the effect of agglomeration economies on firm deaths a comparison of firm and regional based approaches this paper compares the merits of regional and firm based approaches for analysing the effect of agglomeration economies on firm deaths in ireland we aggregate a comprehensive data set on irish fi

activity choice labor allocation and forest use in malawi this article examines the determinants of activity choice affecting forest use among low income households in malawi data from three villages are used to estimate a system of household labor share equations for maize production forest employment and non forest employment a system estimation approach is used to identify factors influencing the competing and synergistic livelihood strategies which households undertake at the forest margin results from constrained maximum likelihood estimation indicate heightened incentives to degrade forests when returns to forest use are high factors reducing forest pressure include favorable returns to non forest employment secondary education of the household head and wealth

the wait and see option in ascending price auctions ascending auctions offer agents the option to wait and see before deciding to drop out we show that in contexts where as time proceeds agents get finer and finer estimates of their valuations incentives to drop out at one s expected valuation are weak it is optimal for agents to wait and see we first illustrate the claim in a private value setting we next analyze an interdependent value setting in which this wait and see option results in an imperfect information aggregation we also analyze the implications for the seller s revenue and show that the ascending format may dominate the second price format independently of the date at which the second price auction is run jel d44 d83

learning by bidding we analyze a dynamic second price auction with an informed bidder and an uninformed bidder who upon seeing a posted price learns whether his valuation is above that price in the essentially unique equilibrium an informed bidder bids in the first period if her valuation is below some cutoff and bids only in the last period otherwise an uninformed bidder bids in every period to optimally change the price unless the price is above his valuation or he is the high bidder this model also provides a rationale behind the use of a secret reserve price in private value settings

a re examination of the relationship between industry structure and economic performance the objective of this study is to develop a simultaneous equations model of profitability concentration advertising expenditures and research and development outlays the data used in the estimation are subjected to regression diagnostics in an effort to determine the importance to the estimation results of a subset of the data that can have a disproportionate influence the estimation results especially for the advertising expenditures relationship and the research and development outlays equation do change when a truncated data sample based on the omission of the outliers is used this serves partly to explain why there is some disagreement in the literature on market structure and economic performance with regard to the impact of several economic factors

imports and the supply of winter tomatoes an application of rational expectations a model of the florida tomato industry is formulated under the hypothesis that growers make production decisions as rational economic agents this assumption implies that anticipated mexican tomato imports as well as other economic variables are taken into account when the planting decision is made maximum likelihood estimation methods are used to solve the simultaneous equations model and the implications of the model s reduced form are analyzed the empirical findings are consistent with the rational expectations hypothesis that producers respond to market information in its entirety when making acreage decisions key vwords expectations imports mexico rational expectations supply response tomatoes florida produces about 90 of u s tomatoes harvested for fresh use during the november to mid june season since the cuban trade embargo of february 1962 mexico has become the major foreign supplier of fresh winter tomatoes the total fresh winter tomato market in the united states has been almost equally shared by florida and mexico in recent years the rivalry for this market reached the point in 1978 that florida growers charged that mexican producers were dumping their product on the u s market schmitz firch hillman many florida growers suggest that unless mexican tomato imports are limited the florida tomato industry will effectively disappear primary attention in this paper is focused on domestic tomato acreage allocations in light of the mexican influence on the winter tomato market the paper does not attempt to evaluate the welfare effects of mexican imports on the florida tomato industry in addition to the emphasis on acreage response the domestic quantity and price effects are also considered most efforts to explain acreage devoted to agricultural crops have utilized some variant of a cobweb model because the ultimate price of the crop cannot be ascertained until the completion of the production cycle nevertheless if the supply and demand framework is truly representative of the way the market works an alternative to lagged price for representing the anticipated price for the crop is the price prediction of the supply and demand model itself thus acreage would be dependent on the expected price of the crop and expected price would result from the solution of the supply and demand model for price on the basis of information available at planting time the underlying hypothesis is that producers are acting in accordance with the information available to them at planting time and in a way represented by the interaction in the supply and demand model viewed in this way planted acreage decisions would be based on such factors as anticipated mexican imports and their attendant effect on the price of tomatoes one distinction between this and the traditional cobweb framework is that in the latter case lagged imports may influence planted acreage via their effect on lagged prices but any impact expected imports might have on current price is ignored in the acreage

entrepreneurship selection and performance a meta analysis of the impact of education in developing economies this meta analytical review of empirical studies of the impact of schooling on entrepreneurship in selection and performance in developing economies looks at variations impact across specific characteristics of the studies a marginal year of schooling in developing economies raises enterprise income by an average of 5 5 percent which is close to the average return in industrial countries the return varies however by gender rural or urban residence and the share of agriculture in the economy furthermore more educated workers typically end up in wage employment and prefer nonfarm entrepreneurship to farming the education effect that separates workers into self employment and wage employment is stronger for women possibly stronger in urban areas and also stronger in the least developed economies where agriculture is more dominant and literacy rates are lower

tv advertising spillovers and demand for private labels the case of carbonated soft drinks the expansion of private labels or store brands has transformed consumer choice sets and competition in retail markets prompting manufacturers to fight back with renewed pricing and product and promotion strategies to forestall further private label expansion this article examines the spillover effects of television advertising on brand level consumer demand for carbonated soft drinks csds including private labels using a random coefficients logit model with household purchasing and advertising viewing nielsen data as in previous work we find that although brand spillover effects significantly increase demand for csd brands in the same company and undermine demand facing other manufacturers csd brands surprisingly there are positive spillover effects on the demand for private label brands this indicates that brand advertising is persuasive with respect to manufacturers brands but complementary with respect to private labels further results show that eliminating television advertising for c

price prediction errors and real activity a reassessment price prediction errors and real activity a reassessment i introduction macro models employing rational expectations and natural rate assumptions have proven to be powerful and tractable analytical tools in these models output and employment fluctuations are typically demand driven with aggregate demand disturbances transmitted to the real sector through price prediction errors the waning popularity of natural rate models is due in part to the widely held belief that although theoretically appealing the models are of questionable empirical relevance this view appears to be based on a small number of studies which fail to find evidence of a robust empirical relationship between price level surprises and aggregate real activity indeed the available evidence has led some influential macroeconomists to conclude that the channels through which aggregate demand influences the economy have yet to be identified 1 this has had the two fold effect of i stimulating research on channels other than price through which aggregate demand may affect the economy and ii discouraging research on channels that do act through the price level while the first of these effects may be desirable the second is of concern this paper is motivated by our conviction that potentially valuable research has been discouraged on the basis of thin and seriously suspect evidence the sections that follow reassess the role of price prediction errors in determining aggregate real activity we provide evidence that the inability of other researchers to verify a positive correlation between demand driven price prediction errors and real activity is due to misspecified models and in some cases inappropriate estimation procedures we demonstrate that in a more correctly specified and estimated model the relationship between price surprises and real activity is positive and strongly significant thus we conclude that previous researchers were incorrect in discarding the major natural rate paradigms as empirically irrelevant these models do appear to identify an important channel namely price surprises through which aggregate demand influences the real sector ii issues and early evidence price prediction errors play a central role in the most prominent natural rate macro models these models typically fall into one of two general classes equilibrium models and contracting models in both classes of models unanticipated movements in the price level are the channel through which aggregate demand disturbances influence the real sector the exact nature of transmission process however differs across the two sets of theories equilibrium models of the sort pioneered by lucas 1973 depend on the assumption of incomplete information to produce non neutrality of aggregate demand disturbances in the best known examples of this kind of model confusion between relative and aggregate price movements causes firms to react to unanticipated price level movements as though they were at least in part relative price movements thus positive price level shocks cause all firms to increase output and generate positive deviations of aggregate output from its natural rate contracting models as developed in the work of fischer 1977 and gray 1976 depend on contractually set wages to produce non neutrality in these models nominal wages are incompletely responsive to unexpected changes in the price level during the term of the contract under which they are set consequently an unanticipated rise in the price level causes a fall in the real wage of all workers whose contracts are not in the process of renegotiation at that moment with employment determined by the firm during the contract interval the result is a rise in aggregate employment and output our present concern is with testing the common implications of equilibrium and contracting models possibilities for distinguishing between the two classes of models are explored in separate work

is environmental policy a secondary trade barrier an empirical analysis should international trade agreements be extended to include negotiations over environmental policy the answer depends on whether countries distort levels of environmental regulations as a secondary means of providing protection to domestic industries our results suggest that they do previous studies of this relationship have treated the level of environmental regulation as exogenous and found a negligible correlation between environmental regulation and trade flows in contrast we find that when the level of environmental regulation is modelled as an endogenous variable its estimated effect on trade flows is significantly higher than previously reported jel classification fl f14 f18 est ce que la politique environnementale est une barriere commerciale secondaire une analyse empirique est ce que les accords commerciaux internationaux doivent etre etendus pour couvrir la politique environnementale la reponse depend du degre de distorsion que les pays introduisent dans leur politique environnementale pour proteger leurs industries nationales nos resultats suggerent que cet impact est important des etudes anterieures de cette relation ont traite la politique environnementale comme exogene et ont montre qu il existe une co relation negligeable entre politique envir onnementale et flux commerciaux au contraire nous revelons que quand la politique environnementale est consideree comme variable endoge ne son effet sur les flux com merciaux est plus eleve de maniere significative que ce qu on a note anterieurement

applying the economic model of crime to child support enforcement a theoretical and empirical analysis child support noncompliance affects both the family and the taxpayer this papers models the decision to pay based on expected utility maximization the amount unpaid is determined jointly with the expected enforcement probability a two stage estimation technique requiring ordinary least squares and probit is used the author improves upon previous problems with measurement error and sex restricted data in deterrence and child support studies the treatment of endogenous deterrence variables as exogenous and the use of aggregate data he finds a joint relationship between the amount unpaid and the enforcement probability policies are suggested for increasing compliance and payments to the family copyright 1988 by mit press

cumulant instrument estimators for hedge fund return models with errors in variables we revisit the factors incorporated in asset pricing models following the recent developments in financial markets i e the rise of shadow banking and the change in the transmission channel of monetary policy we propose two versions of the fung and hsieh 2004 hedge fund return model especially an augmented market model which accounts for the new dynamics of financial markets and the procyclicality of hedge fund returns we run these models with an innovative hausman procedure tackling the measurement errors embedded in the models factor loadings our empirical method also allows for confronting the drawbacks of the instruments used to estimate hedge fund asset pricing models

the roots of entrepreneurship and labour demand individual ability and low risk aversion the topic of entrepreneurship currently experiences a revived interest as is shown by the research agenda of today s empirical researchers there are few issues in economics which are backed up by such a rich historical knowledge base as is the case with entrepreneurship this paper aims to give an overview of some important classic contributions relating to today s and tomorrow s empirical research subjects the overview consists of answers to six research questions by six historical contributors to entrepreneurship research together these questions give some insight into the determinants of successful entrepreneurship the classic contributors considered are cantillon say marshall schumpeter knight and kirzner their views are compared to each other as well as to some recent results of empirical research into the determinants of successful entrepreneurship

structural adjustment and the japanese textile industry a production theory approach the production theory approach for modelling trade in intermediate goods is applied to dervie export supply and import demand functions for the japanese textile industry the estimated elasticities provide insight into the process of internal adjustment and structural change reflected in the declining international competitiveness of the japanese textile sector estimation issues related to endogeneity tests and the concavity restictions implied by economic theory are highlighted in the econometric results estimated trade balance adjustments are derived from the parameter estimates of the export supply and import demand functionf for the japanese textile sector

the two waves of voucher privatization in the czech republic a model of learning in sequential bidding this study develops a dynamic model of bidding behaviour to investigate the czech voucher privatization process which took place in two waves of bidding rounds the first in 1992 and the second in 1994 it examines the voucher mechanism from the standpoint of investors and the pricing and allocation of shares investors could participate as independent individuals or by assigning some of all of their voucher points to investment privatization funds principal findings are that individual participants behaved differently from funds and benefited by learning from one round to the next and from observing the behaviour of the funds an important collateral finding is that the market though crude behaved efficiently in the adjustment of share prices over the bidding rounds

a structural model of the demand for owner occupied housing abstract the goal of the analysis in this paper is to estimate a structural model of the demand for owner occupied housing in our framework the buyer selects the value of the house the size of the mortgage and the length of stay in the house we estimate a housing demand equation which includes both the length of stay and the loan to value ratio as endogenous variables one empirical result of interest is that the income elasticity of demand for housing found in the structural housing demand equation is much larger than the value estimated in the reduced form we also point out some occasions when it is important to distinguish between a reduced form and a structural model of housing choices

business ownership and attitudes towards risk we explore the relationship between business ownership and attitudes towards financial risk using individual level data drawn from the us survey of consumer finances scf the scf includes a measure of individuals attitudes towards risk allowing us to explore the implications of interpersonal differences in risk attitudes for the probability and success of business ownership our empirical findings suggest that willingness to take financial risk is positively associated with both the incidence and success of business ownership we find that this relationship is particularly pronounced in cases where the individual actually started the business

manufacturer retailer channel interactions and implications for channel power an empirical investigation of pricing in a local market the issue of power in the marketing channels for consumer products has received considerable attention in both academic and practitioner journals as well as in the popular press our objective in this paper is to provide an empirical method to measure the power of channel members and to understand the reasons demand factors cost factors nature of channel interactions for this power we confine our analysis to pricing power in channels we use methods from the game theory literature in marketing on channel interactions to obtain the theoretical framework for our empirical model this literature provides us a definition of power one that is based on the proportion or percentage of channel profits that accrue to each of the channel members there can be a variety of possible channel interactions between manufacturers and retailers in channels the theoretical literature has examined some of these games for example choi 1991 examines how channel profits for manufacturers and retailer vary if channel interactions are either vertical nash or if they are stackelberg leaderfollower with either the manufacturer or the retailer being the price leader each of these three channel interaction games has different implications for profits made by manufacturers and retailers and consequently for the relative power of the channel members in contrast to the previous literature that has focused largely on the above three channel interaction games our model extends the game theoretic literature by allowing for a continuum of possible channel interactions between manufacturers and a retailer furthermore for a given product market we empirically estimate from the data where the channel interactions lie in this continuum more critically we obtain measures of how channel profits are divided between manufacturers and the retailer in the product market where a higher share of channel profit is associated with higher channel power we then examine how channel power is related to demand conditions facing various brands and cost parameters of various manufacturers in going from game theory based theoretical models of channel interactions to empirical estimation we use the new empirical industrial organization framework bresnahan 1988 as part of this structural modeling framework we build retail level demand functions for the various brands manufacturer and private label in a given product category given these demand functions we obtain optimal pricing rules for manufacturers and the retailer in determining their optimal prices manufacturers and the retailer account for how all the players in the channel choose their optimal prices that is we account for dependencies in decision making across channel members these dependencies are characterized by a set of conduct parameters which are estimated from market data the conduct parameters enable us to identify the nature of channel interactions between manufacturers and the retailer along the continuum mentioned previously in addition to the demand and conduct parameters manufacturers marginal costs are also estimated in the model these marginal cost estimates along with the manufacturer prices and retail prices available in our dataset enable us to compute the division of channel profits among the channel members hence we are able to obtain insights into who has pricing power in the channel in the empirical application of the model we analyze a local market for two product categories refrigerated juice and tuna in both categories there are three major brands the difference between them is that the private label has an insignificant market share in the tuna category our main empirical results show that the usual games examined in the marketing literature do not hold for the given data we also nd that the retailer s market power is very significant in both these product categories and that the estimated demand and cost parameters are consistent with the estimated pattern of conduct between the manufacturers and the retailer given the evidence from the trade press of intense manufacturer competition in these categories as well as the commodity nature of these products the result of retailer power appears intuitive

who determines mexican trade policy using a political economy approach the authors analyze the pattern of protection in mexico s manufacturing sector during the period of trade policy reforms 1985 89 when mexico experienced significant trade liberalization and an important inflow of foreign direct investment they take into account the potential effect of foreign direct investment on endogenous tariff formation it turns out that the data support this analytic approach in which the formulation of trade policy reflects political support and in which the presence of foreign direct investment in the sector strongly affects the pattern of tariff protection before and after reform in mexican manufacturing especially sectors with heavy foreign direct investment received greater protection in import competing sectors although the move toward greater openness was associated with a reduction in the influence of industrial and foreign investor lobbying

single equation multiple regression methodology is it an appropriate methodology for the estimation of the structure performance relationship in banking abstract tests of the structure performance paradigm of the industrial organization literature have been carried out almost exclusively using a single equation multiple regression methodology the purpose of this paper is to suggest that where the firms being considered are multiple product in nature and may pursue objectives in addition to maximizing the value of the firm such a methodology may be inappropriate the results presented in this paper suggest that the absence of a consistently strong positive and statistically significant relationship between market concentration and bank profitability may be traced in part to such an inappropriate methodology

children and female labour supply behaviour using the generalized residual method this paper investigates the assumption that children are exogenous in the labour supply equations of married women via alternative regression specifications for the children variables the empirical results of this paper suggest that children are endogenous to the participation decision and likely to be exogenous to the hours of work decision for married women children under age six have a dramatic negative impact on the labour force participation of married women these findings support the implication of the literature relating fixed costs of employment including child care costs to female labour supply

a tale of two italian cities brand level milk demand and price competition abstractwe apply the blp random coefficient logit model demand model to fluid milk sales data from two north south italian cities turin and naples by virtue of their location and socioeconomic differences these cities provide a natural experiment for contrasting consumer choices and retail market power related to milk physical and marketing characteristics results reveal that regardless of location consumers negatively value price increases fat content and ultra high temperature uht treatment however location matters with respect to brand and type of milk purchased while in turin the higher income region demand for the leading manufacturers brands is the most price inelastic in naples consumers have the lowest price elasticities in case of cheaper milk often small manufacturer or private label brands unlike previous studies we do not find price elasticities for private labels to be consistently lower or markups to be higher compared to manufacturer brands indicating that private labe

the value of human and social capital investments for the business performance of startups we investigate the manifold posed question to what extent does investment in human and social capital besides the effect of talent enhance entrepreneurial performance we distinguish between three different performance measures survival profits and generated employment on the basis of the empirical analysis of a rich dutch longitudinal data set of firm founders we conclude that specific investments indeed affect the three performance measures substantially and significantly specific attention is paid to the unobserved talent bias moreover the effect of the emergence of so called knowledge industries is explored

interactions between hospital admissions cost per day and average length of stay hospital cost per day cost annual admissions per capita admit and average length of stay alos are important health policy variables because each variable provides important information about hospital industry performance this study uses country level data to explore the empirical relationships between cost admit and alosin three steps ols estimation application of the wu hausman endogeneity test and re estimation with two stage least squares the major results are i admitand alosexert exogenous influences on costand ii admitand alosare endogenously related with possible one way casuality from admitto alos

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

the price is right but are the bids an investigation of rational decision theory the television game show the price is right is used as a laboratory to conduct a preference free test of rational decision theory in an environment with substantial economic incentives it is found that contestants strategies are transparently suboptimal in response to this evidence simple rules of thumb are developed that are shown to explain observed bidding patterns better than rational decision theory further learning during the show reduces the frequency of strategic errors this is interpreted as evidence of bounded rationality finally there is no evidence that a concern for fairness significantly alters bidding behavior copyright 1996 by american economic association

the informational efficiency of experimental asset markets a fundamental difficulty in devising any test of general efficient market hypotheses is the specification of the relevant public and private information sets of traders without a consensus as to reasonable empirical specifications tests of the hypotheses remain minimal or controversial in this study we examine the efficiency of experimental asset markets in which one may unambiguously identify the public and private information sets of traders we focus on how market efficiency is affected by the presence of futures markets in settings that incorporate different types of uncertainty and inside information our experimental results support four conclusions 1 market outcomes tend to evolve toward strong form informationally efficient equilibria whether or not futures markets and or event uncertainty are present 2 the presence of futures markets clearly stabilizes spot prices 3 the presence of futures markets tends to speed the evolution of asset markets to more efficient equilibria where there

estimating a continuous hedonic choice model with an application to demand for soft drinks using micro level scanner data i study empirically the consumer demand for soft drinks which is characterized by multiple product multiple unit purchasing behavior i develop a continuous hedonic choice model to investigate how consumers choose the best basket of products to satisfy various needs my model s embedded characteristics approach both helps to reduce the dimensionality problem in model estimation and generates flexible substitution patterns hence the model is useful in application to data with many product choices that are correlated with each other at the individual level the estimation results show that interesting substitutability and even a form of complementarity exist among soft drinks

donor preferences and recipient fiscal behavior a simultaneous analysis of foreign aid we theoretically develop and empirically estimate a preference model determining foreign aid donor behavior aid access and levels are separately determined by endogenous budgetary allocations the international economic environment the distribution of income between countries basic human needs the small country effect and regional bias we find fungibility of aid in recipient budgets is due to donor and recipient preferences despite the importance of other economic influences we find a significant pro poor country bias in aid allocations although little aggregate influence of basic human needs or regional bias the small country effect is significant for two of six donors jel f35 o19 h 77

what s so entrepreneurial about intrapreneurs this paper discusses the determinants of becoming an intrapreneur individuals maximise their utility while deciding among three occupations independent entrepreneurship paid employment and intrapreneurship i show that intrapreneurs resemble employees rather than entrepreneurs specifically comparing the decision making of intrapreneurs to that of entrepreneurs the former are significantly more risk averse expect lower but less uncertain reward and are broadly endowed with a poorer set of entrepreneurial abilities despite having higher levels of human capital they fail to recognise business opportunities and have lower confidence in their entrepreneurial skills a distinction within the category of intrapreneurship based on the level of engagement and therefore the level of personal risks they bear adds to our understanding of intrapreneurship engaged intrapreneurs i e intrapreneurs that expect to acquire an ownership stake in the business unlike the rest of intrapreneurs share the attributes usually assumed to characterise entrepreneurs

international capital mobility evidence from panel data abstract to test whether capital is internationally mobile some researchers have examined the relationship between saving and investment using time averaged data they find saving and investment to be related and conclude that capital is relatively immobile in this paper i argue that a country s intertemporal budget constraint biases results using time averaged data against finding capital mobility using annual data pooled for 21 oecd countries over the 1962 1990 period i find the estimated impact of saving on investment to be considerably smaller than previous estimates

hybrid entrepreneurship and public policy the case of firm entry deregulation hybrid entrepreneurs are entrepreneurs who are simultaneously working as paid employees although they constitute a systematic and large part of new firm creation their possibly distinct responsiveness to public policy is not yet studied arguing for the need to consider hybrid entrepreneurs in public policy we analyze the introduction of one stop shops for faster and simplified firm registration in mexico we find that hybrid entrepreneurs are more responsive to changes in entry regulation than full time entrepreneurs while both the best and least educated people respond to the reform the effect is most pronounced for highly educated hybrid entrepreneurs

demand for carbonated soft drinks implications for obesity policy this article examines consumer choices of carbonated soft drinks csds and their implications for obesity policy demand in relation to product and consumer heterogeneity is estimated via a random coefficients logit model berry et al 1995 applied to quarterly scanner data for 26 brands in 20 us cities involving 40 000 consumers counterfactual experiments show that caloric taxes could be effective in decreasing caloric csd consumption though having little impact on obesity incidence

on the turnover of business firms and business managers this paper develops a model of small business failure and sale that is motivated by recent evidence concerning how the failure and sale of small businesses vary with the age of the business and the tenure of the manager this evidence motivates two key features of the model a match between the manager and the business and characteristics of businesses that survive beyond the current match the parameters of the model are estimated and the properties of this parametric model are studied this analysis results in a simple characterization of the workings of the small business sector

grit and self employment a multi country study blending the literatures on grit and self employment we propose the role of grit in separating the self employed from the employed based on a sample of 13 210 respondents from nine countries our results indicate that not only is grit related to self employment but also grit is more strongly related to self employment for risk takers females and younger individuals the findings are robust controlling for several individual characteristics and alternate specifications and have implications for the broader literature on self employment

vertical relationships between manufacturers and retailers inference with limited data in this paper different models of vertical relationships between manufacturers and retailers in the supermarket industry are compared demand estimates are used to compute price cost margins for retailers and manufacturers under different supply models when wholesale prices are not observed the purpose is to identify the set of margins compatible with the margins obtained from estimates of cost and to select the model most consistent with the data among non nested competing models the models considered are 1 a simple linear pricing model 2 a vertically integrated model and 3 a variety of alternative strategic supply scenarios that allow for collusion non linear pricing and strategic behaviour with respect to private label products using data on yogurt sold in several stores in a large urban area of the u s the results imply that wholesale prices are close to marginal cost and that retailers have pricing power in the vertical chain this is consistent with non linear pricing by the manufacturers or high bargaining power of the retailers

examining risk preferences under high monetary incentives experimental evidence from the people s republic of china several experimental sessions were conducted to elicit certainty equivalents for a sequence of lotteries involving real monetary outcomes the opportunity to conduct sessions in the people s republic of china afforded the ability to offer very large monetary incentives relative to subjects living costs in the highest payoff condition subjects earned three times their normal monthly revenue in the course of a two hour experiment results indicate a statistically significant impact of the level of monetary incentives on revealed risk preferences however even under extreme monetary incentives subjects demanded amounts well in excess of expected value for low probability gain prospects copyright 1992 by american economic association

naturally occurring markets and exogenous laboratory experiments a case study of the winner s curse we examine the relevance of experimental findings from laboratory settings that abstract from the field context of the task that theory purports to explain using common value auction theory as our guide we identify naturally occurring settings in which one can test the theory experienced agents bidding in familiar roles do not fall prey to the winner s curse yet experienced agents fall prey to the winner s curse when bidding in an unfamiliar role we conclude that the theory predicts field behaviour well when one is able to identify naturally occurring field counterparts to the key theoretical conditions

estimating individual discount rates in denmark a field experiment we estimate individual discount rates with respect to time streams of money using controlled laboratory experiments these discount rates are elicited by means of field experiments involving real monetary rewards the experiments were carried out across denmark using a representative sample of 268 people between 19 and 75 years of age individual discount rates are estimated for various households differentiated by socio demographic characteristics such as income and age our conclusions are that discount rates are constant over the 12 month to 3 year horizons used in these experiments and that discount rates vary substantially with respect to several socio demographic variables hence we conclude that it would be reasonable to assume constant discount rates for specific household types but not the same rates across all households

are entrepreneurship and cognitive skills related some international evidence do national differences in cognitive skills cs predict a nation s likelihood of generating high quality entrepreneurs who create and expand high value businesses we answer this question by estimating cross country regressions that use the acs and szerb global entrepreneurship development index gedi and a measure of national cs after including conventional controls we find for a sample of 60 countries that our measure of cs robustly predicts the gedi unconditional correlation 0 65 standardized beta 0 42 an index that gives weight to both entrepreneurial attitudes within a nation and the institutional and economic prerequisites for creating high value high growth firms we find that this result also holds for an alternative measure of entrepreneurship

information cascades replication and an extension to majority rule and conformity rewarding institutions in a randomly determined order each agent was given an independent private signal about which of two states was selected by a random draw after receiving the private signal each agent made a publicly announced decision about the state thus at the time of personal decision each agent had a private signal and also knew the decisions of all preceding agents the experiments focused on three different types of organization 1 agents were rewarded according to whether their announced decision was right or wrong this individualistic institution is the one studied by anderson and holt aer 1997 their discovery of information cascades is replicated 2 agents were rewarded according to whether a majority of announced decisions were right or wrong under this majority rule institution the instance of information cascades is sharply reduced 3 agents are rewarded more according to whether their personal announced decision was the same as the majority decision than they were rewarded if their decision was correct this conformity rewarding institution is motivated by proceedings in which there is incentive to produce reports that conform to the reports of others substantial information cascades are observed

risk uncertainty and entrepreneurship evidence from a lab in the field experiment theory predicts that entrepreneurs have distinct attitudes toward risk and uncertainty but empirical evidence is mixed to better understand the unique behavioral characteristics of entrepreneurs and the causes of these mixed results we perform a large lab in the field experiment comparing entrepreneurs to managers a suitable comparison group and employees n 2 288 the results indicate that entrepreneurs perceive themselves as less risk averse than managers and employees in line with common wisdom however when using experimental incentivized measures the differences are subtler entrepreneurs are only found to be unique in their lower degree of loss aversion and not in their risk or ambiguity aversion this combination of results might be explained by our finding that perceived risk attitude is not only correlated to risk aversion but also to loss aversion overall we therefore suggest using a broader definition of risk that captures this unique feature of entrepreneurs their willingness to risk losses this paper was accepted by uri gneezy behavioral economics

estimations of the economic model of crime using aggregate and individual level data much has happened in the economics of crime since becker s 1 seminal paper of two decades ago the theory has been refined by among others ehrlich 10 11 12 block and lind 4 5 block and heinke 3 and schmidt and witte 30 attempts to test the model empirically began immediately the most cited including ehrlich 10 11 12 sjoquist 31 carr hill and stern 7 phillips and votey 26 witte 38 and myers 22 23 interest continues with recent work including layson 19 sandelin and skogh 29 ehrlich and brower 13 cover and thistle 9 viscusi 36 and tauchen witte and griesinger 33 there has been some controversy however concerning the type of data more suitable to the estimation of the economic model of crime most of the work has used aggregate data in which the unit of observation is a political jurisdiction but the use of aggregate data has been sharply criticized the alternative is individual data few attempts have been made to use individual data probably because an ideally constructed data set representative of a general population would be far too costly for most research budgets most of the studies that have been done have used data on releasees from prison or other criminal justice programs they are in effect recidivism studies based on the economic model of crime

theory and misbehavior of first price auctions recent experimental evidence appears to reject simple nash equilibrium models of bidding behavior in first price auctions the author presents a methodological critique of this evidence existing tests have concentrated on deviations of subjects from predictions in the message space of the action bid deviations the author suggests that it is more natural to evaluate subject behavior in expected payoff space he concludes that the evidence against the simple models is not significant enough to warrant their rejection copyright 1989 by american economic association

trade foreign direct investment and industry performance abstract this paper investigates the us margins effect of imports and fdi using a panel of 448 manufacturing industries for 1982 1990 in the single equation two way fixed effects regressions greenfield fdi has no significant effect on margins while there is some indication that non greenfield fdi affect margins and the effect is found to depend on the level of industry concentration when potential endogeneity among variables are taken into account both types of fdi are found to increase margins however for non greenfield fdi the effect appears with a lag of two periods for the most part the results indicate that the positive effect on margins holds for industries with low levels of concentration beyond some critical level the competitive effect of fdi predominates