competition between multiple asymmetric networks theory and applications this paper presents a tractable model of network competition with many firms elastic subscriber demand off net price discrimination call externalities and cost and market share asymmetries we characterize stability in expectations and equilibrium under firm and market level network effects the model is applied to simulate the effects of termination rates market maturity and retail pricing strategies we show that predictions based on duopoly models can be misleading in particular concerning the effects of termination rates

competition between telecommunications operators abstract many observers of the telecommunications industry predict that regulation will soon give way to competition policy the paper analyzes unregulated network competition both in the mature and the transition phase of the industry it considers competition in linear or nonlinear prices for customers and also considers both nondiscriminatory pricing and termination based discriminatory pricing the paper investigates whether freely negotiated access charges are compatible with effective competition in the mature phase of the industry and do not erect barriers to entry in the transition towards competition last it analyzes the meaning and impact of the efficient component pricing rule in the context of network competition

human capital and institutional determinants of information technology compensation modeling multilevel and cross level interactions compensation is critical in attracting and retaining information technology it professionals however there has been very little research on it compensation juxtaposing theories of compensation that focus on human capital endowments and labor market segmentation we hypothesize multilevel and cross level determinants of compensation we use hierarchical linear modeling to analyze archival salary data for 1 576 it professionals across 39 institutions results indicate that compensation is directly determined by human capital endowments of education and experience institutional differentials do not directly drive compensation but instead moderate the relationship of human capital endowments to compensation large institutions pay more than small institutions to it professionals with more education while small institutions pay more than large institutions to it professionals with less education not for profit institutions pay more than for profits to it professionals with more or it specific education further information intensive institutions pay more than non information intensive institutions to it professionals with more or it specific education we interpret these results in the context of institutional rigidity core competencies and labor shortages in the it labor market

why is on net traffic cheaper than off net traffic access markup as a collusive device abstract mobile telephony networks typically overcharge each other for the termination of incoming calls leading to high prices for off net traffic the existing theory claims that this behavior reduces profits since high termination charges make firms set high marginal prices thus leading to lower subscription fees and reduced profits this paper bridges the gap between theory and reality by incorporating several assumptions in a model that reflects the reality of mobile telephony markets one of the key assumptions is the fact that subscribers tend to place their calls to a limited number of people consisting mostly of friends and relatives the existence of such calling clubs combined with switching costs supports high access fees at the equilibrium we also discuss the implications of our analysis for eu regulation

uncovering spatial productivity centers using asymmetric bidirectional spillovers abstract the principal contribution of this paper is to present the first method to sift through a large number of firms in an industry to uncover which firms act as large spatial total factor productivity tfp growth centers we define a large spatial tfp growth center as a firm that is a large net generator of spatial tfp growth spillovers i e it is a source of large tfp growth spill outs to other firms vis a vis the size of the tfp growth spill ins that permeate to the firm from other firms we use this definition because other things being equal firms would want to locate near a firm that is a net generator of tfp growth spillovers in the process of presenting the above method we make three further contributions two of which are methodological and the other relates to our application first rather than follow the literature on spatial frontier modeling by considering spatial interaction between firms in a single network we introduce a more sophisticated model that is able to account for spatial interaction in multiple networks second we obtain bidirectional spatial tfp growth decompositions by complementing a unidirectional decomposition in the literature where the spillover components are spill ins to a firm with a decomposition that includes spill out components third from a spatial revenue frontier for u s banks 1998 2015 we find a number of cases where banks that represent large spatial tfp growth centers have branches that cluster together while in several states we find no such clusters

promoting network competition by regulating termination charges abstract this paper contributes to the policy debate about the optimal termination charge when penetration rates are explicitly taken into account although lowering termination charges towards cost leads to more efficient usage its impact on consumer surplus is ambiguous since it induces an increase in fixed subscription fee through the so called waterbed effect we show that a reduction in termination charge below cost has two opposing effects on consumer surplus it softens competition but also helps to internalize network externalities hence it can decrease or increase penetration depending on whether or not the first effect dominates the second we show that the first effect dominates the second when networks are weak substitutes or the penetration rate is high

bill and keep vs cost based access pricing revisited abstract we study network competition with two part tariffs and termination based price discrimination in the presence of call externalities we show that both the collusive and the welfare maximizing access charges fall below marginal cost moreover bill and keep arrangements are welfare improving compared with cost based access pricing

cost based access regulation and collusion in a differentiated duopoly abstract this paper revisits the conventional doctrine that it is easier to collude among equals applied in the context of vertically related markets in a differentiated duopoly model we study how cost based access price regulation may hinder the sustainability of tacit collusion

mobile termination network externalities and consumer expectations we re examine the literature on mobile termination in the presence of network externalities externalities arise when firms discriminate between on and o net calls or when subscription demand is elastic this literature predicts that profit decreases and consumer surplus increases when termination charges increase this is puzzling since in reality regulators are pushing termination rates down while being opposed to do so by network operators this puzzle is resolved when consumers expectations are assumed passive but required to be fulfilled in equilibrium as defined by katz and shapiro aer 1985 instead of being responsive to non equilibrium prices as assumed until now

information technology effects on firm performance as measured by tobin s q despite increasing anecdotal evidence that information technology it assets contribute to firm performance and future growth potential of firms the empirical results relating it investments to firm performance measures have been equivocal however the bulk of the studies have relied exclusively on accounting based measures of firm performance which largely tend to ignore it s contribution to performance dimensions such as strategic flexibility and intangible value in this paper we use tobin s q a financial market based measure of firm performance and examine the association between it investments and firm q values after controlling for a variety of industry factors and firm specific variables the results based on data from 1988 1993 indicate that in all of the five years the inclusion of the it expenditure variable in the model increased the variance explained in q significantly the results also showed that for all five years it investments had a significantly positive association with tobin s q value our results are consistent with the notion that it contributes to a firm s future performance potential which a forward looking measure such as the q is better able to capture

network competition and interconnection with heterogeneous subscribers abstract this paper analyses two way access pricing in a telecommunications market where consumers are heterogeneous in their demand for calls and firms are allowed to use non linear tariffs we first investigate how the presence of access charges affects the tariffs offered by firms in symmetric equilibrium next we show that under certain conditions each firm s profit is independent of the level of reciprocal access charge and therefore collusion using access charges is not sustainable this result suggests that efficient call allocations can be achieved under a minimal regulatory intervention i e recommending firms set access charges equal to call termination cost

on the optimality of the full cost pricing abstract this article is aimed at defining the full cost pricing as a leader follower game in two tier organizations i the upstream unit fixes the production capacity and uses it as a cost driver to compute the average cost ii the downstream unit operates on the market and chooses the output level on the basis of the average cost in the cournot oligopoly case the full cost pricing is compared with other pricing rules there exists a wide range of values of the fixed cost for which the full cost pricing dominates any other pricing rules in terms of gross profit

a retail benchmarking approach to efficient two way access pricing no termination based price discrimination jeon gratefully acknowledges financial support from the spanish government under sej2006 09993 econ and a ramon y cajal grant hurkens gratefully acknowledges the financial support from the spanish ministry of science and technology under sej2006 01717 both authors acknowledge support through grant consolider ingenio 2010 csd2006 00016 and through the net institute netinst org

using bill and keep interconnect arrangements to soften network competition abstract this paper demonstrates that low below marginal cost interconnect or access charges can be used to sustain high subscription prices under network competition with two part tariffs and price discrimination this result stands in contrast to other results in the literature suggesting that high interconnect charges can play a collusive role

the impact of the 1962 repatriates from algeria on the french labor market this paper uses census data to examine the impact on the french labor market of the 900 000 people repatriated from algeria in 1962 repatriates settled in regions culturally and climatically simil

skilled immigration and the employment structures of u s firms we study the impact of skilled immigrants on the employment structures of us firms using matched employer employee data unlike most previous work we use the firm as the lens of analysis to account for greater heterogeneity and the fact that many skilled immigrant admissions are driven by firms themselves e g the h 1b visa ols and iv specifications show rising overall employment of skilled workers with increased skilled immigrant employment by the firm employment expansion is greater for young natives than for their older counterparts the departure rates for older workers relative to younger workers appear highest for those in stem occupations

entry access pricing and welfare in the telecommunications industry abstract this paper investigates the effects of entry on welfare in the telecommunications industry equilibrium pricing parameters for monopoly and duopoly situations are determined where access charges are chosen non cooperatively welfare comparisons between alternative access pricing regimes are also performed

optimal access pricing for natural monopoly networks when costs are sunk and revenues are uncertain this paper studies optimal access pricing for natural monopoly networks with large sunk costs and uncertain revenues using techniques from the option pricing literature we show that the optimal access price corresponds to a risk free form of the efficiency component pricing rule ecpr that is where the opportunity cost is based on the risk free rate of return we also show that at levels of revenue above the optimal level that triggers entry the entrant should pay a premium above risk free ecpr that rewards the incumbent for relinquishing his rights to the risky cash flows at the higher revenue level

a spatial productivity index in the presence of efficiency spillovers evidence for u s banks 1992 2015 abstract we present the methodology for a new spatial decomposition of total factor productivity tfp growth the relevant literature is underdeveloped as there is just one short study which proposes a partial spatial tfp growth decomposition we develop this literature in four respects the first two developments are methodological to go from a partial decomposition to a complete one first we augment the partial decomposition with a cost efficiency spillover growth component second we introduce own and spillover allocative efficiency growth components third we provide a more detailed coverage of the spatial decomposition of tfp growth fourth in contrast to the traditional application to geographical areas e g countries in the relevant literature we apply our decomposition using firm level data which suggests that there can be an important role for spatial productivity analysis in or our application is to large u s banks over the period 1992 2015 among other things we find for the average large u s bank that tfp growth since the financial crisis has become much more dependent on the bank itself and less so on spatial spillovers

the role of incentives for opening monopoly markets comparing gte and boc cooperation with local entrants while the 1996 telecommunications act requires all incumbent local telephone companies to cooperate with local entrants section 271 of the act provides the bell companies but not gte additional incentives to cooperate using an original data set i compare the negotiations of at t as a local entrant with gte and with the bell companies in states where both operate my results suggest that the differential incentives matter the bells accommodate entry more than does gte as evidenced in quicker agreements less litigation and more favorable prices offered for network access consistent with this there is more entry into bell territories

can two part tariffs promote efficient investment on next generation networks abstract we analyze if two part access tariffs solve the dynamic consistency problem of the regulation of next generation networks we model the industry as a duopoly where a vertically integrated incumbent and a downstream entrant that requires access to the incumbent s network compete on hotelling s line the incumbent can invest in the deployment of a next generation network that improves the quality of the retail services we have three main results first we show that if the regulator can commit to a policy a regulatory moratorium may emerge as socially optimal second we show that if the regulator cannot commit to a policy it can induce investment only when the investment cost is low third we show that in this case two part tariffs involve very large payments from the entrant to the incumbent

intraconnectivity and interconnectivity when value creation may reduce profits this paper analyses firms decisions to provide connectivity to their customers we distinguish between intraconnectivity the ability of one firm s customers to connect to each other and interconnectivity the ability of one firm s customers to connect with another firm s customers the profitability implications of allowing connectivity are not a straightforward consequence of the consumer value of connectivity because connectivity affects not only the customer value but also the intensity of competition by creating or changing network externality we find that if sales are driven by brand switching rather than by category expansion a firm may find it optimal not to provide intraconnectivity even if providing it is not costly and may find it optimal to provide interconnectivity even at a cost exceeding the consumer value of connectivity on the other hand if category expansion is possible providing intraconnectivity may be profitable in this case either the equilibrium intraconnectivity provision may be asymmetric or both firms may find it individually optimal to provide intraconnectivity under certain conditions in the latter case the firms choice of intraconnectivity is a prisoner s dilemma game

price regulation of access to telecommunications networks abstract without access of networks to each other competition in the telecommunications sector would hardly have spread so quickly such mutual access is necessary for carriers to provide ubiquitous service and enable endusers to call and be called by anybody without subscribing to a system wide monopolist one way access concerns bottleneck inputs provided by an incumbent network to entrants while two way access concerns the interconnection between networks whereas one way access regulation is exclusively driven by containment of market power two way access is additionally affected by collusion possibilities among the numerous pricing rules discussed none clearly dominates this article provides a roadmap vis a vis the competing policy objectives for access price regulation

network competition with price discrimination bill and keep is not so bad after all abstract we study the impact of access charges on the incentives to invest in competing telecommunications networks of different quality high access charges soften competition in the investment stage and can be used to sustain higher profits under competition with two part tariffs and termination based price discrimination below cost charges such as bill and keep arrangements have a positive impact on investments

intertemporal price cap regulation under uncertainty this paper examines the intertemporal price cap regulation of a firm that has market power under uncertainty the unconstrained firm waits longer before investing or adding to capacity and as a corollary enjoys higher prices over time than would be observed in an equivalent competitive industry in the certainty case the imposition of an inter temporal price cap can be used to realise the competitive market solution by contrast under uncertainty it cannot even if the price cap is optimally chosen under uncertainty the monopoly firm will generally a under invest and b impose quantity rationing on its customers

global disaggregation of information intensive services information intensive services are being globally disaggregated as corporations respond to the pressures of increasing global competition and take advantage of the opportunities made available by the progress of information technology and the emerging global work force in order to globally disaggregate services corporations must decide whether or not to carry out a service activity within the organization and where to locate it within or outside the geographic boundary of the home base country this paper analyzes the opportunities and challenges of global disaggregation of information intensive services specifically the paper proposes a taxonomy of disaggregation and develops a theoretical framework that identifies the criteria and guidelines for successfully selecting service activities to be globally disaggregated

network competition ii price discrimination our companion article developed a clear conceptual framework of negotiated or regulated interconnection agreements between rival operators and studied competition between interconnected networks under the assumption of nondiscriminatory pricing this article relaxes this assumption and allows networks to charge different prices for calls terminating on the subscriber s network and those terminating on a rivals network this creates a price differential between services that are identical for the consumer and generates network externalities despite network interconnection we show that in both the mature and entry phases of the industry the nature of competition is substantially affected by such price discrimination

productivity and efficiency estimation a semiparametric stochastic cost frontier approach this paper proposes a flexible stochastic cost frontier panel data model where the technology parameters are unknown smooth functions of firm and time effects which non neutrally shift the cost frontier the model decomposes inefficiency into firm and time specific components and productivity change into inefficiency change technical change and scale change we then apply the proposed methodology to the norwegian salmon production data and analyze technical efficiency as well as productivity changes

outsourcing vertical integration and price vs quantity competition abstract we show that standard conclusions about duopoly competition can be reversed when the production of key inputs is outsourced to a vertically integrated retail competitor with upstream market power under such outsourcing bertrand competition can produce higher prices higher industry profit lower consumer surplus and lower total surplus than cournot competition in addition to limiting the intensity of retail competition bertrand competition can limit the extent of wholesale competition by reducing the incentive of retail providers to produce key inputs themselves

the assessment european networks competition interconnection and regulation recent events such as the california energy crisis the failures of the uk s railways and the consequences of the third generation 3g mobile licence auctions have called into question the european reliance on a strategy of network industry liberalization substantial concentration in energy and telecoms markets has also raised the issue of the consistency of competition policy with the creation of internal energy and communications markets the paper considers the multiple market failures in these industries and the problems raised by a series of national policy approaches which fail fully to reflect the economies of scale and scope and the european level public goods security of supply in energy the roll out of broadband and the gains for an overarching approach to climate change require a more european focus this in turn will require institutional reform at the european level failure to address this europe wide agenda will leave europe behind the usa copyright 2001 oxford university press

primal and dual dynamic luenberger productivity indicators abstract this paper develops primal and dual versions of the dynamic luenberger productivity growth measures that are based on the dynamic directional distance function and intertemporal cost minimization respectively the empirical application focuses on panel data of dutch dairy farms over the period 1995 2005 primal dynamic luenberger productivity growth averages 1 5 percent annually in the period under investigation with technical change being the main driver of annual change dual dynamic luenberger productivity growth is 0 1 percent in the same period improvements in technical inefficiency and technical change are partly counteracted by deteriorations of allocative inefficiency with large dairy farms presenting a slightly higher productivity growth than small dairy farms

cross licensing and competition we study bilateral cross licensing agreements between n 2 firms that engage in competition after the licensing phase it is shown that the most collusive cross licensing royalty i e the one that allows the industry to achieve the monopoly profit is sustainable as the outcome of bilaterally efficient agreements in a symmetric setting if the terms of the cross licensing agreements are not observable to third parties the monopoly royalty is the unique symmetric bilaterally efficient royalty however when the terms of the agreements are public the most competitive royalty i e zero can also be bilaterally efficient policy implications regarding the antitrust treatment of cross licensing agreements are derived from these results

contracts and externalities how things fall apart a single principal interacts with several agents offering them contracts the crucial assumption of this paper is that the outside option payoffs of the agents depend positively on how many uncontracted or free agents there are we study how such a principal unwelcome though he may be approaches the problem of contract provision to agents when coordination failure among the latter group is explicitly ruled out two variants are considered when the principal cannot re approach agents there is a unique equilibrium in which contract provision is split up into two phases in phase 1 simultaneousoffers at good though varying terms are made to a number of agents in phase 2 offers must be made sequentially and their values are discontinuously lower they are close to the very lowest of all the outside options when the principal can repeatedly approach the same agent there is a multiplicity of equilibria in some of these the agents have the power to force delay they can hold off the principal s overtures temporarily but they must succumb in finite time in both models despite beingable to coordinate their actions agents cannot resist an invasion by the principal and hold to their best payoff it is in this sense that things eventually fall apart

network competition in nonlinear pricing previous research assuming linear pricing has argued that telecommunications networks may use a high access charge as an instrument of collusion i show that this conclusion is difficult to maintain when operators compete in nonlinear pricing i as long as subscription demand is inelastic profits can remain independent of the access charge even when customers are heterogeneous and networks engage in second degree price discrimination ii when demand for subscriptions is elastic networks may increase profits by agreeing on an access charge below marginal cost relative to cost based access pricing welfare is typically increased by setting the access charge above marginal cost

immigrants and human capital investment why do immigrants invest more in human capital than the native born and how do investment patterns vary by type of immigrant summarizing our previous research we approach this question theoretically and empirically excerpt

enjoying the quiet life under deregulation evidence from adjusted lerner indices for u s banks abstract the quiet life hypothesis posits that firms with market power incur inefficiencies rather than reap monopolistic rents we propose a simple adjustment to lerner indices to account for the possibility of forgone rents to test this hypothesis for a large sample of u s commercial banks we find that adjusted lerner indices are significantly larger than conventional lerner indices and trending upward over time instrumental variable regressions reject the quiet life hypothesis for cost inefficiencies however lerner indices adjusted for profit inefficiencies reveal a quiet life among u s banks

bertrand competition under network externalities abstract two firms engage in price competition to attract buyers located on a network the value of the good of either firm to any buyer depends on the number of neighbors on the network who adopt the same good when the size of externalities increases linearly with the number of adoptions we identify the set of pricing strategies that are consistent with an equilibrium in which one of the firms monopolizes the market the set includes marginal cost mc pricing as well as bipartition pricing which offers discounts to some buyers and charges markups to others we show that mc pricing fails to be an equilibrium under non linear externalities in a general network but identify conditions for an equilibrium with bipartition pricing to be robust against perturbations in the externalities from linearity the analysis is applied to platform competition in a two sided market under local and approximately linear externalities

the impact of mass migration on the israeli labor market mass migration from the former soviet union increased the israeli population by 12 in the first half of the 1990s this exodus was precipitated by the lifting of emigration restrictions in an unstable ussr and by the open immigration policy of israel toward soviet jews who faced more restrictive entry policies elsewhere i use this natural experiment to study the impact of immigration on the labor market outcomes of native israelis ols yields significant reductions in wages and small reductions in employment however ols is biased if the distribution of immigrants across occupations in israel was not exogenous to relative wage and employment conditions i instrument for the entry of russians into an occupation in israel using information on their former occupations in the ussr there is a significant positive correlation between the former presence of the immigrants in an occupation in the ussr and their presence in that occupation in israel but the previous occupational choices of russians abroad were independent of israeli wage and employment growth subsequent to their migration iv estimates indicate that immigration did not have an adverse impact on native israeli labor market outcomes

asymmetric access price regulation in telecommunications markets abstract in liberalized telecommunications markets the incumbent typically enjoys several advantages over any entrant regulation in such asymmetric markets stimulates competition in the short and the long term if retail prices are low and the entrant s profits are high so that entry is encouraged i show that asymmetric access price regulation with a cost based access price for the incumbent and an access markup for the entrant is more successful than cost based access price regulation applied to incumbent and entrant this is a robust prediction with respect to the pricing strategies considered such asymmetric access price regulation is in accordance with european legislation

your network or mine the economics of routing rules in many markets including payment cards and telecommunications service providers operate networks that support customer transactions with each other when the two sides of a transaction belong to more than one network in common the question arises as to which network will carry the transaction we show that the answer depends on a combination of who has the formal authority to choose and the parties network subscription decisions our central finding is that granting formal authority to one side of the market can increase the extent to which transactions run over the network preferred by the other side of the market we also characterize competing networks equilibrium choices of routing rules and prices

calling circles network competition with non uniform calling patterns we introduce a flexible model of telecommunications network competition with nonuniform calling patterns accounting for the fact that customers tend to make most calls to a small set of similar people equilibrium call prices are distorted away from marginal cost and competitive intensity is affected by the concentration of calling patterns contrary to previous predictions jointly profit maximizing access charges are set above termination cost in order to dampen competition if calling patterns are sufficiently concentrated we discuss implications for regulating access charges as well as on and off net price discrimination

access to bottleneck inputs under oligopoly a prisoners dilemma we analyze the incentives of vertically integrated oligopolists to concede access to their bottleneck inputs to an entrant in the downstream market first two vertically integrated incumbents make access price offers to an entrant that chooses which one to accept if any second firms compete on salop s circle the firms may be asymmetrically located on the circle to reflect differences in consumer shares for some levels of asymmetry the incumbents face a prisoners dilemma with respect to conceding access to their bottleneck inputs entry by a downstream firm may lead to lower retail prices however entry may also lead to higher retail prices for the access provider and for the entrant we also consider the cases where there are several incumbents and where the entrant makes the access price offers

empirical evidence on the relationship between mobile termination rates and firms profits the theoretical literature on mobile termination rates mtrs is inconclusive on how the level of mtrs affects overall consumer charges and firms profits we show that when firms offer bundles with fixed included usage a tariff structure that has become more common in recent years an identical change in all mtrs does not affect firms retail prices or profits we use a panel dataset from saturated european markets to estimate the effect of mtrs on mobile operators profits as predicted by the theoretical model we cannot reject the fact that firms profits are unaffected by an identical change in all mtrs

termination fees revisited we reconsider the question of the optimal level of termination fees between communication networks in the context of heterogeneous usage and elastic participation the interaction between these two features yields new insights in our model i the profit maximizing reciprocal termination fee is above marginal cost ii the welfare maximizing termination fee is also above cost iii the welfare maximizing termination fee is below the profit maximizing one in the absence of termination based price discrimination but can be above it otherwise

tirole s industrial regulation and organization legacy in economics jean tirole was awarded the 2014 sveriges riksbank prize in economic sciences in memory of alfred nobel for his analysis of market power and regulation this paper provides an overview of some of that work and of his related contributions to game theory

price competition with reduced consumer switching costs the case of wireless number portability in the cellular phone industry wireless number portability wnp is a telecommunication regulatory policy that requires cellular phone service providers to allow customers who switch service subscriptions to retain their original phone numbers the right to retain the number lowers the switching cost for a consumer thus the purpose of the policy is to induce more competition and facilitate the growth of new or small service providers in this paper we show that wnp drives market price downward as expected but with a surprising twistrather than helping the smaller firms grow the policy may accelerate the process of market concentration we find that the main contributing factor to this peculiarity is the discriminatory pricing scheme prevalent in the industrythat is a service provider charges a lower per minute fee for the calls initiated and received within the same network than for the calls connected across two networks under this pricing scheme a consumer who subscribes to a larger network would benefit more than if subscribing to a smaller network despite the relatively higher fixed access fee that the former may charge by lowering the barrier of switching wnp creates a market condition conducive for a larger network to gain market share we support our analysis with the empirical evidence gathered from hong kong where wnp was adopted in march 1999

foreclosing competition through high access charges and price discrimination this article analyzes competition between two asymmetric networks an incumbent and a new entrant networks compete in non linear tariffs and may charge different prices for on net and off net calls when access charges are high this allows the incumbent to foreclose the market in a profitable way if switching costs are sufficiently large in the absence of termination based price discrimination however such foreclosure strategies are not profitable

why are companies offshoring innovation the emerging global race for talent this paper empirically studies determinants of decision by companies to offshore innovation activities it uses survey data from the international offshoring research network project to estimate the impact of managerial intentionality past experience and environmental factors on the probability of offshoring innovation projects the results show that the emerging shortage of highly skilled science and engineering talent in the us and more generally the need to access qualified personnel are important explanatory factors for offshoring innovation decisions moreover contrary to drivers of many other functions labor arbitrage is less important than other forms of cost savings the paper concludes with a discussion of the changing dynamics underlying offshoring of innovation activities suggesting that companies are entering a global race for talent

people flows in globalization the policy debate over globalization in the past decade has largely bypassed the international mobility of labor restrict trade and cries of protectionism resound suggest linking labor standards to trade and it s protectionism in disguise limit capital flows and the international monetary fund is on your back but restrict people flows that s just an accepted exercise of national sovereignty during the last few decades when most countries reduced barriers to trade in goods and services and liberalized financial capital markets most also sought to limit immigration in this essay i examine what we know about the causes and consequences of immigration i argue that people flows are fundamental to creating a global economy and that the interplay among immigration capital and trade is essential to understanding the way globalization affects economies i consider ways to reduce barriers to immigration that could improve the well being of workers around the world

decomposing productivity indexes into explanatory factors abstract productivity measures are increasingly regarded as key indicators of economic performance identifying sources of productivity growth is of interest to both firms and policy makers this paper revisits the debate on how to decompose productivity growth into explanatory factors with a focus on extracting technical progress technical efficiency change and returns to scale components using bjurek s concept of the malmquist index introduced into production theory in a systematic way by caves christensen and diewert a reference technology is required to define the components of interest unlike other approaches ours do not make any convexity assumptions on the reference technology but instead follows the example of tulkens and his coauthors in assuming that the reference technology satisfies free disposability assumptions a new decomposition of a productivity index is provided with the existence and properties of the underlying distance functions of the decomposition proven under relatively unrestrictive assumptions the paper also provides for the first time a theoretical justification for the geometric average form of the bjurek productivity index these rigorous theoretical contributions provide significant avenues for enhanced understanding of empirical productivity performance

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

welfare analysis of regulating mobile termination rates in the u k we develop a calibrated simulation model of the u k mobile telephony market and use it to analyze the effects of reducing mobile termination rates mtr s as recommended by the european commission we find that reducing mtr s is likely to increase both consumer surplus and networks profits depending on the strength of call externalities i e benefits to the recipient of a call social welfare may increase by as much as 1 billion to 4 6 billion per year we also use the model to estimate the welfare effects of the 2010 merger between orange and t mobile and find that the merger led to a substantial reduction in consumer surplus

you can t take it with you immigrant assimilation and the portability of human capital the national origin of an individual s human capital is a crucial determinant of its value education and labor market experience acquired abroad are significantly less valued than human capital obtained domestically this difference can fully explain the earnings disadvantage of immigrants relative to comparable natives in israel variation in the return to foreign schooling across origin countries may reflect differences in its quality and compatibility with the host labor market the return to foreign experience is generally insignificant acquiring additional education following immigration appears to confer a compound benefit by raising the return to education acquired abroad

nonlinear pricing of telecommunications with call and network externalities abstract this paper investigates how call and network externalities affect a monopolist s optimal nonlinear tariff in a two way telecommunication service market where consumers valuations for outgoing and incoming calls are positively correlated and the firm is not allowed to charge incoming calls it is shown that in contrast to the traditional efficiency on the top result all subscribers including those with the highest willingness to pay make suboptimal quantities of calls in the equilibrium the presence of call externalities may result in the existence of no call making subscribers in equilibrium also the firm may have incentives to sell the service below costs to some low valuation consumers in order to take advantage of the effect of network externalities

information exchange and competition in communications networks we develop a model of information exchange between calling parties we characterize the equilibrium when two interconnected networks compete by charging both for outgoing and incoming calls we show that networks have reduced incentives to use off net price discrimination to induce a connectivity breakdown when calls originated and received are complements in the information exchange this breakdown disappears if operators are allowed to negotiate reciprocal access charges we also study the relationship between sending and receiving retail charges as a function of the level of access charges we identify circumstances where private negotiations over access charges induce first best retail prices i introduction people use electronic communications in order to exchange information this exchange may take very different forms take as an example a situation with two individuals a and b a and b are academics trying to work on a joint paper but live in different places thus they rely on telephone conversations and e mail exchanges to conduct their work one day a and b are struggling to solve an equation a finds the solution and calls b b is obviously happy but then does not need to call a back since the problem has been solved another day a has an embryo of an idea and calls b b needs some time to ponder over this rudimental idea and then calls a back to tell him what she thinks about it in this second case b is still happy to have received a call from a since it may lead to an improvement of their paper but now the original call has initiated a chain reaction that has led b to return the call

are foreign it workers cheaper u s visa policies and compensation of information technology professionals the use of h 1b and other work visas to hire foreign information technology it professionals in the united states has attracted significant controversy and policy debates on one hand hiring high skill foreign it professionals on work visas can be advantageous for u s firms and the overall economy on the other hand high skill immigration can adversely impact the wages of foreign and american it professionals this study uses data on skills and compensation of more than 50 000 it professionals in the united states over the period 2000 2005 to study patterns in compensation of foreign and american it professionals to inform these debates contrary to the popular belief that foreign workers are a cheap source of labor for u s firms we find that after controlling for their human capital attributes foreign it professionals those without u s citizenship and those with h 1b or other work visas earn a salary premium when compared with it professionals with u s citizenship the salary premiums for non u s citizens and for those on work visas fluctuate in response to supply shocks created by the annual caps on new h 1b visas setting lower and fully utilized annual caps results in higher salary premiums for non u s citizens and those with work visas we discuss implications of this study for crafting informed visa and immigration related policies by the u s government for staffing practices of firms and for human capital investments by it professionals

two sided markets a progress report the paper provides a road map to the burgeoning literature on two sided markets and presents new results it identifies two sided markets with markets in which the structure and not only the level of prices charged by platforms matters the failure of the coase theorem is necessary but not sufficient for two sidedness the paper builds a model integrating usage and membership externalities that unifies two hitherto disparate strands of the literature emphasizing either form of externality and obtains new results on the mix of membership and usage charges when price setting or bargaining determine payments between end users

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

two part tariff competition in duopoly abstract this paper develops two models of two part tariff competition when consumers are differentiated a la hotelling equilibrium prices equal marginal cost if and only if the demand of the marginal consumer equals the average demand entry fees are socially optimal in a symmetric equilibrium if all consumers participate in the market two part tariffs tend to result in lower prices higher profits and social welfare relative to uniform pricing in the logit model marginal cost pricing holds but entry fees are higher than socially optimal and two part tariffs lead to lower aggregate net consumer surplus but higher profits than uniform pricing

the role of buying consortia among smes in the electricity market in italy we model the electricity market in italy focusing on the impact of buying consortia among smes on the behaviour of the large electricity producers and sellers we show that consortia may in certain circumstances produce a pro competitive result i e they may induce a reduction of prices not only for consortia members but also for firms not in the consortia

the labor market impact of high skill immigration the rapid growth in the number of foreign students enrolled in american universities has transformed the higher education system particularly at the graduate level many of these newly minted doctorates remain in the united states after receiving their doctoral degrees so that the foreign student influx can have a significant impact in the labor market for high skill workers using data drawn from the survey of earned doctorates and the survey of doctoral recipients the study shows that a foreign student influx into a particular doctoral field at a particular time had a significant and adverse effect on the earnings of doctorates in that field who graduated at roughly the same time a 10 percent immigration induced increase in the supply of doctorates lowers the wage of competing workers by about 3 percent this abstract was borrowed from another version of this item

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

competition in communication networks pricing and regulation by any measure the communication sector is important it is no surprise then that the communication sector has attracted the attention of both policy makers and economists in this paper we argue that four characteristics of the networks that deliver communication services make this area of particular interest we analyse the implications of networks cost structures the strong complementarity between their components the demand side externalities that arise from consumption of their services and the social obligations attached to them despite the attention that the communication sector has received many aspects of competition between networks are still poorly understood we identify some of the key issues that will continue to trouble regulators and interest academics

network competition and entry deterrence we develop a model of logit demand that extends to a multi firm industry the traditional duopoly framework of network competition firstly we show that incumbents establish inefficiently the reciprocal access charge below cost when they compete in prices but they behave efficiently if they compete in utilities secondly we study how incumbents determine the industry wide access charge under the threat of entry we show that incumbents may accommodate all possible entrants only a group of them or may completely deter entry when entry deterrence is the preferred option incumbents distort the access charge upwards

hubs and high fares dominance and market power in the u s airline industry this article estimates the importance of route and airport dominance in determining the degree of market power exercised by an airline the results indicate that an airline s share of passengers on a route and at the endpoint airports significantly influences its ability to mark up price above cost the high markups of a dominant airline however do not create much of an umbrella effect from which carriers with smaller operations in the same markets can benefit the article suggests a number of possible explanations for this asymmetry

market failures and public policy industrial organization studies the exercise and control of market power to this purpose it builds models that capture the essence of the situation the predictions of the model can then be tested econometrically and possibly in the lab or the field in the end the reasonableness of and robustness to modeling assumptions and the quality of empirical fit determine how confident economists are in making recommendations to public decision makers for intervention and to companies for the design of their business model industrial organization has a long tradition first theoretical with the work of french engineer economists antoine augustin cournot 1838 and jules dupuit 1844 then policy oriented with the enactment of the sherman act 1890 and subsequent legislation then descriptive with the studies of the harvard school structure conduct performance comforting and refining the antitrust drive and finally skeptical with the chicago school the chicago school correctly pointed out the lack of underlying theoretical doctrine and went on to cast doubt on the whole edifice it however did not develop an alternative antitrust doctrine perhaps because

immigration and wages evidence from the 1980s this paper presents new evidence on the effects of immigration based on changes in the distributions of wages in 24 major u s cities during the 1980s we concentrate on measuring the effects of immigration at the lower tail of the wage distribution in particular we ask whether recent declines in the real earnings of the least skilled workers in the u s economy are related to immigration our empirical analysis reveals large differences across cities in the relative growth rates of wages for low and high paid workers nevertheless these differences bear little or no relation to the size of immigrant inflows excerpt

network interconnection in telecommunications this paper discusses industries such as telecommunications where firms each have their own customers and must interconnect with other firms to provide a comprehensive service two scenarios are considered i the case of a symmetric unregulated industry and ii the case of an industry with a dominant regulated incumbent in the first provided there is sufficient product differentiation it is shown that firms agree to set interconnection charges above associated costs in order to obtain the joint profit maximising outcome in the second a formula for the welfare maximizing interconnection charge is derived relations with the efficient component pricing rule are discussed

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

international network competition under national regulation we extend the workhorse model of network competition to international calls this model enables us to show that national regulatory authorities nras maximizing domestic welfare have incentives to increase termination rates above the social optimum to extract rent from international call termination excessive termination rates distort prices but transfer surplus from foreign to domestic consumers via intensified network competition the model can explain the regulation of termination rates through rate floors international network ownership and deregulation are alternatives to combat the incentives of nras to distort termination rates we identify conditions under which each of these policies increases aggregate welfare

strategic investment timing under asymmetric access charge regulation in telecommunications in a liberalized telecommunications market an incumbent has several advantages over any entrant an asymmetric access charge regulation for two such asymmetric firms stimulates competitive investment we show that an entrant with a cost disadvantage has an incentive to invest as a leader under an asymmetric access charge regulation these results fit well with the findings of previous empirical work moreover we also investigate the effects of an asymmetric access charge regulation on competitive investment strategies

demand and innovation in services the case of mobile communications abstract this paper aims to analyse the pricing strategies of mobile communications operators and examine the role of demand characteristics in the development of new tariff plans in so doing we depart from a traditional industrial organization approach to price discrimination and interpret new tariff plans as innovations in the spirit of schumpeter we look at competition in this sector as depending upon this form of innovation and we argue that given the specific features of the industry the development of new tariff plans is strongly related to the users characteristics and behaviour our main point is that in a context of uncertainty demand affects firms innovative strategies in two ways first by providing information on user behaviour and by increasing the capability of market segmentation and second by providing the incentives to innovate this argument is supported by an empirical analysis carried out on the basis of an original dataset which includes all the tariff plans on offer in the history of the italian market between 1992 and 2005 we find that both a firm s installed customer base and the level of market saturation play a role in shaping firms innovative pricing strategies in terms of the number and characteristics of the new tariff plans

network competition i overview and nondiscriminatory pricing we develop a model of unregulated competition between interconnected networks and analyze the mature and transition phases of the industry in this deregulated environ ment networks pay negotiated or regulated access charges to each other and com pete in prices for customers we show that a competitive equilibrium may fail to exist for large access charges or for large network substitutability and that freely negotiated access charges may prevent effective competition in the mature phase of the industry and erect barriers to entry in the transition toward competition last we examine the meaning and impact of policies such as the efficient component pricing rule

international telecom settlements gaming incentives carrier alliances and pareto superior reform liberalized countries that allow competition in international telecommunications favor traffic re routing practices as arbitrage against foreign monopolists this view is seriously incomplete monopolists allied with carriers in liberalized countries can use these practices to reduce termination payments to nonalliance carriers thereby harming also consumers in liberalized countries by gaming regulations that require equal termination rates at both ends and proportional return the monopolist s traffic is allocated among carriers in proportion to their shares of traffic to its country we also present a simple bilateral settlements reform that eliminates gaming incentives and other proportional return distortions yet benefits both countries

impact of competition investment and regulation on prices of mobile services evidence from france in this paper we assess the impact of competition investment and regulation on prices of mobile services in france we estimate hedonic price regressions using data on tariff plans offered by the main mobile telecommunications operator in france between may 2011 and december 2014 in this time period the obtained quality adjusted price index decreased by about 42 8 as compared to a decline in weighted average prices without quality adjustment of 8 7 in a second step we relate the quality adjusted prices to a set of competition investment and regulation variables and find that the launch of 4g networks by mobile operators was the main driver of price reductions for classic tariffs with commitment low cost tariffs without commitment which were introduced to pre empt the entry of low cost competitor declined at the time of entry moreover we find that regulation which is approximated by the level of mobile termination charges and international roaming price caps for voice and data has a joint significant impact on quality adjusted prices in percentage terms competition is responsible for about 23 4 of total price decline and investments in 4g for 56 1 we conclude that the reduction in quality adjusted prices in the last years was largely caused by competition between operators for a new 4g technology and by entry of a fourth low cost operator jel l13 l50 l96

network competition with income effects i generalize the workhorse model of network competition to include income effects in demand empirical work has shown income effects to be positive and statistically significant income effects deliver theoretical results consistent with regulatory concern about excessive termination rates unregulated network operators competing in nondiscriminatory retail contracts negotiate termination rates above cost for any positive income effect this also holds when operators discriminate between on net and off net calls if networks are differentiated operators profit from increasing termination rates above cost under second degree price discrimination if a sufficient share of consumers prefer on net off net contracts and their subscription demand is relatively inelastic