the impact of mandatory disclosure laws on product choices an analysis of the salad dressing market abstract the nutrition labeling and education act nlea requires most food products to include a nutrition label prior to the nlea labeling was voluntary this study uses nutrition label information and supermarket scanner data pre and post nlea to examine the impact of moving from a voluntary to a mandatory labeling regime on consumer product choice the voluntary unraveling of information is shown to be an important market mechanism prior to the nlea all low fat salad dressings had a nutrition label while the majority of the higher fat dressings did not however there remained large variation in fat content among dressings that did not voluntarily label those with the highest fat levels experienced a significant decline in sales after they were required to disclose the results indicate that even in markets with credible low cost mechanisms to disclose mandatory labeling can have an impact on consumer behavior and health

market fundamentals competition and natural gas prices after the liberalisation of the gas industry trading hubs have emerged in europe although these hubs appear to be liquid market places fostering gas to gas competition the efficiency of the gas market remains a topic of interest as a fair share of gas is still traded through long term contracts with prices linked to the oil price while the number of gas suppliers to the european market is limited in order to assess the efficiency of the gas market we analyse the day ahead spot price at the dutch gas hub over the period 2011 2014 we find that the oil price had a small positive impact on the gas price changes in the concentration on the supply side did not affect the movement in gas prices the availability of gas in storages and the outside temperature negatively influenced the gas price we also find that the gas price was related to the production of wind electricity overall we conclude that the day ahead gas prices are predominantly determined by gas market fundamentals policies to further integrate gas markets within europe may extend this gas to gas competition to a larger region

the impact of the 1992 cable act on household demand and welfare i measure the benefit to households of the 1992 cable act in light of strategic responses by cable systems to the regulations mandated by the act a discrete choice differentiatedproduct model of household demand for all offered cable television services forms the basis of the analysis aggregation over households and service combinations to the level of the data permits estimation on a cross section of cable markets from before and after the act the results indicate that while the regulations mandated price reductions of 10 17 for cable services observed system responses yielded no change in household welfare post act changes in cable prices are responsible for most of the difference

assortative matching and reputation in the market for first issues using a tractable structural model of the matching equilibrium between underwriters and equity issuing firms we study the determinants of value in underwriter firm relationships our estimates imp

distinguishing between equilibrium and integration in spatial price analysis this article introduces a new spatial price analysis methodology based on maximum likelihood estimation of a mixture distribution model incorporating price transfer cost and trade flow data this method permits differentiation between market integration and competitive market equilibrium and derivation of intuitive measures of intermarket tradability competitive market equilibrium perfect integration segmented equilibrium and segmented disequilibrium one can also use these estimates to derive semiparametric measures of time varying regime probabilities to track changing market conditions an application to trade in soybean meal among pacific rim economies demonstrates the usefulness of the method copyright 2002 oxford university press

do female gender role attitudes affect labour market participation in egypt abstractwe analyse the inter generational relationship of attitudes towards gender roles and their impact on individuals labour market participations in egypt we find a strong correlation between mothers and daughters perceptions of gender roles unlike the existing literature perceptions are not associated with the labour market status even if we control for endogeneity issues using an instrumental variable regression furthermore higher educated females are more likely to be unemployed in egypt these results imply that perceptions among females are not translated into their labour market behaviour and the supply side policies alone may not be sufficient for improving young women s employment opportunities

parity reversion in real exchange rates during the post bretton woods period abstract a common view among recent studies on purchasing power parity is that the post bretton woods period is far too short to reveal any significant parity reversion in individual series of real exchange rates is this really so the answer this study shows depends very much on the statistical test being used two efficient univariate unit root tests are applied to uncover parity reversion these tests require much shorter sample sizes than conventional tests to attain the same statistical power empirical results show that parity reversion can be unveiled over the modern float if an efficient unit root test is applied

value of parsimonious nutritional information in a framed field experiment abstract this study investigates consumers beliefs about the tastiness and healthiness of 173 food items in a framed field experiment designed to mirror a grocery shopping environment using data collected from 129 food shoppers in grenoble france demand models are estimated to determine how product choice is affected by price taste and perceived healthiness and how choices change with the provision of objective health information unlike previous studies focusing on relatively complex nutrition labels we elicit and convey health information using simple nutritional indices meant to lower search and cognitive processing costs the results indicate that consumers are willing to pay for tastier foods and for healthier foods particularly if the consumers have objective information as opposed to perceived subjective information on nutrient content the estimates suggest that the value of the type of nutritional information provided in the experiment is 0 98 per day the figure refers to the daily welfare benefits that arise from being able to make a set of choices that better reflect people s preferences by receiving the nutrient index information on all 173 food items versus not having such information

can the us shale revolution be duplicated in continental europe an economic analysis of european shale gas resources abstract over the past decade the rapid increase in shale gas and shale oil production in the united states has profoundly changed energy markets in north america and has led to a significant decrease in american natural gas prices the possible existence of large shale deposits in continental europe mainly in france denmark the netherlands and germany has fostered speculation on whether the u s shale revolution could be duplicated in europe however a number of uncertainties notably geological technological regulatory and relating to public acceptance make this possibility unclear we present a techno economic model of shale gas production amenable to direct estimation on historical production data to analyze the main determinants of the profitability of shale wells and plays we contribute an in depth analysis of an extensive production dataset covering 40 000 wells and accounting for nearly 90 of shale gas production in the six main plays of the continental united states from 2004 to 2014 we combine this analysis with a discussion of the main differences between the american and european contexts to calibrate our model and conduct monte carlo simulations this enables us to estimate the distribution of breakeven prices for shale gas extraction in continental europe we find a median gross breakeven price before taxes and royalties of 10 1 per mmbtu this would make extraction unprofitable in europe in the current natural gas price environment with

the impact of natural disaster on energy consumption international evidence abstract this research shows that natural disasters may hurt energy consumption by using data on 123 countries over the period 1990 2015 and classifying them according to their economic development level and region based on world development indicators we employ a two step system gmm method to examine the effect of natural disasters on energy consumption presenting findings that support our hypotheses in the models and show a strong negative effect for low income countries or those in the africa region after considering an alternative proxy for natural disaster we implement quantile regression methods their results find that natural disasters exhibit a negative and significant impact on oil renewable and nuclear energy consumptions the quantile regression models used in the robustness check present that the effects are stronger for low level energy consumption economies

toward the integration of european natural gas markets a time varying approach abstract over the past fifteen years european gas markets have radically changed in order to build a single european gas market a new regulatory framework has been established through three european gas directives the purpose of this article is to investigate the impact of the reforms in the natural gas industry on consumer prices with a specific focus on gas prices for industrial use the strength of the relationship between the industrial gas prices of six western european countries is studied by testing the law of one price for the period 1991 2009 estimations were carried out using both cointegration analysis and time varying parameter models results highlight an emerging and on going process of convergence between the industrial gas prices in western europe since 2001 for the six eu member states the strength and the level of convergence differ widely between countries strong integration of gas markets in continental europe except for the belgian market has been established it appears that the convergence process between continental countries and the uk is not completed thus the integration of european gas markets remains an open issue and the question of how far integration will proceed will still be widely discussed in the coming years

endogeneity in brand choice models applications of random utility models to scanner data have been widely presented in marketing for the last 20 years one particular problem with these applications is that they have ignored possible correlations between the independent variables in the deterministic component of utility price promotion etc and the stochastic component or error term in fact marketing mix variables such as price not only affect brand purchasing probabilities but are themselves endogenously set by marketing managers this work tests whether these endogeneity problems are important enough to warrant consideration when estimating random utility models with scanner panel data our results show that not accounting for endogeneity may result in a substantial bias in the parameter estimates

the relationship between spot and contract gas prices in europe abstract following deregulations in the european gas market spot trading of natural gas has been established in the uk belgium and the netherlands while long term contracts remain the dominant pricing process in continental europe in this paper we investigate the degree of market integration between the three spot markets the contract gas price in germany and the oil price the results indicate a highly integrated market and there is no evidence of an independent price determination process for natural gas

search with learning for differentiated products evidence from e commerce this article provides a method to estimate search costs in a differentiated product environment in which consumers are uncertain about the utility distribution consumers learn about the utility distribution by bayesian updating their dirichlet process prior beliefs the model provides expressions for bounds on the search costs that can rationalize observed search and purchasing behavior using individual specific data on web browsing and purchasing behavior for mp3 players sold online we show how to use these bounds to estimate search costs as well as the parameters of the utility distribution our estimates indicate that search costs are sizable we show that ignoring consumer learning while searching can lead to severely biased search cost and elasticity estimates

a general multiple distributed lag framework for estimating the dynamic effects of promotions game attendance resulting from ticket sales is the single largest revenue stream for major league baseball mlb teams we propose a general multiple distributed lag framework following the koyck family of models for estimating mlb attendance drivers and focus specifically on the differential direct and carryover effects of in game promotions by setting various model constraints the proposed framework incorporates different forms of serial correlation and promotion specific dynamic effects using information model selection heuristics we select an optimal model of attendance drivers for the pittsburgh pirates 2010 2012 mlb seasons we demonstrate that our newly proposed model with an unrestricted serial correlation structure performs best we find that although kids promotions have the highest direct effect on attendance giveaway and entertainment promotions have substantial carryover effects and the largest total effects we use our results to optimize the pirates promotional schedule and find that a reallocation of resources across promotional categories can increase profits between 39 and 88 data as supplemental material are available at http dx doi org 10 1287 mnsc 2013 1856 this paper was accepted by eric bradlow special issue on business analytics

heterogeneity in price sensitivity and retail price discrimination the nature of heterogeneity in price sensitivity has considerable implications for research in the study of retail price formation new data collection technologies have become available that allow firms to gather detailed information on household demographics and purchase histories using these new methods it is increasingly feasible for a firm to perform demand estimation at the demographic group or even the household level with household demand estimates in hand a firm can offer individualized discounts engaging in nearperfect price discrimination the nature of heterogeneity in household price response has implications for how firms might be able to extract surplus from consumers through individualized pricing price discrimination has long held the interest of economists interested in the pricing of retail food products the types of price discrimination traditionally discussed in food retailing are secondand third degree price discrimination second degree price discrimination involves self selection on the part of consumers where sellers offer price quantity or price quality bundles designed to attract different consumer types well known examples of second degree price discrimination are quantity discounts or coupons issued in newspaper supplements magazines or mass mailings third degree price discrimination arises when retailers charge different prices to different market segments according to the demand elasticity of each segment for example retailers might charge different prices at different retail outlets or offer discounts to identifiable groups such as students or senior citizens

european market integration for gas volume flexibility and political risk this is a copy of an article originally published by elsevier in energy economics see http www sciencedirect com science journal 03014215 2002 elsevier science b v

new products quality changes and welfare measures computed from estimated demand systems this paper examines the construction of a price index based on an estimated demand system in principle the method examined can produce a price index that takes account of the introduction of new p

price elasticities and demand side real rigidities in micro data and in macro models abstract high degrees of demand side real rigidities are able to generate the large monetary non neutrality found in aggregate data this paper provides micro based evidence on the key parameters governing this rigidity using european homescan data we find strong evidence for demand side real rigidity which is however significantly lower than that normally assumed in macro models in a menu cost model calibrated to our estimates we show that these estimates are associated with reasonable values for production side parameters but they are not able to generate the degree of monetary non neutrality observed in macro data

convergence of european natural gas prices abstract over the period 2015 2050 the consumption of natural gas of european oecd countries is expected to grow more than the consumption of any other energy source although these countries are interconnected and in most cases share a common currency their wholesale national gas markets are highly heterogeneous we study the determinants of cross country convergence of natural gas prices for industrial consumers in fourteen european countries our empirical analysis is based on the notions of pairwise relative and convergence we show that there is evidence of pairwise price convergence and that some key characteristics of gas markets such as the existence of trading hubs and the degree of interconnection are positively associated with the existence of a convergence process this result carries over to the notion of convergence and is robust to a number of changes in the implementation of the statistical tests the analysis of relative convergence points to the existence of price growth convergence while price level convergence is not supported by the data lastly we assess the short run implications of price convergence focusing on the speed of reversion to equilibrium after a system wide shock hits the cointegrating relation

the influence of expert reviews on consumer demand for experience goods a case study of movie critics an inherent problem in measuring the influence of expert reviews on the demand for experience goods is that a correlation between good reviews and high demand may be spurious induced by an underlying correlation with unobservable quality signals using the timing of the reviews by two popular movie critics siskel and ebert relative to opening weekend box office revenue we apply a difference in differences approach to circumvent the problem of spurious correlation after purging the spurious correlation the measured influence effect is smaller though still detectable positive reviews have a particularly large influence on the demand for dramas and narrowly released movies

nutrition information in the supermarket lists of nutrition information posted in supermarkets were designed to reduce the information processing costs of comparing alternative foods in experiment 1 lists of vitamins and minerals increased nutrition knowledge but had no influence on actual purchases in experiment 2 a list of added sugar a negative component of food increased the market share of low sugar breakfast cereals at the expense of high sugar brands we conclude that effort reducing displays are a successful technique for increasing information use especially for the more highly valued negative nutrients

a fundamental analysis on the implementation and development of virtual natural gas hubs abstract the ongoing gas market liberalization in europe has brought up a new competitive environment in which shippers i e companies that are responsible for conveying gas from producers to consumers must adapt their behavior to the changing conditions the development of gas virtual hubs increases market interactions among shippers but the oligopolistic market structure may give room for strategic behavior the market is in addition segmented by type of costumer each shipper maximizes its profit by supplying gas to households businesses and industries conventional costumers participating in the electricity market trading in the global lng spot market and interacting with the rest of shippers in a virtual hub during the hub implementation and development the following questions arise how do shippers behave at the different levels of hub maturity and to what extent does the implementation of virtual hubs in entry exit systems diminish the barriers to entry of new market players provides more flexibility and fosters competition with this aim the decision making process of the different shippers is simulated under different market structures representing four stages of the market liberalization process at different levels of hub maturity first the proto liberalization case includes the global lng spot market which is represented as a perfectly competitive market the electricity market which is represented as an oligopoly and the conventional demand which is assumed to be captive i e monopolized second a hub is implemented which provides transparency and reduces information costs by revealing the gas price third switching rates are expected to grow as consumers have access to a transparent gas price hence the conventional demand is no longer considered as captive fourth wholesale procurement and retail activities are unbundled and a wholesale market is established where the retailers presumably buy gas from the shippers thereby wholesale and retail activities acquire importance and market transactions i e liquidity increase from the simulation and the analysis of the different market equilibria the following conclusions emerge first with the introduction of the virtual hub the marginal cost of all shippers reaches a unique value i e the transparent gas hub price second the aggregated profit of the shippers is increasing even when anticompetitive behavior is not explicitly represented due to the flexibility gained by shippers with the hub accordingly and third the hub is a necessary but not sufficient condition to increase competition the entry of new players is critical and discouraging market regulations or the anticompetitive behavior of a highly concentrated market may not facilitate it

iq and stock market participation stock market participation is monotonically related to iq controlling for wealth income age and other demographic and occupational information the high correlation between iq and participation exists even among the affluent supplemental data from siblings studied with an instrumental variables approach and regressions that control for family effects demonstrate that iq s influence on participation extends to females and does not arise from omitted familial and nonfamilial variables high iq investors are more likely to hold mutual funds and larger numbers of stocks experience lower risk and earn higher sharpe ratios we discuss implications for policy and finance research

forecasting marketing mix responsiveness for new products abstract before a new product launch marketers need to infer how demand will respond to various levels of marketing mix variables to set an appropriate marketing plan a critical challenge in estimating marketing mix responsiveness from historical data is that the observed decisions were affected by private information possessed by managers about the heterogeneous effects of marketing mix variables on sales the authors refer to this as the slope endogeneity problem such endogeneity differs from the intercept endogeneity problem which has been widely acknowledged in the literature to correct for the slope endogeneity bias the authors develop a conceptually simple control function approach that is amenable to multiple endogenous variables and marketing mix carryover effects the method is applied to forecasting advertising responsiveness in the u s dvd market the results suggest that advertising responsiveness varies substantially across dvd titles and that estimated marketing mix elasticities w

measuring market power in the ready to eat cereal industry the ready to eat cereal industry is characterized by high concentration high price cost margins large advertising to sales ratios and numerous introductions of new products previous researchers have concluded that the ready to eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense nonprice competition this paper empirically examines this conclusion in particular i estimate price cost margins but more importantly i am able empirically to separate these margins into three sources i that which is due to product differentiation ii that which is due to multi product firm pricing and iii that due to potential price collusion the results suggest that given the demand for different brands of cereal the first two effects explain most of the observed price cost margins i conclude that prices in the industry are consistent with noncollusive pricing behavior despite the high price cost margins leading firms are able to maintain a portfolio of differentiated products and influence the perceived product quality it is these two factors that lead to high price cost margins

the effects of banning advertising in junk food markets we develop a structural model to analyze the eects of banning advertising on market equilibria and welfare in junk food markets we consider the impact on demand and prices and show how to quantify welfare eects when advertising might lead consumers to take decisions that are inconsistent with their underlying preferences we use transaction level data on the potato chips market and nd that banning advertising leads to a direct reduction in demand but also toughens price competition leading to lower prices and increased demand welfare increases as consumers benet from no longer making distorted

a shaky business natural gas extraction earthquakes and house prices the production of natural gas is strongly increasing around the world long run negative external effects of extraction are understudied and often ignored in social cost benefit analyses one important example is that natural gas extraction leads to soil subsidence and subsequent induced earthquakes that may occur only after a couple of decades we show that induced earthquakes that are noticeable to residents generate substantial non monetary economic effects as measured by their effects on house prices also when house owners are fully compensated for damage to their houses to address the issue that earthquakes do not occur randomly over space we use temporal variation in the occurrence of noticeable earthquakes while controlling for the occurrence of earthquakes that cannot be felt by house owners we find that earthquakes that are noticeable with peak ground velocities of above half a cm s lead to price decreases of 1 9 percent the total non monetary costs of induced earthquakes for groningen are about 170 million about 600 per household these results indicate that the non monetary costs are in the same order of magnitude as the monetary damage costs

the effect of information on product quality evidence from restaurant hygiene grade cards this study examines the effect of an increase in product quality information to consumers on e rms choices of product quality in 1998 los angeles county introduced hygiene quality grade cards to be displayed in restaurant windows we show that the grade cards cause i restaurant health inspection scores to increase ii consumer demand to become sensitive to changes in restaurants hygiene quality and iii the number of foodborne illness hospitalizations to decrease we also provide evidence that this improvement in health outcomes is not fully explained by consumers substituting from poor hygiene restaurants to good hygiene restaurants these results imply that the grade cards cause restaurants to make hygiene quality improvements

limit theorems for estimating the parameters of differentiated product demand systems we provide an asymptotic distribution theory for a class of generalized method of moments estimators that arise in the study of dierentiated product markets when the number of observations is associated with the number of products within a given market we allow for three sources of error sampling error in estimating market shares simulation error in approximating the shares predicted by the model and the underlying model error it is shown that the estimators are can provided the size of the consumer sample and the number of simulation draws grow at a large enough rate relative to the number of products we consider the implications of the results for berry levinsohn and pakes 1995 random coecient logit model and the pure characteristic model analyzed in berry and pakes 2002 the required rates dier for these two frequently used demand models a small monte carlo study shows that the dierence in asymptotic properties of the two models are reflected in quite a striking way in the models small sample properties moreover the limit distributions provide a good approximation to the actual monte carlo distribution of the parameter estimates the results have important implications for the computational burden of the two models

relative price changes as a tool to stimulate more healthy food choices a danish household panel study abstract the increased prevalence of lifestyle related illnesses particularly in western countries calls for public action a poor diet is a key explanatory factor to this development previous research has addressed the problem of unhealthy food consumption behavior by looking at how taxes may function as an instrument to change purchase behavior from less healthy products to healthier ones in this paper we address this issue by looking at the effects of discounts depending on whether healthy or less healthy products are available at a discount our study is based on weekly purchase data from a danish household panel for the period 2010 2011 interestingly from a public health perspective our findings suggest that there is an asymmetric effect of discounts depending on the fat content of the product furthermore our results point at two classes of consumers where the asymmetric effects go in different directions

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

market analysis methods are our enriched toolkits well suited to enlivened markets the past fifteen years have brought historic reduction of government intervention in agricultural markets in the developing world most economists and policy makers believe these reforms enliven markets previously fettered by excessive government authority nonetheless the impact of market oriented reforms on the spatial and intertemporal extent and the competitiveness of markets remains an inherently empirical question meanwhile there also have been major innovations in methods used to analyze markets and prices due largely to the rapidly emerging time series econometric literature agricultural economists toolkits have changed nearly as rapidly and dramatically as have developing economy markets but can these enriched toolkits answer the

multiperiod production with forward and option markets production and hedging in both forward and options markets are analyzed for forward looking firms that maximize expected utility in the presence of unbiased forward and options prices it is shown that such firms will use options as hedging instruments this result contrasts with the conclusions from studies that assume myopic behavior and occurs because forward looking agents care about the effect of future output prices on profits from future production cycles simulations support the theoretical results and show how the introduction of an options market influences the optimal forward position

competition in gas markets abstract this paper discusses some of the current regulatory issues that arise in gas markets under perfect or imperfect competition it first presents a benchmark model of gas transportation pricing when all markets are competitive optimal prices and capacities are characterized both without and with a break even constraint for the transportation operator elaborating on this framework it then studies the appropriate dimensioning of the transportation network when an otherwise unregulated supplier exerts market power specifically it points to the possibility of building up excess transmission capacity in order to mitigate local market power

genetically modified food labeling the impacts of message and messenger on consumer perceptions of labels and products abstract we analyze responses to a survey designed to elicit consumer reaction to various approaches to labeling genetically modified gm foods consumers were shown sample labels that differed with respect to claims concerning the presence and potential effects of gm ingredients and the agency that certified these claims a sample of 1898 us consumers rated 3681 labels with regard to the credibility and adequacy of the information content with regard to perceived health and environmental impacts of the product and with regard to purchase intent simple claims that a product contains gm ingredients are viewed as most credible while simple claims of no gm content are viewed as most adequate label claims certified by the us food and drug administration fda are in general viewed as most credible and adequate and products with fda certified claims are perceived to have fewer long term health problems several practical policy implications of the results are discussed including how different label messages may impact consumer reactions in markets involving gm products

effects of carbon reduction labels evidence from scanner data we investigate the effects of carbon reduction labels using a detailed scanner data set using a difference in differences estimation strategy we find that having a carbon label has no impact on detergent prices or demand we also investigate possible heterogeneous effects of carbon labels using the synthetic control method we find no evidence to indicate that the prices for the counterfactual detergents without the label would have been any different from the prices of the carbon labeled detergents we investigate the reasons for these results and conclude that the specific design of the carbon label is responsible for its lack of success jel d12 d83 l15 q54

a test of nutritional quality signaling in food markets prior to implementation of mandatory labeling in may 1994 new nutrition labeling regulations went into effect in the united states requiring mandatory disclosure of information on the nutritional content of foods this article uses grossman s model of totally effective quality signaling to evaluate whether markets were effective in information provision prior to the new regulation if markets were effective in providing information to consumers on the nutritional quality of foods the new regulation would be unnecessary the results of the logistic model where the probability of voluntary information disclosure is linked to the nutritional quality of food products and their prices indicate that private quality signaling was not reliably at work in food markets prior to implementation of the mandatory nutrition labeling regulation copyright 2000 oxford university press

some recent developments in futures hedging the use of futures contracts as a hedging instrument has been the focus of much research at the theoretical level an optimal hedge strategy is traditionally based on the expected utility maximization paradigm a simplification of this paradigm leads to the minimum variance criterion although this paradigm is quite well accepted alternative approaches have been sought at the empirical level research on futures hedging has benefited from the recent developments in the econometrics literature much research has been done on improving the estimation of the optimal hedge ratio as more is known about the statistical properties of financial time series more sophisticated estimation methods are proposed in this survey we review some recent developments in futures hedging we delineate the theoretical underpinning of various methods and discuss the econometric implementation of the methods

measuring the welfare effects of nutrition information cost benefit analysis justifies regulations altering the amount of health related information presented to consumers the current method of benefit analysis the cost of avoided illness is limited it assumes the benefits of health related information are adequately represented by changes in illnesses the manuscript develops a benefit estimation method to measure the welfare impacts of providing nutrient information nutrient labeling significantly affects purchase behaviour but may not lead to increased consumption of health foods nutrient labeling may increase welfare without any change in health risk thus the cost of avoided illness approach can underestimate the social benefits of providing nutrient information copyright 2001 oxford university press

beyond the endogeneity bias the effect of unmeasured brand characteristics on household level brand choice models we investigate the role of potential weekly brand specific characteristics that influence consumer choices but are unobserved or unmeasurable by the researcher we use an empirical approach based on the estimation methods used for standard random coefficients logit models to account for the presence of such unobserved attributes using household scanner panel data we find evidence that ignoring such time varying latent to the researcher characteristics can lead to two types of problems first consistent with previous literature we find that these unobserved characteristics may lead to biased estimates of the mean price response parameters this argument is based on a form of price endogeneity if marketing managers set prices based on consumer willingness to pay then the observed prices will likely be correlated with the latent to the researcher brand characteristics we resolve this problem by using an instrumental variables procedure our findings suggest that simply ignoring these attributes may also lead to larger estimates of the variance in the heterogeneity distribution of preferences and price sensitivities across households this could overstate the benefits from marketing activities such as household level targeting we resolve the problem by using weekly brand intercepts embedded in a random coefficients brand choice model to control for weekly brand specific characteristics while accounting for household heterogeneity overall our results extend the finding on the endogeneity bias from the mean of the heterogeneity distribution i e the price effect to include the variance of that distribution

the preferred hedge instrument abstract the optimal choice of hedging instruments in futures and option markets is analyzed for a risk averse exporting firm that maximizes expected utility assuming unbiased futures and options prices optimal output and hedging decisions are derived it is shown that futures will unequivocally be preferred to options this preference for futures continues even if their price is adversely biased provided the bias is not too strong

what drives natural gas prices a structural var approach abstract in this study we develop a structural vector autoregressive model var for the german natural gas market our setup allows us to analyze the determinants of the natural gas price in a comprehensive framework in particular we illustrate the usefulness of our approach by disentangling the effects of different fundamental influences on gas prices during three recent supply interruptions the russian ukrainian gas dispute of january 2009 the libyan civil war in 2011 and the withheld russian exports in february 2012 our results show that the natural gas price is affected by temperature storage and supply shortfalls in the short term while the long term development is closely tied to both crude oil and coal prices capturing the economic climate and the substitution relationship between the different energy commodities

information cost and consumer choices of healthy foods this article examines whether or not a reduction in consumer search cost for nutritional information increases the probability that heterogeneous consumers will choose healthier food products empirical results from the ready to eat breakfast cereal rtec market confirm the conceptual analysis that lowering information cost via simplified nutritional labeling increases the healthfulness of consumer choices the healthfulness attribute weighs 28 44 more heavily in consumers decision making with simpler labeling systems on average introducing front of package labeling increased the probability of a consumer choosing a healthy rtec by 3 49 and reduced the probability of choosing an unhealthy rtec by 3 81 calories sugar saturated fat and sodium consumption decrease by 0 31 2 63 6 94 and 1 97 respectively fiber intake increases by 3 24 further results show that less educated and smaller households with less frequent purchases benefit the most from a reduction in information cost overall this article shows the potentially positive role that voluntary more convenient labeling could play in improving market and public health outcomes

price interactions and discovery among natural gas spot markets in north america recent advances in modeling causal flows with time series analysis are used to study relationships among eight north american natural gas spot market prices results indicate that the canadian and us natural gas market is a single highly integrated market further results indicate that price discovery tends to reflect both regions of excess demand and supply across north america malin hub in oregon chicago hub illinois waha texas and henry hub louisiana region are the most important markets for price discovery opal hub in wyoming is an information sink in contemporaneous time receiving price information but passing on no price information aeco hub in alberta canada receives price signals from several markets and passes on information to opal and the oklahoma region

on the economics of labels how their introduction affects the functioning of markets and the welfare of all participants are labels good or bad for consumers and firms the answer may seem straightforward since labels improve information yet economic theory reveals situations where their introduction reduces the welfare of at least some market participants this essay reviews the theoretical literature on labels in order to identify and explain the main reasons that may cause labeling to produce undesirable side effects in contrast to earlier reviews that either concentrate on narrow topics or treat the subject in a more or less informal way we bring together the main results from all the relevant topics by presenting and discussing the assumptions and model building techniques that underpin them the advantage of this approach is that it identifies the origin of the differences between results thus allowing the synthesis of results that sometimes appear even to be contradictory we focus on quality labels and examine the impact of labeling on market structure the side effects of costly certification issues related to the label s trustworthiness the rationale for mandatory vs voluntary labeling the level at which the label s standard is set according to the agency that selects it the political economy of labels that is pro or anti label lobbying lobbying to affect the label s standard and lobbying in favor or against the label s mandatory imposition these topics cover a wide range of applications including genetically modified organism gmos organic produce geographic indicators controlled origin eco labels etc we conclude by identifying topics that require further research

pricing product diversity and search costs a bertrand chamberlin diamond model we study price competition in the presence of search costs and product differentiation the limit cases of the model are the bertrand paradox the diamond paradox and chamberlinian monopolistic competition market prices rise with search costs and decrease with the number of firms prices may initially fall with the degree of product differentiation because more diversity leads to more search and more competition equilibrium diversity rises with search costs while the optimum level falls so entry is excessive the market failure is most pronounced for low preference for variety and high search costs

brand supermarket demand for breakfast cereals and retail competition the berry levinsohn and pakes 1995 market equilibrium model is extended to the supermarket chain level to examine consumer choices and retail competition for thirty seven brands of breakfast cereals in boston estimated taste parameters for product characteristics vary significantly across consumers although consumers are price sensitive with respect to their chosen cereals they exhibit strong brand and supermarket loyalty retail markups increase and marginal costs decrease with grocery market shares attesting to oligopoly power with efficiencies markups decrease with the own price elasticity of demand with corn flakes having the highest markups a detailed picture of consumer response and supermarket competition is provided

international market integration for natural gas a cointegration analysis of prices in europe north america and japan this paper investigates the degree of integration of natural gas markets in europe north america and japan in the time period between the early 1990s and 2004 the relationship between international gas market prices and their relation to the oil price are explored through principal components analysis and johansen likelihood based cointegration procedure both of them show a high level of natural gas market integration within europe between the european and japanese markets as well as within the north american market at the same time the obtained results suggest that the european respectively japanese and the north american markets were not integrated

what makes you grab low carb beers what makes people choose low carbohydrate high protein food low carb food which is good for health but usually tastes bad using panel data on us beer consumption in which each consumption occasion is uniquely associated with various companion based consumption contexts and exposure levels to diet information we analyse the variations in consumers preferences for low carb food the results show that there exist considerable gender differences in the preference variation under peer pressure first single females behave in a way they dislike drinking low carb beer in front of friends spouses and significant others second male both married and single and married females pretend to choose low carb beer when accompanied by spouses or significant others finally the elasticity of demand for healthy food with respect to news articles about low carb diets is positive yet with substantial differences in the degree of elasticity across demographic groups

can information costs affect consumer choice nutritional labels in a supermarket experiment this paper investigates whether information costs under currently regulated nutritional labeling prevent consumers from making healthier food choices we implement five nutritional shelf label treatments in a market level experiment these labels reduce information costs by highlighting and summarizing information available on the nutritional facts panel following a difference in differences and synthetic control method approach we analyze weekly store level scanner data for microwave popcorn purchases from treatment and control stores our results suggest that consumer purchases are affected by information costs implemented low calorie and no trans fat labels increase sales in contrast implemented low fat labels decrease sales suggesting that consumer response is also influenced by consumers taste perceptions a combination of these claims into one label treatment increases information costs and does not affect sales significantly

a control function approach to endogeneity in consumer choice models abstract endogeneity arises for numerous reasons in models of consumer choice it leads to inconsistency with standard estimation methods that maintain independence between the model s error and the included variables the authors describe a control function approach for handling endogeneity in choice models observed variables and economic theory are used to derive controls for the dependence between the endogenous variable and the demand error the theory points to the relationships that contain information on the unobserved demand factor such as the pricing equation and the advertising equation the authors approach is an alternative to berry levinsohn and pakes s 1995 product market controls for unobserved quality the authors apply both methods to examine households choices among television options including basic and premium cable packages in which unobserved attributes such as quality of programming are expected to be correlated with price without correcting for endogeneity aggregate d

endogeneity in semiparametric binary response models this paper develops and implements semiparametric methods for estimating binary response binary choice models with continuous endogenous regressors it extends existing results on semiparametric estimation in single index binary response models to the case of endogenous regressors it develops a control function approach to account for endogeneity in triangular and fully simulataneous binary response models the proposed estimation method is applied to estimate the income effect in a labor market participation problem using a large micro data set from the british fes the semiparametric estimator is found to perform well detecting a significant attenuation bias the proposed estimator is contrasted to the corresponding probit and linear probability specifications jel c14 c25 c35 j22

prominence and consumer search this article examines the implications of prominence in search markets we model prominence by supposing that the prominent firm will be sampled first by all consumers if there are no systematic quality differences among firms we find that the prominent firm will charge a lower price than its less prominent rivals making a firm prominent will typically lead to higher industry profit but lower consumer surplus and welfare the model is extended by introducing heterogeneous product qualities in which case the firm with the highest quality product has the greatest incentive to become prominent and making it prominent will boost industry profit consumer surplus and welfare

endogeneity and individual consumer choice abstract in many markets there is likely to be correlation both across periods in terms of the choices of one consumer and across consumers in terms of their choices in each period the former is caused by consumer heterogeneity and the latter may be the result of demand common shocks across consumers furthermore if firms partially observe these common shocks their market decisions may end up being endogenous and correlated with the common shocks because researchers cannot typically fully observe consumer heterogeneity and the common shocks the estimation method must account for the endogeneity of firms decisions in this article the authors present a test for endogeneity under unobserved consumer heterogeneity and common shocks which is based on a quasi likelihood estimation method to estimate the model parameters consistently when endogenous firm behavior unobserved heterogeneity and common shocks are present the test examines the differences in general method of moments coefficient estima

information and advertising the case of fat consumption in the united states the role of information in markets has become a mainstay of the economics literature theoretical work has focused on the market effects of asymmetric information and costly search incentives for voluntary disclosure contracting and other market and policy solutions to information issues see michael katz 1989 and joseph stiglitz 1989 for recent reviews and on how consumers ability to use information could affect market outcomes as in the recent work on information cascades e g sushil bikhchandani et al 1992 the empirical literature testing informational theories is more limited in large part because the key variable of interest information is so difficult to measure most of the literature relies on indirect tests usually based on regulatory differences as in the study of state restrictions on advertising for eyeglasses lee benham 1972 or on new information or public education campaigns typified by the studies of smoking see w kip viscusi 1992 for a recent summary other studies examine cross sectional differences in behavior in an effort to assess whether human capital or other individual or household differences are important in explaining responses to evolving information this paper follows these traditions specifically this study examines changes in fat and saturated fat consumption in the united states as information spread connecting these lipids to heart disease and cancer risks 1 the study examines changes in consumption during two regulatory regimes the years 1977 1985 when government and general information sources continued their efforts to educate the public about the links between fats and disease risks and when producers were free to label these characteristics on food packages and in advertising and the years 1985 1990 when the regulatory ban was lifted that prohibited producers from explaining the reasons why consumers should be interested in the content of foods this controversial regulatory change allowed the use of so called health claims in labeling and advertising subject to the normal deception rules for all advertising and labeling claims 2 comparison of these two periods allows us to provide evidence on whether and how consumers reacted to the general flow of information prior to 1985 and whether advertising appears to have added information to the market or as many critics believe provided deceptive or sufficiently incomplete information to undermine public education efforts

tax incidence with strategic firms in the soft drink market abstract because soft drink sd consumption is considered to be a contributor to the epidemic of obesity there is a growing interest in evaluating the impact on sd consumption of alternative tax policies in this paper we propose a methodology to evaluate the impact of taxation of a food market taking into account the strategic price response of both manufacturers and retailers we apply this methodology to the french sd market and simulate the impacts of ad valorem and excise taxes we find that firms behave differently when facing an ad valorem tax or an excise tax an excise tax is overshifted to consumer prices while an ad valorem tax is undershifted to consumer prices we find that an excise tax based on the sugar content of sd is the most effective at reducing sd consumption our results also indicate that ignoring strategic pricing by firms leads to misestimations of the impact of taxation by between 15 and 40 depending on the products and the tax implemented in the short term that is ignoring positive long term health effects a 9 cents l excise tax has a small negative welfare effect about 1 person year

recreation demand models with taste differences over people we estimate random parameter logit models of anglers choice of fishing site the models generalize logit by allowing coefficients to vary randomly over anglers rather than being fixed the models do not exhibit the restrictive independence from irrelevant alternatives property of logit and can represent any substitution pattern estimation explicitly accounts for the fact that the variation in coefficients over anglers induces correlation in unobserved utility over trips by the same angler willingness to pay for improved fish stock and the value to anglers of specific sites are calculated from the models and compared with the estimates obtained from a standard logit model

the geopolitical impact of the shale revolution exploring consequences on energy prices and rentier states while the shale revolution was largely a us affair it affects the global energy system in this paper we look at the effects of this spectacular increase in natural gas and oil extraction capacity can have on the mix of primary energy sources on energy prices and through that on internal political stability of rentier states we use two exploratory simulation models to investigate the consequences of the combination of both complexity and uncertainty in relation to the global energy system and state stability our simulations show that shale developments could be seen as part of a long term hog cycle with a short term drop in oil prices if unconventional supply substitutes demand for oil these lower oil prices may lead to instability in rentier states neighbouring the eu especially when dependence on oil and gas income is high youth bulges are present or buffers like sovereign wealth funds are too limited to bridge the negative economic effects of temporary low oil prices

downstream integration of natural gas prices across u s states evidence from deregulation regime shifts abstract this study examines the cointegration between city gate and residential retail natural gas prices at the u s state level using monthly data from 1989 1 to 2012 12 both price series are tested for unit roots using the harris 2009 procedure to endogenously identify structural breaks related to deregulation associated with ferc order no 636 the endogenously determined structural breaks are then used in the saikkonen and lutkepohl 2000a 2000b 2000c maximum likelihood approach to test cointegration of the series tests show cointegration of the two price series for all 50 states estimates of the long run relationship in the pre and post structural break periods result in mixed evidence about the degree of perfect market integration induced by deregulation although the magnitude and variation of parameters indicate increased integration a vector error correction model is used to infer causality in the short and long run dynamics for the pre and post structural break periods for each state the post break period exhibits bidirectional causality in both short and long run dynamics for all states an indication of greater downstream integration of the natural gas market

unintended nutrition consequences firm responses to the nutrition labeling and education act this paper investigates how firms responded to standardized nutrition labels on food products required by the nutrition labeling and education act nlea using a longitudinal quasi experimental design we test our predictions using two large scale samples that span 30 product categories results indicate that the nlea reduced brand nutritional quality relative to a control group of products not regulated by the nlea at the same time among regulated products brand taste increased although this reduction in nutrition represents an unintended consequence of regulation there were a set of category firm and brand conditions under which the nlea produced a positive effect on brand nutritional quality we find that firms were more likely to improve brand nutrition when firm risk or firm power is low lower risk occurs when the firm is introducing a new brand rather than changing an existing brand and weaker power in a category is reflected by lower market share in a category furthermore firms competing in low health categories e g potato chips or small portion categories e g peanut butter improved nutrition more than firms competing in high health categories e g bread or large portion categories e g frozen dinners recommendations for firm strategy and the design of consumer information policy are examined in light of these surprising firm responses

how does the u s natural gas market react to demand and supply shocks in the crude oil market abstract in this paper we use monthly data over the period from january 1976 to december 2012 and a structural var model to disentangle demand and supply shocks in the global crude oil market and investigate their effects on the real price of natural gas in the united states we identify the model by assuming that innovations to the real price of crude oil are predetermined with respect to the natural gas market and show that close to 45 of the variation in the real price of natural gas can be attributed to structural supply and demand shocks in the global crude oil market

the message in north american energy prices how similar is the price behavior of north american natural gas fuel oil and power prices using current state of the art econometric methodology we explore the degree of shared trends across north american energy markets across these markets there appear to be effective arbitraging mechanisms for the price of natural gas and fuel oil but not for the price of electricity

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

the hedging role of options and futures under joint price basis and production risk this paper analyzes the optimal production and hedging decisions for firms facing futures price basis and production risk assuming futures and options can be used using constant absolute risk aversion utility and normal distributions the authors derive an exact solution and show that joint production and price risk lead to a hedging role for options risk averse firms that can use each hedging instrument will generally have higher expected output using iowa data for soybeans the parameters of the joint distribution of future prices cash prices and yields are estimated and the results are used to approximate optimal hedging decisions for soybean producers copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

true monopolistic competition as a result of imperfect information the paper restates hart s 1985a 1985b definition of large group monopolistic competition distinguishes it from oligopolistic competition and raises the question of whether there are reasonable circumstances that give rise to true monopolistic competition as defined the purpose is to show that consumers imperfect information may create conditions that will turn an otherwise oligopolistic market into a truly monopolistically competitive one