male female urban income distributions in canada the service sector in a dependency model international trends of increasing income inequality have not occurred equally for male and female income distributions in canadian cities urban male income inequality declined from 1970 to 1980 it increased in the next decade but only to its 1990 level female income inequality has declined consistently these urban income distributions can be well explained using a dependency model in which the female income distribution is influenced by the male income distribution and the income gap between males and females this dependence effect is modified by urban characteristics male and female income distributions are more alike in larger cities and in cities with relatively higher female median incomes beginning in 1990 service sector employment contributes significantly to income inequality for both gender groups with a slightly greater effect for females

structural transformation the mismeasurement of productivity growth and the cost disease of services if workers self select into industries based upon their relative productivity in different tasks and comparative advantage is aligned with absolute advantage then the average efficacy of a sector s workforce will be negatively correlated with its employment share this might explain the difference in the reported productivity growth of contracting goods and expanding services instrumenting with defense expenditures i find the elasticity of worker efficacy with respect to employment shares is substantially negative albeit estimated imprecisely the estimates suggest that the view that goods and services have similar productivity growth rates is a plausible alternative characterization of growth in developed economies jel e23 e24 h56 j24 o41 o47 one of the strongest and seemingly most accurate characterizations of the process and problems of growth in advanced economies is william baumol s cost disease of services baumol s argument begun in papers as early as 1965 and continuing to this very day e g baumol and bowen 1965 baumol 1967 baumol blackman and wolff 1985 and baumol 2012 starts from the premise that productivity growth is inherently more difficult to achieve in the production of services than in the pro

all pay auctions an experimental study this paper reports the results of a repeated all pay auction game the auction form used is the simplest possible complete information perfect recall and common value our main findings are that in such an auction over bidding is quite drastic and the seller s revenue depends strongly on the number of bidders in early stages however after a few rounds of play this dependence completely disappears and the seller s revenue becomes independent of the number of participants the results are confronted with two solution concepts of economic theory the nash equilibrium and the symmetric logit equilibrium 2005 published by elsevier b v

sources of aggregate labour productivity growth in canada and the united states abstract in this paper we propose a decomposition technique to examine the sources of industrial contribution to aggregate labour productivity growth we show that in terms of pure labour productivity growth the manufacturing and service sectors contributed equally to the aggregate canada u s labour productivity growth gap during the 1987 98 period but in terms of total industrial contributions which also take into account the contributions from a change in relative size the service sector was the largest contributor we also find that high labour productivity growth industries did not attract resources from stagnant industries a phenomenon consistent with baumol s cost disease of stagnant industries jel classification o47 c43

the drivers of structural change the main goal of this paper is to provide an integrated survey of the literature devoted to identifying the drivers of structural change broadly defined as the process of reallocation of economic activity across the three broad sectors agriculture manufacturing and services using the ggdc 10 sector database this paper first presents the empirical facts associated with structural change in different regions of the world that is europe and the usa asia latin america and africa then reviews four determinants of structural change i changes in income ii changes in relative sectoral prices iii changes in input output linkages and iv changes in comparative advantage s via globalization and trade

industrial structure change and the widening canada us labor productivity gap in the post 2000 period canada s deterioration in labor productivity performance in the post 2000 period especially relative to the united states has been a major concern for policy makers from an industrial structure perspective this article shows that the faster loss of the manufacturing base in canada than in the united states and the deterioration in the productivity performance of canadian large manufacturing firms relative to their us counterparts were the main factors associated with the widening canada us labor productivity gap in the post 2000 period

a growing trend toward knowledge work in canada abstract this paper answers three questions related to the growing trend toward knowledge occupations in canada i what was the magnitude of the trend between 1971 and 1996 ii was the trend a widespread phenomenon or was it restricted to specific industries iii what are the proximate causes of the trends using five censuses 1971 1981 1986 1991 1996 and the input output i o data the paper provides evidence that the canadian economy is becoming increasingly knowledge based although the upgrading trends differ across knowledge occupations moreover we find that this phenomenon is spread across all industrial sectors finally using a decomposition analysis borrowed from wolff and baumol three factors the substitution effect the productivity lag effect and the demand effect have been examined in order to shed some light on these trends we find that these effects vary according to the nature of the knowledge involved in these different groups of occupations thus reflecting not only the importance of the technological change skill bias but also the increasing complexity of controlling and managing the new economic activities

looking for loss aversion in scanner panel data the confounding effect of price response heterogeneity recent work in marketing has drawn on behavioral decision theory to advance the notion that consumers evaluate attributes and therefore choice alternatives not only in absolute terms but asdeviations from a reference point the theory has important substantive and practical implications for the timing and execution of price promotions and other marketing activities choice modelers using scanner panel data have tested for the presence of these reference effects in consumer response to an attribute such as price in applications of the theory of reference dependent choice tversky and kahneman 1991 some modelers report empirical evidence of loss aversion when a consumer encounters a price above his or her established reference point a loss the response is greater than for a price below the reference point a gain researchers have gone so far as to suggest that evidence for the so called reference effect make it an empirical generalization in marketing e g kalyanaram and winer 1995 meyer and johnson 1995 it is our contention that the measurement of loss aversion in empirical applications of the reference dependent choice model is confounded by the presence of unaccounted for heterogeneity in consumer price responsiveness our reasoning is that the kinked price response curve implied by loss aversion is confounded with the slopes of the response curves across segments that are differentially responsive to price a more price responsive consumer with a steeper response function tends to have a lower price level as a reference point this consumer faces a larger proportion of prices above his reference point thus the response curve is steeperin the domain of losses similarly the less price responsive consumer sees a greater proportion of prices below his reference point so the response curve is less steep within the domain of gains as a result any cross sectional estimate of loss aversion that does not take this into account will be biased upward researchers who do not control for heterogeneity in price responsiveness may arrive at incorrect substantive conclusions about the phenomenon it is interesting to note that in this instance failure to control for heterogeneity induces a bias infavor of finding an effect rather than the more typical case of attenuation of the effect toward zero we first test our assertion regarding the referencedependent model using scanner panel data on refrigerated orange juice and subsequently extend this analysis to 11 additional product categories in all cases we find as predicted that accounting for price response heterogeneity leads to lower and frequently nonsignificant estimates of loss aversion we do however find some categories in which the effect does not disappear altogether we also estimate loss aversion using a sticker shock model of brand choice in which the reference prices arebrand specific in line with the results of the majority of prior literature we find smaller and insignificant estimates of loss aversion in this model we show that this is because in the sticker shock model there is no apparent correlation between the price responsiveness of the consumer and the representation of reference effects as losses or gains our findings strongly suggest that loss aversion may not in fact be a universal phenomenon at least in the context of frequently purchased grocery products

the role of manufacturing in regional growth harris r i d 1987 the role of manufacturing in regional growth reg studies 21 301 312 since a shift in regional policy away from manufacturing to aiding services is being advocated this paper re examines the role of manufacturing in regional growth from both an empirical and theoretical viewpoint first of all it discusses the importance of manufacturing s share of output concluding that in output terms and prior to 1979 manufacturing has not been displaced by services in shares of total output secondly the paper focuses on the theoretical importance of manufacturing to the growth of regional output showing that for most theories demand side growth pole cumulative causation manufacturing is the natural base for growth potential harris r i d 1987 le role des industries de fabrication dans la croissance regionale reg studies 21 301 312 vu que l on propose une reorientation de la politique regionale au depens des industries de fabrication et en faveur du tertiaire cet article

are small or large producers driving the canada u s labour productivity gap recent evidence from manufacturing this paper shows that the higher small plant employment share in canada compared with the united states mattered for the canada u s manufacturing labour productivity gap but it did not contribute to the widening of the gap between 2002 and 2007 in addition it shows that while the weaker productivity performance of small plants in canada compared with the united states accounted for much of the gap in a particular year the deterioration in the productivity performance of large plants in canada was responsible for most of the widening gap over this period resume est ce que les petits ou les grands producteurs conforment l ecart de productivite du travail entre le canada et les etats unis resultats recents pour le secteur manufacturier ce texte montre que la plus grande portion de l emploi dans les petits etablissements au canada par rapport aux etats unis est importante dans l explication de la difference de niveau de productivite du travail entre le canada et les etats unis mais que ce facteur n a pas contribue a l accroissement de l ecart entre 2002 et 2007 de plus on montre qu alors que la productivite plus faible des petits etablissements au canada par rapport aux etats unis explique le gros de l ecart pour une annee particuliere c est la deterioration de la productivite des grands etablissements au canada qui explique le gros de la croissance de l ecart au cours de cette periode

when rational sellers face nonrational buyers evidence from herding on ebay people often observe others decisions before deciding themselves using ebay data for dvd auctions we explore the consequences of neglecting nonsalient information when making such inferences we show that bidders herd into auctions with more existing bids even if these are a signal of no longer available lower starting prices rather than of higher quality bidders bidding a given dollar amount are less likely to win low starting price auctions and pay more for them when they do win experienced bidders are less likely to bid on low starting price auctions remarkably the seller side of the market is in equilibrium because expected revenues are nearly identical for high and low starting prices

anchoring in financial decision making evidence from jeopardy abstract this paper analyzes 12 596 daily double wagering decisions of 6064 contestants in the us game show jeopardy we exploit a situation in which a player has to unexpectedly wager on responding correctly to an unknown clue known as a daily double clue we find evidence consistent with the hypothesis of contestants anchoring heavily on the initial dollar value of a clue in wagering this positive relationship remains statistically significant at the one percent level after controlling for other characteristics that may independently affect wagering decisions such as scores clue categories time trends individual jeopardy experience and player fixed effects exploiting within player variation only raising the anchoring amount by 100 translates to an increase of 29 in the wager an alternative explanation of underlying strategic considerations appears unlikely and results are consistent throughout a number of robustness checks overall these findings suggest that anchoring can play a substantial role in financial decision making under pressure

the impact of heterogeneity in purchase timing and price responsiveness on estimates of sticker shock effects the notion that individuals have an internal reference price against which they compare observed prices is well supported by several psychological theories empirically several papers in the marketing literature employing scanner panel data have modeled the impact of reference prices on brand choice via the sticker shock formulation in which consumers evaluate choice alternatives using differences between shelf prices and reference prices most of the studies reported thus far have not accounted for heterogeneity in price response among consumers and have typically imputed reference prices from the shelf prices of brands that a consumer is supposed to have observed on previous purchases in the category since category marketing activity can differentially affect the purchase timing of households we argue that this measure of reference price may follow certain systematic patterns across consumers and when combined with unaccounted for price response heterogeneity may result in a spurious sticker shock effect specifically we show that estimates of sticker shock are biased upward if households that are price sensitive in the brand choice decision are also more responsive to category promotion activity in their purchase timing decision we discuss some general conditions under which the bias occurs and conduct a simulation experiment to confirm our specific hypotheses our simulation results show that changes in purchase timing are a critical determinant of the bias in the sticker shock effect we also show that unaccounted for price response heterogeneity can in itself result in a biased sticker shock parameter however this requires very large differences in price sensitivities across consumers far greater than what is normally observed we develop a hierarchical bayes version of the nested logit model which models heterogeneity via individual level parameters in a continuous random effects framework we estimate the model on scanner panel data from the yogurt and ketchup categories we find in both categories that the 95 probability interval of the posterior distribution of the mean sticker shock coefficient contains the value zero therefore at least for the data used in this study there is no evidence for the sticker shock effect at the aggregate level in contrast the corresponding coefficient from a standard model which ignores this heterogeneity is highly significant and supports the existence of a possibly spurious sticker shock effect consistent with our explanation of the underlying cause of the bias households that are more price sensitive in the choice decision are also found to be more responsive to category promotion activity in their decision to purchase in the category the results highlight the measurement problems associated with imputing reference prices from past prices since the frequency duration and price level of a retailer s promotional program depend on its size and prevalence accurate estimates of the sticker shock effect are essential for formulating optimal promotion strategies an adequate accounting of consumer heterogeneity is critical to this effort

industrial composition interindustry effects and the u s productivity slowdown this paper investigates the effect of shifts in output composition on the slowdown of productivity growth in the united states between 1947 67 and 1967 76 i employ a leontief input output framework and a divisia index of aggregate productivity growth to separate the effects of changes in sectoral rates of technical progress from the effects of changes in output composition and interindustry flows on the change in overall productivity growth of the approximately 2 percentage point decline in overall total factor productivity growth 17 to 22 was due to compositional effects and the remainder to other factors t he importance of shifts in input or output composition in explaining the recent productivity slowdown in the united states has been a source of some controversy estimates of such shift effects vary considerably for example gollop 1982 calculated that resource shifts were actually an offset to the slowdown in productivity growth kutscher mark and norsworthy 1977 estimated that employment shifts had no effect on productivity growth thurow 1979 ascribed half of the slowdown between 1965 72 and 1972 77 to employment shifts and nordhaus 1972 attributed 77 of the decline from 1948 55 to 1965 71 to employment shifts in a related paper the possible reasons for these disparate results were discussed at length see baumol and wolff forthcoming briefly these differences stem primarily from the use of different concepts and measures actually three different concepts are used in the literature the first is a resource allocation or equilibrating shift effect which measures the increase in productivity that can result from a more efficient allocation of resources cf denison 1979a 1979b and 1984 norsworthy harper and kunze 1979 and gollop 1982 while interesting in itself this resource reallocation effect is a somewhat limited notion measuring the movement toward the efficient frontier instead of the outward movement of the frontier over time the second concept is the so called level effect which assesses the effect of resource shifts on overall productivity growth by holding constant the productivity levels of the various sectors of the economy cf nordhaus 1972 kutscher mark and norsworthy 1977 and thurow 1979 this measure was found to be quite arbitrary depending on the arbitrary choice of base year used in the computation the third is the so called rate effect which assesses the effect of shifts in resources by holding constant sectoral rates of productivity growth cf nordhaus 1972 baily 1982 and gollop 1982 all three authors found that the rate effect had a negligible influence on the productivity slowdown this measure is the most theoretically sound of the three and my measure will fall in this category though differ in significant ways from previous formulations and show a greater effect on overall productivity growth from compositional changes i shall first develop a general model to measure such shifts or composition effects from a leontief input output framework sections i and ii results for the u s economy over the 1947 76 period will then be reported with particular emphasis on accounting for the productivity slowdown after 1967 sections iii iv and v conclusions and a comparison with other results will be discussed in section vi vii and viii i the standard model following the work of peterson 1979 let us define x column vector of gross output by sector at time t y column vector of final demand by sector at time t at matrix of inter industry technical coefficients at time t it row vector of labor coefficients at time t showing employment per unit of output kt row vector of capital stock coefficients at time t showing the capital stock required per unit of output p row vector of prices at time t showing the price per unit of output of each industry received for publication june 27 1983 revision accepted for publication october 19 1984 new york university i would like to express my appreciation to wassily leontief william baumol m i nadiri mark schankerman martin baily and andrew sharpe for helpful comments and to the division of information science and technology of the national science foundation for financial support

a nonparametric approach to identifying latent relationships in hierarchical models this paper provides a method for nonparametrically modeling the relationship between consumer preference for product features such as reliability or durability and covariates that describe consumers and how they use the product this relationship is of interest to firms designing and delivering products to a market because the extent to which consumers are sensitive to particular features determines the potential profitability of product offerings and affects decisions relating to appropriate distribution outlets and advertising strategies the successful identification of these relationships also aids in efficiently targeting marketing activities to specific segments of the consumer population the relationship between consumer preference for product features and observable covariates is important but is typically unknown in addition these relationships are often deeply embedded in a model hierarchy and are not observed directly for example in models of household choice the observed outcomes are multinomial with probabilities driven by latent utilities or values that consumers place on the choice alternatives these utilities are in turn a function of characteristics such as price and product features which are differentially valued of primary interest is the relationship between consumer sensitivity to product characteristics and readily observed covariates such as household demographics or aspects of product usage because the relationships of interest are not directly observed it is difficult to draw inferences about them without formal statistical models this paper presents a three level hierarchical bayes model for modeling binary consumer preferences as a function of observable covariates the hierarchical model nonparametrically estimates the relationships between consumer preferences for product features and the covariates without assuming a specific functional form a nonparametric model is particularly useful in the exploratory analysis of consumer data in which the primary purpose of the analysis is to generate further questions rather than provide specific answers to well posed questions this type of analysis is frequently encountered in marketing where a series of studies are commissioned to better understand the nature of demand the first level of the hierarchy in the bayesian model relates the binary consumer choice to the sensitivities of the consumer to product attributes such as brand name price reliability and durability the second level of the hierarchy models the heterogeneity across consumers using functions that relate attribute sensitivities to observable covariates this level of the hierarchy also allows each respondent to have unique demand coefficients by introducing random effect components the third level of the hierarchy specifies a smoothness prior for each of the unknown functions used in the second level the approach is flexible and works well both when the unknown function can be closely approximated by a linear function and when it cannot be a bayesian model selection technique is used to determine which functions can be modeled using a linear function and which ones should be modeled nonparametrically to provide the necessary flexibility to estimate the function accurately the proposed methodology is illustrated using data from a survey of consumer preferences for features of marine outboard engines that was collected as part of a consulting project our analysis focuses on measuring consumer preferences for engine features and their relationships to two variables related to boat length and engine size consumer preferences for engine features were obtained through a national survey conducted over the telephone preferences were elicited by means of a pairwise evaluation in which respondents chose between two engines that were identical in every respect except for two engine features the methodology can be modified to allow for more complex comparisons such as conjoint data collected in full profiles the application of a bayesian model selection procedure indicates that 4 of the 28 covariate relationships in the model are nonlinear while the other 24 are linear the preferences associated with these four functions are involved in 56 of the pairwise comparisons in the study therefore in practice if the nonlinear functions are not properly estimated there is the potential to draw misleading inferences regarding 56 of the pairwise choices firms can use the estimates of the functions relating preferences to covariates in a number of ways first they can use the covariates to determine the total number of consumers who have high demand for a particular product feature and then they can target communication efforts to those individuals alternatively the empirical results can be used as a basis of subsequent analysis to obtain a more complete characterization of a market segment

accommodating heterogeneity and nonlinearity in price effects for predicting brand sales and profits abstract we propose a hierarchical bayesian semiparametric approach to account simultaneously for heterogeneity and functional flexibility in store sales models to estimate own and cross price response flexibly a bayesian version of p splines is used heterogeneity across stores is accommodated by embedding the semiparametric model into a hierarchical bayesian framework that yields store specific own and cross price response curves more specifically we propose multiplicative store specific random effects that scale the nonlinear price curves while their overall shape is preserved estimation is fully bayesian and based on novel mcmc techniques in an empirical study we demonstrate a higher predictive performance of our new flexible heterogeneous model over competing models that capture heterogeneity or functional flexibility only or neither of them for nearly all brands analyzed in particular allowing for heterogeneity in addition to functional flexibility can improve the predictive performance of a store sales model considerably while incorporating heterogeneity alone only moderately improved or even decreased predictive validity taking into account model uncertainty we show that the proposed model leads to higher expected profits as well as to materially different pricing recommendations

common trends and drivers of co2 emissions and employment a decomposition analysis in the industrial sector of selected european union countries the countries of the european union face the challenge of reversing the declining role of industry and achieving their targets for sustainable development combining industrial growth with fewer environmental repercussions and more jobs this paper uses a decomposition analysis in order to quantify the effect of the driving factors on two indicators of sustainable industrial development co2 emissions and employment in five european union countries during 2000 2011 the decomposition method applied is the log mean divisia index i and the models developed comprise some common or closely related driving factors the parallel investigation of the factors affecting the two indicators offers useful insights into relevant complementary and or antithetical effects the timeframe of the study is divided into two time periods before and after the start of the economic crisis 2000 2007 and 2007 2011 respectively this time division enables the evaluation of the impacts of the economic crisis directly on the drivers and indirectly on the two indicators it was deduced that in both time periods the two main drivers of industrial co2 emissions and employment were economic growth and resource intensity which counterbalance each other structural changes appeared to have a rather marginal effect even if the general tendency was the expansion of less energy labour intensive sectors finally changes in the fuel mix used in industry were beneficial to emissions reduction in all the examined countries especially in the second time period the results obtained show that the examined eu countries have not found a solid path towards sustainable and inclusive industrial development yet the stronger economies seem to move faster to this direction though

what is the role of the asking price for a house abstract this paper considers the role of the asking price in housing transactions both theoretically and empirically significant fractions of housing transactions involve sales prices that are either below or above asking price which might suggest that asking price has limited relevance however many housing transactions involve a sales price exactly equal to asking price a fact that has previously drawn little notice strongly suggesting that asking price does matter the paper develops a model where asking price is neither a binding commitment nor a ceiling yet still directs buyer search and impacts sales price using novel survey data the paper provides empirical evidence consistent with asking price playing a directing role in buyer search consistent with theory this effect is stronger for more atypical houses and in bust markets

step level reasoning and bidding in auctions step level models of reasoning slr proved to be very successful in predicting behavior in the beauty contest game recently a quantified version of the model was suggested as a more general model of thinking in particular it was found that the distribution of choices could be represented by a poisson distribution i test the model in stylized first and second price common value sealed bid auctions equilibrium for both auction types prescribes that players undercut each other and profits are small the slr prediction on the other hand is different for the two auctions nash equilibrium predicts the outcomes poorly the slr model predicts the outcomes well in the second price auction however while bids in the first price auction could be represented by a poisson distribution this could not be attributed to step level reasoning

estimating a multinomial probit model of brand choice using the method of simulated moments the multinomial probit model of brand choice is theoretically appealing for marketing applications as it is free from the independence of irrelevant alternatives property of the multinomial logit model however difficulties in estimation have restricted its widespread use in marketing this paper presents an application of the method of simulated moments a new methodology that enables easy estimation of probit models with a large number of alternatives in the choice set we describe the theoretical development of the technique and using pseudo simulated data conduct numerical experiments to compare the method with existing techniques for estimating probit models using the scanner panel data on the purchases of catsup we provide an empirical application of the method of simulated moments to the estimation of the parameters of a multinomial probit model estimating the covariance structure associated with the underlying latent variable probit model enables us to identify broad patterns of similarities across alternatives it also enables us to derive a pairwise similarity matrix across choice alternatives which when input into a multi dimensional scaling routine provides us with a graphical representation of competitive structure in the catsup market for completeness we compare the substantive implications for the effects of marketing variables obtained from the multinomial probit model with those obtained from models in the extant marketing literature

semiparametric analysis to estimate the deal effect curve abstract the marketing literature suggests several phenomena that may contribute to the nature of the relationship between sales and price discounts these phenomena can produce complex nonlinearities and interactions in the deal effect curve that are best captured with a flexible approach because a fully nonparametric regression model suffers from the curse of dimensionality the authors propose a semiparametric regression model store level sales over time are modeled as a nonparametric function of own and cross item price discounts and a parametric function of other predictors the authors compare the predictive validity of the semiparametric model with that of two parametric benchmark models and obtain superior performance the results for three product categories indicate threshold and saturation effects for both ownand cross item temporary price cuts the authors also find that the nature of the own item curve depends on other items price discounts comparisons with restricted model specification

an empirical comparison of the validity of a neural net based multinomial logit choice model to alternative model specifications applications of choice models to brand purchase data as a rule specify a linear deterministic utility function we estimate deterministic utility by means of a neural net able to approximate any continuous multivariate function and its derivatives to a desired level of precision we compare this model to related alternatives both with linear and nonlinear utility functions alternatives with nonlinear utility functions are based on generalized additive modeling and taylor series expansion respectively we analyze purchase data of the six largest brands in terms of market share for two product groups neural choice models outperform the alternative models studied w r t posterior probabilities they also attain the best crossvalidated log likelihood values these results demonstrate that the increase in complexity caused by the neural choice model is justified by higher validity in the empirical study the neural choice models imply elasticities different from those obtained by linear utility multinomial logit models for several predictors neural choice models discover inversely s shaped saturation and interaction effects on utility

an empirical analysis of latitude of price acceptance in consumer package goods scanner panel data analyses for sweetened and unsweetened drink categories with four brands in each support the presence of a region of price insensitivity around a reference price the analyses also suggest that consumers with higher average reference price have a wider latitude of price acceptance consumers with a higher frequency of purchase i e shorter average interpurchase time interval are found to have a narrower latitude of price acceptance because they are more aware of the range of price distributions finally consumers with a higher average brand loyalty have a wider latitude of price acceptance demonstrating greater tolerance of price fluctuations

relative prices and sectoral productivity the relative price of services rises with development a standard interpretation of this fact is that productivity differences across countries are larger in manufacturing than in services the service sector comprises heterogeneous categories we document that many disaggregated service categories such as transportation communication and finance feature a negative income elasticity of relative prices whereas the relative price of aggregate services is mostly driven by large expenditure categories in housing collective government and health that feature a positive income elasticity of relative prices we also document a substantial reallocation of expenditures in services from categories with positive income elasticities traditional services to categories with negative elasticities non traditional services as income rises using an otherwise standard multi sector development accounting framework extended to include an input output structure we find that the cross country income elasticity of sectoral productivity is large in non traditional services 1 15 smaller in manufacturing 1 05 and much smaller in traditional services 0 67 eliminating cross country productivity differences in non traditional services reduces aggregate income disparity by 58 percent a 7 9 fold reduction in aggregate productivity differences we also find that the heterogeneity between traditional and non traditional services has a substantial impact on aggregate productivity and that the input output structure is important in this assessment

the modest environmental relief resulting from the transition to the service economy a service transition is supposed to lead to the decline of energy intensity energy gdp we argue that this interpretation is overly optimistic because the shift to a service economy is somewhat of an illusion in terms of real production several recent studies of structural effects on energy intensity have made the error of using sector shares in current prices combined with gdp in constant prices which is inconsistent and ignores the different behaviour of prices across sectors we use the more correct method of sector shares in constant prices and make an attempt to single out the effect from the real service transition by using two complementary methods shift share analyses in current and constant prices and logarithmic mean divisia index lmdi for 10 developed and 3 emerging economies a service transition is rather modest in real terms the major driver of the decline in energy intensity rests within the manufacturing sector meanwhile the transition to a service sector had a small downward impact on energy intensity in 7 of the developed countries and no impact in the others for emerging economies like brazil mexico and india it is the residential sector that drives energy intensity down because of the declining share of this sector as the formal economy grows and as a consequence of switching to more efficient fuels less

a model of brand choice and purchase quantity price sensitivities many consumer decisions involve a discrete choice and a continuous outcome examples of such decisions are whether to own a home or rent one and how much to spend which brand of orange juice to buy and how many ounces to buy in cases like these the choice decision is typically modeled separately say using a logit model and the continuous outcomes modeled separately using regression analysis however the continuous outcomes may not be independent of the discrete choice and vice versa and modeling the two decisions independently can lead to inefficient choice parameter estimates and biased and inconsistent regression parameter estimates in this paper we present a methodology from the limited dependent variable literature to model the dependence between the choice and quantity decisions our substantive interest is in the role of price in the choice and quantity decisions when choosing among alternatives we argue that consumers consider prices of all the competitive brands in the quantity decision on the other hand only the price of the chosen alternative is expected to impact how much of the alternative is purchased the analysis of three brands using disaggregate level panel data strongly supports our hypothesis about the role of competitive prices in the choice and quantity decisions

structural change in a multisector model of growth we study a multi sector model of growth with differences in tfp growth rates across sectors and derive sufficient conditions for the coexistence of structural change characterized by sectoral labour reallocation and constant aggregate growth path the conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists we present evidence from us two digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services we show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model

knowledge dynamics structural change and the geography of business services the article provides a review of and presents some empirical evidence on the dynamics of knowledge structural change and spatial concentration of economic activities focusing on the case of business services it explores how the role of knowledge has evolved in relation to the dimensions of i science technology and structural change ii the long term processes of tertiarisation of the economy in particular the growth of business services iii the spatial concentration of business services as an outcome of the increasing volume and complexity of knowledge and the need to manage it through spatial proximity our arguments are supported by empirical evidence on the spatial concentration of business services in the european regions

winter is coming robert gordon and the future of economic growth this comment assesses the claim of the rise and fall of american growth that for coming decades growth in us tfp will continue the disappointing pace of the last decade while predicting future technological advance is difficult there are indications that gordon may actually be too optimistic on future tfp growth the share of output from manufacturing which still generates the majority of r d expenditures and has historically more rapid tfp growth will continue to fall there are substantial obstacles to rapid tfp advance in much of the rest of the economy construction transport health care and other services

formal choice models in marketing the paper gives an overview and evaluates the theoretical traditions underlying choice models that are used in marketing in particular the emphasis of this essay is on the underlying assumptions limitations and empirical demands of these choice models four fundamental choice models are used as a basis to analyze this complex field the neoclassical economic theory as extended by lancaster the risk preference theory of choices under uncertainty the strict utility theory and the random utility theory these four choice models and their extensions are compared and contrasted along the three critical steps in the model building process theory generation parameterization and estimation

learning by doing changes in industrial structure and trade patterns and economic growth in a small open economy abstract this paper presents a simple dynamic model which allows for changes in both industrial structure and trade patterns during the process of economic growth learning by doing in the producer service sector is the source of endogenous growth interesting interdependences between economic growth and the structure of the economy are obtained economic growth is accompanied by changes in industrial structure and comparative advantage while changes in industrial composition of the manufacturing sector accelerate economic growth furthermore this paper analyzes the relationship between economic growth and the endowment structure and the effects of two types of technology transfers on economic growth

time on the market and price change the case of sydney housing market this article is an empirical study of characteristics related to residential properties sold in sydney australia we use comprehensive data on the sydney housing market composed of 25 489 observations for properties sold in the sydney region in 2011 we consider the fact that both the seller of the property and the real estate agent have a common goal to sell the property at the highest possible price in the shortest amount of time the analysis is divided into two major parts first we estimate a two stage least square model to analyse which parameters affect time on the market for a property second we propose a probit model that estimates the parameters that affect a revision in list prices the results contribute to the existing literature on the australian housing market by extending understandings about the parameters that could affect the time on the market of properties and the revision of their list prices

bureaucracy inefficiency and time this paper examines the bureaucrat s choice between devoting resources to economic rents organizational slack and maximizing the budget of the agency a new model of bureaucracy is developed using utility rather than a demand function as its foundation it is shown that increases in income alter the slack budget constraint to favor organizational slack over budget maximization modern federal bureaucracies in the u s are predicted to be slack maximizing and x inefficient

reference effects of price and promotion on brand choice behavior when consumers are exposed to pricing and promotional activity by frequently purchased packaged goods they may develop expectations that are used as points of reference in evaluating future activi

structural change in advanced nations a new set of stylised facts we provide new evidence on patterns of structural change in advanced economies reconsidering the stylised facts put forward by kaldor 1963 kuznets 1971 and maddison 1980 since 1980 the services sector has overwhelmingly predominated in the economic activity of the european union japan and the us but there is substantial heterogeneity among services personal finance and business services have low productivity growth and increasing shares in employment and gdp by contrast shares of distribution services are constant and productivity growth is rapid we find that the labour share in value added is declining while the use of ict capital and skilled labour is increasing in all sectors and regions

a homeowner s dilemma anchoring in residential real estate transactions abstract we examine whether and how listing strategies impact sale prices in residential home sales literatures in housing economics negotiations and auctions offer diverse predictions around this question on the one hand housing studies typically treat home prices as an objective function of property and neighborhood characteristics yet the large and robust literature on anchoring effects tversky and kahneman 1974 suggests a positive relationship between listing prices and sale prices finally evidence from the auctions literature suggests the opposite pattern through herding behaviors we analyzed more than 14 000 transactions taking into account observable property heterogeneity geographical location and timing of the sales we find that higher starting prices are indeed associated with higher selling prices consistent with anchoring for the average home in our sample over pricing between 10 and 20 leads to an increase in the sale price of 117 163 this effect is particularly strong in areas with higher rates of mortgage foreclosure or serious delinquency additional analyses show that our results are unlikely to be driven by seller motivations or unobserved home qualities we contrast our findings with recommendations and private beliefs of real estate agents who provide services and advice for about 90 of home sales in the us

anchoring effects on consumers willingness to pay and willingness to accept we examine the susceptibility of consumers willingness to pay wtp and willingness to accept wta judgments to influence by arbitrary anchors the results of four studies suggest that although circumstantial differences between buying and selling decisions can lead to systematic differences in susceptibility to anchoring effects the principles governing the impact of anchoring on wtp and wta judgments are essentially the same in particular robust anchoring effects are observed when the anchor relates to the focal source of uncertainty further wtp and wta judgments are most susceptible to anchoring and endowment effects under uncertainty about the desire to trade the implications of this research for our understanding of anchoring and endowment effects are discussed

a logistic growth theory of public expenditures a study of five countries over 100 years this paper offers a new theory and empirical testing of long term trends of public expenditures for five countries while wagner s law would imply an exponential growth process of the ratio between public expenditures and national income g y the law should be rejected both on theoretical and empirical grounds because it disregards the role of ever increasing distortionary taxation however under some conditions the combination of wagner s law and the pigou s conjecture that the excess burden of taxation constrains the growth of public expenditures can be captured by a non linear first order differential equation the equation is the verhulst s logistic originally invented to model malthusian predictions on population growth the integration of a verhulst equation generates an s shaped curve this analytical framework combines intuitions from a welfare economics and a public choice perspective and potentially offers a new research strategy on the dynamics of government expenditures we offer preliminary econometric estimates on long run trends around 1870 1990 of g y in u s u k france germany italy these estimates confirm a pattern of similar trajectories in spite of different national parameters and suggest that the logistic view of growth of government is consistent with observed data

anchored in the past persistent price effects of obsolete vineyard ratings in france abstract although abundant evidence for anchoring in economic valuations has been produced in experimental settings there have been relatively few studies testing for anchoring in actual markets we analyze data on grape and vineyard prices in the champagne region of france to determine whether current prices are anchored on past prices set under a discontinued price setting system the key feature of this system is a vineyard quality rating called the echelle des crus edc the econometric challenge is to separately identify anchoring effects from the effects of relevant information edc era prices may convey about grape and vineyard quality our empirical approach controls for observable attributes of vineyards and time invariant unobserved determinants of vineyard quality that may be revealed to market participants through edc era prices in addition we use an instrumental variables strategy to mitigate confounding influences of time varying unobservables we find strong evidence that anchoring has large effects on prices for grapes and vineyards we also examine whether the anchoring effect is diminishing over time as market participants come to rely more on objective information to determine prices we find instead a persistent effect of the edc many years after it became obsolete

reassessing brand loyalty price sensitivity and merchandising effects on consumer brand choice this article reports the results of an empirical study of household brand choices over four scanner panel data sets the study uses a random effects autocorrelated logistic regression model the analysis presents evidence that the brand choice process is not zero order in addition the influence of in store displays and feature advertisements on switching is shown to be about two to three times more effective than estimates obtained from previous studies finally the analysis indicates systematic differences between frequent and infrequent buyers of products in terms of their sensitivity to price displays and feature advertising

coherent arbitrariness stable demand curves without stable preferences economic theories of valuation generally assume that prices of commodities and assets are derived from underlying fundamental values for example in finance theory asset prices are believed to reflect the market estimate of the discounted present value of the asset s payoff stream in labor theory the supply of labor is established by the tradeoff between the desire for consumption and the displeasure of work finally and most importantly for this chapter consumer microeconomics assumes that the demand curves for consumer products chocolates cds movies vacations drugs and so forth can be ultimately traced to the valuation of pleasures that consumers anticipate receiving from these products because it is difficult as a rule to measure fundamental values directly empirical tests of economic theory typically examine whether the effects of changes in circumstances on valuations are consistent with theoretical prediction for example whether labor supply responds appropriately to a change in the wage rate whether compensated demand curves for commodities are downward sloping or whether stock prices respond in the predicted way to share repurchases however such comparative static relationships are a necessary but not sufficient condition for fundamental valuation e g summers 1986 becker 1962 was perhaps the first to make this point explicitly when he observed that consumers choosing commodity bundles randomly from their budget set would nevertheless produce downward sloping demand curves

a more timely house price index using listings data we construct a new repeat sales house price index that describes house values at the contract date when the price is determined rather than the closing date when the property is transferred we showthat this difference in timing helps explain several puzzles about house prices including their strong short term serial correlation and their weak correlation with stock prices and macroeconomic news shocks in addition we showthat a variant of our index that relies exclusively on listings data for recent transactions accurately reveals trends in house prices several months before existing price indexes like case shiller become available