dynamic adjustment process of retail store density in cointegrated panels evidence from japan using recently developed econometric techniques for testing the existence of unit roots and cointegration in panel datasets this article investigates the dynamic adjustment process of the number of retail stores per person by business type specifically the major objective of this article is to examine whether there is a long term relationship between retail store density and consumers ability to transport and store goods that is the relative costs of performing distributive tasks as suggested in previous studies relating to store density the first conclusion from this article is that a cointegration relationship exists between store density for most types of retail businesses and proxies for consumers ability to transport and store goods second the estimation results of an error correction model reveal that the density of stores dealing in convenience goods exhibits a slow adjustment speed to recover the long run equilibrium density level while the density of stores selling shopping goods show

an economic theory of self control the concept of self control is incorporated in a theory of individual intertemporal choice by modeling the individual as an organization the individual at a point in time is assumed to be both a farsighted planner and a myopic doer the resulting conflict is seen to be fundamentally similar to the agency conflict between the owners and managers of a firm both individuals and firms use the same techniques to mitigate the problems which the conflicts create this paper stresses the implications of this agency model and discusses as applications the effect of pensions on saving saving and the timing of income flows and individual discount rates

brand pricing and advertising industrial organization theory posits that market structure influences a firm s opportunity to raise its product s price above its marginal cost most studies have explained the structure performance relationship in terms of the ability of firms to collude in an industry protected by barriers to entry an alternative theory is that the structure performance relationship results from leading firms relative efficiency a third explanation one that has not previously been explored is related to the positive effect of brand advertising on brand price in consumer markets the purpose of much advertising is to convince buyers that the brands they are purchasing provide the best value in some products consumers preferences for high priced brands have persisted in spite of credible evidence that competing brands are physically identical concentrated lemon juice evaporated milk and household bleach alternative brands are packaged under identical specifications by the same manufacturers cookies or buyers cannot distinguish their brand from lower priced brands in blind taste tests beer the results of structure performance studies of food manufacturing industries generally are similar to those found in other industries collins and preston 3 found that sales concentration was positively related to industry price cost margins across 32 food industries parker and connor 21 found that advertising intensity also was positively related to food industry price cost margins rogers 26 concluded that the impacts of advertising intensity and concentration on food industry price cost margins had increased between 1954 and 1977 the federal trade commission 10 imel and helmberger 14 and ravenscraft 25 similarly conclude that profit rates of food manufacturing firms reflect the structure of the markets they serve and their relative position in those markets

self rewards and personal motivation self administered rewards are ubiquitous they serve as incentives for personal accomplishments and are widely recommended to increase personal motivation we show that in a model with time inconsistent and reference dependent preferences self rewards can be a credible and effective tool to overcome self control problems we also discuss the different types of self rewards the individual can use such as vice goods and virtue goods and analyze which types of goods the individual prefers

the role of firm size in bilateral bargaining a study of the cable television industry we examine the effect of buyer merger on bilateral negotiations between a supplier and n buyers merger may have bargaining effects in addition to the usual efficiency effects the effect of merger on the buyers bargaining position depends on the curvature of the supplier s gross surplus function merger enhances worsens the buyers bargaining position if the function is concave convex based on a panel of advertising revenue in the cable television industry our estimates indicate that the gross surplus function for suppliers of program services is convex this result suggests that cable operators integrate horizontally to realize efficiency gains rather than to enhance their bargaining position vis a vis program suppliers

correlates of narrow bracketing we examine whether different phenomena of narrow bracketing can be traced back to some common characteristic and whether and how different phenomena are related we find that making dominated lottery choices or ignoring the endowment when making risky choices are related phenomena and are both associated with low levels of cognitive reflection in contrast the phenomena of setting narrow goals or narrow mental budgets seem not to reflect choice errors due to low cognitive reflection but are tools to overcome self control problems buying small scale insurance is associated with having narrow mental budgets suggesting that people buy such insurance to insure themselves against the consequences of their own self control strategy

do pharmacists buy bayer informed shoppers and the brand premium we estimate the effect of information and expertise on consumers willingness to pay for national brands in physically homogeneous product categories in a detailed case study of headache remedies we find that more informed or expert consumers are less likely to pay extra to buy national brands with pharmacists choosing them over store brands only 9 percent of the time compared to 26 percent of the time for the average consumer in a similar case study of pantry staples such as salt and sugar we show that chefs devote 12 percentage points less of their purchases to national brands than demographically similar nonchefs we extend our analysis to cover 50 retail health categories and 241 food and drink categories the results suggest that misinformation and related consumer mistakes explain a sizable share of the brand premium for health products and a much smaller share for most food and drink products we tie our estimates together using a stylized model of demand and pricing

innovation and diffusion in small firms theory and evidence the article provides an inventory of the strengths and weaknesses of small firms in a dynamic context to do this it considers verbal accounts of the processes of innovation and diffusion as well as quantitative studies testing cause effect relations it consider both economic and noneconomic factors concerning issues of motivation perception and knowledge first an overall summary is given of the characteristics of small business compared with large business as a basis for an assessment of strengths and weaknesses perhaps the most important characteristic of small business is its diversity and the article gives the conditions and sources of it other core characteristics are small scale personality and independence of the small firm from these derived characteristics strengths and weaknesses and core strategies can be inferred from the perspective of the firm strengths and weaknesses are subsequently analysed for the successive stages of innovation invention development tooling production introduction to practice market strengths and weaknesses in diffusion are analysed for the successive stages in the adoption process as proposed by rogers reference is made to theory and to empirical studies from the literature and from research by the present author

service sector restrictiveness and economic performance an estimation for the mena region this article aims to assess barriers to service provision in the banking and telecom sectors of four middle east and north africa mena countries and the impact of these barriers on firm performance our methodology involves the computation of aggregate and modal trade restrictiveness indices tris by sector and utilisation of these tris as regressors of firms economic performance our analysis shows that significant regulatory reforms have taken place in the service sectors over the last decade in the mena region but that a broad range of restrictions still remain the most significant change in these service sectors has been the lifting or softening of constraints on foreign equity participation these regulatory reforms however have had varying degrees of impact on market structure depending on the country the sector and the mode moreover service restrictions have had an impact on economic performance in the three studied sectors while a rent creating effect seems to dominate restrictions on banking and fixed telecom sectors a cost inefficiency effect seems to dominate the mobile telecom sector finally we find evidence of interactions between modal restrictions for banking services our results suggest a complementarity between modes 3 and 1 as well as a substitution effect between modes 3 and 4 in the banking sector

insurer hospital bargaining negotiated discounts in post deregulation connecticut this paper uses unique data from the state of connecticut to examine discounting patterns in the state s hospital industry for the years following deregulation 1995 1998 the data provide a rare opportunity to study payer level differences in negotiated discounts for hospital services in addition to presenting descriptive evidence on how discounts vary across payers payer types and hospital types this study uses matched revenue data to analyze the economic determinants of discount magnitudes payer size appears to affect bargaining power but the economic significance of the effect is small the data exhibit patterns consistent with a bargaining explanation in which discount magnitudes depend critically on payers abilities to channel patients to hospitals with which favorable discounts have been negotiated

advertising sunk costs and barriers to entry this paper tests hypotheses about the entry deterring effects of advertising the model isolates three separate effects of advertising on entry the effect on the irrecoverable costs of entry the effect on the uncertainty underlying the entry environment and the effect on the measured rates of profit we find that advertising impedes entry since necessary advertising expenditures give rise to a sunk cost which raises the risk of entry however we also find a countervailing force due to advertising in that the entrant perceives a greater likelihood of success in markets where advertising is important our analysis shows that the overall impact of advertising on entry is positive

deficits government expenditures and tax smoothing in the united states 1929 1988 abstract barro s tax smoothing hypothesis tsh implies that the government runs a budget deficit whenever it anticipates the growth rate of national income to increase or the growth rate of its expenditure to decline we test this implication of the hypothesis by examining the implied cross equation restrictions on a vector autoregression var model using u s data for the period ranging from 1929 to 1988 our formal tests reject the hypothesis for the full sample period but cannot reject it for the post 1947 period further investigations show that the statistical rejection should be attributed to sharp differences in the statistical properties of the pre 1947 and the post 1947 data rather than the failure of the hypothesis itself

normal costs and demand effects in price setting a study of retailing the study aims at contributing to the debate whether there are demand effects in models that seek to explain prices as mark ups on costs for costs it considers actual costs normal costs and an intermediate model with a partial adjustment to the deviation of actual from normal costs for demand effects it considers an effect on the price level of a change of demand with an allowance for asymmetry between demand growth and demand decline tests and estimates are conducted on the basis of data from retailing

concentration of marketing channels and brand level retailer margins evidence from japan this article investigates the impacts of marketing channel concentration at each distributive channel stage on brand level retailer gross margins a unique official japanese dataset the national survey of prices which reports brand level wholesale prices as well as retail prices of national brand items in various consumer product categories enables us to estimate the retail margin directly for each specified brand the most notable conclusion is that an inverse relationship is found between brand level retailer margins and the degree of wholesaler concentration which is consistent with empirical results in previous marketing and economic studies that investigated the impacts of manufacturer concentration on category level retailer margins

consumption self control by rationing purchase quantities of virtue and vice consumers attempts to control their unwanted consumption impulses influence many everyday purchases with broad implications for marketers pricing policies addressing theoreticians and practitioners alike this paper uses multiple empirical methods to show that consumers voluntarily and strategically ration their purchase quantities of goods that are likely to be consumed on impulse and that therefore may pose self control problems for example many regular smokers buy their cigarettes by the pack although they could easily afford to buy 10 pack cartons these smokers knowingly forgo sizable per unit savings from quantity discounts which they could realize if they bought cartons by rationing their purchase quantities they also self impose additional transactions costs on marginal consumption which makes excessive smoking overly difficult and costly such strategic self imposition of constraints is intuitively appealing yet theoretically problematic the marketing literature lacks operationalizations and empirical tests of such consumption self control strategies and of their managerial implications this paper provides experimental evidence of the operation of consumer self control and empirically illustrates its direct implications for the pricing of consumer goods moreover the paper develops a conceptual framework for the design of empirical tests of such self imposed constraints on consumption in consumer goods markets within matched pairs of products we distinguish relative virtue and vice goods whose preference ordering changes with whet her consumers evaluate immediate or delayed consumption consequences for example ignoring long term health effects many smokers prefer regular relative vice to light relative virtue cigarettes because they prefer the taste of the former however ignoring these short term taste differences the same smokers prefer light to regular cigarettes when they consider the long term health effects of smoking these preference orders can lead to dynamically inconsistent consumption choices by consumers whose tradeoffs between the immediate and delayed consequences of consumption depend on the time lag between purchase and consumption this creates a potential self control problem because these consumers will be tempted to over consume the vices they have in stock at home purchase quantity rationing helps them solve the self control problem by limiting their stock and hence their consumption opportunities such rationing implies that per purchase occasion vice consumers will be less likely than virtue consumers to buy larger quantities in response to unit price reductions such as quantity discounts we first test this prediction in two laboratory experiments we then examine the external validity of the results at the retail level with a field survey of quantity discounts and with a scanner data analysis of chain wide store level demand across a variety of different pairs of matched vice regular and virtue reduced fat calorie or caffeine etc product categories the analyses of these experimental field and scanner data provide strong convergent evidence of a characteristic crossover in demand schedules for relative vices and virtues for categories as diverse as among others potato chips chocolate chip cookies cream cheese beer soft drinks ice cream and frozen yogurt chewing gum coffee and beef andturkey bologna vice consumers demand increases less in response to price reductions than virtue consumers demand although their preferences are not generally weaker for vices than for virtues constraints on vice purchases are self imposed and strategic rather than driven by simple preferences we suggest that rationing their vice inventories at the point of purchase allows consumers to limit subsequent consumption as a result of purchase quantity rationing however vice buyers forgo savings from price reductions through quantity discounts effectively paying price premiums for the opportunity to engage in self control thus purchase quantity rationing vice consumers are relatively price in sensitive from a managerial and public policy perspective our findings should offer marketing practitioners in many consumer goods industries new opportunities to increase profits through segmentation and price discrimination based on consumer self control they can charge premium prices for small sizes of vices relative to the corresponding quantity discounts for virtues virtue consumers on the other hand will buy larger amounts even when quantity discounts are relatively shallow a key conceptual contribution of this paper lies in showing how marketing researchers can investigate a whole class of strategic self constraining consumer behaviors empirically moreover this research is the first to extend previous theoretical work on impulse control by empirically demonstrating its broader implications for marketing decision making

retail margins during recession and growth the influence of consumer spending on retail price setting behaviour is investigated in the context of a theory developed in previous research the results indicate that the effect is not the same for growth and decline of spending

demand uncertainty and sales a study of fashion and markdown pricing the theory of clearance sales is expanded and applied to explain why markups markdowns and the frequency of sales of merchandise sold by department stores have increased dramatically in recent years and why they differ across merchandise groups tha major theme of the paper is that the growing role of fashion and product variety is an important reason for these increases and for the differences between merchandise groups the growing importance of fashion is illustrated by documenting the declining use of whites and the increasing use of colors and prints estimates of the effects of imports and technological and demographic changes on markups and markdowns are presented copyright 1988 by american economic association

quasi hyperbolic discounting and retirement abstract some people have self control problems regularly this paper adds endogenous retirement to laibson s quasi hyperbolic discounting savings model quarterly journal of economics 112 1997 443 477 earlier selves think that the deciding self tends to retire too early and may save less to induce later retirement still earlier selves may think the pre retirement self does this too much saving more to induce early retirement the consumption pattern may be different from that with exponential discounting other observational non equivalence includes the impact of changing mandatory retirement rules or work incentives on savings and a possibly negative marginal propensity to consume out of increased future earnings naive agents are briefly considered

choosing the joneses endogenous goals and reference standards a growing economic literature stresses the importance of relative comparisons e g for savings and consumption or happiness in this literature it is usually assumed that reference standards against which people compare themselves are exogenously given in contrast findings from social psychology suggest that people play an active role in determining their reference standards we introduce a social comparison model where people choose their reference standards to serve motives of self improvement and self enhancement the model predicts that reference standards increase in individuals abilities and that people thus tend to compare themselves to similar others the results of a questionnaire study confirm the prediction of the model

some effects of business environment on retail firms abstractthis paper empirically tests how formal retail entrepreneurs perception about the business environment in cameroon affects the performance of the retail sector i use business owners responses from the 2009 enterprise survey to estimate an econometric model that corrects for heteroscedasticity the results show that regulation costs corruption credit constraints and lack of infrastructure negatively affect the gross margins of firms in contrast the competition of the informal sector perceived by many formal entrepreneurs as a major constraint is positively associated with the gross margins of formal firms policy implications are discussed

the outputs of retail activities concepts measurement and evidence from u s census data the authors develop a new economic framework for the empirical analysis of retail margins this framework formalizes the role of distribution services as outputs of retail activities their main results are the following the measures of outputs of retail activities identified in the data perform as important and robust determinants of retail margins variables that purport to capture oligopolistic features of market structure play a limited or no role in determining retail margins quantity setting and price setting under the assumptions of profit maximization and monopolistic competition are categorically rejected by the data the data base is information on 49 retail sectors from the 1982 u s census of retail trades copyright 1993 by mit press

intertemporal tax smoothing and the government budget surplus canada and the united states this paper shows that if the government smooths taxes then the budget surplus should equal the present discounted value of expected changes in government expenditure this implication of the tax smoothing hypothesis imposes more stringent restrictions on the data than the more usual method of testing whether changes in tax rates follow a random walk the tax smoothing model is applied to the federal government budgets of canada and the united states and in each case receives considerable empirical support copyright 1995 by ohio state university press

to be consumed with moderation abstract we study the optimal behavior of a hyperbolic discounting agent who has incomplete information about his own preferences and can only learn them through consumption we show that even if moderate current consumption and moderate future consumption always dominates abstinence the agent may optimally decide not to consume as a commitment device against inefficient learning that would lead to future excesses this provides a rationale for why smokers gamblers or compulsive buyers stick to second best personal rules of behavior such as abstinence without invoking standard habit formation arguments we also study how urges modify the strategy of the individual

selling costs and switching costs explaining retail gasoline margins recent theoretical work has shown that price discrimination can take place in imperfectly competitive as well as monopoly markets the persistence of higher retail margins on unleaded than on leaded gasoline during the 1980s suggests that discrimination may occur even in very competitive markets this article studies a number of cost based explanations for such gasoline pricing as well as the possibility of price discrimination the analysis indicates that gas stations discriminate against groups of customers who are less likely to switch to another station the conclusions highlight the influence of shopping or search costs on pricing decisions even in markets thought to be quite competitive

the europe u s productivity gap in a rear view mirror will measurement differences in the services sector output please rise the deterioration in 1995 of europe s productivity performance relative to the u s coincided with the renaissance of the u s statistical system which can be regarded by now as the frontier in official statistics this paper raises the natural question whether the european statistical system was left at the station while its u s counterpart departed making it possible for measurement differences to become the primary suspect for the existing productivity gap my retrospective review of the development path in the services sector productivity statistics suggests that europe lags significantly behind the u s in the services producer price index program both in terms of scope and timing of its implementation accordingly the role of these measurement differences in the post 1995 europe u s productivity story cannot reasonably be ruled out the paper concludes with a structured guess that provides a circumstantial evidence on the benefits generated by the upgrades in the u s services sector statistics the results show that these enhancements led to two kinds of benefits during the post 1995 period a considerable reduction in the contribution of industries that traditionally dampened the aggregate productivity trend combined with a larger contribution of those that generally lifted it this contrasts markedly with europe where the contribution of these two sources remained unchanged in the meantime

the welfare effects of distribution regulations in oecd countries i introduction the distribution sector plays a crucial and large role in most economies 1 in the g 7 united states japan germany france united kingdom italy and canada distribution s share of gross domestic product gdp ranges from 8 to 15 and its share in employment ranges from 11 to 19 pilat 1997 table 2 1 because almost all goods in an economy pass through this sector distribution can heavily influence prices for consumer goods in particular these price effects can be large in organisation for economic cooperation and development oecd countries consumer prices for final goods exceed the corresponding producer prices by 40 and more in addition to indeed because of its economic importance distribution producers enjoy substantial political clout and have won many favorable regulations from the political process see kalirajan 2000 and pilat 1997 these regulations may impose large welfare costs and may exert a large influence on trade flows nonetheless relatively few publications rigorously analyze the potential overall welfare and trade effects of deregulating distribution this study seeks to fill some of that void i first provide a brief overview of distribution regulations then i present new internationally comparable distribution margins data for a sample of eight oecd countries these data are used to infer the extent to which distribution regulations reduce efficiency for four of these countries i conduct an applied general equilibrium age analysis of the welfare effects of high margins and find that they impose large costs rivaling those of protection it appears that efforts to increase economic welfare should not ignore the potentially large gains from liberalizing distribution this article also examines the relationship between restricted distribution and imports ii distribution regulations several studies have described a variety of distribution regulations in oecd countries nicoletti 2001 boylaud 2000 kalirajan 2000 and pilat 1997 provide excellent overviews these studies imply that despite some liberalization many impediments remain the most burdensome regulations include restrictions on large stores onerous business set up rules restrictive zoning laws and other real estate regulations limits on product ranges store hours and pricing and monopoly distributors for certain products such as pharmaceuticals liquor and tobacco in addition many local regulations work under the radar of studies such as these the limited literature on the subject implies that distribution regulations reduce welfare pellegrini 2000 estimates that deregulating retail trade would increase italian gdp by more than 1 japan s economic planning agency 1996 finds that loosening restrictions on large retailers has increased japanese gdp by 1 pilat 1997 cites a european commission study that finds that liberalizing store hours has greatly increased consumer welfare carree and nijkamps 2001 find efficiency gains after entry barrier removal in the netherlands nicoletti 2001 concludes both simulation and econometric studies point unequivocally to potentially large welfare gains from the liberalization of retail trade also burda 2000 and studies cited in nicoletti 2001 find that employment would increase not decrease with liberalization these studies provide valuable information but none simulate the effect of a country s total package of distribution regulations on welfare i do so by exploiting age modeling which takes account of links among industries and nations to produce broad brushed estimates of inflated margins effects in multiple countries distribution s widespread influence on an economy makes an age approach especially important 2 iii measuring margins the underlying data the distribution margins data grow out of protection data developed in bradford 1998 2003

manufacturing margins differences between small and large firms the influence of labour costs concentration capacity utilization exports and firm size on manufacturing profit margin is studied with a discrimination between small and large firms

a model of pricing behavior an econometric case study empirical pricing studies are scarce in the modern literature in spite of their obvious importance for understanding competition the present study employs a structural model to identify deviations of individual pricing routines from the commonly assumed single period profit maximization it is applied to individual wholesale firms because wholesale pricing has a decisive influence on the price formation in the entire economic system and because hardly any research exists in this area the results show that wholesale firms operate in imperfectly competitive world markets providing a highly differentiated service package traders apply pricing rules consistent with cost mark up pricing the mark up varies among traders with the extent to which a firm s pricing strategy deviates from full profit maximization this divergent behavior is associated with firm size the type of buyers served and other aspects of the wholesale service package

should marginal tax rates be equalized through time i derive necessary and sufficient conditions for the intertemporal equalization of optimal tax rates the conditions in the case of wage taxes include constant elasticity labor supply and constant relative risk aversion wage taxes should be low in times of relatively elastic labor supply or low risk aversion the conditions in the case of capital taxes include perfect foresight expectations and constant relative risk aversion if foresight is imperfect intertemporal equality will be impeded by a covariance term if relative risk aversion is time varying next period s capital tax should have the same sign as this period s change in relative risk aversion

retailers strategies and food price dynamics evidence from dairy scanner data abstract we investigate the relationship between retailers strategies and dairy price dynamics using high frequency italian scanner data for different dairy products we compute a weekly drift free price index specific for product category chain and type of store exploiting the unbalanced panel data structure to control for unobservable strategies by chain time and type of store we test if unobservables are statistically significant in influencing the price dynamics of each of the products covered by our analysis in general chain and type of store specific unobservables play a significant role moreover we identify the role of some observable strategic variables in controlling or in stimulating price inflation rates we obtain mixed results on the relationship between private label pl market shares and price trend while we find price promotions to be more effective if applied to national brands nbs rather than pls we conclude with some implications for the potential role of public policies in controlling food inflation

economic success factors in spanish small retail businesses an analysis based on sector relative definitions the purpose of this study was to carry out a sectorial analysis of the strategic profile of successful small businesses in spanish retailing first a one dimensional statistical formalisation of the concept of small business was proposed based on yearly sales revenue and relative to the sector likewise some statistical formalisations of the concept of economic success were proposed based on profit margins and also relativised according to sector once a conceptual framework was established a sectorial model of strategic characterisation of successful small retailing firms was developed the results of applying these proposals to the spanish retail industry confirmed the importance of a sectorial approach as opposed to an overall analysis

a dual self model of impulse control we propose that a simple dual self model gives a unified explanation for several empirical regularities including the apparent time inconsistency that has motivated models of quasi hyperbolic discounting and rabin s paradox of risk aversion in the large and small the model also implies that self control costs imply excess delay as in the o donoghue and rabin models of quasi hyperbolic utility and it explains experimental evidence that increased cognitive load makes temptations harder to resist the base version of our model is consistent with the gul pesendorfer axioms but we argue that these axioms must be relaxed to account for the effect of cognitive load

returns policy new model introduction and consumer welfare abstract this paper investigates how economic outcomes differ for new model introduction between two extreme contracts outright sales contract and returns policy contract with full credit under the outright sales contract we show that the retailer s incentive to introduce a new model can lead to a reduction of consumer welfare when the retailer is moderately risk averse the primary conclusion from this study is that the returns policy contract resolves this conflict between firms and consumers and that the supply chain introduces the new model only when consumer surplus from the new model is higher than that from the old model

market disequilibria and their influence on small retail store pricing in this paper a quantitative model is developed to explain differences in average store price levels we assume that stores may operate under different economic regimes that is under excess capacity or excess demand prices are expected to the higher than average in case of an excess demand regime and lower in an excess capacity situation actual information regarding the regime that applies to each individual store is not available therefore we propose to use a so called switching model with endogenous regime choice to analyse the store price differences the model developed in the paper is estimated using four largely differing types of stores from the dutch retail trade these samples consist mainly of small stores

productivity and efficiency impacts of human resources practices in food retailing data from an annual survey of us supermarkets including detailed information on store characteristics operations and performance are used to develop an index of human resource hr practices for food retailers a stochastic frontier analysis demonstrates that hr policies have a positive impact on value added in food retailing establishments while efficiency is not adversely influenced by hr practices managerial implications of the model link technical inefficiency estimates for retailers to slight declines in store level gross margins evaluated on the basis of technical efficiency retailers choosing a portfolio of hr practices that score high on the hr index are able to match the performance of competitors pursuing an alternative low hr strategy

on the path dependence of tax compliance abstract this paper presents experimental evidence that tax compliance is path dependent for given values of the audit probability and the fine for tax evasion we compare the income declaration of subjects who faced a change in one of the two parameters to that of subjects who experienced no such parameter change we show that past tax enforcement regimes continue to have an impact on current income declarations this finding may be explained by reference dependent preferences and it has important policy implications for instance legal transplants cannot be expected to reliably yield similar behavior in countries with different legal histories

multimarket market power estimation the australian retail meat sector a new technique for estimating market power in several markets simultaneously is developed and applied to the australian retail beef lamb and pork markets the hypotheses that market power is zero and that market power is the same for each meat cannot be rejected nor is there evidence that market power increased over the period of analysis little bias is created by examining markets is isolation rather than within a system when markets are competitive but that bias can be large when market power exists in some markets in the system

the outputs of retail activities french evidence a new economic framework is applied to the empirical analysis of retail margins this framework is founded on the definition of profits and incorporates recent theoretical developments formalizing the role of distribution services as outputs of retail activities the main results are the measures of outputs of retail activities identified in the data perform as important and robust determinants of retail margins variables that purport to capture the oligopolistic features of market structure have little association with the variation in retail margins hypotheses of price setting and quantity setting under the assumptions of profit maximization and monopolistic competition are categorically rejected by the data the data base is information on 50 retail sectors from the 1982 survey of firms in commerce and the 1983 survey of firms in services reported by insee

productivity growth in the grocery trade this paper presents a model of the growth of the average efficiency of labour per type of shop as a function of the wage rate use of part time labour labour supply and demand and economies of scale shop size the model is estimated on the basis of data for the grocery trade prior to 1975 this yields a forecast beyond 1975 which is compared with more recent observations are estimate of the model on the basis of data for the grocery trade in the period 1975 78 is found to be in agreement with the original estimate some implications of the model are indicated

price discrimination in grocery trade evidence from italy this paper investigates the determinants of price dispersion between staple and non staple goods in grocery retailing as the result of pricing decisions by multiproduct firms theoretical predictions about the nature of supermarkets pricing behaviour are compared and tested empirically using disaggregated data from the italian grocery trade over the period 1990 1992 the empirical results provide evidence for the existence in all types of retail organization of the form of price discrimination suggested by bliss particularly for specialist shops the results are consistent with discrimination due to the exploitation of consumers switching costs

decomposition of structural and exogenous changes 1989 decomposition of structural and exogenous changes applied economics vol 21 no 1 pp 125 137

efficient timing of income taxes abstract the marginal collection cost of an income tax is predicted to be a martingale and the marginal income tax rate is predicted to be a supermartingale collection costs can be estimated from tax rates almost all tests based on a u s series of actual marginal income tax rates 1913 1975 accept the hypothesis of random walk behavior in collection costs and reject the parallel hypothesis on tax rates

a model of retail formats based on consumers economizing on shopping time retailers in developed countries increasingly provide one stop shopping why are they responding to growing demand for time saving convenience or are they responding to economies of scale made possible by new retail technology and what role if any is played by improvements in automotive refrigeration and other consumer technology to examine these questions we develop a model that can help explain the growth of one stop shopping estimate the model with aggregate grocery retail data and compare the implications of our model with competing explanations our model includes several desirable features 1 the extent of one shop shopping is endogenously determined 2 consumer store choice is determined in an explicit household production utility maximizing context this choice is based on a tradeoff between time saving shopping convenience and price 3 the model is readily amenable to empirical testing the key endogenous parameter of our model describes the number of categories carried by a store in the context of grocery retailing this parameter can distinguish between a single category specialty store a simple grocer a supermarket and a large superstore this parameter is determined by the interplay of consumers economizing on shopping time and retail competition in the presence of technological constraints which relate operating cost with assortment size our approach may also be viewed as an example of how the boundary between retail service production and household service production can be modeled as a market outcome in the spirit of betancourt and gautchi betancourt roger david gautschi 1990 demand complementarities household production and retail assortments marketing sci 92 spring 146 161 and wernerfelt wernerfelt birger 1994 an efficiency criterion for marketing design j marketing res 31november 462 470 the nature of extant retail formats and other channel related institutions circumscribes the boundary between retailers and households with the notable early exception of baumol and ide baumol william j edward a ide 1956 variety in retailing management sci 31 october 93 101 few explicit models describe retail format determination as an equilibrating market mechanism our model describes the determination of one aspect of retail formats namely the extent of one stop shopping our hope is that similar approaches can be used to describe other aspects and types of emergent retail formats we estimate our model using u s aggregate annual data for a 26 year period and later corroborate parts of the analysis using cross sectional data for the 48 contiguous states of the u s the equilibrium conditions of our model translate into a system of two equations with two endogenous variables estimates of the reduced form parameters provide our central empirical finding that per capita disposable income has had a significant positive effect on both supermarket assortment as expected from our model and store operating costs perhaps somewhat less expected this suggests that greater prevalence of one stop shopping has been a response to growing demand for time saving convenience the estimates of the underlying structural parameters also provide a measure of the imputed net savings to consumers from supermarket shopping taking into account reductions in shopping time made possible by supermarkets savings equivalent to approximately 2 2 of expenditures on grocery products over the 1961 1986 period we lastly consider competing hypotheses while a number of explanations can account for increased store assortment these explanations have divergent implications for retail margins operating costs and profits these implications suggest that retail scale economies were not the drivers of one stop shopping in the years of our data nor was the impetus to increase store size primarily a desire to bring in new higher margin items however we acknowledge that transportation and inventory holding technologies are prerequisites to one stop shopping and that improvements in these technologies were particularly important in the early growth period of supermarkets

goals and bracketing under mental accounting abstract behavioral economics struggles to explain why people sometimes evaluate outcomes separately narrow bracketing of mental accounts and sometimes jointly broad bracketing we develop a theory of endogenous bracketing where people set goals to tackle self control problems goals induce reference points that make substandard performance painful evaluating goals in a broadly bracketed mental account insulates an individual from exogenous risk of failure but because decisions or risks in different tasks become substitutes there are incentives to deviate from goals that are absent under narrow bracketing extensions include goal revision naivete about self control income targeting and firms bundling strategies

self regulation through goal setting goals are an important motivator but little is known about why and how people set them we address this issue in a model based on two stylized facts first goals serve as reference points for performance second present biased preferences create self control problems we show the power and limits of self regulation through goals goals increase an individual s motivation but only up to a certain point furthermore they are painful self disciplining devices thus greater self control problems may result in tougher goals but for a severe present bias goals either lack a motivating force or are too painful to be accepted

a new theory of retailing costs in cross section studies of shops of the same type we find that costs in general and labour in particular depend on the sales size per shop according to a linear function with a positive intercept this paper provides some empirical evidence and a theoretical explanation based on queuing theory

the role of prices in measuring the poor s living standards in this paper we revisit two pieces of conventional wisdom in the current debate about poverty paying close attention to the price data underlying these findings that the poor pay more than households of higher income for the goods and services they purchase and that poverty rates at least as measured by the u s census have remained essentially flat since the late 1960s raising questions about the success of the policies implemented to reduce poverty by examining scanner data on thousands of household purchases we find that the poor pay less not more for the goods they purchase and by extending the advances on price measurement in the recent decade back to the 1970s we find that current poverty rates are less than half of the official numbers

incentives for procrastinators we examine how principals should design incentives to induce time inconsistent procrastinating agents to complete tasks efficiently delay is costly to the principal but the agent faces stochastic costs of completing the task and efficiency requires waiting when costs are high if the principal knows the task cost distribution she can always achieve first best efficiency if the agent has private information the principal can induce first best efficiency for time consistent agents but often cannot for procrastinators we show that second best optimal incentives for procrastinators typically involve an increasing punishment for delay as time passes

tying odysseus to the mast evidence from a commitment savings product in the philippines we designed a commitment savings product for a philippine bank and implemented it using a randomized control methodology the savings product was intended for individuals who want to commit now to restrict access to their savings and who were sophisticated enough to engage in such a mechanism we conducted a baseline survey on 1777 existing or former clients of a bank one month later we offered the commitment product to a randomly chosen subset of 710 clients 202 28 4 percent accepted the offer and opened the account in the baseline survey we asked hypothetical time discounting questions women who exhibited a lower discount rate for future relative to current trade offs and hence potentially have a preference for commitment were indeed significantly more likely to open the commitment savings account after twelve months average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned to the control group we conclude that the savings response represents a lasting change in savings and not merely a short term response to a new product

optimal fiscal policy with redistribution i study the optimal taxation oflabor and capital in a dynamic economy subject to government expenditure and technology shocks unlike representative agent ramsey models workers are heterogenous and lump sum taxation is not ruled out i consider two tax scenarios a linear taxation with a lump sum intercept and b nonlinear mirrleesian taxation when taxes are linear i derive a partial equivalence result with ramsey settings that provides a reinterpretation of such analyses i find conditions for perfect tax smoothing oflabor income taxes and zero capital taxation implications that contrast with ramsey are derived for public debt management for the nature of the time inconsistency problem and for the viability of replicating complete markets without state contingent bonds shifts in the distribution of skills provide a novel source for variations in tax rates for the nonlinear tax scenario i show that taxation based on income averages is optimal

effects of wholesaler concentration on retailers by format evidence from japanese brand level price data using unique brand level wholesale price data this article examines how purchase prices of commodities for retailers are influenced by wholesale concentration compared with studies focusing on retail prices little empirical work has measured the impact of wholesale concentration on wholesale prices economic theory suggests that the sensitivity of purchase price in response to degree of wholesale concentration is smaller for large retail formats than for small retail formats in the presence of intra format retail competition to test the validity of the theoretical implication i measure the impact of the concentration on purchasing prices for retailers by format empirical findings support the hypothesis that the large retail format tends to draw advantageous purchase prices when wholesalers become increasingly oligopolistic

strategic ignorance as a self disciplining device we analyse the decision of an agent with time inconsistent preferences to consume a good that exerts an externality on future welfare the extent of the externality is initially unknown but may be learned via a costless sampling procedure we show that when the agent cannot commit to future consumption and learning decisions incomplete learning may occur on a markov perfect equilibrium path of the resulting intra personal game in such a case each agent s incarnation stops learning for some values of the posterior distribution of beliefs and acts under self restricted information this conduct is interpreted as strategic ignorance all equilibria featuring this property strictly pareto dominate the complete learning equilibrium for any posterior distribution of beliefs

labour productivity and profitability in the dutch flower trade this paper makes an attempt to illustrate the use of econometric models as frame of reference for diagnosing small firm performance for this purpose two models are developed explaining differences in labour productivity and profitability among dutch flower exporters in addition we show how these models can be used for inter firm performance comparisons

theory of tax smoothing in the small open economy abstract we derive necessary and sufficient conditions for the martingale like behavior of tax rates the world real interest rate is exogenous to the small domestic economy consumers are risk averse and markets are incomplete the government s loss function is not ad hoc

self confidence and personal motivation the maintenance and enhancement of self esteem has always been identified as a fundamental human impulse philosophers writers educators and of course psychologists have all emphasized the crucial role played by self image in motivation affect and social interactions the aim of this chapter is to bring these concerns into the realm of economic analysis and show that this has important implications for how agents process information and make decisions conversely the tools of economic modelling can help shed light on a number of apparently irrational behaviours documented by psychologists

goal setting and self control abstract this paper addresses the role of non binding goals to attenuate time inconsistency present biased agents have linear reference dependent preferences and endogenously set a goal that is the reference point they face an infinite horizon optimal stopping problem in continuous time when there is sufficient commitment to expectation based goals goal setting attenuates the present biased agent s tendency to stop too early and may even lead an agent to wait longer than the first best in particular reference dependence is strictly worse for a time consistent agent notably none of the effects of goal setting require loss aversion

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