Dynamic Competition With Network Externalities: Why History Matters, Hanna Halaburda, Bruno Jullien, Yaron Yehezkel
Dec 2019
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 …
Local Environmental Quality And Inter-Jurisdictional Spillovers, John W. Hatfield, Katrina Kosec
Jul 2019
Local Environmental Quality And Inter-Jurisdictional Spillovers, John W. Hatfield, Katrina Kosec
Katrina Kosec
We investigate the classic question of how the provision of a local publicly-provided good--air quality--varies with the degree of decentralization of policymaking. Exploiting exogenous variation in the natural topography of the United States to instrument for the number of local government jurisdictions in a metropolitan area, we show that areas with more jurisdictions have significantly lower air quality, and significantly higher concentrations of the toxic air pollutants most closely associated with cancer and non-cancer health risks. Moreover, we estimate that this increase in pollution lowers housing values by at least 3%. By contrast, local drinking water quality--a publicly-provided good not …
Investor Valuations Of Japan's Adoption Of A Territorial Tax Regime: Quantifying The Direct And Competitive Effects Of International Tax Reform, Sebastien J. Bradley, Estelle Dauchy, Makoto Hasegawa
Dec 2017
Investor Valuations Of Japan's Adoption Of A Territorial Tax Regime: Quantifying The Direct And Competitive Effects Of International Tax Reform, Sebastien J. Bradley, Estelle Dauchy, Makoto Hasegawa
Sebastien J Bradley
Despite an extensive literature on the normative implications of different international tax regimes and an empirical literature addressing individual specific predictions, there exists little evidence encompassing the broad range of effects of taxing corporations' foreign-source income on a worldwide or territorial basis. This paper takes a more comprehensive quantitative approach by examining stock market reactions surrounding four events over the course of which Japan's 2009 adoption of a dividend exemption system was developed into proposed law. Using an event study methodology which leverages individual firm characteristics and accounts for contemporaneous financial market developments, we find that Japanese firms with less …
Simulating Hospital Merger Simulations, David J. Balan, Keith Brand
Dec 2017
Simulating Hospital Merger Simulations, David J. Balan, Keith Brand
David J. Balan
We assess the performance of three hospital merger simulation methods by means of a Monte Carlo experiment. We fi#12;rst specify a rich theoretical model of hospital markets and use it to generate "true" price eff#11;ects of a large number of hospital mergers. We then use the theoretical model to generate the data that would be available in a real-world prospective merger analysis and apply the merger simulation methods to those data. Finally, we compare the predictions of the merger simulation methods to the true price eff#11;ects. While there is some heterogeneity in performance, all three simulation methods perform reasonably well.
Competing By Restricting Choice: The Case Of Search Platforms, Hanna Halaburda, Mikolaj Jan Piskorski, Pinar Yildirim
Dec 2017
Competing By Restricting Choice: The Case Of Search Platforms, Hanna Halaburda, Mikolaj Jan Piskorski, Pinar Yildirim
Hanna Halaburda
We show that a two-sided platform can successfully compete by limiting the choice of potential matches it offers to its customers while charging higher prices than platforms with unrestricted choice. Starting from micro-foundations, we derive the strength and direction of network effect, and find that increasing the number of potential matches not only has a positive effect due to larger choice, but also a negative effect due to competition between agents on the same side. Agents with heterogeneous outside options resolve the trade-off between the two effects differently. For agents with a lower outside option, the competitive effect is stronger …
"Information, Risk Sharing And Incentives In Agency Problems", Jia Xie
Aug 2017
"Information, Risk Sharing And Incentives In Agency Problems", Jia Xie
Jia Xie
This paper studies the use of information for incentives and risk sharing in agency problems. When the principal is risk neutral or the outcome is contractible, risk sharing is unnecessary or dealt with by a contract on the outcome. In this case, information systems are ranked only according to their informativeness about the agent's action. When the outcome is noncontractible, however, the principal has to rely on imperfect information not only for incentives, but also for risk sharing. Under the first-order approach, this paper characterizes a problem-independent ranking of information systems, relaxing Gjesdal's (1982) criterion. We also find sufficient conditions …
Integrated Assessment Models And The Social Cost Of Carbon: A Review And Assessment, Gilbert E. Metcalf, James Stock
Feb 2017
Integrated Assessment Models And The Social Cost Of Carbon: A Review And Assessment, Gilbert E. Metcalf, James Stock
Gilbert E. Metcalf
We consider the role of integrated assessment models (IAMs) in estimating the social cost of carbon (SCC) for U.S. regulatory purposes. Our approach is rooted in the needs of U.S. institutions responsible for making and implementing climate policy, specifically regulatory agencies within the Executive Branch and Congress should it choose to take up climate legislation. We argue, first, that policy makers need a numerical value for the SCC for policy evaluation and implementation. This cannot be done credibly without sophisticated computer models that incorporate climate and economic considerations, that is, without IAMs. Second, whatever the true value of the SCC …
Inattention To Deferred Increases In Tax Bases: How Michigan Homebuyers Are Paying For Assessment Limits, Sebastien J. Bradley
Feb 2017
Inattention To Deferred Increases In Tax Bases: How Michigan Homebuyers Are Paying For Assessment Limits, Sebastien J. Bradley
Sebastien J Bradley
The Michigan property tax system gives rise to wide variation in taxable basis across comparable homes due to the application of acquisition-value based assessment limits. Exploiting the fact that the resulting differences in property tax liability are temporarily inherited by new homebuyers, I estimate the degree of capitalization of these largely-idiosyncratic tax differences in a setting free of many of the econometric problems that typically plague estimation of property tax capitalization in order to evaluate whether homebuyers understand the tax implications of their home purchases. Consistent with anecdotal evidence, I find that homebuyers are woefully inattentive to the temporary nature …
Determinants Of Homeownership Among Immigrants: Changesduring The Great Recession And Beyond, Kusum Mundra, Ruth Uwaifo Oyelere
Dec 2016
Determinants Of Homeownership Among Immigrants: Changesduring The Great Recession And Beyond, Kusum Mundra, Ruth Uwaifo Oyelere
Ruth Uwaifo Oyelere
No abstract provided.
Committee Design With Endogenous Participation, Volker Hahn
Dec 2016
Committee Design With Endogenous Participation, Volker Hahn
Volker Hahn
We analyze different committee designs in a model with the endogenous participation of experts who have private information about their own abilities. Each committee design involves a test of abilities whose accuracy influences experts’ decisions to participate. We derive the following findings. First, higher wages lead to lower quality experts. Second, an increase in transparency improves the quality of experts on the committee. Third, larger committees attract less able experts than smaller ones, unless the committee operates under full transparency. Fourth, we derive the properties of optimal committees. They involve low wages and can be transparent or opaque.
Persistence In Industrial Policy Impacts: Evidence From Depression-Era Mississippi, Matthew Freedman
Jul 2016
Persistence In Industrial Policy Impacts: Evidence From Depression-Era Mississippi, Matthew Freedman
Matthew Freedman
This paper studies the effects of a large-scale industrial policy implemented in 1930s Mississippi on contemporaneous and modern-day labor market outcomes. Attracted by unprecedented government incentives under Mississippi’s Balance Agriculture with Industry (BAWI) Program, 13 large manufacturing plants established operations in the state between 1936 and 1940. Using difference-in-differences and synthetic control matching techniques, I estimate that counties that received these plants experienced an over 15% increase in female labor force participation on average in the short run. Moreover, these effects persisted decades into the future, well after many of the original companies shut down. I also find suggestive evidence …
Immigration, Employment Opportunities, And Criminal Behavior, Matthew Freedman, Emily Owens, Sarah Bohn
Jun 2016
Immigration, Employment Opportunities, And Criminal Behavior, Matthew Freedman, Emily Owens, Sarah Bohn
Matthew Freedman
We take advantage of provisions of the Immigration Reform and Control Act of 1986 (IRCA), which granted legal resident status to long-time unauthorized residents but created new obstacles to employment for more recent immigrants, to explore how employment opportunities affect criminal behavior. Exploiting administrative data on the criminal justice involvement of individuals in San Antonio, Texas and using a triple-differences strategy, we find evidence of an increase in felony charges filed against residents most likely to be affected by IRCA’s employment regulations. Our results suggest a strong relationship between access to legal jobs and criminal behavior.
Exploring The Relationship Between Agricultural Electricity Consumption And Output: New Evidence From Turkish Regional Data, Eyup Dogan, Maamar Sebri, Berna Turkekul
May 2016
Exploring The Relationship Between Agricultural Electricity Consumption And Output: New Evidence From Turkish Regional Data, Eyup Dogan, Maamar Sebri, Berna Turkekul
Maamar Sebri
This study investigates the relationship between agricultural electricity consumption and agricultural output for a panel of 12 regions of Turkey for the period 1995–2013. In order to reveal the possible heterogeneity between regions, empirical analyses are conducted for the whole panel data and two sub-groups within the panel data; namely, coastal regions and non-coastal regions. The results from several panel unit root tests indicate that electricity consumption and output are stationary process at their levels for overall panel and the two specific groups. By using the OLS with regional fixed effects, this study finds that coefficient estimate of electricity consumption …
Your Friends And Neighbors: Localized Economic Development And Criminal Activity, Matthew Freedman, Emily G. Owens
Apr 2016
Your Friends And Neighbors: Localized Economic Development And Criminal Activity, Matthew Freedman, Emily G. Owens
Matthew Freedman
We exploit a sudden shock to demand for a subset of low-wage workers generated by the 2005 Base Realignment and Closure (BRAC) program in San Antonio, Texas to identify the effects of localized economic development on crime. We use a difference-in-differences methodology that takes advantage of variation in BRAC’s impact over time and across neighborhoods. We find that appropriative criminal behavior increases in neighborhoods where a fraction of residents experienced increases in earnings. This effect is driven by residents who were unlikely to be BRAC beneficiaries, implying that criminal opportunities are important in explaining patterns of crime.
Forthcoming in the …
The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman
Apr 2016
The Urban Density Premium Across Establishments, R. Jason Faberman, Matthew Freedman
Matthew Freedman
We use longitudinal establishment data to estimate the urban density premium for U.S. establishments, controlling for observed establishment characteristics and dynamic establishment behavior. Consistent with previous studies, we find an elasticity of average establishment earnings with respect to metropolitan area population of 0.03, controlling for the endogeneity of location and establishment and metropolitan area characteristics. More importantly, we find that the estimated density premium is realized almost entirely at entry and is constant over an establishment’s life. We find little evidence that the endogenous entry or exit of establishments can account for any of the estimated density premium. We interpret …
General Equilibrium Models With Morishima Elasticities Of Substitution In Production, Daniel H. Karney
Jan 2016
General Equilibrium Models With Morishima Elasticities Of Substitution In Production, Daniel H. Karney
Daniel H Karney
Analytical general equilibrium (AGE) models are important tools that economists use to answer questions about theory and policy. When a production function has three or more inputs, the traditional modeling technique employs Allen elasticities of substitution to represent general functional forms. This paper builds an analytical general equilibrium model using the Morishima elasticity of substitution (MES). Specifically, an existing model using Allen elasticities is reformulated to employ the MES and the new, closed-form solutions are interpreted with additional insights from the reformulation. Importantly, the special case of constant elasticity of substitution (CES) production follows directly when using Morishima elasticities, but …
The Role Of Conference Externalities And Other Factors In Determining The Annual Recruiting Rankings Of Football Bowl Subdivision (Fbs) Teams, Joshua Pitts, Brent Evans
Jan 2016
The Role Of Conference Externalities And Other Factors In Determining The Annual Recruiting Rankings Of Football Bowl Subdivision (Fbs) Teams, Joshua Pitts, Brent Evans
Joshua Pitts
In this article, we analyse the impact of school, head coach and conference characteristics on a college football team’s annual recruiting ranking. Utilizing panel data collected from various sources covering 2002–2014, we find that measures of recent school success such as having winning seasons and finishing seasons ranked in the Associated Press (AP) top 25 poll have a positive impact on a team’s recruiting ranking. Similarly, schools with more successful head coaches tend to earn better recruiting classes, while schools facing bowl bans, scholarship restrictions and probation tend to earn worse recruiting classes. Various measures of conference achievement indicate that …
Undergraduate Intermediate Microeconomics (Econ 301), Matthew Freedman
Dec 2015
Undergraduate Intermediate Microeconomics (Econ 301), Matthew Freedman
Matthew Freedman
This is a four-credit course that builds on the theory developed in principles of microeconomics. This course is required for students with a major in economics or with a major in business and a concentration in economics. The goals of this course are (1) to analyze the workings of markets from a quantitative rather than purely conceptual perspective; (2) to use calculus to solve microeconomics problems; (3) to be able to apply microeconomic theory to real world issues; (4) to be able to explain the intuition behind microeconomic models. Topics include the basics of demand and supply, elasticity, consumer choice, …
Undergraduate Labor Economics (Econ 336), Matthew Freedman
Dec 2015
Undergraduate Labor Economics (Econ 336), Matthew Freedman
Matthew Freedman
In this course, students will be expected to think critically about labor economics and to apply theoretical concepts related to wage and employment determination to real-world policy and workplace issues. Students will demonstrate their mastery of the subject through class participation as well as in exams, problem sets, and a writing assignment. Learning how to analyze and draw inferences from labor market data represents a key component of the class. Topics covered include, but are not limited to, labor supply and demand, human capital investment, firm compensation policy and performance incentives, unemployment, unions, discrimination, and wage inequality.
Course materials are …
Violence And Birth Outcomes: Evidence From Homicides In Brazil, Martin Koppensteiner, Marco Manacorda
Dec 2015
Violence And Birth Outcomes: Evidence From Homicides In Brazil, Martin Koppensteiner, Marco Manacorda
Martin Foureaux Koppensteiner
This paper uses microdata from Brazilian vital statistics on births and deaths between 2000 and 2010 to estimate the impact of in-utero exposure to local violence – measured by homicide rates – on birth outcomes. The estimates show that exposure to violence during the first trimester of pregnancy leads to a small but precisely estimated increase in the risk of low birthweight and prematurity. Effects are found both in small municipalities, where homicides are rare, and in large municipalities, where violence is endemic, and are particularly pronounced among children of poorly educated mothers, implying that violence compounds the disadvantage that …
Inference Of Self-Exciting Jumps In Prices And Volatility Using High-Frequency Measures, Worapree Ole Maneesoonthorn, Catherine S. Forbes, Gael M. Martin
Dec 2015
Inference Of Self-Exciting Jumps In Prices And Volatility Using High-Frequency Measures, Worapree Ole Maneesoonthorn, Catherine S. Forbes, Gael M. Martin
Worapree Ole Maneesoonthorn
Dynamic jumps in the price and volatility of an asset are modelled using a joint Hawkes process in conjunction with a bivariate jump diffusion. A state space representation is used to link observed returns, plus nonparametric measures of integrated volatility and price jumps, to the specified model components; with Bayesian inference conducted using a Markov chain Monte Carlo algorithm. An evaluation of marginal likelihoods for the proposed model relative to a large number of alternative models, including some that have featured in the literature, is provided. An extensive empirical investigation is undertaken using data on the S&P500 market index over …
Does A Ban On Informal Health Providers Save Lives? Evidence From Malawi, Edward Okeke, Susan Godlonton
Dec 2015
Does A Ban On Informal Health Providers Save Lives? Evidence From Malawi, Edward Okeke, Susan Godlonton
Edward Okeke
Informal health providers ranging from drug vendors to traditional healers account for a large fraction of health care provision in developing countries. They are, however, largely unlicensed and unregulated leading to concern that they provide ineffective and, in some cases, even harmful care. A new and controversial policy tool that has been proposed to alter household health seeking behavior is an outright ban on these informal providers. The theoretical effects of such a ban are ambiguous. In this paper, we study the effect of a ban on informal (traditional) birth attendants imposed by the Malawi government in 2007. To measure …
"Immigrants And Mortgage Delinquency", Zhenguo Lin, Yingchun Liu, Jia Xie
Dec 2015
"Immigrants And Mortgage Delinquency", Zhenguo Lin, Yingchun Liu, Jia Xie
Jia Xie
No abstract provided.
The Role Of Coordination Bias In Platform Competition, Hanna Halaburda, Yaron Yehezkel
Dec 2015
The Role Of Coordination Bias In Platform Competition, Hanna Halaburda, Yaron Yehezkel
Hanna Halaburda
This paper considers platform competition in a two-sided market that includes buyers and sellers. One of the platforms benefits from a favorable coordination bias in the market, in that for this platform it is less costly than for the other platform to convince customers that the two sides will coordinate on joining it. We find that the degree of the coordination bias affects the platform's decision regarding the business model (i.e., whether to subsidize buyers or sellers), the access fees and the size of the platform. A slight increase in the coordination bias may induce the advantaged platform to switch …
Designing Monetary Policy Committees, Volker Hahn
Dec 2015
Designing Monetary Policy Committees, Volker Hahn
Volker Hahn
We integrate monetary policy-making by committee into a New Keynesian model to assess the consequences of the committee's institutional characteristics for inflation, output, and welfare. Our analysis delivers the following results. First, we demonstrate that transparency about the committee's future composition is typically harmful. Second, we show that short terms for central bankers lead to effective inflation stabilization at the expense of comparably high output variability. Third, larger committees generally allow for more efficient stabilization of inflation but possibly for less efficient output stabilization. Fourth, large committees and short terms are therefore socially desirable if the weight on output stabilization …
The Development Of Modern Corporate Governance In China And India, Nicholas Howson, Vikramaditya Khanna
Dec 2015
The Development Of Modern Corporate Governance In China And India, Nicholas Howson, Vikramaditya Khanna
Nicholas Howson
This book chapter (forthcoming, China, India & the International Economic Order) examines the development of corporate governance in the world’s two biggest and fastest growing emerging markets - China and India. Although both countries are different in important ways, they also share significant similarities such as rapid economic development, significant foreign investment, economic, structural and legal reform, and a shared interest in (if not implementation of) essentially Anglo-American corporate law norms. These differences and similarities provide an interesting and rich platform for consideration of popular or contested corporate governance precepts. In particular, after an extensive discussion of corporate governance reforms …
Housing First: Documenting The Need For Permanent Supportive Housing (Executive Summary), Susan Burkholder, Kathryn Hexter
Dec 2015
Housing First: Documenting The Need For Permanent Supportive Housing (Executive Summary), Susan Burkholder, Kathryn Hexter
Kathryn W. Hexter
Five years ago, very few people would have believed that it was possible to end homelessness for the most marginalized Americans. Today, the idea that we can end the cycle of homelessness and institutionalization for vulnerable Americans is so mainstream that the Bush administration declared in its 2003 budget proposal that it considers “ending chronic homelessness in the next decade a top objective.” The key to this turnaround in thinking is supportive housing, an approach that is both smart and compassionate” according to a recent editorial in the New York Times. It is a concept that is proving to be …
Northeast Ohio’S Waterways: Lakefront Planning Issue Forums Summary Report Utilities And Railroads, Kathryn Hexter
Dec 2015
Northeast Ohio’S Waterways: Lakefront Planning Issue Forums Summary Report Utilities And Railroads, Kathryn Hexter
Kathryn W. Hexter
No abstract provided.
Responding To Foreclosures In Cuyahoga County: Program Year Three Evaluation Report, March 1, 2008 Through February 28, 2009, Kathryn Hexter, Molly Schnoke
Dec 2015
Responding To Foreclosures In Cuyahoga County: Program Year Three Evaluation Report, March 1, 2008 Through February 28, 2009, Kathryn Hexter, Molly Schnoke
Kathryn W. Hexter
Cuyahoga County, Ohio is at the epicenter of the foreclosure crisis. With close to 13,000 foreclosure filings a year since 2005, more than 10,000 vacant and derelict structures and thousands of homeowners losing their homes, the effects of the crisis will be long lasting and far reaching. In Ohio, County courts, agencies and departments have some level of authority and responsibility for virtually every step of the foreclosure process. So it is not surprising that the fifteen mayors of the First Suburbs Consortium2 turned to Cuyahoga County to help them address this crisis. In response, in August 2005, the Cuyahoga …
Identifying High Demand Occupations And Understanding The Needs Of Northeast Ohio Manufacturers: Focus Group Summary Report, Ziona Austrian, Kathryn Hexter, Molly Schnoke
Dec 2015
Identifying High Demand Occupations And Understanding The Needs Of Northeast Ohio Manufacturers: Focus Group Summary Report, Ziona Austrian, Kathryn Hexter, Molly Schnoke
Kathryn W. Hexter
While the current economic climate is challenging, it provides an opportunity to assess critical workforce and talent issues facing the manufacturing community. In March 2009, Dr. Joel Elvery of Cleveland State University’s Maxine Goodman Levin College of Urban Affairs released the Employment and Wage Trends of Manufacturing Occupations in the Cleveland-Elyria PMSA analysis. The analysis identified occupations that appear to be “pain-points” for employers - or open positions that are hard to fill and thus, in high demand.
