competitive procurement of ancillary services by an independent system operator this paper discusses the competitive procurement of ancillary services by an independent system operator iso the paper assumes the existence of an underlying market for energy and explains why this energy market must be accompanied by a market for ancillary services these services include operating reserves and automatic generation control agc both of which may require generators that are infra marginal in the energy market to choose between supplying energy or ancillary services the paper discusses the design of an auction for these services that has formed the basis for the california iso s ancillary services market the paper also discusses the real time dispatch of ancillary services

a survey of frequency and voltage control ancillary services part i technical features this two part paper surveys the frequency and voltage control ancillary services in power systems from various parts of the world in this second part essential economic features that must be taken into account when designing markets for ancillary services are first discussed the methods adopted in eight different systems australia france germany great britain new zealand pjm spain and sweden for trading frequency and voltage control ancillary services are then compared lastly new indicators for comparing volumes and costs of ancillary services across systems are proposed and calculated for the systems included in this survey the companion paper surveys the technical features of these ancillary services

public procurement with unverifiable quality the case for discriminatory competitive procedures unverifiable quality may affect the enforcement of procurement contracts even when the award procedure is able to select the most efficient firm in the market in this paper we show that a discriminatory competitive mechanism which awards the contract on the basis of price and firms past performance yields an efficient allocation of the contract and allows the buyer to implement her desired quality quality enforcement arises out of relational contracting whereby the buyer handicaps a contractor in future competitive tendering processes if it fails to provide the required quality we study an infinitely repeated procurement model with two firms and one buyer imperfectly informed on the firms cost in which in each period the buyer runs a discriminatory auction we restrict our analysis to the case of a buyer committed to her handicapping strategy a case which captures some of the features of a public buyer when players use either grim trigger or stick and carrot strategies we find that the buyer can induce the delivery of optimal unverifiable quality with a variety of handicap levels and when applicable durations of the punishment period for some values of the handicap and the length of the punishment period both firms remain active in the market even when punished

product market competition and the industry price cost markup fluctuations abstract we examine the role played by imperfect competition in the response of markups to energy price and monetary changes we find i for concentrated industries markups increase with monetary expansion and decrease when energy prices increase the elasticity with respect to energy prices is greater than monetary changes ii for low concentration industries markups are virtually unaffected by monetary changes and the energy price elasticities are statistically insignificant iii markups are procyclical over the industry specific cycle and iv increased import competition lowers markups only in the concentrated industries the energy price increases decreases during the 1970s 1980s may have been a key factor contributing to the narrowing widening of the markup gap between high and low concentration industries we provide evidence that procyclical markups in concentrated industries are not being driven by differences in the degree of labor hoarding between low and high concentration industries

strike three discrimination incentives and evaluation major league baseball umpires express their racial ethnic preferences when they evaluate pitchers strikes are called less often if the umpire and pitcher do not match race ethnicity but mainly where there is little scrutiny of umpires pitchers understand the incentives and throw pitches that allow umpires less subjective judgment e g fastballs over home plate when they anticipate bias these direct and indirect effects bias performance measures of minorities downward the results suggest how discrimination alters discriminated groups behavior generally they imply that biases in measured productivity must be accounted for in generating measures of wage discrimination

product market competition and the impact of price uncertainty on investment some evidence from us manufacturing industries the authors estimate the impact of price uncertainty on investment using a panel of u s manufacturing industries pooling the data for all industries uncertainty has no impact on current investment however for industries that have low levels of seller concentration and thus are likely to be highly competitive the estimated impact is negative and statistically significant while for industries with high levels of seller concentration the impact is always small and not significantly different from zero the finding of a negative relationship between investment and price uncertainty in competitive industries is broadly consistent with models that incorporate irreversibility of capital investment copyright 1996 by blackwell publishing ltd

is there a glass ceiling over europe exploring the gender pay gap across the wages distribution using harmonised data from the european union household panel we analyse gender pay gaps by sector across the wages distribution for ten countries we find that the mean gender pay gap in the raw data typically hides large variations in the gap across the wages distribution we use quantile regression qr techniques to control for the effects of individual and job characteristics at different points of the distribution and calculate the part of the gap attributable to differing returns between men and women we find that first gender pay gaps are typically bigger at the top of the wage distribution a finding that is consistent with the existence of glass ceilings for some countries gender pay gaps are also bigger at the bottom of the wage distribution a finding that is consistent with sticky floors third the gender pay gap is typically higher at the top than the bottom end of the wage distribution suggesting that glass ceilings are more prevalent than sticky floors and that these prevail in the majority of our countries fourth the gender pay gap differs significantly across the public and the private sector wages distribution for each of our eu countries

managing online auctions current business and research issues the internet s computational power and flexibility have made auctions a widespread and integral part of both consumer and business markets though online auctions are a multi billion dollar annual activity with a growing variety of sophisticated trading mechanisms scientific research on them is at an early stage this paper analyzes the current state of management science research on online auctions it develops a broad research agenda for issues such as the behavior of online auction participants the optimal design of online auctions the integration of auctions into the ongoing operation of firms and the use of the data generated by online auctions to inform future trading mechanisms these research areas will draw from applied and theoretical work spanning management science economics and information systems

a comparison of buyer determined and price based multiattribute mechanisms reverse auctions are fast becoming the standard for many procurement activities in the past the majority of such auctions have been solely price based but increasingly attributes other than price affect the auction outcome specifically the buyer uses a scoring function to compare bids and the bid with the highest score wins we investigate two mechanisms commonly used for procurement in business to business markets in a setting in which buyers welfare is affected by exogenous nonprice attributes such as the quality service and past relationships under both mechanisms bidders bid based on price but in the buyer determined mechanism the buyer is free to select the bid that maximizes her surplus while in the price based mechanism the buyer commits to awarding the contract to the low price bidder we find both in theory and in the laboratory that the buyer determined mechanism increases the buyer s welfare only as long as enough suppliers compete if the number of suppliers is small and the correlation between cost and quality is low the buyer is better off with the price based mechanism these findings are intended to help procurement managers make better decisions in designing procurement mechanisms for a variety of settings

procurement contracting with time incentives theory and evidence in public procurement social welfare often depends on how quickly the good is delivered a leading example is highway construction where slow completion inflicts a negative externality on commuters in response highway departments award some contracts using scoring auctions which give contractors explicit incentives for accelerated delivery we characterize efficient design of these mechanisms we then gather an extensive data set of highway projects awarded by the california department of transportation between 2003 and 2008 by comparing otherwise similar contracts we show that where the scoring design was used contracts were completed 30 40 faster and the welfare gains to commuters exceeded the increase in procurement costs using a structural model that endogenizes participation and bidding we estimate that the counterfactual welfare gain from switching all contracts from the standard design to the efficient apb design is nearly 22 of the total contract value 1 14 billion copyright 2011 oxford university press

symposium on mergers and antitrust m x ergers and acquisitions spark ongoing controversy in the economics profession and in society at large this is not surprising billion dollar deals not only involve a great deal of money but they often raise economic issues implicating capital and labor markets as well as the markets for the products sold by the merger partners because of this merger enforcement is probably the most widely known area of antitrust however economists who do not specialize in industrial organization generally have little understanding of the type of competitive analysis that forms the basis for merger enforcement by the antitrust authorities and the courts this is unfortunate not only does this analysis have important social implications but when formulated rigorously the analytic model used in antitrust represents a simple yet quite sophisticated microeconomic model of competition in the past ten years economics and economists have become far more important in antitrust the so called chicago school of antitrust has provided the intellectual rationale for a considerable loosening of antitrust law its intellectual leaders for example robert bork richard posner and frank easterbrook have become judges and soon may ascend to or already have joined the supreme court economists like james miller and george douglas have become federal trade commissioners and the staff economists at the commission and the department of justice have gained considerable influence

on the analysis of asymmetric first price auctions we provide a new set of tools for studying asymmetric rst price auctions connecting their equilibria to the concavity of the underlying type distributions and showing how one can use surplus expressions related to symmetric auctions to bound equilibrium behavior in asymmetric auctions we apply these tools to studying procurement auctions in which as is common in practice one seller is given an advantage re ecting for example better reliability or quality we show conditions under which for any given rst price handicap auction there is a second price auction with bonuses that outperforms it with most of our results involving ex post dominance

quality vs quantity in military procurement it is often argued that the same expenditures on military procurement would produce a more effective defense if larger numbers of less sophisticated and thus cheaper weapons were purchased this paper shows that such a result can occur even if the military derives no private consumption value from technically sophisticated weapons rather the organization of the decision making process itself can produce this result this suggests some possible solutions through organizing decision making in a different fashion copyright 1990 by american economic association

persistent trade effects of large exchange rate shocks this paper presents a theoretical basis for the argument that large exchange rate shocks such as the 1980s dollar cycle may have persistent effects on trade flows and the equilibrium exchange rate itself we begin with a partial equilibrium model in which large exchange rate fluctuations lead to entry or exit decisions that are not reversed when the currency returns to its previous level then we develop a simple model of the feedback from hysteresis in trade to the exchange rate itself here we see that a large capital inflow which leads to an initial appreciation can result in a persistent reduction in the exchange rate consistent with trade balance

oligopoly supergames some empirical evidence on prices and margins this paper is a panel data study on the behavior of prices and margins of oligopolies involved in repeated games the authors examine two supergame models which generate very different predictions about the cyclical behavior of prices and margins evidence on the levels of price cost margins indicates that oligopolies achieve equilibria that more closely resemble a one shot cournot nash outcome than monopoly the authors find however that industries with high price cost margins exhibit cyclical price behavior which is quite different from that of unconcentrated industries little evidence of price wars during either recessions or booms is found copyright 1987 by blackwell publishing ltd

antitrust and merger policy a review and critique a ny antitrust policy that tries to put some restrictions on mergers must have a conceptual basis one such framework might be a populist approach in which only absolute or relative size of the merger partners and or the resulting entity would be the criterion political rhetoric often embodies this approach an alternative approach the one that underlies the 1982 department of justice merger guidelines concerns itself with the possible exercise of market power 1 i believe this second approach is more consistent with the language of section 7 of the clayton act itself which instructs the department of justice and the federal trade commission to prevent those mergers the effects of which may be substantially to lessen competition or to tend to create a monopoly this market power approach also places merger policy in a realm that is susceptible to economic analysis for this reason as well this approach appeals to me the merger guidelines are firmly rooted in the standard oligopoly theory developed by chamberlin 1933 fellner 1949 and stigler 1964 and strengthened

subcontracting and competitive bidding on incomplete procurement contracts this article examines the impact of incomplete contracts on subcontracting and the design of procurement auctions i estimate the effect of ex post contract revisions on unit costs for both subcontracted and in house performed work items on bridge projects procured by the california department of transportation i model a scoring auction showing how ex post revisions skew bidding decisions and estimate unit costs from bid data using the method of sieve estimation the results highlight the cost implications of incomplete contracting frictions subcontracting decisions and bidding distortions in conclusion i propose alternative auction mechanisms that could improve outcomes

awarding monopoly franchises the authors analyze how to award a monopoly franchise when the objective is to maximize expected consumers surplus net of transfer payments to the producer potential producers initially possess independent private information about uncertain production costs only the chosen producer subsequently observes realized production costs after awarding the franchise to the producer with the lowest expected costs prices are optimally set above realized marginal cost these ex post distortions foster more competitive bidding ex ante the distortions for any bid cost pair are invariant to the number of bidders n though expected distortions and profits decline with n copyright 1987 by american economic association

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had

prejudice and wages an empirical assessment of becker s the economics of discrimination we test the predictions from becker s 1957 seminal work on employer prejudice and find that relative black wages a vary negatively with the prejudice of the marginal white in a state b vary negatively with the prejudice in the lower tail of the prejudice distribution but are unaffected by the prejudice of the most prejudiced persons in a state and c vary negatively with the fraction of a state that is black our estimates suggest that one quarter of the racial wage gap is due to prejudice with nontrivial consequences for black lifetime earnings

design competition through multidimensional auctions this article studies design competition in government procurement by developing a model of two dimensional auctions wherefirms bid on both price and quality and bids are evaluated by a scoring rule designed by a buyer three auction schemes first score second score and second preferred offer are introduced and related to actual practices if the buyer can commit to a scoring rule in his best interest the resulting optimal scoring rule underrewards quality relative to the buyer s utility function and implements the optimal outcome for the buyer underfirst and second score auctions absent the commitment power the onlyfeasible scoring rule is the buyer s utility function under which 1 all three schemes yield the same expected utility to the buyer and 2 first and second score auctions induce the first best level of quality which turns out to be excessive from the buyer s point of view

pricing of reserves valuing system reserve capacity against spot prices in electricity markets this paper models the interdependencies between markets for secondary reserve capacity and spot electricity to derive the pricing of reserves under equilibrium conditions starting with the indifference condition between offering in both markets the reservation price is derived from the opportunity cost consideration and the unit commitment conditions in a fundamental interrelated market framework the reserve market examined compares widely to the german market for secondary reserves but the general approach may also be used to investigate other reserve markets the approach explores and formalizes the influence of reserve capacity on the spot market supply function a numerical solution procedure is provided to this non trivial case of market interaction the model is used to estimate the expected reservation price development over the last years in germany

evidence on nominal wage rigidity from a panel of u s manufacturing industries we provide a set of stylized facts on the response of industry nominal wage growth to aggregate and industry specific influences using annual data for 450 u s manufacturing industries over the period 1958 to 1989 we find support for the canonical wage contracts model the response of nominal wage growth to expected inflation is estimated to be between 0 6 and 0 8 this estimate holds for several sectors within manufacturing the response of nominal wage growth to unexpected inflation is around 0 1 indicating a striking departure from the classical assumption of full indexation we also find support for the multisector wage indexation models the estimated profit sharing elasticity is positive as hypothesized in these models the instrumental variable estimates of the profit sharing elasticity are typically between 0 1 and 0 2 copyright 1996 by ohio state university press

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

do gender stereotypes reduce girls or boys human capital outcomes evidence from a natural experiment schools and teachers are often said to be a source of stereotypes that harm girls this paper tests for the existence of gender stereotyping and discrimination by public high school teachers in israel it uses a natural experiment based on blind and non blind scores that students receive on matriculation exams in their senior year using data on test results in several subjects in the humanities and sciences i found contrary to expectations that male students face discrimination in each subject these biases widen the female male achievement difference because girls outperform boys in all subjects except english and at all levels of the curriculum the bias is evident in all segments of the ability and performance distribution and is robust to various individual controls several explanations based on differential behavior between boys and girls are not supported empirically however the size of the difference is very sensitive to teachers characteristics suggesting that the bias against male students is the result of teachers and not students behavior

pricing energy and ancillary services in integrated market systems by an optimal power flow a detailed ac opf based formulation for procuring pricing and settling energy and ancillary service in simultaneous auctions by integrated market systems is presented the paper provides clear definitions of locational marginal prices for energy and ancillary service marginal prices in terms of lagrange multipliers the characteristics of the prices are analyzed especially when economic substitution among ancillary services is required the paper also evaluates the conditions under which opportunity costs are incurred to units that provide ancillary services it is particularly shown that the intuitive belief that the provision of regulation down service does not incur opportunity cost to the provider in general is not true

auctions with endogenous quantity this article studies auctions in which several sellers compete for the right to sell to a market characterized by a negatively sloped demand curve in this environment the quantity traded becomes endogenous this effect leads to three results concerning the outcomes of open versus first price sealed bid auctions first an open auction yields a higher expected price than does sealed bidding second and more important the open auction captures less of the potential gains from trade than does the sealed bid auction third for broad classes of demand curves the efficiency gains from switching to sealed bids from an open auction accrue to both sellers and the buyer so that all concerned parties would agree to the change a direct application of the theory is to procurement the heavy use of sealed bidding in procurement is seen as rational in light of these results auction models with endogenous quantity could be an alternative to price setting oligopoly models for the study of price formation in general for the latter impose strong information requirements on agents and yield only equilibrium price vectors not equilibrium processes for determining prices

the private r d investment response to federal design and technical competitions it is the federal government s role to promote investment in research and development rd and 2 contracting with private firms and nonprofit organizations such as universities to perform rd the winning firm recovered its development costs in the form of profits on the sale of the airplanes and the losing firms did not recoup their r d investment mansfield 1971 p 122

export orientation and domestic merger policy theory and some empirical evidence abstract recent open economy industrial organization literature finds export orientation enhances the weight of post merger international competitive gains favouring lenient domestic merger policy however mergers seldom generate the significant synergies supportive of international competitive gains since a joint economies of production effect suggests domestic mergers tend to generate international competitive losses not gains export orientation favours strict not lenient domestic merger policy we show how non synergistic domestic mergers in the presence of international sales might reduce national welfare and incur stringent merger reviews a panel data set of u s merger policy by manufacturing sector 1990 2001 empirically supports export orientation leading to strict merger policy jel classification l40 f10

an empirical study of scoring auctions and quality manipulation corruption abstract we provide a modeling framework for empirical studies of scoring auction data that addresses the problem that scores are intangible and cannot be compared across auctions we apply the method on a dataset from chinese server room procurement auctions and provide empirical evidence for the seminal scoring auction model developed by che 1993 and asker and cantillon 2008 using this method we study the problem of quality manipulation the quality evaluating agent may exaggerate the quality score of a favored firm in exchange for a bribe we propose a test for quality manipulation and perform it on the server room procurement dataset we find that the bidding behaviors are generally consistent with the competitive model but not the corruption model

total cost procurement auctions impact of suppliers cost adjustments on auction format choice we consider sealed and open bid total cost procurement auctions where two attributes are used for contract award decisions price which is bid by the supplier and a fixed cost adjustment which is included by the buyer to capture nonprice factors such as logistics costs suppliers know only their own true production cost and their own cost adjustment and the buyer does not know the suppliers true production costs but does know all suppliers cost adjustments which she herself sets in order to make an informed total cost decision the buyer who seeks to minimize her total price and cost adjustment procurement cost can choose to run a first price sealed bid auction where suppliers bids are affected by their beliefs about each other s total costs or a descending open bid auction where only the actual realizations of suppliers total costs drive the auction outcome we characterize the buyer s choice between the two formats as a threshold decision over suppliers cost adjustments and analyze the effect of supplier beliefs on her decision we also study the impact of additional suppliers on the buyer s decision the effect of correlation between suppliers production costs and their cost adjustments and additive as well as multiplicative total cost functions the results suggest that procurement managers can use their evaluations of suppliers cost adjustments to make better auction format decisions

critical import supply elasticities and the imports as market discipline hypothesis abstract this paper formally examines the factors underlying how responsive imports must be to domestic prices the import supply elasticity in order to thwart an anticompetitive domestic price increase stemming from a merger an issue that frequently arises in many antitrust reviews domestic firms face a fringe comprised of foreign firms who import their products into the domestic market in the eyes of domestic consumers these imports are viewed as imperfect substitutes in demand to the output produced by the domestic firms the model is solved in terms of the critical import supply elasticity that can then be used evaluate the ability of imports to constrain an anticompetitive price increase post merger numerical simulations are conducted to consider the magnitude of perturbations in the model s exogenous parameters potential empirical extensions of the model are also considered

can gender parity break the glass ceiling evidence from a repeated randomized experiment this paper studies whether the gender composition of recruiting committees matters we make use of the unique evidence provided by spanish public examinations where the allocation of candidates to evaluating committees is random we analyse how the chances of success of 150 000 female and male candidates for positions in the four main corps of the spanish judiciary from 1987 to 2007 were affected by the gender composition of their evaluation committee we find that a female male candidate is significantly less likely to be hired whenever she he is randomly assigned to a committee where the share of female male evaluators is relatively greater evidence from multiple choice tests suggests that this is due to the fact that female majority committees overestimate the quality of male candidates

multi criteria auctions without full comparability of bids the emergence of auction mechanisms that support bids characterized by several attributes is one of the most recent evolutions within auction theory these mechanisms referred to as multi attribute multiple issue or multi dimensional auctions are at the intersection between multi criteria decision and auction theories the purpose of this paper is to introduce multi criteria auctions the originality of which is not to require full comparability between bids we claim that this distinctive feature is of great interest especially in procurement situations furthermore the existence of potential incomparability between multi dimensional offers will permit us to manage different bidding niches coexisting within the same bidding space a theoretical framework based on a general preference structure will be introduced and then referenced to existing approaches such as multi attribute auctions or new ones such as dominance based multi criteria auctions or butterfly auctions

potential foreign competition in us manufacturing abstract trade barriers are falling and firms are competing in increasingly open international markets the data reveal considerable heterogeneity across industries in the intertemporal path of import shares against this backdrop we focus on an issue that is increasingly important for competition policy analysis potential foreign competition inadequate attention to this aspect could result in a biased picture of total competition leading to misguided antitrust decisions drawing on the conceptual framework outlined by landes and posner harvard law review 94 1981 937 we measure potential foreign competition by the intertemporal response of industry import share to industry specific and aggregate economic factors and our estimates indicate wide variation across industries in this dimension a particularly striking finding is that highly concentrated industries which are more likely to be subject to antitrust scrutiny have a greater degree of potential foreign competition than industries with low concentration even though the extent of actual foreign competition is similar across these groups of industries

monopoly in the uk what determines whether the mmc finds against the investigated firms this paper draws on data from 73 uk monopolies and mergers commission reports on monopoly between 1973 and 1995 it shows that there is a roughly two in three chance that the commission will come to an adverse conclusion against the investigated firms in a given case 75 80 of decisions can be explained purely in terms of the market share of the leading firm and knowledge of the broad nature of the alleged anti competitive practice an adverse finding is most likely in cases involving exclusive dealing and least likely where other vertical restraints are involved

the relation between price and marginal cost in u s industry an examination of data on output and labor input reveals that some u s industries have marginal cost well below price the conclusion rests on the finding that cyclical variations in labor input are small compared with variations in output in booms firms produce substantially more output and sell it for a price that exceeds the costs of the added inputs the paper documents the disparity between price and marginal cost where marginal cost is estimated from annual variations in cost it considers a variety of explanations of the findings that are consistent with competition but none is found to be completely plausible

discrimination nepotism and long run wage differentials the wage discrimination model developed by becker has been criticized for predicting that competitive forces will lead to the disappearance of racial discrimination in the long run we have reformulated the model in terms of nepotism toward white workers rather than discrimination against black workers in this new framework both nepotistic and taste neutral firms are expected to survive the competitive struggle in the long run therefore the new framework is consistent with long run as well as short run racial wage differentials

dea based auctions we discuss the design of a multi dimensional procurement mechanism that combines data envelopment analysis dea and auction theory the mechanism selects an agent to provide a project characterized by multiple attributes the optimal configuration of the multiple attributes is settled endogenously by trading off the costs to the provider with the benefits to the acquirer this is done within a context of asymmetric information and strategic behavior as well as possibly correlated costs the mechanism makes it individually rational and incentive compatible to participate and reveal costs and the outcome is socially optimal allocatively efficient

discrimination in a deprived neighbourhood an artefactual field experiment abstract we present a field experiment designed to examine the discriminatory motives of an understudied demographic the poorest people in england subjects are first asked to divide 10 between two strangers and then play a 10 dictator game with another stranger we subtly vary the ethnicity of the receivers by providing subjects with surnames randomly drawn from the electoral register including treatments that allow us to parse behaviour into either in group favouritism or out group negativity an important behavioural distinction that is typically overlooked in the discrimination literature our results suggest that the observed discriminatory attitudes are the result of out group negativity rather than in group favouritism we advance the literature on discrimination through the estimation of a structural model of group contingent social preferences which we exploit to perform counterfactual simulations our results provide insights into the behaviour of this unique demographic and provide a rationale for why they may support discriminatory policies in their voting behaviour

employers discriminatory behavior and the estimation of wage discrimination this paper considers the linkage of empirical estimates of wage discrimination between two groups introduced by oaxaca 1973 to a theoretical model of employers discriminatory behavior it is shown that conditional on different assumptions about employers discriminatory tastes oaxaca s estimators of wage discrimination can be derived that the approach is more generally useful is demonstrated by deriving an alternative estimator of wage discrimination based on the assumption that within each type of labor e g unskilled skilled the utility function capturing employers discriminatory tastes is homogeneous of degree zero with respect to labor inputs from each of the two groups the estimators are compared empirically in an application to male female wage differentials

orchestrating impartiality the impact of blind auditions on female musicians a change in the audition procedures of symphony orchestras adoption of blind auditions with a screen to conceal the candidate s identity from the jury provides a test for sex biased hiring using data from actual auditions in an individual fixed effects framework we find that the screen increases the probability a woman will be advanced and hired although some of our estimates have large standard errors and there is one persistent effect in the opposite direction the weight of the evidence suggests that the blind audition procedure fostered impartiality in hiring and increased the proportion women in symphony orchestras

strategy proof contract auctions and the role of ties a contract auction establishes a contract between a center and one of the bidders as contracts may describe many terms preferences over contracts typically display indifferences the qualitative vickrey auction qva selects the best contract for the winner that is at least as good for the center as any of the contracts offered by the non winning players when each bidder can always offer a contract with higher utility for the center at an arbitrarily small loss of her own utility the qva is the only mechanism that is individually rational strategy proof selects stable outcomes and is pareto efficient for general continuous utility functions a variant of the qva involving fixed tie breaking is strategy proof and also selects stable outcomes however there is no mechanism in this setting that in addition also selects pareto efficient outcomes

is there a causal effect of concentration on persistent profitability differentials this article searches for a causal effect of industry concentration on estimates of persistent profitability differentials i offer solutions to identification problems that plague related analyses by applying an iv and a natural experiment this is the first study that explains estimates of persistent profit differentials using business segments data allowing to match micro and industry level data more consistently testing linear relations critical concentration levels and interactions with mobility barriers i find no evidence that concentration has any positive effect on long run profitability differences results rather tend to point to a statistically and economically significant negative causal effect

what is discrimination gender in the american economic association 1935 2004 we illustrate problems of measuring discrimination using elections to aea offices with a new econometric technique we find female candidates have a much better than random chance of victory this advantage is either reverse discrimination or reflects beliefs that women are more productive the former interpretation could be explained by an unchanging median voter whose preferences were not satisfied by suppliers of candidates but there was a structural change in voting behavior in the mid 1970s the results suggest it is generally impossible to claim differences in rewards for different groups measure the extent of discrimination or even its direction jel a11 d72 j16

auctions and bidding a primer maybe the contractor was right to think bid jobs are different but it is more likely that he suffered from too simple a view of what is involved in preparing a competitive bid our analysis will show that even an experienced estimator working in familiar terrain can lose money if he doesn t understand the subtleties of competitive bidding the phenomenon experienced by the painting contractor known as the winner s curse is just one of the surprising and puzzling conclusions that have been turned up by modern research into auctions another is the theoretical proposition supported also by some experimental evidence that for example a sealed bid treasury bill auction in which each buyer pays a price equal to the highest rejected bid would yield more revenue to the treasury than the current procedure in which the winning bidder pays the seemingly higher amount equal to his own bid there are also subtle results that demonstrate the equivalence of such apparently different institutions as the standard sealed bid auction in which the auctioneer seller sells the goods to the highest bidder for a price equal to his bid and the dutch auction in which the auctioneer seller begins by asking a high price and gradually lowers the price until

procuring fast delivery sole sourcing with information asymmetry this paper studies a queuing model in which a buyer sources a good or service from a single supplier chosen from a pool of suppliers the buyer seeks to minimize the sum of her procurement and operating costs the latter of which depends on the suppliers lead time the selected supplier can regulate his lead time but faster lead times are costly although the buyer selects the supplier to source from possibly via an auction and dictates the contractual terms the buyers bargaining power is limited by asymmetric information the buyer only has an estimate of the suppliers costs while the suppliers know their costs precisely we identify a procurement mechanism that minimizes the buyers total cost procurement plus operating this mechanism is not simple it is a numerically derived nonlinear menu of contracts therefore we study several simpler mechanisms e g one that charges a late fee and one that specifies a fixed lead time requirement no menus no nonlinear functions we find that simple mechanisms are nearly optimal generally within 1 of optimal because asymmetric information conveys significant protection to the supplier i e the supplier is able to retain most of the benefit of having a lower cost renegotiation is another concern with the optimal mechanism because it does not minimize the supply chains cost the firms can be both better off if they throw away the contract and start over interestingly we find that the potential gain from renegotiation is relatively small with either the optimal or our simple mechanisms we conclude that our simple mechanisms are quite attractive along all relevant dimensions buyers performance supply chain performance simplicity and robustness to renegotiation

competitive procurement with corruption we study competitive procurement administered by a corrupt agent who is willing to manipulate his evaluation of contract proposals in exchange for bribes with complete information and no corruption the efficient firm will win the contract for sure if the agent is corrupt and has large manipulation power however bribery makes it costly for the efficient firm to secure a sure win so in equilibrium the efficient firm loses the contract with positive probability the optimal scoring rule for the buyer deemphasizes quality relative to price and does not fully handicap and may even favor the efficient firm

racial discrimination among nba referees the nba provides an intriguing place to assess discrimination referees and players are involved in repeated interactions in a high pressure setting with referees making split second decisions that might allow implicit racial biases to become evident we find that more personal fouls are awarded against players when they are officiated by an opposite race officiating crew than when they are officiated by an own race refereeing crew these biases are sufficiently large so that they affect the outcome of an appreciable number of games our results do not distinguish whether the bias stems from the actions of white or black referees

near optimality of second price mechanisms in a class of asymmetric auctions consider a setting with n sellers having i i d costs with log concave density f from cumulative f and a buyer who puts a premiumi on procuring from seller i we show how for any given 1 n a sim ple second price bonus auction can be chosen which comes surprisingly close to giving the auctioneer the same surplus as an optimal mecha nism the bonuses depend only on the magnitude and monotonicity of the slope of virtual costs given f we show that these in turn depend only on fairly coarse information about f we explore how this result generalizes to asymmetrically distributed costs abstract

optimal auction design in two sided markets a key feature of online markets for advertising e g sponsored links is that clicking rates depend on the searchers expectations that the platform selects relevant advertisers this article studies auction design by a platform that maximizes profits in the long run where clicking rates are mechanism dependent in line with the practice of the major search engines the revenue maximizing mechanism is a scoring auction that combines the willingness to pay and the relevance to searchers of advertisers by trading off rent extraction and clicking volume this mechanism works as a cross subsidization device between searchers and advertisers

female led firms and gender wage policies using a longitudinal data set covering the period 1987 2000 the authors explore the impact of female employers and gender segregation on wages in portugal in the context of becker s 1957 taste for discrimination theory they investigate whether the gender of a firm manager affects gender wage differences they find that females benefit from higher wages in female led firms than in male led firms further when females lead the wage gap between female and male workers is reduced by 1 5 regardless of the gender composition of the workforce at the same time the higher the share of females in a firm the lower the wages overall for both female and male workers the authors results are compatible with the notion that job promotion is an important factor in wage increases the more females are mentored and promoted the less men will be however as more females in the firm compete for promotion opportunities for both females and males to be promoted diminish author s abstract

estimation of beauty contest auctions beauty contests are auction mechanisms used to buy or sell differentiated products where the auctioneer does not specify a decision rule to pick the winning bidder beauty contests are widely used in procuring welfare to work projects freelance services selling online ads real estate transactions and hiring dating marriage decisions unlike price only auctions beauty contests have no closed form bidding strategies and suffer from nonmultiplicatively separable unobserved auction heterogeneity which makes their estimation challenging to address these challenges we formulate beauty contests as incomplete information games and present a two step estimator a key contribution of our method is its ability to account for common knowledge auction specific unobservables using finite unobserved types we show that unobserved auction types and distributions of bids are nonparametrically identified and recoverable in the first step using a nonparametric expectation maximization em like algorithm and that

rfq auctions with supplier qualification screening we consider a manufacturer using a request for quotes rfq reverse auction in combination with supplier qualification screening to determine which qualified supplier will be awarded a contract supplier qualification screening is costly for the manufacturer for example involving reference checks financial audits and on site visits the manufacturer seeks to minimize its total procurement costs i e the contract payment plus qualification costs although suppliers can be qualified prior to the auction prequalification we allow the manufacturer to delay all or part of the qualification until after the auction postqualification using an optimal mechanism analysis we analytically explore the trade offs between varying levels of pre and postqualification although using postqualification causes the expected contract payment to increase bids from unqualified suppliers are discarded we find that standard industrial practices of prequalification can be improved upon by judicious use of postqualification particularly when supplier qualification screening is moderately expensive relative to the value of the contract to the manufacturer

efficient scoring rule in multipart procurement auctions for power systems reserve in this paper scoring rules are analyzed based on the german markets for procuring power system reserves for paying accepted offers the pay as bid settlement rule is applied each offer consists of a reserve capacity and two prices the capacity price is for holding the capacity in reserve and the energy price is for delivery in case of actual use a scoring rule is applied to value the two part price bids today this scoring rule is based on procuring the offers in the rank order of the capacity prices a first analysis of historic price data indicates efficiency problems due to this scoring rule this leads to proposing to value the two part price bids based on the ex post knowledge of the actual use of the procured reserves it is shown that in contrast to today s scoring rule this duration curve approach gives incentives to reveal the variable generation costs in the energy price bids

endophilia or exophobia beyond discrimination the discrimination literature treats outcomes as relative but does a differential arise because agents discriminate against others exophobia or because they favour their own kind endophilia using a field experiment that assigned graders randomly to students examinations that did did not contain names we find favouritism but no discrimination by nationality nor by gender we are able to identify these preferences under a wide range of behavioural scenarios regarding the graders that endophilia dominates exophobia alters how we should measure discriminatory wage differentials and should inform the formulation of anti discrimination policy

modeling the effects of mergers in procurement in procurement settings mergers among suppliers reduce buyers choice sets and can harm buyers by eliminating their preferred supplier or reducing their negotiating leverage i develop a stochastic economic model that predicts the effects of mergers based on information that commonly is available to antitrust authorities i derive general expressions for the ex ante expected changes in price buyer utility and supplier profit each becomes tractable under certain distributional assumptions the model predicts that average prices will increase by more than 40 due to the recently litigated acquisition of power reviews by bazaarvoice in the absence of an effective remedy

equilibrium bids in practical multi attribute auctions this article proposes a nonlinear scoring rule which transforms multiple attributes of a bid into comparable dimensionless ones practically the buyer can use it to select the most competitive winner for risk neutral bidders we characterize a symmetric bayes nash equilibrium and find that as the number of bidders increases the equilibrium quality improves whereas the equilibrium price decreases

models for iterative multiattribute procurement auctions multiattribute auctions extend traditional auction settings to allow negotiation over nonprice attributes such as weight color and terms of delivery in addition to price and promise to improve market efficiency in markets with configurable goods this paper provides an iterative auction design for an important special case of the multiattribute allocation problem with special preferential independent additive structure on the buyer value and seller costs auction additive discrete provides a refined design for a price based auction in which the price feedback decomposes to an additive part with a price for each attribute and an aggregate part that appears as a price discount for each supplier in addition this design also has excellent information revelation properties that are validated through computational experiments the auction terminates with an outcome of a modified vickrey clarke groves mechanism this paper also develops auction nonlinear discrete for the more general nonlinear case a particularly simple design that solves the general multiattribute allocation problem but requires that the auctioneer maintains prices on bundles of attribute levels

better faster cheaper an experimental analysis of a multiattribute reverse auction mechanism with restricted information feedback the majority of reverse auctions for procurement use a single attribute price format while providing constraints on nonprice attributes such as quality and lead time alternatively a buyer could choose to conduct a multiattribute auction where bidders can specify both a price and levels of nonprice attributes while such an auction may provide higher theoretical utility to the buyer it is not clear that this theoretical improvement will be realized given the increased complexity of the auction in this research we present an ascending auction mechanism for a buyer whose utility function is known and dependent on three attributes motivated by a supply chain procurement problem setting we consider quality and lead time for the two attributes in addition to price the auction mechanism provides the bidders with restricted feedback regarding the buyer s utility function we explore experimentally the performance of this multiattribute auction mechanism as compared to a price only auction mechanism compared with the price only auction we find that our mechanism design is effective in increasing both buyer utility and bidder supplier profits