An Examination of Entry and Competitive Performance in Rural Banking Markets

This article explores the change in the level of competition in rural banking markets after the deregulation that occurred following passage of the Riegle‐Neal Act of 1994. Using an empirical model that utilizes both the number of banks and the value of deposits in a cross‐section of 278 rural markets, we decompose the impact of the entry of new banks into resulting changes in per capita demand and the costs/profits of local banks in 1994 and 2004. The results support the view that local banking markets have become more competitive since the mid‐1990s.     

Estimating Reaction Functions in Experimental Duopoly Markets

It is well known that, in general, there are a multitude of supergame equilibria in noncooperative duopoly markets, suggesting the inability (without severe restrictions) of theory alone to determine the 'best' strategy in a repeated game context. Axelrod's prisoner's dilemma simulation tournaments have led to the view of the somewhat cooperative 'tit-fortat' approach as an attractive strategy, in particular compared to an alternative strategy of 'always defecting' (choosing at all times the single period Nash solution). In this paper, we use data obtained from two independent posted-offer duopoly experiments to investigate the actual dynamic reaction functions of participants. Neither of the above seems to be commonly employed as a pure strategy.We also provide some support for the Axelrod view of 'tit-for-tat' as the most profitable strategy.     

Do international shocks affect small wholesalers and retailers?

Previous research has suggested that the smallest firms are those most vulnerable to international competition, as measured by exchange rate fluctuations and import shares. However, that work—and the overwhelming bulk of the empirical literature on determinants of exit or firm survival—dealt entirely with the manufacturing sector of the economy. This paper analyzes annual US data for 1989–2005 for about 50 wholesale and retail sectors to explain small firm exit rates in several employment size categories. The main result is that wholesalers respond negatively to a stronger currency in a manner similar to that of manufacturers, while retailers are generally unaffected.     

Strategic and deterrent pricing responses to antitrust investigations

This paper examines the issue of the effects of antitrust on pricing through two empirical studies. The first analyzes time series of prices in five industries involved in antitrust cases to determine whether the various stages of the antitrust process influenced pricing behavior. Some evidence of a ‘deterrent’ effect is found, with real prices lower than their pre-investigation level following the conclusion of the case; a major part of the pricing reaction occurs prior to the filing of formal charges. The second study provides additional evidence of the existence of such a ‘strategic’ reaction to the onset of investigation through an examination of prices in 23 industries investigated but not charged with price fixing.     

An empirical investigation of owner–manager labor-supply behavior

This paper uses data from the University of Michigan's Panel Study of Income Dynamics to examine an owner–manager's labor-supply decision. Graphical analysis is used to motivate the central hypothesis tested, which is that the hourly wage paid to comparable hired managers is the marginal price of leisure to the owner–manager and will help determine his hours worked. The results suggest that this is an appropriate interpretation, with the average elasticity of hours-worked with respect to cost of comparable hired managerial services equal to + 0.23.     

Market Power and Incentives to Form Research Consortia

It is well known that instability is a limit to the formation of cartels, and that some synergies are required to give cartel members an advantage over outsiders. In this paper, we explore theoretically the linkage between cost-reduction alliances (like research joint ventures) and the formation of cartels. The former have negative external impacts on outsiders, while the latter have positive external effects on outside (independent) competitors. We find that when the decisions to join both are made simultaneously the cartel can be profitable and stable for a smaller number of members than previously found for cartel formation alone by Salant et al. (1983, Quarterly Journal of Economics 98, 185–199). This result follows both for open membership and exclusive membership rules, and suggests a possible anticompetitive impact of research joint ventures.     

Central city crime and suburban economic growth

This paper explores the relationship between inner-city crime patterns and suburban income growth, analysing data on 318 US counties for selected metropolitan statistical areas of 32 states within the United States from 1982 to 1997. The findings suggest that violent crime does seem to have a negative impact on close-in suburbs, with a less negative impact farther away from the central city (becoming positive at some point). While results are not as robust as we had hoped they are consistent with flight to further-out suburbs rather than migration to different metropolitan areas in response to urban crime.     

State antitrust enforcement in the US and implications for small business entry and relocation

This article examines the impact of the important, yet little studied, state-level antitrust enforcement activity on entry and relocation behaviour by small US firms. Feinberg and Husted (2011) have shown that this enforcement, especially nonhorizontal cases, may be viewed by potential entrants as a negative aspect of the state business climate. However, they did not pursue a more disaggregate analysis of small firm entry behaviour; nor did they investigate different responses between manufacturing, wholesaling and retailing firms. Another related issue is the extent to which state cases filed in tandem with federal investigations have the same impact on establishment entry as do purely ‘independent’ cases. These considerations are dealt with in this article. The author uses annual state-level data from the Statistics of US Business to examine entry and relocation reactions to state antitrust enforcement by firms within three small-business categories: 1–19 employees; 20–99 employees; 100–499 employees. Generally speaking, the smallest retail and wholesale firms seem to favour vigorous antitrust activity, especially enforcement targeted against cartel behaviour by suppliers. The largest small-firm retailers and wholesalers (those with 100–499 employees) seem somewhat threatened by such activity, especially the more controversial nonhorizontal enforcement. However, it must be acknowledged that the effects on entry or relocation of small firms – both positive and negative – are quite small.     

Integrating service and design: the influences of organizational and communication factors on relative product and service characteristics

The aim of this study is to identify the organizational and communication antecedents, and evaluate the consequences on relative product and service characteristics, of the use of service-sourced information by product designers during new product development. An empirical study of 121 product design managers demonstrates that a firm’s market orientation is improved by a healthy working relationship between product designers and service employees. Such a relationship motivates designers to use service-sourced information disseminated to them, enhancing both product and service characteristics of the new offering. The authors discuss how communication channels and information content affect the information use of product designers. Product designers value written information most. Information use does not relate to the frequency of receiving verbal or electronic information. Information about product ergonomics positively influences product designers’ perceptions of the information, whereas information on product aesthetics negatively influences their perceptions.

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