credible spatial preemption it is often argued that incumbent firms may deter entry by preemptive investment in new goods we show that these conclusions are reversed when multiproduct incumbentfirms may exit in response to entry once entrants are in an industry an incumbent will often want to withdraw some goods to prevent competition with the entrant from reducing profits on other goods such a reaction makes entry more attractive to a potential entrant the equilibrium industry structure is less likely to be monopolistic as the goods are better substitutes as exit costs are low and as the competition between producers of the same good is more intense

herding with and without payoff externalities an internet experiment most real world situations that are susceptible to herding are also characterized by direct payoff externalities yet the bulk of the theoretical and experimental literature on herding has focused on pure informational externalities in this paper we experimentally investigate the effects of several different forms of payoff externalities e g network effects first mover advantage etc in a standard information based herding model our results are based on an internet experiment with more than 6000 subjects of which more than 2400 participated in the treatments reported here including a subsample of 267 consultants from an international consulting firm we also replicate and review earlier cascade experiments finally we study reputation effects i e the influence of success models in the context of herding

structural change competitive balance and the rest of the major leagues i introduction competitive balance is the object of significant attention in the analysis of pro sports leagues under rottenberg s 1956 uncertainty of outcome hypothesis enough imbalance may actually drive down the demand for pro sports and league revenues with it but the analysis of competitive balance itself also is insightful for the impact of league self regulation choices in this paper we extend recent approaches in time series analysis found in schmidt 2001 schmidt and berri 2001a 2001b 2003 2004 lee and fort 2005 henceforth lf and fort and lee 2006 beyond its exclusive focus on major league baseball mlb to the national basketball association nba the national football league nfl and the national hockey league nhl we restrict ourselves only to north american leagues henceforth nals although davies downward and jackson 1995 simmons 1996 and dobson and goddard 1998 provide interesting time series analysis in world leagues as well these works add dramatically to the understanding of structural impacts found from ad hoc cross section approaches the review is in lf in nals a number of structural changes have been hypothesized to dramatically alter competitive balance among teams over time first there are the familiar macro occurrences of depression and war and exogenous league factors like the fundamental alteration in local revenue brought on by increases in the value of local tv broadcast rights beginning in the late 1970s second there are more direct league circumstances changes in the rules of the games the draft the end of the reserve clause changes in the number of teams merger and expansion and their locations salary caps and labor issues lf also examined the impact of racial integration on competitive balance but for the rest of the nals there is no clearly defined point marking their racial integration finally schmidt and berri 2003 and eschker perez and siegler 2004 have begun to investigate the impacts of the influx of foreign born players we apply break point detection techniques described at length in lf to within season competitive balance measures in the rest of the nals there are a number of interesting insights all breaks detected for these other nals occur after 1966 and not until 1970 in the nba rule changes in the nfl in the late 1970s correspond with a break point in that league but generally rule changes do not correspond to any break points the imposition in nals of the draft and free agency conform to rottenberg s invariance proposition ip except for a general negative trend in competitive balance in the nba when they do correspond with break points league expansion and team relocation have predictable impacts but some of these alterations do not have corresponding break points mergers in all three of the other nals correspond in interesting ways with break points that enhance competitive balance but not all mergers correspond with break points there is no correspondence between the break points and the imposition of the salary caps in the nba and the nfl finally we can find no correspondence between break points and any labor issues in any of these leagues except for enhanced balance that followed after the 1998 nba lockout explanations for the negative trend in nba are consistent with the idea that there is a short supply of tall people that is a truly physical limit on talent inputs in the nba originally proposed by berri et al 2005 and an explanation for the second break point in the nhl may have to do with the influx of european players the paper proceeds as follows in section ii we specify the empirical approach and handle the important details of stationary series and detrending the results are shown and discussed within the context of the limits of the break point technique in section iii conclusions round out the paper in section iv ii

public sector efficiency leveling the playing field between oecd countries in this paper we seek a robust methodology for the measurement of the relative public sector efficiency of 19 oecd countries over the period 1980 2000 we estimate relative efficiency scores for five disaggregated accounts of public spending as well as for aggregate public spending then we use a semi parametric econometric method to isolate the impact of government inefficiency from the inefficiency arising from the socioeconomic environment and luck to verify the validity of our index we use it to examine a number of well established relationships in the public choice literature which have only been tested using local government data

installed base and compatibility innovation product preannouncements and predation a good is often more valuable to any user the more others use compatible goods the authors show that this effect may inhibit innovation if an installed base exists and transition to a new standard must be gradual early adopters bear a disproportionate share of transient incompatibility costs this can produce excess inertia the installed base however is stranded if the new standard is adopted this may create excess momentum these dynamic effects have strategic implications temporary price cutting can permanently prevent entry and product preannouncements can be critical in innovation these strategic actions have ambiguous welfare effects

boom and gloom we study the performance of investments made at different points of an investment cycle we use a large data set covering hotels in the united states with rich details on their location characteristics and performance we find that hotels built during hotel construction booms underperform their peers for hotels built during local hotel construction booms this underperformance persists for several decades we examine possible explanations for this long lasting underperformance the evidence is consistent with information based herding explanations

performance indicators in higher education a survey of recent work this article surveys recent work on the construction of performance indicators in higher education focusing particular attention on degree results student wastage and research output performance indicators ought to provide measures of value added by the various institutions under review as such crude measures of output which fail to take account of input differences across institutions are inappropriate so it is necessary to investigate what factors underlie inter institution differences in measured output in order to correct for input variations in assessing overall performance the absence of market prices for teaching and research outputs severely hinders the construction of composite measures of the performance of higher education institutions since in their absence no objective weights can be assigned to the different roles of these institutions the resource implications of performance measurement exercises need to be clarified if rankings exercises are to have the desired incentive effects copyright 1992 by oxford university press

learning and capacity expansion under demand uncertainty a competitive dynamic model of entry into a new industry is set up and both its positive and normative aspects are studied the main assumptions are that entry is sequential that it occurs under imperfect information on the size of the market and that better information becomes available as time goes on the gradual improvement in information is due to the fact that later waves of entrants are able to observe the profitability of earlier entrants the major results reported here under suitable restrictions are that the equilibrium rate of entry is monotonically decreasing over time and that at any given point in time it is smaller than the socially optimal one when a new market opens as a result of a product being newly invented for instance or when an existing market starts to expand uncertainty with respect to its size is likely to prevail as a result of this uncertainty entry of firms into such markets typically will occur in waves some firms will enter initially while others will wait to see the consequences of that initial entry if the experience of early entrants is favourable entry will continue otherwise entry will cease hence with the introduction of a new product two phases are associated the growth phase typified by positive operating profits for existing firms and expansion of productive capacity due to entry of new firms and the mature phase typified by erosion of profits and fixed total productive capacity empiricists estimating the time pattern of investments during the growth phase have found an s shaped diffusion curve see mansfield 1986 and gort and klepper 1982 the purpose of the present paper is to theoretically characterize these time patterns and to investigate their welfare properties any attempt to model the type of entry described above must account for differences in both entry dates and resultant earnings in other words the theory must explain why the realized earnings of different cohorts of firms are not equal often such ex post differences are reconciled by assuming heterogeneity with respect to some latent underlying characteristic managerial ability for instance and attributing differences in earnings to differences in that characteristic in this paper instead earning differentials are attributable to luck only ex ante all firms are technologically identical and equally capable of forecasting market prospects and rationally acting upon those forecasts ex post some firms turn out to have entered at the right time and are for that reason more profitable the model developed in this paper analyzes a parametric example of a sequential entry problem in which the uncertainty over market size is gradually resolved over time in a bayesian setting in an environment of perfect competition and constant returns toscale a free entry equilibrium concept is introduced and the aggregate implications of the time path of investments are derived i then compare this actual time path to the optimum this comparison is interesting because the equilibrium is analysed under the

the cost structure of american research universities 1597 this study estimates translog variable cost functions for 147 american doctorate granting universities accounting for three major products of these institutions undergraduate and graduate instruction and research explicit measures of research output and quality are employed evidence is found for considerable economies of scale for the average institution as well as economies of scope related to the joint production of undergraduate and graduate instruction the public or private ownership of an institution is not significant for the explanation of variable costs the intensity of state regulation in the public sector does not have a significant impact on production efficiency copyright 1991 by mit press

two stage perfect equilibrium in hotelling s model hotelling i 929 suggests that his spatial competition model can be used to describe a wide range of differentiation problems he points to the selection of product variety within an industry as a potential application most of the subsequent work in his tradition has taken the equivalence of the two problems for granted in this note we look more closely at this equivalence we distinguish between two types of differentiated products according to the variety of preferences assumed with respect to those products building on this distinction we recognize that the demand faced by a firm locating on hotelling s line is analogous to the demand faced by a firm selecting a horizontally differentiated product it should be emphasized thus that the equivalence between the geographical and the product selection problem is by no means general and relies on specific assumptions about consumers preferences next we formulate a small model close to hotelling s one in which firms select a horizontally differentiated product within this model it will be shown that a pure strategy price equilibrium exists for every pair of products this statement is to be contrasted with the results of d aspremont et al i979 who have shown that in the original hotelling s setting an equilibrium fails to exist when firms are too close together 1 in addition we will examine the product selection problem faced by firms in a two stage game in the first stage each firm selects a product in the second stage the firm defines a price for its product we will seek the existence of a perfect equilibrium in this game a perfect equilibrium in this context can be viewed as a nash equilibrium in a game in which firms select a product aware of the non cooperative price equilibrium that will occur for each of their choices it will be shown that contrary to hotelling s principle the two firms will maximise their differentiation i e firms will locate at opposite ends of the market

ownership of property rights and the allocation of talents under the reserve clause system that assigns the property rights on the major league baseball players services to teams player transfers are negotiated between teams without the involvement of players in contrast under the current free agency system players with free agent status negotiate directly with potential suitors thus the system assigns the property rights to players using data extracted from the baseball archive http baseball1 com this article examines the effect of the change in the property rights assignment on the allocation of talents across teams we find that the change increased large market teams shares of veteran all star players and the concentration of senior players

evaluating the productive performance of uk universities as cost constrained revenue maximizers an empirical analysis the study presents an empirical analysis of the relative revenue efficiency of uk universities in providing teaching and research with government policies pressurizing the largely public funded universities to secure efficiency in both input usage and output revenue university producers are modelled as cost constrained revenue maximizers taking explicit account of the quality of research output the methodology uses linear programming techniques to construct nonparametric cost indirect production frontiers and to compute revenue efficiency relative to these frontiers revenue efficiency is then decomposed into its output allocative and technical components further analysis investigates the sources of allocative and technical inefficiencies

competitive balance measures in sports leagues the effects of variation in season length appropriate measurement of competitive balance is a cornerstone of the economic analysis of professional sports leagues we examine the distributional properties of the ratio of standard deviations rsd of points percentages the most widely used measure of competitive balance in the sports economics literature in comparison with other standarddeviation based measures simulation methods are used to evaluate the effects of changes in season length on the distributions of competitive balance measures for different distributions of the strengths of teams in a league the popular rsd measure performs as expected only in cases of perfect balance if there is imbalance in team strengths its distribution is very sensitive to changes in season length this has important implications for comparisons of competitive balance for different sports leagues with different numbers of teams and or games played jel l83 d63 c63

competition and diversification in public and private higher education the development of mass higher education and growing competition between higher education institutions has given increasing visibility to the issue of diversification this article analyses the issue of programme diversification using a panel of 181 portuguese higher education institutions over the period 1995 to 2007 by comparing the behaviour of public and private institutions the results show that the legal status of institutions is the major determinant of programme diversification as private institutions are far more specialized than their public counterparts the study also evaluates the role of other institutional variables such as the institution s size age location institutional mission and research intensity to explain differences in the diversification behaviour of higher education institutions the results provide important insights as competition has been thought to improve the performance of higher education institutions

learning and payoff externalities in an investment game abstract this paper examines the interplay of informational and payoff externalities in a two player irreversible investment game each player learns about the quality of his project by observing a private signal and the action of his opponent i characterize the unique symmetric equilibrium in a timing game that features a second mover advantage allowing for arbitrary correlation in project qualities despite private learning the game reduces to a stochastic war of attrition in contrast to the case of purely informational externalities all investments happen at the same real time instant irrespective of the sign of the correlation and beliefs never get trapped in a no learning region provided that the second mover advantage is sufficiently high

endogenous timing of actions under conflict between two types of second mover advantage in a model two players heterogeneous in their information quality compete with each other with perfect information about the other player s information quality if they can decide their timings of actions endogenously the less informed player has an incentive to delay her action for learning on the other hand the more informed player wants to delay her action to prevent her information from being revealed not to enable her to learn the consict of these two types of second mover advantages yields a war of attrition although both players can bene t from acting as the follower the gain from a delay for learning is greater than that for preventing the other s learning therefore a cost for the delay in action plays an important role in characterizing the equilibrium in contrast to the literature in which only informational externalities are considered this article shows that the introduction of payoff externalities contributes to different procedures and reasoning processes through which the heterogeneous players timings of actions are decided endogenously

first versus second mover advantage with information asymmetry about the profitability of new markets is it better to move first or second to innovate or to imitate we show that if one player s information about the profitability of new markets is only modestly superior the possibility of foreclosing the market can lead to a first mover advantage on the other hand more extreme information superiority can reverse this leading to a second mover advantage knowing more surely what is the best choice the better informed player wants to delay to keep his information private and the less informed player wants to delay to learn because of this more accurate information can actually lead to inefficiency by increasing the incentive to delay and exogenous costs of delay can aid efficiency by neutralizing that strategic incentive in fact in some circumstances a player may purposely coarsen his information to deter imitation

institutions of higher education as multi product firms economies of scale and scope a multiple output cost function is estimated for institutions of higher education in the united states employing data for 1981 82 the authors flexible fixed cost quadratic function includes three outputs undergraduate teaching graduate teaching and research grants and one input price average faculty salaries results indicate the existence of scope economies at least up to a point for both public and private institutions of higher education ray economies of scale are more pronounced in the private sector and product specific economies of scale are observed only in the public sector for research and graduate teaching copyright 1989 by mit press

decentralization duplication and delay we argue that although decentralization has advantages in finding low cost solutions these advantages are accompanied by coordination problems which lead to delay or duplication of effort or both consequently decentralization is desirable when there is little urgency or a great deal of private information but it is strictly undesirable in urgent problems when private information is less important we also examine the effect of large numbers and find that coordination problems disappear in the limit if distributions are common knowledge

racial integration as an innovation empirical evidence from sports leagues this paper treats racial integration as an innovation in economic process in which economic entities find it advantageous to utilize potentially more productive inputs previously unavailable due to law custom or managerial discretion data on the racial integration of major league baseball and atlantic coast conference basketball are employed to address this issue the central question examined is which type of team integrated first losers or winners the results strongly support the idea that entrepreneurship trumps competitive rivalry that is winning teams led the process of racial integration jel li j7 one of the watershed events in u s history is the struggle to achieve a racially integrated society while the civil rights laws and court rulings in the 195o s 196o s and 197o s are among the major changes in public policy that gradually led to a breakdown of jim crow rule in the american south other changes in law and custom also motivated the process of racial integration across time and place indeed segregation was not limited to the south but was a prominent feature of many national organizations and markets despite the extensive commentary on these events from various perspectives there has been very little economic analysis of the actual process of racial integration economists have focused their efforts on the economics of discriminatio n while the actual process by which individuals firms and

individual team incentives and managing competitive balance in sports leagues an empirical analysis of major league baseball abstract major league baseball and other professional sports leagues have long been concerned with competitive imbalances caused by differences in local revenues the fear is that in the absence of salary caps or other regulatory mechanisms smaller market teams will be unable to remain competitive this research uses a structural dynamic programming model to analyze ownership s payroll investment decisions this model estimates the relationship between optimal payrolls and local market populations and the influence of long term customer equity dynamics on payroll investments in addition the author analyzes the impact of a recent policy intervention that implemented revenue transfers from high local revenue markets to low local revenue markets the statistical results indicate that market population has a significant impact on the value of a team s payroll investments for example optimal payrolls double as the population increases from 2 5 million to 7 5 million furthermore rather than improving com

costs efficiency and economies of scale and scope in the english higher education sector an understanding of the production and cost technology of higher education institutions is of considerable policy interest as it motivates the structure of the sector how large universities should be and what mix of outputs they should produce we review the literature and using data for english institutions in 2013 14 apply appropriate frontier methods to model the structure of costs in this diverse sector in doing so we uncover information about the returns to scale and scope within the higher education sector in particular the class of institutions comprising larger research intensive universities and small specialist institutions could benefit from further concentrating postgraduate and research activity we find that the universities comprising the english higher education sector are largely efficient measured relative to observed practices and that there is little scope for gains in technical efficiency from allocating resources on the basis of efficiency scores

a theory of exit in duopoly we develop a duopoly model in which exit occurs because of the existence of fixed costs or opportunity costs each firm enters the market knowing its own cost but not that of its opponent as times goes on each firm becomes increasingly pessimistic about the cost of its remaining rival the time of exit is the only strategic variable so that our model is a war of attrition in contrast to the classic war of attrition however we assume that with positive probability each firm s costs may be low enough that staying in forever is a dominant strategy thus our model unlike the classic one has a unique equilibrium

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

endogenous sequencing of firm decisions abstract when firms are symmetrically informed a stackelberg leader prefers to be leader rather than a cournot duopolist however when the leader has superior information about demand the leader may earn lower ex ante profits than it would earn if it was choosing quantities simultaneously with the follower in this paper i give the firm with superior information the option of delaying its quantity decision until the decision period of the less informed firm so that decisions are made simultaneously surprisingly in the unique stable outcome the informed firm moves first regardless of its private information journal of economic literature classification numbers c72 c73 d82 l10

the long run link between money growth and inflation is inflation always a monetary phenomenon many economists believe that the link between money growth and inflation in the u s has weakened over the last two decades due in part to the federal reserve s policy experiment in 1979 1982 and innovations in the financial sector of the economy i find that the long run relationship between money growth and inflation is strong in a statistical sense and important economically the key result is that the trend or growth component in cpi inflation is entirely due to the trend component of monetary base growth jel c32 e31 e51

firm and industry level profit efficiency analysis using absolute and uniform shadow prices we discuss the nonparametric approach to profit efficiency analysis at the firm and industry levels in the absence of complete price information two new insights are developed first we measure profit inefficiency in monetary terms using absolute shadow prices second we evaluate all firms using the same input output prices this allows us to aggregate firm level profit inefficiencies to the overall industry inefficiency besides the measurement of profit losses the presented approach enables one to recover absolute price information from quantity data we conduct a series of monte carlo simulations to study the performance of the proposed approach in controlled production environments

ranking and clustering of the faculties of commerce research performance in australia there is a growing policy focus in australian higher education on quantitative research performance assessment however most of the analysis has addressed aggregate performance at the institutional level an approach inconsistent with recent policy emphasis on diversity among universities and one that ignores performance variations across disciplines using averaged and all available data for 2000 2004 cluster analysis is used to classify australian commerce faculties into groups that exhibit similar research performance measured by publication phd completion and secured competitive research grant funding we also use factor analysis to generate full multidimensional rankings within the resulting two or three clusters it is found that in terms of total research output with the exception of adelaide all the group of 8 go8 members plus university of technology sydney and griffith always belong to clusters a however when research performance is expressed in per academic staff terms an additiona

evaluating the performance of higher education institutions in europe a nonparametric efficiency analysis of 944 institutions abstractalthough a long tradition exists of studying the economics of education performance comparisons of different kinds have traditionally been difficult to undertake an important impediment has been the lack of comparable data to a large extent this study remedies the shortcomings of earlier studies our contribution is twofold first the current higher education policy of contraction and economizing common to most european countries make knowledge of potential efficiency gains crucial second a unique database allows us to study a broad diversity of organizations as well as organizations located in a number of different european countries the study suggests evaluating higher education institution hei performance in a production theory context applying the well known data envelopment analysis dea method to a cross section of 944 heis in 17 european countries the dea approach is particularly suitable in this context where little is known about production technologies and economic behavio

unit costs some explanations of the differences between uk universities considerable interest is currently being shown in the funding of university education the uk university sector has suffered a series of major cuts in public funding since 1980 and these have been accompanied by demands for higher standards and increased efficiency policy statements issued during the present decade have frequently emphasized the need for methods of assessing the performance of universities the comparison of universities on the basis of their performance it is argued would lead to a more efficient use of resources the essentials of performance measurement in education are to introduce into considerations of policy and the management of the education system at national and institutional level some concrete information on the extent to which the benefits expected from education expenditure are actually secured and to facilitate comparisons in terms of effectiveness and efficiency as between various parts of the system and as between different points in time des 1987a p 49 variou

efficiency in the provision of university teaching and research an empirical analysis of uk universities summary a flexible three output two input cost function model is used to examine the cost efficiency of uk universities as producers of teaching and research outputs unlike previous studies a comprehensive peer review of research quality is incorporated overall product specific and input specific economies of scale global and product specific economies of scope marginal costs and cost complementarities are estimated overall and product specific scale results indicate considerable increasing returns while the scope results generally suggest neither economies nor diseconomies sensitivity analysis is used to simulate the impact of current government policy regarding the expansion of undergraduate teaching output on these results

the effect of risk based capital requirements on profit efficiency in banking the purpose of this paper is twofold to show how to measure profit efficiency in banking using a newly developed technique and to use that technique to determine the effect of risk based capital requirements on the profit performance of us banks the measure of profit efficiency used captures deviations from profit maximization arising from technical inefficiency caused by a lack of managerial oversight and allocative inefficiency which is caused by managers choosing a nonoptimal mix of inputs and outputs a leverage ratio constraint and a risk weighted capital ratio constraint are explicitly included in the model which allows identification of the effect on profits of those constraints the techniques are applied to random samples of us banks for 1990 1992 and 1994 the results indicate that allocative inefficiency is a larger source of profit loss than technical inefficiency and that the risk based capital standards have a significant effect on bank allocative efficiency

on the evolution of competitive balance the impact of an increasing global search the coase theorem maintains that where free market precepts exist the allocation of property rights does not impact the distribution of resources an application to major league baseball suggests that institutions such as free agency and the reverse order amateur draft would not impact player distributions and therefore would not impact competitive balance the present study finds that the distribution of wins is generally consistent with the precepts of the coase theorem and therefore suggests a course for those who wish to alter the level of competitive balance major league baseball should increase its focus on expanding the size of its labor pool jel o15 l83 c22

best practice benchmarking in uk higher education new nonparametric approaches using financial ratios and profit efficiency methodologies the neglected issue of using profit efficiency for the best practice benchmarking of uk universities is explored to see whether this supports the policy stance of encouraging more specialized university production the article also investigates whether nonparametric modelling with financial ratios in contrast to nonparametric modelling based on the prices and quantities of each university s inputs and outputs can yield ready insights into this profit efficiency issue the empirical results using two new approaches confirm that more specialized university production yields relatively higher performance on average than less specialized production the results also highlight certain advantages of financial ratios modelling

asymmetric information information externalities and efficiency the case of oil exploration in this article we examine the efect of private information and information externalities on the ex post eficiency of investment in oil exploration we show that too much drilling tends to occur ifjirms believe that the area is likely to contain a sizeable pool of oil and too little drilling occurs if the opposite is true bargaining with well defined property rights to the information externality can eliminate underinvestment but overinvestment remains a problem because firms have an incentive not to disclose their private information

strategic delay and the onset of investment cascades i study the phenomenon of herd behavior in a framework where agents can endogenously choose both the actions and the timing of their actions i assume that agents may have privately known quality and content of information a unique symmetric equilibrium in pure strategies is proved to exist and characterized in its closed form an investment cascade always occurs in the equilibrium and a strategic delay is shown to exist before the sudden onset of the investment cascade i also examine the loss of welfare from delay and information cascade

impact of bayesian learning and externalities on strategic investment we investigate the interplay between learning effects and externalities in the problem of competitive investments with uncertain returns we examine a game theoretic duopoly investment model in which i a firm can learn about the profitability of the investment by observing the performance of the first mover and ii externalities exist between the investments of two firms we find a region of a war of attrition between the two firms in which the interplay between externalities and learning gives rise to counterintuitive effects on investment strategies and payoffs in particular we find that contrary to the conventional war of attrition where an increase in benefits for the follower generally delays the first move an increase in the rate of learning which tends to benefit the follower can hasten the first investment this paper was accepted by james smith decision analysis

on the evolution of competition an application of nonlinear tests a corollary of the coase theorem maintains that where free market precepts exist the allocation of property rights would not impact the level of competition within an industry within the major league baseball industry for example the theorem would suggest that institutional arrangements such as free agency would not impact player distributions and therefore would fail to alter competitive balance in order to examine this implication the present paper investigates the univariate behaviour of competition balance in the end it appears that an increased labour pool rather than institutional changes is responsible for movements in competitive levels within the industry specifically the evidence suggests that competitive balance measures are trend stationary however the trend is nonlinear and is common to baseball s labour pool i e the two co trend

crime and punishment in major league baseball the case of the designated hitter and hit batters i introduction are you seriously going to throw at somebody when you re facing randy johnson curt schilling 1 in 1973 amid waning fan interest in baseball the american league al of major league baseball mlb instituted the designated hitter rule as an experiment the stated goal of this rule change was to boost offensive output by increasing the talent pool of batters in the lineup traditionally the competing teams field nine players who must play defense in the field and bat because of the importance of the pitcher who is responsible for putting every ball in play teams rely on pitching ability and ignore the hitting ability when choosing the pitcher in the lineup therefore pitchers tend to be very poor hitters by allowing teams to substitute a player of greater hitting ability known as the designated hitter dh to bat for the pitcher the total offensive output increases the experiment has since grown into an institution in the al that differentiates it from the national league nl where all players must bat and play in the field the dh succeeded in turning the al into the power league as intended but an unintended consequence of the rule change is that the al now has more batters hit by pitches than the nl traditional baseball lore holds that the lack of retaliatory punishment in the al for hitting batters is the cause of this phenomenon veteran nl manager dusty baker describes the deterrent impact from a pitcher s point of view you can be bold in the american league and get away with hitting batters it s different in our league where you have to hit 2 pitchers who do not have to bat where they might face retaliation are more willing to risk hitting batters than pitchers who do bat given that the rules of the game in both leagues are identical except for the use of the dh mlb created ideal conditions for a natural experiment to examine the impact of the dh on hit batters in a controlled setting 3 several economists have looked at the issue and found that there is a statistically significant relationship between the dh and hit batters however the reason for this difference is subject to much debate it is possible for the hit batter differential to exist without the deterrent effect of retaliation the rulebook punishment for hitting a batter awarding the hit batter first base makes retaliatory enforcement costly for teams to employ pitchers are typically poor hitters who rarely reach base via hitting while batters who are dhs are typically good hitters the fewer hit batters in the nl may reflect the lineup composition in which the pitcher must bat nl teams will try to avoid plunking pitchers because they are relatively less likely to reach base than non pitchers while al teams do not have this easy out in their batting lineups a problem with previous studies of the subject is their reliance on yearly aggregate data hit batters are rare events approximately 1 of all plate appearances result in a hit batter that occur in the course of game where other incentives are quite relevant this means that identifying small changes in pitcher behavior from specific factors will be difficult to identify with aggregate data differentiating between the two competing explanations for the hit batter differential between leagues deterrence and lineup composition requires micro level data where we can control for in game strategic incentives for hitting batters using a unique play by play data set that allows us to control for specific factors that affect hit batters we find that pitchers are still more likely to hit batters with a dh in the lineup than without and though pitchers are hit more rarely than other players pitchers do experience retaliation for hitting batters retaliation against pitchers who plunk batters which was not found in earlier studies is needed to generate an effective deterrent for pitchers in the nl

a technically level playing field profit efficiency analysis of enforced competition between publicly funded institutions abstract the study demonstrates how recent advances in the data envelopment analysis dea of profit efficiency and in combining dea and stochastic frontier analysis sfa to measure producer performance can be used to obtain a technically level playing field profit efficiency performance measure a three stage analysis is used to provide an empirical investigation of public sector universities facing regulatory pressures to attain both profit efficiency and output quality stage one employs directional distance function analysis to decompose dea profit efficiency measures into technical and allocative components as these performance measures incorporate the impacts of managerial inefficiency the operating environment and luck statistical noise stage two applies sfa to total radial and non radial slacks to obtain a degree of disentanglement from the latter two impacts the stage two results are used to define a common environment and common luck scenario thus permitting university producers inputs to be adjusted so as to reflect operation within this more level playing field scenario stage three recomputes the first stage dea for this scenario to yield an input focused technically level playing field measure of profit efficiency that unifies the regulatory financial audit and output quality indicators in a single best practice benchmarked performance measure

rule changes and competitive balance in japanese professional baseball i introduction since rottenberg s 1956 classic analysis of baseball s reserve clause economists have been interested in whether the rules for initially allocating players among major league baseball mlb teams affect their final allocation el hodiri and quirk 1971 formalized rottenberg s analysis of player allocation rules for a sports league in which each team independently maximizes its profits within the league s institutional constraints 1 consider the effect of a player draft regime and an open bidding regime on the allocation of new players often called rookies if a player draft allows team a to claim initially a particular new player and that player would generate a higher marginal product with team b then the two teams have incentives to make an exchange and send the player to team b alternatively under an open bidding regime the new player signs with the team presenting the highest offer i e team b with which he generates the highest marginal product assuming that transaction costs of exchanging players are zero el hodiri and quirk showed that the final allocation of players across teams will be the same in both regimes this result that the final allocation of players does not depend on the rules governing the initial allocation of players is baseball s version of the coase theorem following coase s 1960 analysis this invariance result vanishes if there are obstacles to exchanging players after the initial allocation in an open bidding regime players are initially allocated to the team with which they have the highest marginal product thereby eliminating the need for player exchanges since the best players are likely to generate the highest marginal product with teams in cities that have a high demand for winning games in an open bidding regime these teams are likely to have higher winning percentages and win more championships than other teams 2 by contrast in a draft regime the best players are often initially allocated to a team located in a city with a low demand for winning games if there are obstacles to player exchange then players will be allocated more evenly across teams under a draft regime and competitive balance should improve both within a given season and over time 3 empirical studies have used performance data from north american mlb to analyze whether changes in the rules for allocating rookies among teams affect competitive balance fort and quirk s 1995 recent study found that mlb s change in 1965 from an open bidding to a draft regime for allocating new players increased competitive balance in the american league and had little effect on competitive balance in the national league the power of statistical tests conducted with the mlb data is however severely limited due to the small number of observations from the draft regime period this article uses a larger data set from japanese baseball to examine the same rule change that economists have analyzed for mlb remarkable as it may seem the japanese professional baseball league jpbl adopted the same rule change from an open bidding to a draft regime for rookies in the same year 1965 as major league baseball our goal is to examine how the rule change in the jpbl affected competitive balance in its two leagues and to compare the outcomes of these two remarkably similar experiments set in two very different cultures ii studies of north american mlb and japanese jpbl daly and moore 1981 compared player allocation in the two regimes for allocating rookies by examining mlb s 1965 switch from an open bidding to a draft regime they used pre and post 1965 performance data from the american and national leagues to examine several measures of competitive balance in the post 1965 draft regime they found substantially more competitive balance in the american league and somewhat more competitive balance in the national league using different tests for competitive balance fort and quirk 1995 1 282 86 also found evidence for more competitive balance in the american league but found no change in competitive balance in the national league

on the interplay of informational spillovers and payoff externalities this thesis consists of four independent essays which consider different topics in information economics and political economy the first two papers are variants of the same idea an uninformed principal e g a government will make a decision in order to gain more information it may consult two experts however these experts have a private interest in certain policies being implemented the question is to gain as much information as possible should the principal consult experts who are biased in the same direction or experts who prefer different decisions the main result is that as long as collusion between experts can be prevented homogeneous panels are superior to heterogeneous ones and this advantage increases with the experts informational precision in the third paper two firms consider entry in a new product market and must decide when to enter the market and how to design their product firms do not know for certain what the best design is so both firms want to outwait the other s decision in order to gain more information the focus of the paper is on which firm will make the first decision the main result is that if products are strong strategic substitutes the worst informed firm makes the first decision in equilibrium the analysis should apply to a range of other contexts such as investors trading decisions or the policy choices of political candidates the final paper asks the following question could it be that parties in a two party system may benefit from using several candidates in the same election to promote the use of multiple candidates i assume that a party never runs the risk of having its votes split up among its candidates despite this it turns out that parties have a strong incentive to restrict their number of nominees paradoxically it seems that the more uncertain parties are about voter opinion the fewer candidates they want to use in particular with a uniform voter distribution the optimal number of candidates is one

structural change in mlb competitive balance the depression team location and integration no detectable break points in within season competitive balance 1901 99 occur after 1937 in the national league or after 1962 in the american league despite expansion free agency and the growth of local tv revenue disparity since then instead a continual improvement in competitive balance has occurred since those years associated with break points prior to these years 1 the al emerged from the depression much more unbalanced than the nl 2 team movement and league expansion alter balance in well known ways and 3 discriminatory preferences were stronger in larger revenue markets than in smaller revenue markets in both leagues jel c32 l83

an indirect approach to the evaluation of producer performance in this paper we suggest a somewhat new analytical approach to producer performance evaluation the suggested approach is somewhat new in that it synthesizes existing analytical techniques from three areas and uses them to look at performance evaluation in a new way the approach is particularly relevant to public sector or service sector contexts in which the performance of alternative providers of a public service is to be evaluated in these contexts any of the following conditions may hold 1 the standard profit maximizing cost minimizing or revenue maximizing paradigms are inappropriate 2 prices of some services being provided or of some resources being consumed are either nonexistent or unobserved 3 observed prices are not exogenous due to monopoly or monopsony power examples abound it is frequently argued that the provision of medical legal educational transportation employment and many other services by public or private agencies is driven by goals other than the maximization of profit moreover these and many other services such as police and fire protection do not always have market prices with which to value them in addition the lack of competition in the provision of many such services and thus in the employment of specialized resources used in their provision makes it dangerous to use existing but distorted market prices to compare the performance of providers on the basis of revenue or cost much less profit