service sector restrictiveness and economic performance an estimation for the mena region this article aims to assess barriers to service provision in the banking and telecom sectors of four middle east and north africa mena countries and the impact of these barriers on firm performance our methodology involves the computation of aggregate and modal trade restrictiveness indices tris by sector and utilisation of these tris as regressors of firms economic performance our analysis shows that significant regulatory reforms have taken place in the service sectors over the last decade in the mena region but that a broad range of restrictions still remain the most significant change in these service sectors has been the lifting or softening of constraints on foreign equity participation these regulatory reforms however have had varying degrees of impact on market structure depending on the country the sector and the mode moreover service restrictions have had an impact on economic performance in the three studied sectors while a rent creating effect seems to dominate restrictions on banking and fixed telecom sectors a cost inefficiency effect seems to dominate the mobile telecom sector finally we find evidence of interactions between modal restrictions for banking services our results suggest a complementarity between modes 3 and 1 as well as a substitution effect between modes 3 and 4 in the banking sector

advertising sunk costs and barriers to entry this paper tests hypotheses about the entry deterring effects of advertising the model isolates three separate effects of advertising on entry the effect on the irrecoverable costs of entry the effect on the uncertainty underlying the entry environment and the effect on the measured rates of profit we find that advertising impedes entry since necessary advertising expenditures give rise to a sunk cost which raises the risk of entry however we also find a countervailing force due to advertising in that the entrant perceives a greater likelihood of success in markets where advertising is important our analysis shows that the overall impact of advertising on entry is positive

normal costs and demand effects in price setting a study of retailing the study aims at contributing to the debate whether there are demand effects in models that seek to explain prices as mark ups on costs for costs it considers actual costs normal costs and an intermediate model with a partial adjustment to the deviation of actual from normal costs for demand effects it considers an effect on the price level of a change of demand with an allowance for asymmetry between demand growth and demand decline tests and estimates are conducted on the basis of data from retailing

a geometric note on some propositions in spatial pricing policy abstract this note uses a simple geometric device to derive rules for identifying the shape of delivered price schedules it is shown that the predatory pricing is not compatible with profit maximisation in situations where consumers are characterised by identical local demand functions only if demand functions vary over space in particular ways is it likely that predatory pricing can be justified as a profit maximising response

concentration of marketing channels and brand level retailer margins evidence from japan this article investigates the impacts of marketing channel concentration at each distributive channel stage on brand level retailer gross margins a unique official japanese dataset the national survey of prices which reports brand level wholesale prices as well as retail prices of national brand items in various consumer product categories enables us to estimate the retail margin directly for each specified brand the most notable conclusion is that an inverse relationship is found between brand level retailer margins and the degree of wholesaler concentration which is consistent with empirical results in previous marketing and economic studies that investigated the impacts of manufacturer concentration on category level retailer margins

demand uncertainty and sales a study of fashion and markdown pricing the theory of clearance sales is expanded and applied to explain why markups markdowns and the frequency of sales of merchandise sold by department stores have increased dramatically in recent years and why they differ across merchandise groups tha major theme of the paper is that the growing role of fashion and product variety is an important reason for these increases and for the differences between merchandise groups the growing importance of fashion is illustrated by documenting the declining use of whites and the increasing use of colors and prints estimates of the effects of imports and technological and demographic changes on markups and markdowns are presented copyright 1988 by american economic association

modelling the ff mm rate by threshold cointegration analysis this paper investigates a sticky price model of exchange rate determination extension of krugman s target zone model with price inertia applied to the french franc a novel theoretical argument is considered threshold cointegration such that the long run relationship between the parity and its fundamentals is dormant within a certain range of disequilibria but is restored when the system crosses the boundaries over the period 1987 1993 nonlinearities in the ff dm rate consistent with the credibility of this target zone were detected by pointing out a band reversion mechanism a shock persistence analysis which highlights a nonlinear reversion of the exchange rate deviation is also implemented

the outputs of retail activities concepts measurement and evidence from u s census data the authors develop a new economic framework for the empirical analysis of retail margins this framework formalizes the role of distribution services as outputs of retail activities their main results are the following the measures of outputs of retail activities identified in the data perform as important and robust determinants of retail margins variables that purport to capture oligopolistic features of market structure play a limited or no role in determining retail margins quantity setting and price setting under the assumptions of profit maximization and monopolistic competition are categorically rejected by the data the data base is information on 49 retail sectors from the 1982 u s census of retail trades copyright 1993 by mit press

selling costs and switching costs explaining retail gasoline margins recent theoretical work has shown that price discrimination can take place in imperfectly competitive as well as monopoly markets the persistence of higher retail margins on unleaded than on leaded gasoline during the 1980s suggests that discrimination may occur even in very competitive markets this article studies a number of cost based explanations for such gasoline pricing as well as the possibility of price discrimination the analysis indicates that gas stations discriminate against groups of customers who are less likely to switch to another station the conclusions highlight the influence of shopping or search costs on pricing decisions even in markets thought to be quite competitive

the europe u s productivity gap in a rear view mirror will measurement differences in the services sector output please rise the deterioration in 1995 of europe s productivity performance relative to the u s coincided with the renaissance of the u s statistical system which can be regarded by now as the frontier in official statistics this paper raises the natural question whether the european statistical system was left at the station while its u s counterpart departed making it possible for measurement differences to become the primary suspect for the existing productivity gap my retrospective review of the development path in the services sector productivity statistics suggests that europe lags significantly behind the u s in the services producer price index program both in terms of scope and timing of its implementation accordingly the role of these measurement differences in the post 1995 europe u s productivity story cannot reasonably be ruled out the paper concludes with a structured guess that provides a circumstantial evidence on the benefits generated by the upgrades in the u s services sector statistics the results show that these enhancements led to two kinds of benefits during the post 1995 period a considerable reduction in the contribution of industries that traditionally dampened the aggregate productivity trend combined with a larger contribution of those that generally lifted it this contrasts markedly with europe where the contribution of these two sources remained unchanged in the meantime

the welfare effects of distribution regulations in oecd countries i introduction the distribution sector plays a crucial and large role in most economies 1 in the g 7 united states japan germany france united kingdom italy and canada distribution s share of gross domestic product gdp ranges from 8 to 15 and its share in employment ranges from 11 to 19 pilat 1997 table 2 1 because almost all goods in an economy pass through this sector distribution can heavily influence prices for consumer goods in particular these price effects can be large in organisation for economic cooperation and development oecd countries consumer prices for final goods exceed the corresponding producer prices by 40 and more in addition to indeed because of its economic importance distribution producers enjoy substantial political clout and have won many favorable regulations from the political process see kalirajan 2000 and pilat 1997 these regulations may impose large welfare costs and may exert a large influence on trade flows nonetheless relatively few publications rigorously analyze the potential overall welfare and trade effects of deregulating distribution this study seeks to fill some of that void i first provide a brief overview of distribution regulations then i present new internationally comparable distribution margins data for a sample of eight oecd countries these data are used to infer the extent to which distribution regulations reduce efficiency for four of these countries i conduct an applied general equilibrium age analysis of the welfare effects of high margins and find that they impose large costs rivaling those of protection it appears that efforts to increase economic welfare should not ignore the potentially large gains from liberalizing distribution this article also examines the relationship between restricted distribution and imports ii distribution regulations several studies have described a variety of distribution regulations in oecd countries nicoletti 2001 boylaud 2000 kalirajan 2000 and pilat 1997 provide excellent overviews these studies imply that despite some liberalization many impediments remain the most burdensome regulations include restrictions on large stores onerous business set up rules restrictive zoning laws and other real estate regulations limits on product ranges store hours and pricing and monopoly distributors for certain products such as pharmaceuticals liquor and tobacco in addition many local regulations work under the radar of studies such as these the limited literature on the subject implies that distribution regulations reduce welfare pellegrini 2000 estimates that deregulating retail trade would increase italian gdp by more than 1 japan s economic planning agency 1996 finds that loosening restrictions on large retailers has increased japanese gdp by 1 pilat 1997 cites a european commission study that finds that liberalizing store hours has greatly increased consumer welfare carree and nijkamps 2001 find efficiency gains after entry barrier removal in the netherlands nicoletti 2001 concludes both simulation and econometric studies point unequivocally to potentially large welfare gains from the liberalization of retail trade also burda 2000 and studies cited in nicoletti 2001 find that employment would increase not decrease with liberalization these studies provide valuable information but none simulate the effect of a country s total package of distribution regulations on welfare i do so by exploiting age modeling which takes account of links among industries and nations to produce broad brushed estimates of inflated margins effects in multiple countries distribution s widespread influence on an economy makes an age approach especially important 2 iii measuring margins the underlying data the distribution margins data grow out of protection data developed in bradford 1998 2003

retailers strategies and food price dynamics evidence from dairy scanner data abstract we investigate the relationship between retailers strategies and dairy price dynamics using high frequency italian scanner data for different dairy products we compute a weekly drift free price index specific for product category chain and type of store exploiting the unbalanced panel data structure to control for unobservable strategies by chain time and type of store we test if unobservables are statistically significant in influencing the price dynamics of each of the products covered by our analysis in general chain and type of store specific unobservables play a significant role moreover we identify the role of some observable strategic variables in controlling or in stimulating price inflation rates we obtain mixed results on the relationship between private label pl market shares and price trend while we find price promotions to be more effective if applied to national brands nbs rather than pls we conclude with some implications for the potential role of public policies in controlling food inflation

economic success factors in spanish small retail businesses an analysis based on sector relative definitions the purpose of this study was to carry out a sectorial analysis of the strategic profile of successful small businesses in spanish retailing first a one dimensional statistical formalisation of the concept of small business was proposed based on yearly sales revenue and relative to the sector likewise some statistical formalisations of the concept of economic success were proposed based on profit margins and also relativised according to sector once a conceptual framework was established a sectorial model of strategic characterisation of successful small retailing firms was developed the results of applying these proposals to the spanish retail industry confirmed the importance of a sectorial approach as opposed to an overall analysis

spatial competition and spatial price discrimination the analysis of spatial competition under conditions of free entry which derives its major impetus from the seminal work of losch 1954 has been conducted in general on the assumption that the competitive firm will adopt an f o b pricing scheme see for example capozza and van order 1978 and holahan 1978 greenhut 1956 does consider some of the implications of discriminatory pricing within competitive markets but his analysis adopts an essentially short run view and provides little rationale for the choice of such a pricing policy by competitive firms this is in contrast with developments in the analysis of spatial monopoly the early work of singer 1937 and hoover 1937 and subsequent developments by for example greenhut 1956 beckmann 1976 beckmann and ingene 1976 greenhut and greenhut 1977 holahan 1975 and norman 1977 indicate that the spatial monopolist should adopt a discriminatory spatial pricing policy where spatial price discrimination is taken conventionally to mean that delivered prices do not follow an f o b scheme but that all concumers equidistant from a particular supplier pay the same price it is rarely however that the results generated by the analysis of spatial monopoly are reconsidered in the analysis of spatial competition in particular although we know that spatial price discrimination will in general increase a monopolist s profit the assumption that profit maximising spatially competitive firms will adopt f o b pricing schemes has rarely been questioned and has not been questioned within the loschian competitive framework greenhut and ohta 1975a chapter 8 and chapter 8 appendix i are notable exceptions but in both cases they depart from the loschian scheme the first objective of this paper is therefore to show that when loschian competitive firms are allowed the option of discriminatory pricing i e are free of institutional constraints which require f o b pricing they will be forced to exercise that option in order to maintain normal profits secondly we shall show that if competitive conditions change the form of price discrimination will also change and that under certain competitive conditions the degree of discrimination will increase with the degree of competition leading eventually to uniform pricing thirdly we compare two competitive cases with multi plant monopoly and derive the spatial analogue of the conventional spaceless monopoly perfect competition comparison the monopolist s plants will be larger in area and total output than each competitive firm but will supply less per consumer at a higher average price welfare comparisons are less clear cut in that they are dependent upon the type of competition we assume we show however that welfare maximisation requires marginal cost pricing where marginal cost includes transport costs and so requires f o b pricing if there are economies of scale to production it follows that welfare maximisation will require production subsidy

the outputs of retail activities french evidence a new economic framework is applied to the empirical analysis of retail margins this framework is founded on the definition of profits and incorporates recent theoretical developments formalizing the role of distribution services as outputs of retail activities the main results are the measures of outputs of retail activities identified in the data perform as important and robust determinants of retail margins variables that purport to capture the oligopolistic features of market structure have little association with the variation in retail margins hypotheses of price setting and quantity setting under the assumptions of profit maximization and monopolistic competition are categorically rejected by the data the data base is information on 50 retail sectors from the 1982 survey of firms in commerce and the 1983 survey of firms in services reported by insee

time varying threshold cointegration and the law of one price a theoretical model of the law of one price which allows for seasonality in transaction costs and supply and demand conditions between markets is developed bivariate three regime threshold vector error correction models are applied to natural gas markets to examine seasonality in threshold levels results indicate that there are nonlinear adjustments to the law of one price in seven pair wise markets chicago is used as the base market in the natural gas sector dynamic threshold effects relative to the chicago market vary depending on season geographical location and whether the market is an excess producing or consuming market

price discrimination in grocery trade evidence from italy this paper investigates the determinants of price dispersion between staple and non staple goods in grocery retailing as the result of pricing decisions by multiproduct firms theoretical predictions about the nature of supermarkets pricing behaviour are compared and tested empirically using disaggregated data from the italian grocery trade over the period 1990 1992 the empirical results provide evidence for the existence in all types of retail organization of the form of price discrimination suggested by bliss particularly for specialist shops the results are consistent with discrimination due to the exploitation of consumers switching costs

on the extent of the market wholesale gasoline in the northeastern united states this paper develops the classical view of the extent of markets by introducing explicitly in the analysis the concept of arbitrage costs arbitrage or transaction costs imply that market boundaries are essentially stochastic while a set of products or regions may have binding arbitrage conditions i e may be in the same market at a given point in time they may not at another thus in defining a market the probability that a set of agents or regions would h3ve binding arbitrage conditions has to be assessed this paper develops an econometric methodology to estimate the transaction costs required to arbitrage among a given set of products as well as the probability that that set of products would be bound by binding arbitrage condi tions finally the methodology is applied to wholesale gasoline in the northeastern part of the united states address for communications pablo t spiller herbert hoover memorl l bldg 9348 stanford ca 94305

a model of retail formats based on consumers economizing on shopping time retailers in developed countries increasingly provide one stop shopping why are they responding to growing demand for time saving convenience or are they responding to economies of scale made possible by new retail technology and what role if any is played by improvements in automotive refrigeration and other consumer technology to examine these questions we develop a model that can help explain the growth of one stop shopping estimate the model with aggregate grocery retail data and compare the implications of our model with competing explanations our model includes several desirable features 1 the extent of one shop shopping is endogenously determined 2 consumer store choice is determined in an explicit household production utility maximizing context this choice is based on a tradeoff between time saving shopping convenience and price 3 the model is readily amenable to empirical testing the key endogenous parameter of our model describes the number of categories carried by a store in the context of grocery retailing this parameter can distinguish between a single category specialty store a simple grocer a supermarket and a large superstore this parameter is determined by the interplay of consumers economizing on shopping time and retail competition in the presence of technological constraints which relate operating cost with assortment size our approach may also be viewed as an example of how the boundary between retail service production and household service production can be modeled as a market outcome in the spirit of betancourt and gautchi betancourt roger david gautschi 1990 demand complementarities household production and retail assortments marketing sci 92 spring 146 161 and wernerfelt wernerfelt birger 1994 an efficiency criterion for marketing design j marketing res 31november 462 470 the nature of extant retail formats and other channel related institutions circumscribes the boundary between retailers and households with the notable early exception of baumol and ide baumol william j edward a ide 1956 variety in retailing management sci 31 october 93 101 few explicit models describe retail format determination as an equilibrating market mechanism our model describes the determination of one aspect of retail formats namely the extent of one stop shopping our hope is that similar approaches can be used to describe other aspects and types of emergent retail formats we estimate our model using u s aggregate annual data for a 26 year period and later corroborate parts of the analysis using cross sectional data for the 48 contiguous states of the u s the equilibrium conditions of our model translate into a system of two equations with two endogenous variables estimates of the reduced form parameters provide our central empirical finding that per capita disposable income has had a significant positive effect on both supermarket assortment as expected from our model and store operating costs perhaps somewhat less expected this suggests that greater prevalence of one stop shopping has been a response to growing demand for time saving convenience the estimates of the underlying structural parameters also provide a measure of the imputed net savings to consumers from supermarket shopping taking into account reductions in shopping time made possible by supermarkets savings equivalent to approximately 2 2 of expenditures on grocery products over the 1961 1986 period we lastly consider competing hypotheses while a number of explanations can account for increased store assortment these explanations have divergent implications for retail margins operating costs and profits these implications suggest that retail scale economies were not the drivers of one stop shopping in the years of our data nor was the impetus to increase store size primarily a desire to bring in new higher margin items however we acknowledge that transportation and inventory holding technologies are prerequisites to one stop shopping and that improvements in these technologies were particularly important in the early growth period of supermarkets

threshold cointegration and purchasing power parity in the pacific nations the paper uses a threshold cointegration methodology to explore the properties of long run purchasing power parity ppp in the pacific nations using japan and the usa as base countries it is shown that long run ppp holds for most asian countries but that the adjustment mechanism is asymmetric in contrast to symmetric error correction models it is found that asymmetric adjustments of nominal exchange rates play an important role in eliminating deviations from long run ppp

dominant firms and their alleged decline abstract by way of a survey of recent literature on the theory of strategic competition this paper focuses on the question of whether dominant firms decline the traditional argument suggesting decline is found to be based on a rather unsatisfactory modelling of dominance and more acceptable conceptualizations suggest that such privileged positions will persist

the role of prices in measuring the poor s living standards in this paper we revisit two pieces of conventional wisdom in the current debate about poverty paying close attention to the price data underlying these findings that the poor pay more than households of higher income for the goods and services they purchase and that poverty rates at least as measured by the u s census have remained essentially flat since the late 1960s raising questions about the success of the policies implemented to reduce poverty by examining scanner data on thousands of household purchases we find that the poor pay less not more for the goods they purchase and by extending the advances on price measurement in the recent decade back to the 1970s we find that current poverty rates are less than half of the official numbers

dynamic market strategy under threat of competitive entry an analysis of the pricing and production policies open to the multinational company there is extensive evidence indicating that firms price discriminatorily over their market areas where price discrimination is defined to exist when the pattern of delivered prices departs from that which would be generated by f o b pricing see greenhut greenhut and li 8 hwang 10 phlips 16 underlying this evidence is an equally extensive body of theory which attempts to explain why such discriminatory pricing rules should be adopted both in competitive and monopolistic markets see capozza and van order 3 greenhut and greenhut 7 norman 15 one limitation of this theory is that it is essentially static even when competitive reactions and interdependencies are introduced there is no truly dynamic analysis rather the theory concentrates on comparing long run equilibria with perhaps some limited comment on how those equilibria might be achieved the analysis of price changes over time has received some attention notably by gaskins 6 jacquemin and thisse 11 and phlips 17 in these cases however analysis is spaceless while some analogies are drawn between intertemporal and spatial price discrimination these analogies are inevitably weak the major objective of this paper is to treat the spatial and temporal problems simultaneously we ask whether the pricing rules and market choice of a firm operating over a spatially extensive market area will vary when it is placed in a dynamic setting in particular we investigate the pricing behaviour of a firm to which we shall refer as the leading firm when it is subject to the threat of competitive entry in certain of its markets our model owes much to the analysis by gaskins 6 but we show that gaskins analysis applies to only part of the spatial market area once we allow for the costs of distance in particular we show that if the firm enjoys a substantial long run cost advantage in particular markets it will adopt a pricing rule identical to that derived in the static monopolistic case this can be expected to be a very

network models of spatial oligopoly with an application to deregulation of electricity generation because of the existence of transmission costs and significant scale economies in power production deregulation of electricity generation would lead to spatial oligopolistic markets this paper uses linear programs to obtain short run spatial price equilibria for a deregulated bulk power market in upstate new york these models unlike most previous models of imperfect competition capture spatial variations in production costs and demand functions we present two models one calculates a nash bertrand equilibrium in which each firm believes that rivals will not react to price changes this equilibrium represents the most intense level of competition to be expected the other model yields limit prices that are designed to discourage new firms from entering the market

does the law of one price really hold for commodity prices in spite of the empirical failure of the law of one price it is usually assumed that commodity prices are perfectly arbitraged at least in the long run this paper argues that this assumption is counterfactual and that much of the empirical evidence provided to support it is flawed and affected by econometric shortcomings spurious regressions nonstationarity in the data inappropriate use of first differences an alternative methodology co integration by which a long run relationship between nonstationary series can be tested is proposed tests of nonstationarity and co integration for a group of commodities show quite uniformly that the law of one price as a long run relationship fails and that deviations from the pattern are permanent

effects of the structural change on transaction costs between north america natural gas spot markets abstractthreshold cointegration between market pairs before and after the potential structural break associated with the shale gas revolution is examined pairwise transaction costs differ between the pre and post break periods during the post break period five of seven pairwise transaction costs decrease while the remaining two pair wise transaction costs increase relative to the pre break period alterations in natural gas flows as the result of the shale gas revolution partially explain the changes in transaction costs

using threshold cointegration to estimate asymmetric price transmission in the swiss pork market this paper employs threshold cointegration tests that allow for asymmetric adjustment towards a long run equilibrium relationship to examine the relationship between producer and retail pork prices in switzerland the short run adjustments are also examined with asymmetric error correction models that are compared to the conventional symmetric error correction models the results indicate that price transmission between the producer and retail levels is asymmetric in the sense that increases in producer prices that lead to declines in marketing margins are passed on more quickly to retail prices than decreases in producer prices that result in increases in the marketing margins

spatial market integration in the presence of threshold effects a large body of research has evaluated price linkages in spatially separate markets much recent research has applied models appropriate for nonstationary data such analyses have been criticized for their ignorance of transactions costs which may inhibit price adjustments and thus affect tests of integration this analysis utilizes threshold autoregression and cointegration models to account for a neutral band representing transactions costs we evaluate daily price linkages among four corn and four soybean markets in north carolina nonlinear impulse response functions are used to investigate dynamic patterns of adjustments to shocks our results confirm the presence of thresholds and indicate strong support for market integration though adjustments following shocks may take many days to be complete in every case the threshold models suggest much faster adjustments in response to deviations from equilibrium than is the case when threshold behavior is ignored a large amount of empirical research has evaluated the extent to which spatially separate markets are integrated though the term is used loosely in the literature tests of market integration usually consider the extent to which shocks are transmitted among spatially separate markets the integration of markets can have important implications for price discovery and the operation of the market since persistent deviations from integration may imply riskless profit opportunities for spatial traders

spatial market arbitrage and threshold cointegration goodwin and piggott reported that corn and soybean prices in spatially separated markets in north carolina exhibited threshold cointegration and that commodity prices in different markets may persistently diverge here a multivariate approach is used to test for threshold cointegration and nonlinear cointegration the results suggest that departures from the law of one price do not persist indefinitely goodwin and piggott gp examined daily corn and soybean prices across spatially separated markets in north carolina and reported that bivariate pairings of prices were threshold cointegrated gp used a twothreshold model in which price differences across markets could persist indefinitely they concluded that empirical models should consider threshold effects in order to adequately characterize spatially integrated markets the purpose of this article is to extend the gp analysis in several directions gp employed the techniques of martens kofman and vorst which involve a multistepped search for thresholds in the residuals of a cointegrating regression this single equation search process is subject to potential misspecification so it is interesting to determine whether the direct multivariate test of threshold cointegration of hansen and seo provides confirmatory evidence in addition gp allowed two thresholds to affect each commodity pair without directly testing for the number of thresholds the second extension uses hansen tests to determine the number of thresholds two thresholds imply no arbitrage bounds that allow persistent departures from the law of one price one threshold is consistent with the traditional view that price differentials are fleeting as arbitrageurs drive excess returns to zero the final extension recognizes that spatially integrated markets might follow a nonlinear relationship that depends on transactions costs peter s sephton is professor school of business queen s university kingston ontario canada the author would like to thank nick piggott for providing his dataset and the dean s research fund in the school of business for financial assistance two anonymous referees provided helpful comments sufficiently large deviations from the law of one price should lead to a reduced price dispersion a direct test of nonlinear cointegration demonstrates that price differences tend to be resolved over time background