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Dynamic Competition With Network Externalities: Why History Matters, Hanna Halaburda, Bruno Jullien, Yaron Yehezkel 2019 Bank of Canada

Dynamic Competition With Network Externalities: Why History Matters, Hanna Halaburda, Bruno Jullien, Yaron Yehezkel

Hanna Halaburda

This paper considers dynamic platform competition in a market with network externalities. A platform that dominated the market in the previous period becomes ``focal" in the current period, in that agents play the equilibrium in which they join the focal platform whenever such equilibrium exists. We ask whether a low-quality but focal platform can maintain its focal position along time, when it faces a higher quality competitor. Under finite horizon, we find that when platforms are patient enough, the unique equilibrium is efficient. With infinite horizon, however, there are multiple equilibria in which either the low or the high quality ...


Hunting Unicorns, Aaron Edlin 2019 Selected Works

Hunting Unicorns, Aaron Edlin

Aaron Edlin

We study the effects of above-cost exclusionary pricing and the efficacy of three policy responses by running experiments involving a monopoly incumbent and a potential entrant. Our experiments show that under a laissez-faire regime, the threat of post-entry price cuts discourages entry, and allows incumbents to charge monopoly prices. Current U.S. policy (Brooke Group) does not help. In contrast, a policy suggested by Baumol (1979) lowers post-exit prices, while Edlin’s (2002) proposal reduces pre-entry prices and encourages entry. While both policies have less competitive outcomes after entry than laissez-faire does, they nevertheless both increase consumer welfare. For Edlin ...


Introduction To The Special Issue On The Blue Economy Of Bangladesh, Pawan G. Patil, Pierre Failler, Khurshed Alam 2019 World Bank

Introduction To The Special Issue On The Blue Economy Of Bangladesh, Pawan G. Patil, Pierre Failler, Khurshed Alam

Journal of Ocean and Coastal Economics

Introduction to the Special Edition on the Blue Economy of Bangladesh by the Editors of the Special Edition.


A Test System For Ercot Market Design Studies: Development And Application, Swathi Battula, Leigh Tesfatsion, Thomas E. McDermott 2019 Iowa State University

A Test System For Ercot Market Design Studies: Development And Application, Swathi Battula, Leigh Tesfatsion, Thomas E. Mcdermott

Economics Working Papers

The ERCOT Test System developed in this study is an open-source platform permitting dynamic performance evaluation of existing and proposed new market features for the ERCOT energy region. The test system models ISO-managed day-ahead and real-time wholesale power markets operating over a high-voltage transmission grid during successive days. Market operations capture salient features of actual ERCOT market practices. Clustering and triangulation methods permit users to construct synthetic transmission grids with buses and lines configured in accordance with ERCOT generation, load, and grid data. A complete 8-bus ERCOT test case is developed and implemented to illustrate the capabilities of the test ...


Property Rights And The Efficient Extraction Of Common Pool Resources: Evidence From West Coast Groundfish, Keith S. Evans, Carl Lian, Quinn Weninger 2019 University of Maine

Property Rights And The Efficient Extraction Of Common Pool Resources: Evidence From West Coast Groundfish, Keith S. Evans, Carl Lian, Quinn Weninger

Economics Working Papers

Evaluating efficiency gains from adopting property rights-based fisheries management is data intensive, complicated by delays in adjusting to economic incentives implicit in output control regulations, and potentially confounded by the effects of changing stock abundance and other fundamentals. This paper evaluates harvesting efficiency for the universe of vessel participants in the West Coast groundfish trawl fishery two years prior to and six years following introduction of individual fishing quota (IFQ) regulations. Our methods control for delayed fleet restructuring and confounding effects of changing groundfish stock abundance. We find that under IFQs, redundant vessel capital exited the groundfish fishery at a ...


Frand And Antitrust, Herbert J. Hovenkamp 2019 University of Pennsylvania Law School

Frand And Antitrust, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

This paper considers when a patentee’s violation of a FRAND commitment also violates the antitrust laws. It warns against two extremes. First, is thinking that any violation of a FRAND obligation is an antitrust violation as well. FRAND obligations are contractual, and most breaches of contract do not violate antitrust law. The other extreme is thinking that, because a FRAND violation is a breach of contract, it cannot also be an antitrust violation.

Every antitrust case must consider the market environment in which conduct is to be evaluated. SSOs operated by multiple firms are joint ventures. Antitrust’s role ...


The Oppressive Pressures Of Globalization And Neoliberalism On Mexican Maquiladora Garment Workers, Jenna Demeter 2019 The University of Tennessee, Knoxville

The Oppressive Pressures Of Globalization And Neoliberalism On Mexican Maquiladora Garment Workers, Jenna Demeter

Pursuit - The Journal of Undergraduate Research at the University of Tennessee

The international economic trends of globalization and neoliberalism have exposed and enabled the exploitation of Mexican workers, especially women in the maquiladora garment industry. During the 1950s, globalization gave rise to the new international division of labor and transnational corporations (TNCs) that have offshored labor-intensive phases of production to developing countries, many of which have pursued export-led industrialization. Export processing in Mexico was encouraged in the 1960s by Item 807 of the U.S. Tariff Code and Mexico’s Border Industrialization Program. Especially following the Latin American debt crisis of the 1980s, advanced capitalist countries and International Financial Institutions foisted ...


Natural Gas Investment In West Virginia, 2010-2016, Eric Bowen 2019 West Virginia University

Natural Gas Investment In West Virginia, 2010-2016, Eric Bowen

Bureau of Business & Economic Research

West Virginia’s natural gas boom began in 2010 as hydraulic fracturing and horizontal drilling techniques began to be applied to the state’s shale formations. Since then, West Virginia has become the nation’s ninth-largest natural gas producer in 2017, with gross withdrawals of more than 1.6 trillion cubic feet. Since the gas boom started, the natural gas industry has made considerable investments in the state to pay for well drilling, mineral royalties, and pipeline infrastructure, among other investment costs. In this report, we estimate these investments in two key areas: upstream costs and midstream infrastructure.


On The Optimality Of One-Size-Fits-All Contracts: The Limited Liability Case, Felipe Balmaceda Assoc Prof. 2019 Diego Portales University

On The Optimality Of One-Size-Fits-All Contracts: The Limited Liability Case, Felipe Balmaceda Assoc Prof.

Felipe Balmaceda

This paper studies a principal-agent relationship when both are risk-neutral and in the presence of
adverse selection and moral hazard. Contracts must satisfy the limited-liability and monotonicity conditions. We provide sufficient conditions under which the optimal contract is simple, in the sense that each type is offered the same contract. These are: the action and the agent's type are complements, and the output's cumulative distribution function is such that the marginal rate of substitution between the action and the agent's type is the same for each possible output realization. Furthermore, under the average monotone likelihood ratio property ...


Why Do Businesses Grow Faster In Urban Areas Than In Rural Areas?, LEE, Jungho, Jianhuan XU 2019 Singapore Management University

Why Do Businesses Grow Faster In Urban Areas Than In Rural Areas?, Lee, Jungho, Jianhuan Xu

Research Collection School Of Economics

We document that growth of business earnings is mostly observed among young firmsin metro areas. Three explanations are considered: metro areas attract more-productiveentrepreneurs, and reaching the optimal size takes time due to borrowing constraints;metro areas provide better learning opportunities; and high operating costs in metroareas allow only the productive firms to survive. We use a firm-dynamics model with alocation choice to quantify the extent to which the three theories explain the data. Wefind the first two theories largely explain the high growth among metro, young firms. Ourmodel also suggests the distortion in entrepreneurs’ location choice can induce substantialwelfare loss.


Tax Uncertainty And Business Activity, Jungho LEE, Jianhuan XU 2019 Singapore Management University

Tax Uncertainty And Business Activity, Jungho Lee, Jianhuan Xu

Research Collection School Of Economics

We investigate the extent to which uncertainties about tax policies affect business activities. We develop a statewide tax-uncertainty measure (TU measure) and show that it captures state corporate tax uncertainty. By comparing adjacent counties across state borders, we show that increasing tax uncertainty by one standard deviation (a 30% increase in the TU measure) leads to a 0.17% point per-year decrease in the growth rate of establishments over two years. The result holds after conducting a variety of robustness checks and is not likely to be driven by general state-policy uncertainties.


Public Interests And Economic Regulation Of Gambling, Rein Halbersma, Joost Poort 2019 Netherlands Gambling Authority

Public Interests And Economic Regulation Of Gambling, Rein Halbersma, Joost Poort

International Conference on Gambling & Risk Taking

In the Netherlands, the Betting and Gaming Act from 1964 largely determines the current structure of gambling markets. The policy was to channel consumers to a limited number of licensed operators. This led to state-owned monopolies for lotteries, sports betting and casinos, a private monopoly for horse race betting, a limited number of privately owned charity lotteries, and a large number of private slot machines operators.

Pending legislation proposes an online market without a limit on the number of operators. Furthermore, state ownership will be phased out, and introduced legislation to privatizing and expanding the number of casinos. The current ...


Apple V. Pepper: Rationalizing Antitrust’S Indirect Purchaser Rule, Herbert J. Hovenkamp 2019 University of Pennsylvania Law School

Apple V. Pepper: Rationalizing Antitrust’S Indirect Purchaser Rule, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

In Apple v. Pepper the Supreme Court held that consumers who allegedly paid too much for apps sold on Apple’s iStore could sue Apple for antitrust damages because they were “direct purchasers.” The decision reflects some bizarre complexities that have resulted from the Supreme Court’s 1977 decision in Illinois Brick, which held that only direct purchasers could sue for overcharge injuries under the federal antitrust laws. The indirect purchaser rule was problematic from the beginning. First, it was plainly inconsistent with the antitrust damages statute, which gives an action to “any person who shall be injured in his ...


Notes On The Gridlab-D Household Equivalent Thermal Parameter Model, Leigh Tesfatsion, Swathi Battula 2019 Iowa State University

Notes On The Gridlab-D Household Equivalent Thermal Parameter Model, Leigh Tesfatsion, Swathi Battula

Economics Working Papers

GridLAB-D (GLD) is an agent-based platform, developed by researchers at Pacific Northwest National Laboratory, that permits users to accurately simulate the state dynamics of power distribution systems at time scales ranging from sub-seconds to years. The purpose of this study is to present, in careful comprehensive form, a complete analytical state-space control representation for a version of the GLD Household Equivalent Thermal Parameter Model as support documentation for model users. This model is a physically-based implementation of a household with multiple price-responsive and conventional appliances whose thermal dynamics are determined over successive days by resident appliance usage and external weather ...


Centros, California’S “Women On Boards” Statute And The Scope Of Regulatory Competition, Jill E. Fisch, Steven Davidoff Solomon 2019 University of Pennsylvania Law School

Centros, California’S “Women On Boards” Statute And The Scope Of Regulatory Competition, Jill E. Fisch, Steven Davidoff Solomon

Faculty Scholarship at Penn Law

We examine the Centros decision through the lens of SB 826 – the California statute mandating a minimum number of women on boards. SB 826, like the Centros decision, raises questions about the scope of the internal affairs doctrine and its role in encouraging regulatory competition. Despite the claim that US corporate law is characterized by regulatory competition, in the US, the internal affairs doctrine has led to less variation in corporate law than in Europe. We theorize that this is due to the shareholder primacy norm in US corporate law which results in the internal affairs doctrine focusing on matters ...


What’S In Your Wallet (And What Should The Law Do About It?), Natasha Sarin 2019 University of Pennsylvania Law School

What’S In Your Wallet (And What Should The Law Do About It?), Natasha Sarin

Faculty Scholarship at Penn Law

In traditional markets, firms can charge prices that are significantly elevated relative to their costs only if there is a market failure. However, this is not true in a two-sided market (like Amazon, Uber, and Mastercard), where firms often subsidize one side of the market and generate revenue from the other. This means consideration of one side of the market in isolation is problematic. The Court embraced this view in Ohio v. American Express, requiring that anticompetitive harm on one side of a two-sided market be weighed against benefits on the other side.

Legal scholars denounce this decision, which, practically ...


Box Office Showdown: How Does Movie Market Saturation Affect First Weekend Box Office Revenues?, Matthew Steele 2019 Macalester College

Box Office Showdown: How Does Movie Market Saturation Affect First Weekend Box Office Revenues?, Matthew Steele

Economics Honors Projects

The scheduling of release dates for feature films is among the most important decisions that movie studios make in the life cycle of a movie. While the economic literature on the movie industry has largely focused on modeling the box office success of a movie based on its own characteristics—star power, critical reception, and trailer data—there is a dearth of literature concerning the way that competition from within the industry affects box office revenues. This article primarily uses a propensity score matching model to fill a gap in the literature, establishing causal relationships between different forms of competition ...


Strategic Ignorance In Sequential Procurement, Silvana Krasteva, Huseyin Yildirim 2019 Texas A & M University - College Station

Strategic Ignorance In Sequential Procurement, Silvana Krasteva, Huseyin Yildirim

Huseyin Yildirim

Should a buyer approach sellers of complementary goods informed or uninformed of her private valuations, and if informed, in which sequence? In this paper, we show that an informed buyer would start with the high-value seller to minimize future holdup. Informed (or careful) sequencing may, however, hurt the buyer as sellers "read" into it. The buyer may, therefore, commit to ignorance, perhaps, by: overloading herself with unrelated tasks; delegating the sequencing decision; or letting sellers self-schedule. Absent such commitment, we show that ignorance is not time-consistent for the buyer but it increases trade. Evidence on land assembly supports our findings.


The Warren Campaign’S Antitrust Proposals, Herbert J. Hovenkamp 2019 University of Pennsylvania Law School

The Warren Campaign’S Antitrust Proposals, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Antitrust policy promises to be an important issue in the 2020 presidential election, and for good reason. Market power measured by price-cost margins has been on the rise since the 1980s. Presidential candidate Senator Elizabeth Warren has two proposals directed at large tech platforms. One would designate large platform markets such as Amazon “platform utilities,” and prohibit them from selling their own merchandise on the platform in competition with other retailers. The other proposes more aggressive enforcement against large platform acquisitions of smaller companies.

This paper concludes that the first proposal is anticompetitive, leading to reduced output and higher prices ...


Three Essays In Industrial Organization, Yiyi Hu 2019 Southern Methodist University

Three Essays In Industrial Organization, Yiyi Hu

Economics Theses and Dissertations

This dissertation includes two papers about issues in two-sided markets and one paper discussing hierarchical Stackelberg model.

Chapter 1 analyzes endogenous horizontal product differentiation in a two-sided market with two platforms based on a two-stage Hotelling model. When the two sides are both single-homing, the platforms will choose maximal product differentiation in the equilibrium. However, when one side is multi-homing, and the multi-homing side views the platforms indifferent, the platforms choose minimal product differentiation in the equilibrium.

Chapter 2 investigates horizontal mergers in a two-sided market between three horizontally differentiated platforms. This chapter provides a theoretical analysis of impacts on ...


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