Health insurer market power and primary care consolidation

This paper analyzes how health insurance market concentration impacts the market structure of primary care physicians. In more concentrated insurance markets, physicians are found to work in larger practices and their practices are more likely to have a hospital with an ownership interest. Physicians are also less likely to report being in a competitive physician market, consistent with practice consolidation. Our results suggest that consolidation in insurance markets impacts the competitive structure of physician markets.     

Entrepreneurial finance and economic growth

This paper develops a theory of the centralization of firms engaged in multi-market collusive agreements. A centralized organization (called the unitary or U-form) allows price coordination across several markets, whereas with decentralized (the multidivisional or M-form) firms the probability that the antitrust authority will find evidence of collusion on one market while investigating the other is lower. We show that the firm’s choice of internal structure depends to a large extent on product substitutability and the instruments used by the antitrust authority.     

What’s fit to print: The effect of ownership concentration on product variety in daily newspaper markets

This paper examines the effect of ownership concentration on product position, product variety and circulation in the US daily newspaper market. The effects of consolidation in differentiated product markets cannot be determined solely from theory. Because multi-product firms internalize business stealing, mergers may encourage firms to reposition products, leading to more, not less, variety. Using data on the assignment of reporters to topical areas at 706 newspapers in 1993, 1999 and 2004, results show that both differentiation and variety increase with ownership concentration. Moreover, greater concentration increases variety over a range of topics and does not reduce readership.     

Appropriate contract durations in the German markets for on-line reserve capacity

This paper explores the economic implications of different contract durations in markets for on-line (primary and secondary) reserve capacity in Germany with the crucial feature of separate markets for spot energy and reserve capacity provision. The analysis is based on an equilibrium model developed by Just and Weber (Energy Econo 30:3198–3221, 2008) for reserve markets. It reveals the implicit trade-off for the bidders and implicit interdependencies between the reserve and the spot markets. Even if the markets are not explicitly coordinated, they are interrelated through the dispatch decisions of the power plant owners. The paper concludes that the current German reserve market design is inefficient and should be improved. The results clearly show that shorter periods (with resulting lower variations in overall electricity demand) lead to more efficient dispatch and market results. Not only prices in the reserve capacity markets are expected to be lower, but also spot market prices. As these benefits can be partially reaped by owners of large generation portfolios also under longer contract durations, it discriminates against smaller generation companies and can potentially deter market participation. Further, the paper takes a broader perspective and discusses security concerns against shorter contract durations. It is shown that the opportunity costs character of the reserve market implies sufficient incentives for supplying online reserve capacity. The concerns do not appear to be predominant and it should be possible to manage them appropriately.     

Endogenous Growth Cycles in Continuous Time

The endogenous dynamics of a closed constant returns multi-market economy are examined in which agents face downward sloping demand. The trigger for growth in this model is a technological change that warrants costly adjustment in input quantities by agents. In the resulting dynamic game, relative prices within markets remain constant. Consequently, all own price elasticities are constant. In markets characterized by lower cost of capital the unique outcome is collusion in which agents do not incur adjustment cost and there is no adoption of new technology. But in other markets a unique non-cooperative equilibrium exists in which agents do incur the cost of adopting the new technology. Only three specifications of adjustment costs are feasible. Output increases along an S-shaped time path with or without a non-explosive cyclical component.     

我国经济转型期间的劳动力市场分割:从所有制分割到行业分割

本文对我国改革开放以来劳动用工单位的劳动力市场分割进行了全面分析.主要观点为:(1)实证分析显示我国劳动力市场中存在所有制分割与行业分割.(2)上世纪90年代中期,劳动力市场中所有制分割向行业分割演化.(3)劳动力市场分割的演化,是经济转轨过程中的特有现象,也是我国经济改革不断深化,市场力量日趋强大的过程.     

A case for water utilities as cooperatives and the UK experience

This article explores the creation of consumer cooperatives as a means of privatizing water utilities. The first section examines the structure of ownership and sets out Hansmann's theoretical basis for determining which category of persons is most efficiently assigned ownership. The section extends the discussion of market contracting costs by considering the externalities and social costs associated with a water utility. The heart of the paper is the second section which applies the theory of efficiently assigned ownership to the case of water utilities. The third section briefly reviews the literature on the relative efficiency of private and public utilities and also succinctly applies the theory of the firm to the question of vertical integration in the case of water utilities. The fourth section discusses the UK's experience with water utilities. The final section draws together the paper's conclusions.   The application of Hansmann's general theoretical scheme for assigning ownership leads to the conclusion that water utilities should be consumer cooperatives. Consumer-owned utilities would confront lower market contracting and ownership costs, than would investor-owned utilities. Additionally, the social costs and externalities that are particular to water are better left to consumers who are more prone to take them into account in their decisions.     

Investment Liberalization and Cross‐Border Acquisitions: The Effect of Partial Foreign Ownership

This paper investigates the optimal strategy for a multinational to conduct FDI. We find that the incentives to use acquisition rather than greenfield investment change significantly if the multinational is allowed to have already an ownership interest in the target local firm before the market is fully liberalized. Interestingly, when investment costs are sufficiently high, the multinational prefers not entering the market at all with partial ownership in place, whereas a cross‐border takeover would be the optimal entry mode otherwise. For intermediate levels of entry costs, holding a stake in the local producer reverses positively the profitability of a full acquisition compared to greenfield investment.     

Maximum likelihood estimation of search costs

In a recent paper Hong and Shum [2006. Using price distributions to estimate search costs. Rand Journal of Economics 37, 257-275] present a structural method to estimate search cost distributions. We extend their approach to the case of oligopoly and present a new maximum likelihood method to estimate search costs. We apply our method to a data set of online prices for different computer memory chips. The estimates suggest that the consumer population can be roughly split into two groups which either have quite high or quite low search costs. Search frictions confer a significant amount of market power to the firms: Despite more than 20 firms operating in each of the markets, we estimate price-cost margins to be around 25%. The paper also illustrates how the structural method can be employed to simulate the effects of the introduction of a sales tax.     

The multi-market analysis of a housing price transmission model

In this article, we examine dynamic relationships among housing prices from four first-tier cities in China from December 2000 to May 2010 and present an equilibrium model of housing price in multi-markets. By explicitly incorporating and modelling endogenous price series in competing housing markets, our empirical model is able to capture the existence of long-run equilibrium relationships and important short-run dynamics and price structures such as price leadership, price transmission lag and asymmetric price responses. Such multi-market analysis has generalized implications and can easily be applied to analyse the pricing dynamics among other real estate markets in the world. Our major contribution lies in two aspects. First, we employ an Error-Correction Model (ECM) with Directed Acyclic Graphs (DAG) to study the price dynamics in the four largest and key housing markets in China. Second, we uncover a price transmission among these housing markets in China and provide an insightful understanding of price adjustment across markets. The revealed effective price transmission and high correlation among these different markets actually is not a good thing for a stable financial system and for the defence against price bubbles in the housing market.     

The empirical effects of competition on third‐degree price discrimination in the presence of arbitrage

Since Borenstein ( 1985 ) and Holmes ( 1989 ), a theoretical and empirical literature has emerged that examines the effects of competition on third‐degree price discrimination. Since transaction costs involved in conducting arbitrage are typically unobserved, empirical investigations in this area have largely been restricted to markets such as for air travel where arbitrage is difficult, if not impossible. Using an entirely novel dataset, this paper documents the effect of competition on price discrimination in the presence of arbitrage in the Canadian online sports betting market where prices for Canadian teams are higher than in the world market. I observe how the prices of Canadian teams change in real time in response to the presence of arbitrageurs that establish Canadian sportsbooks’ observable marginal opportunity costs. I exploit the existence of government betting outlets not subject to arbitrage to obtain reduced form counterfactual estimates of the extent to which competition affects price discrimination in the presence of arbitrage. In this new empirical environment, I find results consistent with the airline literature: competition reduces overall price dispersion and markups, but dispersion and markups shrink more for those in the “strong” market than the “weak” market.     

Stock market reaction to dividend announcements: Evidence from the Greek stock market

This study investigates the market reaction to cash dividend announcements for the period 2000–2004 employing data from the Athens Stock Exchange (ASE). In particular, the paper examines both the stock price and trading volume response to dividend distribution announcements. Dividend distributions in Greece demonstrate noticeable differences to those of the US, the UK and other developed markets. First, dividends in Greece are paid annually rather than quarterly or semi-annually. Second, the Greek corporate laws 2190/1920 and 148/1967 specifically designate the minimum amount for distribution from the taxed corporate profits. Third, neither tax on dividends nor on capital gains was imposed during the period under examination. Fourth, Greek listed firms are characterized by high ownership concentration where major owners are usually involved in management and therefore have less need for dividend announcements as an information source. Despite this neutralized information and tax environment, we document significant market reaction to dividend change announcements, lending support to the “information content of dividends hypothesis”.     

A Pollution Offset System for Trading Non-Point Source Water Pollution Permits

Water pollution from non-point sources is a global environmental concern. Economists propose tradable permit systems as a solution, but they are difficult to implement due to the nature of non-point sources. We present a pollution offset system for trading non-point source water pollution permits. Conventional pollution offset systems suffer from thin markets and transaction costs. In this paper, we show how to overcome these problems with a centrally managed common-pool market. We define permits as allowable nitrate loading to a groundwater aquifer. This trading system utilizes estimates of potential nitrate leaching from land uses, a set of transport coefficients generated from a simulation of nitrate transport in groundwater, an online trading system, and a linear program to clear the market. We illustrate the concept using a hypothetical case study.     

Hedonic Analysis in a Spatial Context: Theoretical Problems in Valuing Location-Specific Amenities*

Hedonic analysis is frequently implemented to generate implicit prices for location-specific amenities within single markets, either in cross-city wage differentials or in intra-city rent gradients. Amenities are shown to be generally priced in both land and labour markets, with single-market valuations tending to understate true amenity values. Establishing a correct multi-market amenity valuation model is seen to depend on the resolution of a host of additional issues.     

Product Market Integration and Wages in Unionized Countries

This paper addresses the effects of product market integration on wages. We develop a two–country general equilibrium model of international trade with imperfectly competitive product markets and unionized labor markets. Integration is modelled as either a fall in fixed or variable trade costs. A reduction in fixed trade costs leads to an unambiguous decrease in wages, whereas a reduction in variable trade costs has an ambiguous effect on wages.
JEL classification : F 15; J 5; L 13     

Competition and ownership structure: Substitutes or complements? Evidence from the Warsaw Stock Exchange

In this paper we analyse the impact of product market competition and ownership structure on firm performance. Our results show that product market competition has a positive and significant impact on performance. Concerning the effect of ownership concentration, we find a U–shaped relationship with performance. Firms with relatively dispersed and relatively concentrated ownership have higher productivity growth than firms with an intermediate level of ownership concentration. This correlation between concentration of ownership and productivity growth is not explained by the type of the controlling shareholder. Finally, product market competition and good governance tend to reinforce each other rather than to be substitutes. Competition has no significant effect on performance for the firms with ‘poor’ governance; on the contrary, it has a significant positive effect in the case of firms with ‘good’ corporate governance. JEL classification: D24, G32, L1, P2.     

China's emerging market for property rights: Theoretical and empirical perspectives1

his paper contrasts state–directed and market–mediated reform of enterprise ownership rights in transition economies. We evaluate China's emerging market for enterprise ownership rights from the perspective of conditions underpinning the Coase Theorem: the assignment of property rights, the degree of competition, and the nature of transaction costs. China's recent experience suggests that policies designed to expand and support the scope of decentralized, market–based restructuring of ownership rights, even under conditions that deviate widely from the ideal assumptions underlying the Coase Theorem, may prove more beneficial than direct official intervention. JEL classification: G34, K11, L1 and P3.     

Competition and Diversification Trends in Telecommunications: Regulatory, Technological and Market Pressures

In this paper, I examine: (i) regulatory, technological and economic trends driving telecommunications diversification and competition; and (ii) substantial investments and marketing efforts of telecommunications firms to diversity and enter each others' markets via vertical integration, joint ventures, and mergers. The Telecommunications Act of 1996 and ongoing regulatory, market and technological trends have addressed concerns that local exchange company (LEC) ownership of essential facilities may hinder diversification into local markets and stimulated substantial competition across historically distinct markets. (For example, long distance companies have entered local markets.) The entry of one LEC into the Connecticut long-distance market demonstrates that the benefits of competition—lower rates and service innovation—will be realized when Bell operating companies are allowed to enter long distance markets.     

Sunk costs of exporting and the role of experience in international trade

This paper estimates the importance of destination‐specific sunk costs of exporting and investigates the role of firms' previous experience in international trade for the decision to export to a market. While destination‐specific sunk costs are important, firms' experience in international trade can help to overcome these costs more easily. In particular, import experience from a market is found to facilitate exporting to this country and export experience from other markets can increase the probability of exporting to a country. This latter effect turns out to be conditional on the characteristics and number of markets served by a firm.