upward pricing pressure in two sided markets measuring upward pricing pressure upp has recently been proposed by farrell and shapiro 2010 as an alternative screening device for horizontal mergers we extend the concept of upp to two sided markets examples of such markets are the newspaper market where the demand for advertising is related to the number of readers and the market for online search where advertising demand depends on the number of users the formulae we derive depend on four sets of diversion ratios that can either be estimated using market level demand data or elicited in surveys in an application we show that it is important to take the two sidedness of the market into account when evaluating upp

tipping and concentration in markets with indirect network effects this paper develops a framework for measuring tipping the increase in a firm s market share dominance caused by indirect network effects our measure compares the expected concentration in a market to the hypothetical expected concentration that would arise in the absence of indirect network effects in practice this measure requires a model that can predict the counterfactual market concentration under different parameter values capturing the strength of indirect network effects we build such a model for the case of dynamic standards competition in a market characterized by the classic hardware software paradigm to demonstrate its applicability we calibrate it using demand estimates and other data from the 32 64 bit generation of video game consoles a canonical example of standards competition with indirect network effects in our example we find that indirect network effects can lead to a strong economically significant increase in market concentration we also find important roles for beliefs on both the demand side as consumers tend to pick the product they expect to win the standards war and on the supply side as firms engage in penetration pricing to invest in growing their networks

quantitative analysis of network externalities in competing technologies the vcr case we develop a dynamic structural model of consumers choices and producers pricing in an oligopolistic market for newly introduced durable products with network externalities the model is then applied to empirically analyze the de facto standardization of the vhs format in the u s home vcr market during 1981 1988 we find i the network advantage of vhs explains at least 70 3 to 86 8 of the logarithm of relative sales of vhs to betamax in each year ii an increase in the network advantage of vhs was an engine of tipping toward the vhs format and iii in the early 1980s the network advantage of vhs was mainly due to its expected growth advantage

ownership consolidation and product characteristics a study of the us daily newspaper market this paper develops a structural model of newspaper markets to analyze the effects of ownership consolidation taking into account not only firms price adjustments but also the adjustments in newspaper characteristics a new dataset on newspaper prices and characteristics is used to estimate the model the paper then simulates the effect of a merger in the minneapolis newspaper market and studies how welfare effects of mergers vary with market characteristics it finds that ignoring adjustments of product characteristics causes substantial differences in estimated effects of mergers jel g32 l13 l82 m37 do mergers affect product characteristics standard merger analyses typically study price effects only and ignore changes in product characteristics this paper endogenizes both it is likely that firms would adjust the features of their products after a merger ignoring this aspect of firm decisions in a merger analysis can lead to a bias in estimated welfare effects specifically i study how ownership consolidation affects product characteristics and welfare in the us daily newspaper market the newspaper market provides an ideal environment for analyzing the effect of mergers on product features for both econometric and economic reasons first of all individual newspapers often circulate in local markets there is substantial variation in demographics and ownership structure across these markets this variation is crucial for this study secondly the characteristics of newspapers are obviously important for welfare for example after an ownership consolidation do newspaper publishers improve or diminish the content quality do they enlarge or shrink the local news ratio do they increase or decrease content variety to address these questions i set up a structural model of the us daily newspaper

the economics of two sided markets at a local best buy a child places a new sony playstation 3 on the cashier s counter while the parents dig out their visa card the gaming system and the payment card may appear to have little connection other than this purchase however these two items share an important characteristic that is generating a series of economic insights and has important implications for strategic decision making and economic policymaking both video game systems and payment cards are examples of two sided markets broadly speaking a two sided market is one in which 1 two sets of agents interact through an intermediary or platform and 2 the decisions of each set of agents affects the outcomes of the other set of agents typically through an externality in the case of a video game system the intermediary is the console producer sony in the scenario above while the two sets of agents are consumers and video game developers neither consumers nor game developers will be interested in the playstation if the other party is not similarly a successful payment card requires both consumer usage and merchant acceptance where both consumers and merchants value each others participation many more products fit into this paradigm such as search engines newspapers and almost any advertisersupported media examples in which consumers often negatively value rather than positively value the participation of the other side as well as most software or title based operating systems and consumer electronics malls which seek retailers and consumers convention organizers which seek buyers and sellers dating services which seek men and women and the journal of economic perspectives which seeks content and readership all experience the economics of two sided markets the multi sided nature of many internet and high technology markets as well as

a theory of interlinked rural transactions this paper argues that the interlinking of labor output and credit contracts often observed in rural economies can be regarded as an attempt to improve allocative efficiency in the face of moral hazard it advances an economic explanation of the phenomenon which is rooted in the view that prevalent modes of transaction of which interlinked contracts are an example are shaped by technological considerations interlinking is shown to be an efficient economic response to unequally distributed information arising from the uncertainty which characterizes subsistence agriculture all pareto efficient allocations require a combination of wage cum output sharing with consumption credit contracts the analytical framework set up to demonstrate the results is used to examine the response of the contractual parameters to changes in i the returns to alternative occupations available to tenant laborers ii the cost of credit to the village economy and iii the riskiness of cultivation the analysis concludes that public policy to alleviate rural poverty must recognize the relationships between technological considerations and modes of transaction in the absence of a complete set of markets

labor tying in a poor agrarian economy a theoretical and empirical analysis in this paper we show how tied labor contrary to its common characterization as a feudal relic and as a symptom of economic stagnation may actually be strengthened by capitalist agricultural development we construct a simple two period theoretical model of a two tiered labor market to show how the proportional importance of voluntary labor tying contracts may increase with yield increasing improvements and with a tightening of the labor market we then provide in support of these hypotheses some general historical as well as more detailed econometric evidence from a variety of cross sectional data in rural india

platform competition in two sided markets many if not most markets with network externalities are two sided to succeed platforms in industries such as software portals and media payment systems and the internet must get both sides of the market on board accordingly platforms devote much attention to their business model that is to how they court each side while making money overall this paper builds a model of platform competition with two sided markets it unveils the determinants of price allocation and end user surplus for different governance structures profit maximizing platforms and not for profit joint undertakings and compares the outcomes with those under an integrated monopolist and a ramsey planner jel l5 l82 l86 l96

hedonic price indexes for spreadsheets and an empirical test for network externalities in this article i first estimate hedonic price equations for computer spreadsheet programs and then use the analysis to empirically test whether network externalities exist in this industry the study shows that consumers are willing to pay a significant premium for spreadsheets that are compatible with the lotus platform and for spreadsheets that offer links to external databases and a similar premium for spreadsheets that offer local area network externalities finally the quality adjusted real price of computer spreadsheets declined by approximately 15 per year from 1986 to 1991

market provision of broadcasting a welfare analysis this paper presents a theory of the market provision of broadcasting and uses it to address the nature of market failure in the industry advertising levels may be too low or too high depending on the nuisance cost to viewers the substitutability of programs and the expected benefits to advertisers from contacting viewers market provision may allocate too few or too many resources to programming and these resources may be used to produce programs of the wrong type monopoly ownership may produce higher social surplus than competitive ownership and the ability to price programming may reduce social surplus

advertising as information an empirical note lamm r mcfall unionism and prices in the food retailing industry journal of labor research 3 winter 1982 69 79 marion bruce w willard f mueller ronald w cotterill frederick e geithman and john r schmelzer the food retailing industrv market structure profits and prices new york praeger 1979a the price and profit performance of leading food chains a merican journal of a gricultural economics 61 aug 1979b 420 433 salinger michael a tobin s q unionization and the concentration profits relationship rand journal of economics 15 summer 1984 159 170 voos paula b and lawrence r mishel the union impact on profits evidence from the supermarket industry working paper no 88 north central project 117 university of wisconsin madison oct 1985 the union impact on profits evidence from industry price cost margin data journal of labor economics 4 jan 1986 105 133

platform intermediation in a market for differentiated products we study a two sided market where a platform attracts firms selling differentiated products and buyers interested in those products in the subgame perfect equilibrium of the game the platform fully internalises the network externalities present in the market and firms and consumers all participate in the platform with probability one the monopolist intermediary extracts all the economic rents generated in the market except when firms and consumers can trade outside the platform in which case consumers obtain a rent that corresponds to the utility they would get if they did trade outside the platform the market allocation is constraint efficient in the sense that the monopoly platform does not introduce distortions over and above those arising from the market power of the differentiated product sellers an increase in the number of retailers increases the amount of variety in the platform but at the same time increases competition as a result the platform lowers the firm fees and raises the consumer charges in contrast an increase in the extent of product differentiation raises the value of the platform for the consumers but weakens competition in this case the platform raises both the charge to the consumers and the fee for the firms

network effects software provision and standardization in this paper we examine the software provision decision of software firms the provision decision by software firms determines the value and hence the market share of competing hardware technologies we show how the provision decision by software firms determines whether multiple hardware technologies are supported in equilibrium or whether there is de facto standardization with only one hardware technology supplied with software in equilibrium we show that when consumers place a high value on software variety there is a suboptimal amount of standardization by the market

consumers use of debit cards patterns preferences and price response debit card use at the point of sale has grown dramatically in recent years in the united states and now exceeds the number of credit card transactions however many questions remain regarding patterns of debit card use consumer preferences when using debit and how consumers might respond to explicit pricing of card transactions using a new nationally representative consumer survey this paper describes the current use of debit cards by u s consumers including how demographics affect use in addition consumers stated reasons for using debit cards are used to analyze how consumers substitute between debit and other payment instruments we also examine the relationship between household financial conditions and payment choice finally we use a key variable on bank imposed transaction fees to analyze price sensitivity of card use and find a 12 decline in overall use in reaction to a mean 1 8 fee charged on certain debit card transactions we believe this represents the first microeconomic evidence in the united states on price sensitivity for a card payment at the point of sale

diffusion of a new product under network effects the us dvd market we formulate a model that captures the inter dependence between hardware demand and software supply indirect network effect in the dvd industry the identification of the network effect comes from the difference in software availability across two different formats vhs and dvd we find that a 1 increase in the number of dvd titles raises the demand for dvd players by 0 87 simultaneously a 1 increase in video player ownership leads to a 0 14 increase in the variety of video titles our simulations show that hardware manufacturers might be able to internalize the network externality to increase total industry revenues

the welfare impact of medicare hmos we estimate the welfare associated with the medicare hmo program now known as medicare choice m c we find that the creation of the m c program resulted in approximately 15 6 billion in consumer surplus and 52 billion in profits from 1993 to 2000 in 2000 dollars this program most likely generated significant net social welfare however we find that consumer surplus is geographically unevenly distributed prescription drug coverage accounts for approximately 45 of the estimated consumer surplus for 2000 consumer surplus increases in the number of plans in a county and most of the increase in welfare is due to increased premium competition

sequential location games we study location games where market entry is costly and occurs sequentially and where consumers are nonuniformly distributed over the unit interval we show that for certain classes of densities including monotone and under some additional restrictions hump shaped and u shaped ones equilibrium locations can be determined independently of when they are occupied our analysis reveals a number of peculiarities of the uniform distribution extensions of the model allow for price competition and advertisement in media markets winner take all competition trade offs between profits in the short and the long run and firms operating multiple outlets

an empirical analysis of competitive nonlinear pricing abstract we estimate a model of competitive nonlinear pricing with multidimensional preference heterogeneity using individual level data on advertisements bought by local businesses e g doctors electricians from two yellow page directories in one u s city market variation in individual choices and payments allows us to identify the joint density of preferences marginal costs of publishing and common utility parameters our estimates suggest substantial welfare loss due to asymmetric information comparing duopoly outcomes with counterfactual monopoly outcomes we find that with less competition i producer surplus increases substantially ii more low type consumers are excluded iii product variety increases but benefits accrue only to the high type consumers iv total consumer surplus decreases v but its distribution across consumers does not change

how does incompatibility affect prices evidence from atm s if consumers value mix and match combinations of network complements incompatibility between different sellers components should affect prices in atm markets a 1996 governance change exogenously generated such incompatibility by allowing banks to impose surcharges when other banks deposit customers use their atm s in our data incompatibility makes the relationship between deposit account pricing and own atm s more positive and makes the relationship between deposit account pricing and competitors atm s more negative the level effect on prices is positive the pattern of results is more pronounced in high population density markets where customers may care more about atm s

estimating network effects in two sided markets without data on prices and quantities abstract i develop a semi structural approach to identify network effects on two sided monopoly platforms without data on prices and quantities when total revenue data is available the test is sufficient when separate revenue data is available on the two sides the test is both necessary and sufficient

media market concentration advertising levels and ad prices standard media economics models imply that increased platform competition decreases ad levels and that mergers reduce per viewer ad prices the empirical evidence however is mixed we attribute the theoretical predictions to the combined assumptions that there is no advertising congestion and that viewers single home allowing for crowding in viewer attention spans for ads may reverse standard results as does allowing viewers to multi home jel classification d11 d43 l13

crowding out and the informativeness of security prices individual investors trade less agressively on any particular piece of information as more investors observe it the trades of the new investors observing a piece of information crowd out some of the trades of the old investors who observe that same piece of information this paper shows that when traders are risk averse these crowding out effects lead the proportions of traders who choose to observe one signal versus another to differ from the proportions that maximize the informativeness of prices one of the principal functions of security markets is to provide incentives for individuals to collect economically relevant information and then to incorporate this information into pricing this paper shows that the presence of multiple types of information can have a major impact on investors incentives to acquire information and the informativeness of the resulting security price specifically the model studies the case in which there are two factors a and b whose sum is the asset s payoff and a fixed pool of investors each of which is about to choose whether to learn a or to learn b the paper addresses the question will the proportion of investors who choose to learn a in equilibrium maximize the security price s ability to predict terminal value the paper finds that when traders are risk averse the answer is no and that there is a clear economic interpretation for the forces which push the equilibrium allocation of information away from the allocation which maximizes price informativeness the paper also finds strikingly different results for risk neutral and riskaverse investors this suggests that intuitions gained from models with risk neutral strategic traders1 may not be robust to situations with riskaverse investors

risk aversion mandatory disclosure and the concealment of information abstract this paper studies a risk averse insider s reaction to mandatory disclosure regulations in particular we examine the effects of disclosure on price efficiency and market liquidity contrary to what people generally believe mandatory disclosure may lead to less efficient prices and less liquid markets

information expected utility and portfolio choice we study the consumption investment problem of an agent with a constant relative risk aversion preference function who possesses noisy information about the future prospects of a stock we also solve for the value of information to the agent in closed form we find that information can significantly alter consumption and asset allocation decisions for reasonable parameter ranges information increases consumption in the vicinity of 25 information can shift the portfolio weight on a stock from 0 to around 70 thus de pending on the stock beta the weight on the market portfolio can be considerably reduced with information causing the appearance of underdiversification the model indicates that stock holdings of informed agents are positively related to wealth unrelated to systematic risk and negatively related to idiosyncratic uncertainty we also show that the dollar value of information to the agent depends linearly on his wealth and decreases with both the propensity to intermediate consumption and risk aversion

advertising as information further evidence in the past 30 years the economics of information has become an important feature of the revolution in modern microeconomic theory the seminal literature includes theoretical advances by stigler 10 nelson 7 8 spence 9 and darby and karni 1 in an original approach laband 3 tests the proposition that the supply of product quality signals increases with a rise in the expected marginal return to consumers utilizing yellow pages advertisements in various urban settings in later expositions laband 4 5 provides further evidence of the durability of the informational content and the differences in information provision of television and commercial advertisements for different types of goods the present paper extends and provides alternatives to laband s tests of the impact of time costs faced by consumers on the informational content of advertising this study employs a supplementary category to laband s of credence goods developed in the literature 2 6 and analyzes the impact of income as a proxy for time and information costs with a unique intra city data set from new york city and los angeles

identification in differentiated products markets using market level data we present new identification results for nonparametric models of differentiated products markets using only market level observables we specify a nonparametric random utility discrete choice model of demand allowing rich preference heterogeneity product market unobservables and endogenous prices our supply model posits nonparametric cost functions allows latent cost shocks and nests a range of standard oligopoly models we consider identification of demand identification of changes in aggregate consumer welfare identification of marginal costs identification of firms marginal cost functions and discrimination between alternative models of firm conduct we explore two complementary approaches the first demonstrates identification under the same nonparametric instrumental variables conditions required for identification of regression models the second treats demand and supply in a system of nonparametric simultaneous equations leading to constructive proofs exploiting exogenous variation in demand shifters and cost shifters we also derive testable restrictions that provide the first general formalization of bresnahan s 1982 intuition for empirically distinguishing between alternative models of oligopoly competition from a practical perspective our results clarify the types of instrumental variables needed with market level data including tradeoffs between functional form and exclusion restrictions

capital requirements screening and interlinked sharecropping and credit contracts this paper provides one more rationale for interlinking credit and tenancy contracts in the context of production loans in an environment characterized by a heterogeneous labor pool and imperfect information landlords will have an incentive to avail themselves of screening devices by linking tenancy and credit contracts a screening device can be implemented the equilibrium set of contracts is characterized by a variety of interest rates some of which might be below the market interest rate the interest rate principal schedule is downward sloping with higher ability tenants choosing larger principals at lower interest rates

dividing online and offline a case study every new method of trade offers an opportunity for economic agents to compare its costs and benefits relative to the status quo such comparison motivates sorting across market segments and reshapes the whole marketplace the internet provides an excellent example it introduces substantial search cost savings over brick and mortar retail stores but imposes new obstacles for sellers to convey quality using sports card trading as a case study we provide empirical evidence on 1 the sorting of product quality between the online and offline segments 2 the changes for retail outlets after the internet came into place and 3 how supporting industries such as professional grading and card manufacturing adapted to take advantage of the new market copyright 2007 wiley blackwell

mixed bundling in two sided markets in the presence of installed base effects we analyze mixed bundling in two sided markets where installed base effects are present and find that the pricing structure deviates from traditional bundling as well as the standard two sided markets literature we determine prices on both sides fall with bundling mixed bundling acts as a price discrimination tool segmenting the market more efficiently consequently as a by product of this price discrimination the two sides are better coordinated and social welfare is enhanced we show unambiguously that platform participations increase on both sides of the market after theoretically evaluating the impact mixed bundling has on prices and welfare we take the model predictions to data from the portable video game console market we find empirical support for all theoretical predictions this paper was accepted by j miguel villas boas marketing

coverage of retail stores and discrete choice models of demand estimating price elasticities and welfare effects consumers choice set of products within stores can be limited ackerberg and rysman 2005 address this problem by modeling unobserved consumer preferences over products and retail stores leading to augmented demand speci cations having carbonated soft drink product level data where we observe products store coverage we are able to estimate their logit nested logit and random coe cient logit speci cations of demand in a structural model of equilibrium allowing for store coverage turns out to have a very signi cant impact on the estimated structural parameters and on the predictive power of the model taking these estimated structural parameters we perform a counterfactual whereby stores carry all products in the market we nd systematic increases in price elasticities and welfare in our new equilibrium competition in markets is more curtailed than normally assumed in structural models of industries

ghatak subrata and ken ingersent agriculture and economic development baltimore md johns hopkins university press 1984 380 pp 27 50 10 95 paper

network externality an uncommon tragedy economists have defined network externality and have examined putative inframarginal market failures associated with it this paper distinguishes between network effects and network externalities where the latter are market failures the authors argue that while network effects are important network externalities are theoretically fragile and empirically undocumented some network externalities are merely pecuniary network ownership or transactions among network participants can internalize some network effects the type of market failure that has been associated with these externalities is a transition problem that has little to do with externality

the dynamic effects of bundling as a product strategy several key questions in bundling have not been empirically examined in marketing is mixed bundling more effective than pure bundling or pure components does correlation in consumer valuations make bundling more or less effective does bundling serve as a complement or substitute to network effects to address these questions we develop a consumer choice model from microfoundations to capture the essentials of our setting the handheld video game market we provide a framework to understand the dynamic long term effects of bundling on demand the primary explanation for the profitability of bundling relies on homogenization of consumer valuations for the bundle allowing the firm to extract more surplus we find that bundling can be effective through a novel and previously unexamined mechanism of dynamic consumer segmentation which operates independent of the homogenization effect and can in fact be stronger when the homogenization effect is weaker we also find that bundles are treated as separate products distinct from component products by consumers sales of both hardware and software components decrease in the absence of bundling and consumers who had previously purchased bundles might delay purchases resulting in lower revenues we also find that mixed bundling dominates pure bundling and pure components in terms of both hardware and software revenues investigating the link between bundling and indirect network effects we find that they act as substitute strategies with a lower relative effectiveness for bundling when network effects are stronger

estimating market power in a two sided market the case of newspapers the newspaper industry is a two sided market the readers market and the advertising market are closely linked by inter market network externalities we estimate market power in the italian newspaper industry by building a structural model which encompasses a demand estimation

strategic incompatibility in atm markets abstract we test whether firms use incompatibility strategically using data from atm markets high atm fees degrade the value of competitors deposit accounts and can in principle serve as a mechanism for siphoning depositors away from competitors or for creating deposit account differentiation our empirical framework can empirically distinguish surcharging motivated by this strategic concern from surcharging that simply maximizes atm profit considered as a stand alone operation the results are consistent with such behavior by large banks but not by small banks for large banks the effect of incompatibility seems to operate through higher deposit account fees rather than increased deposit account base

competition between networks a study of the market for yellow pages this paper estimates the importance of network effects in the market for yellow pages i estimate three simultaneous equations consumer demand for usage of a directory advertiser demand for advertising and a publisher s first order condition derived from profit maximizing behaviour estimation shows that advertisers value consumer usage and that consumers value advertising implying a network effect i find that internalizing network effects would significantly increase surplus as an application i consider whether the market benefits from monopoly which takes advantage of network effects or oligopoly which reduces market power i find that a more competitive market is preferable copyright 2004 wiley blackwell

imperfect competition among informed traders we analyze competition among informed traders in the continuous time kyle 1985 model as foster and viswanathan 1996 do in discrete time we explicitly describe the unique linear equilibrium when signals are imperfectly correlated and confirm the conjecture of holden and subrahmanyam 1992 that there is no linear equilibrium when signals are perfectly correlated one result is that at some date and at all dates thereafter the market would have been more informationally efficient had there been a monopolist informed trader instead of competing traders the relatively large amount of private information remaining near the end of trading causes the market to approach complete illiquidity copyright the american finance association 2000

the dynamic spillovers of entry an application to the generic drug industry this paper examines whether experience from entry in one market can potentially enhance profitability at a future market opportunity for a related product we formulate and estimate a dynamic game of entry in which forward looking firms make decisions not just based on present benefits of past entry but also anticipating potential future benefits of current entry dynamic spillovers of entry are incorporated through a firm specific unobservable to the researcher cost that depends on past entry decisions the unobserved costs may also be serially persistent thus the model allows for firm specific unobserved heterogeneity that evolves based on firm actions the challenge of estimating a dynamic game with serially correlated unobserved state variables subject to endogenous feedback is overcome by embedding a particle filter based technique in a nested fixed point algorithm using an application to a stylized model of entry in the generic pharmaceutical industry we underscore the motivation for the model specification and the methodology developed our estimates imply positive spillover effects of entry moreover these spillovers suggest heterogeneity not just across firms but also within firms over time based on their history of entry decisions our results illustrate that entry may potentially provide firms with additional strategic advantage in later markets and that entry spillovers may be an important factor to consider in the equilibrium evolution of the generic drug industry the web appendix is available at https doi org 10 1287 mnsc 2016 2648 this paper was accepted by j miguel villas boas marketing

assessing farmers risk preferences and their determinants in a marginal upland area of vietnam a comparison of multiple elicitation techniques we examine the consistency of risk preference measures based on eight hypothetical elicitation methods and a lottery game applied to smallholder farmers in a marginal upland environment in vietnam using these measures we identify influencing factors of risk aversion via regression analysis whereby unlike previous studies we include several proxies of social capital such as social networks and norms data were collected from household heads and spouses separately in a random sample of 300 households although correlations between most of the various risk preference measures are all statistically highly significant most are weak on average respondents have a high degree of risk aversion and specific characteristics gender age idiosyncratic shocks education social norms network reliance with extended family and connections to local authorities are significant determinants of risk preferences across most elicitation methods whereas others the household s dependency ratio wealth and covariate shocks are significant in a few methods only the explanatory power of the models is limited indicating that other factors are likely to be of greater importance in determining risk preferences the results can help target safety nets encourage investments and lead to the development of more applicable methods for assessing risk preferences of smallholders in developing countries

price discrimination in political advertising evidence from the 2012 presidential election in 2010 the us supreme court loosened contribution limits to political action committees pacs sparking fears that big donors could exert outsize influence on elections by funding pac advertising however pacs are potentially handicapped when buying advertising time data from 2012 reveal that pacs pay 32 above regulated campaign rates i estimate a model of demand for advertising by pacs exploiting the misalignment of state and media market borders to address price endogeneity i find that prices reflect willingness to pay for viewer demographics rather than media bias the estimates further suggest that network owned stations discriminate more successfully than do local affiliates

targeted advertising the role of subscriber characteristics in media markets this paper seeks to establish the importance of targeted advertising in media markets using zip code level circulation for us daily newspapers i show that newspapers facing more competition have lower circulation prices but higher advertising prices than similar newspapers facing little or no competition i explain this by showing that newspapers in more competitive markets are better able to segment readers according to their location and demographics this leads to greater homogeneity in the characteristics of subscribers and raises advertisers willingness to pay for such readers the results imply a substantial benefit to advertisers and media firms from targeted advertising

the effect of public information and competition on trading volume and price volatility in a one period model of market making with many exogenously informed traders we first show that the variance of prices and expected trading volume depend on the public information released at the start of trading this is accomplished by representing beliefs with elliptically countoured distributions for which the form of optimal decision rules does not depend on the specific distribution used second if the model is altered so that the decision to become informed is made endogenous then the decision rules of the market maker and infomed traders depend on the public information third in a multiperiod model with many informed traders and long lived private information recursion formulas similar to those of kyle 1985 hold for all elliptically contoured distributions trading volume is autocorrelated and unless per period liquidity trading is bounded away from zero as new trading periods are added informed traders profits vanish article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

credit and sharecropping in agrarian societies this paper considers a model of linkage between land labor and credit transactions in the context of sharecropping the paper s objectives are a to derive and characterize the equilibrium in a model of a land scarce labour abundant economy under sharecropping given an infinitely elastic supply of identical sharecroppers at a reservation utility and b to demonstrate that in an imperfect market a landlord may offer credit to his tenant sometimes even at a subsidized rate of interest without necessarily insisting that the sharecropper borrow only from him precluding an involuntary linkage between credit and land transations it has been demonstrated that regardless of the presence or absence of linkage or any other control by the landlord as long as he can vary the size of the plot given to a tenant and there are enough potential tenants in equilibrium contracts a tenants utility under sharecropping will be the same as that which he could have obtained as a full time wage laborer this result implies that policies other than land reform will not affect the welfare of tenants

motives for private transfers over the life cycle an analytical framework and evidence for peru abstract this paper tests for the motives for private income transfers we consider two motives altruism and exchange the question of private transfer motives is important because such motivation can influence the effects of public income transfers on the distribution of income using a household survey for peru we find that transfer amounts received increase with recipient pre transfer income which contradicts a key prediction of the strong form of the altruism hypothesis but is consistent with exchange we also find that capital market imperfections are likely to be an important cause of private transfers and that social security benefits crowd out the incidence of private transfers

platform pricing at sports card conventions we study a new data set of u s sports card conventions from the perspective of the pricing theory of two sided markets conventions are two sided because organizers must set fees to attract both consumers and dealers we present several findings first consumer pricing decreases with competition but pricing to dealers is insensitive to competition and in longer distances even increases with competition second when consumer price is zero and thus constrained dealer price decreases more strongly with competition these results are compatible with existing models of two sided markets but are difficult to explain without such models

risk aversion imperfect competition and long lived information abstract this paper presents a methodology for characterizing the optimal dynamic behavior of risk averse strategic agents with private information by building on kyle econometrica 1985 53 1315 1335 it is shown that both monopolistic and competing informed traders choose to exploit rents rapidly causing market depth to be low in the initial periods and high in later periods and causing information to be revealed rapidly unlike in the case of a risk neutral monopolist considered by kyle

did installed base give an incumbent any measurable advantages in federal computer procurement this research examines the relative strength and significance of the status of incumbent contractor in federal computer procurement one finding as expected is that an agency is likely to acquire a system from an incumbent vendor another finding perhaps more interesting is that the in compatibility between a buyer s installed base and a potential system also influences the vendor choice a result that may be the first econometric measurement of the competitive effects of incompatibility an illustration of this thesis comes from ibm s experience new evidence shows however that ibm s apparent disadvantage with government agencies is largely due to incompatibilities in ibm s product line

the economics of networks a survey of the empirical literature network effects the increase in value of consuming a product if many other consumers use the same product are a feature of many markets and in particular of many high technology products this paper surveys the burgeoning empirical literature that has developed especially during the last years after theoretical work dominated the earlier years of research in this area newer research has combined theoretical models with empirical studies and applied work with direct implications for public policy marketing and company strategies furthermore insights from the study of social networks have been applied to analyse how consumers interact with each other the paper argues that a closer analysis of the network structure of consumer interaction promises fruitful future research avenues and advances in our understanding of how network effects operate copyright 2009 blackwell publishing ltd

dynamic price competition with network effects i consider a dynamic model of competition between two proprietary networks consumers die and are replaced with a constant hazard rate and firms compete for new consumers to join their network by offering network entry prices i derive a series of results pertaining to a existence and uniqueness of symmetric equilibria b monotonicity of the pricing function e g larger networks set higher prices c network size dynamics increasing dominance vs reversion to the mean and d firm value how it varies with network effects finally i apply my general framework to the study of termination charges in wireless telecommunications i consider various forms of regulation and examine their impact on firm profits and market share dynamics

network effects in the german magazine industry this paper examines the two sided network effects in the german magazine industry we specify and estimate the network effect functions for readers and advertisers nonparametrically and find that they are neither linear nor monotonic

implicit interest rates usury and isolation in backward agriculture the unusually high interest rates in many backward agricultural regions have been a source of some puzzlement to economists adding to this puzzle is the fact that these rates can take on a wide range of values often within the same region one important question is why arbitrage between sectors does not lead to more homogeneous and lower interest rates the traditional answer to this is in terms of lender s risk it is argued that moneylenders in backward regions face a great risk of default and once this is taken into account the effective interest rate turns out to be no higher than its counterpart in the organised sector consequently there is no real room for arbitrage and the high interest rates are equilibrium prices while this explanation may be of use in some situations it is in general inadequate and can even be misleading the reason which novelists describing rural india have repeatedly written about is that in these financial transactions the lender s risk frequently ranges from minimal to non existent because the personalised relation between the borrower and the lender enables the latter to extract the defaulted loan in the form of asset transfers from the borrower in a somewhat stylised manner these deals could be thought of as follows a peasant takes a loan from his employer keeping some of his assets like land a standing crop or even the promise of labour services as security or collateral a collateral price is then fixed this is the conversion price used to calculate the amount of collateral that has to be relinquished to the lender given a certain amount of default clearly the lower the collateral price the larger the quantity of collateral that the peasant has to forfeit hence the underpricing of collateral amounts to the charging of an implicit interest a widespread feature of rural credit markets reported in many diverse studies bardhan and rudra 1978 myint 1964 raj 1981 roth 1979 and sivakumar 1978 to mention just a few is the underpricing of collateral an interesting attempt to bring collateral explicitly into a model of usury was made by bhaduri 1977 see also 1983 who argued that one of the reasons why landlords raise interest rates is in fact to encourage default and to claim ownership of the asset kept as collateral a sharp contrast to the lender s risk model this hypothesis has deservedly received much attention 1

estimation of cost efficiencies from mergers application to us radio this article estimates fixed cost efficiencies from mergers using a dynamic oligopoly model in which mergers and repositioning of products are endogenous the inference is based on revealed preference approach selecting cost synergies that rationalize observed merger decisions the estimates can be used to assess the total welfare impact of retrospective and counterfactual mergers the framework is applied to estimate cost efficiencies after the 1996 deregulation of u s radio industry within the period of 1996 to 2006 the cost savings resulting from mergers amount to 1 2 billion per year equally split across economies of scale and within format cost synergies

submission demand in core economics journals a panel study i introduction academic economics journals have proliferated to around 1 500 providing economists a large number of outlets for publishing manuscripts econlit n d ideas n d although researchers have examined how the demand for submission for academic economics journals responded to nonprice variables such as an editorial policy change on page limit card and dellavigna 2012 surprisingly the price elasticity of demand for submission remains unknown and becomes the focus of this study the objective of this study was to examine empirically what factors influence authors decisions on which economics journal to submit to focusing on three sets of demand factors manuscript submission fee observed journal quality such as impact factor and ranking and journal usage such as abstract views and library subscriptions similar to most of the literature on economics journals we focused on the economics journals indexed in journal citation reports jcr compiled by the institute for scientific information because jcr journals tend to be viewed as the core or leading academic journals two challenges arose in estimating the demand for journal submission first submission fee may be endogenous if supply and demand are simultaneously determined or if economics journals set the fee based on demand variations that the econometrician does not observe and hence cannot explicitly specify in the demand model to reduce the potential endogeneity bias we surveyed journal editors to obtain and use as an instrument the fee paid to a journal referee for reviewing the reviewer fee might serve as a good instrument in this case because the reviewer fee which is a supply side variable generally is paid by the submission fee there is little evidence to support that paying referees is correlated with unobserved journal quality such as journal reputation indeed a recent study by chetty saez and sandor 2014 found that reviewer fees have little or no effects on quality of the reviewer reports based on an experiment with referees at the journal of public economics casting doubt on the relationship between reviewer fee and referee report the second challenge is that journal quality such as journal reputation or editor reputation is not observed by the econometrician our strategy to address this issue was to use panel data to control for unobserved individual journal effect by supplementing the jcr citation data with other publicly available data and our two rounds of surveys of journal editors we constructed a unique panel dataset that contains various journal characteristics such as submission fee fee paid to a journal referee for reviewing and the number of new submissions for the years of 2008 and 2013 thompson scientific institute for scientific information 2008 and 2013 many researchers have analyzed theoretically the role of submission fee and or response times in academic publishing e g azar 2006 cotton 2013 heintzelman and nocetti 2009 leslie 2005 for a recent example cotton 2013 showed that journal quality could be maximized through a combination of both moderate fees and moderate delays when authors have heterogeneous preferences such a result is obviously based on the assumption that authors respond negatively to a submission fee from an empirical perspective submission fees raise the cost of submitting an article and therefore discourage the submission of papers especially those of marginal quality i e a self selection process regarding the quality of authors own manuscripts however several factors can alleviate the negative impact of submission fees on submissions first azar 2005 pointed out that the rewards for publications in good economics journals are very high compared with the relatively low submission fees second submission fees are sometimes paid by department funds and faculty s grants research contracts

network effects without network externalities abstract the network externalities hypothesis postulates that consumers prefer to purchase brands which are bought by more consumers compared with brands with a low market share in this paper we show that increasing returns to scale in the production of complementary products can substitute for the network externalities assumption we develop a model for the computer industry in which the production of complementary software requires a large fixed cost of development relative to the cost of duplicating and marketing the software the increasing returns to scale in the production of software yields consumers behavior which is very similar to consumers who have preferences exhibiting network externalities

strategic trading in a dynamic noisy market this paper studies a dynamic model of a nancial market with a strategic trader in each period the strategic trader receives a privately observed endowment in the stock he trades with competitive market makers to share risk noise traders are present in the market after receiving a stock endowment the strategic trader is shown to reduce his risk exposure either by selling at a decreasing rate over time or by selling and then buying back some of the shares sold when the time between trades is small the strategic trader reveals the information regarding his endowment very quickly

optimal quality threshold of admission in a two sided farmers market we develop a two sided model for a farmers market where farmers value the number of consumers and consumers value the number of farmers and the average product quality in the market consumer preference over product quality provides an incentive for the farmers market to exclude farmers of the lowest product quality using the model we identify what factors the farmers market has to consider in determining the optimal quality threshold of admission an issue that has not received any formal study those factors include the network effects between farmers and consumers consumer preference over product quality and variety and the quality spread among farmers we also outline an empirical estimation strategy in order to make use of the model developed in this study

sharecropping and the interlinking of agrarian markets one of the often noted features of less developed agrarian economies is the existence of interlinkages among the land labor credit and product markets the landlord is often the supplier of credit he frequently purchases and markets the output of the tenant farmers and often sells raw materials and even consumption goods to his tenant farmers how can this phenomenon be explained what are the welfare consequences of attempts to restrict these practices which often seem to constitute restraints on free trade these are the questions to which this paper is addressed a general set of arguments applicable to both competitive and noncompetitive environments are presented to situations where all the terms of the contract are determined in an optimal way as well as to situations where many of the terms are specified institutionally section i examines interlinked credit and tenancy contracts section ii examines interlinked marketing and tenancy contracts section iii points out the possible interlinking between labor contracts and consumption goods markets and section iv presents the different equilibrium frameworks discussed in the paper such as monopoly monopsony competition and equilibria with surplus labor

long lived private information and imperfect competition we develop a multi period auction model in which multiple privately informed agents strategically exploit their long lived information we show that such traders compete aggressively and cause most of their common private information to be revealed very rapidly in the limit as the interval between auctions approaches zero market depth becomes infinite and all private information is revealed immediately these results are in contrast to those of kyle 1985 in which the monopolistic informed trader causes his information to be incorporated into prices gradually and when the interval between auctions is vanishingly small market depth is constant over time fama 1970 defines a strong form efficient market as one in which security prices fully reflect all available information including both publicly and privately held information in a pioneering and influential article kyle 1985 develops a model in which a single privately informed trader with long lived information optimally exploits his monopoly power over time kyle s 1985 main results are i the informed trader trades in a gradual manner so that his information is incorporated into prices at a slow almost linear rate and ii when auctions are held continuously the depth of the market is constant over time however kyle s 1985 assumption of a single informed trader is strong in the sense that in actual financial markets it is reasonable to expect that at least a few players will have access to private information and will trade in the knowledge that they will face competition with other informed agents in the market 1 we develop a multi period auction model in which multiple strategic informed traders optimally exploit their long lived informational advantage we thus explore the restrictiveness of kyle s assumption of a single informed trader and also examine

platform pricing at sports card conventions platform pricing at sports card conventions we study a new data set of us sports card conventions in order to evaluate the pricing theory of two sided markets conventions are two sided because organizers must set fees to attract both consumers and dealers we have detailed information on consumer price dealer price and since most conventions are local the market structure for conventions we present several findings first consumer pricing decreases with competition at any reasonable distance but pricing to dealers is insensitive to competition and in longer distances even increases with competition second when consumer price is zero and thus constrained dealer price decreases more strongly with competition these results are compatible with existing models of two sided markets but are difficult to explain without such models

a semi parametric analysis of two sided markets an application to the local daily newspapers in the usa summary this paper considers an empirical semiparametric model for two sided markets contrary to existing empirical literature on two sided markets we specify network effects and probability distribution functions of net benefits of the two sides nonparametrically we then estimate the model by nonparametric instrumental variables regression for local daily newspapers from the usa we show that semiparametric specification is supported by the data and the network effects are neither linear nor monotonic with a numerical illustration we demonstrate that the mark up of the newspaper on each side changes drastically with the nonlinearly specified network effects from the case with linear network effects copyright 2015 john wiley sons ltd

switching cost and deposit demand in china this article develops and estimates a dynamic model of consumer demand for deposits in which banks provide differentiated products and product characteristics that evolve over time the switching cost is 0 8 of the deposit s value which leads the static model to bias the demand estimates the dynamic model shows that the price elasticity over a long time horizon is larger than the same elasticity over a short time horizon counterfactual experiments with a dynamic monopoly show that reducing the switching cost has a comparable competitive effect on bank pricing as a result of reducing the dominant position of the monopoly

estimating equilibrium models of sorting across locations while there is growing interest in measuring the size and scope of local spillovers it is well understood that such spillovers cannot be distinguished from unobservable local attributes using solely the observed location decisions of individuals or firms we propose an empirical strategy for recovering estimates of spillovers in the presence of unobserved local attributes for a broadly applicable class of equilibrium sorting models our approach relies on an iv strategy derived from the internal logic of the sorting model itself we show practically how the strategy is implemented provide intuition for our instruments discuss the role of effective choice set variation in identifying the model and carry out a series of monte carlo simulations to demonstrate performance in small samples

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

an inquiry into quasi credit contracts the role of reciprocal credit and interlinked deals in small scale fishing communities in agrarian village societies beset with many hazards and uncertainties people evolve various means of coping with risk what is perhaps less known is that credit transactions can sometimes serve the function of reducing risk in such societies this article is concerned with examining several insurance motivated credit arrangements in small scale fishing communities a hunger insurance mechanism of reciprocal credit and a system of interlinked contracts aimed at insuring against risks in the spheres of labour and marketing relations will be extensively dealt with moreover the concept of triadic relationships will be shown to have special relevance in the case of traditional insurance arrangements aiming at controlling problems of moral hazard

quantifying equilibrium network externalities in the ach banking industry we seek to estimate the causes and magnitudes of network externalities for the automated clearinghouse ach electronic payments system using a panel data set on individual bank usage of ach we construct an equilibrium model of consumer and bank adoption of ach in the presence of a network the model identifies network externalities from correlations of changes in usage levels for banks within a network from changes in usage following changes in market concentration or sizes of competitors and from adoption decisions of banks outside the network with small branches in the network and can separately identify consumer and bank network effects we structurally estimate the parameters of the model by matching equilibrium behavior to the data using simulated maximum likelihood and a data set of localized networks and use a bootstrap to recover confidence intervals the parameters are estimated with high precision and fit various moments of the data reasonably well we find that most of the impediment to ach adoption is due to large consumer fixed costs of adoption the deadweight loss from the network externality is moderate the optimal number of ach transactions is about 16 higher than the equilibrium level

systems competition and network effects this paper discusses firm behavior market performance and the public and private institutions that arise in systems markets i e markets where consumers use compatible components together to generate benefits in such markets which include communications networks and hardware software networks popular products are inherently more valuable these network effects can drive corporate strategies and are critical in understanding innovation in many high technology markets the discussion here emphasizes the dynamics of consumer adoption decisions in the presence of network effects competition between incompatible systems and how suppliers choose which components are compatible and which are not

regulating platform competition in two sided markets under the o2o era abstract online to offline o2o services permeate our daily life and consumption along with the advanced technology in e commerce in this study motivated by taxi hailing market case we analyze the effect of government regulations on competition in two sided markets featured network externality under the o2o era first a model with hotelling specification is formulated to describe the competition in taxi hailing markets using subsidies as decision variables in the model platforms subsidize two sides agents labeled drivers and passengers and the subsidies are given based on whether a state of membership or every transaction second government regulations are introduced into the model by adding corresponding modification into agents utility and new consequent market equilibriums are compared with the benchmark status major findings of this work include i the effects of price adjustments regulation depend largely on relative size of mutual network externalities which causes a negative impact on social welfare except for extreme size level ii butt joint with official platforms brings down platforms cost in both sides so that companies make more profits where social welfare including consumer surplus and profits increases iii forbiddance setting in time limited usage scarifies a little economic effectiveness to ensure better safety

experimentation in two sided markets we study optimal experimentation by a monopolistic platform in a two sided market the platform provider is uncertain about the strength of the externality each side is exerting on the other setting participation fees on both sides it gradually learns about these externalities by observing actual participation levels this provides an informational rationale for introductory pricing with the platform provider charging a fee below the myopically optimal level on at least one side of the market if the externality that the other side exerts is sufficiently well known and weaker than the externality it experiences the platform provider extracts surplus from that side by charging it a fee above the myopically optimal level this interplay between learning and surplus extraction is crucial to the market outcome and its dynamics

price structure in two sided markets evidence from the magazine industry we present and estimate a model of competition in a two sided market the market for magazine readership and advertising using data on magazines in germany we find evidence that magazines have properties of two sided markets the results are consistent with the perception that prices for readers are subsidized and that magazines make all their money from advertisers consistent with advertisers valuing readers more than readers value advertisements our results imply that higher demand on the reader side increases ad rates but that higher demand on the advertising side decreases cover prices