the economics of a blend mandate for biofuels a biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices depending on relative supply elasticities biofuel tax credits always reduce fuel prices tax credits result in lower fuel prices than under a mandate for the same level of biofuel production if tax credits are implemented alongside mandates then tax credits subsidize fuel consumption instead of biofuels this contradicts energy policy goals by increasing oil dependency co 2 emissions and traffic congestion while providing little benefit to either corn or ethanol producers these social costs will be substantial with tax credits costing taxpayers 28 7 billion annually by 2022 copyright 2008 oxford university press

multiregional oligopoly with capacity constraints we develop a model of cournot competition between capacity constrained firms that sell a single good to multiple regions we provide a novel characterization for the unique equilibrium allocation o

entry costs reduction and competition in the portuguese mobile telephony industry we study the eect of entry on costs and competition in the portuguese mobile telephony industry we construct and estimate a model that includes demand network and cost equations the latter accounts for ine ciency and cost reducing eort we show that failure to account for cost reducing eort leads to biased estimates of competition in the industry we also nd that our estimated price cost margins are similar to hypothetical nash margins if rms are patient and have optimistic beliefs about the industry growth finally our results suggest that the entry of a third operator in 1998 lead to signi cant cost reductions and fostered competition

examining crop price effects on production decision and resource allocation an ex ante approach this article examines the output price effects on the us crop production employing an ex ante approach to the differential systems of input demand and output supply the estimation results of the

an economic rationale for public education the value of commitment abstract this paper offers an explanation for the widespread phenomenon of uniform public schooling which is viewed here as a way for the government to precommit itself to restraints on future income redistribution such precommitment is likely to enhance accumulation of human capital to bolster economic growth and under certain circumstances to constitute a preferred choice for a majority of voters

the competitive effects of partial equity interests and joint ventures abstract antitrust authorities should consider the trade off between enhanced efficiency and reduced competition in cases of partial ownership this paper examines the competitive effects side of that trade off in the context of a modified cournot model we show that in markets where entry is difficult partial ownership arrangements could result in less output and higher prices than otherwise even if the ownership shares are relatively small these effects arise solely because these arrangements link the fortunes of actual or potential competitors producing a positive correlation among their profits in this sense the effects are purely structural they arise not because of increased opportunities for collusion or changes in the concentration of control but because the linking of profits reduces each firm s incentive to compete since these links internalize free rider problems associated with policing collusion and investing in entry deterrence however they could also enhance cartel stability and profitability

the global supply and demand for agricultural land in 2050 a perfect storm in the making the number of people which the world must feed is expected to increase by another 2 billion people by 2050 when coupled with significant nutritional improvements for the 2 1 billion people currently living on less than 2 day this translates into a very substantial rise in the demand for agricultural production most past growth in the demand for food has been met by improvements in productivity but there is evidence of declining growth rates for agricultural yields climate change is likely to have important impacts on productivity through changes in temperature and precipitation land based climate mitigation policies are also projected to lead to increasing pressure on agricultural lands meanwhile supplies of water for irrigation are under pressure urban land use is on the rise and demands for setting aside land for environmental purposes continue to increase clearly an enormous amount of additional research on ways to deal with this potential perfect storm is needed this paper highlights the explores the roles of biophysical and economic uncertainty in these projections of long run land use change using this to suggest a future research agenda

factor mobility and fiscal policy in the eu policy issues and analytical approaches this paper outlines some of the implications of factor market integration for fiscal policy in the countries of the eu and for the eu itself it draws particular attention to the dynamic dimensions of factor market integration and identifies some of the many issues for further research on these topics the past century has seen dramatic growth in the role of the public sector in the countries of western europe both by extensive regulatory as well as fiscal interventions by far the most important reason for the growth of public spending has been the increase in the level of redistributive or social insurance activities of governments these include public pension systems and health care programs as well as a host of other policies tax policies also have the effect of redistributing income among different groups european economic integration including prospective enlargement of the eu contributes to the freer movement of factors of production such as labor and capital both within the eu and between the eu and neighboring regions integration of factor markets affects the distribution of income and factor movements depend on fiscal incentives affecting the benefits and costs of redistributive policies

a study of cartel stability the joint executive committee 1880 1886 this article employs weekly time series data on the joint executive committee railroad cartel from 1880 to 1886 to test empirically the proposition that observed prices reflected switches from collusive to noncooperative behavior an equilibrium model of dynamic oligopoly with asymmetric firms together with explicit functional form assumptions about costs and demand determines the estimating equations and stochastic structure of the econometric model the hypothesis that no switch took place so that price and quantity movements were solely attributable to exogenous shifts in the demand and cost functions is then tested against this alternative and rejected

the estimation of product supply and input demand by the differential approach this paper makes use of the differential approach to the theory of the multiproduct firm in order to empirically analyze input demand and product supply in italian agriculture estimation of the parameters of the model with annual 1961 80 data for a sector model of fourteen products and three factors of production suggests possibilities for farmers to change their output mix in response to changes in the expected prices of products on the input demand side the derived demand functions seem to satisfy the integrability conditions but turn out to be quite inelastic

prices and productivity in agriculture developing countries often tax agriculture heavily a practice that might affect the productivity as well as the quantity of resources allocated to agriculture a variable coefficient cross country agricultural production function is estimated with past price expectations among the determinants of the production coefficients productivity s responsiveness to those expectations implies that had these developing economies eliminated price interventions agricultural productivity would have increased on average by about a fourth copyright 1993 by mit press

privacy and time consistent optimal labor income taxation abstract incomplete information is a commitment device for time consistency problems in the context of time consistent optimal labor income taxation privacy can lead to a pareto superior outcome and increases the effectiveness of public education as a second best policy

the dynamics of multimarket competition in exploration and exploitation activities prior studies of multimarket contact have investigated exploitation rather than exploration activities we contrast effects of multimarket contact on entry and exit dynamics in these two settin

education policies and taxation without commitment we study the implications of limited commitment on education and tax policies set by benevolent governments consistent with real world practices a government can decide to subsidize different levels of education at different rates a lack of commitment however affects the optimal structure of education subsidies the direction of the effect depends on how labor taxes are designed with linear labor tax rates and a transfer for redistribution subsidies become more progressive by contrast if the government is only constrained by informational asymmetries when designing taxes subsidies become more regressive

student and worker mobility under university and government competition we provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments student mobility generates a university competition effect which induces them to overinvest in education whereas worker mobility generates a free rider effect for governments who are not willing to subsidize the education of agents who will work abroad at equilibrium the free rider effect always dominates the competition effect resulting in underinvestment in human capital this inefficiency can be corrected under exogenous university budgets if a transnational transfer for mobile students is implemented with endogenous income taxation under the non cooperative equilibrium between governments the combination of the free rider effect and fiscal competition leads to underinvestment in both teaching and research furthermore the transnational transfer no longer restores efficiency instead it can reinforce fiscal competition and imposes a tradeoff between research and human capital

entry in monopoly market this paper develops new empirical models of market concentration from game theoretic models of entry we construct our models from inequality conditions that describe entrants equilibrium strategies in simultaneous move and sequential move games and use them to study the effects of entry in isolated monopoly markets for new automobiles from estimates of the market size necessary to support one and two dealers we conclude that monopoly dealers do not block the entry of a second dealer we also find that entry does not cause price cost margins to fall by much

efficiency analysis of cournot competition in service industries with congestion we consider cournot competition in the presence of congestion effects our model consists of several service providers with differentiated services each competing for users who are sensitive to both price and congestion we distinguish two types of congestion effects depending on whether spillover costs exist that is where one service provider s congestion cost increases with the other providers output level we quantify the efficiency of an unregulated oligopoly with respect to the optimal social welfare with tight upper and lower bounds we show that when there is no spillover the welfare loss in an unregulated oligopoly is limited to 25 of the social optimum even in the presence of highly convex costs on the other hand when spillover cost is present there does not exist a constant lower bound on the efficiency of an unregulated oligopoly even with affine cost we show that the efficiency depends on the relative magnitude between the marginal spillover cost and the marginal benefit to consumers this paper was accepted by christian terwiesch operations management

cross shareholdings and competition in a rent seeking contest abstract we consider a tullock rent seeking contest with two firms and two investors each investor owns a majority share in one firm and a silent minority cross shareholding in the other firm we measure competition by either firms aggregate efforts or rent dissipation we show that aggregate efforts are smaller in our contest than in the benchmark case without cross shareholdings next we provide the necessary and sufficient conditions such that equilibrium rent dissipation in our contest is larger than in the benchmark case rent dissipation is larger under cross shareholdings if and only if one firm is much more efficient than the other firm and the cross shareholding in the more efficient firm is sufficiently smaller than the cross shareholding in the less efficient firm

time varying competition normative models typically suggest that prices rise in periods of high demand and cost however in many markets prices fall when demand or costs rise this inconsistency occurs because the normative models assume that competitive intensity does not change with demand and cost conditions over time we therefore introduce the notion of time varying competition by suggesting that it is important not only to account for the direct effect of demand and cost on prices e g higher demand means higher prices but also the indirect effect of demand and cost changes on competition e g higher demand could cause more competition and hence lower prices we develop a general unified framework to empirically model the direct and indirect effects of demand and cost shifts on pricing in differentiated product markets our approach allows us to measure the indirect effect of multiple demand and cost drivers on competitive intensity and test predictions from alternative theories of repeated games the empirical application is to the u s photographic film industry where there are two main players kodak and fuji we find that the indirect effects are highly significant and comparable in magnitude to the direct effects competitive intensity is greater in periods of high demand and lower cost and is moderated by whether demand or costs are expected to grow or decline interestingly we find asymmetries in the competitive responses of kodak and fuji while kodak is sensitive to demand factors fuji is sensitive to costs our results suggest that market characteristics such as observability of competitor prices can be an important determinant of how competitive intensity is affected by demand and cost conditions

removing distortions in the u s ethanol market what does it imply for the united states and brazil we analyze the impact of trade liberalization and removal of the federal tax credit in the united states on ethanol markets using a multimarket international ethanol model we find that u s trade barriers have been effective in protecting the ethanol industry under current policy there is separability of the u s ethanol market from world markets with trade liberalization the ethanol market deepens making it less susceptible to price volatility the effect of trade liberalization extends beyond ethanol markets affecting agricultural markets the results show that the impact of removal of the tax credit overrides the impact of the tariff removal copyright 2008 oxford university press

optimum taxation with errors in administration abstract the paper compares the welfare levels which can be achieved by two distinct tax regimes lump sum taxation where one attempts to identify individuals and allocate transfers or subsidies on the basis of characteristics and income taxation where characteristics are not observed but personal incomes are measured and taxed where there are no errors in classifying individuals lump sum taxation is superior but where mistakes are made in the allocation of lump sum grants or subsidies income taxation may be more attractive the level of errors where the regimes are equally desirable in terms of social welfare is computed in simple models following that of feldstein 1973 where there is strong aversion to inequality then income taxation becomes preferable at quite small errors in analysing income taxation it is shown that in the feldstein model with endogenous wages the marginal tax rate in optimum income taxation on the more skilled is negative and that on the less skilled is positive in contrast to the standard results see seade 1977 with exogenous wages

manufacturer retailer channel interactions and implications for channel power an empirical investigation of pricing in a local market the issue of power in the marketing channels for consumer products has received considerable attention in both academic and practitioner journals as well as in the popular press our objective in this paper is to provide an empirical method to measure the power of channel members and to understand the reasons demand factors cost factors nature of channel interactions for this power we confine our analysis to pricing power in channels we use methods from the game theory literature in marketing on channel interactions to obtain the theoretical framework for our empirical model this literature provides us a definition of power one that is based on the proportion or percentage of channel profits that accrue to each of the channel members there can be a variety of possible channel interactions between manufacturers and retailers in channels the theoretical literature has examined some of these games for example choi 1991 examines how channel profits for manufacturers and retailer vary if channel interactions are either vertical nash or if they are stackelberg leaderfollower with either the manufacturer or the retailer being the price leader each of these three channel interaction games has different implications for profits made by manufacturers and retailers and consequently for the relative power of the channel members in contrast to the previous literature that has focused largely on the above three channel interaction games our model extends the game theoretic literature by allowing for a continuum of possible channel interactions between manufacturers and a retailer furthermore for a given product market we empirically estimate from the data where the channel interactions lie in this continuum more critically we obtain measures of how channel profits are divided between manufacturers and the retailer in the product market where a higher share of channel profit is associated with higher channel power we then examine how channel power is related to demand conditions facing various brands and cost parameters of various manufacturers in going from game theory based theoretical models of channel interactions to empirical estimation we use the new empirical industrial organization framework bresnahan 1988 as part of this structural modeling framework we build retail level demand functions for the various brands manufacturer and private label in a given product category given these demand functions we obtain optimal pricing rules for manufacturers and the retailer in determining their optimal prices manufacturers and the retailer account for how all the players in the channel choose their optimal prices that is we account for dependencies in decision making across channel members these dependencies are characterized by a set of conduct parameters which are estimated from market data the conduct parameters enable us to identify the nature of channel interactions between manufacturers and the retailer along the continuum mentioned previously in addition to the demand and conduct parameters manufacturers marginal costs are also estimated in the model these marginal cost estimates along with the manufacturer prices and retail prices available in our dataset enable us to compute the division of channel profits among the channel members hence we are able to obtain insights into who has pricing power in the channel in the empirical application of the model we analyze a local market for two product categories refrigerated juice and tuna in both categories there are three major brands the difference between them is that the private label has an insignificant market share in the tuna category our main empirical results show that the usual games examined in the marketing literature do not hold for the given data we also nd that the retailer s market power is very significant in both these product categories and that the estimated demand and cost parameters are consistent with the estimated pattern of conduct between the manufacturers and the retailer given the evidence from the trade press of intense manufacturer competition in these categories as well as the commodity nature of these products the result of retailer power appears intuitive

investment in education and the time inconsistency of redistributive tax policy time inconsistency of tax policy is shown to arise in a setting where households differ in their ability to accumulate wealth and where the government has redistributional objectives it is assumed that wealth accumulation takes the form of human capital acquired through education the government is precluded from redistributing to a first best optimum by a self selection constraint the second best is shown to be time inconsistent in the time consistent optimum households underinvest in education an argument can be made for public intervention in the provision of education

the new competition for land food energy and climate change abstract the paper addresses the new competition for land arising from growing and changing demand for food when combined with increasing global demand for transport energy under conditions of declining petro chemical resources and the urgent need to reduce greenhouse gas emissions the paper starts from the premise of a food energy and environment trilemma tilman et al 2009 where all demands to expand the area of cultivated land present high risks of increasing the carbon footprint of agriculture having reviewed the main drivers of demand for food and for liquid transport fuels the paper weighs the controversies surrounding biofuels arising from food price spikes the demand for land and consequent direct and indirect land use change it suggests that we need a more complex and geographically differentiated analysis of the interactions between direct and indirect land use change the paper then reviews evidence of land availability and suggests that in addition to technical availability in terms of soil water and climate political social and technological factors have significantly shaped the competition for land in different global regions particularly the three major biofuel producing ones of the usa brazil and europe this point is further developed by reviewing the different innovation pathways for biofuels in these three regions the main conclusion of this review is firstly that any analysis requires an integrated approach to the food energy environment trilemma and secondly that strategic political direction of innovation and sustainability regulation are required to bring about major shifts in agriculture leading to sustainable intensification of cultivation royal society 2009 rather than the continued expansion of cultivated area the consequent perspective is one of considerable global variety in technologies agricultural productive systems and use of natural resources this contrasts sharply with the world of a dominant global and integrated technology platform based on petro chemicals to which we have become accustomed

demand pricing and regulation evidence from the cable tv industry subsequent to the nationwide deregulation of the cable tv industry a number of questions have been raised concerning the conduct of cable firms answers to these questions turn upon a fundamental set of issues regarding the economic relationships of demand pricing and regulation in this article we empirically examine these relationships for the period prior to deregulation a number of basic findings emerge among these we find that the demand for basic cable service ranges from being generally inelastic in rural areas to elastic in large urban markets the elasticity of demand for pay cable services is typically well in excess of unity also while regulation did not lead to economically efficient marginal cost prices for basic cable service it did act to keep prices below monopoly levels moreover our examination reveals some significant differences in the effectiveness of the various types of regulation practiced in the pre deregulation period

nitrogen land substitution in corn production a reconciliation of aggregate and firm level evidence in this paper we seek to reconcile low farm level substitution elasticity between nitrogen fertilizer and land with larger industry level values for the corn sector this is accomplished with a micro simulation model which identifies twenty three heterogeneous groups of corn farmers based on survey data for indiana after controlling for soil quality slope crop rotation and natural nitrogen sources considerable variation in fertilizer application rates remains model simulations indicate that the estimated substitution elasticity at the state level 1 15 is consistent with very low farm level substitutability the difference is attributable to compositional changes in the wake of relative price shocks these compositional effects are potentially very important but they are ignored in most policy analyses

investment under uncertainty and dynamic adjustment in the finnish pork industry bykyosti s pietola and robert j myersmay 1998paper prepared for a selected paper session at the annual meeting of the american agriculturaleconomics association salt lake city utah august 1998 this research was financed jointly byagricultural economics research institute in finland the academy of finland and the finnishcultural foundation we also knowledge the michigan agricultural experiment station for itssupport of this research authors are agricultural economist agricultural economics research institute helsinki finland and associate professor department of agricultural economics michigan state university eastlansing copyright 1998 by kyosti s pietola and robert j myers all rights reserved readers may makeverbatim copies of this document for non commercial purposes by any means provided that thiscopyright notice appears on all such copies

biofuels and the poor global impact pathways of biofuels on agricultural markets this study seeks to assess the future impacts of biofuel production on regional agricultural and related sectors over the next decade with a specific focus on the vulnerable regions of developing nations using a modification of the gtap modeling platform to account for the global interactions of regional biofuel and food markets the analysis shows that biofuel production levels depend on the assumption about the future price of energy and the nature of the substitutability between biofuels and petroleum based transport fuels low energy prices reduce the demand for biofuels and thus require greater government support to meet the desired production targets at the other extreme when prices are high and there is scope for substituting biofuels for petroleum based fuels the volume of biofuels produced will exceed the mandates even when biofuels are being mainly produced in developed countries our results indicate that there are impact pathways that extend far beyond the borders of the us brazil and the eu prices of feedstock and non feedstock commodities rise in developing countries there is also a rise in value added from the agricultural sector a gain that is enjoyed by the owners of land and labor including unskilled hence to the extent that agriculture is a key sector in getting growth started and addressing poverty needs the emergence of biofuels can in this way at least be a positive force

policy cooperation among benevolent governments may be undesirable this paper presents a simple counterexample to the belief that policy cooperation among benevolent governments is desirable it also explains circumstances under which such counterexamples are possible and relates them to the literature on time inconsistency since the work of hamada 1976 investigating the effects of increasing policy cooperation among countries has been a major topic in international economics a standard conclusion of this work is that increasing policy cooperation among countries is desirable in a seminal paper rogoff 1985 has challenged this view using a simple monetary model rogoff shows that cooperation among policy makers can lead to a lower level of welfare than noncooperation does rogoff s result has caused much consternation among those who advocate policy cooperation and his work has been criticized along several dimensions for example some authors including canzoneri and henderson 1988 have noted that a key assumption in rogoff s model is that the objective function of each country s policy maker does not coincide with the objective function of its residents indeed if in his model policy makers maximize the welfare of their country s residents the counterexample is overturned and cooperation strictly dominates noncooperation this feature leads some to interpret rogoff s result as simply saying that if policy makers form a coalition against the private sector they may be worse off than if they do not others such as neck and dockner 1988 have claimed that rogoff s result depends on private agents acting strategically under this interpretation rogoff s result is relevant to say economies with a large trade union but not to economies with a large number of competitive private agents in a somewhat different vein persson 1988 and especially devereux 1986a b have questioned the significance of welfare comparisons across different institutional regimes in a model without a solid foundation for the behavioural relationships this paper presents a simple model in which governments are benevolent but cooperation is still undesirable the model is a two country version of fischer s 1980 optimal tax model in it private agents are competitive in that each agent takes both prices and government policies as uninfluenced by his actions and each government maximizes the welfare of its country s residents in the paper the two different regimes cooperative and noncooperative

the diffusion of mobile telecommunications services in the european union we study the technological and regulatory determinants of the diffusion of mobile telecommunications services in the european union using a logistic model of diffusion we find that the transition from the analogue to the digital technology during the early 1990s and the corresponding increase in spectrum capacity had a major impact on the diffusion of mobile telecommunications countries which granted first licenses at later points in time show a significant but slow catching up effect implying international convergence only by around 2006 the impact of introducing competition has also been significant during both the analogue and the digital period though the effect was smaller than the technology effect

tax competition and leviathan abstract attitudes towards downward pressure on tax rates from international tax competition depend on attitudes towards government this paper synthesises the two extremes which as in other areas of public finance have dominated the debate typically being presented as stark alternatives the view of government as a leviathan from which tax competition emerges as a useful constraint on policy makers and the view of government as a benevolent maximiser of their citizens welfare from which it emerges as a source of inefficiency conditions are derived under which when policy makers are neither entirely benevolent nor wholly self serving tax coordination benefits the representative citizen

common ownership market power and innovation abstract i examine the effects of overlapping ownership on market power when there are external effects across firms this is done in an oligopoly model with cost reducing innovation with technological spillovers where firms have an overlapping ownership structure based largely on lopez and vives 2019 the model allows for cournot competition with homogeneous product and for bertrand with differentiated products as well as for strategic effects of r d investment it derives positive testable implications and normative results to inform policy

impact of increasing liquid biofuel usage on eu and uk agriculture the biofuels industry in both the uk and the eu as a whole has expanded significantly in recent years in response to various eu biofuel policy initiatives further expansion of biofuel demand will increase the impact of the biofuels sector on agricultural markets this paper examines the impact that increasing levels of first generation biofuel demand to 10 of total transport fuel use in the uk and other eu member states would have on agricultural markets within the eu and specifically the uk using a partial equilibrium modelling system increasing overall biodiesel demand raises demand for vegetable oil and oilseed and in turn their prices the increased grain demand in response to the increased bioethanol demand is mostly sourced from changes in eu net trade

taxing education in ramsey s tradition abstract assuming a two period model with endogenous choices of labour education and saving it is shown to be second best efficient to deviate from ramsey s rule and to distort qualified labour less than nonqualified labour furthermore if the earnings function displays constant elasticity the choice of education should not be distorted with the necessary qualifications the results extend to the case when taxpayers are heterogeneous and when the planner trades off efficiency against equity

the indirect land use impacts of united states biofuel policies the importance of acreage yield and bilateral trade responses recent work has highlighted agricultural land conversion as a significant debit in the greenhouse gas accounting of ethanol as an alternative fuel this work has at the same time sparked considerable debate on the role of crop yield growth as a means of avoiding rapid land conversion we examine the agricultural land use impacts of mandate driven ethanol demand increases in the united states in a formal economic equilibrium framework which allows us to examine the importance of yield price relationships we find that the standard assumption of trend yield growth is likely restrictive for analysis of equilibrium response to significant demand increases for fuel feedstocks furthermore we identify both the acreage response and bilateral trade specification of a multi country model as important sources of variability in terms of parametric uncertainty in predicting global land use change from the biofuels boom

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

the evolution of markets under entry and standards regulation the case of global mobile telecommunications abstract we analyze the effects of government policies on the evolution of an industry the global mobile telecommunications market i we find a relatively slow diffusion convergence between countries this follows partly from regulatory delay in issuing first licenses yet persisting initial cross country differences also contribute to a lack of convergence ii introducing competition has a strong immediate impact on diffusion but a weak impact afterwards sequential entry is preceded by pre emptive behavior by incumbents this is consistent with the presence of consumer switching costs iii setting a single technological standard accelerates the diffusion of analogue technologies considerably for digital technologies it is too early to draw reliable conclusions yet the available evidence suggests that setting single standards has similar beneficial effects

competing with menus of tariff options the nature of numerous strategies of firms is often discrete or countable this adds difficulty to measuring and testing for the existence of complementarities among several strategies this paper introduces a generalized multivariate count data model that allows estimating correlations of any sign among the pricing decisions of competing firms in a manner that is robust to the existence of unobserved heterogeneity leading to either over and underdispersion of the distribution of counts thus it is possible to overcome a major challenge in testing whether two decisions are strategic complements or substitutes namely dealing with the effect of unobserved heterogeneity i study how firms actually compete in nonlinear tariffs by analyzing the interrelation between the incumbent and entrant s decisions to offer a given number of tariff options results document the existence of complementarity among tariff options regardless of whether they are dominated or not this result supports the view that the implementation of nonlinear tariffs by means of a menu of self selecting two part tariffs has some strategic competitive value jel c35 d43 m21

collusive conduct in duopolies multimarket contact and cross ownership in the mobile telephone industry the deregulation of the telecommunications industry has resulted in a variety of industry structures which have been created in hopes of increasing competition one example is the licensing of cellular telephone services in the united states where the fcc created duopolies in which two firms were granted licenses to compete in strictly defined product and geographic markets taking advantage of the unique regulatory environment we test to what degree duopolistic competition leads to competitive market outcomes we find that cross ownership and multimarket contact are important factors in explaining non competitive prices

productivity growth in world agriculture sources and constraints during the last half century advances in crop production came from expansion in areas irrigated from more intensive application of fertilizers and crop protection chemicals and from crop varieties that were more responsive to technical inputs and management advances in animal production came from genetic improvements and advances in animal nutrition differences among developed and developing countries in output per hectare and per worker have widened if these gaps are to be narrowed agricultural research capacity in developing countries will have to be substantially strengthened

land use change impacts of biofuels near var evidence from the us abstract the present paper studies the land use change impacts of fuels and biofuels we test the theoretical hypothesis which says that changes in fuel prices cause changes in land use both directly and indirectly and that because of price inter dependencies biofuels reinforce the land use change impacts we apply time series analytical mechanisms to five major traded agricultural commodities the cultivated area of agricultural land and crude oil price our data consists of yearly observations extending from 1950 to 2007 for the us the empirical findings confirm that markets for crude oil and cultivated agricultural land are interdependent an increase in oil price by 1 dollar barrel increases land use between 54 000 and 68 000 ha we also find that the increase of bioenergy sector accelerates land use change in the us i e food commodities are being substituted for bioenergy crops

product innovation transfer under passive partial ownership holdings abstract we investigate the incentives of a high quality firm to transfer for free its proprietary product innovation technology to its standard quality rival on which it has passive partial ownership holdings ppos we identify the conditions under which there exists an ownership threshold to make such a free transfer profitable for the high quality firm and show that these conditions are more stringent under bertrand than under cournot competition finally we show that technology transfer increases aggregate output industry wide profits consumers surplus and social welfare

market power and price increases for basic cable service since deregulation since the deregulation of rates for basic cable television service increases in price have outpaced the rate of inflation this article examines whether or not cable systems increased market power or their increased exercise of market power explains these price increases an estimated quasi supply function for cable systems before and after deregulation implies that real basic cable prices increased 18 since deregulation holding quality and other costs constant accounting for 43 of the total real price increase a demand equation is also estimated and the estimated demand elasticity of basic cable does not change after deregulation implying that this 18 real price increase is due to greater exercise of existing market power made possible by the elimination ofprice regulation rather than to an increase in market power caused by a change in the demand elasticity for cable

conjectures firm characteristics and market structure abstract this paper makes use of a unique data set to investigate how firms in the vancouver british columbia retail gasoline market view their rivals and how consumers in turn view these firms own and rival price elasticities of demand conjectural variations and lerner indices are estimated for thirteen service stations in a submarket of vancouver these variables are then related to firm characteristics such as type of ownership degree of horizontal and vertical integration and type of service in this way systematic patterns in seller behavior and in buyer attitudes are revealed

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

strategic pricing and detailing behavior in international markets we study three determinants of the levels of price and detailing effort across geographic markets the within market response to each variable the nature of interfirm strategic interactions both within that market and across markets we empirically examine the interactions of prozac zoloft and paxil across the united states the united kingdom germany france and italy our results indicate that all three factors driving marketing mix interactions are at play in this product category the u s market is less price sensitive than the european markets detailing elasticities are comparable across the united states germany and italy while the united kingdom and france show greater elasticity for the u s market we find that almost all deviations from nash pricing and detailing levels are due to within market interactions in the u k market deviations from nash prices come about due mostly to across market interactions both with the united states as well as the rest of europe whereas deviations from nash detailing levels are mainly due to across market interactions with the united states for italy we observe that both within and across market interactions affect price and detailing levels overall the pattern of interactions makes observed prices more similar across countries than prices implied by the estimated elasticities this underscores the importance of considering within and across market interactions in developing multimarket strategy

land allocation effects of the global ethanol surge predictions from the international fapri model we quantify the emergence of biofuel markets and its impact on world agriculture using the multimarket multicommodity international fapri model the model incorporates trade offs between biofuel feed and food production and consumption and international feedback effects of the emergence through world prices and trade we shock the model with exogenous changes in ethanol demand first in the united states then in brazil and other countries and compute shock multipliers for land allocation decisions for important crops and countries the brazilian ethanol expansion using sugarcane has fewer consequences on existing arable land allocation than the u s ethanol expansion does using corn feedstock

the welfare economics of a biofuel tax credit and the interaction effects with price contingent farm subsidies a framework is developed to analyze the effects of a biofuel consumer tax exemption and the interaction effects with a price contingent farm subsidy ethanol prices rise above the gasoline price by the amount of the tax credit corn farmers gain directly while gasoline consumers only gain from any reduction in world oil prices due to the extra ethanol production domestic oil producers lose historically the intercept of the ethanol supply curve is above the gasoline price hence part of the tax credit is redundant and represents rectangular deadweight costs that dwarf triangular deadweight cost measures of traditional farm subsidies copyright 2007 oxford university press

social background education and inequality the role parents education plays for the educational achievements of children is a source of unequal opportunities through this channel the number of educated affects the options of future cohorts creating a social multiplier effect making improvements in education self reinforcing policies to compensate for inequalities of opportunities public education or transfers have very different implications transfers not only reduce inequality on impact but also reduce social mobility while public education even if a perfect substitute to private education works in the opposite direction social impediments to education are similar to a market imperfection and publicly provided education may lead to a pareto improvement jel d3 i2 h2 h4

multimarket contact economies of scope and firm performance we integrate the efficiency and competitive effects of product market scope choice into a comprehensive model of economic performance and empirically test the model in the context of the u s airli

human capital investment and globalization in extortionary states abstract this paper considers education investment and public education policy in closed and open economies with an extortionary government the extortionary government in a closed economy chooses an education policy in order to overcome a hold up problem of time consistent taxation similar to benevolent governments the two types of government differ in their education policies if highly productive labor is mobile extortionary governments incentives for a policy that stimulates higher private education efforts vanish instead they have incentives to prevent individuals from mobility increasing education investment tax competition therefore reduces hold up problems of time consistent extortionary taxation but introduces other distortions that reduce workers utility

silent financial interests and product innovation abstract we study quality enhancing r d price competition and welfare in markets with asymmetric passive partial ownership ppo holdings the asymmetries in ppos generate a positive re allocation effect which in some cases can increase consumer and total surplus in markets with no spillovers

redistribution and education subsidies are siamese twins abstract we develop models of optimal linear and non linear income taxation with endogenous human capital formation to explore optimal education subsidies optimal subsidies on education ensure efficiency in human capital accumulation and thus play an important role in alleviating the tax distortions on learning induced by redistributive policies if the government cannot verify all investments in human capital education policy offsets some but not all tax induced distortions on learning non pecuniary educational costs benefits may increase decrease subsidies on education especially if they are complementary to work effort

multimarket contact competition and pricing in banking abstract in this paper we assess the impact of multimarket contact of banks on their market power by means of a simultaneous equation model in which the divergence of price from marginal cost is a function of multimarket linkages the model is estimated using aggregate data from the italian regions for the years 1997 2009 our results show that multimarket contact is positively and significantly correlated to the market power index and is also connected to both home and non home market concentration the evidence is robust to changes in model specification and multimarket contact measures and supports the idea that firms which have a greater amount of contact are more likely to collude

demand and innovation in services the case of mobile communications abstract this paper aims to analyse the pricing strategies of mobile communications operators and examine the role of demand characteristics in the development of new tariff plans in so doing we depart from a traditional industrial organization approach to price discrimination and interpret new tariff plans as innovations in the spirit of schumpeter we look at competition in this sector as depending upon this form of innovation and we argue that given the specific features of the industry the development of new tariff plans is strongly related to the users characteristics and behaviour our main point is that in a context of uncertainty demand affects firms innovative strategies in two ways first by providing information on user behaviour and by increasing the capability of market segmentation and second by providing the incentives to innovate this argument is supported by an empirical analysis carried out on the basis of an original dataset which includes all the tariff plans on offer in the history of the italian market between 1992 and 2005 we find that both a firm s installed customer base and the level of market saturation play a role in shaping firms innovative pricing strategies in terms of the number and characteristics of the new tariff plans

regional finance and competition policy the canary islands petrol market market competition levels affect all agents of an economy businesses consumers and the state traditional analysis has evaluated the state s effects on the other agents but no analysis has been conducted regarding the inverse relationship thus the aim of this study is to estimate the tributary income losses that low levels of competition in the retail petrol market could cause in it using the data from canary islands autonomous community first we will use parker and roller s methodology 1997 to measure the level of competition and confirm a deficiency then using estimated rates we will determine the differences that would appear in tributary income if the market were to behave as a cournot s model our results show that the lack of competition causes a substantial loss of tributary income for this region somewhere between 5and 10 of the real income from the tax on unleaded petrol for the year 2004

living by the golden rule multimarket contact in the u s airline industry this paper examines empirically the effects of multimarket contact on pricing in the u s airline industry the analysis of the time series and cross sectional variability of airline fares in the 1000 largest domestic city pair routes reveals the presence of statistically significant and quantitatively important multimarket effects fares are higher in city pair markets served by carriers with extensive interroute contacts these findings are consistent with the claims of industry experts that airlines live by the golden rule i e that they refrain from initiating aggressive pricing actions in a given route for fear of what their competitors might do in other jointly contested routes during his testimony mr steven b elkins senior director of marketing systems development for northwest airlines cited an example in which northwest lowered fares on night flights that were flying with empty seats in a number of routes from minneapolis and upper midwest cities to various west coast cities he said that continental airlines swiftly responded by cutting prices in important northwest markets mr elkins s memo advises northwest pricing analysts we will live by the golden rule in his testimony he explained that the golden rule in that context was that i did not want my pricing analyst initiating actions in another carrier s market like chicago for fear of what that other carrier might do to retaliate wall street journal october 9 1990 p b1

pricing patterns of cellular phones and phonecalls a segment level analysis one expectation of the u s federal communications commission fcc in the early stages of the cellular communications industry was that the presence of two licensees in each market would ensure competition and thereby result in declining prices over time for both cellular phones handsets and phonecalls however industry observers have noted recently that although the price of handsets has declined over time the price of the phonecalls has not we investigate this interesting pricing issue by modeling the market interaction between the providers of cellular services and also their interaction with customers using a game theoretic framework a critical assumption in the development of our model is that there exist segments of customers with different valuations usage levels and price sensitivities for cellular service empirically we provide support for the existence of two customer segments viz business professional and personal from both secondary data on industry usage and revenue and primary data collected from a conjoint analysis study of cellular service customers from the latter source we also establish that the business professional customers are more sensitive to prices of phonecalls than the personal segment from our analytical model we characterize the conditions under which penetration and skimming pricing strategies for the handsets are profit maximizing from the sellers standpoint and derive the corresponding price of phonecalls one of our main analytical results is that a competitive structure can result in lower prices over time for the handset but higher prices for the phonecalls depending on production costs of the handset we are thus able to provide a theoretical explanation for the observed price patterns for the handset and phonecalls

food vs fuel the effect of biofuel policies the rise in food commodity prices since 2004 which reached record highs in 2008 has coincided with the tripling of corn ethanol production from 15 billion liters bl to 50 bl over the 2004 2010 period this has spurred the food vs fuel debate and raised questions about the extent to which biofuels have contributed to the increase in food crop prices estimates of the impact of observed levels of biofuel production differ widely across studies and lie between 20 and 60 hochman et al 2011 biofuel production in the united states us has surged as a result of government policies like the renewable fuel standard rfs volumetric ethanol excise tax credit veetc for blenders of ethanol and tariffs that restrict the imports of sugarcane ethanol the rfs authorized by the energy independence and security act eisa of 2007 has set ambitious targets of increasing biofuel production sixfold to 136 bl by 2022 with over 60 of it to be met by advanced biofuels produced using non corn starch based feedstocks a 0 12 liter veetc is provided to blenders of ethanol to reduce their costs of meeting the rfs while a tariff of 0 14 liter and an ad valorem tariff of 2 5 were enacted to prevent transfer of the tax credit to ethanol producers in brazil the current veetc and import tariff expired in 2011 with increasing federal debt and concerns about the impact of these policies on food and feed prices political support for the

overlapping ownership r d spillovers and antitrust policy this paper considers cost reducing r d investment with spillovers in a cournot oligopoly with overlapping ownership we show that overlapping ownership leads to internalization of rivals profits b

market concentration and competition in oecd mobile telecommunications markets this study analyses the progress of market concentration in oecd member states mobile telecommunications markets and evaluates the relationship between market concentration and performance using annual panel data from 24 oecd member states for the 1998 2011 period the study estimates regression equations for market concentration mobile prices and profits the empirical results indicate that the more concentrated the mobile market the higher the prices and profits providing support for the market power hypothesis if this hypothesis holds then market concentration can be a useful indicator of market performance on the other hand the applicability of the hypothesis is unclear for the second half of the sample period the results provide evidence that regulatory policies influence the structure and performance of mobile markets

self selection and pareto efficient taxation abstract this paper analyses the set of pareto efficient tax structures the formulation of the problem as one of self selection not only shows more clearly the similarity between this problem and a number of other problems such as the optimal pricing of a monopolist which have recently been the subject of extensive research but also allows the derivation of a number of new results we establish i under fairly weak conditions randomization of tax structures is desirable ii if different individuals are not perfect substitutes for one another in production then the general equilibrium effects until now largely ignored in the literature of changes in the tax structure may be dominant in determining the optimal tax structure in particular if the relative wage of high ability and low ability individuals depends on the relative supplies of labor the optimal tax structure entails a negative marginal tax rate on the high ability individuals and a positive marginal tax rate on the low ability individuals the marnitude of which depends on the elasticity of substitution iii if individuals differ in their preferences pareto efficient taxation may entail negative marginal tax rates for high incomes while iv if wage income is stochastic the marginal tax rate at the upper end may be 100 our analysis thus makes clear that the main qualitative properties of the optimal tax structure to which earlier studies called attention are not robust to these attempts to make the theory more realistic