Author Index Volume 19 2001

Authors Index

Author Index Volume 19 2001     

The U.S.-China Exchange Rate Debate: Using Currency Offer Curves

The paper introduces an innovative graph for presenting bilateral exchange rates. The currency quantities are on the axes and the exchange rate is the ratio between them, i.e., the slope of a ray from the origin. Behavior is captured by currency offer curves. The paper uses the model to address the issues surrounding China’s export-led growth strategy, i.e., its policy of undervaluing the yuan.     

Tariff protection and workforce gender: Evidence from U.S. manufacturing industries

A data set of 266 four-digit SIC U.S. manufacturing industries is used to examine the relationship between tariff protection and workforce gender. The paper shows that industries with a relatively large proportion of women are more likely to be protected by U.S. tariff policy, even when factors such as wages and human capital are controlled. Furthermore, this result is robust in that it is not driven by any particular industry or industries.     

The Consumer’s Micro-Micro Gasoline Buying Decision

A “micro-micro” consumer problem of gasoline purchases is examined using daily price data. Comparing the optimizing consumer with one who buys gasoline at random, the paper finds optimizers save about 4% of their annual gasoline bill. The paper also provides some evidence about the costs of non-optimal gasoline buying strategies.      

Gains and losses from transfers of solid waste

Municipal solid waste is often transferred to landfills in other regions or states. While municipalities frequently resist imports, the interpretations of the Interstate Commerce Clause require that landfills accept waste regardless of its origin. This may require importers to act in ways that are not in their own best interest. The analysis of this paper suggests that importers benefit from trade when their landfill is so large that it is not exhausted at the end of the planning period. However, when landfill capacity is sufficiently scarce, importing waste is not welfare enhancing. Such municipalities have considerable motivation to try to de facto exclude waste from outside the municipality.     

Mixed bundling with profit and sales objectives

Suppose the marginal cost of a bundle is less than the sum of the marginal costs of the two products that make up the bundle. In this case, even when demands are completely uncorrelated, bundling is profitable but usually reduces total sales. The primary assumption of this paper is that firms are reluctant to bundle because they resist the loss in sales. Three optimization problems are analyzed: no bundling, mixed bundling, and bundling with profits and sales objectives, in which the firm has an objective function with a penalty for lost sales. This paper will show that firms benefit by bundling even if they modify their prices in such a way to reduce (or reverse) any loss in sales.     

Effects of brand-related and market signals on franchisees’ entrepreneurial decisions: a multi-country panel data analysis

This paper analyses the influence of market and brand-related signals on franchisees’ decisions when choosing a franchise brand with which to open an outlet for the first time. Panel data methodology was used to analyse a sample of 1277 chains operating in Spain, Mexico and Peru between 2004 and 2013. The results show that market signals prevail over brand-related signals. Within brand-related signals, franchisees first seek information relating to the brand’s sector and then seek information relating to the brand’s value. Franchisors should match the content of the signals they send to the market to the true characteristics of the franchise. Franchisors should also endeavour to ensure the country where they operate has general and franchise-specific legislation that fosters business activity by both franchisor and franchisee. The use of institutional quality as a signal in a multi-country study represents a significant contribution to the literature on franchising.

     

Product Reliability,R&D,and Manufacturing Cost Shocks

Suppose a firm’s research and development (R&D) improves product reliability which in turn decreases the cost of product failure for both the firm and its customers. The primary research question of the paper is how a firm with market power optimally adjusts its R&D if it experiences a manufacturing cost shock. Our model suggests that a manufacturing cost shock prompts the firm to do less R&D in the cases where the replacement cost is low or the marginal manufacturing cost is high. Conversely, if the replacement cost is high and the marginal manufacturing cost is low, then the firm increases R&D, mitigating some of the increase in the manufacturing cost. The paper also compares the outcomes for reliability, profits, consumer surplus, and social surplus for the optimal R&D case as compared to the case of doing no R&D, paying particular attention to how exogenous changes in the marginal manufacturing cost affect this comparison.     

Economists Need People Too: A Tribute to John Virgo

A Tribute to John Virgo     

The Effect of Alternative e-Prices on eBay Book Auctions

This paper uses the usual eBay auction variables and some data from ABE and Amazon, namely, lot size and the alternative e-price, the lowest price for a given book on a given site, to examine in the question of how information from ABE and Amazon affects eBay auction outcomes. We find that although lot-size sometimes affects bids and final sale price, the alternative e-price effects are more important. Sellers on eBay set their minimum prices below the alternative e-prices, but the closer the minimum price is set to the alternative e-price, the lower the final sale price. Decomposing this result into bidding versus final sale price per se effects, our evidence suggests that the primary comparison shopping effect is on bidding behavior.