price dispersion and seller heterogeneity in retail food markets price dispersion i e a homogeneous product being sold at different prices by different sellers is among the most replicated findings in empirical economics the paper assesses the extent and determinants of spatial price dispersion for 14 perfectly homogeneous food products in more than 400 retailers in a market characterized by the persistence of a large number of relatively small traditional food stores alongside large supermarkets the extent of observed price dispersion is quite high when prices in an urban area where the spatial concentration of sellers is higher are compared with those in smaller towns and rural areas differences in search costs and the potentially higher degree of competition do not yield lower prices other counteracting factors including differences in seller costs and consumer incomes make prices on average higher in the urban area for 11 of the 14 products considered for many but not all the products supermarkets proved to be less expensive than traditional retailers although average savings from food shopping at supermarkets were extremely low finally the results of the study provide evidence that retailers have different pricing strategies and these differences also emerge for supermarkets belonging to the same chain the results presented in the paper suggest that a variety of factors play a role in explaining price dispersion in addition to differences in seller costs the contemporaneous heterogeneity of retailers in terms of services provided and consumers in terms of search costs and preferences makes the emergence of monopolistic competition possible as well as allowing small traditional food retailers to remain in business

the relative importance of actual and potential competition empirical evidence from the pharmaceuticals market the relative importance of actual and potential competition empirical evidence from the pharmaceuticals market

discrete equilibrium price dispersion an explicit solution of an equilibrium model with price setting firms and searching customers makes possible a number of comparativestatics predictions about how cost differences among firms search costs of customers and taxes will affect the mean and variance of the distribution of market prices another implication of the model is that a firm s demand depends on the difference between its price and the average price in the market

bridging the gap between the field and the lab environmental goods policy maker input and consequentiality abstract this paper explores the criterion validity of stated preference methods through experimental referenda that capture key characteristics of a stated preference survey for a proposed environmental program in particular we investigate whether advisory referenda where participant votes have either known or unknown weight in the policy decision can elicit values comparable to that of a standard incentive compatible referendum when participants regard their votes as consequential our results suggest there is no elicitation bias with advisory referenda for advisory referenda where participants view their votes as inconsequential and for purely hypothetical referenda we observe elicitation bias

prices and price dispersion on the web evidence from the online book industry using data collected between august 1999 and january 2000 covering 399 books we examine pricing by thirty two online united states based bookstores at the aggregate level we find that both advertising and competitive structure had the predicted effects more competition led to lower prices and to lower price dispersion holding competitive structure constant more widely advertised items also had lower prices at the firm level we observe considerable heterogeneity in behavior firms had differentiated or attempted to differentiate on dimensions such as brand price and selection

retail strategies on the web price and non price competition in the online book industry two conflicting predictions have emerged regarding the effect of low cost information on price the first states that all internet retailers will charge the same low price for mass produced goods the second states that internet retailers will differentiate to avoid intense price competition using data collected in april 1999 on the prices of 107 books in thirteen online and two physical bookstores we find similar average prices online and in physical stores and substantial price dispersion online analysis of product differentiation yields no clear results the substantial premium charged by amazon provides indirect evidence of product differentiation

estimating willingness to pay for a cycling event using a willingness to travel approach abstract this study examines the monetary value of nonmarket benefits to participants of an active sport tourism event such as happiness and pride from participating in an event willingness to travel wtt greater distances for future events is assessed and converted into willingness to pay wtp estimates using travel costs using survey data from the 2014 and 2015 blood sweat gears bike ride the intended visitation models show that changes in travel cost have a significant negative effect wtp to revisit the event was between 41 and 57 the likelihood of return visit decreases as travel costs increase indicating that wtp estimates are internally valid wtp estimates stemming from two years of data collection are stable suggesting that they are also temporally reliable this study demonstrated the feasibility of using stated preference wtt questions to assign a monetary value to nonmarket benefits of active sport tourists

hedonic price indexes for spreadsheets and an empirical test for network externalities in this article i first estimate hedonic price equations for computer spreadsheet programs and then use the analysis to empirically test whether network externalities exist in this industry the study shows that consumers are willing to pay a significant premium for spreadsheets that are compatible with the lotus platform and for spreadsheets that offer links to external databases and a similar premium for spreadsheets that offer local area network externalities finally the quality adjusted real price of computer spreadsheets declined by approximately 15 per year from 1986 to 1991

price dispersion in the small and in the large evidence from an internet price comparison site this paper examines four million daily price observations for more than 1 000 consumer electronics products on the price comparison site http shopper com we find little support for the notion that prices on the internet are converging to the law of one price in addition observed levels of price dispersion vary systematically with the number of firms listing prices the difference between the two lowest prices the gap averages 23 per cent when two firms list prices and falls to 3 5 per cent in markets where 17 firms list prices these empirical results are an implication of a general clearinghouse model of equilibrium price dispersion

contingent valuation a practical alternative when prices aren t available a person may be willing to make an economic tradeoff to assure that a wilderness area or scenic resource is protected even if neither that person nor perhaps anyone else will actually visit this area this tradeoff is commonly labeled passive use value contingent valuation studies ask questions that help to reveal the monetary tradeoff each person would make concerning the value of goods or services such surveys are a practical alternative approach for eliciting the value of public goods including those with passive use considerations first i discuss the exxon valdez oil spill of march 1989 focusing on why it is important to measure monetary tradeoffs for goods where passive use considerations loom large although discussions of contingent valuation often focus on whether the method is sufficiently reliable for use in assessing natural resource damages in lawsuits it is important to remember that most estimates from contingent valuation studies are used in benefit cost assessments not natural resource damage assessments those working on benefit cost analysis have long recognized that goods and impacts that cannot be quantified are valued implicitly by giving them a limitless value when government regulations preclude certain activities or giving them a value of zero by leaving certain consequences out of the analysis contingent valuation offers a practical alternative for reducing the use of either of these extreme choices i put forward an affirmative case for contingent valuation and address a number of the concerns that have arisen

understanding the consequences of consequentiality testing the validity of stated preferences in the field this study pursues the external validation of stated preference methods by comparing survey responses from verified voters with the outcome of a parallel public referendum on a conservation and preservation program to be funded by a local property tax surcharge the majority of respondents were unaware of the upcoming referendum and the experimental design allows us to control for referenda related information effects as well as respondents perceptions regarding the consequentiality i e the potential policy impact of their survey votes we find the survey under predicts yes referendum votes at the precinct level these differences go away however if we focus only on respondents who perceived their survey vote to be consequential negative hypothetical bias among inconsequential survey respondents is also evident in the estimation of willingness to pay and controlling for consequentiality increases construct validity

does bank relationship have an economic value abstract previous empirical studies supported the hypothesis that banks are special due to the existence of private information in this paper we provide further evidence by investigating the effect of the hokkaido takusyoku bank s failure on stock returns of its client firms

lessons about markets from the internet many of us have grown used to tired of and finally downright skeptical of claims of the transformative powers of the internet it was to usher in the new economy but we seem mostly to have the old it would transform retail but toys r us has outlasted etoys frictionless commerce would be the norm but plenty of friction still exists the internet was also claimed to require a whole new economics with all new laws while this too was very far from the truth existing theories have mostly done quite well the internet has had a substantial effect on economic thought in this paper we discuss some ways in which the internet has affected how economists think about markets

market response to bank relationships evidence from korean bank reform abstract this paper examines how the forced closure of failing banks and the transfer of their loans to surviving banks affect the market value of firms that borrow from the closed banks pre existing relationships between firms and the banks that acquire their loans are detrimental to the positive valuation effects of the event banks may have an incentive to favor pre existing relationships to increase the value of previously extended loans therefore loan renewals to firms with prior relationships do not signal borrower quality to the market which is aware of the banks conflicts of interest this study highlights the importance of the specific mechanisms employed to replace failed banks without decreasing the value of their client firms

asymmetric price effects of competition when price dispersion is prevalent a relevant question is what happens to the whole distribution of equilibrium prices when the number of firms changes using data from the gasoline market in the netherlands we find first that markets with n competitors have price distributions that first order stochastically dominate the price distributions in markets with n 1 firms second the effect of competition is stronger for the medium to upper percentiles of the price distribution finally consumer gains from competition are larger for relatively well informed consumers to account for these empirical patterns we extend varian s 1980 model by allowing for richer heterogeneity in consumer price information

what s to know about hypothetical bias in stated preference valuation studies abstract hypothetical bias arises in stated preference valuation studies when respondents report a willingness to pay wtp that exceeds what they actually pay using their own money in laboratory or field experiments although this bias is not found in all stated preference surveys hypothetical wtp typically exceeds the actual value by a factor of two to three unfortunately there is no widely accepted general theory of respondent behaviour that explains hypothetical bias therefore two meta analyses are reviewed to test current hypotheses regarding the causes of this overstatement of wtp and the associated recommendations to mitigate the bias suggestions for future research are made including the development of a general theory

number of sellers average prices and price dispersion abstract a variety of models provide differing predictions regarding the effect of an increase in the number of competitors in a market seller density on prices and price dispersion we review different approaches to generating equilibrium price dispersion and then empirically estimate the relationship between seller density average product price and price dispersion in the retail gasoline industry using four unique gasoline price data sets controlling for station level characteristics we find that an increase in station density consistently decreases both price levels and price dispersion across four geographical areas

concentration potential entry and performance in the airline industry airline markets do not satisfy the theoretical conditions for perfect contestability and theory does not indicate which deviations from perfect contestibilty significantly affect performance thus the effect of potential entry on performance in airline markets is explored empirically the best model for explaining fares is found to be one in which the measure of market concentration takes into account not only the number and size distribution of incumbents but also the number of potential entrants not significantly disadvantaged due to economies of scale and scope the hypothesis that all city pair markets are perfectly contestable is rejected coauthors are richard l johnson andrew s joskow gregory j werden and michael a williams copyright 1989 by blackwell publishing ltd

using contingent valuation to explore willingness to pay for renewable energy a comparison of collective and voluntary payment vehicles abstract this study uses a split sample dichotomous choice contingent valuation survey of 1574 u s residents to explore willingness to pay wtp for renewable energy under collective and voluntary payment vehicles and under government and private provision of the good we also evaluate the impact of participation expectations on stated wtp we find some evidence that when confronted with a collective payment mechanism respondents state a somewhat higher wtp than when voluntary payment mechanisms are used similarly private provision of the good elicits a somewhat higher wtp than does government provision we also find that contingent valuation responses are strongly correlated with expectations for the wtp of others our results shed light on strategic response behavior and the incentive compatibility of different cv designs and offer practical insight into u s household preferences for how to support renewable energy

nonsequential search equilibrium with search cost heterogeneity we generalize the model of burdett and judd 1983 to the case where an arbitrary finite number of firms sells a homogeneous good to buyers who have heterogeneous search costs we show that a price dispersed symmetric nash equilibrium always exists numerical results show that the behavior of prices and consumer surplus with respect to the number of firms hinges upon the nature of search cost dispersion when search costs are relatively concentrated entry of firms leads to lower average prices and greater consumer surplus however for relatively dispersed search costs the mean price goes up and consumer surplus may decrease with the number of firms

public support for hosting the olympic summer games in germany the cvm approach cities and their respective regions must weigh the merits of hosting major sport events including the olympic games this paper presents a contingent valuation method estimate of the monetary value of intangible benefits to germans of hosting the olympic summer games in a nationwide online survey 6977 respondents said whether they would support a referendum to host the games the survey employed a payment card format containing monthly tax amounts to elicit individual willingness to pay for the games over a five year period in the weighted sample 26 expressed an average willingness to pay of 51 willingness to pay varied widely across regions around cologne the average willingness to pay was 100 interval data hurdle models reveal that policy consequentiality and various intangible benefits increased willingness to pay aggregate willingness to pay over a five year period amounted to 46 billion which exceeded the estimated costs of the 2024 summer games for hamburg the findings have implicatio

are we willing to pay enough to back the bid valuing the intangible impacts of london s bid to host the 2012 summer olympic games using a contingent valuation survey this paper provides the first empirical test of the proposition that intangible impacts might justify hosting major sporting events on cost benefit grounds respondents drawn from london manchester and glasgow were asked for their willingness to pay wtp to host the 2012 olympic games in london on the basis of the intangible impacts that this event might provide annual mean wtp is 22 12 and 11 per year for 10 years in these 3 uk cities respectively an illustrative total uk wtp for intangible impacts is in the region of 2 billion statistical analysis of wtp determinants reveals a range of plausible explanatory factors such as respondents degree of support for the bid

the relative impact of actual and potential rivalry on firm profitability in the pharmaceutical industry this paper estimates the effects of actual and potential rivalry on profitability of firms in the u s pharmaceutical industry during the 20 year period 1963 82 the results show that during the 1960s actual rivalry among the sampled firms did not materially affect firm profitability but that during the 1970s competition among incumbents had an increasingly adverse effect on their profitability the results also show that potential competition significantly reduced drug firms profitability during the entire 20 year period copyright 1999 john wiley sons ltd

expert mediated sequential search abstract this paper studies markets such as internet marketplaces for used cars or mortgages in which consumers engage in sequential search in particular we consider the impact of information brokers experts who can for a fee provide better information on true values of opportunities we characterize the optimal search strategy given a price and the terms of service set by the expert and show how to use this characterization to solve the monopolist expert s service pricing problem our analysis enables the investigation of three common pricing schemes pay per use unlimited subscription and package pricing that can be used by the expert we demonstrate that in settings characteristic of electronic marketplaces namely those with lower search costs for consumers and lower costs of production of expert services unlimited subscription schemes are favored finally we show that the platform that connects consumer and experts can improve social welfare by subsidizing the purchase of expert services the optimal level of subsidy forces the buyer to exactly fully internalize the marginal cost of provision of expert services in electronic markets this cost is minimal so it may be worthwhile for the platform to make the expert freely available to consumers

dubious and dubiouser contingent valuation and the time of day we collect contingent valuation data from 524 student survey respondents over a 3 day 72 hour period data analysis of a hypothetical campus referendum focuses on time of day effects on willingness to pay for a renewable energy project we find that subjects responding to the survey during the night time hours i e between 12 a m and 6 a m do not display the law of demand offering theoretically invalid responses to questions with important policy implications results from this research may have serious implications for the contingent valuation method cvm in short just like your father said nothing good happens after midnight when using the cvm jel q51

price price dispersion and number of sellers at a low entry cost shopbot abstract shopbots function as market intermediaries by providing unprecedented quantities of information to buyers and sellers this paper explores the role of market structure across shopbot mediated markets using an unbalanced panel of 399 digital camera models it extends prior work by using an ultra low entry cost site additionally allowing controls for life cycle and popularity effects we find a robust negative relationship between seller number and price which persists even as markets become crowded with sellers the results are capable of either an scp or a carlson mcafee heterogeneous cost interpretation but observed entry behaviour here is consistent with the latter

using ex ante approaches to obtain credible signals for value in contingent markets evidence from the field while contingent valuation remains the only option available for measurement of total economic value of nonmarketed goods the method has been criticized due to its hypothetical nature we analyze field experimental data to evaluate two ex ante approaches to attenuating hypothetical bias directly comparing value statements across four distinct referenda hypothetical cheap talk consequential and real our empirical evidence suggests two major findings hypothetical responses are significantly different from real responses and responses in the consequential and cheap talk treatments are statistically indistinguishable from real responses we review the potential for each method to produce reliable results in the field

market structure and market performance in e commerce we investigate the effect of market structure on market performance in the market for consumer electronics we exploit product life cycle information to build an instrumental variable for the number of firms in a market a variable which hitherto had to be treated as exogenous in comparable studies on seller behavior in e commerce we combine data from austria s largest online site for price comparisons with retail data on wholesale prices provided by a major hardware producer for consumer electronics we observe input prices of firms and all their moves in the entry and the pricing game using this information for 70 digital cameras we generate instrumenting is particularly important for estimating the effect of competition on the markup of the price leader

information gatekeepers on the internet and the competitiveness of homogeneous product markets we examine the equilibrium interaction between a market for price information controlled by a gatekeeper and the homogenous product market it serves the gatekeeper charges fees to firms that advertise prices on its internet site and to consumers who access the list of advertised prices gatekeeper profits are maximized in an equilibrium where a the product market exhibits price dispersion b access fees are sufficiently low that all consumers subscribe c advertising fees exceed socially optimal levels thus inducing partial firm participation and d advertised prices are below unadvertised prices introducing the market for information has ambiguous social welfare effects

assessing the olympic games the economic impact and beyond this study reviews the literature on the evaluation of the olympic games within the broader framework of their significance as cultural assets and opportunities for endogenous growth and sustainable development of the host city the study reviews the main approaches to the economic assessment of the games from the point of view of the underlying economic concepts and methodologies as well as of the empirical results obtained it focuses on the effects that are measured and on those which even though important are generally neglected the methodologies utilized for the quantitative assessments of the games are reviewed with special emphasis on impact and cost benefit analysis both on ex ante and ex post basis the studies surveyed are analysed from the point of view of different sets of effects on the host city and for a limited number of cases on the host country while the major focus is on hosting the summer olympics some attention is also paid to the bidding cities the winter olympics and the paralympics the general findings appear to be controversial with some hints of positive overall effects but also with a well documented tendency to exaggerate the benefits and underestimate the costs of holding the games in the ex ante versus the ex post studies the survey finally suggests that ex post cross country econometric studies tend to catch sizable differential and persistent benefits ignored by individual studies especially on macroeconomic and trade variables