transport and low carbon fuel a study of public preferences in spain abstract transport is essential for the control of future greenhouse gas ghg emissions and thus a target for active policy intervention in the future yet social preferences for policies are likely to play an important role in this paper we first review the existing literature on preferences regarding low ghg car fuels but also covering policy instruments and strategies in this area we then present the results of a survey of spanish households aimed at measuring preferences for climate change policies we find a positive willingness to pay wtp in the form of higher car fuel prices for a policy to reduce ghg emissions through biofuels there is however significant heterogeneity in public preferences due to personal motivations accounted for via factor analysis of responses to attitudinal questions and to socio demographic variables

economies of density and regulatory change in the u s railroad freight industry abstract two reform acts the staggers railroad act of 1980 and the railroad revitalization and regulatory reform act of 1976 represented big changes in u s policy toward railroads an important welfare gain from these changes predicted by researchers was the efficiency gain from increased densities in rail freight traffic however few retrospective studies have analyzed the accuracy of these predictions the present paper fills this gap by analyzing the effects of regulatory changes on freight traffic density through simulation of the cost savings from gains in density using a newly estimated rail cost function and by comparison of these results with earlier predictions our results indicate net benefits of 7 10 billion per year as of 2001 stemming from cost savings from increased traffic densities relative to what would have occurred under regulation these benefits are substantially higher than those predicted by researchers in the 1970s and early 1980s for reasons explained in the paper

interpreting rising concentration the case of beer despite considerable long term progress in distinguishing conceptually between the fact of market power and the calculation of market concentration antitrust claimants the department of justice the federal trade commission ftc and private litigants continue to place substantial emphasis on defining a market computing market shares and calculating measures of concentration the operating supposition is virtually always that monopoly or market power is positively associated with concentration whether other offsetting characteristics are also associated with high concentration ordinarily receives less if any consideration the most often cited consideration weighing against an automatic condemnation of increased concentration say through horizontal merger is that costs market power and concentration may all be jointly related economic analysis suggests that if higher concentration brings with it is caused by or causes lower industry costs then it may also bring positive total benefits even if antitrust concern with industry concentration focuses on market power the ability of firms to restrict output and raise price the brewing industry among others has been a major target of this concern because of its high and rising concentration this paper sketches two alternative explanations for this change in industry structure competitive expansion by the more efficient brewers and anticompetitive exclusion of equally efficient but smaller brewers empirical analysis indicates that competition is the better hypothesis in explaining changes in the structure of the beer market

long run effects of mergers the case of u s western railroads abstractwe provide a retrospective assessment of the effects of the two recent major railroad mergers in the western united states burlington northern atchison topeka santa fe and union pacific southern pacific on the price of rail transport of export grain estimation accounts for selectivity bias that arises because rail prices are observed only for routes with traffic despite concerns that both mergers could harm consumers by reducing carrier competition we find that in the long run the mergers have had negligible effects on grain transportation prices and consumer welfare

a reappraisal of interpreting rising concentration the case of beer there has been a tremendous amount of change in the structure and conduct of the post world war ii brewing industry most important concentration has risen scale economies have increased and advertising intensity especially television advertising has changed in a recent article in this journal william j lynk 1984 attempted to determine empirically how changes in concentration and technology affected brewing industry performance between 1974 and 1980 2 he found support for the competition hypothesis that cost reductions due to cost superiority or the exploitation of scale economies have dominated the possible market power effect of rising concentration and have caused output to increase and prices to fall thus the alternative or the exclusion hypothesis that large brewers have squeezed smaller rivals out of in contrast to the finding of william j lynk that rising concentration in the u s brewing industry caused industry output to expand and by his presumption prices to fall the results of this study show that concentration had no significant direct impact on post world war ii beer prices estimates from a reduced form price equation reveal that advertising and costs have had a significant positive effect on beer prices these results provide evidence that the rising concentration scale economies and advertising expenditures in the u s brewing industry generated higher beer prices between 1950 and 1971 i would like to thank william hallagan for bringing lynk s paper to my attention and james f ragan jr carol horton tremblay and an anonymous referee for their helpful comments on earlier drafts any remaining errors are my responsibility 1 for example the number of firms declined from 386 to 37 and the five firm concentration ratio increased from 23 to 71 between 1950 and 1978 see elzinga 1973 1982 keithahn 1978 ornstein 1981 and greer 1971a 1981 for excellent industry studies 2 in this paper industry performance is evaluated from the consumer s point of view for a given level of product quality if structure and conduct changes are beneficial to consumers by causing the market price to fall then industry performance has improved

advertising and the us market demand for beer the us per capita market demand for beer is empirically estimated to determine the effect of advertising on the demand for beer the empirical results indicate that the most important determinants of demand are the price of beer the price of substitutes demographic factors and a light beer dummy variable the positive effects of income and lagged consumption appear to be small although many have argued that advertising promotes beer consumption the empirical results of this study do not support this hypothesis

a study of cartel stability the joint executive committee 1880 1886 this article employs weekly time series data on the joint executive committee railroad cartel from 1880 to 1886 to test empirically the proposition that observed prices reflected switches from collusive to noncooperative behavior an equilibrium model of dynamic oligopoly with asymmetric firms together with explicit functional form assumptions about costs and demand determines the estimating equations and stochastic structure of the econometric model the hypothesis that no switch took place so that price and quantity movements were solely attributable to exogenous shifts in the demand and cost functions is then tested against this alternative and rejected

willingness to pay for e85 from corn switchgrass and wood residues abstract willingness to pay wtp for e85 automotive fuel blend of 85 ethanol and 15 gasoline was estimated from a contingent choice exercise contained in a national survey of consumers the choice exercise included e85 blends from three different feedstock sources corn grain switchgrass and wood wastes and an e10 blend 10 ethanol and 90 gasoline with corn grain as the ethanol feedstock results from the study indicate willingness to pay a premium for e85 from switchgrass compared with e10 from corn concerns about land use for food versus fuel had a negative impact on wtp for e85 from corn grain while greater concerns about fuel security relative to the environment had a positive impact

blend wall economics relaxing us ethanol regulations can lead to increased use of fossil fuels abstract the us environmental protection agency is currently considering a waiver allowing an increase in the fuel ethanol blend limit the blend wall from 10 e10 up to 15 e15 justifications for this waiver are reduced vehicle fuel prices and less consumption of petroleum gasoline leading to energy security a theoretical examination of this waiver reveals an anomaly where a relaxation of this blend wall elicits a demand response under a wide range of elasticities this demand response can actually increase the consumption of petroleum gasoline and thus lead to greater energy insecurity the economics supporting this result and associated policy implications are developed and discussed

renewable energy policy alternatives for the future the united states has been subsidizing ethanol since 1978 in the last decade a subsidy has been added for biodiesel the ethanol subsidy has ranged from 40 to 60 cents per gallon over the entire time period tyner and taheripour 2007 the ethanol subsidy is currently 51 cents per gallon and the biodiesel subsidy is 50 cents for biodiesel made from recycled materials such as cooking grease or tallow and 1 per gallon for biodiesel made from oilseed crops such as soybeans over the years the objectives for biofuel subsidies have included in

public acceptance of biofuels abstract the public acceptance of biofuels in greece is examined in this work the analysis of 571 face to face interviews shows that 90 7 of the respondents believe that climatic changes are related to fossil fuel consumption while only 23 8 know the difference between biodiesel and bioethanol 76 1 believe that energy saving should precede the use of an alternative source of energy only 27 3 believe that priority must be given to biofuels over other renewable energy sources only 49 9 think that the use of biofuels can be an effective solution against climatic changes and 53 9 believe that the use of biofuels can be an effective solution for the energy problem finally 80 9 of the car owners are willing to use biofuels 44 8 are willing to pay the supplementary amount of 0 06 l of the fuel market price while the average amount reported as willing to pay was 0 079 l on top of the fuel market price furthermore eight models correlating the eight main responses with several socioeconomic variables are developed and analyzed those findings heave important policy implications related to the use and promotion of biofuels

environmental externalities and social optimality in biomass markets waste to energy in the netherlands and biofuels in france this paper explores two existing markets for energy produced from biomass waste to energy electricity production in the netherlands and the blending of biofuels with oil based fossil fuels in cars in france both cases provide excellent material to analyse social optimality of current biomass markets vis a vis their fossil fuel substitute the paper applies social cost benefit analysis to estimate both private and environmental cost of these supplies and uses the results to evaluate actual government behaviour in both countries the main findings for the waste to energy case in the netherlands are perhaps somewhat surprizingly that waste to energy is optimal only if the alternative of landfilling is excluded as an opportunity for waste management the case for biofuels in france shows that the take off of this market is only due to considerable government subsidization these subsidies cannot be defended by the difference they make in externality reduction even if the opportunity cost and benefits of set aside land are included as well as the potential productivity improvements

the price and output of beer revisited in an earlier article lynk 1984 i discussed several hypotheses about the interpretation of rising industry concentration and concluded essentially that the phenomenon standing alone was consistent with both the ordinary competitive process and with various successful anticompetitive practices i focused on the brewing industry for an empirical investigation of this phenomenon because it has had an unusually high rate of increase in concentration and has attracted a correspondingly high level of antitrust and merger scrutiny noting a number of basic ambiguities with the use of average prices competing brands may sell at different prices as may competing package types i shifted the test of the competitive consequences of rising concentration from price effects to output effects see posner 1981 i found that as concentration grew through the continued expansion of the larger u s brewers over time and in different parts of the country output expanded rather than contracted this finding i concluded was consistent with growing concentration as an effect of the competitive process and inconsistent with the contraction of output we associate with increasing market power victor tremblay s in this issue paper considers rising concentration may often result from an efficient reorganization of an industry s assets but it may also create market power i found earlier that the efficiency effects dominate in the brewing industry in related research tremblay discusses some policy implications of my finding noting that greater concentration may result in more advertising rather than lower prices i argue here that a higher level of competitive advertising does not have the adverse welfare implications that tremblay suggests and that in any case tremblay s tests are biased against finding an inverse relationship between retail prices and either advertising or concentration i note also that despite these biases tremblay s findings confirm and extend my earlier results higher concentration has led to lower prices as well as higher output journal of business 19 85 vol 58 no 4 1985 by the university of chicago all rights reserved 0021 939818515804 0002 01 50

mergers coordinated effects and efficiency in the portuguese non life insurance industry we evaluate the impact on market power and efficiency of a series of mergers on three portuguese non life insurance markets we specify and estimate with a panel of firm level data a structural model which includes preferences technology and a market equilibrium condition firms demand curves are not very elastic firms technologies exhibit scale and scope economies and high cost efficiency scores we find that for the period following the mergers there is no evidence of i an increase in market power through coordinated behavior or ii changes in cost efficiency levels in addition social welfare increased

how should heavy duty trucks be taxed abstract this paper develops and implements an analytical framework for estimating optimal taxes on the fuel use and mileage of heavy duty trucks in the united states accounting for external costs from congestion accidents pavement damage noise energy security and local and global pollution the analysis allows for endogenous fuel economy increased auto travel in response to reduced truck congestion and distinguishes driving by truck type and region we estimate the optimal second best diesel fuel tax at 1 12 per gallon and implementing it increases welfare by 1 34 billion per annum optimizing over both fuel and mileage taxes and differentiating mileage taxes by vehicle type and region yields progressively higher welfare gains the most efficient tax structure involves a diesel fuel tax of 69 cents per gallon and charges on trucks that vary between 7 and 33 cents per mile implementing this tax structure yields estimated welfare gains of 2 06 billion

concentration price and critical concentration ratios a potentially important parameter that has not yet been convincingly estimated is the critical concentration ratio this paper attempts to estimate it in three types of market the estimation of a critical concentration ratio if one exists seems of potentially great importance because of its implication for antitrust policy if a critical concentration ratio were found and if concentration had no effect below that level it would seem to follow that a horizontal merger in a market where concentration was below the critical level and where the merger could not increase concentration to the critical level could not substantially lessen competition or tend to create monopoly

evaluating the performance of merger simulation evidence from the u s airline industry abstract this paper uses merger simulations to predict postmerger prices for five airline mergers from the 1980s and compares these predictions with observed postmerger prices i find that standard simulation methods which measure the effect of the change in ownership on unilateral pricing incentives do not generally provide an accurate forecast by incorporating postmerger information into the model i measure the relative importance of other factors that also contributed to the observed price changes the results indicate that the unexplained component of the price change is largely accounted for by supply side effects i conclude that deviations from the assumed model of firm conduct play an important role in accounting for the differences between the predicted and observed price changes this conclusion suggests that the predictive performance of merger simulation would benefit if more flexible models of firm conduct were incorporated into the methodology

an optimal u s biodiesel fuel subsidy abstract enhanced environmental quality fuel security and economic development along with reduced prices of blended diesel are often used as justifications for a u s federal excise tax exemption on biodiesel fuels however the possible effect of increased overall consumption of fuel in response to lower total prices mitigating the environmental and fuel security benefits are generally not considered taking this price response into account the optimal u s biodiesel subsidy is derived estimated values of the optimal subsidy are close to the recently expired subsidy revealing the subsidy s environmental and security benefits however further positive environmental and security benefits from the biodiesel tax exemption subsidy may be obtained if the subsidy is combined with a federal excise tax on petroleum diesel

does britain or the united states have the right gasoline tax this paper develops an analytical framework to assess the second best optimal level of gasoline taxation taking into account unpriced pollution congestion and accident externalities as well as interactions with the broader fiscal system we provide calculations of the optimal taxes for the us and the uk under a variety of parameter scenarios under our central parameter values the second best optimal gasoline tax is 1 01 gal for the us and 1 34 gal for the uk current tax rates are much lower than this in the us and higher in the uk the calculations are moderately sensitive to alternative parameter assumptions the congestion externality is the largest component in both nations revenue raising needs also play a significant role as do accident externalities and local air pollution potential welfare gains from reducing the current uk tax rate are estimated at nearly one fourth the production cost of all gasoline used in the uk even larger gains could be achieved by switching to a tax on vehicle miles with equal revenue yield for the us the welfare gains from optimizing the gasoline tax are smaller but those from switching to an optimal tax on vehicle miles are very large

are subsidies for biodiesel economically efficient abstract biodiesel produces less pollution than petrodiesel however it is more expensive and will only be a viable alternative if market prices of the products are comparable this paper examines whether the external benefits from biodiesel use justify subsidies required for adoption outside of niche alternative fuel markets the authors establish a range of subsidies required to make biodiesel a viable substitute for petrodiesel published estimates of the emissions reductions from biodiesel and the dollar benefits of unit reductions in emissions are used to compute a per gallon external benefit from use of biodiesel versus petrodiesel under conservative estimates of the benefits from biodiesel use in non road equipment the external benefits outweigh the required subsidies jel q48 q42 h2

simulating the effects of railroad mergers the purpose of the study reported in this paper is to add to the empirical literature concerning market power and competition between railroads in particular the paper examines the effect of railroad mergers on railroad market power this is achieved through a case study of the transportation market for the export of kansas wheat to houston texas the models techniques and general conclusions of the study can be applied to similarly situated regional transportation markets for homogeneous goods such as coal ores field crops and lumber two models are developed to achieve the objectives of the study a network model of the wheat logistics system is used to identify the least cost transportation routes from the kansas study area to the market at houston a profit improvement algorithm which identifies nash equilibrium prices is developed to measure the amount by which railroads can profitably raise their prices above variable cost the results of the study have implications for united states railroad merger policy the paper indicates that railroad mergers do not necessarily increase railroad market power or make railroad shippers worse off instead the study demonstrates that the impact of railroad mergers on shippers and railroads depends on factors that vary geographically such as the degree of intrarailroad and intermodal competition in the area

estimation and identification of merger effects an application to hospital mergers abstract existing empirical estimates of merger effects are compromised by the fact that merging and nonmerging entities differ in unobserved ways that independently affect outcomes of interest to obtain an unbiased estimate of the effect of consummated mergers i propose an approach that focuses on the response of rivals to mergers and accounts for the endogeneity of exposure to these mergers i apply this approach to evaluate the impact of independent hospital mergers in the united states between 1989 and 1996 using the physical colocation of rivals as an instrument for whether they merge i find a sizeable one time increase in price following a rival s merger with the greatest increase occurring among hospitals nearest the merging hospitals these results are more consistent with predictions from structural models of the hospital industry than with prior observational estimates of the effects of hospital mergers

productivity growth and some of its determinants in the deregulated u s railroad industry this study analyzes the effects of an important postderegulation innovation on rail freight productivity the elimination of cabooses and related crew members it also analyzes the overall growth of productivity in rail freight between 1983 and 1997 using a translog rail cost function estimated over a sample of class i railroads between 1983 and 1997 the results indicate that elimination of cabooses and associated crew members from freight trains reduced costs by 5 8 on the typical class i railroad in 1997 equivalent to an annual cost saving of 2 billion to 3 3 billion for all class i railroads moreover if class i railroads had no other technological advances since 1983 their 1997 costs with 1997 factor prices would have been 36 43 higher than they in fact were finally the results show that overall productivity growth in rail freight did not decelerate between 1983 and 1997 if anything it accelerated slightly

are mergers beneficial to consumers evidence from the market for bank deposits the general conclusion of the empirical literature is that in market consolidation generates adverse price changes harming consumers previous studies however look only at the short run pricing impact of consolidation ignoring effects that take longer to materialize using a database that includes detailed information on the deposit rates of individual banks in local markets for different categories of depositors we investigate the long run price effects of mergers we find strong evidence that although consolidation does generate adverse price changes these are temporary in the long run efficiency gains dominate over the market power effect leading to more favorable prices for consumers jel g21 g34 l1

optimal subsidies to new energy sources abstract this paper broadens previous discussion on the conditions for subsidizing new energy sources several arguments for and against subsidizing new energy sources such as solar energy and synthetic fuels are reviewed and critiqued emphasis is given to vintage subsidies to conventional energy sources net energy analysis and a variety of production externalities a theorem for determining optimal subsidies to new energy sources is developed based on a general theorem proposed by baumol and bradford 2 finally two equity issues are also considered

monetized value of the environmental health and resource externalities of soy biodiesel abstract this study monetizes the life cycle environmental damage human health risk and resource depletion externalities associated with the production and use of biodiesel fuels from soybean feedstock applying a framework that couples life cycle damage measurements with social preferences elicited from a conjoint choice experiment allows for comparison of petrodiesel and biodiesel s external damages the results of the study reveal that production and consumption of soybean based biodiesels produce improvements in environmental health and resource impacts of 0 27 per gallon relative to petrodiesel for a 20 blend and 3 14 per gallon for a 100 blend

national television and the market for local products the case of beer information technology lowers the cost of distributing information to dispersed consumers because national firms reap larger benefits from new media than firms serving only local consumers media innovations may reduce the market for local products this paper considers the effect of television on the market for local beer using market level data on television penetration local breweries and brewery production from 1945 1960 results show that increases in television penetration are associated with fewer local breweries and less local beer production the results indicate that the industrial organization of media markets can affect the structure of markets for local products

advertising restrictions and concentration the case of malt beverages the relationship between state imposed advertising restrictions and state level market concentration in the malt beverage industry is examined the authors find that the presence of proscriptions on price advertising significantly increases market concentration at the state level both absolutely and relative to a measure of national concentration the evidence also indicates that banning local nonprice advertising in addition to price advertising yields no marginal significant change in either measure of state level concentration analysis of individual brewers market shares suggests that large national brewers gain at the expense of smaller brewers when price advertising is restricted copyright 1995 by mit press

toward an optimal u s ethanol fuel subsidy abstract enhanced environmental quality fuel security and economic development along with reduced prices of ethanol gasoline blends are often used as justifications for the u s federal excise tax exemption on ethanol fuels however the possible effect of increased overall consumption of fuel in response to lower total price mitigating the environmental and fuel security benefits are generally not considered taking this price response into account the optimal u s ethanol subsidy is derived estimated values of the optimal subsidy reveal that the subsidy s environmental and security benefits are questionable however positive environmental and security benefits from the ethanol tax exemption subsidy may be obtained if the subsidy is combined with an increase in the excise tax on gasoline

sell or not sell biodiesel local competition and government measures the introduction of biofuels is one of the objectives of the european union for this reason measures to promote the production and consumption of this product have been implemented such as tax exemptions fixing a minimum amount of mixture or the introduction of public transport that consume biofuels in this paper we test different factors that can affect the introduction of biodiesel in the spanish gasoline market these factors are mainly the level of local competition technical difficulties and local government action empirical evidence shows that a higher level of competition more buses that consume biodiesel and a lower adjustment costs increase significantly the probability of sell biodiesel at service stations these results show how the promotion of competition and public procurement of vehicles can improve the commercialization of biofuels

advertising price and welfare evidence from the u s brewing industry the welfare effect of advertising has been a subject of controversy among economists for some time one obvious concern is simply the cost of advertising in 1990 for example americans spent 130 1 billion on advertising to put this figure into perspective this amounted to 523 per capita 2 35 percent of gross national product and roughly 80 percent of the national deficit 1 much of the early debate regarding the social desirability of advertising stems from different preconceptions regarding its purpose 13 14 8 49 for example according to the kaldor 29 hypothesis advertising is primarily persuasive or deceptive in nature it changes consumer preferences creates brand loyalty and persuades consumers to favor commodities that they did not previously desire an opinion survey by bauer and greyser 5 indicates that consumers believe that much of advertising is persuasive and greyser and reece 27 158 find that 85 percent of the over 2 700 harvard business review subscribers surveyed believe that advertising persuades people to buy things they do not need if advertising is purely deceptive then it can be classified as a bad and reduces welfare