edgeworth price cycles cost based pricing and sticky pricing in retail gasoline markets abstract this paper examines dynamic pricing behavior in canadian retail gasoline markets i find three distinct pricing patterns cost based pricing sticky pricing and sharp asymmetric retail price cycles that resemble the edgeworth cycles of maskin and tirole 1988 i use a markov switching regression to estimate the prevalence of the regimes and the structural characteristics of the cycles themselves i find cycles are more prevalent when there are more small firms and are accelerated and amplified with very many small firms in markets with few small firms sticky pricing dominates the findings are consistent with the theory of edgeworth cycles

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

partisanship tax policy and corporate profit shifting in a globalized world economy political science scholarship has found mixed evidence on the impact of partisanship on the taxation of firms in this article i show that although left leaning governments set tax rates at higher

temporary wholesale gasoline price spikes have long lasting retail effects the aftermath of hurricane rita abstract i study u s gasoline prices following hurricane rita to show that short lived geographical differences in the severity of wholesale gasoline price spikes are associated with long lasting geographical differences in retail prices in most u s cities wholesale prices spiked significantly for roughly 2 weeks following the hurricane however in cities where this spike was particularly large retail margins remained higher than in other cities for nearly 2 months high retail margins dissipated more quickly after the hurricane in cities where competition between stations tends to generate cyclical retail price fluctuations independent of wholesale cost movements i discuss why prices may have fallen faster in cities exhibiting retail price cycles and present additional results identifying differences in market characteristics between cities with and without price cycles i find that cycling cities tend to have higher population density and have independent nonrefinery brand stations that are mor

earnings shocks and tax motivated income shifting evidence from european multinationals this paper presents a new approach to estimating the existence and magnitude of tax motivated income shifting within multinational corporations existing studies of income shifting use changes in corporate tax rates as a source of identification in contrast this paper exploits exogenous earnings shocks at the parent firm and investigates how these shocks propagate across low tax and high tax multinational subsidiaries this approach is implemented using a large panel of european multinational affiliates over the period 1995 2005 the central result is that parents positive earnings shocks are associated with a significantly positive increase in pretax profits at low tax affiliates relative to the effect on the pretax profits of high tax affiliates the result is robust to controlling for various other differences between low tax and high tax affiliates and for country pair year fixed effects additional tests suggest that the estimated effect is attributable primarily to the strategic use of debt across affiliates the magnitude of income shifting estimated using this approach is substantial but somewhat smaller than that found in the previous literature

economic growth strategies the effects of ideological partisanship on interest rates and business taxation in the united states we reformulate the partisanship thesis in light of four claims leveled against it the reformulated version ideological partisanship is based upon the theory that similar rates of economic growth may follow from the different use of policy instruments owing to their role as determinants of investment and growth interest rates business taxation rates and the redistribution of the tax burden between capital gains and earned income are examined we advance models that take into account other views of politics beside the partisan one and test for political influences the united states is characterized by very pronounced partisan differences in national economic policy with democratic administrations seeking to promote growth through a consumption driven while republican administrations promote an investment driven strategy democratic administrations also seek to shift the tax burden toward corporations and owners of capital these findings are examined in light of the comparative political economy literature we conclude that the forms and institutional foundations of left partisan policies differ among democratic capitalist countries

political partisanship and welfare state reform in advanced industrial societies in this article we evaluate two claims made in recent studies of the welfare states of advanced industrial societies first that welfare states have remained quite resilient in the face of demands for retrenchment and second that partisan politics have ceased to play a decisive role in their evolution addressing the first claim we present analysis from a new data set on unemployment insurance and sickness benefit replacement rates for 18 countries for the years 1975 99 we find considerably more evidence of welfare retrenchment during the last two decades than do recent cross national studies second we examine the end of partisanship claim by estimating the effects of government partisanship on changes in income replacement rates in sickness and unemployment programs our results suggest that contrary to claims that partisanship has little impact on welfare state commitments traditional partisanship continues to have a considerable effect on welfare state entitlements in the era of retrenchment

edgeworth price cycles and intertemporal price discrimination in a retail gasoline market exhibiting edgeworth price cycles prices change asymmetrically with many small decreases interrupted by occasional large increases the result is a de facto menu of prices from which consumers can choose based on exactly when they buy this article introduces four classes of purchase timing strategies designed to systematically shift consumer purchases towards the cycle troughs it shows in the study market of toronto canada the monetary gains to consumers from optimized timing strategies are as high as 3 9 markups earned from these consumers fall up to 82 in spite of the gains from timing strategies surprisingly few consumers use them evidence is presented that a main reason is that consumers are not well informed about the cycles policy implications are discussed

black hole tariffs and endogenous policy theory political economy in general equilibrium preface acknowledgments list of results 1 a preview of the results 2 endogenous policy theory a diagrammatic approach part i endogenous policy theory with specific factors the theory of industry tariffs in partial equilibrium 3 the probabilistic voting model of political efficiency and powerless politicians 4 endogenous lobbying theory and the contribution specialization theorem 5 endogenous tariff theory 6 the power function model of endogenous industry lobbying 7 three simple tests of the stolper samuelson theorem 8 the invisible foot and the waste of nations lawyers as negative externalities part ii endogenous policy theory in general equilibrium a long run theory of national tariff levels 9 the 2 x 2 x 2 x 2 model of endogenous redistribution theory 10 a prisoner s dilemma theory of endogenous protection the leontief model 11 the compensation effect and the multiple equilibrium trap 12 increasing returns to politics and factor endowments economic development and brazilian vitality versus the indian disease 13 endogenous protection in the united states 1900 88 14 a cobb douglas model 15 black hole tariffs 16 the endowment effect cross national evidence on endogenous tariffs part ii postscript 17 the senile industry argument for protection 18 optimal obfuscation and the theory of the second worst the politically efficient policy mathematical appendices references author index subject index

estimating the degree of market integration existing tests of spatial market integration are commonly based on statistical criteria without an explicit link to an economic model of price determination this article proposes new measures of market integration defined directly in terms of a well known spatial price determination model and develops an econometric methodology for estimating these measures due to the intractability of the conditional density function of prices we use indirect inference to estimate the model parameters and market integration measures the methodology is illustrated with simulated data and is applied to soybean price data for the united states brazil and the eu copyright 2008 oxford university press

retail price cycles and the presence of small firms abstract in many canadian cities retail gasoline prices remain unchanged for weeks at a time while in other cities retail prices cycle increasing sharply and declining slowly in maskin and tirole econometrica 56 1988 571 both price cycles and rigid prices can exist in equilibrium in this article i demonstrate that the existence of these equilibria is dependent on the number of retail outlets operated by the firms constant price equilibria are found to exist only when firms are of similar size however cycle equilibria can be constructed for a wide range of relative sizes

partisan politics and privatization in oecd countries many scholars have argued that partisan differences have disappeared since the 1980s because of the ever increasing economic globalization and the deepening of european integration using a new primary data set on public ownership that contains detailed information on privatization in 20 countries between 1980 and 2007 we test these claims empirically in relation to state ownership we pay special attention to the question of whether changes in the international political economy notably globalization and different aspects of european integration condition partisan politics our empirical findings suggest that political parties have continued to significantly shape national privatization trajectories in line with the classic partisan hypothesis while partisan differences are somewhat reduced by the liberalizing and market building efforts of the european union globalization does not condition partisan effects moreover the run up to the european monetary union even seems to have reinforced partisan

empirical studies of gasoline retailing a guide to the literature abstract this paper surveys the empirical literature on gasoline retailing which has been growing rapidly over the last three decades possibly in response to antitrust and regulatory concerns and increased availability of pricing data studies of both pricing and non price decision variables are considered in general it is found that crude oil prices are the primary driver of national price movements over time however market structure has been identified as playing a role in price dynamics equilibrium selection and price differentials across markets and stations the economic literature emphasizes the importance of heterogeneity across stations and coordination problems faced by retailers several directions for future work are suggested including the development of theory and demand estimation using high frequency station level data

consumer search and dynamic price dispersion an application to gasoline markets this article studies the role of imperfect information in explaining price dispersion we use a new panel data set on the u s retail gasoline industry and propose a new test of temporal price dispersion to establish the importance of consumer search we show that price rankings vary significantly over time however they are more stable among stations at the same street intersection weestablishtheequilibriumrelationshipsbetweenpricedispersionandkeyvariables from consumer search models price dispersion increases with the number of firms in the market decreases with the production cost and increases with search costs

do rockets rise faster and feathers fall slower in an atmosphere of local market power evidence from the retail gasoline market this study explores the possibility that local market power influences the observed asymmetric relationship between changes in wholesale gasoline costs and changes in retail gasoline prices i exploit an original data set of weekly gas station prices in southern california from september 2002 to may 2003 and take advantage of detailed station and local market level characteristics to determine the extent to which geographic and product differentiation influence price response asymmetry i find that brand identity proximity to rival stations and local market features and demographics each influence a station s predicted price response asymmetry

selling at the farmgate or traveling to market using detailed survey data from uganda this article examines whether coffee producers sell to itinerant traders or directly to markets where they can get a higher price but must incur a transport cost we find that selling to the market is more likely when the quantity sold is large and the market is close by wealthy farmers are less likely to sell to the market possibly because the shadow value of their time is higher but if they have a large quantity of coffee for sale they are more likely to sell it to the market they are also more likely to travel to a distant market these findings are consistent with their better ability to pay for public transportation we find no evidence that the decision to sell at the farmgate is driven by a self control motive

the effect of explicit communication on pricing evidence from the collapse of a gasoline cartel we study the collapse of collusion in quebec s retail gasoline market following a competition bureau investigation and show that it involved two empirical regularities high margins and asymmetric price adjustments using weekly station level prices we test whether collusion was successful and whether asymmetric adjustments were part of the cartel s strategy we do so in the markets targeted by the investigation and in markets throughout the province with similar pre collapse pricing cyclical markets our results suggest that stations in both target and cyclical markets adjusted pricing following the announcement margins fell by 30 15 in target cyclical markets and adjustments became more symmetric

the new political economy of taxation in advanced capitalist democracies earlier versions of this paper were presented at the 1999 annual meeting of the american political science association september 1 5 atlanta ga and the 2000 annual meeting of the midwest political science association april 27 30 chicago il the authors thank steffen ganghof philip genschel mark hallerberg alex hicks william keech dennis quinn and the anonymous reviewers and editor of this journal for many helpful comments and dennis quinn for generously sharing data duane swank thanks the german marshal fund of the united states and marquette university for support of work incorporated in this paper data utilized in this paper are available from duane swank marquette edu

cash crop production food price volatility and rural market integration in the third world large farmers in the third world often devote to cash crops a larger share of their land than do small farmers this paper suggests a possible explanation even in the presence of food markets third world farmers food security is best assured by food self sufficiency a model of crop portfolio choice under multivariate risk is used to show that reasonable assumptions regarding risk and preferences reproduce the observed pattern simulations further indicate that food market integration reduces the need for food self sufficiency policy implications are drawn regarding domestic trade liberalization and agricultural technology

a simple spatial model for edgeworth cycles abstract maskin and tirole 1998 formalise edgeworth s 1925 model of a dynamic equilibrium between two players where prices increase sharply and decrease slowly the edgeworth cycle here we present an application of the model showing how edgeworth cycles might arise in a marketplace where spatial competition is important we illustrate the approach using the example of retail gasoline markets where edgeworth cycles have been widely observed

shell shocked the impact of foreign entry on the gasoline retail market in china abstract since joining the wto in 2001 restrictions on foreign entry into china s energy sector have been steadily reduced we investigate the impact of royal dutch shell s entry on the pricing behavior of three varieties of gasoline in the retail market of china using a difference in difference pairwise estimator we show that a year after entry the average absolute price differential of gasoline between two cities increased by around 1 4 before falling the following year in other words shell s entry caused prices to diverge but only for a short period of time the largest price effect was found for highly refined fuels in western cities similar results are found when we examine the effect of entry of the top four foreign retailers policy implications are discussed

increasing returns and market efficiency in agricultural trade abstract using detailed trader surveys in benin madagascar and malawi this paper investigates the presence of increasing returns in agricultural trade after analyzing margins costs and value added we find little evidence of returns to scale motorized transport is found more cost effective for large loads on longer distances but transporters appear to pool quantities from multiple traders margin rates show little relationship with transaction size personal travel costs are a source of increasing returns but the effect is small consequently total marketing costs are nearly proportional to transaction size working and network capital are key determinants of value added constant returns to scale in all accumulable factors working capital labor and network capital cannot be rejected this implies that policies to restrict entry into agricultural trade are neither necessary nor useful governments should focus instead on technological and institutional innovations to upgrade agricultural markets

the digital provide information technology market performance and welfare in the south indian fisheries sector when information is limited or costly agents are unable to engage in optimal arbitrage excess price dispersion across markets can arise and goods may not be allocated efficiently in this setting information technologies may improve market performance and increase welfare between 1997 and 2001 mobile phone service was introduced throughout kerala a state in india with a large fishing industry using microlevel survey data we show that the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion the complete elimination of waste and near perfect adherence to the law of one price both consumer and producer welfare increased

malawi reforming the state s role in agricultural marketing abstract the role of the state in agricultural marketing activities has been a contentious issue in many countries undergoing structural adjustment this paper examines three examples of smallholder market reform in malawi to illustrate the case for various forms of state involvement and the complexities involved in reducing the state s role when this is required

on the dynamics of gasoline market integration in the united states evidence from a pair wise approach abstract this paper employs a pair wise approach to examine regional integration in the us gasoline market using gasoline price data at the state level over a period of more than two decades we find strong support for the view that the law of one price holds in regional markets as more than 80 of bivariate price differentials turn out to be stationary furthermore we uncover evidence that the speed at which prices converge to the long run equilibrium depends upon the distance between states asymmetries are also present in this relationship our findings suggest that the more similar are states with respect to taxation gas stations and refining capacity the faster is the speed of adjustment towards the long run equilibrium

retail gasoline price dynamics and local market power using monthly data from the 48 contiguous states except nevada for the 1988 2002 period it is shown that retail gasoline prices respond faster to wholesale price increases than to equivalent wholesale price decreases moreover markets with high average retail wholesale margins experience a slower adjustment and a more asymmetric response since gasoline is the only variable input average margins in a state likely reflect the degree of retail market power this suggests that sticky prices and response asymmetries in the gasoline market are at least partially a consequence of retail market power

remodeling the competition for capital how domestic politics erases the race to the bottom this paper proposes and tests a new formal model of the competition for capital using the analogy of a tournament as a substitute for the race to the bottom model our key insight is that political costs that accompany legislating have both direct and indirect effects on the likelihood and scale of reforms while countries with higher political costs are less likely themselves to enact reforms the presence of these costs also reduces competing countries incentives to reform regardless of their own political costs domestic politics therefore mitigates the pressures for downward convergence of tax policy despite increased capital mobility we examine the capital tax policies in oecd countries during the period from 1980 to 1997 and find that states are sensitive to tax reforms in competitor countries although their responses to reforms are mediated by their own domestic costs to reform we define two potential sources of political costs of reform transaction costs due to the presence of multiple veto players in the legislative process and constituency costs due to ideological opposition to policy changes that benefit capital our evidence reveals that a reduction in these costs either domestically or abroad increases the likelihood that a country enacts tax reforms hat are the policy consequences of the elimination of various barriers to international capital and labor mobility robert frost in mending wall instructed that good fences make good neighbors scholars have increasingly expressed this sentiment s converse i e the pessimistic viewpoint that as the mobility of factors of production increases international competition assumes a beggar thy neighbor character when fences separate countries and make it difficult for factors of production to move from country to country governments can operate essentially as monopolistic suppliers of services governments can extract a price from the owners of productive resources in the form of taxes or can place regulatory restrictions on production without fear that factors of production will emigrate when the fences fall and governments must compete with each other for the same resources a state s or country s ability to tax or regulate diminishes in the extreme countries lose sovereignty over domestic policymaking e g andrews 1994 and lee and mckenzie 1989 the model that most scholars employ implicitly or explicitly to understand international or interstate competition is known commonly by its central prediction the race to the bottom e g oates 1972

how is the liberalization of food markets progressing market integration and transaction costs in subsistence economies we propose a modification of baulch s parity bounds model to measure the market integration of food markets in developing countries instead of extrapolating a single observation of transaction costs we estimate transaction costs predicted transaction costs compare well with survey data of traders probabilities of market regimes computed on the basis of predicted transaction costs fluctuate significantly and do not support fixed regime probabilities over time the probability of market integration with trade decreases consistently during food shortages increasing either the probability of no trade or loss making trade or the probability of profitable but unexploited trade opportunities the data further support a negative trend in market integration with trade

trains trade and transaction costs how does domestic trade by rail affect market prices of malawi agricultural commodities this paper measures the impact of low cost transport by rail in malawi on the dispersion of agricultural commodities prices across markets by exploiting the quasi experimental design of the nearly total collapse of domestic transport by rail in january 2003 due to the destruction of a railway bridge at rivirivi balaka estimations are based on monthly market prices of four agricultural commodities maize groundnuts rice and beans in 27 local markets for the period 1998 2006 market pairs connected by rail when the railway line was operational are intervention observations railway transport services explain a 14 percent to 17 percent reduction in price dispersion across markets geographical reach of trade varies by crop most likely related to storability and geographical spread of production perishability appears to increase impact reflecting limited scope for arbitrage overall impacts are remarkably similar in size across commodities

estimating policy effects on spatial market efficiency an extension to the parity bounds model the standard parity bounds model pbm is extended to allow for dynamic shifts in regime probabilities in response to changes in marketing policy the approach allows estimation of the length of the adjustment period and a statistical test for no policy effects the extended pbm is applied to maize and wheat markets in ethiopia evidence of a dynamic adjustment path is found and grain marketing reforms are found to have improved spatial efficiency in a few markets worsened it in a few others but generally to have had little effect on the spatial efficiency of ethiopian grain markets

international corporate taxation and u s multinationals behaviour an integrated approach this paper explores the effects of corporate taxation on u s capital invested abroad and on tax planning practices the econometric analysis first indicates that investment is strongly influenced by average tax rates with a magnified impact particularly for low tax rates implying that the attractiveness of low tax countries is not weakened by anti deferral rules and cross crediting limitations further explorations suggest that firms report higher profit higher subpart f income and are less likely to repatriate dividends when they are located in low tax jurisdictions finally when the role of effective transfer pricing regulations is estimated it appears that low degrees of law enforcement are associated with higher income shifting ce memoire s interesse aux effets des impots sur le revenu des societes sur l investissement et les pratiques de planifications fiscales des firmes multinationales americaines l analyse econometrique indique que l investissement americain est fortement influence par le taux d imposition moyen et que cet impact est sensiblement plus important pour de faibles taux d imposition ceci suggere que l attractivite des pays a faible imposition n est pas affaiblie par les limites imposees par le systeme fiscal americain sur la possibilite de differer l impot et sur les moyennes de credit des tests additionnels montrent que les firmes reportent un profit ainsi qu un revenu subpart f plus important et rapatrient moins leurs dividendes lorsqu elles sont localisees dans des pays a faible imposition finalement en estimant le role joue par l efficacite des reglementations en termes de prix de transferts il apparait qu un faible etat de droit est associea de plus fortes manipulations fiscales

internal borders ethnic based market segmentation in malawi summary ethnic diversity is associated with poorer economic development but why i argue that market segmentation is one mechanism linking diversity to economic underdevelopment when ethnic groups are geographically segregated and trust is concentrated within groups markets will be tend to be segmented along ethnic lines i evaluate this argument using maize price data from seventy malawian markets over 14 years and combine it with census data on the spatial distribution of ethnic groups i find that maize price differences a key indicator of market segmentation are indeed larger for ethnically dissimilar markets even after taking sub national administrative borders geographic barriers and climatic differences into account these statistical findings are complemented by interview data from farmers and traders in three markets across malawi which highlight the centrality of trust in small scale maize trading as well as a preference for coethnic trading partners together these findings suggest that ethnic diversity and ethnoregional segregation in particular can have a negative impact on market integration an important driver of food security and long term economic development

high frequency quoting short term volatility in bids and offers at subsecond horizons bids and offers in u s equity markets are more volatile than what would be implied by long term fundamentals to assess costs and consequences this paper suggests that traders random delays latencies interact with quote volatility to generate execution price risk and relative latency costs analysis of the behavior of quote setters suggests that this volatility is more likely to arise from recurrent cycles of undercutting similar to the edgeworth cycles found in product markets rather than mixed strategies of limit order placement

a theory of dynamic oligopoly ii price competition kinked demand curves and edgeworth cycles we provide game theoretic foundations for the classic kinked demand curve equilibrium and edgeworth cycle we analyze a model in which firms take turns choosing prices the model is intended to capture the idea of reactions based on short run commitment in a markov perfect equilibrium mpe a firm s move in any period depends only on the other firm s current price there are multiple mpe s consisting of both kinked demand curve equilibria and edgeworth cycles in any mpe profit is bounded away from the bertrand equilibrium level we show that a kinked demand curve at the monopoly price is the unique symmetric renegotiation proof equilibrium when there is little discounting we then endogenize the timing by allowing firms to move at any time subject to short run commitments we find that firms end up alternating thus vindicating the ad hoc timing assumption of our simpler model we also discuss how the model can be enriched to provide explanations for excess capacity and market sharing keiiwords tacit collusion markov perfect equilibrium kinked demand curve edgeworth cycle excess capacity market sharing endogenous timing

gas wars retail gasoline price fluctuations this paper examines the retail gasoline price fluctuations known as gas wars weekly prices for the los angeles area were examined for the period from january 2 1968 through december 23 1975 the observed fluctuations were remarkably regular and apparently large ly predictable the data appear consistent with the recent game theory model of e maskin and j tirole in which competing firms produce edgeworth cycles by undercutting each other and eventually relenting copyright 1993 by mit press

marginal reductions in vehicle emissions under a dual blend ethanol mandate evidence from a natural experiment among the many reasons policy makers across the world have sought to supplement fuel supplies with ethanol blended fuels are the cited environmental benefits that come with replacing a fossil fuel with a cleaner burning alternative dual blend ethanol mandates in which multiple ethanol blends are simultaneously available are one way policy markers can move forward with more aggressive mandates more quickly the recent ethanol mandate in the state of new south wales australia offers a unique natural experiment to quantify the potential environmental benefits and costs of a dual blend ethanol policy this paper estimates the impact on carbon dioxide co2 emissions from road activity that are attributable to the implementation of the new south wales ethanol requirements we find that there was a decrease in emissions due to the policy but that the decrease is relatively minor given the size of the market and that it comes at a high cost the cost was over 1200 per ton of carbon to reduce gasoline emissions by just 1 2

why pay more corporate tax avoidance through transfer pricing in oecd countries this paper presents suggestive evidence of income shifting in response to differences in corporate tax rates for a large selection of oecd countries we use a new method to disentangle the income shifting effects from the effects of tax rates on real activity our baseline estimates suggest that a substantial share of the revenues from a unilateral increase in the corporate tax rate is lost because of a decline in reported income

retail gasoline pricing what do we know abstract we use a data set consisting of a three year panel of prices from a sample of gasoline stations located in suburban washington dc and a corresponding census of the region s stations to develop three new empirical findings about retail gasoline pricing first while average retail margins vary substantially over time by more than 50 over the three years we analyze the shape of the margin distribution remains relatively constant second there is substantial heterogeneity in pricing behavior stations charging very low or very high prices are more likely to maintain their pricing position than stations charging prices near the mean third retail gasoline pricing is dynamic despite the heterogeneity in station pricing behavior stations frequently change their relative pricing position in this distribution sometimes dramatically we then relate these three findings to relevant theories of retail pricing while many models of retail pricing are consistent with some of our findings we find that all have serious shortcomings

gasoline price dispersion and consumer search evidence from a natural experiment the vast majority of empirical studies examining the link between consumer search and price dispersion focus on how changes in consumer search impact price dispersion this article does the reverse it examines how a shock to price dispersion impacts consumer search a direct measure of search is used and an exogenous shock to price dispersion is found in a refinery fire that caused decades old retail gasoline price cycles and the nonlinear high frequency price dispersion pattern generated by them to stop identifying effects from this shock the results show a substantial response of consumer search to changes in price dispersion

origins and consequences of changes in u s corporate taxation 1981 1998 foreign direct investment hat u s corporate tax policy is partly determined by partisan and organizational forces as well as by domestic economic forces is a standard theoretical view scholars find that democratic presidential administrations have differed from republican administrations in that the former tended to increase the tax burdens of corporate taxpayers other studies report that increasing business political activity has had an ameliorating effect on business tax burdens on the economic side corporate tax policy is counter cyclical investment inducing and linked with growth and investment in long run structural relationships in at least two important ways however the structure of the american economy differed in the 1980s and 1990s from earlier periods first the u s economy internationalized with the oil shocks of the 1970 s serving as globalization s annunciation second economic agents became increasingly sophisticated in anticipating how governments would respond to economic events and how these government policies would in turn affect economic events the rational expectations revolution led president reagan among others to conclude that traditional u s macroeconomic policies were ineffective some scholars argue that these structural shifts changed the dynamics of u s corporate tax policy they theorize that in open economies like the

asymmetric price adjustments in us gasoline markets impacts of spatial dependence on the rockets and feathers hypothesis gasoline retail prices show sometimes wild asymmetric fluctuations over time we explore the impact of spatial dependence on gasoline retail price formation by using for the first time an asymmetr

the privatization of agricultural trading in malawi abstract this paper examines the privatization of smallholder agricultural output marketing in malawi despite problems with implementing the privatization program including serious disruptions in the supply of maize the staple food the move toward greater private sector involvement in agricultural marketing has been successful nonetheless several medium term development issues e g food security and buyer and seller of last resort functions need to be addressed in the context of relations between the marketing parastatal admarc and the private sector before the policy change can be regarded as fully successful

forecasting gasoline prices in the presence of edgeworth price cycles abstract forecasting is a central theme in economics the ability to forecast prices enables economic agents to make optimal decisions for the present and future in this article we investigate if and how gasoline prices can be forecast in retail gasoline markets that are subject to high frequency asymmetric price cycles known as edgeworth price cycles we examine a series of purchase timing decision rules and a series of feasible forecasting algorithms for updating those rules over time we find that in the presence of cycles agents in our five australian markets can systematically reduce purchase prices below market average the equivalent of 11 to 15 u s cents per gallon using simple decision rules and feasible forecasting algorithms

the speed of gasoline price response in markets with and without edgeworth cycles retail gasoline prices are known to respond fairly slowly to wholesale price changes this does not appear to be true for markets with edgeworth price cycles recently many retail gasoline markets in the midwestern u s and in other countries have been shown to exhibit price cycles in which competition generates rapid cyclical retail price movements we show that cost changes in cycling markets are passed on 2 to 3 times faster than in markets without cycles we argue that the constant price movement inherent within the edgeworth cycle eliminates price frictions and allows firms to pass on cost fluctuations more easily

do edgeworth price cycles lead to higher or lower prices abstract a recent literature seeks to understand the causes of the high frequency asymmetric retail price cycles observed in many retail gasoline markets however much less attention has been given to the effects of the cycles in particular whether the cycles lead to higher or lower prices and margins the leading theory for the underlying cause of the price cycles edgeworth price cycles is silent on the issue the challenge in addressing this most important question has been the difficulty in isolating cycle effects from other confounding factors especially market structure in this article i exploit a unique natural experiment to isolate the effect of cycles a refinery fire that in a matter of days halted cycles that had previously persisted for decades i find that edgeworth price cycles lead to lower prices and lower margins i conclude with implications for competition policy

globalization and capital taxation in consensus and majoritarian democracies this article contributes to the growing literature on the role that domestic political institutions play in mediating globalization pressures by arguing that the capital tax constraints arising from international economic integration are the most severe for countries with majoritarian political institutions in doing so the author solves a tax puzzle that challenges conventional thinking about how institutions condition the relationship between economic globalization and domestic politics he presents a formal game theoretic model to sharpen the basic logic of his argument and then tests some of the model s predictions empirically using both quantitative and qualitative evidence

mixed strategy in oligopoly pricing evidence from gasoline price cycles before and under a timing regulation this paper studies oligopoly firms dynamic pricing strategies in a gasoline market before and after the introduction of a unique law that constrains firms to set price simultaneously and only once per day the observed gasoline pricing behavior both before and under the law is well captured by the edgeworth price cycle equilibrium in the maskin and tirole dynamic oligopoly model my results highlight the importance of price commitment in tacit collusion i also find evidence that the price leadership outcome under the law is better predicted by mixed strategies play than by alternative hypotheses

spatial integration at multiple scales rice markets in madagascar the dramatic increase in the price of rice and other commodities over the past year has generated new interest in how these markets work and how they can be improved this article uses an exceptionally rich data set to test the extent to which markets in madagascar are integrated across space at different scales of analysis and to explain some of the factors that limit spatial arbitrage and price equalization within a single country we use rice price data across four quarters of 2000 2001 along with data on transportation costs and infrastructure availability for nearly 1 400 communes in madagascar to examine the extent of market integration at three different spatial scales subregional regional and national and to determine whether non integration is due to high transfer costs or lack of competition the results indicate that markets are fairly well integrated at the subregional level and that factors such as high crime rates remoteness and lack of information are among the factors limiting competition

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

do retail gasoline prices respond asymmetrically to cost shocks the influence of edgeworth cycles asymmetric price cycles similar to edgeworth cycles are appearing in increasingly many retail gasoline markets in the united states and worldwide the asymmetry in the cycles can give rise to a finding of asymmetric price responses to cost shocks asymmetric passthrough this article estimates asymmetric passthrough for the market of toronto which exhibits cycles and decomposes it into two components that part explainable by the cycles and that part driven by other unknown sources significant asymmetric passthrough is found with increases passed through more quickly than decreases a significant cause of the finding is the presence of the cycles themselves

regulated and unregulated substitutes aversion effects of an ethanol mandate i introduction regulation is a tool policymakers can use to steer markets away from private outcomes deemed to be socially suboptimal or inefficient regulations work either by altering market incentives or changing consumers choice sets as they attempt to reshape or restrict private market equilibria they can sometimes lead to unexpected consumer reactions and unanticipated consequences such as higher consumer costs or reduced effectiveness in meeting goals the extent to which a regulation can have adverse and unanticipated consequences depends on the nature and design of the regulation in this article we highlight a case where the design of an unpopular and hurried regulation led to especially adverse consequences the case is that of the recent ethanol mandate in the state of new south wales nsw australia ethanol mandates have become popular with legislators over the past decade and currently 62 countries have some form of one grfa 2014 a typical mandate requires producers to blend a certain percentage or certain volume of ethanol into the overall supply of gasoline the u s mandate for example requires 18 2 billion gallons of renewable fuels primarily ethanol be blended into the gasoline supply in 2014 up from 16 6 billion in 2013 epa 2013 the european union mandate requires 5 75 renewable fuels in gasoline by 2010 and 10 by 2020 eu 2003 2009 ethanol mandates have been controversial however griffin 2013 grafton kompas and van long 2012 rodriguez et al 2009 serra and zilberman 2013 westbrook et al 2014 and others proponents argue they help slow greenhouse gas accumulation promote renewable energy and reduce dependence on foreign oil they also point out benefits to the domestic farming and ethanol production industries which is sometimes a goal in itself critics on the other hand question their environmental value the need for fossil fuel replacement the lower energy yield and potential for food price inflation when crops grown for food are converted to ethanol use carter rausser and smith 2013 1 they also point out that ethanol blends tend to be more expensive for consumers on an energy adjusted basis than unblended gasoline mandates tend to be on net unpopular with consumers 2 an important consideration when transitioning to a new ethanol mandate or a higher ethanol blend under an existing mandate is ensuring compatibility with the vehicle fleet ethanol is an alcohol and in higher concentrations can be corrosive to engine valves seals and gaskets in older vehicles not designed with ethanol s properties in mind an option many jurisdictions have used in implementing ethanol mandates is to limit the ethanol blend to a level tested and widely believed to be compatible with the vast majority of vehicles on the road in the united states and canada for example a 10 blend has been implemented almost universally while a 5 blend has been used universally in many european countries if regulators instead deem that higher blends are desirable another option is to mandate that newly built vehicles be compatible with the new higher blend and then implement the fuel mandate once the vehicle fleet has largely turned over however vehicle turnover can take decades and this approach has not been as popular with regulators a third option that has found some favor is to introduce a higher ethanol blend that a majority of vehicles can use while still making the previous possibly ethanol free blend available as long as there are those who still need it in principle this dual blend approach promises to accommodate more aggressive ethanol mandates and lead to more ethanol in the fuel supply more quickly however we show that this kind of dual blend or selective mandate in its efforts to hurry ethanol blending beyond the capabilities of the vehicle fleet as a whole or beyond the confidence of consumers in its safety can have severe negative consequences

on the effects of suggested prices in gasoline markets textabstractthis article analyzes the role of suggested prices in the dutch retail market for gasoline suggested prices are announced by large oil companies with the suggestion that retailers follow them there are at least two competing rationales for the existence of suggested prices they may either help retailers translate changes in international gasoline spot market prices into retail prices or they may coordinate retail prices we show that there is next to the international spot market prices additional information in suggested prices that explains retail prices therefore we conclude that suggested prices help to coordinate retail prices

a transaction level analysis of spatial arbitrage the role of habit attention and electronic trading despite the central role of arbitrage in finance and economic theory there is limited evidence of the factors that create and eliminate arbitrage opportunities how often arbitrage occurs and how profitable it is we address these gaps via a transaction level analysis of spatial arbitrage in the wholesale automotive market we investigate why arbitrage opportunities are created by analyzing how sellers choose where to sell vehicles we find that the attention sellers pay to the distribution of a vehicle is negatively related to the probability that it is arbitraged arbitrage occurs in approximately 1 of transactions although electronic trading is making arbitrage less prevalent by improving buyer seller matching across locations arbitrage yields a 5 6 return on average although arbitrageurs take a loss 14 of the time our results contribute to the literature on arbitrage the effect of attention allocation on market outcomes and the effect of information technology on market efficiency this paper was accepted by brad barber teck ho and terrance odean special issue editors

market emergence and transition arbitrage transaction costs and autarky in china s grain markets using trimonthly chinese provincial grain prices from 1988 to 1995 we estimate a parity bounds model of interregional trade for four subperiods to characterize how multiple aspects of market performance change during the process of economic transition for each period we estimate the extent to which arbitrage opportunities are realized by traders the transaction costs between location pairs and the likelihood that regions do not trade trade restrictions cannot explain the pattern of uneven market development over time infrastructure bottlenecks managerial incentive reforms and production specialization policies all were likely important factors affecting market performance

determining trade policy do voters hold politicians accountable models of trade policy often depend on the efficient aggregation of individual preferences while much of the recent empirical work on trade focuses on whether domestic coalitions form along class or sectoral lines the process of preference aggregation itself remains understudied in democratic countries voting is typically assumed to be an unproblematic mechanism for aggregating preferences but such an assumption may be misleading when the salience of trade policy is low or heterogeneous throughout the electorate using data from a survey of 36 501 potential voters in the 2006 u s midterm congressional elections this article explores the salience of trade policy for voters as a whole and for populations predicted to be most affected by changing trade patterns the article offers an estimation of trade policy salience based on the degree to which voters held senate incumbents accountable for their 2005 vote on the central american free trade agreement relative to roll call votes on other issues of the day the article finds trade policy salience to be relatively low in terms of stated importance in voters knowledge of their representatives policy positions and in its effect on voters propensity to vote for the incumbent the low salience of trade policy particularly among highly affected groups calls into question voter driven models of trade policy

transfer costs spatial arbitrage and testing for food market integration conventional tests for food market integration ask often misleadingly whether prices in different locations move together in this paper an alternative methodology the parity bounds model pbm is developed which uses information on transfer costs in addition to food prices to assess the efficiency of spatial arbitrage monte carlo experiments using data generated by a point space spatial price equilibrium model show the pbm to be statistically reliable an application to philippine rice markets demonstrates that the pbm detects efficient arbitrage when other tests do not

market integration efficiency of arbitrage and imperfect competition methodology and application to u s celery this paper develops and applies a methodology to test for efficiency of interregional commodity arbitrage application of the methodology requires only time series data on prices for alternative cities regions countries or product forms yet the approach is capable of generating evidence on a number of market parameters including market integration arbitrage efficiency the magnitude of marketing margins product substitutability and competitiveness of markets estimation is based on a switching regression model with three regimes efficient arbitrage relative shortage and relative glut results from application of the model to u s celery marketing indicated significant departures from efficient arbitrage for both california and florida celery

price leadership and coordination in retail gasoline markets with price cycles abstract this study examines the coordination mechanism used by gasoline stations in the midwestern united states where prices exhibit highly cyclical fluctuations known as edgeworth cycles stations in these markets repeatedly coordinate large marketwide price increases following periods of aggressive price undercutting by studying these periodic price jumps both over time and across cities i find that a particular retail chain in each city acts as a price leader initiating each price restoration the leader signals the new price level to competitors by simultaneously jumping prices at all its stations to a single price competitors follow quickly with a large majority of stations jumping to the exact same price within a 24 hour period the characteristics of the leading firms and the nature of observed price coordination suggest that successful price jumps may be facilitated by the existence of a retailer controlling the prices of a significant number of stations in a city identifying the important role of these firms in the market contributes to a broader understanding of price leadership and coordination and highlights another potential reason why price cycles exist in some in retail gasoline markets and not others

measurement of consumer gains from market stabilization for most cases of practical significance in which partial equilibrium analysis is appropriate there is little difference between exact measures of consumer gains from market stabilization and approximations such as expected change in marshallian or hicksian consumer surplus careful specification of the nature of stabilization is more crucial than the choice of welfare measure it is important to represent correctly the demand curvature and supply response and to determine whether general equilibrium responses can be ignored in any event an improved analytical approximation and a simple numerical method for calculating the exact measures make it unnecessary to rely on suspect measures

getting prices right the impact of the market information service in uganda the market information service project in uganda collected data on prices for the main agricultural commodities in major market centers and disseminated the information through local fmradio stations in various districts exploiting the variation across space between households with and without access to a radio we find evidence suggesting that better informed farmers managed to bargain for higher farm gate prices on their surplus production

edgeworth cycles revisited some gasoline markets exhibit remarkable price cycles where price spikes are followed by a series of small price declines a pattern consistent with a model of edgeworth cycles described by maskin and tirole we extend the model and empirically test its predictions with a new dataset of daily station level prices in 115 us cities consistent with the theory and often in contrast with previous empirical work we find the least and most concentrated markets are much less likely to exhibit cycling behavior both within and across cities areas with more independent convenience store gas stations are also more likely to cycle

testing for food market integration revisited this article considers the statistical performance of four commonly used econometric tests for market integration the law of one price the ravallion model cointegration and granger causality a spatial price equilibrium spe model that is subject to both production shocks and general price inflation and mimics many of the key characteristics of integrated food markets is constructed the model is used to generate food price time series of lengths that are typical of the short sample sizes available in most developing countries for both instantaneously integrated and independent markets a series of monte carlo experiments on these artificial food price time series are performed which show that all four of the conventional tests for market integration are statistically flawed

spatial price efficiency in mozambique s post reform maize markets maize zea mays shortages and maize price instability continue to occur in mozambique in spite of policy reforms and great capacity for increased production in northern mozambique this study measured the efficiency of spatial maize price arbitrage in mozambique s post reform period spatial price inefficiency does not seem to explain why food shortages continue to occur in mozambique suggesting nonprice market constraints such as poor infrastructure and poor market institutions as more likely explanations baulch s spatial efficiency test indicated that it is not profitable to ship maize from northern surplus maize regions to southern mozambique records of interregional maize shipments show that indeed grain is not being shipped from the north to the south market liberalization may have improved spatial price efficiency but high transfer costs still limit trade and potential benefits from freeing markets under these circumstances food shortages and price instability are likely to continue

do gasoline prices respond asymmetrically to crude oil price changes the authors test and confirm that retail gasoline prices respond more quickly to increases than to decreases in crude oil prices among the possible sources of this asymmetry are production inventory adjustment lags and market power of some sellers by analyzing price transmission at different points in the distribution chain the authors attempt to shed light on these theories spot prices for generic gasoline show asymmetry in responding to crude oil price changes which may reflect inventory adjustment effects asymmetry also appears in the response of retail prices to wholesale price changes possibly indicating short run market power among retailers