the incidence of congestion tolls on urban highways abstract the incidence of an optimal short run congestion toll is investigated using an equilibrium model of modal choice and congestion on a highway corridor served by express bus transit it is argued that for an externality tax the usual equi revenue analysis of burdens is inappropriate instead welfare effects are computed under three alternative assumptions about redistribution of toll revenues in almost all cases the net result is benefits for all income groups it is concluded that congestion tolls should not be rejected on grounds of income distribution but that an explicit package of tolls and revenue uses is probably a political prerequisite for adoption

too big to be efficient the impact of implicit subsidies on estimates of scale economies for banks we examine whether too big to fail tbtf factors affect estimates of scale economies for large banks from a standard model of bank production that does not control for any tbtf factors we find evidence of scale economies for our sample of large banks we then control for tbtf factors by using a measure of the implicit subsidy that emerges from a reduction in tbtf banks funding costs due to investor expectations of government support we do this in two ways first we estimate scale economies from an augmented model of bank production that employs a proxy for the counterfactual price of debt that banks would face in the absence of any tbtf funding cost advantage second we estimate scale economies from a model of bank production that is estimated only for a sample of banks considered unlikely to be tbtf after controlling for tbtf factors using either method we no longer find evidence of scale economies for our sample of large banks these results suggest that estimated scale economies for large banks are affected by tbtf factors

quantifying structural subsidy values for systemically important financial institutions abstract claimants to systemically important financial institutions sifis would receive transfers when governments are forced into bailouts ex ante this bailout expectation lowers sifis daily funding costs the funding cost advantage reflects both the structural level of the government support and the time varying market valuation for such a support based on a large worldwide sample of banks we estimate the value of the structural subsidy by exploiting expectations of state support embedded in credit ratings and by applying the long run average value of the rating bonus the value of the structural subsidy was already sizable 60 basis points bp as of the end 2007 before the crisis it increased to 80 bp by the end 2009

taming macroeconomic instability monetary and macro prudential policy interactions in an agent based model abstract we develop an agent based model to study the macroeconomic impact of alternative macro prudential regulations and their possible interactions with different monetary policy rules the aim is to shed light on the most appropriate policy mix to achieve the resilience of the banking sector and foster macroeconomic stability simulation results show that a triple mandate taylor rule focused on output gap inflation and credit growth and a basel iii prudential regulation is the best policy mix to improve the stability of the banking sector and smooth output fluctuations moreover we consider the different levers of basel iii and their combinations we find that minimum capital requirements and counter cyclical capital buffers allow to achieve results close to the basel iii first best with a much more simplified regulatory framework finally the components of basel iii are non additive the inclusion of an additional lever does not always improve the performance of the macro prudential regulation

airport congestion when carriers have market power this paper analyzes airport congestion when carriers are nonatomistic showing how the results of the road pricing literature are modified when the economic agents causing congestion have market power the analysis shows that when an airport is dominated by a monopolist congestion is fully internalized yielding no role for congestion pricing under monopoly conditions under a cournot oligopoly however carriers are shown to internalize only the congestion they impose on themselves a toll that captures the uninternalized portion of congestion may then improve the allocation of traffic the analysis is supported by some rudimentary empirical evidence

distributional consequences of airport congestion pricing abstract imposition of airport congestion pricing redistributes welfare among commercial regional and general aviation this article extends daniel s econometrica63 327 370 1995 stochastic bottleneck model with dynamically adjusting traffic rates queuing delays and congestion fees to include elastic demand heterogeneous operating time preferences and heterogeneous layover and queuing time values using parameters from minneapolis st paul airport simulations of congestion pricing determine its effects on equilibrium traffic patterns queuing delays schedule delays airport revenues and social welfare gains by commercial aviation common travelers and airport authorities exceed losses by general and regional aviation the article evaluates several price and rebate programs and proposes several that are self financing and pareto improving

uniform versus peak load pricing of a bottleneck with elastic demand abstract this paper considers commuting to work across a bottleneck such as a bridge or tunnel with elastic demand with no toll there is wasteful queueing the optimal peak load toll eliminates queueing and leaves total traffic unchanged the second best uniform toll cannot eliminate queueing but reduces total traffic the second best uniform toll may be larger or smaller than the maximum value of the optimal peak load toll

endogenous trip scheduling the henderson approach reformulated and compared with the vickrey approach abstract the henderson approach to modeling peak period congestion lacks equilibria when lateness is prohibited this paper reformulates the henderson approach and compares it to the vickrey approach both analytically and numerically the behavior of the reformulated henderson approach varies with its elasticity of travel delay with respect to traffic flow while the vickrey approach lacks such flexibility the behavior of the vickrey approach is the limit of that of the reformulated henderson approach as the elasticity of travel delay goes to infinity

airport charges and capacity expansion effects of concessions and privatization abstract this paper examines the decisions on airport charges and capacity expansion made by airports with different objectives we find that allowing an airport to have profitable concession operations may be more welfare improving than the alternative of depriving the airport of all profits from concession operations furthermore the airport charge of a social welfare maximizing airport would be lower than that of a budget constrained public airport which in turn would be lower than that of a privatized airport pursuing profit maximization we also show that a constrained public airport would add capacity later than a social welfare maximizing airport whilst a privatized airport would add capacity later still given that constrained public airports represent the second best situation the capacity decisions of privatized airports would be socially suboptimal

the environmental impact of highway congestion pricing abstract this article simulates the effects of congestion pricing on emissions of carbon monoxide nitrogen oxide and hydrocarbons for an actual metropolitan highway network traffic is assigned to the network assuming elastic travel demand and endogenous route selection to minimize private or social travel costs simulations price all or part of the network delaware s household travel demand and highway traffic count data calibrate the simulations epa s mobile 5a model predicts that vehicle emissions decrease as much as 10 in aggregate and 30 in highly congested areas benefits from reduced emissions are 15 30 of those from reduced congestion

regional liberalisation of trade in services this paper investigates quantitatively the trade enhancing effect of regional trade agreements rtas under the general agreement on trade in services article v services rtas by applying a gravity regression analysis to four major services sectors financial business communication and transportation services while controlling for both country specific and time varying importer and exporter fixed effects the regression analysis covers bilateral imports in services consisting of 20 986 country pairs in total over six years 2000 05 our results indicate that sector specific trade creating effects of services rtas are significantly positive without incurring trade diverting effects excluding transportation services moreover we find that there is a significant cumulative effect of services rtas excluding communication services and a complementary relationship between goods and services imports in addition the trade creating effect of services rtas is stronger between developed members compared with between developed and developing countries

does religious similarity matter in international trade in services impacts of religion on trade in services were examined using gravity models with two estimation methods poisson pseudo maximum likelihood ppml to correct for heteroscedasticity and bias due to the exclusion of zero trade flow and standard heckman correction to compensate for sample selection bias we found that religious similarity contributes to increased international trade in services by establishing trust related institutions second religious pluralism variety fosters trade even more than religious similarity suggesting that in facilitating trade religious openness matters more than religious similarity third a strong dominant religion discourages trade in services whereas the presence of religious minorities encourages trade in services a highly significant inverse mill s ratio imr result indicated the presence of sample selection bias indicating that controls are necessary to prevent estimation bias this study concluded that religion is an important determining factor for trade in services positively affecting interpersonal trust and thereby reducing institutional distance between countries

bailouts sovereign risk and bank portfolio choices abstract i study the role of sovereign risk in determining the effects of expected bailouts on banks portfolio decisions empirically data on italian banks show that they decrease lending to firms and increase purchases of government bonds following an increase in the probability of a bailout if the risk of sovereign default is sufficiently low crucially the portfolio adjustment becomes weaker and eventually reverses sign as sovereign risk increases to interpret these results i develop a model in which the relation between the bailout probability and the corresponding payoff to bank owners bailout rents depends on sovereign risk the model s predictions are consistent with the key features of the data

when do auctions ensure the welfare maximizing allocation of scarce inputs we determine when an unfettered auction will ensure the welfare maximizing allocation of a scarce input that enhances product quality and may reduce production costs a supplier values the input for this use value and for its foreclosure value because once the input is acquired it is unavailable to rivals an unfettered auction often ensures the welfare maximizing allocation of an input increment however it can fail to do so when the input would increase relatively rapidly the competitive position of a rival with a moderate competitive disadvantage bidder handicapping that ensures auctions generate welfare maximizing input allocations differ from standard handicapping policies

efficiency analysis of cournot competition in service industries with congestion we consider cournot competition in the presence of congestion effects our model consists of several service providers with differentiated services each competing for users who are sensitive to both price and congestion we distinguish two types of congestion effects depending on whether spillover costs exist that is where one service provider s congestion cost increases with the other providers output level we quantify the efficiency of an unregulated oligopoly with respect to the optimal social welfare with tight upper and lower bounds we show that when there is no spillover the welfare loss in an unregulated oligopoly is limited to 25 of the social optimum even in the presence of highly convex costs on the other hand when spillover cost is present there does not exist a constant lower bound on the efficiency of an unregulated oligopoly even with affine cost we show that the efficiency depends on the relative magnitude between the marginal spillover cost and the marginal benefit to consumers this paper was accepted by christian terwiesch operations management

congestion pricing and capacity of large hub airports a bottleneck model with stochastic queues this paper models and estimates congestion prices and capacity for large hub airports the model includes stochastic queues time varying traffic rates and endogenous intertemporal adjustment of traffic in response to queuing delay and fees relative costs of queuing and schedule delays are estimated using data from minneapolis st paul simulations calculate equilibrium traffic patterns queuing delays schedule delays congestion fees airport revenues airport capacity and efficiency gains the paper also investigates whether a dominant airline internalizes delays its aircraft impose it tests game theoretic specifications with atomistic nash dominant stackelberg dominant and collusive airline traffic

third degree price discrimination in the presence of congestion externality this paper analyzes third degree price discrimination of a monopoly airline in the presence of congestion externality when all markets are served the model features the business passenger and leisure passenger markets where business passengers exhibit a higher time valuation and a less price elastic demand than leisure passengers our main result is the identification of the time valuation effect of price discrimination which can work in the opposite direction as the well known output effect on welfare this time valuation effect clearly explains why discriminating prices can improve welfare even when this is associated with a reduction in aggregate output

airport and airline competition for passengers departing from a large metropolitan area abstract in this paper an airport and airline choice model based on a nested multinomial logit model is developed to investigate both airport competition and airline competition in a metropolitan area with multiple departure airports the model can be used to analyze the effects of e g an improvement in accessibility of a specific airport in a metropolitan area it is shown analytically that if the frequency elasticity of demand is smaller than 1 unique airfare frequency and passenger charge equilibria exist next symmetric equilibria are derived analytically their properties are also examined finally asymmetric equilibria are derived numerically while their properties are discussed as well

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

airport pricing congestion tolls lumpy investment and cost recovery abstract in this paper we investigate the relationship between congestion tolls and capacity expansion costs for congestion prone transportation infrastructures with lumpy investment with constant variable costs and social marginal cost pricing this relationship determines the cost recovery status of an infrastructure authority the theoretical model for optimal user charges and the timing of capacity expansion shows that the relative magnitudes of total congestion tolls and total capacity costs in an investment cycle depend on the time pattern of traffic growth a point overlooked in the literature a queuing model is used to conduct a numerical experiment to determine the cost recovery ratios under various time paths of traffic growth

people s opium religion and economic attitudes since max weber there has been an active debate on the impact of religion on people s economic attitudes much of the existing evidence however is based on cross country studies in which this impact is confounded by differences in other institutional factors we use the worldvalues surveys to id entify the relationship between intensity of religious beliefs and economic attitudes controlling for country fixed effects we study several economic attitudes towardcooperation the government working women legal rules thriftiness andthe market economy we also distinguish across religious denominations differentiating on whether a religion is dominant in a country we find that on average religious beliefs are associated with good economic attitudes where good is defined as conducive to higher per capita income andgrowth yet religious people tendto be more racist andless favorable with respect to working women these effects differ across religious denominations overall we find that christian religions are more positively associatedwith attitudes conducive to economic growth r 2003 elsevier science b v all rights reserved jel classification a1 e0 n4 z1

optimal pricing of flights and passengers at congested airports and the efficiency of atomistic charges abstract this paper investigates and compares airport pricing policies under various types of competition considering both per passenger and per flight charges at congested airports we show that an airport requires both pricing instruments to achieve the first best outcome and we distinguish their role by showing that congestion externalities need to be addressed through per flight tolls whereas the inefficiency caused by airlines market power exertion must be corrected with per passenger subsidies we also show that bertrand competition with differentiated products a type of behavior recently pointed out by the empirical literature as pertinent has policy implications that diverge from analyses that assume cournot competition the welfare gains and congestion reductions of congestion pricing would be higher than what has been advanced before the degree of self financing of airport infrastructure under optimal pricing would be increased and may approach exact self financing and the implied differentiation of charges between asymmetric airlines would be significantly smaller presumably enhancing the political feasibility of welfare maximizing congestion pricing as the potential distributional concerns would be decreased finally we numerically analyze second best policies and find that atomistic pricing may offer a relatively attractive alternative to first best congestion pricing

the equity and efficiency of runway pricing abstract this paper poses and answers the following question if an airport authority is assumed to choose landing fees that maximize a weighted sum of airline consumers surpluses subject to a revenue requirement what set of weights is implied by currently observed fees the model is loosely applied to san francisco international airport the main result is that commuter airlines are much more favored than others

atomistic congestion tolls at concentrated airports seeking a unified view in the internalization debate abstract the goal of this paper is to bring some unity to the theoretical side of the debate on internalization of airport congestion by showing that all the literature s theoretical results can be derived within one simple and unified framework the analysis starts by replicating the results of brueckner brueckner j k 2002 airport congestion when carriers have market power american economic review 92 1357 1375 who showed that because airlines behaving in cournot fashion internalize congestion they should be charged low congestion tolls the analysis then validates the findings of daniel daniel j i 1995 congestion pricing and capacity of large hub airports a bottleneck model with stochastic queues econometrica 63 327 370 who argued that larger atomistic tolls are required in a model where a stackelberg leader interacts with competitive fringe airlines however it is shown that this result only holds approximately when the carriers outputs are imperfect substitutes

regulation innovation and the introduction of new telecommunications services i examine the effects of fcc regulation on the innovation and introduction of advanced telecommunications services in the united states an interim of lighter regulation provides an experiment to test the regulatory regime s impact the econometric model comprises an arrival process for service innovation followed by a duration process for regulatory delay the number of services the firms created during the interim is 60 99 higher than the model predicts they would have created if the stricter regulation had still been in place overall firms would have introduced 62 more services to consumers during the study period if the regulation had not been in place

comparison of three empirical models of airport congestion pricing abstract we compare three empirical models of airport congestion pricing a standard peak load pricing model with econometrically estimated demand and delay functions morrison 7 morrison and winston 8 a deterministic bottleneck model with traffic adjusting intertemporally to congestion prices vickrey 9 arnott et al 2 and a bottleneck model with time dependent stochastic queuing daniel 4 when implemented using daniel s airport traffic data the models produce similar traffic patterns under weight based pricing but differ significantly under congestion pricing we conclude that structural modeling of stochastic traffic queues and intertemporal substitution is necessary to produce realistic responses of traffic patterns to congestion pricing

implicit bank debt guarantees costs benefits and risks the expectation by market participants that public authorities might bailout the creditors of banks that are considered too important for financial system stability or another reason to be allowed to fail is commonly referred to as an implicit guarantee public authorities do not have any explicit commitment to intervene they may even honestly state that they not want to do so ex ante but may feel compelled to do so ex post a declared policy aim is to limit the value of implicit guarantees by making banks stronger more easily resolvable in case of distress as well as by imposing extra charges that rise as banks become more systemically important as part of the latter approach globally systemically important banks are identified and subjected to more costly and intrusive regulation there is little evidence that specific approach has been successful so far there is some evidence that the introduction of new resolution frameworks has been helpful while the use of newly available resolution tools and the involvement of bank creditors in the burden sharing associated with bank failure resolution has significantly reduced the value of implicit bank debt guarantees where it occurred in that sense actions speak louder than words

the value of scarce water measuring the inefficiency of municipal regulations abstract rather than allowing urban water prices to reflect scarcity rents during periods of drought induced excess demand policy makers have mandated command and control approaches primarily rationing the use of water outdoors while such policies are ubiquitous and likely inefficient economists have not had access to sufficient data to estimate their economic impact using unique panel data on residential end uses of water in 11 north american cities we examine the welfare implications of urban water rationing in response to drought using estimates of expected marginal prices that vary both across and within markets we estimate price elasticities specific to indoor and outdoor water use our results suggest that current policies do target water uses that households themselves are most willing to forgo nevertheless we find that rationing outdoor water in cities has costly welfare implications primarily due to household heterogeneity in willingness to pay for scarce water we find that replacing rationing policies with a market clearing drought price would result in welfare gains of more than 29 of what households in the sample spend each year on water

estimating the gravity model without gravity using panel data this article examines the effects of zero trade on the estimation of the gravity model using both simulated and real data with a panel structure which is different from the more conventional cross sectional structure we begin by showing that the usual log linear estimation method can result in highly deceptive inference when some observations are zero as an alternative approach we suggest using the poisson fixed effects estimator this approach eliminates the problems of zero trade controls for heterogeneity across countries and is shown to perform well in small samples

congestion pricing of canadian airports abstract under congestion pricing canadian airports would annually save between 72 and 105 million social costs per landing and takeoff decrease about 300 at toronto and vancouver and 50 at calgary and montreal slot constraints fail to eliminate this airport congestion congestion prices are lower on average than existing weight based prices current airport capacity accommodates at least five more years of traffic growth before congestion reaches current levels substantial welfare gains occur even if dominant airlines already internalize their self imposed delays this article calculates equilibrium congestion pricing schedules traffic rates queuing delays layover times and connection times by time of day

pricing the major us hub airports abstract implementing congestion pricing at 27 major us airports would reduce delays by 13 passenger years and 1000 aircraft hours every day saving 3 5 million dollars daily chicago and atlanta would save about 1000 dollars per aircraft airport revenues would increase about 11 million dollars daily a bottleneck model with stochastic queues estimates substantial welfare gains whether or not airlines internalize self imposed delays erroneously imposing fees from the non internalizing specification on internalizing airlines however would be a costly mistake the model calculates equilibrium traffic rates queuing delays layover times connection times and congestion fee schedules by minute of the day

the economics of airport congestion pricing abstract conventional economic wisdom suggests that congestion pricing would be an appropriate response to cope with the growing congestion levels currently experienced at many airports several characteristics of aviation markets however may make naive congestion prices equal to the value of marginal travel delays a non optimal response this paper develops a model of airport pricing that captures a number of these features the model in particular reflects that 1 airlines typically have market power and are engaged in oligopolistic competition at different sub markets 2 part of external travel delays that aircraft impose are internal to an operator and hence should not be accounted for in congestion tolls and 3 different airports in an international network will typically not be regulated by the same authority we present an analytical treatment for a simple two node network and some numerical results to illustrate our findings some main conclusions are that second best optimal tolls are typically lower than what would be suggested by congestion costs alone and may even be negative and that cooperation between regulators need not be stable but that non cooperation may lead to welfare losses also when compared to a no tolling situation

airlines strategic interactions and airport pricing in a dynamic bottleneck model of congestion abstract this paper analyzes efficient pricing at a congested airport dominated by a single firm unlike much of the previous literature we combine a dynamic bottleneck model of congestion and a vertical structure model that explicitly considers the role of airlines and passengers we show that a stackelberg leader interacting with a competitive fringe partially internalizes congestion and that there are various toll regimes that induce the welfare maximizing outcome widening the set of choices for regulators in particular charging the congestion toll that would apply for fully competitive carriers and that ignores any internalization to both the leader and the fringe yields the first best outcome

optimal metering in the bottleneck congestion model abstract this paper examines whether metering entry to highways can reduce commuting costs we consider a modified version of the bottleneck congestion model which includes travel time downstream of the bottleneck the highway authority s choice of an entry rate enables it to substitute queuing time for travel time the authority s choice is constrained by the road s speed flow curve we find that the benefits of metering increase as the speed that would prevail in the absence of metering decreases and as the speed flow curve gets flatter the major cost of metering is providing a holding area for vehicles waiting to enter

price vs quantity based approaches to airport congestion management abstract this paper analyzes price and quantity based approaches to management of airport congestion using a model where airlines are asymmetric and internalize congestion under these circumstances optimal congestion tolls are differentiated across carriers and a uniformity requirement on airport charges as occurs when slots are sold or tolls are uniform distorts carrier flight choices flight volumes tend to be too low for large carriers and too high for small carriers but quantity based regimes where the airport authority allocates a fixed number of slots via free distribution or an auction lead carriers to treat total flight volume and thus congestion as fixed and this difference generates an efficient outcome as long as the number of slots is optimally chosen

systematic peak load pricing congestion premia and demand diverting empirical evidence abstract this paper finds empirical support to systematic peak load pricing in airlines higher fares in ex ante known congested periods it estimates a congestion premia and supports the main empirical prediction in gale and holmes gale i holmes t 1993 advance purchase discounts and monopoly allocation of capacity american economic review 83 135 146 less discount seats on peak flights

the determinants of prices in the fcc s 700 mhz spectrum auction this article examines the prices paid for 700mhz licenses in recent federal communications commission auctions econometric modelling confirms the presence of economies of scale and scope in wireless spectrum valuations that is higher prices are recorded for areas with large populations whilst lower prices are realized for geographically large areas also smaller geographic license areas appear to meet bidders demand more effectively and licenses in areas with high incomes are sold at higher prices not surprisingly more strict deployment requirements and the presence of harmful technical interference reduce prices also paired spectrum receives higher prices than unpaired spectrum interestingly high minimum opening bids and upfront deposits are associated with higher prices finally competitive bidding places upward pressure on prices

determinants of democracy a panel study of over 100 countries from 1960 to 1995 finds that improvements in the standard of living predict increase in democracy as measured by a subjective indicator of electoral rights the propensity for democracy rises with per capita gdp primary schooling and a smaller gap between male and female primary attainment for a given standard of living democaracy tends to fall with urbnization and with a greater reliance on natrual resources democracy has little relation to country size but rises with the middle class share of income the apparently strong relation of democracy to colonial heritage mostly disappears when the economic variables are held constant similarly the allowance for these economic variables weakens the interplay between democracy and religious affiliation however negative effects from muslim and non religious affiliations remain intact

the economic effects of non optimal pricing and investment policies for substitutable transport facilities a dynamic simulation model of subbstitutable transportation facilities demonstrated the welfare revenue and capacity implications of various non optimal pricing and investment policies applications to a major airport and an urban transportation system an expressway and a subway showed that in both cases the welfare surface surrounding the optimal policy is relatively flat for a substantial range and that existing policies are also on this range for both transportation systems a policy of financial self sufficiency is on this range for the airport but not for the urban transportation system author

on the efficiency of competitive markets for operating licenses some economists and policy makers have suggested that market allocation of scarce operating licenses broadcasting licenses and airport slots for instance would lead to their efficient use this paper demonstrates that a competitive market allocation of operating licenses whether attained through auctioning selling or allowing resale of the rights does not in general assure efficiency the profit criterion that would guide the allocation of licenses in a competitive market would not necessarily lead to the uses that maximize social benefits the paper shows that the difference between private and social incentives in the allocation process can be quite large the theory is then applied to discussions of allocating airport takeoff and landing slots and broadcasting licenses

implicit bank debt guarantees costs benefits and risks implicit bank debt guarantees the expectation by market participants that public authorities might bailout the creditors of banks that are considered too important for financial system stability or another reason to be allowed to fail is commonly referred to as an implicit guarantee public authorities do not have any explicit commitment to intervene they may even honestly state that they not want to do so ex ante but may feel compelled to do so ex post a declared policy aim is to limit the value of implicit guarantees by making banks stronger more easily resolvable in case of distress as well as by imposing extra charges that rise as banks become more systemically important as part of the latter approach globally systemically important banks are identified and subjected to more costly and intrusive regulation there is little evidence that specific approach has been successful so far there is some evidence that the introduction of new resolution frameworks has been helpful while the use of newly available resolution tools and the involvement of bank creditors in the burden sharing associated with bank failure resolution has significantly reduced the value of implicit bank debt guarantees where it occurred in that sense actions speak louder than words

the economies of massed reserves the economy of massed reserves first mentioned by e a g robinson 1958 pp 26 27 is now firmly established in the industrial organization literature as an example of a potential plant level scale economy the massing of reserves results in a savings in the proportion of required reserves to expected output as the scale of a facility increases examples of such reserves are bank tellers specialized tools and equipment repairmen inventories spare parts and checkout lines the potential economies from massing reserves are dependent on the underlying stochastic processes governing the supply and or demand of the service provided theoretical justification for the economies of massed reserves has usually been based on an appeal to the law of large numbers for example donald hay and derek morris wrote the law of large numbers makes the number of breakdowns more predictable in a plant using a large number of machines so that the number of stand by maintenance staff need not be increased in proportion to size 1979 p 44 this paper demonstrates that the law of large numbers does not provide a theoretical explanation of massed reserves scale economies instead it is shown that the expected economies of massed reserves can be calculated from the steady state properties of well known queuing models queuing models apply to any case where a servicing input is held in reserve to cope with the stochastic nature of the market or production process in addition a method for quantifying the expected economies of queuing processes is developed the magnitude of these expected economies is shown to be significant and calculable for example the expected economies inherent in a widely applied queuing model are shown to exceed 23 percent in some cases section i establishes the irrelevance of the law of large numbers as a theory of scale economies section ii provides a formal method for determining the scale economies inherent in the most often mentioned massed reserves example machine repair section iii shows that the same method can be used to calculate scale economies for the remaining massed reserves examples specialized repair tools and equipment checkout counter clerks bank tellers and other service personnel capacity and inventories and spare parts in addition it is demonstrated that the same method can be used to calculate scale economies for some multiproduct operations

random queues and risk averse users we analyse nash equilibrium in time of use of a congested facility users are risk averse with general concave utility queues are subject to varying degrees of random sorting ranging from strict queue priority to a completely random queue we define the key no residual queue property which holds when there is no queue at the time the last user arrives at the queue and prove that this property holds in equilibrium under all queueing regimes considered the no residual queue property leads to simple results concerning the equilibrium utility of users and the timing of the queue

factors affecting trade in services evidence from panel data in the course of economic development nations have typically progressed through stages in which agriculture then manufacturing and finally services predominate concerns around the sustainabili

sequential peak load pricing the case of airports and airlines we investigate airport peak load pricing using a vertical structure of airport and airlines we find that a profit maximizing airport would charge higher peak and off peak runway prices and a higher peak off peak price differential than a public airport consequently airport privatization would lead to both fewer total passengers and fewer passengers in the peak period although peak travelling passengers benefit from fewer delays this low level of peak congestion is not efficient suggesting that airport privatization cannot be judged based on its effect on congestion alone we also examine pricing behaviour of a public airport constrained to charge a time independent price on etudie la tarification de pointe dans une structure verticale d aeroports et de compagnies d aviation on decouvre qu un aeroport qui maximise ses profits chargerait des prix plus eleves pour l usage des pistes tant aux heures de pointe qu en autre temps qu un aeroport public ainsi qu un differentiel plus grand entre ces differents moments en consequence la privatisation des aeroports va entrainer a la fois moins de passagers et moins de passagers aux heures de pointe meme si ceux qui voyagent aux heures de pointe vont devoir subir moins de delais cette moindre congestion n est pas efficace voila qui suggere qu on ne doit pas evaluer la privatisation des aeroports seulement a l aune de l impact sur la congestion les auteurs examinent aussi les strategies de tarification d un aeroport public contraint a imposer une tarification qui ne peut varier selon le moment d usage dans le temps

technical change and scale economies given stochastic demand and production abstract this paper provides a formal attempt to separate the effects of changes in scale and technology for a relatively general class of queuing models the paper makes a distinction between the output rate and capacity while changes in technology affect the output rate and lead to larger indivisible production units this change in the output rate has often been confused in the literature as a change in scale as a result the importance of scale economies claimed has often been due more to the potential for technological change not the potential for scale economies inherent to these queuing processes

excludable public goods pricing and social welfare maximization abstract we compare two pricing strategies buffet pricing and usage pricing of excludable public goods for social welfare maximization buffet pricing is better than usage pricing for low consumer heterogeneity while the opposite holds for high consumer heterogeneity

the importance of being systemically important financial institutions abstract we investigate whether financial markets reacted to the regulatory changes implied by the publication of the list of systemically important financial institutions sifi and the new rules designed to address the too big to fail problem of systemic banks by applying event study methodology to a sample of 70 of the world s largest banks we assess whether the stock prices of sifis reacted significantly and differently from those of other large banks not deemed to be systemically important following the release of information regarding the methodology used to identify sifis and their new capital requirements the disclosure of the first list of 29 sifis and the publication of the updated list of 28 sifis overall we determine that financial markets did not univocally react to the new regulation regarding sifis however markets discriminated between high and low capitalized banks and they correctly estimated the probable effects of the additional capital requirements

network effects congestion externalities and air traffic delays or why not all delays are evil we examine two factors that explain air traffic congestion network benefits due to hubbing and congestion externalities while both factors impact congestion we find that the hubbing effect dominates empirically hub carriers incur most of the additional travel time from hubbing primarily because they cluster their flights in short time spans to provide passengers as many potential connections as possible with a minimum of waiting time non hub flights at the same hub airports operate with minimal additional travel time these results suggest that an optimal congestion tax might have a relatively small impact on flight patterns at hub airports jel l2 l5 l9 d6

assigning property rights to radio spectrum users why did fcc license auctions take 67 years abstract while leo herzel 1951 and ronald coase 1959 persuasively argued for auctioning licenses issued by the federal communications commission fcc not until 1993 did the u s congress grant the fcc authority to assign wireless operating permits via competitive bidding why were auctions with obvious efficiency and equity advantages so long in coming why were comparative hearings in the public interest first abandoned as assignment tools in 1981 not for auctions but for lotteries and why were radio and tv licenses pointedly excluded from auctions four factors the special interest of regulators in influencing broadcasting content the limits placed on explicit program regulation by the u s constitution the recent increase in the relative economic importance of nonbroadcast wireless services and the agency problem embedded in central planning are used to explain both the political stability of economically inefficient licensing methods and recent reforms

another look at airport congestion pricing we study alternate approaches to implement congestion pricing at us airports conventional formulations toll all aircraft without determining whether a plane operated by a given airline delays other planes that it operates or planes operated by other airlines recent work points out optimal pricing calls for carriers to be charged only for the delay they impose on other airlines we find a small difference between the net benefits generated by the two congestion pricing policies because the bulk of airport delays are not internalized and because the efficiency loss from pricing internalized congestion is small jel l11 l93 r41

do carriers internalize congestion costs empirical evidence on the internalization question abstract economists have long suggested overhauling the existing u s airport landing departure fees to reflect market valuations of scarce runway capacity economists however do not agree on the optimal congestion based pricing scheme while some researchers advocate for a uniform congestion fee regardless of a carrier s airport market share others suggest that airport tolls should only reflect the congestion costs imposed on other carriers this paper uses ten years of ontime performance data to empirically determine if carriers internalize congestion costs while previous researchers e g mayer christopher sinai todd 2003a network effects congestion externalities and air traffic delays or why all delays are not evil american economic review 93 4 1194 1215 use excess travel time to measure flight delays the contribution of this paper is the addition of on time arrival and delay measures based on actual versus scheduled arrival and departure times we find that estimates based on these new delay measures reverse earlier findings by mayer and sinai 2003a network effects congestion externalities and air traffic delays or why all delays are not evil american economic review 93 4 1194 1215 and hence imply that carriers are not internalizing flight congestion costs

manipulable congestion tolls the recent literature on congestion pricing with large agents contains a remarkable inconsistency though agents are large enough to recognize self imposed congestion and exert market power over prices they do not take into account the impact of their own actions on the magnitude of congestion tolls when large agents are confronted with tolls derived under this parametric assumption but understand the rule used to generate them the toll system will no longer guide the market to the social optimum to address this problem the present paper derives alternate manipulable toll rules which are designed to achieve the social optimum when agents anticipate the full impact of their actions on toll liabilities

regulation of road accident externalities when insurance companies have market power abstract accident externalities that individual drivers impose on one another via their presence on the road are among the most important external costs of road transport we study the regulation of these externalities when insurance companies have market power some of the results we derive have close resemblance to the earlier literature on externality regulation with market power in aviation and private roads but there are important differences too using analytical models we compare the first best public welfare maximizing outcome with a private profit maximizing monopoly and oligopoly we find that insurance companies will internalize some of the externalities depending on their degree of market power we derive optimal insurance premiums and regular parametric taxes as well as manipulable ones that make the companies set socially optimal premiums the latter take into account that the firm tries to exploit knowledge of the tax rule applied by the government finally we also study the taxation of road users rather than that of firms

trip scheduling in urban transportation analysis evidence is presented for the importance of endogenous scheduling the effects of ignoring it and the recent advances in modeling it are also described these advances include analysis of the welfare benefits associated with policies that modify scheduling choices there are many ways that models can be made more realistic one way is to embed them in a network with endogenous route choice another is to incorporate more fully the heterogeneity that is found in the empirical studies of scheduling choice both in parameters and in unobservable preferences for particular schedules yet another is to allow capacity to be random depending for example on weather conditions or traffic accidents another desirable extension awaiting better empirical measurements is to incorporate the reliability of travel schedules despite these limitations the analysis is sufficiently advanced and it can be incorporated into practical traffic studies and into standard economic theories of traffic congestion doing so promises to bring new predictive accuracy and new insights into transportation analysis

economics of a bottleneck abstract drawing on vickrey amer econ rev 59 251 261 1969 and subsequent literature this paper provides a thorough economic analysis of the simplest bottleneck model of road congestion with peak load demand in the morning rush hour a fixed number of identical individuals one per car must travel from home to work between which is a bottleneck of given capacity the costs of travel include queuing time and schedule delay time early or late for work the frequency distribution of departure times adjusts so that in equilibrium all individuals have the same travel costs the paper extends the previous literature by examining a coarse toll and solving for optimal capacities the application of congestion tolls can generate efficiency gains by altering the frequency distribution of departure times previous estimates of the efficiency gains from congestion tolling are likely to be substantially downward biased because they have ignored this effect