Social and Behavioral Sciences Commons^™

Entry Costs And Economies Of Scope In Multiproduct Firms' Decisions, Xosé-Luís Varela-Irimia

Xosé-Luís Varela-Irimia

This paper computes the scope economies associated to the commercialization of several product varieties by multiproduct firms, in a dynamic oligopoly setting. Goods are differentiated and firms decide on firm entry and exit, product entry and exit, quality and pricing. The model is applied to the Spanish automobile market. Results show moderate entry costs and substantial cost reductions when introducing a second product as compared to the first, indicating that multiproduct firms benefit from strong economies of scope when expanding their range of products. However, those economies disappear after five products have been introduced, suggesting a U-shaped curve for entry …

Report On Key Design Elements Of Auctions Under Australia's Carbon Pollution Reduction Scheme, Peter Cramton

Peter Cramton

No abstract provided.

Auctions For Injecting Bank Capital (Addendum To 'A Troubled Asset Reverse Auction'), Peter Cramton, Lawrence M. Ausubel

Peter Cramton

Public discussion has turned, in the past few days, toward using some of the $700 billion in rescue funds for the injection of government money into banks in return for ownership stakes. The purpose of this short note, an addendum to “A Troubled Asset Reverse Auction,” is to describe an auction mechanism suitable for injections of capital into banks. The auctions would price the equity purchases through a competitive process.

The Dtv Coupon Program: A Boon To Retailers, Not Consumers, Scott J. Wallsten

Scott J. Wallsten

No abstract provided.

Asymmetric Dynamic Pricing In A Local Gasoline Retail Market, Felipe Balmaceda Assoc Prof., Paula Soruco

Felipe Balmaceda

Asymmetric-price adjustment is a common phenomenon in many markets around the world, particularly in retail gasoline markets. This paper studies the existence of this phenomenon in the retail gasoline market in the city of Santiago, Chile, using a data set of weekly gas station prices that covers a period of almost four years. We found that prices adjust asymmetrically, and the asymmetry is different for branded gas stations and unbranded stations. In addition, we found that the asymmetry for high-margin stations is statistically equivalent to that for low-margin stations. This evidence is suggestive of collusion as a rationale for the …

Auctioning Long-Term Gas Contracts In Colombia, Peter Cramton

Peter Cramton

This paper presents an approach to auctioning long-term gas contracts in Colombia. I propose an annual auction for long-term firm gas contracts. The auction would assign and price all firm gas contracts, with the exception of gas from the Guajira field, which is assigned administratively at a regulated price. The proposal is a partial market design in that it does not address the transportation of gas from producer to consumer.

The goal of the approach is to improve the transparency and efficiency of the gas market with a coordinated auction for long-term gas contracts. Currently, gas contracts are sold in …

A Review Of The L-Band Auction, Peter Cramton

Peter Cramton

In May 2008, Ofcom’s L-band auction concluded. This was Ofcom’s second combinatorial clock auction. The auction used an innovative format intended to encourage an efficient assignment of the 17 lots. Eight bidders competed for the lots. In sharp contrast to the first combinatorial clock auction, the 10-40 GHz auction, in which each of the ten bidders won spectrum, in the L-band auction there was a single winner—Qualcomm won all the lots. This note briefly reviews the auction.

A Troubled Asset Reverse Auction, Peter Cramton, Lawrence M. Ausubel

Peter Cramton

The US Treasury has proposed purchasing $700 billion of troubled assets to restore liquidity and solve the current financial crisis, using market mechanisms such as reverse auctions where appropriate. This paper presents a high-level design for a troubled asset reverse auction and discusses the auction design issues. We assume that the key objectives of the auction are to: 1) provide a quick and effective means to purchase troubled assets and increase liquidity; 2) protect the taxpayer by yielding a price for assets related to their value; and 3) offer a transparent rules-based process that minimizes discretion and favoritism. We propose …

The Quadratic Core-Selecting Payment Rule For Combinatorial Auctions, Peter Cramton, Robert Day

Peter Cramton

We report on the use of a quadratic programming technique in recent and upcoming spectrum auctions in Europe, and proposed for use in the FAA’s landing-slot auctions in the United States. Specifically, we compute a unique point “in the core” that minimizes the sum of squared deviations from the Vickrey-Clarke-Groves payments. Analyzing the Karush-Kuhn-Tucker conditions, we demonstrate that the resulting payments can be decomposed into a series of economically meaningful and equitable penalties, adding to the perceived “fairness” of this payment rule. Further, we discuss the many benefits of this combinatorial auction paradigm.

A Review Of The 10-40 Ghz Auction, Peter Cramton

Peter Cramton

In February 2008, Ofcom’s 10-40 GHz auction concluded. This was Ofcom’s first combinatorial clock auction. The auction used an innovative format intended to encourage an efficient assignment of the 27 lots. Each of the ten bidders won one or more lots. All 27 lots were assigned. This note briefly reviews the auction.

Esop Fables: The Impact Of Employee Stock Ownership Plans On Labor Disputes, Peter Cramton, Hamid Mehran, Joseph Tracy

Peter Cramton

By the early 1990s employee stock ownership plans (ESOPs) had become as prevalent in unionized firms as in nonunionized firms. However, little research has been devoted to examining the implications of ESOPs for collective bargaining, or cross ownership more generally. In this paper, we extend the signaling model of Cramton and Tracy (1992) to allow partial ownership by the union. We demonstrate that ESOPs create incentives for unions to become weaker bargainers. As a result, the model predicts that ESOPs will lead to a reduction in strike incidence and in the fraction of labor disputes that involve a strike. We …

Testimony For Fcc En Banc Hearing At Carnegie Mellon University On Broadband And The Digital Future, Scott J. Wallsten

Scott J. Wallsten

No abstract provided.

Understanding International Broadband Comparisons, Scott J. Wallsten

Scott J. Wallsten

No abstract provided.

Capitalización Heterogénea De Un Bien Semipúblico: El Metro De Santiago, Claudio A. Agostini, Gaston A. Palmucci

Claudio A. Agostini

In this work we estimate the degree of capitalization of the Santiago Subway (Metro) network on housing prices, analyzing price the differences among lines and counties. For this purpose, we combine hedonic price regressions with simple difference estimators. The results show that apartments located near the Metro stations have, on average, a larger value of 8.84%, 27.16% y 6.72% for Lines 1, 2, and 5 respectively. The degree of capitalization is not uniform within a county but depends on the distance to the subway station and the specific line providing the service.

Distribución Espacial De La Pobreza En Chile, Claudio A. Agostini, Philip H. Brown, Diana Paola Gongora

Claudio A. Agostini

Chile ha sido particularmente exitoso en la reducción de la pobreza durante los últimos 20 años, disminuyendo el porcentaje de la población bajo la línea de pobreza de un 38,6% en 1990 a un 13,7% en 2006. Con tasas de pobreza más bajas el esfuerzo de focalización necesario para el diseño de políticas públicas que permitan reducir aún más o erradicar la pobreza es mucho mayor y se requiere información más desagregada a nivel geográfico.\nLos mapas de pobreza pueden cumplir este rol, ya que entregan una descripción detallada de la distribución espacial de la pobreza, lo cual permite adicionalmente estudiar …

De Evoluerende Marktpositie Van Beschutte Werkplaatsen In Vlaanderen: Uitdagingen En Knelpunten, Wim Van Opstal, Jozef Pacolet

Wim Van Opstal

Beschutte werkplaatsen hebben als grootste speler in de sociale inschakelingseconomie goed weten door te dringen in onze economie. Dit brengt echter ook de confrontatie met alle uitdagingen van een competitieve economische omgeving met zich mee. Het HIVA voerde een onderzoek uit naar de uitdagingen waarmee de beschutte werkplaatsen in Vlaanderen geconfronteerd worden vanuit hun evoluerende marktpositie. Daarnaast belicht deze studie de knelpunten vanuit de interne organisatie van beschutte werkplaatsen om het hoofd te kunnen bieden aan deze uitdagingen. De vitaliteit van de beschutte werkplaatsen aan de ene kant en de kwetsbaarheid ervan aan de andere kant, is het genuanceerde beeld …

Coöperaties In De Social Profit? Een Verkenning., Wim Van Opstal

Wim Van Opstal

Het is ondertussen meer dan 150 jaar geleden dat de eerste coöperaties werden opgericht om de levensstandaard van arbeiders en boeren te verbeteren. De jongste jaren begint men de coöperatie echter opnieuw te ontdekken als instrument om economische activiteiten te combineren met sociale doelstellingen. In deze bijdrage belichten we de rol die coöperaties spelen binnen het activiteitenspectrum van de social profit in een internationaal kader en staan we stil bij de vraag of dit ook voor Vlaanderen een interessant alternatief kan bieden.

The Economics Of Pacific Bell V. Linkline Communications, Scott J. Wallsten

Scott J. Wallsten

No abstract provided.

Market Design: Auctions And Matching, Peter Cramton

Peter Cramton

No abstract provided.

Innovation And Market Design, Peter Cramton

Peter Cramton

Market design plays an essential role in promoting innovation. I examine emission allowance auctions, airport slot auctions, spectrum auctions, and electricity markets, and demonstrate how the market design can encourage innovation. Improved pricing information is one source of innovation. Enhancing competition is another driver of innovation seen in all of the applications. Market design fosters innovation in other ways as well by addressing other potential market failures.

Forward Reliability Markets: Less Risk, Less Market Power, More Efficiency, Peter Cramton, Steven Stoft

Peter Cramton

A forward reliability market is presented. The market coordinates new entry through the forward procurement of reliability options—physical capacity bundled with a financial option to supply energy above a strike price. The market assures adequate generating resources and prices capacity from the bids of competitive new entry in an annual auction. Efficient performance incentives are maintained from a load-following obligation to supply energy above the strike price. The capacity payment fully hedges load from high spot prices, and reduces supplier risk as well. Market power is reduced in the spot market, since suppliers enter the spot market with a nearly …

The Effect Of Incumbent Bidding In Set-Aside Auctions: An Analysis Of Prices In The Closed And Open Segments Of Fcc Auction 35, Peter Cramton, Allan T. Ingraham, Hal J. Singer

Peter Cramton

This paper examines the impact of an incumbent carrier’s participation in two simultaneously conducted auctions: one set-aside for non-incumbents and one open to all carriers. This paper estimates the extent to which prices in the closed auction were inflated by the participation of incumbents. This paper also estimates what prices would have been in the open auction had incumbents been excluded from bidding in the closed. It is found that an incumbent’s participation in the closed auction through a front, Alaska Native, enabled it to win more licenses at lower prices in FCC Auction 35. In contrast, non-incumbents won fewer …

Vertical Mergers That Eliminate Double Markups Are Procompetitive, Simon Loertscher

Simon Loertscher

Assuming that oligopolistic downstream firms take intermediate goods prices as given and that upstream and integrated firms choose their quantities first and simultaneously, this note shows that vertical mergers between upstream and downstream firms are procompetitive.