Pricing in Segmented Markets, Arbitrage Barriers, and the Law of One Price: Evidence from the European Car Market

The paper uses micro‐level price data from the European car market to examine why there are deviations from the law of one price. The absolute law of one price is strongly rejected, but there is convergence to its relative version. Two sets of explanations are considered: (i) price‐setting in segmented markets, and (ii) arbitrage barriers. Overall, the determinants of arbitrage costs have more explanatory power. The single most important factor is the distance between markets. Evidence for Belgium and Luxembourg suggests that a single currency lowers price differences significantly.     

Social economics and economics imperialism

Address delivered at a session on April 2, 1993 at the Midwest regional meetings of the Association for Social Economics, Indianapolis, IN.     

Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions

This paper studies federal auctions for wildcat leases on the Outer Continental Shelf from 1954 to 1970. These are leases where bidders privately acquire (at some cost) noisy, but equally informative, signals about the amount of oil and gas that may be present. We develop tests of rational and equilibrium bidding in a common values model that are implemented using data on bids and ex post values. We also use data on tract location and ex post values to test the comparative static prediction that bidders may bid less aggressively in common value auctions when they expect more competition. We find that bidders are aware of the "winner's curse" and their bidding is largely consistent with equilibrium.     

Gender-Based Vicarious Sensitivity to Disempowering Behavior in Organizations: Exploring an Expanded Concept of Hostile Working Environment

The purpose of this study was to explore evidence of gender-based vicarious sensitivity to disempowering behavior in organizations, expanding the concept of hostile working environment beyond the context of sexual harassment. Male and female graduate and undergraduate students viewed 10 video segments of Anita Hill's interview by U.S. senators during the October 1991 confirmation hearings of Supreme Court Justice Nominee, Clarence Thomas. Although no significant relationship was found between the personal attributes of age and ethnicity to perceptions of disempowering behavior, female participants reported seeing significantly more offensive behavior in the video segments than did male participants. The results are discussed in terms of greater female sensitivity to common forms of disempowering behavior in organizations, and having a disparate negative impact and systematically placing women at a disadvantage in today's workforce.     

Introduction: What Role Can Experiments Play in Research on Regulation?

Journal of Regulatory Economics -     

The impact of capacity expansion on the market value of the firm

This paper empirically investigates the impact of capacity expansion decisions on the market value of the firm. Event study methodology is used to estimate the abnormal change in stock prices around capacity expansion decision announcements. On the day of the announcement, the magnitude of the price change is abnormally high, evidenced by a significantly positive mean standardized square of the abnormal change (Beaver's U-statistic). We also analyze factors that we could affect the direction and magnitude of the abnormal change in the stock prices. We find that the change in price on the day of the announcement is positively and significantly related to the real growth rate of the industry, and negatively and significantly related to the variability of demand. A negative relationship between the price change and industry capacity utilization is also found which can have important implications for companies which follow the wait-and-see approach to capacity expansion decisions. We also find management ownership to be a significant predictor in explaining stock price changes around these announcements.