Platform competition in the tablet PC market: The effect of application quality

The tablet PC market is dominated by two platforms: iOS and Android. In this paper, we combine tablet-level data with data on the quality of the top 1000 mobile applications from these platforms and estimate a structural demand model. We exploit variations over three periods and five European countries to find whether the application quality affects tablet demand. We then run two counterfactuals. The first counterfactual suggests that an improvement in application quality benefits the tablet producers on that platform with a more pronounced effect on the demand for Android-based tablets. The second counterfactual discusses the policy of leveling the app quality of the two stores. It shows that such a policy favors the tablet producers adopting the lowest quality app store (Google) and stimulates the adoption of tablet PCs. This generates consumer surplus in tablet demand.     

Simulating media platform mergers

The empirical analysis of media platforms economics has often neglected the multi-homing behaviour of advertisers. Assuming away the cross-substitutability and/or complementarity between the advertising slots of different platforms could damage the quality and the robustness of counterfactual analysis. To evaluate the consequence of such an abstraction, we compare the simulation results of hypothetical platform mergers when the demand on the advertising side is derived from a Translog cost model which allows for multi-homing, and when it is approximated by using a simple log-linear inverse demand model that ignores the differentiation among media platforms’ advertising slots. Ignoring the existence of substitutes or complements on the advertising side would result in overpredicting the losses of the viewers’ surplus and in underpredicting the gains in platforms’ revenues.     

Demand-Driven Technical Change and Productivity Growth: Theory and Evidence from the Energy Policy Act

We present novel evidence on the effect of market size on technology adoption and productivity. Our tests exploit a natural experiment in the U.S. corn industry where changes to national energy policy created exogenous increases in demand. Difference-in-difference estimates show that the demand shock caused technical change as corn producers adopted higher quality seeds which in turn raised productivity by 7%. We develop a simple model that formalizes the mechanisms underlying our results.     

Quality certification vs. product traceability: Consumer preferences for informational attributes of pork in Georgia

Consumer willingness-to-pay for informational attributes of food products is important information for food producers and supply chain participants and policy makers. We examine consumer demand in the pork sector of the Republic of Georgia. Results of conditional and mixed logit estimation, conducted on choice experiment data, reveal that Georgian consumers treat quality certification and product traceability attributes as substitutes. We also find that producers and other supply chain participants should be concerned primarily with maintaining the appearance of pork products. Retailer specific factors such as location and type of outlet can also substitute for product traceability. Store location and product appearance, however, are complementary attributes. In light of the recent turbulence in Georgia these consideration may be of paramount importance as participants in the supply chain seek to rebuild damaged infrastructure.     

Effects of FTA Provisions on the Market Structure of the Korean Automobile Industry

The Korean passenger car market is dominated by a few domestic producers. In this paper, we investigate whether this market structure is the result of import tariffs and taxes that penalize foreign manufacturers. Our counterfactual simulation under two FTA scenarios shows that the market shares of imported and domestic cars show minimal adjustments, suggesting that import tariffs and taxes may not explain the lack of penetration of import cars in Korea. We predict changes in consumer surplus and discuss the policy implications of our findings.     

Platform competition with free entry of sellers

We study platforms setting access prices and commissions on revenues of sellers engaged in monopolistic competition with free entry, such as the app providers on the app stores of Apple and Android devices. The link between prices on different sides induces the platforms to redistribute all the commission revenues through lower access prices and to set the optimal commission rates from the point of view of consumers, taking into account the pass-through on the prices of sellers, the elasticities of demand and surplus for their services and the elasticity of entry with respect to profitability. We discuss the role of heterogeneous sellers, substitutability between sellers’s products and limitations of the basic alignment of interest due to direct channels for sellers and consumer myopia.     

App store governance: Implications,limitations, and regulatory responses

Events such as the riot at the United States Capitol and tightening constraints on the Russian public sphere have highlighted the socio-political significance of app store governance. This is dominated by Apple and Google as operators of the two largest smartphone platforms. In this article, we analyse two case studies: the removals from app stores in 2021 of the fringe American social media app Parler and of the Russian opposition app Smart Voting. On the basis of this analysis, we identify three critical limitations for app store governance at present: Apple's and Google's dominance, the substantive opacity of their respective app store guidelines, and the arbitrariness with which these guidelines are applied to specific cases. We then assess the potential efficacy of legislative proposals in the EU and US to intervene in this domain and conclude by offering some recommendations supporting more efficacious and socially responsible app store governance.     

Regional relationships between inherent coffee quality and growing environment for denomination of origin labels in Nariño and Cauca,Colombia

International markets are increasingly signaling demand for quality-differentiated coffee, which the Colombian Coffee Growers Federation (FNC) proposed to exploit to identify those regional coffees that would fulfill the requirements to be classified as denomination of origin. The objective of this study was to develop and implement a sound, robust and repeatable approach with and for the FNC to identify regional causal relationships between coffee quality and environmental characteristics as bases for labels of denomination of origin. Environmental differences between coffee-growing areas in the departments of Cauca and Nariño were statistically significant for several characteristics, including the number of dry months, annual precipitation and diurnal temperature range. The dominant varieties (Caturra and Colombia) did not show major differences in quality attributes, and were pooled for the analyses with the environmental data. There are significant differences in biochemical and sensorial product characteristics between the two departments. The spatial patterns in product characteristics exhibit a non-random, regionally-changing structure that is related to those in the environmental data. The generated results provided ample evidence to support the application for regionally-based denominations of origin. Recommendations were derived to help mainstreaming the developed approach and thereby facilitate policy decisions for its use in other geographies and with other crops. Furthermore, the importance of systematic interdisciplinary institutional collaboration for large-scale denomination of origin projects was corroborated for food policy dialogue and decision making. It seems plausible that producers of high-quality products within other commodities are likely to follow the FNC in seeking denomination of origin for their goods. The presented approach is crucial to facilitate policy.     

Mechanism choice and the buy-it-now auction: A structural model of competing buyers and sellers

A striking feature of many online sales platforms is the coexistence of multiple sales mechanisms. Items on eBay, for instance, are frequently offered through auctions, posted prices, and buy-it-now auctions. In this article, I study how this mechanism multiplicity influences the welfare of buyers and sellers. I specify and estimate a structural model of mechanism choice in online markets, in which I consider both sides of the market: On the demand side, buyers' choices among available listings are equilibrium outcomes of an entry game. On the supply side, sellers make equilibrium decisions when choosing sales mechanisms and prices. I estimate this model using data from sales of baseball tickets on eBay and calculate consumer and seller rents in three markets: the actual market with all three sales mechanisms and two counterfactual markets with auctions and fixed prices or only fixed-price listings, respectively. I find that the addition of auctions to fixed-price markets hurts sellers and risk-averse buyers but benefits risk-neutral buyers. Additionally, the consumer surplus increases when buy-it-now auctions are offered but the seller surplus is reduced further. I discuss the intuition for the cause of this result.     

The development of and prospects for organic farming in the UK

The organic sector in the UK is booming with the largest ever wave of farm conversions underway. Consumer demand is currently growing faster than supply. The evidence regarding the factors that have been critical, now and in the past, in causing producers to establish organic systems is reviewed. This review draws on the authors’ own work as well as that of other researchers in Europe and the USA. In the second part of the paper we report on a recent study of the factors that prompt organic producers to abandon registered organic production. This analysis is based on a survey of producers, formerly registered with the Soil Association, who have left the scheme since 1990. Finally, the paper considers the current policy regime with respect to organic farming, the scope for the continued growth of the sector and the debate regarding the design of future policy.     

Evaluating the net benefits of collective reputation: The case of Bordeaux wine

In this paper we develop an original approach to assess the net benefits associated with a generic promotion program using an application to Bordeaux wines. The benefit is computed from the marginal impact of the program’s collective reputation on the individual reputation for sub-regions within Bordeaux. These different marginal impacts are estimated using detailed survey data about the image of Bordeaux wines in seven European countries. We find positive and significant spillover effects from the collective reputation (Bordeaux) that moreover increase with the reputation of the sub-region. These spillover effects, when significantly positive, vary from a minimum of 5% to a maximum of 15% of additional favorable quality opinions. We then calculate a measure of the average net benefits earned by producers from the regional promotion program in selected sub-regions within Bordeaux. Our results indicate that producers in some sub-regions are more likely to benefit from the promotion program and suggest that the current fee structure may not be properly aligned with market conditions.     

A protectionist foodgrain price policy : The case of rice in Panama

Panama has pursued a protectionist price policy for rice, with domestic prices well above the world market level. The government marketing authority purchases sufficient rice to support the established price level and stores or exports the surplus. Although producers benefit, this policy imposes significant costs on consumers, government expenditures and economic efficiency. One policy recommendation is to bring domestic prices in line with the international level. Although free trade is one possibility, a market stabilization programme could be retained. At a minimum Panama's rice price should reflect domestic demand and not production costs. The unfavourable rice-fertilizer price ratio also deserves attention.     

Estimating the Demand for Service Bundles under Three‐Part Tariffs

Consumers may face demand uncertainty when choosing a service plan under three‐part tariffs, and preferences for multiple services may be inter‐dependent. To examine such a demand system, we construct a two‐stage discrete/continuous choice model for service bundles, allowing for interactive utility and preference correlations. Implementing a piecewise maximization approach to consumers’ non‐differentiable utility maximization problem, we estimate the model via simulated method of moments. We empirically illustrate the model using data from a Chinese wireless service provider. Our counterfactual analysis shows that the three‐part tariffs with interchangeable units show no significant loss of revenue, compared to existing tariffs.     

Affirmative Action and Intersectionality at the Top: Evidence from South Africa

Previous research shows that gender‐based board quotas alone do not increase women's share in senior management positions. We study the effects of an affirmative action policy in South Africa, which stipulates group‐based targets for senior management roles, beyond boards, focusing on representing intersectional identities, sex, and race. Our findings show that the policy led to a sizable increase in employment probability in top positions for Black women relative to their employment in these positions in the counterfactual scenario of no policy. We extend our analysis and estimate policy spillovers in education, wages, and self‐employment.     

The exclusion of competing one-way essential complements: Implications for net neutrality

We analyze the incentives of internet service providers (ISPs) to break net neutrality by excluding competing one-way essential complements, i.e. internet applications competing with their own products. A typical example is the exclusion of VoIP applications by telecom companies offering internet and voice services. A monopoly ISP may want to exclude a competing internet app if it is of inferior quality and the ISP cannot ask for a surcharge for its use. Competition between ISPs never leads to full app exclusion but it may lead to a fragmented internet where only one ISP offers the application. We show that, both in monopoly and duopoly, prohibiting the exclusion of the app and surcharges for its use does not always improve welfare.     

Indirect network effects and the quality dimension: A look at the gaming industry

Two-sided markets consist of platforms that need to bring both retail consumers and complementary goods producers on board to be successful. Consumer adoption of these platforms can often hinge on the presence and magnitude of indirect network effects — the positive feedback loop where a larger base of adopters of a primary product (“hardware”) creates a larger market for complementary goods (“software”), which in turn increases the value of the primary good. Prior work attempting to measure indirect network effects often uses aggregate counts of software variety to do so. In this paper, we illustrate the importance of accounting for variation in software quality — a feature present in many markets — when conducting this measurement, and provide the conditions under which not doing so results in over- or underestimation of the actual indirect network effect. We apply our framework to the 7th-generation video game console market with quality-differentiated titles and show that in this market the use of aggregate software measures underestimates the indirect network effects by approximately 30%.     

Welfare effects of public procurement of medicines: Evidence from Ecuador

This article evaluates the welfare implications of a public procurement program, where the Ecuadorian government procures medicines used for cancer treatment and distributes it to patients for free with the aim to benefit the poor. Using a unique dataset on Ecuador’s pharmaceutical market, we estimate a structural model of demand and supply, and focus on two research questions related to this program. First, we consider a targeting strategy commonly implemented in various developing countries, where patients below a given income threshold qualify for the free drug. We compare this with a simpler drug distribution mechanism where every patient is a potential recipient of the free drug and the patients are served on first-come-first-serve basis. Our results show that the poor patients do self-select into the program, and the first-come-first-serve strategy does benefit the poor more compared to the relatively rich. However, the targeting strategy does a much better job in serving the poorest patients. Second, we study the supply side implications of this program. Our counterfactual exercises show that when the government procures low-cost drugs and provides them for free, it distorts the supply side incentives, and hence, market prices of similar low-cost drugs may increase by about 7% in response. Prices of the high cost drugs remain mostly unaffected. Therefore, the policy may end up negatively affecting near-poor patients that did not qualify for the free government drug.     

Do birds of a feather flock together? Platform’s quality screening and end-users’ choices theory and empirical study of online trading platforms

We propose a model which incorporates both quality and quantity in end-users’ interactions and analyze how platforms can use quality screening to alleviate information asymmetry and motivate end-users’ participations. We address the question from theoretical and empirical perspectives. In the theory, we build a model in which two platforms compete but only one of them screens sellers’ products. We show that the quality screening influences consumers’ expectations of product quality and their choices of sellers and platforms. The resulting screening effect, together with the network and competition effects, further drives sellers to enter different platforms. The equilibrium result indicates that sellers’ incentives to join the platform that screens products follow a non-monotonic relationship with respect to the observable quality of products. We estimate the model in Alibaba’s Platforms - Tmall and Taobao. The results are consistent with the theory. Counterfactual analysis suggests quality screening benefits consumers and Alibaba.     

Attention Platforms,the Value of Content,and Public Policy

This paper shows that two related aspects of attention platforms are important for the sound economic analysis of public policy including antitrust: first, attention platforms generate valuable content. Even though people often don’t pay for content, we know from revealed preference that content is valuable because people spend a considerable amount of time—which has an opportunity cost—consuming it. Second, demand for advertising and the supply of content are interdependent. A decrease in the demand for advertising reduces the returns to supplying content and therefore the amount of content that is provided. Accounting for the value of content and these positive feedbacks cannot determine optimal interventions; but failing to do so can result in policies that reduce consumer—as well as advertiser—welfare. The paper then considers the implications of these considerations for public policy: particularly privacy regulation and antitrust enforcement. From the standpoint of promoting consumer welfare, the failure to account for the value of content and the ad-content interdependencies increases the chances that authorities do not intervene when they should and do intervene when they should not.

     

Food demand studies in Sub-Saharan Africa: a survey of empirical evidence

The recent empirical food demand studies on Sub-Saharan Africa show significant advances in demand specification and methodology, especially in the application of less restrictive and theoretically consistent flexible functional forms. The findings to date establish some broad patterns on effect of income, household demography and life cycle, location, and prices on food demand patterns. However, the numerical values of the demand estimates are less generalizable because of an insufficient number of data points to separate the true demand component from other confounding factors, which are linked to differences in modeling and estimation of demand relations. The priority for future research is to generate sufficiently detailed demand estimates that have a high utility for disaggregated policy analysis, but are based on a theoretically consistent and comparable methodology.