is protectionism on the rise assessing national trade policies during the crisis of 2008 to understand the role of trade policies in the crisis of 2008 this paper constructs the overall trade restrictiveness indices for a wide range of countries using their tariff schedules in 2008 and 2009 the index summarizes the trade policy stance of a country taking into account the share of each good in trade as well as its corresponding import demand elasticity results show that there is no widespread increase in protectionism via tariff policies since the global financial crisis has unfolded while many countries have adjusted tariffs upward on selected products only a handful of countries such as malawi russia argentina turkey and china focus on products that have significant impacts on trade flows the united states and the european union by contrast rely mainly on anti dumping duties to shield domestic industries overall while the rise in tariffs and anti dumping duties in these countries may have jointly caused global trade to drop by as much as us 43 billion during the crisis period it explains less than 2 percent of the collapse in world trade

an experimental investigation of the hahn noll revenue neutral auction for emissions licenses abstract this paper reports on three series of laboratory experiments designed to test the performance of the hahn noll revenue neutral auction rna an alternative institution a no rebate uniform price auction upa is also examined as a benchmark in these experiments the rna markets were little different from upa markets in terms of either prices or market efficiencies the two institutions did differ in terms of the distribution of the gains from exchange and of the propensity of bidders to engage in a certain type of overbidding

a conjectural variations model of reduced japanese milk price supports conjectural variations are estimated to determine the degree of imperfection in the japanese milk market estimated conjectural variations indicate that the japanese milk market is imperfectly competitive but is becoming more competitive our comparative static analysis indicates that when the milk support price is reduced the fluid milk price will decline less under the current imperfectly competitive structure than it would under a competitive structure

the role of price in multi attribute product evaluations the potentially multifaceted role of price in product evaluations is investigated with an empirical analysis of surveyed beliefs attitudes and intentions regarding automobile brands it is found that price beliefs both influence and are influenced by beliefs about a brand s quality thereby contributing to the attribution definition process however price is not a significant determinant of overall attitude it is also found that price becomes a negative factor when behavioral intentions are involved lending support to an economic interpretation of price

the non monetary nature of gifts this paper addresses the prevalence of non monetary gifts over more highly valued and e cient monetary transfers in social relationships we demonstrate that under a wide variety of circumstances ine cient non monetary gifts will be o ered by a donor in lieu of cash in order to signal the donor s quality of information about the recipient s preferences this result emerges because gift giving is ine cient relative to cash and not because of any arbitrary assumptions regarding communication in particular the donor has available the strategy of o ering cash and saying what he would have purchased nonetheless there is still an important equilibrium role for buying gifts 2001 elsevier science b v all rights reserved jel classixcation a13 d10 d64 d82 z1

beyond dollar exchange rate targeting china s crisis era export management regime while considerable attention has been directed towards chinese management of its currency vis a vis the u s dollar the frequent alteration during the recent global economic downturn of rebates on value added taxes paid by exporters on the inputs they have imported has been overlooked in this paper the relevant chinese policy changes are documented and evidence to help gauge the relative importance of this form of intervention presented given the relatively high share of imported value added in chinese exports even apparently small changes in vat export rebates are equivalent to non trivial percentages of domestic value added this finding adds further nuance to our understanding of the impact of supply chains on the resort to protectionism during the crisis

why do people volunteer an experimental analysis of preferences for time donations why do individuals volunteer their time even when recipients receive far less value than the donor s opportunity cost previous models of altruism that focus on the overall impact of a gift cannot rationalize this behavior despite its prevalence we develop a model that allows for differential warm glow depending on the form of the donation in a series of laboratory experiments that control for other aspects of volunteering such as its signaling value subjects demonstrate behavior consistent with the theoretical assumption that gifts of time produce greater utility than the same transfers in the form of money subjects perform an effort task accruing earnings at potentially different wage rates for themselves or a charity of their choice with the ability to transfer any of their personal earnings to charity at the end of the experiment subjects exhibit strong preferences for donating time even when differential wage rates make it costly to do so the results provide new insights on the nature of vo

assessing the importance of oligopsony power in agricultural markets oligopoly competition among few sellers is the cornerstone of industrial organization io conversely its sister concept oligopsony competition among few buyers is scarcely mentioned for example oligopsony is not discussed in the entire two volume handbook of industrial organization and monopsony is mentioned only in the context of incentives to integrate vertically two reasons apparently account for io economists lack of interest in buyer market power i they don t think it s very important and ii they don t believe it presents any unique modeling issues relative to seller market power scherer and ross illustrate this first viewpoint arguing that average concentration on the buyers side in manufacturing is undoubtedly lower than seller concentration p 519 tirole in his masterful treatise on io theory illustrates the second dispatching monopsony power in one sentence naturally the conclusions regarding monopoly power would also hold as well for monopsony power p 65 we argue that this dismissive treatment of buyer market power is not reasonable for economists interested in agriculture and agricultural markets the scherer and ross viewpoint may apply when considering generic inputs such as labor capital and energy competition for these inputs is apt to exceed competition for the outputs they produce because firms cross product market boundaries to compete for these inputs and there is essentially no branding among input buyers to diminish price competition among them moreover these inputs are typically mobile hence in elastic supply to individual buyers limiting the exercise of oligopsony power even in geographic settings where relatively few buyers prevail this view of input markets does not apply however to first handler markets for the raw agricultural commodities that are inputs into the processed or fresh packed food products we identify the following distinctive structural characteristics of these markets

marketing margins and price uncertainty the case of the u s wheat market this paper seeks to determine the effect of changes in output price risk on marketing margins a theoretical model of price determination in a marketing channel with risk averse firms is developed this model shows that if marketing firms are competitive and decreasingly absolute risk averse then an increase in output price risk should result in higher expected marketing margins empirical evidence from the wheat marketing channel supports the theoretical model increased price variability significantly increases wheat marketing margins for both the farm mill margin and the mill retail margin these results suggest a potential benefit from price stabilization programs

the deadweight loss of christmas reply we welcome bradley j ruffle and orit tykocinski s 1999 attempt to reconcile the difference in findings between our paper solnick and hemenway 1996 and joel waldfogel s 1993 in both studies subjects were asked to estimate the cost and the value to them of gifts they had received waldfogel found that gift recipients typically valued their gifts at only 87 percent of their estimated cost to the givers by contrast our sample of adults from train stations and airports and from faculty staff and graduate students at harvard reported valuing their gifts at more than twice the estimated cost ruffle and tykocinski examine the wording of the question used to elicit the valuation of the gift waldfogel s subjects were economics students hence he could ask them directly what amount of cash would make them indifferent between the gift and a cash alternative since we wanted to question people without economics training we asked respondents to name the amount of money that would make them equally happy as receiving the gift ruffle and tykocinski find that the change from waldfogel s wording to ours results in a 15to 20 percent increase in estimated value while leaving accompanying cost estimates unchanged the wording of the question clearly matters but to pose a question that only those with training in economics can answer limits the scope of inquiry in the study by ruffle and tykocinski 10 percent of the psychology students raised their hands to ask for a definition of indifferent we wonder how this concept was explained to them what those who asked and those who did not ask made of the term and what set of emotions might have been activated had waldfogel used our question rather than finding any deadweight loss a yield of 87 percent he would have reported gifts being valued very close to cost 100 0 or 104 4 percent thus ruffle and tykocinski take us partway towards an understanding of the difference in our findings and waldfogel s yet a wide gulf remains ruffle and tykocinski reject our claim that sample selection may be largely responsible for the difference between our results and waldfogel s it does appear that results do not vary a great deal with the type of undergraduate questioned whether a student is enrolled in a psychology or an economics class or in a more or less prestigious institution but the real issue of sample selection has not been adequately addressed ours remains the only study to use adults living independently as subjects we note that ruffle and tykocinski s subjects performed poorly in estimating costs for example psychology students estimated the cost of the mask at 603 shekels and economics students at 375 shekels actual retail price was 800 shekels this incidental finding supports our belief that college students may not be full fledged participants in many market or gift exchange processes it is certainly possible that the average gain in gift exchange may be lower than the 214 percent measured in our survey but we remain convinced that even examining solely the material value to the recipient gift giving can and often does result in a gain rather than a deadweight loss

does consumer irrationality trump consumer sovereignty scholars working on the border of economics and psychology have documented many contexts in which individual decision making is unreliable and might be improved by paternalistic interventions against this mounting body of negative evidence economists default belief in consumer sovereignty has been motivated primarily by theory rather than evidence the goal of the present study is to see whether there is direct evidence supporting economists faith in consumer sovereignty in a simple context we address this question by presenting direct evidence that consumers own purchases generate between 10 and 18 more value per dollar spent than items received as gifts

a study of collusion in first price auctions this paper examines the bidding for school milk contracts in florida and texas during the 1980s in both states firms were convicted of bid rigging the data and legal evidence suggest that the cartels in the two states allocate contracts in different ways one cartel divides the market among members while the other cartel also uses side payments to compensate members for refraining from bidding we show that both forms of cartel agreements are almost optimal provided the number of contracts is sufficiently large in the auction the cartel bidder may face competition from non cartel bidders the presence of an optimal cartel induces an asymmetry in the auction the selected cartel bidder is bidding as a representative of a group and has on average a lower cost than a non cartel bidder the data support the predicted equilibrium bidding behaviour in asymmetric auctions in accordance with optimal cartels

zero as a special price the true value of free products when faced with a choice of selecting one of several available products or possibly buying nothing according to standard theoretical perspectives people will choose the option with the highest cost benefit difference however we propose that decisions about free zero price products differ in that people do not simply subtract costs from benefits but instead they perceive the benefits associated with free products as higher we test this proposal by contrasting demand for two products across conditions that maintain the price difference between the goods but vary the prices such that the cheaper good in the set is priced at either a low positive or zero price in contrast with a standard cost benefit perspective in the zero price condition dramatically more participants choose the cheaper option whereas dramatically fewer participants choose the more expensive option thus people appear to act as if zero pricing of a good not only decreases its cost but also adds to its benefits after documenting this basic effect we propose and test several psychological antecedents of the effect including social norms mapping difficulty and affect affect emerges as the most likely account for the effect

a model of price determination for fresh produce with application to california iceberg lettuce most fresh produce commodities are highly perishable thus supply at any time is fixed at prices above marginal harvest costs in this paper we develop a model of short run farm price determination for produce commodities that incorporates this key structural feature and also allows for imperfect competition in price determination the model is empirically manifest in a switching regression framework and applied to california iceberg lettuce results support the general model relative to a model restricted to competitive behavior and suggest that retailer buyers capture most of the rents from lettuce production and sale

modeling interdependent consumer preferences abstract a consumer s preference for an offering can be influenced by the preferences of others in many ways ranging from social identification and inclusion to the benefits of network externalities in this article the authors introduce a bayesian spatial autoregressive discrete choice model to study the preference interdependence among individual consumers the autoregressive specification can reflect patterns of heterogeneity in which influence propagates within and across networks these patterns cannot be modeled with standard random effect specifications and can be difficult to capture with covariates in a linear model the authors illustrate their model of interdependent preferences with data on automobile purchases and show that preferences for japanese made cars are related to geographically and demographically defined networks

risk response in the beef marketing channel a multivariate generalized arch m approach a model of the farm retail price spread for beef is specified under rational expectations in which systematic risk response on the part of marketing intermediaries is allowed the three equation structural model contains potentially time varying risk terms in margin and supply equations which i approximate and estimate using a multivariate garch in mean approach the estimated model is used to infer relative risk premia in beef margins and to simulate short run equilibrium risk effects results indicate that price risk has at times had substantial impacts on farm and retail beef prices and production

empirical generalizations about the impact of advertising on price sensitivity and price consumers sensitivities to price changes are an important input to strategic and tactical decisions it has been argued that price sensitivities depend on factors such as advertising prior studies on the effect of advertising on consumer price sensitivity have found seemingly conflicting results we analyze the characteristics of previous studies in marketing and generate a set of three empirical generalizations these are 1 an increase in price advertising leads to higher price sensitivity among consumers 2 the use of price advertising leads to lower prices and 3 an increase in nonprice advertising leads to lower price sensitivity among consumers these generalizations have important implications for managers and researchers managers need to coordinate their advertising and pricing decisions to attain maximum profits for researchers our summary and discussion of empirical results provide directions for future

endogenous product differentiation and trade policy implications for the u s food industry the effects of tariffs on intermediate inputs and final goods in monopolistically competitive industries are assessed output per firm and firm numbers decline due to input tariffs when coupled with output tariffs the change in firm numbers is ambiguous numerical illustrations for u s food processing industries indicate the decline in firm numbers is larger than the decrease in firm output for input tariffs monopolistic competition strengthens the response to input tariffs compared to perfect competition considering the joint effects of input and output tariffs the direction of change in total output may differ between monopolistic and perfect competition

gains from digitization evidence from gift giving in music abstract in this paper we focus on recorded music gifts during the holiday season and estimate the reduction in deadweight loss due to the transition from physical cd gift giving to digital music gift giving with gift cards based on our survey data we find that music cd gifts generate an average deadweight loss between 15 and 38 of the price according to our estimates of gift music album sales which are based on u s data the welfare gains from digitization in terms of eliminated deadweight loss as a percentage of total spending on music albums were between 5 and 13 during the week when digital sales peak in 2014

risk behavior and rational expectations in the u s broiler market this study examines the empirical implications of extending the rational expectations hypothesis reh to include price uncertainty a general estimation framework that incorporates both the restrictions on structural parameters and the variance covariance terms is developed garch time series processes are used to generate time varying expectations of both the means and the variances of exogenous variables the empirical application is with a quarterly model of the u s broiler industry the results indicate that the rational expectation of price variance is an important determinant of broiler supply a formal test indicates that the restrictions implied by the reh cannot be rejected

markets gift cards the mobil oil company introduced the first retail gift card that recorded value on a magnetic strip in 1995 in under a decade such gift cards replaced apparel as the number one item sold during the christmas season this study will discuss the reasons for the strong surge in the gift card market it will then consider the value of gift cards as an intermediate option between two alternatives purchasing a physical gift which could possibly be returned or exchanged versus giving cash empirical data on the resale price of gift cards from an internet auction website provide information on the value that recipients place on gift cards suggesting that the difference between the cost of a gift card to the giver and its value to the recipient is substantial although perhaps not quite as large as the parallel gap involved in physical gifts

on the income dependence of equivalence scales household consumption exhibits economies of scale as the number of household members increases we collect survey data from two countries germany and france in order to obtain direct subjective estimates of household consumption economies of scale and in particular to examine an additional dimension whether household consumption economies of scale change as living standards go up our data from both countries indicate strongly that household economies of scale increase as the living standard goes up we discuss the robustness of our survey method and compare our results to these of alternative estimation methods in the literature

what experimental protocol influence disparities between actual and hypothetical stated values preferences elicited in hypothetical settings have recently come underscrutiny causing estimates from the contingent valuation method to bechallenged due to perceived hypothetical bias given that the receivedliterature derives value estimates using heterogeneous experimentaltechniques understanding the effects of important design parameters onthe magnitude of hypothetical bias is invaluable in this paper we addressthis issue statistically by using a meta analysis to examine data from 29experimental studies our empirical findings suggest that on averagesubjects overstate their preferences by a factor of about 3 in hypotheticalsettings and that the degree of over revelation is influenced by thedistinction between willingness to pay and willingness to accept publicversus private goods and several elicitation methods

the deadweight loss of christmas comment two previous surveys used to measure the welfare implications of christmas gift giving in the united states have reached opposite conclusions joel waldfogel 1993 finds a welfare reduction of 13 percent or more associated with christmas giving curiously sara j solnick and david hemenway s 1996 henceforth sh replication of waldfogel s survey turns up just the opposite result a 214 percent welfare gain we design a series of controlled laboratory experiments to determine why the two papers arrive at opposite conclusions we do not produce our own estimate of the deadweight loss of gift giving rather our aim is to understand how and which among the differences in methodology between the two studies account for their divergent findings waldfogel 1993 surveyed 58 students enrolled in an intermediate microeconomics class about specific gifts they had received for christmas he asked recipients to estimate the amount paid by the giver for each gift received recipients were then asked to place a value on each gift they received respondents were instructed to estimate the value of a gift as the amount of cash such that you are indifferent between the gift and the cash not counting the sentimental value of the gift p 1331 waldfogel measures the welfare yield of a gift as the difference between the recipient s valuation and her cost estimate of the gift based on 278 gifts reported waldfogel finds that gifts have an average yield of 87 1 percent indicating that gifts lose about 13 percent of their value in the exchange from giver to receiver when cash gifts are excluded the average yield falls further to 83 9 percent sh were intrigued enough by waldfogel s results to replicate his study contrary to waldfogel sh find that gift giving is actually welfare improving with an average yield of 214 percent median yield 111 percent they claim that a broader subject pool than that questioned by waldfogel explains the reversal concerned that undergraduates in an intermediate microeconomics class may be unrepresentative sh administered their survey to members of the general public at train stations and airports and to staff and graduate students enrolled in a biostatistics or an economics class at the harvard school of public health they also altered the question used to elicit respondents valuations of gifts received their survey question reads as follows p 1300 aside from any sentimental value if without the giver ever knowing you could receive an amount of money instead of the gift what is the minimum amount of money that would make you equally happy the change in wording from the amount of cash such that you are indifferent to the amount of money that would make you equally happy was prompted by a concern that indifference is a technical word familiar only to economists it remains to be seen whether sh s equally happy question is substantially equivalent to the indifference version of the question or whether they have introduced a greater change than they realize an additional methodological concern is that the cost estimates always precede respondents valuations in both studies order effects are well documented in the social psychology literature cost estimates may influence valuations in particular costs may serve as a judgmental anchor upon which to base value estimates reversing the order of the questions is a technique common to survey and experimental methods in the social sciences to balance the researcher s design and offset possible order effects ruffle department of economics ben gurion university p o b 653 beer sheva 84105 israel e mail bradley bgumail bgu ac il tykocinski department of behavioral sciences ben gurion university beer sheva 84105 israel e mail oritt bgumail bgu ac il we thank tomer bakalash for research assistance and sara solnick todd kaplan three anonymous referees of this journal and seminar participants at ben gurion university universite louis pasteur and the 1998 esa meetings in mannheim for comments 1 howard schuman and stanley presser 1981 provide a good starting point in this literature

gifts as economic signals and social symbols gift giving has often puzzled economists especially because efficient gifts like cash or giving exactly what a person asks for seem crass or inappropriate it is shown in a formal game theoretic model that gifts serve as signals of a person s intentions about future investment in a relationship and inefficient gifts can be better signals other explanations for the inefficiency of gift giving are advanced and some stylized facts about gift giving practices are described many of which are consistent with the signaling view of gifts

beggar thy neighbour policies during the crisis era causes constraints and lessons for maintaining open borders since the onset of the global financial crisis in 2007 governments have resorted to beggar thy neighbour measures conforming to previous historical bouts of protectionism the form of discrimination against cross border discrimination changed as well as documenting government attempts to tilt the playing field towards domestic firms this paper discusses the causes and apparent constraints on contemporary protectionism and concludes with a discussion of steps that can be taken to maintain the wide variety of cross border commercial flows seen in the twenty first century

price behavior in a dynamic oligopsony washington processing potatoes punishment strategies are necessary to sustain a collusive oligopsony in a repeated game context when demand is uncertain and only market variables are observable this article proposes a test for tacit collusion among potato processors in washington state using a dynamic regime switching model estimated with a finite mixture method the results support the existence of punishment and collusive regimes and show the welfare losses due to anti competitive behavior on the part of processors to be significant processors oligopsony power is enhanced by higher domestic production imports and existing stocks but it is ameliorated by high capacity utilization rates and exports copyright 2001 oxford university press

the impact of bestseller rank on demand evidence from the app market this article uses daily data on the ranking by sales of the top 100 apps sold through apple s app store to provide evidence of the causal impact of today s bestseller rank information on tomorrow s demand the estimates indicate that the willingness to pay of consumers is about 4 50 greater for a top ranked app than for the same unranked app the results also indicate that the effects of bestseller status on willingness to pay decline steeply with rank at the top ranks but remain economically significant for the apps in the first half of the top 100 list

two moment decision models and expected utility maximization two moment decision models are consistent with expected utility maximization only if the choice set or the agent s preferences are restricted this paper identifies a restriction which is sufficient to ensure this consistency and confirms that it holds in many economic models the implications for economic analysis are then derived two different approaches to representing an agent s preferences over strategies yielding random payoffs are in wide use under the mean standard deviation ms approach the agent is assumed to rank the alternatives according to the value of some function defined over the first two moments of the random payoff while the expected utility eu criterion assumes that the expected value of some utility function defined over payoffs is used instead the fact that there are these two competing approaches has generated a considerable literature some authors are concerned with the advantages and disadvantages of each while others deal with conditions under which the potentially different approaches would yield the same results or at least approximately so space does not

substitutability experience and the value disparity evidence from the marketplace abstract recent empirical evidence suggests that important disparities exist between willingness to pay and compensation demanded for the same good these results which clearly contradict closely held economic doctrines have led some influential commentators to call for an entirely new economic paradigm to displace conventional neoclassical theory this study examines the generality of these experimental findings by going to a well functioning marketplace and examining more than 350 individual decisions across two incentive compatible elicitation mechanisms the data suggest that behavior of individuals with intense experience approaches neoclassical predictions any observed wta wtp disparity amongst this group is negligible

industrial policy choice during the crisis era using an extensive database of non macroeconomic state interventions implemented since the global economic crisis began this paper provides quantitative evidence on the resort to selectivity by several major economic powers the propensity to promote certain sectors certain firms within sectors and domestic over commercial interests is contrasted across jurisdictions at least one prominent contention in the industrial policy literature is not borne out in the data and certain cross country and cross sectoral variations found here could benefit from further analysis a crisis era shift towards selectivity and away from the level playing field can be detected in the major trading nations

trade climate change and the political game theory of border carbon adjustments the lack of real progress at the durban climate change conference in 2011 postponing effective action until at least 2020 has many causes one of which is the failure to address trade issues and in particular carbon leakage this paper advances two arguments first it argues that the conventional view of border carbon adjustments bcas as a dirty trade barrier should be turned on its head rather the absence of a carbon price comprises an implicit subsidy to dirtier production in non regulated markets second bcas could act as a game changer when climate policy negotiations move at a glacial pace if at all materially stronger progress could be achieved indirectly from the threat of unilateral trade policies the paper shows how this could come about using a simple political game theory model the appropriate game form is one in which parties move unilaterally and sequentially given the failure to agree on a common course of action and are fully aware of the impacts of their actions the paper shows that properly crafted bcas could help reduce trade distortions limit the competiveness effects and help build a broader coalition of interests for more global actions

the effects of imperfect competition on the size and distribution of research benefits studies of agricultural research benefits usually assume perfectly competitive markets studies that have allowed for market power of agribusiness firms have generally assumed unrealistic pure monopsony or monopoly behavior this paper allows for processing firms to exhibit a range of degrees of oligopsony power in buying raw farm products and oligopoly power in selling processed farm products the results indicate that different types of research induced technical change can exacerbate or ameliorate distortions from the exercise of market power by agribusiness firms which affects the size and especially the distribution of research benefits

market transparency and market structure the livestock mandatory reporting act of 1999 the premise of the livestock mandatory reporting act of 1999 is that enhanced transparency promotes competition this article provides a theoretical study of the consequences of such transparency for the structure conduct and performance of the livestock industry i conclude that the usefulness of the act to the livestock industry may not be in the value of reported information to feeders as the supporters of the act claim rather by forcing packers to pool information at negligible marginal cost the act may foster more competitive conduct in the procurement of livestock copyright 2003 oxford university press

in search of welfare improving gifts gift giving is thought to decrease welfare recipients are sometimes stuck with gifts they would not have purchased because the giver does not perfectly know the recipient s preferences and in kind gifts cannot be costlessly refunded such gifts are welfare reducing compared to giving cash if in addition recipients possess full information as to which stores carry their desired goods and the ability to reach these stores costlessly we replace these two latter assumptions with the more realistic assumptions of uncertainty about the location of goods and search costs in contrast to existing economic models gifts in our model enhance expected welfare moreover gift giving cannot be replaced by a profit maximizing trader nor the introduction of nearby specialty stores carrying gift goods we use our model to explain a number of stylized facts about gift giving the organization of retail trade and in kind government transfers 2008 elsevier b v all rights reserved

forced gifts the burden of being a friend abstract in many developing countries gift expenses escalate with income growth and account for a substantial share of household expenditure we develop a theoretical model to demonstrate how unequal income growth may trigger gift competition and drive up the financial burden associated with gift exchange we use unique census type panel data from rural china to test our model predictions and demonstrate that 1 the value of gifts responds to the average gift in the community 2 the escalation of gift giving may have adverse welfare implications especially for the poor and 3 escalating gift expenses crowd out expenditures on other consumption items

arbitrage across borders why itunes gift cards sell above face value on ebay i introduction firms that operate internationally often charge different prices for the same product in different countries these price differences may be due to cost differences exchange rate fluctuations and or price discrimination where firms set prices based on consumers willingness to pay for the product there is an extensive literature on international price differences but nearly all of this research has focused on physical goods where arbitrage the situation where someone buys the product from a low price country and resells it to someone in a high price country tends to be relatively costly because of transaction costs including search costs and transportation costs there have been no empirical papers in the economics literature thus far on the arbitrage of downloadable goods this paper looks at the case of itunes which sells downloadable music videos books ipad and iphone applications and other content worldwide and shows how the sale of itunes gift cards above face value on the auction website ebay is linked to the arbitrage of itunes products itunes which is operated by apple first started selling music downloads in 2003 and by 2008 it was the largest music retailer in the united states and the world 1 people typically purchase products from their own country specific itunes stores but not all content is available in all countries due in part to licensing restrictions and consumer preferences e g itunes does not sell music movies and tv shows in many countries prices also vary across countries as detailed in section iii of this paper one can easily switch to any other country s itunes store with just a few mouse clicks in particular the u s store would seem to be a natural focal point and it tends to have lower prices and a wider selection however in order to actually purchase something from the u s store one needs to have either a u s credit card or a u s itunes gift card available in denominations ranging from 10 to 100 in the primary market through apple and its authorized sellers such as wal mart and best buy as such it can be surmised that some individuals outside the united states may be willing to purchase itunes gift cards on ebay in order to gain access to the u s store it should be noted that itunes terms and conditions specify that the u s store s products are available only to buyers in the united states we can see the evidence for this through the sale of itunes gift cards on ebay nearly 200 itunes gift cards are sold daily on ebay about 10 of all gift cards and more than half of these itunes gift cards sell above face value a phenomenon that is unusual among gift cards after discussing some background information and related literature this paper examines more than 1 300 ebay transactions in february 2011 and finds that itunes gift cards targeted to international buyers which are often sent electronically are more likely to have higher prices controlling for seller reputation shipping charges and other variables this indicates that non u s buyers are willing to pay a premium for the gift cards because they are unable to obtain them otherwise information about the buyers countries allows us to see whether it is the u s store s greater product availability or its lower prices that buyers are interested in this paper addresses an important issue because of the rising popularity of the sales of downloadable content worldwide this market includes music videos books video games and applications the internet has also made it easier for buyers and sellers in different countries to find one another and in the case of digital products exchange goods if arbitrage is widespread firms may decide to either minimize price differences between countries stop selling in low price countries altogether or use the legal system or other methods to prevent arbitrage in terms of the big picture this issue has implications for social welfare copyright enforcement and international trade policies and governments in some countries may also be concerned if their citizens have access to goods that are banned

the magic of the personal touch field experimental evidence on money appreciation as gifts this paper makes use of two field experiments to explore individual effort responses to gifts we extend the literature by looking at nonfinancial gifts and gifts that combine financial and nonfinancial elements with or without adding a personal touch we find that non pecuniary gifts that signal worker appreciation induce reciprocity most importantly we find that there are interaction effects between money and appreciation while money and appreciation are individually effective they only work well together when they are combined with a personal touch this points to the importance of interpersonal elements in gift giving and has important implications for how to effectively elicit worker effort

bid sensitivity and the structure of the vickrey auction a research study explored a version of economist w vickrey s second price sealed bid auction used for the valuation of nonmarket goods the sensitivity of revealed values generated by this variation were examined a standard second price auction with repeated market trials was compared to a random nth price auction and a combinatorial private collection auction with sequentially revealed values results showed the consistency of revealed values in a low probability risk scenario

alleviating the constant stochastic variance assumption in decision research theory measurement and experimental test analysts often rely on methods that presume constant stochastic variance even though its degree can differ markedly across experimental and field settings this reliance can lead to misestimation of effect sizes or unjustified theoretical or behavioral inferences classic utility based discrete choice theory makes sharp testable predictions about how observed choice patterns should change when stochastic variance differs across items brands or conditions we derive and examine the implications of assuming constant stochastic variance for choices made under different conditions or at different times in particular whether substantive effects can arise purely as artifacts these implications are tested via an experiment designed to isolate the effects of stochastic variation in choice behavior results strongly suggest that the stochastic component should be carefully modeled to differ across both available brands and temporal conditions and that its variance may be relatively greater for choices made for the future the experimental design controls for several alternative mechanisms e g flexibility seeking and a series of related models suggest that several econometrically detectable explanations like correlated error state dependence and variety seeking add no explanatory power a series of simulations argues for appropriate flexibility in discrete choice specification when attempting to detect temporal stochastic inflation effects

an experiment on cash and in kind transfers with application to food assistance programs the impact of providing food assistance in kind via food stamps or restricted debit cards vs cash has long been a subject of debate prior efforts to causally identify the effects of the two types of transfers have been hindered by concerns over non random selection into assistance programs misreporting of program benefits and identification of inframarginal households who theoretically should treat cash and in kind transfers identically this paper reports the results of an economic experiment designed to cleanly test some conceptual issues associated with in kind vs cash giving in a lunchroom meal setting given current debates about the healthiness of food assistance recipients diets we also consider the impacts of placing restrictions on in kind transfers that either prohibit soda purchases with the transfer or require the transfer be spent on fruits and vegetables overall we find that as theory predicts in kind transfers have the same effect on food expenditures as an unrestricted cash transfer for inframarginal consumers and for extramarginal consumers food expenditures are higher for in kind than cash transfers participants also respond to the fruit and vegetable restriction as theory would predict however in contrast to the theoretical prediction the soda restriction reduces soda expenditures for more than half the inframarginal consumers

measuring returns to an innovation in an imperfectly competitive market application to mechanical harvesting of processing tomatoes in taiwan in this paper we develop and apply a general imperfect competition model to evaluate returns to a cost reducing innovation most related work has applied models of perfect competition results demonstrate that welfare estimates derived from a model of perfect competition may be seriously distorted when the relevant market is imperfectly competitive application to mechanical harvesting of processing tomatoes in taiwan reveals the potential for significant benefits to adoption of mechanical harvesting in taiwan however farmers incentives to adopt the harvester are attenuated because total benefits are reduced by oligopsony power in tomato procurement and imperfectly competitive processors will capture a large share of the benefits that remain in this paper we analyze the welfare impacts of mechanical harvesting of processing tomatoes in taiwan a key distinguishing feature of the study relative to previous empirical work on returns to innovations is that it permits market power to be exhibited in both the markets for the raw agricultural product and the processed product outputs indeed the empirical results find significant processor market power in taiwan in both the procurement of raw tomatoes and the sale of processed products in the domestic market the study demonstrates that welfare estimates derived from a model of perfect competition may be seriously distorted when in fact the relevant markets are imper

a market equilibrium analysis of the impact of risk on the u s rice industry an economic model of supply demand for u s rice suggests that increases in risk result in decreased acreage and increased marketing margins in a market equilibrium context the empirical results also suggest rice production and rice prices are more responsive to changes in risk faced by marketing firms than changes in risk faced by producing firms

analysis of a supply control program under uncertainty and imperfect competition chinese cabbage in taiwan researchers have often attributed the farm wholesale price spread after adjusting for marketing costs as compensation for marketing firms risk bearing however price spreads in excess of marketing costs can also be due to marketing firms exercise of market power in settings where both imperfect competition and marketer risk aversion are plausible a modeling framework must be sufficiently general to accommodate both types of behavior this article develops and estimates such a model in the context of fresh produce marketing and develops the implications for analysis of supply control programs the model is applied to the production and marketing of chinese cabbage in taiwan and specifically to the analysis of supply control programs implemented in this industry by the taiwanese government the empirical results provide little support for the hypothesis that marketing firms exhibit risk averse behavior but they do show that marketing firms exercise oligopsony power in procurement of the product from farmers and that this power is positively related to the quantity supplied in each market period this provides a heretofore unexplored impetus for supply controls intended to raise producer incomes however such controls are also rendered less effective by imperfect competition because marketing firms capture part of the benefits from supply reduction

modeling gift choice the effect of uncertainty on price sensitivity abstractgift giving generates high revenues for retailers it is also marked with significant welfare or deadweight loss in that givers tend to pay more than the receivers valuation previous research has attributed this discrepancy to givers inaccurate predictions of the receivers preferences this research demonstrates that reduced price sensitivity is another important source of the deadweight loss givers use gift prices to signal the importance of their relationship with the receiver in order to demonstrate this mechanism the authors develop a new bayesian gift choice model that captures both preference predictions as well as the signaling value of price the model is estimated on two choice based conjoint studies for gift giving that allow for the manipulation of the giver s uncertainty about the receiver s preferences both studies show the strong signaling value of price especially when givers are uncertain about receivers preferences decomposition of the deadweight loss shows that the s

interactions between agricultural and resource policy the importance of attitudes toward risk using a method proposed by meyer for deriving comparative statics results in the presence of risk this paper analyzes the effects of various agricultural and environmental policy alternatives on the choices of a risk averse producer with a just and pope production function many commonly held beliefs about policy effects are not supported unambiguously by economic theory for example a tax on pesticides will not necessarily reduce pesticide use or average output and a reduction in price of agricultural output will not necessarily lead to a reduction in use of water or agricultural chemicals

the limitations of european union control of state aid the european union eu is one of the few jurisdictions in the world that has introduced specific legal provisions for controlling state aid the treaty provisions are structured in such a way that the commission is in principle obliged to authorize every single grant of aid this has proved to be practically impossible the more so with 27 members of the eu as a result the commission has issued a number of exemption and de minimis rules for which notification is not required that suggest that the bulk of state aid is beneficial in order for state aid policy to become more rigorous the 2005 state aid action plan rightly enhanced the role of economic analysis this means rethinking the exemption regulations and the way individual decisions are taken one important step forward would be to make sure that distortions of competition are noticeable before a state measure is declared incompatible as a result at least with respect to individual decisions eu policy would stop addressing cases where the distortions of competition are minimal furthermore the commission would stop imposing irrelevant constraints on subsidized forms this is particularly the case for restructuring aid where the restoration of the healthiness of the firm is the final objective of the aid however even in recent decisions taken as a result of the financial crisis the commission uses competition type considerations only to overcome moral hazard by attaching a number of intrusive conditions to its authorization decisions prohibition of reducing prices before a competitor does introduction of capacity or sales caps merger prohibitions caps on managers salaries etc very often these conditions reduce not increase the probability that these companies restructure successfully moral hazard can only be eliminated by not allowing the aid by limiting the aid to what is strictly necessary or by making sure that it is a once and for all option and not by constraining the company from competing copyright 2012 oxford university press

predicting joint choice using individual data choice decisions in the marketplace are often made by a collection of individuals or a group examples include purchase decisions involving families and organizations a particularly unique aspect of a joint choice is that the group s preference is very likely to diverge from preferences of the individuals that constitute the group for a marketing researcher the biggest hurdle in measuring group preference is that it is often infeasible or cost prohibitive to collect data at the group level our objective in this research is to propose a novel methodology to estimate joint preference without the need to collect joint data from the group members our methodology makes use of both stated and inferred preference measures and merges experimental design statistical modeling and utility aggregation theories to capture the psychological processes of preference revision and concession that lead to the joint preference results based on a study involving a cell phone purchase for 214 parent teen dyads demonstrate predictive validity of our proposed method

returns to public investments in agriculture with imperfect downstream competition a multiple market framework is developed to measure the size and distribution of research benefits the model considers an upstream raw product market and a downstream finished product market and allows for imperfect competition in the intermediary food processing sector a central conceptual result is derived an increase in raw product output is a sufficient condition for costreducing innovations in the farm sector to increase social welfare a special case of linear farm supply and isoelastic processing production functions reveals that necessary conditions for welfare to decrease are a convergent farm supply shift an oligopsonistic upstream market configuration and increasing returns to scale processing technology a basic goal of public agricultural research is to reduce the costs of farm production toward this end governments have invested considerable resources to improve basic scientific knowledge develop novel technologies and facilitate the adoption of modern plant varieties and farming methods economists have generally concluded that public investments in agriculture have achieved remarkable success in lowering the marginal cost of farm production due in large part to the effectiveness of land grant research and extension activities chavas and cox cochrane as a result of these cost changes public agricultural investments have been shown to yield impressive social rates of return in numerous studies for a survey of this literature see alston norton and pardey several recent papers have shown that imperfect competition in the downstream processing sector can affect both the size and the distribution of welfare changes dryburgh and doyle consider the impact of technical innovation in a multimarket study of the british dairy industry under alternate downstream in

time is not money in an ultimatum bargaining experiment we study how subjects bargain over the returns to their investments of money and time the most notable finding is that a third of the subjects demand no compensation for their time investments whereas almost all subjects demand compensation for equally costly monetary investments

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

choosing for others abstractexperiments conducted in the us and france were used to study how individuals make trade offs between health and taste for themselves and others when someone receives a choice made for them that differs from their preference they experience a welfare loss at least in the short term we measure the empirical magnitude of this loss and suggest it play a role in assessing the desirability of paternalistic policies motivated by behavioural economics we show that the welfare loss changes with the provision of new information and the impact of this information differs for the two countries

russia s commercial policy 2008 11 modernization crisis and the wto accession this paper examines the commercial policy of russia during 2008 11 a time of global financial crisis which coincided with an announced russian modernization programme in 2008 russia introduced a development strategy to limit its dependence on natural resources however the government relied heavily on this income for the planned modernization programme the falling price of oil in 2008 9 led to a tightened government budget constraint this situation induced russia towards wider use of more traditional instruments of trade policy such as tariff policy as well as an import substitution strategy the creation of the customs union and a pause in the wto accession process russia has been found by the global trade alert gta initiative to be one of the main users of protectionist policies since november 2008 with the oil price recovery from september 2010 russia had been back in the wto accession process on revised terms and conditions the wto ministerial conference in geneva approved the accession package of the russian federation on 16 december 2011 copyright 2012 oxford university press

broad and narrow bracketing in gift certificate spending abstract we survey 1050 consumers who have just redeemed one or more open loop gift certificates to learn whether they view gift certificate income cash gifts and non gift income as substitutes we find that the majority 83 of recipients spend the certificates in the same way as cash the other respondents 17 bought an item they would not have bought otherwise but adjustments in their shopping pattern do not seem to result from constraints in redeeming the certificates 80 of all respondents in this group says they have used the certificate to buy an item they really love to have while inconsistent with standard microeconomic demand theory this behavior can be explained by narrow bracketing in spending gift certificates these consumers consider a limited choice set of nice personal items our data show that females are more likely to narrow bracket gift certificate income and that positive reciprocity towards the giver induces narrow bracketing in case the giver is a household member who suggests to buy a particular item using the certificate previous studies have found that both giving in kind gifts waldfogel 1993 as giving gift cards offenberg 2007 entail a welfare loss of 10 30 when compared to giving cash we find that the welfare effects of open loop gift certificates among users are limited the consumption of broad bracketing consumers is unaffected and narrow bracketing consumers seem to value the possibility to separate gift certificate income from other income sources

modeling choice interdependence in a social network this paper investigates how individuals product choices are influenced by the product choices of their connected others and how the influence mechanism may differ for fashion versus technology related products we conduct a novel field experiment to induce and observe choice interdependence in a closed social network in our experiment we conceptualize individuals choices to be driven by multiattribute utilities and we measure their initial attribute preferences prior to observing their choice interdependence and collecting network information these design elements help alleviate concerns in identifying social interaction effects from other confounds given that we have complete information on choices and their sequence we use a discrete time markov chain model nonetheless we also use a markov random field mrf model as an alternative when the information on choice sequence is missing we find significant social interaction effects our findings show that whereas experts exert asymmetrically gre

the deadweight loss of christmas when economists comment on holiday gift giving it is usually to condone the healthy effect of spending on the macroeconomy however an important feature of gift giving is that consumption choices are made by someone other than the final consumer a potentially important microeconomic aspect of gift giving is that gifts may be mismatched with the recipients preferences in the standard microeconomic framework of consumer choice the best a gift giver can do with say 10 is to duplicate the choice that the recipient would have made while it is possible for a giver to choose a gift which the recipient ultimately values above its price for example if the recipient is not perfectly informed it is more likely that the gift will leave the recipient worse off than if she had made her own consumption choice with an equal amount of cash in short gift giving is a potential source of deadweight loss this paper gives estimates of the deadweight loss of holiday gift giving based on surveys given to yale undergraduates i find that holiday gift giving destroys between 10 percent and a third of the value of gifts while these recipients may be unrepresentative of the u s population their gifts are not necessarily unrepresentative holiday expenditures average 40 billion per year implying that a conservative estimate of the deadweight loss of christmas is a tenth as large as estimates of the deadweight loss of income taxation i also explore how deadweight loss and the tendency to give cash gifts vary with the relationship and age difference between giver and recipient i find that gifts from friends and significant others are most efficient while noncash gifts from members of the extended family are least efficient and destroy a third of their value i develop a simple expected utility model to explain the decision to give cash as opposed to in kind gifts the data are consistent with the model cash gifts are most common from the sorts of givers whose noncash gifts have the lowest expected value to recipients given their cost and high variability in recipient valuation

marketing margins market power and price uncertainty this paper provides a conceptual and empirical framework for analyzing marketing margins in a noncompetitive food processing industry facing output price uncertainty the framework allows the decomposition of observed margins into components reflecting the marginal cost of the processing industry oligopoly oligopsony price distortions and an output price risk component the empirical procedure is applied to a time series of spreads between wholesale pork prices and farm prices of market hogs the principal finding is that while farm wholesale margins are more consistent with competitive performance now than they were fifteen years ago the output price risk component persisted throughout the sample period

willingness to pay and compensation demanded experimental evidence of an unexpected disparity in measures of value aside from possible income effects measures of the maximum amounts people will pay to avoid a loss and the minimum compensation necessary for them to accept it are generally assumed to be equivalent unexpectedly wide variations between these sums however have been noted in survey responses to hypothetical options this paper reports the results of a series of experiments that confronted people with actual money payments and cash compensations the results indicate that the compensation measure of value seems to exceed significantly the willingness to pay measure which would appear to call into some question various rules of entitlement damage assessments and interpretations of indifference curves

intrinsic preference for information abstract suppose agents value information not only to make contingent plans but also intrinsically how are such attitudes toward information related to attitudes toward risk we generalize the kreps porteus recursive expected utility model dropping both recursivity and expected utility there is a geometric analogy between risk and information we characterize intrinsic information loving in general by a substitution property analogous to multivariate risk loving and for smooth preferences by the convexity of gateaux derivatives even with recursivity preference for information does not imply expected utility we provide an example we examine connections between information loving and risk aversion for early and late resolving risks journal of economic literatureclassification numbers d80 d81

cost minimizing welfare programs abstract we study opportunities for lowering the cost of welfare programs by exploiting heterogeneity in the unobservable tastes of welfare recipients relying on the inability of cash based programs to achieve self selection we provide circumstances in which it is optimal to provide payments in kind our model differs from other self selection models because we allow the recipients the opportunity to trade the subsequent to the receipt of their welfare packages the presence of unreported cash among the recipient population is considered

crisis era protectionism and the multilateral governance of trade an assessment this paper examines the multilateral governance of trade along with the prospects for its meaningful reform in the light of recent crisis era discrimination against the many types of cross border commerce prior episodes of protectionism provide a useful benchmark the findings are not optimistic the current set of multilateral rules is incomplete has weak incentives for compliance and can be readily circumvented only a far reaching revision of these rules could induce more restraint

market reasoning as moral reasoning why economists should re engage with political philosophy abstract in my book what money can t buy the moral limits of markets 2012 i try to show that market values and market reasoning increasingly reach into spheres of life previously governed by nonmarket norms i argue that this tendency is troubling putting a price on every human activity erodes certain moral and civic goods worth caring about we therefore need a public debate about where markets serve the public good and where they don t belong in this article i would like to develop a related theme when it comes to deciding whether this or that good should be allocated by the market or by nonmarket principles economics is a poor guide deciding which social practices should be governed by market mechanisms requires a form of economic reasoning that is bound up with moral reasoning but mainstream economic thinking currently asserts its independence from the contested terrain of moral and political philosophy if economics is to help us decide where markets serve the public good and where they do

does oligopsony power matter in price support policy design empirical evidence from the thai jasmine rice market in the oligopsony market farmers may receive low prices and policy analysis assuming perfect competition can yield serious bias results in this paper we estimate oligopsony power between processors and farmers and evaluate the welfare impact of the paddy pledging program ppp a generous price support program in the thai jasmine rice market with an imperfect competition model we develop a model that consists of rice supply equation and derived demand equation we then simultaneously estimate these equations using system estimation methods to recover oligopsony power parameters finally we use these parameters to assess the welfare impact of the price support program using annual panel data running from crop marketing year 2001 2002 2015 2016 and exploiting the institutional feature of the ppp we find strong evidence of some oligopsony power a moderate level of oligopsony price distortion and a negative relationship between price support and oligopsony power we also find that the ppp is inefficient but effective in income redistribution moreover the program benefits both farmers and consumers with better policymaking decisions the ppp can be efficient by setting a suitable support price therefore our results show that in the case of the thai jasmine rice market the generally accepted wisdom about agricultural price support policy does not necessarily hold and price support can be designed to improve the efficiency of the market