measuring returns on investments in collectibles this paper considers the question of how to measure and interpret the financial return to investing in collectibles we review various methodologies for creating priced indexes and then discuss studies that explicitly calculate a rate of return to some set of collectibles while most collectibles appear to yield positive real returns the majority embody more risk and yield lower financial returns than stocks other characteristics of collectibles prices such as covariance with other asset prices are also examined

applications of behavioural economics to tax evasion the paper reviews recent models that have applied the techniques of behavioural economics to the analysis of the tax compliance choice of an individual taxpayer the construction of these models is motivated by the failure of the yitzhaki version of the allingham sandmo model to predict correctly the proportion of taxpayers who will evade and the effect of an increase in the tax rate upon the chosen level of evasion recent approaches have applied non expected utility theory to the compliance decision and have addressed social interaction the models we describe are able to match the observed extent of evasion and correctly predict the tax effect but do not have the parsimony or precision of the yitzhaki model

policy watch the marriage penalty many government programs have implicit penalties or subsidies for marriage for example many couples pay higher income taxes when married than their combined tax liabilities as single filers while many other couples receive a marriage subsidy because their joint taxes fall with marriage likewise most low income couples are eligible for higher welfare benefits if they are separated rather than married this article discusses the marriage penalty with a particular focus on tax and transfer programs why does it exist who faces it to what extent does it affect marriage and labor market behavior what tradeoffs are involved in reducing it

measuring the impact of negative demand shocks on car dealer networks the goal of this paper is to study the behavior of consumers dealers and manufacturers in the car sector and present an approach that can be used by managers and policy makers to investigate the impact of significant demand shocks on profits prices and dealer networks more specifically we investigate consumer demand substitution patterns and price decisions across different cars and dealer locations to identify dealerships with low margins or high fixed costs and measure the value of closing down dealerships for manufacturers we apply our model empirically to the san diego area using a transactional data set with information about the locations of dealers and consumers as well as manufacturer and retail prices we find strong consumer disutility for travel and find that dealers have local demand areas that are shared with a small set of competitors we show that a reduction of market demand by 30 over two years similar to the economic crisis of 2008 2009 results in an annual drop in prices of approximately 11 we discuss this price drop in the context of the 2009 federal policy measure known as the car allowance rebate system program we compare predictions and actual dealership closings in the general motors and chrysler dealer networks as an application of our approach

the determinants of u s state economic growth a less extreme bounds analysis this study investigates u s state economic growth from 1970 to 1999 i innovate on previous studies by developing a new approach for addressing model uncertainty issues associated with estimating growth equations my approach borrows from the extreme bounds analysis approach of leamer while also addressing concerns raised by granger and uhlig sala i martin and others that not all specifications are equally likely to be true i then apply this approach to identify robust determinants of state economic growth my analysis confirms the importance of productivity characteristics of the labor force and industrial composition of a state s economy i also find that policy variables such as 1 size and structure of government and 2 taxation are robust and economically important determinants of state economic growth jel 040 051 h10 h20 h30 h70 r11 r58 c51

the growth effects of tax rates in the oecd this paper explores the merits of macro and micro based tax rate measures within an open economy fiscal policy and growth model using annual data for 15 oecd countries we find statistically small non robust long run growth effects of macro based average tax rates on capital income and consumption but some evidence for average labor income tax effects changes in micro marginal income tax rates at both the personal and corporate levels yield statistically robust gdp responses of modest size both domestic and foreign corporate taxes appear relevant in general tax effects on gdp operate largely via factor productivity rather than factor accumulation

competitive pricing behavior in the auto market a structural analysis in a competitive marketplace the effectiveness of any element of the marketing mix is determined not only by its absolute value but also by its relative value with respect to the competition for example the effectiveness of a price cut in increasing demand is critically related to competitors reaction to the price change managers therefore need to know the nature of competitive interactions among firms in this paper we take a theory driven empirical approach to gain a deeper understanding of the competitive pricing behavior in the u s auto market the ability motivation paradigm posits that a firm needs both the ability and the motivation to succeed in implementing a strategy boulding and staelin 1995 we use arguments from the game theoretic literature to understand firm motivation and abilities in different segments of the auto market we then combine these insights from the game theoretic literature and the ability motivation paradigm to develop hypotheses about competition in different segments of the u s auto market to test our hypotheses of competitive behavior we estimate a structural model that disentangles the competition effect from the demand and cost effects on prices the theory of repeated games predicts that firms with a long run profitability objective will try to sustain cooperative pricing behavior as a stable equilibrium when conditions permit for example markets with high concentration and stable market environments are favorable for sustaining cooperative behavior and therefore provide firms with the ability to cooperate the theory of switching costs suggests that in markets in which a firm s current customers tend to be loyal firms have a motivation to compete very aggressively for new customers recognizing the positive benefits of loyalty from the customer base in the long run as consumer loyalty in the market increases the gains from increasing market share by means of aggressive competitive behavior are more than offset by losses in profit margins firms therefore have the motivation to price cooperatively empirically we find aggressive behavior in the minicom pact and subcompact segments cooperative behavior in the compact and midsize segments and bertrand behavior in the full size segment these findings are consistent with our theory based hypotheses about competition in different segments in estimating a structural model of the auto market we address several methodological issues a particular difficulty is the large number of car models in the u s auto market existing studies have inferred competitive behavior only in markets with two to four products they also use relatively simple functional forms of demand to facilitate easy estimation functional forms of demand however impose structure on cross elasticities between products such structure when inappropriate can bias the estimates of competitive interaction we therefore use the random coefficients logit demand model to allow flexibility in cross elasticities we also use recent advances in new empirical industrial organization neio to extend structural estimation of competitive behavior to markets with a large number of products we use the simulation based estimation approach developed by berry et al 1995 to estimate our model a frequent criticism of the neio approach is that its focus on industry specific studies limits the generalizability of its findings in this study we retain the advantages of neio methods but partially address the issue of generalizability by analyzing competitive behavior in multiple segments within the auto industry to see whether there is a consistent pattern that can be explained by theory theoretical modelers can use our results to judge the appropriateness of their models in predicting competitive outcomes for the markets that they analyze a by product of our analysis is that we also get estimates of demand and cost apart from competitive interactions for the market managers can use these estimates to perform what if analysis they can answer questions about what prices to charge when a new product is introduced or when an existing product s characteristics are changed

tax base erosion in developing countries it is widely believed that the tax base in most developing countries has been severely eroded by legal tax avoidance and illegal tax evasion brought about largely by poor tax administration 1 this erosion it is thought has had a variety of fiscal effects tax revenues are lost and the growth of the tax base is dampened the progressivity implied by the statutory rate structure is not achieved the costs of tax administration are increased and horizontal and vertical equity suffer because the effective tax rates faced by individuals depend largely upon their success in playing the tax compliance game it is not surprising therefore that virtually all fiscal reform programs in developing countries start with the promise to improve administration better administration is a discretionary government action that at once can lower the tax rate increase revenues slow capital flight and improve the fairness of the system yet tax base erosion in developing countries is something about which precious little is known and in particular the empirical evidence about the severity and the nature of the problem is all but nonexistent 2 why do we know so little about the dimensions of the evasionavoidance problem one reason is conceptual problems in measuring erosion of the tax base for example how does one estimate the substitution of nontaxable for taxable compensation in response to the tax structure or the extent to which a higher marginal tax rate has induced individuals to report less of their taxable income another reason is the problem of comparability across countries the many legal and

the incidence of indirect taxes on low income households in jamaica it is generally understood that the main concern of tax policy in developing countries with respect to the poor is that the poor not be made poorer the usual aim of tax reformers is thus either to avoid regressivity in tax design or to reduce regressivity through tax reform measures more positive actions to reduce poverty are it is usually argued best left to government expenditure policies in recent years however skepticism has grown as to the effectiveness of conventional public expenditure policy in reaching the very poor 2 in addition the potential scope for tax policy to affect factor prices and hence income distribution in developing countries has been stressed 3 the distributional effects of taxes thus continue to be of interest in most developing countries in the developed countries advances in modeling the effects of taxation have shed light on the complex relationships between taxation and income distribution and new approaches to incidence analysis have cast doubt on the earlier consensus as to the relative regressivity of various taxes 4 a few applications of these new ideas and techniques to developing countries are now available 5 in this article we contribute to this literature by making use of a new data set to analyze the incidence of indirect taxes on the poor in jamaica a decade ago a comprehensive review of fiscal incidence studies concluded that in only two of the 44 studies examined covering 22 developing countries was the tax system basically regressive that is in only two countries did the poor broadly defined appear to pay a larger proportion of their incomes in tax than did the rich 6 in a number of other cases however there was evidence of some regressivity to

enforcement socioeconomic diversity and tax filing compliance in the united states in this article we examine the determinants of tax filing compliance in the united states we use county level data on non filing rates for the tax year 2000 obtained directly from the internal revenue service we include explanatory variables identified in the rational compliance framework including an enforcement index against identified non filers the audit rate of filers and the average penalty rate for both filers and non filers we also examine the role of socioeconomic diversity on tax compliance testing whether within county heterogeneity in household income language race and religion can help explain variation in non filing rates we find that non filing is increasing with heterogeneity by race although not by income or language and that non filing is decreasing with heterogeneity by religious membership as for enforcement variables we find that non filing rates tend to fall with the enforcement index other variables have somewhat mixed results

getting the word out enforcement information dissemination and compliance behavior the question for the tax authority is how individuals become aware of enforcement effort to be an effective tool in reducing tax evasion taxpayers must be aware of the current audit and penalty regime we use laboratory experiments to examine the compliance impact of types of information dissemination regarding audit frequency and results the information includes official information disseminated by the tax authority and unofficial or informal communications among taxpayers our results indicate that the effect of the type of post audit information is conditional on whether the taxpayer is well informed of the audit rate prior to filing we find that the tax authority would be served by pre announcing audit rates credibly and by emphasizing the previous period audit frequency in annual reporting of enforcement effort

taxpayer response to an increased probability of audit evidence from a controlled experiment in minnesota abstract in 1995 a group of 1724 randomly selected minnesota taxpayers was informed by letter that the returns they were about to file would be closely examined compared to a control group that did not receive this letter low and middle income taxpayers in the treatment group on average increased tax payments compared to the previous year which we interpret as indicating the presence of noncompliance the effect was much stronger for those with more opportunity to evade in fact the difference in differences is not statistically significant for those who do not have self employment or farm income and do not pay estimated tax surprisingly however the reported tax liability of the high income treatment group fell sharply relative to the control group

is there a consensus among economists in the 1990 s in a 1976 survey kearl et al 1979 hereafter the 1976 survey concluded that the then widespread perception that there was little agreement among professional economists on matters of theory or policy was simply wrong however the most casual empiricism namely the continuing popularity of jokes about disagreements among economists suggests the perception of noneconomists has not changed much since the 1970 s what is the present state of consensus among economists this question is of interest because more than a decade has elapsed since the 1976 survey and during this time many issues confronting economists and the composition of the profession have changed 1 benjamin m friedman and lawrence h summers 1991 p ix for example have asserted that economic thinking in many subfields of the discipline now differs markedly from what it was in 1970 consensus among european economists has been examined by bruno s frey et al 1984 martin ricketts and edward shoesmith 1990 1992 focus exclusively on british economic opinion this paper provides the first general analysis of opinions of u s economists in more than a decade i the survey and questionnaire

price reactions to rivals local channel exits in this paper we study the effect of a firm s local channel exits on prices charged by incumbents remaining in the marketplace exits could result in higher prices due to tempered competition or lower prices due to reduced colocation or agglomeration benefits the net effect of these two countervailing forces remains unknown in addition little is known about how this effect could change depending on incumbents geographic locations we address this research gap by examining new car price reactions by incumbent multiproduct automobile dealerships who experience the exit of a chrysler dealership in their local markets we find evidence that the competition effect exceeds the colocation effect prices increase by about 1 318 following an exit relative to the price change in the absence of an exit more important we find that the price increase is lower at dealerships more proximate to the exiting dealership than dealerships farther away for the same set of cars available across these locations this

wind turbine manufacturing in china a review abstract domestic wind turbine manufacturing sector in china has experienced development stages starting from scratch to mass production during the 11th fyp period 2006 2010 the main goal of wind power policy in china is to promote the commercialization of wind power by large scale deployment of wind farms this goal has been realized to a great extent and now the cost of wind power generation is nearly comparable to coal fired power generation in china the industry policy which devotes to mass production of domestic wind turbines is also largely successful the purpose of the paper is to provide an overview on wind turbine manufacturing sector in china the policy evolution in different stages achievements and challenges pertinent to the sector are addressed in the paper key findings are that the misleading industry policy which provides strong incentive to blind entrance and competition for scale and price and restrains innovation as well is the key obstacle for the sustainable development of the sector deficient technology standard and qualification system and the misplaced franchise bidding system also indulge vicious competition and oversupply creating a level playground for all turbine supplies providing strong incentive to innovative manufacturers establishing thorough and practicable standard and qualification system and fine tuning the directive of the franchise bidding system towards technology and service are the primary policy implications proposed by our study

simpler is better predicting consumer vehicle purchases in the short run abstract when agencies such as the us environmental protection agency epa establish future greenhouse gas emissions standards for new vehicles forecasting future vehicle purchases due to changes in fuel economy and prices provides insight into regulatory impacts we compare predictions from a nested logit model independently developed for us epa to a simple model where past market share predicts future market share using data from model years 2008 2010 and 2016 the simple model outperforms the nested logit model for all goodness of prediction measures for both prediction years including changes in vehicle price and fuel economy increases bias in forecasted market shares this bias suggests price increases are correlated with unobserved increases in vehicle quality changes in preferences or brand specific changes in market size but not cost pass through for 2010 past shares predict better than a nested logit model despite a major shock the economic disruption caused by the great recession observed share changes during this turbulent period may offer upper bounds for policy changes in other contexts the largest observed change in market share across the two horizons is 6 6 for manufacturers in 2016 and 3 4 for an individual vehicle in 2010

the elasticity of taxable income with respect to marginal tax rates a critical review this paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates using tax return data first we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis we discuss what other parameters should be estimated when the elasticity is not a sufficient statistic second we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the united states to illustrate those issues third we provide a critical discussion of selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out finally we discuss avenues for future research jel h24 h31 j22

product positioning and competition the role of location in the fast food industry this paper examines optimal product positioning strategies of asymmetric firms in the context of retail outlet locations in the fast food industry the relationships between profits and product differentiation reveal that both mcdonald s and burger king are better off avoiding close competition if the market area is large enough however in small market areas mcdonald s would prefer to be located together with burger king rather than have the two outlets be only a slight distance apart in contrast burger king s profits always increase with greater differentiation offsetting these incentives is the desirability of locating centrally to appeal to the most customers the equilibrium depends on the market s size in small markets mcdonald s locates near the center of the market and burger king locates to the side of the market in larger markets mcdonald s and burger king choose locations on opposite sides of the market although mcdonald s locates closer to the optimal central location than burger king i also show that the role of price competition on product positioning is fundamentally different under asymmetric competition than under symmetric competition price competition unambiguously induces symmetric firms toward differentiation in contrast with asymmetric firms price competition shifts burger king s incentives toward locating closer to mcdonald s even while price competition increases mcdonald s desire for differentiation as a result equilibrium locations with asymmetric firms are approximately the same regardless of whether prices adjust with location

is economics useful for public policy economists have always played an important role in major public policy debates even so i believe that the role of economists in these public policy discussions has often been misguided because it has typically relied upon best practices stated in the form of general guidelines or even universal principles however best practices are not best if the specific situation does not conform with the assumptions that underlie the advice so my first conclusion is a cautionary and negative one specific circumstances differ so profoundly across individuals firms markets countries and time that most any attempt to define best practices that apply in all circumstances will lead to profoundly misleading public policy recommendations however even if economics cannot identify the truth it can often identify a truth so my second conclusion is a more positive one economists should continue to develop multiple theories that inform public policies but we should also focus our efforts on identifying and testing the critical assumptions that drive the results of these theories recognizing that the validity of any assumptions will depend intimately on specific circumstances i illustrate these two main conclusions with specific examples from my own work i conclude with some best practices recommendations of my own recognizing the obvious irony of such an effort

exclusive dealing as a barrier to entry evidence from automobiles exclusive dealing contracts between manufacturers and retailers force new entrants to set up their own costly dealer networks to enter the market we ask whether such contracts may act as an entry barrier and provide an empirical analysis of the european car market we first estimate a demand model with product and spatial differentiation and quantify consumers valuations for dealer proximity and dealer exclusivity we then perform policy counterfactuals to assess the profit incentives and possible entry deterring effects of exclusive dealing we find that there are no unilateral incentives to maintain exclusive dealing but there is a collective incentive for the industry as a whole furthermore a ban on exclusive dealing would raise the smaller entrants market share but more importantly consumers would gain not so much because of increased price competition but rather because of the increased spatial availability which compensates for the demand inefficiency from a loss of dealer exclusivity

economists views about parameters values and policies survey results in labor and public economics specialists in labor economics and public economics at 40 leading research universities provided opinions of policy proposals quantitative best estimates and 95 percent confidence intervals for economic parameters and answers to values questions regarding income redistribution efficiency versus equity and individual versus social responsibility their positions on policy are more closely related to their values than to their estimates of relevant economic parameters average best estimates of the economic parameters agree well with the relevant literature but individual best estimates are usually widely dispersed the individual 95 percent confidence intervals are much narrower than the substantial cross respondent variation in estimates would warrant

commentaries and rejoinder to measuring the impact of negative demand shocks on car dealer networks by paulo albuquerque and bart j bronnenberg this series of discussions presents commentaries and a rejoinder on strategic and managerial issues arising from albuquerque and bronnenberg albuquerque p b j bronnenberg 2012 measuring the impact of negative demand shocks on car dealer networks marketing sci 31 1 4 23

insurer provider networks in the medical care market i use data on the hospital networks offered by managed care health insurers to estimate the expected division of profits between insurers and providers i include a simple profit maximization framework and an additional effect hospitals that can secure demand without contracting with all insurers e g those most attractive to consumers and those that are capacity constrained may demand high prices that some insurers refuse to pay hospital mergers may also affect price bargaining i estimate that all three types of hospitals capture higher markups than other providers these results provide information on the hospital investment incentives generated by bargaining

vertical relationships between manufacturers and retailers inference with limited data in this paper different models of vertical relationships between manufacturers and retailers in the supermarket industry are compared demand estimates are used to compute price cost margins for retailers and manufacturers under different supply models when wholesale prices are not observed the purpose is to identify the set of margins compatible with the margins obtained from estimates of cost and to select the model most consistent with the data among non nested competing models the models considered are 1 a simple linear pricing model 2 a vertically integrated model and 3 a variety of alternative strategic supply scenarios that allow for collusion non linear pricing and strategic behaviour with respect to private label products using data on yogurt sold in several stores in a large urban area of the u s the results imply that wholesale prices are close to marginal cost and that retailers have pricing power in the vertical chain this is consistent with non linear pricing by the manufacturers or high bargaining power of the retailers

determinants of store level price elasticity using weekly scanner data representing 18 product categories the authors estimated store specific price elasticities for a chain of 83 supermarkets they related these price sensitivities to a com

a control function approach to endogeneity in consumer choice models abstract endogeneity arises for numerous reasons in models of consumer choice it leads to inconsistency with standard estimation methods that maintain independence between the model s error and the included variables the authors describe a control function approach for handling endogeneity in choice models observed variables and economic theory are used to derive controls for the dependence between the endogenous variable and the demand error the theory points to the relationships that contain information on the unobserved demand factor such as the pricing equation and the advertising equation the authors approach is an alternative to berry levinsohn and pakes s 1995 product market controls for unobserved quality the authors apply both methods to examine households choices among television options including basic and premium cable packages in which unobserved attributes such as quality of programming are expected to be correlated with price without correcting for endogeneity aggregate d

the role of spatial demand on outlet location and pricing abstract in this article the authors consider the problem of outlet pricing and location in the context of unobserved spatial demand the analysis constitutes a scenario in which capacity constrained firms set prices conditional on their location demand and costs this enables firms to develop maps of latent demand patterns across the market in which they compete the analysis further suggests locations for additional outlets and the resultant equilibrium effect on profits and prices using bayesian spatial statistics the authors apply their model to seven years of data on apartment location and prices in roanoke va they find that spatial covariation in demand is material in outlet choice the 95 spatial decay in demand extends 3 6 miles in a region that measures slightly more than 9 5 miles they also find that capacity constraints can cost complexes upward of 100 per apartment as they predict price elasticities and costs are biased downward when spatial covariance in demand is ignored costs a

tax structure and tax compliance a model of individual tax compliance behavior including evasion and avoidance is developed and estimated the model recognizes the importance of marginal income tax rates payroll tax contributions and benefits and the probabil ity of detection and the penalty on unpaid taxes share equations for avoidance evasion and reported income are estimated using individual level data the estimation results indicate that the tax base rises with higher benefits for payroll tax contributions and falls with higher marginal tax rates the base also falls with more severe penalties and more certain detection of evasion as individuals substitute towards avoid ance income t he methods by which individuals reduce their tax liabilities take a variety of legal and illegal forms all of which are influenced at least in part by incentives created by the tax structure these methods can be broadly classified as avoid ance and evasion tax avoidance is any legal activity that lowers taxes such as worker substitu tion between wage and nonwage compensation tax evasion is the reduction in tax liabilities by illegal means such as underreporting income on tax returns despite extensive but separate literatures on avoidance and evasion we know very little about the tax base response to changes in tax structure it is the purpose of this paper to examine the role that the tax structure plays in compliance there are several reasons for the persistence of the compliance puzzle most prominent is the absence of detailed individual data that would allow a full empirical specification of all factors affecting compliance this difficulty is most evi dent when searching for individual data on the evasion compliance decision even when avail able data have never allowed in the same work the construction of both tax and audit variables 1 clearly data availability is even more problem atic when looking at the choice among evasion avoidance and reported income in addition pre vious work has not looked at the avoidance evasion compliance decision as a joint process even though these decisions are made simultane ously 2 further both strands of the literature have ignored another factor that may affect the compliance decision the benefits that accrue from participation in payroll programs if benefits are tied only to taxable income then their presence gives individuals an incentive to pay taxes in short there has been no empirical work that analyzes the effects of tax rates probabilities penalties and payroll benefits on avoidance and evasion choices of individuals in this paper we provide such an analysis we first develop a theory of individual choice among the three types of compensation we then esti mate the resulting share demand equations using a unique data set which has detailed information on the compensation paid to roughly one quarter of the labor force in jamaica in 1983 from these data we are able to derive measures of reported taxable income evasion income and avoidance income for individual workers in the formal sec tor we are also able to construct measures of the marginal income tax rate marginal payroll taxes and benefits the probability of detection and the penalty on evasion for individual workers we are therefore able to estimate for the first time the responses of workers to the full range of tax structure parameters section i presents the theoretical model of worker compensation choice and the empirical specification of the model section ii discusses the jamaican tax system data and variable con struction are discussed in section iii estimation results are presented in section iv the final section summarizes the main results

the use of field experiments to increase tax compliance governments have become increasingly interested in the explosion of research into taxpayer behaviour this article briefly reviews two main theories of tax compliance deterrence and non deterrence before discussing the recent rapid rise of natural field experiments nfes in this area these nfes represent a win win for policy makers and academics since they can test theories while also evaluating the impact of a specific intervention in the real world the evidence from nfes shows that deterrence approaches improve compliance while the case for non deterrence approaches is less conclusive at the moment nfes could be improved by paying more attention to findings from behavioural science that apparently incidental factors such as timing framing and complexity substantially affect whether compliance occurs or not new directions for future studies include network effects tax payments in addition to declarations the behaviour of firms the provision of public goods and the relationship between attitudes and behaviour

evaluating the economic effects of flat tax reforms using synthetic control methods tax reforms are often motivated by their potential to improve economic performance however their actual impacts are difficult to quantify we analyze the impact of flat tax reform on incomes using synthetic control methods we identify the eight eastern and central european countries that adopted flat tax systems between 1994 and 2005 and then compare post reform gdp per capita of treated countries with a convex combination of similar but untreated countries while accounting for the time varying impact of unobservable heterogeneity we find positive impacts in all eight countries with seven out of eight cases significant at the conventional level