyze when and why firms prefer the latter to the former output quota may be required to solve coordination and incentive problems when market demand is sufficiently elastic if market demand is sufficiently inelastic then the cartel faces a trade off between increasing prices and the amount of costly overproduction we find that a price cartel prices consistently below the monopoly price to mitigate excessive production in this case a quota arrangement allows firms to avoid overproduction and to sustain the monopoly price from a policy perspective our findings suggest that an overall price increase in conjunction with more stable prices and market shares is indicative of collusion in industries where production precedes sales and outputs are imperfectly observable

does the european natural gas market pass the competitive benchmark of the theory of storage indirect tests for three major trading points this paper presents the first comparative analysis of the relationship between natural gas storage utilization and price patterns at three major european trading points using two indirect tests developed by fama and french 1987 1988 that are applied in other commodity markets we impose the no arbitrage condition to model the efficiency of the natural gas market the results reveal that while operators of european storage facilities realize seasonal arbitrage profits substantial arbitrage potentials remain we suggest that the indirect approach is well suited to provide market insights for periods with limited data we find that overall market performance differs substantially from the competitive benchmark of the theory of storage

some results on optimal penal codes in asymmetric bertrand supergames abstract optimal penal codes in asymmetric bertrand supergames exhibit security level punishments for the largest firm if no firm has sufficient capacity to service the market then collusion that is barely sustainable by optimal penal codes entails higher capacity utilization by the largest firm than by the other firms collusion supported by optimal penal codes in models with a large firm facing a competitive fringe can result in the large firm having low capacity utilization and thus providing a price umbrella for the fringe firms which have high capacity utilization journal of economic literature classification numbers c72 c73 l11 l13

gainfully employed assessing the employment and earnings of for profit college students using administrative data we draw on population level administrative data from the u s department of education and the internal revenue service to quantify the impact of for profit college attendance on the employment and earnings of more than one million students using a matched comparison group difference in differences design we find that certificate seeking students in for profit institutions are 1 5 percentage points less likely to be employed and conditional on employment have 11 percent lower earnings after attendance than students in public institutions these results hold for both men and women and for seven of the top ten fields of study we find that earnings and employment outcomes are particularly poor for students attending for profit colleges that offer the majority of their courses online and for multicampus chains we find that for profit students experience small statistically insignificant gains in annual earnings after attendance compared to a matched end page 342 control group of young individuals who do not attend college a back of the envelope comparison of these earnings gains to average debt burdens suggests that for profit certificate programs do not pay off for the average student abstract from author

dynamic duopoly prices and quantities we study a dynamic model of duopoly in which firms choose both prices and quantities if quantity capacity choices are relatively inflexible firms generally carry excess idle capacity in equilibrium because of this enforcement cost firms are unable to achieve monopoly levels this contrasts with models in which which firms compete in either prices or quantities alone on the other hand if capacities are flexible firms may be able to sustain monopoly behaviour

an anatomy of cartel contracts we study cartel contracts using data on 18 contract clauses of 109 legal finnish manufacturing cartels one third of the clauses relate to raising profits the others deal with instability through incentive compatibility cartel organization or external threats cartels use three main approaches to raise profits price market allocation and specialization these appear to be substitutes choosing one has implications on how cartels deal with instability simplifying we find that large cartels agree on prices cartels in homogenous goods industries allocate markets and small cartels avoid competition through specialization

colluding on excluding abstract in an oligopoly characterized by barriers to re entry a finite horizon complete information convex costs and the presence of three identical firms i show that in subgame perfect equilibrium two of them the predators can choose to charge an initial price that is so low that the third the prey decides to exit immediately in this predatory pricing equilibrium the predators can enjoy higher profits than in the best collusive equilibrium with three firms thus a coalition of two firms can benefit from colluding on excluding

the effectiveness of public sponsored training revisited the importance of data and methodological choices this article revisits the effectiveness of public sponsored training programs for germany accounting for dynamic selection into heterogeneous programs we carefully assess to what extent various aspects of our empirical strategy such as conditioning flexibly on employment and benefit histories the availability of rich data handling of later program participations and further methodological choices affect our estimates our results imply pronounced negative lock in effects in the short run and positive medium run effects on employment and earnings when job seekers enroll after having been unemployed for some time we find that data and specification issues can have a large effect

way station or launching pad unpacking the returns to adult technical education abstract we estimate returns to diplomas and certificates awarded to adult students by public technology centers a niche sector of higher education that elevates occupational and competency based education over transferable credits and traditional degrees technology centers cater to nontraditional students particularly adults seeking part time training in specific skills sub associate credentials arising from tennessee colleges of applied technology increase access to new industries particularly health and industrial mobility explains half of the employment returns to postsecondary diplomas and at least three quarters of the earnings returns to certificates tcat diploma completers earn 707 1034 in additional quarterly earnings over non completers similar to the returns from community college diplomas benefits extend beyond the signal value of completion students who leave without a credential fare significantly better than matched non students with a similar history of earnings

safe port in a storm the impact of labor market conditions on community college enrollments the paper examines the impact of the business cycle on enrollments and finances at individual community colleges between the late 1960s and the mid 1980s we find that 1 percent increases in the unemployment rates of recent high school graduates and of all adults are associated with rises in full time attendance of about 0 5 percent and 4 percent respectively part time enrollment exhibits similar anticyclical patterns this link carries over in large part to degrees obtained in contrast state and local appropriations per student are procyclical we interpret this funding pattern as a failure to integrate education policy sufficiently closely with labor market policy

general education versus vocational training evidence from an economy in transition abstract this paper examines the relative benefits of general education and vocational training during romania s transition to a market economy we examine a 1973 educational reform that shifted a large proportion of students from vocational training to general education using census and household survey data we analyze the effect of this policy with a regression discontinuity design we find that men affected by the policy are significantly less likely to work in manual or craft related occupations but have similar levels of labor market participation and earnings compared to their counterparts unaffected by the policy we conclude that differences in labor market returns between graduates of vocational and general schools are largely driven by selection

participation games and international environmental agreements a non parametric model abstract we examine the size of stable coalitions in a participation game that has been used to model international environmental agreements cartel formation rd based on these examples a consensus has emerged that in this kind of game the equilibrium coalition size is small except possibly when the potential benefits of cooperation are also small in this paper we develop a non parametric approach to the problem and demonstrate that the conventional wisdom is not robust in a general setting we identify conditions under which the equilibrium coalition size can be large even when potential gains are large contrary to previously examined leading special cases we show that reductions in marginal abatement costs in an international environmental game can increase equilibrium membership and we provide a measure of the smallest reduction in costs needed to support a coalition of arbitrary size

a dynamic oligopoly with collusion and price wars we provide a collusive framework with heterogeneity among jirms investment entry and exit it is a symmetric information model in which it is hard to sustain collusion when there is an activejim that is likely to exit in the near future numerical analysis is used to compare a collusive to a noncollusive environment only the collusive industry generates price wars also the collusive industry offers both more and higherquality products to consumers albeit often at a higher price the positive effect of collusion on variety and quality more than compensates consumers for the negative effect of collusive prices so that consumer surplus is larger with collusion

examining models of collusion the market for lysine abstract we compare the experience with collusion in the market for lysine with the predictions of theory the lysine market provides an ideal setting following the confessions of cartel participants in antitrust investigations data availability allows demand and cost functions to be estimated and observed mark ups compared with predictions we find that several integral aspects of collusion in the lysine market are not adequately addressed in the literature the dynamics associated with entry and investment persistent asymmetries between firms the cartel s bargaining problem and the existence of cheating in equilibrium these issues are likely to have much wider applicability beyond the lysine market

do vertical mergers facilitate upstream collusion we investigate the impact of vertical mergers on upstream firms ability to collude when selling to downstream firms in a repeated game we show that vertical mergers give rise to an outlets effect the deviation profits of cheating unintegrated firms are reduced as these firms can no longer profitably sell to the downstream affiliates of their integrated rivals vertical mergers also result in an opposing punishment effect integrated firms typically make more profit in the punishment phase than unintegrated upstream firms the net result of these effects in an unintegrated industry is to facilitate upstream collusion we provide conditions under which further vertical integration also facilitates collusion

how do switching costs affect market concentration and prices in network industries i investigate the effects of switching costs on the market outcome in network industries using a dynamic duopoly model of price competition in the presence of an outside option i find that the role of switching costs depends on network effects and the outside option without a viable outside option high switching costs can neutralize the tendency towards high market concentration associated with network effects but with a viable outside option switching costs increase market concentration furthermore switching costs lower prices if network effects are modest and there exists a viable outside option but generally raise prices otherwise

an explanation for accounting income smoothing it is widely believed that corporate managers often engage in income smoothing taking actions to dampen fluctuations in their firms publicly reported net income one reason given for this is that managers think that investors pay more for a firm with a smoother income stream see ronen and sadan 1981 while there have been many empirical studies attempting to document whether or not income smoothing actually occurs there has been little exploration of why a manager might rationally want to smooth his firm s income explaining why smoothing might be observed and how it can result in an increased stock price is the focus of this paper in two recent studies lambert 1984 and dye 1988 demonstrate in agency settings that a risk averse manager who is precluded from borrowing and lending in the capital markets has an incentive to smooth his firm s reported income in this paper in contrast it is shown that within a market setting an incentive exists for a manager to smooth income that is independent of either risk aversion or restricted access to capital markets the market setting is also useful in that it allows for the analysis of the effect of income smoothing on stock prices it is shown here that if a manager can choose which of two periods to recognize certain income he may prefer the choice that is expected to

coalition proof nash equilibria ii applications abstract in bernheim peleg and whinston coalition proof equilibria i concepts j econ theory 42 1987 1 12 we proposed the notion of coalition proof nash equilibrium and perfectly coalition proof nash equilibrium as solution concepts for strategic environments in which players can freely discuss their strategies but cannot make binding commitments this paper undertakes applications to several economic problems including the behavior of cournot oligopolists oligopolistic entry deterrence cooperation in finite horizon games and social choice rule implementation

optimal penal codes in price setting supergames with capacity constraints this paper constructs optimal pure strategy penal codes for a broad class of symmetric bertrand supergames with capacity constraints the results should simplify the analysis of bertrand supergames because the punishments comprising the penal codes constructed below have a very simple form and the associated payoffs are often easy to calculate it is also shown that for a commonly employed subclass of the games considered the admission of mixed strategies does not allow severer punishments the analysis draws heavily on the pathbreaking work of abreu 1984 he demonstrated that in the search for optimal penal codes attention can be restricted to simple penal codes simple penal codes are characterized by a vector of outcome paths one for each player the ith outcome path is interpreted as the punishment to be imposed on the ith player if he deviates from the equilibrium path or from any punishment path section 2 explains the basic framework of analysis the class of bertrand games studied is very general no particular rationing rule is imposed some mild restrictions are placed on the firms sales functions instead the commonly used models of levitan and shubik 1972 and beckman 1965 are special cases of the games analysed below it is assumed throughout that there is a price firms can be induced to charge if the punishment for charging a different price gives the offending firm a payoff equal to its security level for the supergame thus either there must exist a static nash equilibrium in pure strategies or else the discount factor must not be too close to zero in section 3 optimal penal codes are constructed and it is established that the punishments comprising them always drive punished firms to their security levels the arguments employed make clear that optimal penal codes are not generally unique this issue is addressed in section 4 where it is also shown that the levitan shubik rationing rule exhibits more types of optimal penal codes than do other rules in particular if the levitan shubik rule is employed then punishments that are analogous to abreu s 1986 symmetric two phase punishments for cournot games can be used to construct optimal penal codes in bertrand games this property does not hold generally however