collaborate or consolidate assessing the competitive effects of production joint ventures we analyze collaborations in which two firms facing external competition reorganize to form an input joint venture as an alternative to horizontal merger under standard regularity conditions the collaboration can lead to higher profits than a horizontal merger though the effect on prices quantities and welfare depends on the form of downstream competition in light of our results regarding profits we provide reasons why firms might still wish to merge imperfect information cost synergies and organizational asymmetries we further consider how our comparisons change with the managerial structure of the joint venture i e by delegation of input pricing jel l13 l23 l42

cross holdings with asymmetric information and technologies abstract we show that a high cost firm may be induced to compete less aggressively when its ownership is increasingly held by a low cost firm with asymmetric information on technologies cross holdings may make it desirable for both the high and low cost firms to reveal private information

using maimonides rule to estimate the effect of class size on scholastic achievement the twelfth century rabbinic scholar maimonides proposed a maximum class size of 40 this same maximum induces a nonlinear and nonmonotonic relationship between grade enrollment and class size in israeli public schools today maimonides rule of 40 is used here to construct instrumental variables estimates of effects of class size on test scores the resulting identiecation strategy can be viewed as an application of donald campbell s regression discontinuity design to the class size question the estimates show that reducing class size induces a signiecant and substantial increase in test scores for fourth and efth graders although not for third graders when asked about their views on class size in surveys parents and teachers generally report that they prefer smaller classes this may be because those involved with teaching believe that smaller classes promote student learning or simply because smaller classes offer a more pleasant environment for the pupils and teachers who are in them mueller chase and walden 1988 social scientists and school administrators also have a longstanding interest in the class size question class size is often thought to be easier to manipulate than other school inputs and it is a variable at the heart of policy debates on school quality and the allocation of school resources in many countries see e g robinson 1990 for the united states ofsted 1995 for the united kingdom and moshel ravid 1995 for israel this broad interest in the consequences of changing class size

the long term costs of job displacement for young adult workers using nlsy data the authors estimate the long term costs of job displacement for young adults earnings and wage losses were large for the first three years following displacement compared to earnings losses found by other studies for more mature workers however earnings losses for these young adults were short lived with differences between observed and expected earnings narrowing considerably five years after job loss at that point the shortfall in annual earnings relative to what would have been expected absent job loss was 9 for men and 12 5 for women and the shortfall in hourly wages was 21 2 for men young workers also apparently differ from more established workers in the composition of total earnings losses for older workers total losses largely represent actual immediate earnings losses whereas for young workers the loss of opportunities for rapid earnings growth is more important

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

does public insurance crowd out private insurance the cost of expanding public sector health programs depends critically on the extent to which public eligibility will cover just the uninsured or will crowd out existing private insurance coverage we estimate the extent of crowd out arising from the expansions of medicaid to pregnant women and children over the 1987 1992 period we estimate that approximately 50 percent of the increase in medicaid coverage was associated with a reduction in private insurance coverage this occurred largely because employees took up employer based insurance less frequently there is also some evidence that employers contributed less for insurance and that workers dropped coverage of dependents

estimating markups and market conduct with multidimensional product attributes we demonstrate how to estimate a model of oligopoly pricing when products are multi dimensionally differentiated we provide an empirical counterpart to recent theoretical work on product differentiation using specifications informed by economic theory we estimate price cost margins for products differentiated in many dimensions

agreements between firms and the technological life cycle model evidence from information technologies abstract contrarily to most previous contributions which have addressed the issue of cooperative agreements essentially in a perspective of comparative statics in this paper a model is proposed that relies on the technological trajectory notion suggested by evolutionary theories and emphasizes the relevance of the technological and market dynamics in explaining why and to what extent firms have recourse to agreements in particular it is claimed that the propensity of firms towards collaborative ventures and the characteristics of the cooperation depend upon the phase of the technological life cycle of the industry branch in which the cooperation takes place based on a cross sectional analysis of 45 industry branches in the information technology industrial system the paper also provides empirical evidence supporting the argument that the propensity towards agreements and the nature of the agreements concluded do change during the technological life cycle to this end it takes advantage of the arpa database developed at the polytechnic of milan and containing detailed information on over 2 000 agreements concluded in the 1980 1986 period all over the world in the semiconductor data processing and telecommunications industries

educational policy and the economics of the family this paper analyzes the implications of alternative ways to model decision making by families for educational policy we show that many of the policy implications associated with credit constraints cannot be distinguished from the implications of models of the family that differ from the conventional barro becker model we then argue that it is the combination of credit constraints and non conventional preferences that provides a robust basis for government intervention to promote educational investment

competitive advantage and collusive optima cost differences may often be important in real oligopolies if side payments are impossible the standard cartel objective total industry profits lacks plausibility when costs differ this essay considers plausible alternatives four different technologies for effecting collusion which are essentially identical when costs are equal define sets of possible profits axiomatic bargaining models are used to select unconstrained optima from among these possibilities simple functional forms are employed low cost firms with large shares in cournot equilibrium may have little to gain from collusion if collusion is effective low cost firms will have relatively low estimated conjectural variations

bertrand competition when firms hold passive ownership stakes in one another abstract we show that the bertrand oligopoly model with cost asymmetries may admit multiple nash equilibria when firms hold passive ownership stakes in each other the equilibrium price may be as high as the monopoly price of the most efficient firm

remedying education evidence from two randomized experiments in india this paper presents the results of a two year randomized evaluation of a large scale remedial education program conducted in mumbai and vadodara india the remedial education program hires young women from the community to teach basic literacy and numeracy skills to children who reach standard three or four without having mastered these competencies the program implemented by a ngo in collaboration with the government is extremely cheap it cost 5 dollars per child per year and is easily replicable it has been implemented in 20 indian cities and reached tens of thousands of children we find the program to be very effective on average it increased learning by 0 15 standard deviations in the first year and 0 25 in the second year the gains are the largest for children at the bottom of the distribution children in the bottom third gain 0 2 standard deviations in the first year and 0 32 in the second year in math they gain 0 51 standard deviation in the second year the results are similar in the two grade levels and in the two cities at the margin extending this program would be up to 12 16 times more cost effective than hiring new teachers authors

are there dynamic gains from a poor area development program poor area development programs in which the government transfers extra resources to unusually poor areas have been widely used to fight poverty there has been some research on such programs but little is known about their impact on household living standards over time the authors address the issue for a sizable poor area development program in rural china china s program had a significant impact on rural living standards in the targeted areas of the sample the consumption growth model suggests that households living in the targeted areas had a higher rate of consumption growth than one would have otherwise expected nonetheless the authors found that while the gains in growth were enough to prevent an absolute decline in average living standards they were not enough to reverse the strong underlying divergent tendencies in the rural economy

students today teachers tomorrow identifying constraints on the provision of education with an estimated 115 million children not attending primary school in the developing world increasing access to education is critical resource constraints limit the effectiveness of demand based subsidies this paper focuses on the importance of a supply side factor the availability of low cost teachers and the resulting ability of the market to offer affordable education the authors first show that private schools are three times more likely to emerge in villages with government girls secondary schools gss identification is obtained by using official school construction guidelines as an instrument for the presence of gss in contrast there is little or no relationship between the presence of a private school and girls primary or boys primary and secondary government schools in support of a supply channel the authors then show that for villages that received a gss there are over twice as many educated women and that private school teachers wages are 27 percent lower in these villages in an environment with poor female education and low mobility gss substantially increase the local supply of skilled women lowering wages locally and allowing the market to offer affordable education these findings highlight the prominent role of women as teachers in facilitating educational access and resonate with similar historical evidence from developed economies the students of today are the teachers of tomorrow

a comparative analysis of intertemporal behavior of profits japan and the united states this paper first asks whether the working of market forces in japanese manufacturing industries is unique to them or similar to u s counterparts it is found that autoregressive profit equations for 376 japanese firms over 1964 82 are on average similar to those for 413 u s firms over 1964 80 the paper next asks whether the interindustry pattern of profit adjustments in japan is related to industry traits in a manner analogous to the united states in this case specific national differences between the two countries in the effects of imports industry growth and capital intensity on the profit adjustment process are found copyright 1989 by blackwell publishing ltd

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

externalities and corporate objectives in a world with diversified shareholder consumers if shareholders own diversified portfolios and if companies impose externalities on one another shareholders do not want value maximization to be corporate policy instead shareholders want companies to maximize portfolio values this occurs when firms internalize between firm externalities any kind of externality pecuniary or nonpecuniary vertical or horizontal suffices what matters is simply that one company s actions affect another s value thus besides the traditional benefit of risk reduction portfolio diversifi cation offers additional benefits to shareholders through helping internalize externalities this paper documents the extent of diversification and cross ownership of stocks among companies where these externalities are likely to be large and provides a capital market test of how merger offers vary with the extent of cross ownership

japan s different trade regime an analysis with particular reference to keiretsu many claim that although formal trade barriers have been removed at the border japanese markets remain unusually closed because of non tariff barriers after describing japan s development strategy and the debate over the sources of japanese growth we consider current trade barriers recent research has made some headway investigating the impact of one of the alleged invisible barriers in particular efforts have been made to test if the behavior of japanese corporate groups known as keiretsu creates a barrier to trade finally we consider whether private sector trade restrictions warrant a public response what if anything should be done about keiretsu

partial ownership arrangements and collusion in the automobile industry this paper develops a conjectural variation model that allows for partial ownership arrangements and foreign trade this model is applied to the japanese and us automobile industries although collusion is found to occur in the japanese automobile industry it is found to be more competitive than the us automobile industry the effect imports have on firms price cost margins in both countries is also found to be different

earnings losses of displaced workers revisited recent literature reviews conclude that job displacement results in sustained earnings losses bruce c fallick 1996 lori g kletzer 1998 and that estimates of the size of those reductions vary with the type of data used in the analysis the industry within which displacement occurs and business cycle conditions the largest estimated losses were obtained using administrative data from pennsylvania during the 1970s and 1980s louis s jacobson robert j lalonde and daniel g sullivan 1993a the data covered a period of high unemployment in a heavily indus trialized state characterized by disproportionate job losses in manufacturing thus the ability to generalize those results to more favorable economic times and states with a greater reliance on service sector employment has been questioned to address these issues administrative data are used to similarly examine the impact of job displacement on earnings losses of workers in connecticut from 1993 to 2004 the work of jacobson lalonde and sullivan jls also provided important methodologi cal advancement by adapting analytical techniques developed for program evaluation james j heckman and v joseph hotz 1989 to the context of job displacement the same techniques fixed effects and time trend estimators as those used in the original jls publication are initially employed here then the methods are extended to include matching estimators developed since their publication both nearest neighbor estimators of average treatment on the treated att and differenced average treatment on the treated datt are adapted to the context of this study heckman hidehiko ichimura and petra todd 1997 heckman et al 1998 and rajeev h dehejia and sadek wahba 1999 2002 the results presented here for connecticut differ in some ways from those found in the work of jls using data from pennsylvania in the period immediately following job loss regardless of the technique employed earnings reductions for workers displaced through mass layoff range from 32 percent to 33 percent jls reported immediate losses of more than 40 percent six years later using the same estimators as jls earnings reductions in connecticut range from 13 percent to 15 percent they report sustained losses in pennsylvania of 25 percent the smaller long term impacts in connecticut demonstrate that under more ordinary economic times esti mated losses from administrative data lie within the range observed using other data sources this finding resolves a long standing conflict among the results of high quality studies that have used differing data sources to study earnings reductions following job loss 1 using two different matching estimators earnings losses six years after mass layoff are 12 percent the matching estimators compare those who experienced mass layoff to compari sons with the same ex ante probability of the event these smaller losses are consistent with the

optimal cartel trigger price strategies abstract a dynamical model of industry equilibrium is described in which a cartel deters deviations from collusive output levels by threatening to produce at cournot quantities for a period of fixed duration whenever the market price falls below some trigger price in this model firms can observe only their own production level and a common market price the market demand curve is assumed to have a stochastic component so that an unexpectedly low price may signal either deviations from collusive output levels or a downward demand shock

job displacement s long run effect on access to employer provided health insurance and other fringe benefits abstract this paper investigates the effect of job displacement on access to employer provided fringe benefits we find that displacement is associated with lost access to all seven employer provided benefits investigated these losses increase the cost of displacement by 10 per year

conditional cash transfers and female schooling the impact of the female school stipend program on public school enrollments in punjab pakistan instead of mean tested conditional cash transfer cct programs some countries have implemented gender targeted ccts to explicitly address intra household disparities in human capital investments this study focuses on addressing the direct impact of a female school stipend program in punjab pakistan did the intervention increase female enrollment in public schools to address this question the authors draw on data from the provincial school censuses of 2003 and 2005 they estimate the net growth in female enrollments in grades 6 8 in stipend eligible schools impact evaluation analysis including difference and difference dd triple differencing ddd and regression discontinuity design rdd indicate a modest but statistically significant impact of the intervention the preferred estimator derived from a combination of ddd and rdd empirical strategies suggests that the average program impact between 2003 and 2005 was an increase of six female students per school in terms of absolute change and an increase of 9 percent in female enrollment in terms of relative change a triangulation effort is also undertaken using two rounds of a nationally representative household survey before and after the intervention even though the surveys are not representative at the subprovincial level the results corroborate evidence of the impact using school census data

dynamic oligopoly with partial cooperation and antitrust threshold correspondance corresponding author tel 39 011 6705753 fax 39 011 6705783 merlone ugo

divesting ownership in a rival we examine the consumer welfare effect of a firm s partial ownership of a competitor and compare the implications of alternative forms of divestiture we identify conditions under which turning voting shares into non voting shares is preferable to selling the shares to the firm s current shareholders an option frequently chosen we also show that selling the voting shares to a large independent shareholder is preferable to selling them to small shareholders we provide additional theoretical results and apply them to the divestiture of portugal telecom s holdings in ptm

vertical cross shareholding theory and experimental evidence abstract this paper analyzes vertical cross shareholding that is the mutual holding of a minority of shares between vertically related firms first we explore the issue in a game theoretic model and show that cross shareholding is sufficient to obtain efficient outcomes we then test the model s predictions in an experiment theory predicts the seller decisions accurately but the buyer decisions only to a small extent buyers are more likely to agree on cross shareholding than sellers in an attempt to avoid the winner s curse cross shareholding occurs more frequently than predicted and it increases the likelihood of trade

horizontal integration in the dutch financial sector in this paper the consequences of cross shareholding in an n firm industry are analyzed our attention focuses on the case where firms have silent interests in each other these interests can be direct or indirect we analyze the effects of cross shareholding on the price cost margins in a cournot and a bertrand setting in all cases competition is reduced due to shareholding interlocks as an empirical example the dutch financial sector is used comparing the case of shareholding with the case of no shareholding the price cost margins are found to be up to 2 higher in a bertrand market and at least 8 higher in a cournot market c 2000 elsevier science b v all rights reserved jel classification g20 l13 l41

effect of partial cross ownership on supply chain performance abstract partial cross ownership pco in a dyad supply chain refers to a situation where each firm holds a portion of its partner s shares we study this topic in push and pull supply chains and prove that neither the supply chain s nor any member s profit changes with the percentage of the leader s shares the follower holds however while the profits of the chain and the leader increase with the percentage of the follower s shares held by the leader the follower s profit does not necessarily increase or decrease as a result both partners can always achieve a win win by setting a proper price for transferring the follower s shares to the leader moreover the equilibrium wholesale price may be greater than the retail price in the push chain but less than the marginal production cost in the pull chain contradicting the usual results found in the literature we also derive a necessary and sufficient condition on the structure of pco allowing a pull chain to perform better than a push one this extends cachon 2004 s result that a pull chain always performs better than a push one without pco finally pco can coordinate a chain if and only if each one holds half of the other s shares

optimal cross holding with externalities and strategic interactions we analyze a two period setting where firms first choose equity positions in each other and second engage in operating activities that cause externalities firms facing positive externalities optimally choose long equity positions to increase their profits firms facing negative externalities encounter a prisoners dilemma where each firm optimally chooses short positions in the first period committing to a more aggressive operating stance that results in lower profits in contrast to the prior literature regulation restricting cross holdings reduces consumer surplus and economic welfare when the number of firms is fixed however such regulation can increase entry improving net welfare

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

the strategic value of partial vertical integration we investigate the strategic incentives for partial vertical integration namely partial ownership agreements between manufacturers and retailers when retailers privately know their costs and engage in price competition with differentiated goods the partial misalignment between the profit objectives within a partially integrated manufacturer retailer hierarchy implies a higher retail price than under full integration this information vertical effect translates into a competition horizontal effect the partially integrated hierarchy s commitment to a higher price induces the competitor to increase its price which strategically relaxes competition our analysis provides implications for vertical merger policy and theoretical support for the recently documented empirical evidence on partial vertical acquisitions

arrival of young talent the send down movement and rural education in china this paper estimates the effects on rural education of the send down movement during the cultural revolution when about 16 million urban youth were mandated to resettle in the countryside using a county level dataset compiled from local gazetteers and population censuses we show that greater exposure to the sent down youths significantly increased rural children s educational achievement this positive effect diminished after the urban youth left the countryside in the late 1970s but never disappeared rural children who interacted with the sent down youths were also more likely to pursue more skilled occupations marry later and have smaller families than those who did not

pulled away or pushed out explaining the decline of teacher aptitude in the united states logic suggests that a teacher s value added is related to her academic aptitude it is therefore troubling that teachers aptitude has declined significantly in the united states since 1960 as demonstrated by sean corcoran et al 2002 combining longitudinal surveys they find a marked fall in teachers propensity to be in the top achievement quartile there are two main hypotheses for the decline in teacher aptitude first greater pay parity with males in nonteaching occupations may have drawn able women out of teaching second unionization may have compressed pay benefits and nonmonetary returns to aptitude in teaching and thereby pushed out high aptitude people in short there is a pull hypothesis pay parity in alternative opportunities and a push hypothesis pay compression in teaching the hypotheses are not mutually exclusive we need not choose between them instead we try to apportion blame to do this we need variation in the timing and size of the pull and push factors fortunately such variation exists among u s states our econometric identification relies on variation in labor markets and unionization laws among states at a point in time and within each state over time

price mark ups market structure and business fluctuation in japanese manufacturing industries howard wach tel and peter adelsheim 1977 and keith cowling 1983 have argued that firms in concentrated industries tend to increase their price mark ups in recession this hypothesis is variously tested for japanese manufacturing industries in 1958 82 most of the results weakly suggest an effect opposite to wachtel and adelsheim and only when industry specific business conditions are taken into account is some albeit weak evidence found in favor of them copyright 1987 by blackwell publishing ltd

in pursuit of monopoly power recent quantitative work in industrial economics this paper reviews empirical work in industrial organization devoted to the question of inferring the existence of monopoly power from data on observed market outcomes like profits and prices the discussion covers inter industry work long conventional in the area newer developments in intra industry analysis and case studies and concludes with some remarks on a small but growing body of work assessing market dynamics the wide range of studies reviewed all generally reveal that market power exists in many industries

incentives work getting teachers to come to school we use a randomized experiment and a structural model to test whether monitoring and financial incentives can reduce teacher absence and increase learning in india in treatment schools teachers attendance was monitored daily using cameras and their salaries were made a nonlinear function of attendance teacher absenteeism in the treatment group fell by 21 percentage points relative to the control group and the children s test scores increased by 0 17 standard deviations we estimate a structural dynamic labor supply model and find that teachers respond strongly to financial incentives our model is used to compute cost minimizing compensation policies jel i21 j31 j45 o15

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

experimental estimates of education production functions this paper analyzes data on 11 600 students and their teachers who were randomly assigned to different size classes from kindergarten through third grade statistical methods are used to adjust for nonrandom attrition and transitions between classes the main conclusions are 1 on average performance on standardized tests increases by four percentile points the first year students attend small classes 2 the test score advantage of students in small classes expands by about one percentile point per year in subsequent years 3 teacher aides and measured teacher characteristics have little effect 4 class size has a larger effect for minority students and those on free lunch 5 hawthorne effects were unlikely

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

school subsidies for the poor evaluating the mexican progresa poverty program abstract this paper evaluates how the progresa program which provides poor mothers in rural mexico with education grants has affected enrollment poor children who reside in communities randomly selected to participate in the initial phase of the progresa are compared to those who reside in other control communities pre program comparisons check the randomized design and double difference estimators of the program s effect on the treated are calculated by grade and sex probit models are also estimated for the probability that a child is enrolled controlling for additional characteristics of the child their parents local schools and community and for sample attrition to evaluate the sensitivity of the program estimates these estimates of program short run effects on enrollment are extrapolated to the lifetime schooling and the earnings of adults to approximate the internal rate of return on the public schooling subsidies as they increase expected private wages

competition and collusion in the american automobile industry the 1955 price war movements in total quantity and in quality adjusted price suggest a supply side shock in the american automobile market in 1955 this paper tests the hypothesis that the shock was a transitory change in industry conduct a price war the key ingredients of the test are alternative equilibrium models of oligopoly under product differentiation in nonnested cox tests of hypotheses a collusive solution is sustained in 1954 and in 1956 while a competitive solution holds in 1955 the result does not appear to be an artifact since it is robust in tests against alternative specifications copyright 1987 by blackwell publishing ltd

the state socialization and private schooling when will governments support alternative producers abstractunderstanding the institutional features that can improve learning outcomes and reduce inequality is a top priority for international and development organisations around the world economists appear to have a good case for support to non governmental alternatives as suppliers of schooling however unlike other policy domains freer international trade or privatisation economists have been remarkably unsuccessful in promoting the adoption of this idea we develop a general positive model of why governments typically produce schooling which introduces the key notion of the lack of verifiability of socialisation and instruction of beliefs which makes third party contracting for socialisation problematic we use the model to explain variations around the world in levels of private schooling we also predict the circumstances in which efforts to promote the different alternatives to government production like charter voucher and scholarship are likely to be successful

school inputs and educational outcomes in south africa we examine the relationship between educational inputs primarily pupilteacher ratios and school outcomes in south africa immediately before the end of apartheid government black households were severely limited in their residential choice under apartheid and attended schools for which funding decisions were made centrally by white controlled entities over which they had no control the allocations resulted in marked disparities in average class sizes controlling for household background variables we find strong and significant effects of pupilteacher ratios on enrollment on educational achievement and on test scores for numeracy

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

measuring unilateral effects in partial horizontal acquisitions recent years have witnessed an increased interest by competition agencies in assessing the competitive effects of partial acquisitions we propose an empirical structural methodology to examine quantitatively the unilateral impact of partial horizontal acquisitions the acquisitions may be direct or indirect and may or may not correspond to control the proposed methodology simulates the effects on prices market shares firm profits and consumer welfare it can deal with differentiated product industries and nest full mergers as a special case we provide an empirical application to several acquisitions in the wet shaving industry

every catholic child in a catholic school historical resistance to state schooling contemporary private competition and student achievement across countries nineteenth century catholic doctrine strongly opposed state schooling we show that countries with larger shares of catholics in 1900 but without a catholic state religion tend to have larger shares of privately operated schools even today we use this historical pattern as a natural experiment to estimate the causal effect of contemporary private competition on student achievement in cross country student level analyses our results show that larger shares of privately operated schools lead to better student achievement in mathematics science and reading and to lower total education spending even after controlling for current catholic shares

report cards the impact of providing school and child test scores on educational markets this paper studies study the impact of providing school and child test scores on subsequent test scores prices and enrollment in markets with multiple public and private providers a randomly selected half of the sample villages markets received report cards this increased test scores by 0 11 standard deviations decreased private school fees by 17 percent and increased primary enrollment by 4 5 percent heterogeneity in the treatment impact by initial school quality is consistent with canonical models of asymmetric information information provision facilitates better comparisons across providers improves market efficiency and raises child welfare through higher test scores higher enrollment and lower fees

collusion or competition interfirm relationships in the chinese auto industry the chinese passenger vehicle industry contains a large number of manufacturers some of them are members of big corporate groups centered around state owned enterprises these corporate relationships may facilitate collusion this paper applies the non nested hypothesis test methodology to data on passenger vehicles to identify whether price collusion exists within corporate groups or across groups our empirical results support the assumption of bertrand nash competition in the chinese passenger vehicle industry we find no evidence for within or cross group price collusion our policy experiments show that indigenous brands will gain market shares and profits if within group companies merge

partial vertical ownership abstract a backward ownership interest held by a downstream firm yields a partial rebate of the upstream margin input demand increases with backward ownership and the upstream firm optimally responds by raising price with symmetric costs every downstream firm s equilibrium input output choice is invariant across a class of ownership profiles including uniform ownership moreover equity trading results in uniform holdings so partial vertical ownership may have no real effects with asymmetric costs ex ante equity trading amplifies the asymmetries and shifts output toward lower cost firms with homogeneous goods this improves producer and total surplus with differentiated goods it may harm consumers

investment credit and child labour it is generally assumed that credit has a positive effect on children s schooling among poor households this article shows that need not be the case when households obtain credit for investment purposes in fact investment loans may not have any effect on the likelihood of schooling for children who work in their family business our estimates confirm that this is the case credit used to finance investments has no effect on the odds of schooling for employed children this may be because investment loans increase children s labour productivity which in turn increases the opportunity cost of schooling the results of this study suggest that improving access to credit may not by itself constitute a solution to the problem of child labour in developing countries

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

countervailing power and consumer prices this paper considers the importance of countervailing power manifested as the effects of increased retail concentration on consumer prices and welfare within a market setting where imperfectly competitive retailers negotiate intermediate prices with a monopoly supplier only when retailer services are regarded as very close substitutes do final prices fall following a reduction in the number of retailers even in these circumstances the social benefits of countervailing power may not be realised as the supplier may seek to protect its profits by using a refusal to supply restraint to engage in exclusive trading

the output and profit effects of horizontal joint ventures the effects of production joint ventures on their parents profits and total industry output are analyzed using a conjectural variations model joint ventures that represent new producing entities are shown to be more likely because the profits of parents in the same industry are more likely to increase under conditions of cooperative as opposed to rivalrous behavior under the same circumstances industry output increases although a modest rise in cooperation among firms suffices to reverse these effects the precise results are shown also to depend upon the degree of coordination of the output decisions of the joint venture and its parents copyright 1992 by blackwell publishing ltd

economic underdevelopment the case of a missing market for human capital abstract this paper demonstrates that the coexistence of developed and underdeveloped countries can be a stationary equilibrium in a world economy with free trade in consumption goods and physical capital an underdeveloped country is characterized by a high ratio of unskilled workers in the labor force a small stock of physical capital a low gross national product a high rate of return on human capital and a corresponding large wage differential between skilled and unskilled workers the critical assumptions are that future labor earnings cannot serve as collateral on a loan and indivisibilities in education

passive cross holding as a strategic entry deterrence this paper builds a duopoly model to study the strategic effects of cross holding on entry deterrence we show that in equilibrium the incumbent optimally chooses strictly positive cross holdings in each other to deter entry for the potential entrant

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

schooling and labor market consequences of school construction in indonesia evidence from an unusual policy experiment between 1973 and 1978 the indonesian government engaged in one of the largest school construction programs on record combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program suggests that each primary school constructed per 1 000 children led to an average increase of 0 12 to 0 19 years of education as well as a 1 5 to 2 7 percent increase in wages this implies estimates of economic returns to education ranging from 6 8 to 10 6 percent

vertical separation and horizontal mergers the author considers a duopoly setting consisting of two manufacturer retailer pairs in which the observable contract between each manufacturer retailer pair specifies a two part tariff without intraband competition the author shows that an upstream merger is anticompetitive under very general demand and cost conditions downstream merger is analyzed using linear demand and constant marginal cost and is shown not to be anticompetitive both with and without intraband competition and for both price and output competition between retailers in the premerger regime copyright 1995 by blackwell publishing ltd

strategic alliances as stackelberg cartels concept and equilibrium alliance structure abstract this paper analyzes incentives of oligopolistic firms to form strategic alliances and the effects of the endogenously derived alliance structure on product market competition a three stage game is considered in the first stage firms decide about forming strategic alliances in the second stage each alliance designs a strategic contract and in the third stage alliance members and outsiders compete in the product market it is shown how contractual terms about transfer prices and profit sharing in a production joint venture for an intermediate product may serve as an appropriate commitment device profits of alliance members and outsiders under different alliance structures are then determined based on this profit structure the alliance formation process is analyzed in a linear cournot oligopoly with at most five firms only one alliance forms and industry output is reduced with more than five firms an alliance structure with at least two alliances results if an equilibrium of the alliance formation game exists and in this case competition is enhanced

technical compatibility and the mode of foreign entry with network externalities we examine the preferences of a foreign firm and a local government over two modes of foreign direct investment de novo entry and acquisition of the domestic incumbent two crucial features of the model are network externalities and partial incompatibility between the domestic and the foreign technology the relative welfare impact of the two entry modes depends on the degree of market competition and the strength of the network externality the clash between the foreign firm s choice and the local government s ranking of the two entry modes can motivate limits on the degree of foreign ownership of the local firm ce texte examine les preferences d une firme etrangere et d un gouvernement du pays hote quant a deux modes d investissement direct de l etranger entree de novo de la firme etrangere versus acquisition d une firme domestique en place deux facteurs pris en compte sont la presence d externalites de reseau et d incompatibilite partielle entre la technologie locale et celle introduite par la firme etrangere l impact relatif des modes d entree sur le mieux etre local depend du degre de concurrence sur le marche et de l importance des externalites de reseau le conflit entre les preferences de l entreprise etrangere et les preferences du gouvernement local peuvent etre a la source de politiques qui limitent le degre de proprieteetrangere permis

are workers permanently scarred by job displacements this paper investigates whether workers suffer lasting scars following job displacements using david t ellwood s 1982 terminology scars represent persistent effects whereas blemishes are transitory adjustments which dissipate over time more precisely dislocated individuals are defined as scarred if they continue to earn less or to be unemployed more than their nondisplaced counterparts even after the conclusion of a several year adjustment period