spectrum auction designs and revenue variations this study examines a sample of 93 national 3g spectrum auctions for the period 2000 2011 to identify the sources of substantial revenue variations an implied reduced form econometric model that recognises the censored nature of the sample relates per capita winning bid per mhz per million populations values to regulator determined auction design characteristics auction competitiveness mobile wireless market conditions and spectrum package attributes identified from tender documents the analysis reveals that among other factors all auction design characteristics independently impact on realized 3g spectrum auction revenues

detecting policy effects with wage rigidity and instability evidence on the taiwan labour market with stagnant wages and growing productivity a widening gap is becoming prevalent in global labour markets the relationship between wages and productivity has become indeterminate especially aft

empirical implications of equilibrium bidding in first price symmetric common value auctions this paper studies federal auctions for wildcat leases on the outer continental shelf from 1954 to 1970 these are leases where bidders privately acquire at some cost noisy but equally informative signals about the amount of oil and gas that may be present we develop tests of rational and equilibrium bidding in a common values model that are implemented using data on bids and ex post values we also use data on tract location and exposr values to test the comparative static prediction that bidders may bid less aggressively in common value auctions when they expect more competition we find that bidders are aware of the winner s curse and their bidding is largely consistent with equilibrium

labor market institutions and inflation volatility in the euro area despite having had the same currency for many years emu countries still have quite different inflation dynamics in this paper we explore one possible reason country specific labor market institutions giving rise to different inflation volatilities when unemployment insurance schemes differ as they do in emu reservation wages react differently in each country to area wide shocks this implies that real marginal costs and inflation also react differently we report evidence for emu countries supporting the existence of a cross country link over the cycle between labor market structures on the one side and real wages and inflation on the other we then build a dsge model that replicates the data evidence the inflation volatility differentials produced by asymmetric labor markets generate welfare losses at the currency area level of approximately 0 3 of steady state consumption

optimal nonparametric estimation of first price auctions this paper proposes a general approach and a computationally convenient estimation procedure for the structural analysis of auctioni data considering first price sealed bid auction models within the independent private value paradigm we show that the underlying distribution of bidders private values is identified from observed bids and the number of actual bidders without any parametric assumptions using the theoiy of minimax we establish the best rate of uniform convergence at which the latent density of private values can be estimated nonparametrically from available data we then propose a two step kernel based estimator that converges at the optimal rate

umbrella branding with imperfect observability and moral hazard abstract in a framework of repeated purchase experience goods with seller s moral hazard and imperfect monitoring umbrella branding may improve the terms of the implicit contract between seller and buyers whereby the seller invests in quality and buyers pay a high price in some cases umbrella branding leads to a softer punishment of product failure which increases the seller s value in other cases umbrella branding leads to a harsher punishment of product failure which allows for a reputational equilibrium that would otherwise be impossible on the negative side under umbrella branding one bad signal may kill two revenue streams not one combining costs and benefits i determine the set of parameter values such that umbrella branding is an optimal strategy

the ir relevance of real wage rigidity in the new keynesian model with search frictions we explore the role of real wage dynamics in a new keynesian business cycle model with search and matching frictions in the labor market both job creation and destruction are endogenous we show that the model generates counterfactual inflation and labor market dynamics in particular it fails to generate a beveridge curve vacancies and unemployment are positively correlated introducing real wage rigidity leads to a negative correlation and increases the magnitude of labor market flows to more realistic values however inflation dynamics are only weakly affected by real wage rigidity this is because of the presence of labor market frictions which generate long run employment relationships the measure of real marginal cost that is relevant for inflation dynamics via the phillips curve contains a dynamic component that does not necessarily move with real wages

credible spatial preemption it is often argued that incumbent firms may deter entry by preemptive investment in new goods we show that these conclusions are reversed when multiproduct incumbentfirms may exit in response to entry once entrants are in an industry an incumbent will often want to withdraw some goods to prevent competition with the entrant from reducing profits on other goods such a reaction makes entry more attractive to a potential entrant the equilibrium industry structure is less likely to be monopolistic as the goods are better substitutes as exit costs are low and as the competition between producers of the same good is more intense

a non expected utility model and its application in practical auctions this article presents a non expected utility decision model which is nonlinear in the winning probabilities the model not only explicitly expresses bidders attitudes to risk but also addresses t

structural estimation of the affiliated private value auction model we consider the structural estimation of the affiliated private value apv model in first price sealed bid auctions the model allows for bidders individual efficiencies and opportunity costs while permitting dependence among bidders private values through affiliation we establish the nonparametric identification of the apv model characterize its theoretical restrictions and propose a computationally convenient and consistent two step nonparametric estimation procedure for estimating the joint private value distribution from observed bids using simulated bid data we provide a step by step guide on how to implement our procedure and show the good behavior of our estimator in small samples

firing costs and business cycle fluctuations this article considers a real business cycle model with establishment level dynamics and uses it to analyze the effects of firing taxes it finds that firing taxes can have significant consequences on business cycle fluctuations that the largest effects are on aggregate employment and that even relatively small firing taxes have substantial effects a significant contribution of the article is computational it describes how to use standard linear quadratic methods to solve for a stochastic equilibrium of an s s economy with tax distortions

collusion via signalling in simultaneous ascending bid auctions with heterogeneous objects with and without complementarities collusive equilibria exist in simultaneous ascending bid auctions with multiple objects even with large complementarities in the buyers utility functions the bidders collude by dividing the objects among themselves while keeping the prices low in the most collusive equilibrium the complementarities are never realized the scope for collusion however narrows as the ratio between the number of bidders and the number of objects increases

the european umts auctions abstract in this paper we review and draw some lessons from the umts auctions that have taken place in europe during 2000 and 2001 we address several design issues and in particular focus attention on asymmetries between the bidders and on possibilities for collusion an outlook is provided to several other auctions in which the stakes may not be so high but the design issues perhaps somewhat more complex

job destruction and propagation of shocks this paper considers propagation of aggregate shocks in a dynamic general equilibrium model with labor market matching and endogenous job destruction cyclical fluctuations in the job destruction rate magnify the output effects of shocks as well as making them much more persistent interactions between capital adjustment and the job destruction rate play an important role in generating persistence propagation effects are shown to be quantitatively substantial when the model is calibrated using job flow data incorporating costly capital adjustment leads to significantly greater propagation

a test that discriminates between two models of the dutch first auction non isomorphism abstract previous experiments reject the hypothesis that the dutch and first auctions are isomorphic two alternatives to the standard normal form analysis of the dutch auction are formalized 1 bidders violate bayes rule 2 bidders experience a utility of suspense that is additive with the utility of monetary reward paired comparisons of bidding behavior between groups in which the treatment is to triple the payoff of the baseline group yields no significant effect of this treatment we therefore reject the utility of suspense model

independent private value auctions bidder behaviour in first second and third price auctions with varying numbers of bidders the symmetric equilibrium of third price auctions is characterized it makes a number of contrasting predictions relative to firms and second price auctions bids exceed private values the marginal effects on bids of an increase in private values is greater than one increasing numbers of bidders reduces bids and risk aversion requires bidding below the risk neutral nash equilibrium in the experiment bidders do not always satisfy the point predictions of the theory however the game theoretic models correctly anticipate at least directionally the important effects of the price rule changes copyright 1993 by royal economic society

efficiency in auctions with private and common values an experimental study this discussion has resulted in a publication in the american economic review 2002 92 3 625 43 auctions are generally not efficient when the object s expected value depends on private and common value information we report a series of first price auction experiments to measure the degree of inefficiency that occurs with financially motivated bidders while some subjects fall prey to the winner s curse they weigh their private and common value information in roughly the same manner as rational bidders with observed efficiencies close to predicted levels increased competition and reduced uncertainty about the common value positively affect revenues and efficiency the public release of information about the common value also raises efficiency although less than predicted

theory experiment and the federal communications commission spectrum auctions abstract the fcc uses the simultaneous multi round auction sma to assign spectrum licenses congress mandated that the sma be compared to an auction that allows combinatorial bids we review the theoretical and experimental evidence relevant to the sma procedures and their inherent defects results from experiments evaluating the sma in comparison to a combinatorial auction designed by charles river and associates show that several of the sma rules hinder efficiency and create a trade off between efficiency and auction length the combinatorial auction outperforms the sma when license values are superadditive but requires more time to complete and is not robust

collusive practices in repeated english auctions experimental evidence on bidding rings the repeated meeting of buyers at english auctions where multiple units are sold is a common occurrence the art auctions at sotheby s christie s and other prestigious auction houses are attended by a regular group of institutional buyers more mundanely the same taxicab buyers meet at vehicle auctions for used police cars jon p nelson 1995 commission order buyers attend the same livestock and agricultural commodity auctions these buyers may be agents for multiple meat processors u s department of agriculture grain inspection packers and stockyards administration 2001 the 1946 american tobacco antitrust case american tobacco co et al v united states 328 u s 781 1946 is a well known account of how buyers of tobacco operated to hold down the price of auctioned leaf tobacco at various sites buyers for the big three cigarette manufacturers had developed facilitating practices that helped them purchase raw tobacco at relatively low prices these buyers voluntarily restricted themselves to attend the same auctions buyers were aware of the amount of leaf and the tobacco grades available at auction sites they had instructions from the cigarette makers on the highest bid prices they could pay and communication among these buyers seemed evident from a coordinated practice of buying low grade tobacco that was not used by the makers in the sale of livestock cattle producers have claimed that packer buyers act to hold down cattle prices at the auction site there are a few large processors who give their agents buy orders these orders along with further communication between the processor and agent instruct the agent on the number of cattle to purchase during a given week and provide a schedule of prices they can pay for varying types of cattle some agents represent more than one processor or packer and therefore have multiple buy orders agents repeatedly meet each other at regional cattle auctions they may not be the only buyers but they are the largest purchasers of slaughter cattle brought to market and at most auction sites have substantial monopsony power this paper documents the impacts of several practices that may facilitate low sale prices when multiple units are sold at repeated english auctions laboratory english auction markets are created the number of symmetric buyers attending the auction is either six or two with total demand in these two environments held constant the six buyer market is intended to represent a relatively competitive environment while auctions with two buyers represent rivalry with substantial monopsony power held by each agent we use these two market environments to study how selected treatments or facilitating influences affect the behavior of buying agents the six buyer market generally is viewed as a control for comparison to the dominant twobuyer environment but very collusive behavior may be observed in the six buyer auctions depending upon market practices phillips department of economics and finance university of wyoming p o box 3985 laramie wy 82071 e mail owenphil uwyo edu menkhaus department of agricultural and applied economics university of wyoming p o box 3354 laramie wy 82071 e mail menkhaus uwyo edu coatney u s department of agriculture grain inspection packers and stockyards administration competition branch aurora co 80011 e mail kalyn t coatney usda gov this work has been supported by the u s department of agriculture under grant numbers usdagipsnc5418 and usdag00354009126 the findings and conclusions expressed in this paper are those of the authors and do not necessarily reflect the views of the funding agency 1 these are regional auctions houses where slaughter cattle primarily cull cows and fed steers and heifers and feeder cattle are sold cull cows are animals taken out of a herd and slaughtered because of age inability to produce calves or reduced milk production concerns regarding slaughter cow possessors sharing common purchasing agents have been raised in assessment of the cattle and hog industries calendar year 2000 u s department of agriculture grain inspection packers and stockyards administration june 2001

equilibrium unemployment job flows and inflation dynamics this paper develops a general equilibrium model to explain a set of facts regarding job flows unemployment and inflation dynamics it integrates a theory of equilibrium unemployment into a monetary model with nominal price rigidities the labor market displays matching frictions and endogenous job destruction the model can explain the cyclical behavior of unemployment job creation job destruction and the joint fluctuations of the labor input along both the extensive and the intensive margin conditional on a shock to monetary policy allowing for variation of the labor input at the extensive margin leads to a significantly lower elasticity of marginal costs with respect to output this helps to explain the sluggishness of inflation and the persistence of output after a monetary policy shock

search frictions real wage rigidities and the optimal design of unemployment insurance abstract in this paper we study the optimal unemployment benefits financing scheme when the economy is subject to labor market imperfections characterized by real wage rigidities and search frictions the us unemployment insurance financing is such that firms are taxed proportionately to their layoffs to finance unemployment benefits using dsge methodology we investigate how policy instruments should interact with labor market imperfections it is shown that wage rigidities in a search and matching environment cause welfare costs especially in the absence of an incentive based unemployment insurance this cost is mainly due to the distorting effect of wage rigidities which generate inefficient separations we show that the optimal unemployment benefits financing scheme corresponding to the ramsey policy offsets labor market imperfections and allows implementation of the pareto allocation the second best allocation brings the economy close to the ramsey allocation the implementation of the optimal policies clearly highlights the role of labor market institutions for short run stabilization

the effect of bidders asymmetries on expected revenue in auctions abstract bidders asymmetries are widespread in auction markets yet their impact on behavior and ultimately revenue and profits is still not well understood this paper defines a natural benchmark auction environment to which to compare any private values auction with asymmetrically distributed valuations the main result is that the expected revenue from the benchmark auction dominates that from the asymmetric auction both in the first price auction and the second price auction moreover for classes of distributions that lend themselves to a quasi ordering of more or less asymmetric configurations we prove that the expected revenue is lower the more asymmetric bidders are these results formalize the idea that competition is reduced by bidders asymmetries applications to merger analysis joint bidding and investment are discussed

empirical testing of auction theory given the state of affairs in auction theory there is at least one model for instance to support any position one would care to take concerning the revenue of sealed bid vs open auctions it should not come as a surprise that a fair amount of empirical work in auctions is underway this paper reports the results of some recently completed research i first discuss papers in which the predictions being tested derive directly from the pure theory of auctions and then papers in which the predictions arise out of an application of auction theory to a related institution

5 information impact and allocation rules in auctions with affiliated private values a laboratory study in affiliated private value auctions each bidder has perfect information regarding his her own value for the object at auction but higher values of the item for one bidder make higher values for other bidders more likely we report on a series of experiments examining three key implications of these auctions i in a first price auction public information about rivals values increases expected revenue ii an english auction increases expected revenue compared to a first price auction and iii a second price auction is isomorphic to an english auction in examining these issues we compare predictions of some ad hoc bidding models with nash equilibrium predictions in the first price auction experiments nash equilibrium bidding theory organizes the data better than either of two ad hoc bidding models public information about others valuations does increase average revenue but the increase in revenue is smaller and less reliable than predicted under risk neutral nash equilibrium bidding lower average revenue might be attributed to risk aversion while the high variability is attributed to a sizable frequency of individual bidding errors relative to the theory bidding theory precisely organizes english auction outcomes after a brief initial learning period the dominant strategy equilibrium does not organize second price auctions nearly as well as market prices persistently exceed predicted prices the difference between english and second price outcomes is attributed to effects of different information flows inherent in the structure of the two institutions on eliminating bidding errors revenue impacts of these two institutions relative to a first price auction are examined in light of observed bidding patterns

entry and competition effects in first price auctions theory and evidence from procurement auctions motivated by several interesting features of the highway mowing auction data from the texas department of transportation tdot we study three competing procurement auction models with endogenous entry our entry and bidding models provide several interesting implications for the first time we show that even within an independent private value paradigm as the number of potential bidders increases bidders equilibrium bidding behaviour can become less aggressive and the expected procurement cost may rise because the entry effect is always positive and may dominate the negative competition effect we then develop structural models of entry and bidding corresponding to the three models under consideration controlling for unobserved auction heterogeneity and use the recently developed semi parametric bayesian estimation method to analyse the data we select the model that best fits the data and use the corresponding structural estimates to quantify the entry effect and the competition effect with regard to the individual bids and the procurement cost copyright 2009 wiley blackwell

job matching and the wage distribution this paper brings together the microeconomic labor and the macroeconomic equilibrium views of matching in labor markets we nest a job matching model a la jovanovic 1984 into a mortensen and pissarides 1994 type equilibrium search environment the resulting framework preserves the implications of job matching theory for worker turnover and wage dynamics and it also allows for aggregation and general equilibrium analysis we obtain two new equilibrium implications of job matching and search frictions for wage inequality first learning about match quality and worker turnover map gaussian output noise into an ergodic wage distribution of empirically accurate shape unimodal skewed with a paretian right tail second high idiosyncratic productivity risk hinders learning and sorting and reduces wage inequality the equilibrium solutions for the wage distribution and for the aggregate worker flows quits to unemployment and to other jobs displacements hires provide the likelihood function of the model in closed form

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

an empirical study of auction revenue rankings the case of municipal bonds using a novel dataset of 386 rst price municipal bond auctions held in california i perform counterfactual revenue comparisons based on the theoretical result of milgrom and weber 1982 i show that the revenue in the second price auction is non parametrically identi ed and the counterfactual revenue in the english auction can be bounded in an informative way these results form a

field experiments on the effects of reserve prices in auctions more magic on the internet i present experimental evidence on the effects of minimum bids in first price sealed bid auctions the auction experiments manipulated the minimum bids in a preexisting market on the internet for collectible trading cards from the game magic the gathering i examine a number of outcomes including the number of participating bidders the probability of sale the levels of individual bids and the auctioneer s revenues the benchmark theoretical model is one with symmetric risk neutral bidders with independent private values the results verify a number of the predictions concerning equilibrium bidding many bidders behave strategically anticipating the effects of the reserve price on others bids

labour market institutions and household consumption insurance within oecd countries this paper tests empirically whether the effect of idiosyncratic income shocks on aggregate consumption depends on institutional features of national labour markets the results show that in a sample of 15 oecd countries institutional heterogeneity is a significant determinant of the response of household consumption to country specific income shocks this is consistent with the idea that institutionally provided social insurance may help increase income stability when people differ in their ability to access financial markets and smooth consumption fluctuations

moral hazard as an entry barrier in an experience goods industry an entrant who could make positive profits by providing a better deal to buyers than do incumbents may cheat buyers by providing goods of low quality to make even greater profits if buyers foresee this possibility they will be unwilling to buy from an entrant as a result moral hazard in a seller s choice of the quality of an experience good can lead to a barrier to entry in particular since hit and run entry is likely to lead to low quality choice the threat of such entry may not discipline the pricing of incumbents we also show that the temptation to dishonest entry the moral hazard problem is stronger if buyers are already receiving some consumer surplus as a result there is a first entrant advantage because the first entrant faces less temptation to provide inefficiently low quality than do subsequent entrants and with rational buyers this works to his advantage the scale of entry may affect quality incentives and therefore introductory offers may assure buyers of an entrant s quality but this cannot happen under a suitable definition of constant returns

auction theory with private values for many centuries auctions have been a common form of selling procedure although auction methods vary across country and product the two most frequently observed are the open ascending bid or english auction and the sealed bid auction recent theoretical research has led to a theory of equilibrium bidding in these two auctions and a wide range of alternatives as well as a result it has been possible to compare the revenue extracted by the seller under different auction methods and even to characterize the revenue maximizing auction the revenue equivalence theorem see for example william vickrey 1961 roger myerson 1981 and riley and william samuelson 1981 asserts that when each bidder s reservation price for a unit of an indivisible good is an independent draw from the same distribution and bidders are risk neutral the sealed bid auction generates the same expected revenue as the open auction much recent research has involved weakening each of the main hypotheses risk neutrality identically distributed values and independence of values in turn we shall illustrate some of the principal conclusions of this work by considering the properties of open and sealed bid auctions in a model of two bidders whose reservation prices can assume only two values and by comparing these auctions to the optimal or revenuemaximizing auction i revenue equivalence

revisiting the matching function abstract there is strong empirical evidence for cobb douglas matching functions we show in this paper that this widely found relation between matches on the one hand and unemployment and vacancies on the other hand can be the result of different underlying mechanisms obviously it can be generated by assuming a cobb douglas matching function less obvious the same relationship results from a vacancy free entry condition and idiosyncratic productivity shocks a positive aggregate productivity shock leads to more vacancy posting a shift of the idiosyncratic selection cutoff and thereby more hiring we calibrate a model with both mechanisms to administrative german labor market data and show that idiosyncratic productivity for new contacts is an important driver of the elasticity of the job finding rate with respect to the market tightness accounting for idiosyncratic productivity can explain the observed negative time trend in estimated matching efficiency and asymmetric business cycle responses to large aggregate shocks

reputation in repeated second price auctions abstract a model in which two bidders take part in a series of second price comon value auctions is examined the question of an optimal auction from an auctioneer s standpoint in a repeated auction setting is partially addressed it is shown that the results from single auction models do not carry over to repeated auctions when one of the bidders is endowed with a reputation for bidding aggressively second price auctions with two bidders are highly susceptible to manipulative behaviour by an aggressive bidder and yield much lower revenues to the auctioneer

pennies from ebay the determinants of price in online auctions this paper presents an exploratory analysis of the determinants of prices in online auctions for collectible united states one cent coins at the ebay web site starting with an initial data set of 20 000 auctions we perform regression analysis on a restricted sample of 461 coins for which we obtained estimates of book value we have three major findings first a seller s feedback ratings reported by other ebay users have a measurable effect on her auction prices negative feedback ratings have a much greater effect than positive feedback ratings do second minimum bids and reserve prices have positive effects on the final auction price in particular minimum bids appear only to have a significant effect when they are binding on a single bidder as predicted by theory third when a seller chooses to have her auction last for a longer period of days this significantly increases the auction price on average

optimal reservation prices in auctions the risk neutral independent private values ipv auction model produces curious results regarding the use of reservation prices no matter how many bidders the seller should announce a fixed reservation price above his true value this is notable since the seller gains by adopting an inefficient institution and puzzling because it conflicts with common practice the authors relax the ipv assumption characterize optimal reservation prices in a richer class of auctions and show that when information is correlated the seller s optimal reservation price converges to his true value often monotonically and rapidly as the number of bidders grows copyright 1996 by royal economic society

the role of real wage rigidity and labor market frictions for inflation persistence we analyze the transmission mechanism of wages to inflation within a new keynesian business cycle model with wage rigidities and labor market frictions our main focus is on the channel of real wage rigidities on inflation persistence for which we find the specification of the wage bargaining process to be of crucial importance under the standard efficient nash bargaining the feedback of wage rigidities on inflation is ambiguous and depends on other labor market variables however under the alternative right to manage bargaining we find that more rigid wages translate directly into more persistent movements of aggregate inflation

labour policy instruments and the cyclical behaviour of vacancies and unemployment the standard mortensen pissarides mp model cannot match the observed elasticity of vacancies and unemployment in the data this paper shows that by introducing labour policy instruments the original mp model can replicate the observed fluctuations in unemployment and job vacancies in response to shocks these instruments reduce the benefit of forming a match thereby increasing the impact that shocks have on firms incentives to post vacancies and workers to accept job offers additionally the analysis shows that the design of labour policy instruments e g whether taxation is progressive or regressive has non trivial consequences on the model s performance

revenue equivalence revisited the conventional wisdom in the auction design literature is that first price sealed bid auctions tend to make more money while ascending auctions tend to be more efficient we re examine these issues in an environment in which bidders are allowed to endogenously choose in which auction format to participate our findings are that more bidders choose to enter the ascending auction than the first price sealed bid auction and this extra entry is enough to make up the revenue difference between the formats consequently we find that both formats raise approximately the same amount of revenue they also generate efficiency levels and bidder earnings that are roughly equivalent across mechanisms though the earnings in the ascending might be slightly higher

job security provisions and employment european countries have enacted various job security provisions over the last 30 years employers are required to pay workers on separation or to give advance notice of termination in anything less than a perfectly functioning market there are effects of the provisions on employment incumbents are more likely to retain their jobs but new workers are less likely to be hired an examination of the european data suggests that severance pay requirements reduce employment

factor substitution and labor market friction in the united states 1948 2010 we re estimate the capital labor elasticity of substitution and the biased factor augmenting technological progress using a system approach for the aggregate u s economy from 1948 to 2010 due to

awarding telecom licences the recent european experience this paper analyses the procedures used by different european countries for awarding spectrum licences to potential operators of third generation 3g mobile telephone networks we contrast market based methods such as auctions with bureaucratic methods such as beauty contests they have been used for decisions about two major questions 1 how many licences should be awarded and how much spectrum should each licence give access to 2 which companies should receive which licences and how much should they pay for their licences most countries used a bureaucratic process to answer the first question however germany austria and greece were different and constructed auctions in which the number and size of licences were determined by the auction itself as for the second question there was much variation between countries and both auctions and beauty contests were popular methods we have four main findings first the bureaucratic procedure used by most countries to answer the first question led to companies concealing relevant information from the authorities second while firms may have tried to manipulate the procedures used in germany austria and greece to deter entry to their markets they were surprisingly unsuccessful in this third the traditional economic criticisms of beauty contests seem to apply to some but not to all those that were conducted finally the bidding strategies adopted by the telecom companies were often more complex than those predicted by economic theory

semiparametric estimation of the optimal reserve price in first price auctions the optimal reserve price in the independent private value paradigm is generally expressed as a functional of the latent distribution of private signals which is by nature unobserved this feature has limited the implementation of the optimal reserve price in practice in this article we consider first price auctions within the general affiliated private values paradigm we show that the seller s expected profit can be written as a functional of the observed bid distribution we propose a semiparametric extremum estimator for estimating consistently the optimal reserve price from observed bids as an illustration we consider the outer continental shelf ocs wildcat auctions

house prices and job losses why are house prices 80 correlated with job losses over the uk business cycle my paper studies this striking fact together with the strong comovements between house prices and labour market variables in general first a regional panel is estimated to quantify the impact of house prices on the unemployment job finding and job separation rates whereby rejection rates of planning applications are used as instruments to find exogenous variation in house prices second an orthogonalised var is used to estimate the aggregate impact of house price shocks both methods confirm the large impact of house price shocks on labour market variables and credit supply to understand the mechanism a general equilibrium model with collateral constraints endogenous job separation and housing shocks is confronted with macroeconomic data via bayesian methods the results suggest that shocks to house prices i explain about 10 of output fluctuations and about 20 of fluctuations in corporate credit unemployment and job separation rates via the collateral channel over the forecast horizon and ii were a major cause in triggering the 1990 and 2008 recessions in the uk

credible spatial preemption through reputation extension abstract judd 1985 rand journal of economics 16 153 166 shows that the results of previous models of brand proliferation and spatial preemption are substantially weakened if the incumbent does not have high exit costs this paper illustrates how an incumbent firm can make spatial preemption credible by extending reputation this is the case with product extensions which are new products but are linked to the successful reputation of another product already on the market it is proved that a product extension can make spatial entry preemption credible because its withdrawal in response to a competitor s new brand can have a negative reputational effect on the incumbent s original product

business cycles and labor market search the quantitative implications of labor market search for economic fluctuations are evaluated in the context of a real business cycle model incorporating labor market search into the model is found to improve its empirical performance along several dimensions in particular hours now fluctuate substantially more than wages and the contemporaneous correlation between hours and productivity falls in addition the model replicates the observation that output growth displays positive autocorrelation at short horizons overall the empirical results suggest that the labor market search environment embodies a quantitatively important propagation mechanism copyright 1996 by american economic association

labor market institutions and aggregate fluctuations in a search and matching model abstract this paper explores the influence of labor market institutions on aggregate fluctuations it uses a dynamic stochastic general equilibrium model characterized by search and matching frictions in the labor market and nominal rigidities in the goods market it finds that firing costs and unemployment benefits can have substantial effects on aggregate fluctuations increasing firing costs decreases the volatility of output employment and job flows due to the reduction in the mass of jobs sensitive to disturbances and lower incentives for firms to hire and fire workers hence firms adjust to shocks mainly through prices causing inflation to become more volatile raising unemployment benefits has the reverse effect on aggregate fluctuations

state dependence in labor market fluctuations this paper documents state dependence in labor market uctuations using a threshold vector autoregression model tvar we establish that the unemployment rate the job separation rate and the job finding rate exhibit a larger response to productivity shocks during periods with low aggregate productivity a diamond mortensen pissarides model with endogenous job separation and on the job search replicates these empirical regularities well we calibrate the model to match the standard deviation of the job transition rates explained by productivity shocks in the tvar and show that the model explains 88 percent of the state dependence in the unemployment rate 76 percent for the separation rate and 36 percent for the job finding rate the key channel underpinning state dependence in both job separation and job finding rates is the interaction of the firm s reservation productivity level and the distribution of match specific idiosyncratic productivity results are robust across several variations to the baseline model

collusion and the choice of auction auctions are used in many different markets including the leasing of a substantial fraction of the natural resources in the united states the procedures used in the auctions conducted by the federal government have been a continuing source of controversy one of the concerns has been the possibility of collusion among bidders this article shows that cartels are stable if the seller uses open ascending bid oral auctions but not if he uses sealed high bid auctions this may help to explain the frequent use of sealed high bid auctions

worker flows job flows and unemployment in a matching model abstract standard matching models of unemployment generate far too little volatility in unemployment and vacancies relative to the variation in the shock variables shimer 2005 showed that in us data the vacancy to unemployment ratio is about 26 times more volatile than the standard model predicts he identified the flexibility of wages as the key issue and triggered a heated debate on possible improvements of the core model to accommodate these empirical facts in this paper we first document shimer s facts for the uk and find them to be qualitatively similar to us facts we then develop and calibrate a model based on the mortensen and pissarides approach that increases the volatility of the v u ratio 20 fold compared to the standard framework the key features of our model relate to the job creation decision by firms and the search options of workers we allow these to search whilst employed and firms to re advertise jobs that have been quit from this leads us to use a different job creation process whereby potential vacancies or job ideas arise at a finite rate per period over a range of idiosyncratic productivities calibrating the model to uk data we show that it delivers volatility in unemployment and vacancies much closer to though still not as large as that observed for the uk whilst retaining the standard wage determination process

asymmetric labor market institutions in the emu and the volatility of inflation and unemployment differentials how does the asymmetry of labor market institutions affect the adjustment of a currency union to shocks to answer this question this paper sets up a dynamic currency union model with monopolistic competition and sticky prices hiring frictions and real wage rigidities in our analysis we focus on the differentials in inflation and unemployment between countries as they directly reflect how the currency union responds to shocks we highlight the following three results first we show that it is important to distinguish between different labor market rigidities as they have opposite effects on inflation and unemployment differentials second we find that asymmetries in labor market structures tend to increase the volatility of both inflation and unemployment differentials finally we show that it is important to take into account the interaction between different types of labor market rigidities overall our results suggest that asymmetries in labor market structures worsen the adjustment of a currency union to shocks

increasing competition and the winner s curse evidence from procurement we assess empirically the effects of the winner s curse which in common value auctions counsels more conservative bidding as the number of competitors increases first we construct an econometric model of an auction in which bidders preferences have both common and private value components and propose a new monotone quantile approach which facilitates estimation of this model second we estimate the model using bids from procurement auctions held by the state of new jersey for a large subset of these auctions we find that median procurement costs rise as competition intensifies in this setting then asymmetric information overturns the common economic wisdom that more competition is always desirable

umbrella branding as a signal of new product quality an example of signalling by posting a bond i present a signalling model in which a multiproduct firm can use its reputation as a bond for quality by using a brand name for an established product when it introduces a new experience good as out of equilibrium beliefs are specified a false signal may be taken to imply that both the established and the new product are of low quality in contrast the absence of a signal leaves open the possibility that one of the two products is of high quality hence the signal can be credible without excessive sunk costs as long as the bond posted is sufficiently large

the empirical content of the job search model labor mobility and wage distributions in europe and the us abstract job search models of the labor market hypothesize a very tight correspondence between the determinants of labor turnover and individual wage dynamics on one hand and the determinants of wage dispersion on the other this paper offers a systematic examination of whether this correspondence is present in the data by estimating a rudimentary partial equilibrium job search model on a three year panel of individual worker data covering 10 european countries and the u s we find that our basic job search model fits the data surprisingly well this also allows us to point at a number of interesting empirical regularities about wage distributions our results suggest that cross sectional data on individual wages contain the basic information needed to obtain a reliable measure of the magnitude of labor market frictions as measured by a parameter of the canonical job search model finally we use our results in a cross country comparison of the intensity and nature of job to job turnover we arrange countries into two different groups according to their turnover intensity we further show that the nature of job to job turnover is very different between those two groups turnover is predominantly voluntary in low turnover countries whereas it is to a large extent involuntary in high turnover countries

how not to run auctions the european 3g telecom auctions abstract there were enormous differences in the revenues from the european third generation 3g or umts mobile phone license auctions from 20 euros per capita in switzerland to 650 euros per capita in the uk though the values of the licenses sold were similar poor auction designs in some countries facilitated collusion between firms and failed to attract entrants the sequencing of the auctions was also crucial we discuss the auctions in the uk netherlands germany italy austria switzerland belgium greece and denmark

the purchasing power parity debate originally propounded by the 16th century scholars of the university of salamanca the concept of purchasing power parity ppp was revived in the interwar period in the context of the debate concerning the appropriate level at which to re establish international exchange rate parities broadly accepted as a long run equilibrium condition in the post war period it first was advocated as a short run equilibrium by many international economists in the first few years following the breakdown of the bretton woods system in the early 1970s and then increasingly came under attack on both theoretical and empirical grounds from the late 1970s to the mid 1990s accordingly over the last three decades a large literature has built up that examines how much the data deviated from theory and the fruits of this research have provided a deeper understanding of how well ppp applies in both the short run and the long run since the mid 1990s larger datasets and nonlinear econometric methods in particular have improved estimation as deviations narrowed between real exchange rates and ppp so did the gap narrow between theory and data and some degree of confidence in long run ppp began to emerge again in this respect the idea of long run ppp now enjoys perhaps its strongest support in more than 30 years a distinct reversion in economic thought

effects of seller supplied prices on buyers product evaluations reference prices in an internet auction context a field experiment investigated the impact of two external reference points under the seller s control on the final price of an auction when an item s seller specified a high external reference price a reserve price the final bid was greater than when the seller specified a low external reference price a minimum bid when the seller provided both high and low reference prices the reserve influenced the final bid more the low reference price led to a lower outcome compared to when the seller did not communicate any reference price the number of bidders influenced outcomes in the absence of seller supplied reference prices

bounds on revenue distributions in counterfactual auctions with reserve prices measuring auction revenues under counterfactual reserve prices or formats requires knowledge of distributions of bidders values and private signals this poses a challenge when bids are observed from rst price common value auctions i bound counterfactual revenue distributions without imposing parametric restrictions on the model structure using data from u s municipal bond auctions i nd rst price and second price auctions under optimal reserve prices lead to little improvement in revenues over existing rst price formats the number of bidders has a more signi cant impact on revenues in optimal auctions i also nd invoking an incorrect assumption of private values in counterfactual analyses results in small errors in predicting revenues from optimal sp auctions

sealed bid versus open auctions the evidence data from u s forest service timber auctions are used to test vickrey s original proposition that sealed bid and open auctions yield equal revenue models for the high bid in an auction are specified and estimated using three different procedures ordinary least squares two stage least squares and maximum likelihood the second two procedures include a second equation which accounts for the forest service s auction choice and therefore control for selection bias these two procedures which unlike ordinary least squares yield consistent estimators imply a statistically and economically insignificant difference in high bids between sealed bid and open auctions

low revenue equilibria in simultaneous ascending bid auctions low revenue equilibria allow participants in an auction to obtain goods at prices lower than would prevail in a competitive market these outcomes are generated as perfect equilibria of ascending bid multiunit auctions we show that these equilibria are possible under mild conditions conditions that are likely to prevail in many situations where auction formats have recently been adopted we argue that these equilibria could explain the low revenues of some recent auctions and discuss potential remedies to eliminate low revenue equilibria

asymmetric information and collusive behavior in auction markets we present a theoretical and empirical analysis of the behavior of a bidder s cartel in a multiperiod auction market in which the purchaser is relatively uninformed our work establishes a tentative connection between the economics of information and collusion by concentrating on the cartel s informational monopoly and its ability to both increase profits and mask its presence by passing misinformation to the purchaser in the models we develop costs are assumed to be stochastic and projects awarded in adjacent periods to be substitutes for one another as a result the purchaser will have incentive to intertemporally reallocate his demand buying more or less of the current period s project depending upon whether the current market price is lower or higher than the price which he expects to prevail in the future a purchaser who needs to form such price expectations yet is ignorant about production costs and market structure will be particularly attracted to the auction mechanism because the data contained in past auctions bids can apparently be incorporated into an explicit structural model of expected future price in fact such a purchaser may hold auctions frequently merely to acquire information such pleasant appearances are deceiving once the auction s bidders become aware of the informational use to which their bids are being put they will have incentive to form a cartel thereby extracting a premium for their knowledge by misinforming the purchaser and skewing his intertemporal decision making to their advantage in some respects the mechanics of our model resemble the case of a multiproduct monopolist selling goods that are substitutes for one another what is unique to our analysis is the dependence of one of the goods future demand on price expectations which are an information resource we are suggesting that information that is distributed asymmetrically among market participants is susceptible to the inefficiencies of collusion in some ways the implications of our work are considerably stronger than this because our cartel never reveals its true knowledge and thus our market may be more inefficient than more standard monopolies in which the good is always traded albeit at noncompetitive prices furthermore by explicitly modeling the purchaser s rational structural approach to price forecasting we point out that complete rational expectations models may be more susceptible to exploitation by informational cartels than simpler forecasting techniques we have tested the implications of our model in a case study of north carolina highway construction cartels the highway construction industry is an auction market characterized by government procurement agencies who are uninformed relative to suppliers and comes complete with a substantial record of known collusion in recent years thus it seems an ideal hunting ground for verification of our theoretical findings our paper proceeds as follows in section i we model a multiperiod competitive auction market and describe a bayesian mechanism through which the purchaser uses past data to improve the accuracy of his price expectations section ii establishes theoretical results for the bidders cartel which has incentive to form in this market we describe massachusetts institute of technology cambridge ma 02109 and university of arizona tucson az 85721 respectively nold was formerly of rhodes associates and is now deceased we thank richard schmalensee and the participants of the economic and legal organization workshop at the university of chicago for valuable suggestions part of this research was supported under research grant 81 ij cr0062 from the national institute of justice

payroll taxes social insurance and business cycles payroll taxes represent a major distortionary influence of governments on labor markets this paper examines the role of time varying payroll taxes and the social safety net for cyclical fluctuations in a nonmonetary economy with labor market frictions and unemployment insurance when the latter is only imperfectly related to search effort a balanced social insurance budget induces countercyclical payroll taxation renders gross wages more rigid over the cycle and strengthens the model s endogenous propagation mechanism for conventional calibrations the model generates a negatively sloped beveridge curve and countercyclical unemployment as well as substantial volatility and persistence of vacancies and unemployment

divisionalization and entry deterrence this paper assumes that incumbent firms can create new independent divisions more cheaply than potential entrants who must incur the additional overhead costs of new entry the main theoretical result is that such divisionalization ability leads perfectly informed incumbents to preempt all rational entry into their industries in contrast existing models of entry deterrence imply that informed incumbents even those with steadily decreasing average costs will often allow rational entry our result may explain why successful large scale entry by firms with no informational advantage is extremely rare the use of divisions to preempt entry may also explain why large firms in high profit oligopolies often divisionalize allowing their divisions to compete freely despite the negative pecuniary externality that each division imposes on others

macroeconomic policy lessons of labor market frictions abstract the paper explores the consequences of macroeconomic policy for labor market outcomes in the presence of frictions it shows how policy may be useful in over riding frictions as well as how it might generate adverse outcomes a partial equilibrium empirically grounded model is used to simulate policy effects the key results are that policy has effects on the stochastic behavior of key variables measures that reduce unemployment also reduce its persistence and increase the volatility of vacancies hiring subsidies and unemployment benefits have substantial effects on labor market outcomes while employment subsidies or wage tax reductions are not very effective policy instruments

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices