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

entry its deterrence and its accommodation a study of the u s photographic film industry this work set in the new empirical industrial organization framework bresnahan 1987 examines firm level demand based and cost based explanations for entry and accommodation strategies in the u s photographic film industry i first estimate preentry and postentry market structures then using the estimated demand cost and market conduct parameters i show how entry by fuji photo or lack thereof by others is a function of two market structures i also show how market structure and conduct and changes in them over the pre and postentry periods are in turn functions of entry its deterrence and it accommodation

competitive pricing by a price leader we examine the problem of pricing in a market where one brand acts as a price leader we develop a procedure to estimate a leader s price rule which is optimal given a sales target objective and allows for the inclusion of demand forecasts we illustrate our estimation procedure by calibrating this optimal price rule for both the leader and the follower using data on past sales and prices from the mid size sedan segment of the u s automobile market our results suggest that a leader follower system stackelberg seems more consistent with the pricing behavior in this market than a mutually independent pricing rule nash we also find that our optimal price rule explains this market data better than other pricing schemes that do not account for optimizing behavior on the part of the leader and the follower

determinants of women s health status and health care utilization in a developing country a latent variable approach a latent variable representation of health is used in a system that determines health and various indicators of health and health care utilization for nicaraguan women estimates differ somewhat from standard estimates they imply that women s schooling increases health care utilization literate women report less disease incidence women s childhood backgrounds affect their adult health and health care utilization and general resources favor childbirth related care but women s full income favors general care the most significant result is that several important characteristics usually associated with development women s schooling household resources and women s labor force participation have inverse or no associations with women s health health status is hypothesized to be important in developing countries both as a direct indicator of welfare and because of its possible impact on productivity health care utilization also is of interest both because of its relation to health status and because it is a particular manifestation of demand and supply for a 1 modem service work on the determinants of health status and health care utilization in developing economies however is flawed because true health status is not directly observable the indicators of health status that have been used in empirical studies anthropometric measures days ill self reported or clinical disease records inputs such as nutrients and health care utilization indicesare imperfect indicators of underlying health status and generally do not give a congruent representation of that status thereby they may not measure adequately health status and their use may lead to biases in estimates and incorrect interpretations we use a latent variable methodology for the first time to explore health status and health care utilization in a developing country this approach employs systematic relations between various indicators of health status and health status itself and between health status and various related outcomes so that it is possible to estimate the determinants of health status and control for health status in other relations even though health status is not directly observed by using this methodology we obtain more satisfactory estimates of the determinants of health status and of health care utilization in a developing country context than previous estimates using direct but imperfect proxies this should improve the empirical bases for evaluating health and related policies in the developing world i latent variable model of health status and health care utilization in the human capital tradition of analysis of health individual health status is viewed as determined by individual demand factors given supply prices environment age and resources including genes health care utilization is a derived demand for a service which is used to produce better health to incorporate the latent variable representation of the unobserved health status we assume that the demand supply health status and health care utilization interactions as well as the relation of other health indicators to health status can be represented by the following linear system of relations

a probit latent variable model of nutrition information and dietary fiber intake nutrition information and intake data for a sample of u s household meal planners are used to estimate the effects of fiber specific information on dietary fiber intake the information variables are measured using survey questions on fiber content of foods attitude toward consuming fiber rich foods and awareness of fiber health links the evidence confirms the influence of nutrition information on fiber intake household income meal planner age smoking status vegetarian status race and ethnicity are major determinants of both information and intake education exerts a sizable intake effect by enhancing the information level direct and indirect effects of exogenous variables are reported

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

econometric studies in health economics a survey of the british literature this paper provides a survey of british applied econometric work in the field of health economics as well as reviewing the literature it suggests some avenues for future research it covers six main areas the supply of health care the demand for health care non medical influences on health market and non price rationing evaluation of health care systems and planning budgeting and monitoring mechanisms

outsourcing retail pricing to a category captain the role of information firewalls it has been argued that retailers lack both the resources and capabilities to maximize category performance retailers may seek category management cm advice from a manufacturer referred to as a category captain cc a cc s recommendations affect all brands in the category not just her own despite an increase in the number of cc collaborations retailers are still concerned about manufacturer opportunism and militant behavior by manufacturers not selected as ccs whereas government agencies are worried about anticompetitive behavior that could harm consumers the federal trade commission recommends strictly enforced information firewalls within a cc s organization as a best practice guideline in this study we develop an empirical model and use policy simulations to quantify the impact of cc arrangements with information firewalls on retailers manufacturers and consumers we show how these effects could be influenced by the deactivation of vertical and horizontal information firewalls within the cc s organization

wages and hazardous working conditions the purpose of this paper is to provide a new empirical test for the existence of wage premiums paid to workers who are exposed to dangerous or unhealthy working conditions prior empirical studies have encountered problems with omitted ability data omitted working conditions data and measurement error the empirical model presented in this paper uses a difference specification to eliminate bias from omitted ability data by assuming that all hazardous working conditions are measured by a single endogenous unobserved variable this empirical model also eliminates bias due to omitted working conditions and measurement error the empirical model is estimated using the 1973 7 version of the quality of employment survey the unique data in this survey facilitate estimation of a model in which working conditions are assumed to be unobservable using a two stage technique for consistent and efficient estimation the empirical results reported in this paper show that a compensating difference for hazardous work

alcohol consumption and human capital a retrospective study of the literature grossman proposed an individual s health can be viewed as one aspect of their human capital following this line of thought a number of recent papers have reported a positive impact of alcohol consumption on earnings the rationale for the existence of such a relationship is the positive impact of alcohol on physical and mental health we conduct a meta analysis to determine whether such factors as the estimation technique the presence of ex drinkers in the sample possible sample selection bias and publication bias may all contribute to these findings an additional suggestion for the positive relationship between alcohol and wages is the presence of a common set of personality traits that determines drinking behaviour and also leads to higher earnings we examine this relationship by reviewing the literature that investigates if the personality influencing aspects of alcohol consumption influences measures of human capital we also survey the significant body of research that has examined how alcohol consumption has been found to influence educational outcomes and the work force participation of problem drinkers

the elasticity of substitution in india s manufacturing sector abstract using cross section data and the translog cost function this paper examines the substitution possibilities between capital and materials and labor and materials since raw materials might be used to overcome the bottlenecks caused by shortages of physical capital and skilled labor three significant conclusions are a since materials are substitutable for both capital and labor to a considerable extent capital and skilled labor may not be a binding constraint on growth agricultural materials expansion may substitute for these inputs and lead to expansion in the industrial sector b fixed proportion models are not warranted in india without modification and c separability tests showed that materials must be included in the production function

marketing models and the lucas critique the lucas critique has been largely ignored in the marketing literature we present a number of conditions under which the critique is most likely to also apply in marketing settings next we provide some perspectives on how to diagnose and accommodate the lucas critique and identify various avenues for future research

competitive pricing behavior in the auto market a structural analysis in a competitive marketplace the effectiveness of any element of the marketing mix is determined not only by its absolute value but also by its relative value with respect to the competition for example the effectiveness of a price cut in increasing demand is critically related to competitors reaction to the price change managers therefore need to know the nature of competitive interactions among firms in this paper we take a theory driven empirical approach to gain a deeper understanding of the competitive pricing behavior in the u s auto market the ability motivation paradigm posits that a firm needs both the ability and the motivation to succeed in implementing a strategy boulding and staelin 1995 we use arguments from the game theoretic literature to understand firm motivation and abilities in different segments of the auto market we then combine these insights from the game theoretic literature and the ability motivation paradigm to develop hypotheses about competition in different segments of the u s auto market to test our hypotheses of competitive behavior we estimate a structural model that disentangles the competition effect from the demand and cost effects on prices the theory of repeated games predicts that firms with a long run profitability objective will try to sustain cooperative pricing behavior as a stable equilibrium when conditions permit for example markets with high concentration and stable market environments are favorable for sustaining cooperative behavior and therefore provide firms with the ability to cooperate the theory of switching costs suggests that in markets in which a firm s current customers tend to be loyal firms have a motivation to compete very aggressively for new customers recognizing the positive benefits of loyalty from the customer base in the long run as consumer loyalty in the market increases the gains from increasing market share by means of aggressive competitive behavior are more than offset by losses in profit margins firms therefore have the motivation to price cooperatively empirically we find aggressive behavior in the minicom pact and subcompact segments cooperative behavior in the compact and midsize segments and bertrand behavior in the full size segment these findings are consistent with our theory based hypotheses about competition in different segments in estimating a structural model of the auto market we address several methodological issues a particular difficulty is the large number of car models in the u s auto market existing studies have inferred competitive behavior only in markets with two to four products they also use relatively simple functional forms of demand to facilitate easy estimation functional forms of demand however impose structure on cross elasticities between products such structure when inappropriate can bias the estimates of competitive interaction we therefore use the random coefficients logit demand model to allow flexibility in cross elasticities we also use recent advances in new empirical industrial organization neio to extend structural estimation of competitive behavior to markets with a large number of products we use the simulation based estimation approach developed by berry et al 1995 to estimate our model a frequent criticism of the neio approach is that its focus on industry specific studies limits the generalizability of its findings in this study we retain the advantages of neio methods but partially address the issue of generalizability by analyzing competitive behavior in multiple segments within the auto industry to see whether there is a consistent pattern that can be explained by theory theoretical modelers can use our results to judge the appropriateness of their models in predicting competitive outcomes for the markets that they analyze a by product of our analysis is that we also get estimates of demand and cost apart from competitive interactions for the market managers can use these estimates to perform what if analysis they can answer questions about what prices to charge when a new product is introduced or when an existing product s characteristics are changed

empirical analysis of competitive product line pricing decisions lead follow or move together researchers have recently developed models for determining which market conduct best describes observed data we apply these techniques from the new empirical industrial organization literature to the competitive product line pricing decision where a firm strategically prices its brands when determining the profit maximizing conduct in the market demand cost and market structure are estimated endogenously empirical results from analyzing price competition in the laundry detergent market between procter and gamble selling tide and eraplus and lever brothers offering wisk and surf indicate that each firm positions its strong brand as a stackelberg leader with the rival s minor brand being the follower

own brand and cross brand retail pass through in this paper we describe the pass through behavior of a major u s supermarket chain for 78 products across 11 categories our data set includes retail prices and wholesale prices for stores in 15 retail price zones for a one year period for the empirical model we use a reduced form approach that focuses directly on equilibrium prices as a function of exogenous supply and demand shifting variables the reduced form approach enables us to identify the theoretical pass through rate without specific assumptions about the form of consumer demand or the conduct of a category pricing manager thus our measurements of pass through are not constrained by specific structure on the underlying economic model the empirical pricing model includes costs of all competing products in the category on the right hand side not only the cost of the focal brand and yields estimates of both own brand and cross brand pass through rates our results provide a rich picture of the retailer s pass through behavior we find that pass through varies substantially across products and across categories own brand pass through rates are on average more than 60 for 9 of 11 categories a finding that is at odds with the claims of manufacturers about retailers in general importantly we find substantial evidence of cross brand pass through effects indicating that retail prices of competing products are adjusted in response to a change in the wholesale price of any given product in the category we find that cross brand pass through rates are both positive and negative we explore determinants of own brand and cross brand pass through rates and find strong evidence in multiple categories of asymmetric retailer response to trade promotions on large versus small brands for example brands with larger market shares and brands that contribute more to retailer profits in the category receive higher pass through we also find that trade promotions on large brands are less likely than small brands to generate positive cross brand pass through i e induce the retailer to reduce the retail price of competing smaller products on the other hand small share brands are disadvantaged along three dimensions trade promotions on small brands receive low own brand pass through and generate positive cross brand pass through for larger competing brands moreover small share brands do not receive positive cross pass through from trade promotions on these larger competitors we also find that store brands are similarly disadvantaged with respect to national brands

estimating the intrahousehold incidence of illness child health and gender inequality in the allocation of time in this paper the authors develop and implement a method for estimating the effects of infant morbidity on the differential allocation of time of family members based on discrete indicators of health and activity participation commonly available in survey data and within the context of a household model in which health is determined endogenously their estimates that take into account the simultaneity of health activity associations indicate that increased levels of infant morbidity significantly exacerbate existing differentials in the accumulation of human capital across teenage boys and girls in indonesia copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

hourly earnings in the united states another look at unionization schooling sickness and unemployment using psid data this paper makes use of panel data to consider the effects of unionization schooling sickness and unemployment on individual earnings our results may be summarized as follows the unionization effect is around 15 20 this measure is consistently estimated controlling for both fixed individual attributes and serially uncorrelated measurement error sickness has little immediate impact but there is some indication that after 4 years earnings have fallen permanently by around 8 consequent on a 10 week spell of sickness a spell of unemployment on the other hand leads to a sharp fall in earnings but this effect decays rapidly leaving the possibility of a small permanent impact finally controlling for all fixed individual attributes we are unable to pin down the schooling effect with any accuracy owing to the absence of instruments that are both valid and effective within the data set

schooling and economic well being the role of nonmarket effects standard estimates of the economic value of additional schooling based on earnings differences associated with differences in the level of schooling attained cover only a portion of the total effects of education that are valued by citizens we first identify a catalog of nonmarketed effects many of which have been recently studied by economists and then propose a procedure for estimating a willingness to pay value for these effects using empirical estimates of the magnitude of a selection of these effects found in the literature we calculate willingness to pay values using our proposed procedure these illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments

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

resale price maintenance and interlocking relationships dampening of interbrand as well intrabrand competition is often advanced to justify per se illegality of rpm we analyze this argument in a context where rival manufacturers distribute their products through the same competing retailers we show that rpm indeed limits the exercise of competition at both levels and can generate industry wide monopoly pricing the impact on prices depends on the extent of potential competition at either level as well as on the parties influence in determining the terms of the contracts our analysis sheds a new light on ongoing legal developments and is supported by recent empirical studies

wage and labor supply effects of illness in cote d ivoire and ghana instrumental variable estimates for days disabled abstract sickness should make individuals less productive but there are problems in measuring this effect first how is adult morbidity measured in a household survey second how is the impact or morbidity on productivity inferred if earning is partly used to improve health self reported functional activity limitation due to illness is considered an indicator of morbidity for wage earners and self employed people to deal with both the measurement and joint determination problems an instrumental variable estimation approach is used where local food prices and health services instrument for disability days that reduce wages by at least 10 and hours by 3 or more

a unified approach to identifying estimating and testing demand structures with aggregate scanner data a one to one map between a specific demand structure and a restricted cross elasticity matrix is developed and tested using a random utility model the resulting demand structure can be used to evaluate a firm s ability to differentiate its products and can help determine if demand is characterized by factors that are easy to change similar brands are assumed to share common attributes that are stochastically evaluated by the consumer resulting in a random utility model with correlated errors the map results in more precise cross elasticity estimates and can be used to both identify and test possible structures

an empirical investigation of private label supply by national label producers private labels pls are ubiquitous in several categories including groceries apparel and appliances however existing empirical work has not examined the differential impact of various upstream supply arrangements for pl products or the strategic motives for pl supply to do so requires one to model the interaction between private and national label nl products both upstream and downstream while accounting for strategic behavior on the part of manufacturers and retailers and retaining essential differences between nl and pl products we build a model that satisfies these requirements and lets us answer our two research questions first can an nl firm profit from being an outsourced pl supplier second what are the upstream and downstream impacts of different pl supply arrangements we answer these questions by modeling private labels as homogenous products at wholesale but as differentiated products at retail in contrast national label products are differentiated at both wholesale and retail levels using structural model estimates for fluid milk in a major metropolitan area we conduct three counterfactual experiments we find that both nl producers and retailers profit from adding private labels we also find that a vertically integrated supply of pl leads to lower prices for end consumers

price discrimination and bargaining empirical evidence from medical devices many important issues in business to business markets involve price discrimination and negotiated prices situations where theoretical predictions are ambiguous this paper uses new panel data on buyer supplier transfers and a structural model to empirically analyze bargaining and price discrimination in a medical device market while many phenomena that restrict price discrimination are suggested as ways to decrease hospital costs e g mergers group purchasing organizations and transparency i find that 1 non discriminatory pricing actually works against hospitals because competition is more intense under price discrimination and 2 results depend ultimately on a previously unexplored bargaining effect

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

employment income distribution and economic growth in seven small open economies resurgent interest has been manifested among development economists in trickle down i e the view that the more rapid the rate of economic growth the more rapid the improvement in employment and income distribution throughout this paper the term income distribution will refer to the location and dispersion of the pattern of incomes i e to absolute incomes and poverty and to relative income inequality empirical evidence supports trickle down in some cases but the evidence is contrary to trickle down in others the evidence from my own study of six countries experiences2 is summarised in tables i and 2

a larger slice or a larger pie an empirical investigation of bargaining power in the distribution channel this research aims to provide insights into the determinants of channel profitability and the relative power in the channel by considering consumer demand and the interactions between manufacturers and retailers in an equilibrium model we use the nash bargaining solution to determine wholesale prices and thus how margins are split in the channel equilibrium margins are a function of demand primitives and of retailer and manufacturer bargaining power bargaining power is itself a function of exogenous retail and manufacturer characteristics the parties bargaining positions are determined endogenously from the estimated substitution patterns on the demand side the more they have to lose in a negotiation relative to an outside option the weaker the bargaining position we use the proposed bargaining model to investigate the role of the three main factors that have been blamed for the power shift from manufacturers to retailers in recent years firm size increases store brand introductions and service level differentiation in our empirical analysis of the german market for coffee we find that bargaining power varies among the different manufacturer retailer pairs this result suggests that bargaining power is not an inherent characteristic of a firm but rather depends on the negotiation partner we are able to confirm empirically previous theoretical findings that there can be cases where the slice of the pie that goes to one of the channel members may decrease but the overall pie increases and compensates for the smaller share of profits

mergers when prices are negotiated evidence from the hospital industry in recent years many hospitals have merged in part to gain bargaining leverage with managed care organizations mcos we investigate the price impact of hospital mergers by formulating and estimating an equilibrium bargaining model between hospital systems and managed care health insurers over prices for inpatient services we estimate the parameters of the model using claims and discharge data from northern virginia in 2006 inova health system proposed to acquire prince william hospital we nd that this merger would have raised prices signicantly and that the remedy of separate bargaining imposed by the ftc in a separate hospital case would have resulted in a larger price increase

comments on competitive responsiveness marketing science features many and diverse articles that analyze competitive responsiveness although recent marketing science editorials e g shugan 2002 suggest that competitive responsiveness is only a part of a comprehensive competitive marketing strategy it remains a vital part for that reason and many others marketing science is particularly proud of this special issue edited by david j reibstein and dick r wittink before introducing and vigorously applauding both the editors and authors of this excellent special issue we emphasize that competitive responsiveness raises numerous issues including whether one can forecast outcomes of new policies based on past observations made under old policies i e the lucas critique and decisions regarding which variables should be considered endogenous shugan 2004 i e determined within the model perhaps normative models are inherently perishable evolution in market structure requires modifications over time also although complete consistency within the world of the model is aesthetically pleasing imposing industry specific exogenous constraints that might appear unrelated to the modeling assumptions is sometimes necessary

an inventory system with demand dependent on both time and price assuming backlogged shortages abstract in this work we analyze an inventory model for items whose demand is a bivariate function of price and time it is supposed that the demand rate multiplicatively combines the effects of a time power function and a price logit function the aim is to maximize the profit per time unit assuming that the inventory cost per time unit is the sum of the holding shortage ordering and purchasing costs an algorithm is developed to find the optimal price the optimal lot size and the optimal replenishment cycle several numerical examples are introduced to illustrate the solution procedure

foreign direct investment in vertically related markets we study an mne s choice of fdi mode in a vertically related market with local input sourcing we show how the market s vertical structure and trading features affect this choice an mne s incentives to expand through cross border acquisition rather than through greenfield investment are stronger in markets with higher upstream bargaining power upstream concentration and unobservable contract terms the opposite holds in markets in which wholesale price contracts instead of two part tariffs are used our welfare analysis suggests that the host country should not always welcome fdi and should discourage fdi through acquisition investissements exterieurs directs sur les marches verticaux dans cet article nous etudions le choix d une entreprise multinationale de proceder a un investissement exterieur direct dans un marche vertical avec sources d approvisionnement locales nous montrons la facon dont la structure verticale et les caracteristiques commerciales du marche ont une incidence sur une telle decision les mesures incitatives offertes aux entreprises multinationales pour se developper par l entremise d acquisitions transfrontalieres plutot que par l investissement dans de nouvelles installations sont plus fortes sur les marches dotes d un pouvoir de negociation et d une concentration en amont plus eleves ainsi que par des conditions contractuelles non observables l inverse s observe sur les marches ou les contrats a prix de gros sont utilises en lieu et place des tarifs binomes en termes de bien etre notre analyse suggere que le pays hote ne devrait pas toujours accueillir les investissements exterieurs directs et devrait decourager ces memes investissements realises par l entremise d acquisitions

measuring the effect of disability on labor force participation this paper estimates the effect of disability on labor force participation by using symptoms or diseases as instruments in a simultaneous equations model of endogenous reported disability and labor force participation the results show that each measure of disability explains a significant amount of variation in labor force participation though the two are not perfect substitutes there is only weak evidence of endogeneity of the disability variables for cases where there is evidence of endogeneity the bias it causes has the opposite effect of that hypothesized in the literatute i e stress causes health to deteriorate with labor force participation furthermore it has only insignificant effects on the coefficients for other variables

bilateral monopolies and incentives for merger the paper presents a model of duopoly in which firms acquire inputs through bilateral monopoly relations with suppliers it combines a bargaining model with a duopoly model to examine how input pri

structural analysis of manufacturer pricing in the presence of a strategic retailer consumer goods manufacturers usually sell their brands to consumers through common independent retailers theoretical research on such channel structures has analyzed the optimal behavior of channel members under alternative assumptions of manufacturer retailer interaction vertical strategic interaction research in empirical industrial organization has focused on analyzing the competitive interactions between manufacturers horizontal strategic interaction decision support systems have made various assumptions about retailer pricing rules e g constant markup category profit maximization the appropriateness of such assumptions about strategic behavior for any specific market however is an empirical question this paper therefore empirically infers 1 the vertical strategic interaction vsi between manufacturers and retailer 2 the horizontal strategic interaction hsi between manufacturers simultaneously with the vsi and 3 the pricing rule used by a retailer the approach is particularly appealing because it can be used with widely available scanner data where there is no information on wholesale prices researchers usually have no access to wholesale prices even manufacturers who have access to their own wholesale prices usually have limited information on competitors wholesale prices in the absence of wholesale prices we derive formulae for wholesale prices using game theoretic solution techniques under the specific assumptions of vertical and horizontal strategic interaction and retailer pricing rules we then embed the formulae for wholesale prices into the estimation equations while our empirical illustration is using scanner data without wholesale prices the model itself can be applied when wholesale prices are available early research on the inference of hsi among manufacturers in setting wholesale prices using scanner data e g kadiyali et al 1996 1999 made the simplifying assumption that retailers charge a constant margin this assumption enabled them to infer wholesale prices and analyze competitive interactions between manufacturers in this paper we show that this model is econometrically identical to a model that measures retail price coordination across brands hence the inferred cooperation among manufacturers could be exaggerated by the coordinated pricing category management done by the retailer we find empirical support for this argument this highlights the need to properly model and infer vsi simultaneously to accurately estimate the hsi when using data at the retail level functional forms of demand have been evaluated in terms of the fit of the model to sales data but recent theoretical research on channels lee and staelin 1997 tyagi 1999 has shown that the functional form has serious implications for strategic behavior such as retail passthrough while the logit and linear model implies equilibrium passthrough of less than 100 lee and staelin call this vertical strategic substitute vss the multiplicative model implies optimal passthrough of greater than 100 vertical strategic complement vsc because passthrough rates on promotions have been found to be below or above 100 chevalier and curhan 1976 armstrong 1991 we empirically test the appropriateness of the logit vss and the multiplicative vsc functional form for the data we perform our analysis in the yogurt and peanut butter categories for the two biggest stores in a local market we found that the vss implications of the logit fit the data better than the multiplicative model we also find that for both categories the best fitting model is one in which 1 the retailer maximizes category profits 2 the vsi is manufacturer stackelberg and 3 manufacturer pricing hsi is tacitly collusive the fact that the retailer maximizes category profits is consistent with theoretical expectations the inference that the vsi is manufacturer stackelberg reflects the institutional reality of the timing of the game retailers set their retail prices after manufacturers set their wholesale prices note that in the stores and product categories that we analyze the two manufacturers own the dominant brands with combined market shares of about 82 in the yogurt market and 65 in the peanut butter market the result is also consistent with a balance of power argument in the literature the finding that manufacturer pricing is tacitly collusive is consistent with the argument that firms involved in long term competition in concentrated markets can achieve tacit collusion managers use decision support systems for promotion planning that routinely make assumptions about vsi hsi and the functional form the results from our analysis are of substantive import in judging the appropriateness of assumptions made in such decision support systems

a decision support system for planning manufacturers sales promotion calendars a common event in the consumer packaged goods industry is the negotiation between a manufacturer and a retailer ofthe sales promotion calendar determining the promotion calendar involves a large number of decisions regarding levels of temporary price reductions feature ads and in store displays each executed at the level of individual retail accounts and brand skus over several months or a year though manufacturers spend much of their marketing budget on trade promotions they lack decision support systems to address the complexity and dynamics of promotion planning previous research has produced insights into how to evaluate the effectiveness of promotional events but has not addressed the planning problem in a dynamic environment this paper develops a disaggregate level econometric model to capture the dynamics and heterogeneity of consumer response by modeling the purchase incidence timing choice and quantity decisions of consumers we decompose total sales into incremental and nonincremental baseline plus borrowed the response model forms the basis of a market simulator that permits us to search for the manufacturer s optimal promotion calendar subject to a set of constraints some of them imposed by the retailer via the simulated annealing algorithm calendar profits are the net result of the contribution from incremental sales minus the opportunity cost from giving away discounts to nonincremental sales and the fixed costs associated with implementing promotional events e g retagging features displays incremental sales result from promotion induced switching the acceleration and quantity promotion effects on those switchers increased consumption and the carryover effect from purchase event feedback we applied our approach to the promotion planning problem of a large consumer packaged goods company in a nonperishable staple product category suggested by company executives canned tomato sauce subject to a retailer pass through constant rate of 80 provided to us by the collaborating firm the optimal promotion calendar produced by the modeling system followed a pattern of frequent and shallow temporary price reductions with no feature or display activity we also analyze how that result would change under different retailer pass through scenarios our findings indicated that the manufacturer could substantially improve the profitability of its sales promotion activity and that there would be a concurrent positive effect on retailer profit and volume levels management reported to us that the insights from the use of the system were implemented in their promotion planning process and produced positive results a validation analysis on follow up data for one market showed that promotion activity could be significantly reduced as recommended with no adverse effect on the brand s market share as predicted to generalize the model beyond the specific category where it was implemented we conducted a sensitivity analysis on the profile of the calendar i e frequency depth and duration of deals with respect to changes in market response competitive activity and retailer pass through first we found that the optimal depth frequency and timing of discounts is stable for price elasticities ranging from near zero to around four in absolute magnitude we also found no systematic impact of competitive promotions on the profile of the optimal calendar for example variation in competitive activity did not affect the optimal depth or frequency of discounts lastly we found changes in retailer pass through to have a significant effect on the optimal depth and number of weeks of trade promotion that a manufacturer should offer this emphasizes the importance to manufacturers of having accurate estimates of pass through for purposes of promotion budgeting and planning

the macroeconomics of trade liberalization abstract this paper analyzes the short run macroeconomic consequences of trade liberalization in ldcs it is shown that linkages between the tradables and nontradables sectors the effect of imported inputs on the economy s productive structure and certain patterns of factor substitution can go a long way toward explaining the perverse contractionary effects frequently seen in liberalization programs

investigating dynamic multifirm market interactions in price and advertising diagnosing the nature and magnitu de of competitive interactions among firms is important for developing effective marketing strategies in this paper we formulate a game theoretic model of firm interaction to analyze the dynamic price and advertising competition among firms in a given p roduct market firm or brand level demand functions account for the contemporaneous and carry over effects of these marketing activities and also allow for the effects of competitor actions firms take into consideration the actions of their rivals as well as their own demand and cost functions both production and advertising when determining the profit maximizing price and advertising levels our formulation enables us to quantify not only the direction and magnitude of competitive reactions but also to identify the underlying form of market conduct that generates the particular pattern of interaction we specify and estimate a fully structural econometric model for three firms constituting a distinct sub market within a personal care product category we estimate the demand and competitive interaction parameters as well as the production and advertising cost functions for each firm we then derive implications for competitive interactions and market structure interestingly we find that while firms seem to compete on advertising they price cooperatively thereby enhancing their price cost margins

breeding competitive strategies we show how genetic algorithms can be used to evolve strategies in oligopolistic markets characterized by asymmetric competition the approach is illustrated using scanner tracking data of brand actions in a real market an asymmetric market share model and a category volume model are combined to represent market response to the actions of brand managers the actions available to each artificial brand manager are constrained to four typical marketing actions of each from the historical data each brand s strategies evolve through simulations of repeated interactions in a virtual market using the estimated weekly profits of each brand as measures of its fitness for the genetic algorithm the artificial agents bred in this environment outperform the historical actions of brand managers in the real market the implications of these findings for the study of marketing strategy are discussed

health and wage a simultaneous equation model with multiple discrete indicators in this article we propose all econometric approach for estimating the simultaneouls effects of health and wages in a structural equations framework in the theoretical works of grossmana 1972a 1972b health is viewed as anl elldogen1oulsly determined capital stock the demand for health should rise with the wage rate as the rate of return to health investment increases with wage onl the other hand better health should raise market productivity and hence wages since health capital is an abstract theoretical concept it can hardly be measured quantitatively however most population surveys include various health indicators these indicators are usually discrete variables in the empirical work of grossman and benham 1974 these qualitative indicators are treated as continuous variables and two stage least squares estimation techniques are used this specification raises various econometric problems see e g goldberger 1964 pp 248 255 domencich and mcfadden 1975 and nerlove and press 1973 a satisfactory specification should take into account the discrete nature of the indicators our specification generalizes the dummy variables simultaneous equations system of heckman 1978 the measurement models of joreskog and goldberger 1975 and is closely related to the models of muthe n 1976 1979 muthen studies full information maximum likelihood procedures for estimation except for very simple cases this does not generally yield feasible or tractable procedures in this article we introduce a tractable procedure for statistical estimation and testing this specification and the estimation procedure is then applied to study the joint dependence of health and wages another departure of our approach from others is that we will test and correct the possible incompatibility of the various health capital indicators in the population surveys one may have subjective health indicators such as self evaluation of health which may reflect different populations perception of health we propose a statistical procedure for testing measurement compatibility and if required for correcting this problem this article is divided into two parts initially we describe the model specification estimation and statistical tests in a general simultaneous equation model with multiple discrete indicators in the second part of the paper we consider specification of a simultaneous equation model for health and wages the model

the welfare effects of bundling in multichannel television markets we measure how the bundling of television channels affects short run welfare we estimate an industry model of viewership demand pricing bundling and input market bargaining using data on ratings purchases prices bundles and input costs we conduct simulations of a la carte policies that require distributors to offer individual channels for sale to consumers we estimate that negotiated input costs rise by 103 0 percent under a la carte these higher input costs offset consumer benefits from purchasing individual channels mean consumer and total surplus change by an estimated 5 4 to 0 2 percent and 1 7 to 6 0 percent respectively jel d12 l11 l51 l82 m31

an empirical analysis of the relationship between brand loyalty and consumer price elasticity this empirical paper explores the relationship between consumer brand preference or loyalty and price elasticity in purchase behavior this behavior is conceptualized as resulting from two distinct but related decisions namely a brand choice decision and a purchase quantity decision we argue that loyal consumers will be less price sensitive in the choice decision than nonloyal consumers however this direction is expected to be reversed in the quantity decision with loyal consumers expected to be more price sensitive than nonloyal consumers we model the choice and quantity decisions jointly using the limited dependent variable framework described in krishnamurthi and raj the data used are diary panel data on a frequently purchased product class from burke and caffeinated ground coffee scanner data from iri we show that loyals are less price sensitive than nonloyals in the choice decision but more price sensitive in the quantity decision managerial implications of the differing elasticities are disc

an industry equilibrium analysis of downstream vertical integration this paper investigates the effect of product substitutability on nash equilibrium distribution structures in a duopoly where each manufacturer distributes its goods through a single exclusive retailer which may be either a franchised outlet or a factory store static linear demand and cost functions are assumed and a number of rules about players expectations of competitors behavior are examined it is found that for most specifications product substitutability does influence the equilibrium distribution structure for low degrees of substitutability each manufacturer will distribute its product through a company store for more highly competitive goods manufacturers will be more likely to use a decentralized distribution system this article was originally published in marketing science volume 2 issue 2 pages 161 191 in 1983

work and the accommodation of chronic illness a re examination of the health labour supply relationship this study uses a data set of over 14000 households from the state of new jersey in the usa to estimate the impact of specific chronic health conditions on the probability of employment and finds wide variation of employment impacts across chronic conditions additionally the elasticity of the employment response is generally greater for women and lower skilled workers most notable is the role of comorbidity individuals with multiple conditions have markedly lower probability of employment and chronic illness explains virtually all of the large gap in employment probability for those who have multiple conditions this is shown using a summary index of disease status that correlates closely with employment rates across age groups in the aggregate chronic disease striking in adulthood explains about 10 of the total non employment in the new jersey among those aged 35 74 finally cross sectional evidence gives little support for health as a primary determinant of the aggregate age employment profile

logit demand estimation under competitive pricing behavior an equilibrium framework discrete choice models of demand have typically been estimated assuming that prices are exogenous since unobservable to the researcher product attributes such as coupon availability may impact consumer utility as well as price setting by firms we treat prices as endogenous specifically prices are assumed to be the equilibrium outcomes of nash competition among manufacturers and retailers to empirically validate the assumptions we estimate logit demand systems jointly with equilibrium pricing equations for two product categories using retail scanner data and cost data on factor prices in each category we find statistical evidence of price endogeneity we also find that the estimates of the price response parameter and the brand specific constants are generally biased downward when the endogeneity of prices is ignored our framework provides explicit estimates of the value created by a brand i e the difference between consumers willingness to pay for a brand and its cost of production we develop theoretical propositions about the relationship between value creation and competitive advantage for logit demand systems and use our empirical results to illustrate how firms use alternative value creation strategies to accomplish competitive advantage

husband s health and wife s labor supply this paper examines the labor supply response of the wife to deterioration in the husband s health unlike past cross sectional studies responses over time are directly examined through the use of longitudinal data the empirical results suggest that the magnitude and direction of the response depend crucially on the attractiveness of transfers which the family may qualify for when the husband s health deteriorates when no transfers are available the wife increases her market work in order to replace the lost earnings of the husband however as transfers become more attractive the wife begins to reduce her labor supply enabling her to spend more time at home caring for her husband

vertical strategic interaction implications for channel pricing strategy this paper examines two strategic pricing decisions within channels using foresight i e price leadership and considering category implications i e product line pricing are price leadership and product line pricing always the best pricing strategies for a channel member if not when does this occur and why by investigating these questions we address some major concerns of both marketing practitioners and scholars interested in channel management issues in addition this study provides an indepth discussion on why previous analytic studies produced answers to these questions that depend upon the choice of the form of demand functions as such this study should significantly resolve the debate among analytic marketing modelers about the right demand specification at the core of our discussion lies the concept of vertical strategic interaction which is defined in terms of the direction of a channel member s reaction to the actions of its channel partner within a given demand structure specifically if a channel member s best reaction is to reduce its margin when its channel partner increases its margin the type of vertical strategic interaction is referred to as vertical strategic substitutability vss if the best reaction is to increase the margin the environment is referred to as vertical strategic complementarity vsc if the best reaction is no margin change it is referred to as vertical strategic independence vsi using a game theoretic approach we demonstrate that these three types of vertical strategic interactions represent a key driving force for optimal decisions on channel price leadership and product line pricing our investigation involves mathematical analyses of an industry model composed of two manufacturers selling competing products both carried by two competing retailers as such the model allows for retailer product line pricing as well as manufacturer and retailer level competition in addition this general model can be used to analyze three more restrictive industry settings often found in the channels literature i e a bilateral monopoly jeuland and shugan jeuland abel steven m shugan 1983 managing channel profits marketing sci 2summer 239 72 two competing manufacturers selling through competing franchised retailers mcguire and staelin mcguire timothy w richard staelin 1983 an industry equilibrium analysis of downstream vertical integration marketing sci 2spring 161 92 and two competing manufacturers selling through one common retailer using product line pricing choi choi s chan 1991 price competition in a channel structure with a common retailer marketing sci 10fall 271 96 unlike many other channel studies most of our analyses are performed without assuming particular functional forms of demand curves thus this paper provides greater assurance that the insights from this stream of research are broadly applicable not only across industry structures but also across demand conditions the paper starts out by defining three different rules for how prices are set the manufacturer uses foresight the retailer uses foresight and neither channel member uses foresight we then show a one to one mapping between the type of vertical strategic interaction and the optimality of channel price leadership specifically a channel member finds it profitable to be a price leader for vss but prefers to be a follower for vsc for vsi channel members are indifferent to the channel price leadership issue as it has no effect on channel member profits we also show that there exist conditions under which a retailer might see a reduction in profits when it changes its policy from non product line pricing to product line pricing such conditions arise when the retailer is not a price leader and the environment is characterized by vss or vsc at a more general level this study suggests not only the value but also the cost to a firm for using superior knowledge i e foresight and or product line pricing in making strategic marketing decisions in this way ignorance can be bliss we also explore the link between demand characteristics and the three types of vertical strategic interaction we show that the type of vertical strategic interaction present in a given environment is closely related with the convexity of the demand curve and the level of demand for a given price interestingly we find that linearity of demand is not a necessary condition for any of the three types of vertical strategic demand function consequently in evaluating the robustness of analytic analyses it may be more important to determine the type of vertical strategic interaction assumed instead of whether the demand is linear or nonlinear finally our results are limited to situations where the channels are not coordinated and the retailer s precommitment to particular pricing policy and decision is credible although such situations still capture a significant portion of reality we acknowledge that the insights from this study might not be applicable in all situations

health as an unobservable a mimic model of demand for health care abstract this paper develops a model to analyze the demand for health care it differs from current practice in that 1 it deals explicitly with the complex relation between income health health insurance and the demand for health care and 2 health is treated as an unobservable variable we present the maximum likelihood estimates of an eleven equation simultaneous multiple indicator multiple causes mimic model containing two simultaneously determined unobservables and in total nine indicators data used stem from a health care survey among 8000 households in the netherlands the results show among other things that health and permanent income have mutual positive impacts both age and education have important direct and indirect via permanent income effects on health the estimated impact of the availability of health care on individual demand confirms similar results based on aggregated data

the role of economic incentives in teenage nonmarital childbearing choices abstract in this paper we explore whether behaviors of youths that are likely to result in a teen nonmarital birth event are influenced by their expectations of the net economic benefits or costs associated with the occurrence of such a birth we posit and find that an increase in the perceived costs associated with the occurrence of a nonmarital birth would lead to a reduction in these risky behaviors and to a lower probability of a nonmarital birth event we represent these economic incentives by the income expectations of young women conditional on either giving birth as an unmarried teen or forgoing childbearing while unmarried and an adolescent we also measure the effects of an extensive list of other factors including the characteristics of the girl s family and its choices the social and economic environment in which she lives including policy related factors such as expenditures by states on family planning programs and the generosity of aid to families with dependent children and her own prior choices

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

demand estimation and merger simulations for drugs logits v aids abstract we use adhd drugs sales data from 2000 2003 and compare estimates of elasticities and merger simulations from three different demand models models include logit random coefficients logit and conditional aids demand model with multistage budgeting the magnitude of cross price elasticities is larger in the third model in comparison to the first two and some of the cross price elasticities are estimated to be negative hypothetical merger simulations show larger price effects for the multistage aids model in comparison to the discrete choice models

commercial use of upc scanner data industry and academic perspectives the authors report the findings from an exploratory investigation of the use of upc scanner data in the consumer packaged goods industry in the u s the study examines the practitioner community s view of the use of scanner data and compares these views with academic research forty one executives from ten data suppliers packaged goods manufacturers and consulting firms participated in wide ranging in person interviews conducted by the authors the interviews sought to uncover key questions practitioners would like to answer with scanner data how scanner data is applied to these questions and the industry s perspective regarding the success that the use of scanner data has had in each area the authors then compare and contrast practitioners views regarding the resolution of each issue with academic research this produces a 2 2 classification of each question as resolved or unresolved from the perspectives of industry and academia along the diagonal of the 2 2 issues viewed as unresolved by both groups are important topics for future research issues deemed resolved by both groups are correspondingly of lower priority in the off diagonal cells industry and academics disagree these topics should be given priority for discussion information exchange and possible further research practitioners reported that scanner data analysis has had the most success and been most widely adopted for decision making in consumer promotions i e coupons trade promotions and pricing for example logit and regression models applied to scanner data have revealed very low average consumer response to coupons which has directly led to reduced couponing activity managers also reported high levels of comfort with and impact from analyses of trade promotions and price elasticities while industry views most of the issues in these areas to be resolved academic research raises concerns about a number of practices in common commercial use these include price threshold analysis and trade promotion evaluation using baseline and incremental sales in product strategy advertising and distribution management practitioners reported that the use of scanner data has had more limited development success and impact in the case of new product decisions scanner data use has been slow to develop due to the inherent limitations of historicaldata for these decisions and a heavy reliance on traditional primary research methods in advertising scanner data is widely analyzed with models but confusion among practitioners is very high due to controversies about methods e g what level of data aggregation is best and conflicting results in distribution and retail management scanner data use has tremendous potential but a mixed track record to date thus practitioners view the use of scanner data as unresolved for most issues in product strategy advertising and distribution this view is largely though not entirely consistent with academic research which has only begun to address many of the key questions raised by practitioners in light of the large number of unresolved issues and mixed record of scanner data use to date the authors offer aseries of specific recommendations for immediate and long term research priorities that are likely to have the greatest impact on commercial utilization of upc scanner data topics of immediate priority include price thresholds and gaps baseline and incremental sales base price elasticity competitive reactions measurement of advertising effects management of brand equity rationalization of product assortments and category management long term priorities include a greater emphasis on profitability versus sales or market share developing prescriptive models versus descriptive models and the need for industry standards

there is no aggregation bias why macro logit models work in this article we examine the aggregation properties of nested logit models to understand their exceptional macro level performance the problem of aggregating micro logit models involves integrating nonlinear functions of model parameters over a distribution of consumer heterogeneity the aggregation problem is analyzed using a mixture of analytic and simulation techniques with the simulation experiments using actual panel data to calibrate the distribution of heterogeneity we conclude that the practice of fitting aggregate logit models is theoretically justified under the following three conditions 1 all consumers are exposed to the same marketing mix variables 2 the brands are close substitutes and 3 the distribution of prices is not concentrated at an extreme value these conditions are frequently met in store level scanner data

the impact of farmers health and nutritional status on their productivity and efficiency evidence from ethiopia this article focuses on the link between agricultural productivity and health and nutrition status of peasants in ethiopia the data come from the first round of the ethiopian rural household survey conducted in 1994 the sites selected were those in which farmers practice ox plow cultivation of cereals a stochastic frontier approach was adopted for the agricultural production the findings of the study show that the distance to the source of water as well as nutrition and morbidity status affect agricultural productivity the market wage rate is also very responsive to the weight for height as well as the body mass index and height in a context where separability between consumption and production decisions of the household is rejected elasticities of labor productivity with respect to nutritional status are noted to be strong and similar in technology estimates and wage equations moreover returns to investment in nutrition are clearly high in the ethiopian context overall the results indicate substantial loss in output due to technical inefficiency even after accounting for the health and nutrition of workers

gender differences in wage losses from impairments estimates from the survey of income and program participation this article develops a model of the relationships among functional impairments work disability employment participation and wage offers the model is estimated separately for males and females with data from the 1984 survey of income and program participation using estimates of disability and wage equations we rank 25 functional impairments by severity of disability and estimate the wage penalty associated with each impairment the results show that limitations to mobility and strength are relatively more disabling for males than for females while the opposite is true for limitations to sensory capacities and appearance

identifying generalizable effects of strategic actions on firm performance the case of demand side returns to r d spending this paper provides an approach for assessing generalizable effects of strategic actions on firm performance we identify five key issues that need to be addressed before one can have confidence in the obtained strategic generalization in addition we suggest a methodology for attacking each of these five issues we then illustrate this framework using the example of demand side returns to r d spending we document two empirical generalizations in this research first and foremost we show that demand returns to r d spending depend on whether the firm has ability and motivation to take advantage of the r d investment thus only firms with high ability and motivation leverage the r d investment into monopoly rents in the form of subsequent price increases second we show that the concept of a firm needing both ability and motivation to sustain returns from a strategic action generalizes across strategic actions we make two other conclusions about empirical approaches to strategy research first to pro

real wage rigidity and optimal commercial policy in less developed countries abstract this paper examines optimal commercial policy in an ldc in which there is a rigid real wage and imports consist of both final and non competitive intermediae inputs the nature of optimal commercial policy depends sensitively upon the composition of imports when export promotion is hampered by import quotas abroad or difficulties in extending export subsidies protection will often be optimal in economies that import intermediates but not in economics that import only final goods the results for the full optimization case establish that there is a general presumption trade policy should be biased in favor of export promotion although there are well defined conditions under which an import substituting regime is optimal

corporate social responsibility in the banking industry motives and financial performance abstract the current study investigates the association between corporate social responsibility csr and financial performance fp and discusses the driving motives of banks to engage in csr three motives namely strategic choices altruism and greenwashing suggest that the relationship between csr and fp is positive non negative and non existent respectively we obtained our sample which covered 2003 2009 from the ethical investment research service eiris databank and bankscope database the data consists of 162 banks in 22 countries we then classified the banks into four types based on their degree of engagement in csr this study proposes the use of an extended version of the heckman two step regression in which the first step adopts a multinomial logit model and the second step estimates the performance equation with the inverse mills ratio generated by the first step the empirical results show that csr positively associates with fp in terms of return on assets return on equity net interest income and non interest income in contrast csr negatively associates with non performing loans hence strategic choice is the primary motive of banks to engage in csr

assessing the competitive interaction between private labels and national brands in this article we employ the linear approximate almost ideal demand system la aids and specify price reaction equations derived under the la aids specification we perform intracategory analyses using data on six individual categories as well as a pooled analysis on a sample of 125 categories and 59 geographic markets we find that consumer response to price and promotion decisions demand and firm pricing behavior supply jointly determine observed market prices and market shares further estimates of residual demand elasticities suggest that examination of partial demand elasticities alone may provide an incomplete picture of the ability of brands to raise price copyright 2000 by university of chicago press

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

improving the numerical performance of static and dynamic aggregate discrete choice random coefficients demand estimation the widely used estimator of berry levinsohn and pakes 1995 p roduces estimates of consumer preferences from a discrete choice demand model with random coefficients market level demand shocks and endogenous prices we derive numerical theory results characterizing the properties of the nested fixed point algorithm used to evaluate the objective function of blp s estimator we discuss problems with typical implementations including cases that can lead to incorrect parameter estimates as a solution we recast estimation as a mathematical program with equilibrium constraints which can be faster and which avoids the numerical issues associated with nested inner loops the advantages are even more pronounced for forward looking demand models where the bellman equation must also be solved repeatedly several monte carlo and real data experiments support our numerical concerns about the nested fixed point approach and the advantages of constrained optimization for static blp the constrained optimization approach can be as much as ten to forty times faster for large dimensional problems with many markets

are supermarkets squeezing small suppliers evidence from negotiated wholesale prices we thank gregory s crawford for his encouragement and insightful comments we also thank victor aguirregabiria ozlem bedre meghan busse jean pierre dub e david genesove margaret kyle rafael moner colonques ariel pakes michelle sovinsky michael waterson ali yurukoglu and the seminar participants at the nber io winter meetings 2012 cepr jie conference on applied io 2012 hebrew university toulouse school of economics universidad diego portales universidad de chile the university of warwick and university of zurich noton acknowledges financial support from the institute for research in market imperfections and public policy icm is130002 ministerio de economia an earlier version of this article circulated under the title revealing bargaining power through actual wholesale prices

the determination of union and non union wage rates abstract if in a partially unionised economy union workers force up their absolute wage rate how does this affect the wage paid in the non union sector this paper suggests a simple answer first in a small open economy a rise in the union wage will raise the non union wage secondly in a closed economy or one with some monopoly power in world trade a rise in the union wage seems likely to depress the non union wage

competition in the swedish coffee market 1978 2002 abstract are multinationals exploiting their market power in national coffee markets by keeping consumer prices too high and thereby limiting demand for imports of coffee beans the purpose of this study is to address this issue by testing if there is market power in the swedish market for roasted coffee the market structure is typical of many consumer markets for coffee with four very large roasting companies two of which are multinationals plus many small ones to analyze the degree of market power an oligopoly model is estimated using market time series data the econometric approach is to first test for long run relationships between the variables with cointegration analysis and then to estimate a system of equations for demand and pricing behavior our key finding is that there is evidence of some market power in the short run but none in the long run

product differentiation and oligopoly in international markets the case of the u s automobile industry this paper develops and estimates a model of the u s automobile industry on the demand side a discrete choice model is adopted that is estimated using micro data from the consumer expenditure survey the estimation results are used in conjunction with population weights to derive aggregate demand on the supply side the automobile industry is modelled as an oligopoly with product differentiation equilibrium is characterized by the first order conditions of the profit maximizing firms the estimation results are used in counterfactual simulations to investigate two trade policy issues the effects of the ver and exchange rate pass through

health and wages panel data estimates considering selection and endogeneity this paper complements previous studies on the effects of health on wages by addressing the problems of unobserved heterogeneity sample selection and endogeneity in one comprehensive framework using data from the german socio economic panel gsoep we find the health variable to suffer from measurement error and a number of tests provide evidence that selection corrections are necessary good health leads to higher wages for men while there appears to be no significant effect for women contingent on the method of estimation healthy males are estimated to earn between 1 3 and 7 8 more than those in poor health

new brand positioning and pricing in an oligopolistic market the positioning and pricing of a new brand requires knowledge about the relationship of both demand and cost with potential attribute locations and prices this paper addresses this problem and illustrates it in the context of the automobile market multi attribute expected utility theory which allows for consumer uncertainty about the brands is used to model individuals behavior attribute weights are estimated from market survey data on brands attributes and preferences using linmap as an estimation procedure expected utility is then updated using the multinomial logit model and choice data to account for the observation that stated preferences do not perfectly reflect the eventual choice it is hypothesized that when faced with an actual choice price may become more important to the consumer while other attributes may become more or less important than is reflected in stated preferences the resulting estimated choice probabilities are aggregated to form demand functions facing each brand which depend on all brands prices and attribute space locations assuming there is a price equilibrium in the existing market and that firms have the same variable cost function variable costs as a function of a brand s attribute levels are estimated given the demand and cost functions facing each firm including the potential new entrant the profit maximizing positioning and pricing of a new brand is analyzed using a game theoretic approach a solution is sought under the assumption that incumbents react to entry by changing their prices possible approaches to the translation of the perceptual attribute positioning of the new brand to physical and engineering attributes are reviewed improvements and future extensions of the study are discussed

a structural equations analysis of the impact of price promotions on store performance guided by past research conventional wisdom in the retailing area and microeconomic theory the authors develop a series of hypotheses about the effects of loss leaders in store price specials