Increasing Competition and the Winner's Curse: Evidence from Procurement

We assess empirically the effects of the winner's curse which, in common–value auctions, counsels more conservative bidding as the number of competitors increases. First, we construct an econometric model of an auction in which bidders' preferences have both common– and private–value components, and propose a new monotone quantile approach which facilitates estimation of this model. Second, we estimate the model using bids from procurement auctions held by the State of New Jersey. For a large subset of these auctions, we find that median procurement costs rise as competition intensifies. In this setting, then, asymmetric information overturns the common economic wisdom that more competition is always desirable.     

Capital asset pricing model in Portugal: Evidence from fractal regressions

We examine risk profiles of the Portuguese stock market index component stocks using a novel approach to the classical capital asset pricing model (CAPM). Specifically, we estimate the CAPM via fractal regressions that allow studying the marginal effects at selected scales. In this way, we can reveal whether the risk is perceived differently by market participants with different investment horizons. Apart from the analysis itself, we provide new statistical insights into the issue of separating and comparing the scale-specific effects with statistical validity. We find several stocks deviating from an expected risk perception homogeneity across investment horizons. This is true for both analysed periods, i.e. before and after the global financial crisis. There are also several stocks that changed their relationship to the market portfolio in between, which has strong implications for possible portfolio construction. The proposed methodology is not limited to financial topics but can be used in any discipline where the scale-specific marginal effects might be of interest.     

Competition and Participation in Religious Markets: Evidence from Victorian Scotland

In 1885, the largest churches in Scotland were engaged in a dispute about state funding. We use data generated in the course of that dispute to test two related hypotheses. First, as market size (proxied by population) increases, the competitiveness (or complexity) of the religious market structure will not decrease. Second, religious activity, as measured by giving per member, church income and participation, will not decrease as market competitiveness (or complexity) increases. Empirical evidence lends support to the first hypothesis, but casts doubt on the second, and the supply-side theories underpinning it, which posit a causal link between increased competitiveness (complexity) and higher levels of religious activity. In interpreting the results the importance of a rich understanding of institutional arrangements—particularly market structure, governance and financing—is underlined.     

The pricing of foreign exchange risk: Evidence from ADRS

This study investigates whether U.S. investors, in pursuing of international diversification, are exposed to foreign exchange risk through the ownership of American depository receipts (ADRs) and if so, whether such risk is systematic. We find that returns of ADRs from countries such as the United Kingdom, Japan, and South Africa are sensitive to their corresponding foreign exchange rate fluctuations. Using a technique developed by Sweeney and Warga (1986), we estimate the risk premium associated with foreign exchange risk. The results suggest that the total foreign exchange risk is priced at equilibrium. However, the incremental foreign exchange risk that is not imbedded in the market returns does not command a risk premium. The evidence indicates that the incremental foreign exchange risk is diversifiable or can be effectively hedged.     

Competition and Costs: Evidence from Competitive Tendering in the Scottish National Health Service

This paper estimates the impact of competitive tendering on cleaning costs in Scottish National Health Service hospitals. Unlike previous studies, which have relied on cross‐sectional data, a five‐year balanced panel of 176 hospitals is used to estimate a series of fixed effects regression models. These panel estimates suggest that previous studies have likely over‐estimated the cost‐savings associated with competitive tendering. The findings also suggest that the lower costs associated with competitive tendering have more to do with auction theory than with any intrinsic efficiency of the private sector.     

Time-varying pricing may increase total electricity consumption: Evidence from Costa Rica

We study the implementation of a time-varying pricing (TVP) program by a major electricity utility in Costa Rica. Because of particular features of the data, we use recently developed understanding of the two-way fixed effects differences-in-differences estimator along with event-study specifications to interpret our results. Similar to previous research, we find that the program reduces consumption during peak-hours. However, in contrast with previous research, we find that the program increases total consumption. With a stylized economic model, we show how these seemingly conflicted results may not be at odds. The key element of the model is that previous research used data from rich countries, in which the use of heating and cooling devices drives electricity consumption, but we use data from a tropical middle-income country, where very few households have heating or cooling devices. Since there is not much room for technological changes (which might reduce consumption at all times), behavioral changes to reduce consumption during peak hours are not enough to offset the increased consumption during off-peak hours (when electricity is cheaper). Our results serve as a cautionary piece of evidence for policy makers interested in reducing consumption during peak hours—the goal can potentially be achieved with TVP, but the cost is increased total consumption     

Entry and Competition Effects in First-Price Auctions: Theory and Evidence from Procurement Auctions

Motivated by several interesting features of the highway mowing auction data from the Texas Department of Transportation (TDoT), we study three competing procurement auction models with endogenous entry. Our entry and bidding models provide several interesting implications. For the first time, we show that even within an independent private value paradigm, as the number of potential bidders increases, bidders' equilibrium bidding behaviour can become less aggressive, and the expected procurement cost may rise because the "entry effect" is always positive and may dominate the negative "competition effect". We then develop structural models of entry and bidding corresponding to the three models under consideration, controlling for unobserved auction heterogeneity, and use the recently developed semi-parametric Bayesian estimation method to analyse the data. We select the model that best fits the data, and use the corresponding structural estimates to quantify the "entry effect" and the "competition effect" with regard to the individual bids and the procurement cost.     

Strategic Tax Competition in Switzerland: Evidence from a Panel of the Swiss Cantons

Abstract. Tax competition is discussed as a source of inefficiency in international taxation and in fiscal federalism. Two preconditions for the existence of such effects of tax competition are that mobile factors locate or reside in jurisdictions with – ceteris paribus – lower tax rates, and that taxes are actually set strategically in order to attract mobile production factors. It is well known from studies about Swiss cantonal and local income tax competition that Swiss taxpayers reside where income taxes are low. In this paper, empirical results on strategic tax setting by cantonal governments are presented for a panel of the Swiss cantons from 1984 to 1999. Completing the evidence on Swiss tax competition, income tax rates in cantons are the lower, the lower the tax rates of their neighbors.     

Competition between private and public schools: testing stratification and pricing predictions

When there are peer effects in education, private schools have an incentive to vary tuition to attract relatively able students. Epple and Romano [American Economic Review 88(1) (1998) 33] develop a general equilibrium model characterizing equilibrium pricing and student selection into schools when peer effects are present. The model predicts that competition will lead private schools to give tuition discounts to more able students, and that this will give rise to an equilibrium exhibiting stratification by income and ability between the public and private sectors and to a hierarchy of schools within the private sector. The model also yields a variety of comparative-static predictions. The predictions of the model are tested in this paper using a unique data set assembled by Figlio and Stone [Research in Labor Economics (1999) 115]. Tests of equilibrium predictions of the model reveal that: The propensity to attend private school increases with both income and ability, and, among private schools, the propensity to attend the highest-tuition schools rises with both income and ability. Within private schools, tuition declines with student ability, with a substantial number of even high-income households paying little or no tuition. The correlation between income and ability is greater in public than private schools. Tests of comparative static predictions of the model reveal that: Both income and ability become stronger predictors of private school attendance as public school expenditure falls. Income becomes increasingly important in determining placement in the private school hierarchy as public school expenditure falls. Discounts to ability in the lowest-quality private school decline as public school expenditure rises while discounts to ability in the highest-quality private school are little affected by changes in public school expenditure. Expenditure in private schools rises as expenditure in public schools increases. These empirical results are consistent with the predictions of the theoretical model.     

财政与规制管理竞争——理论与实证

经济竞争并不仅仅是私营经济部门的主要特征:政府自身同样积极参与竞争以吸引新的商业投资、就业和收入以鼓励经济发展。此外,这是一个有争议的重大问题。某些观察家把这种竞争看作是一种导致实力削弱的“竞相向下限造就”的破坏性力量,结果造成伴有公众     

Downstream gas pricing in an era of upstream deregulation

State public service commission regulation of gas utility pricing is examined during the period of wellhead price deregulation. A model which incorporates asymmetry in price setting during a period of changing input costs is estimated. Statistical analyses suggest public service commission regulation slowed the increase in gas utility prices during periods of rising costs. Gas utility pricing was not monitored as closely when purchased gas prices fell, thereby altering the rate structure in favor of industrial customers. Federal Energy Regulatory Commission policies designed to promote competition by restructuring the transmission sector of the gas industry after 1985 appear to have suppressed retail prices in industrial markets.     

银行竞争的微观效应:来自融资约束的经验证据

银行竞争的加剧将促使银行更多地搜集和挖掘企业信息,降低银企之间的信息不对称,进而缓解企业融资约束。为此,本文在构建理论模型分析的基础上,进一步实证检验了这一假定。实证检验结果表明,银行竞争显著降低了企业投资-现金流敏感性,即缓解了企业融资约束;该结论在控制内生性问题,以及采用不同银行竞争指标和融资约束指标进行稳健性检验后仍旧成立。同时,本文还发现,银行竞争降低了企业债务融资成本,从而为银行竞争降低企业融资约束这一结论提供了补充性证据。进一步地,在企业信息不对称程度更严重的情况下,银行竞争缓解企业融资约束的作用更大,且银行竞争能够降低企业贷款的交易成本,从而为银行竞争降低融资约束的作用机制提供了证据支持。本文不仅丰富了银行竞争的经济后果以及融资约束等相关领域文献,同时还具有较为重要的政策含义。     

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.     

Oligopolistic Competition and Intra-industry Trade: Evidence From the OECD

This paper develops a general reciprocal-markets model of intra-industry trade in oligopolistic industries. It shows that the effects of industry characteristics on the extent of bilateral intra-industry trade, as measured by the Grubel-Lloyd index, are invariant to whether firms compete over homogeneous or differentiated products. Based on this model, we investigate industry determinants of bilateral intra-industry trade, using internationally comparable industry data for 22 manufacturing industries in 12 OECD countries during 1970–1985. Our estimates indicate that, even after controlling for idiosyncratic industry and country-pair effects, our measures of the industry determinants explain variations in the intensity of bilateral intra-industry trade, for the most part, in accord with what the theory predicts.     

Using the stochastic health state function to forecast healthcare demand and healthcare financing: Evidence from Singapore

Typically, healthcare financing for an ageing population requires projections on healthcare demand and cost. However, projecting healthcare demand based on projected elderly does not consider changes in population health state over time. This paper proposes a new approach to forecast health variables using a stochastic health state function and the well‐established Lee–Carter stochastic mortality model. With the estimated health state at each age over time, we project the hospitalization rate, healthcare demand, and financing cost for Singapore using historical life tables and hospital admission data. Our findings show that while hospital insurance claims increase owing to an aging population, improving health state could save costs from hospital insurance claims. This has policy implications: more attention should be given to preventive healthcare such as health screening to improve the overall health state of the population.     

Exchange rate pass-through to domestic producer prices: Evidence from Korean firm-level pricing survey

This note studies exchange rate pass-through to the prices of domestically produced goods, exploring the firm-level pricing survey conducted by the Bank of Korea. The data reveal the imported inputs channel of, as well as nonlinear and asymmetric, exchange rate-pass-through.     

Competition,benchmarking, and electoral success: Evidence from 69 years of the German Bundestag

The German electoral system ensures that there is always at least one federal legislator per constituency. This legislator can face competition from additionally elected competitors to the Bundestag from precisely the same constituency. The existence of several legislators per constituency allows voters to benchmark their quality against each other. We analyze the causal impact of having more elected competitors from the same constituency on legislators’ personal success versus the success of their parties. Our data cover the legislative terms in the German Bundestag and federal elections in the period 1953–2021. In our analysis, we rely on exogenous variation in elected competitors by investigating changes induced by legislators who leave the Bundestag during the legislative period and their respective replacement candidates as instrumental variables. We find that legislators are less successful in elections when they are exposed to elected competitors from the same constituency. The results suggest that benchmarking possibilities are relevant for voters to evaluate their representatives.     

Taxes,Competition and Finance for Albanian Enterprises: Evidence from a Field Study

This paper analyses the results from a survey, carried out in 1999, of more than 100 enterprises in Albania. The main finding of the survey is that registered businesses regard competition from the informal sector as the most important problem they face in doing business. Unregistered firms have a significant advantage because they are able to evade the relatively high tax burden. Poor access to loans is also a significant obstacle. Enterprises tend to rely on own sources of funds for business start-up expansion. Larger enterprises are more likely to apply for loans than smaller ones, but having applied, are no more likely to be successful.     

Deregulation, consolidation and banks efficiency in Singapore: Evidence from event study window approach and Tobit analysis

A three-year window analysis together with the Data Envelopment Analysis (DEA) approach is employed to investigate the effects of mergers and acquisitions on the Singapore banking groups’ efficiency. The results suggest that the merger has resulted in a higher Singapore banking groups’ mean overall efficiency. We do not find evidence of more efficient acquirers compared to the targets and that the acquiring banks’ mean overall efficiency tends to improve from the merger with a more efficient bank. The Tobit regression results suggest that bank profitability has positive impact on bank efficiency, whereas poor loan quality has negative influence on bank performance. (JEL: G21, D24) All findings, interpretations, and conclusions are solely those of the authors’ and do not necessarily represent the views of the institutions to which they belong. We would like to thank the anonymous referees for their comments and suggestions. The remaining errors are of our own.     

市场竞争与外商直接投资技术转移--来自中国制造业的证据

目前对技术溢出的研究较少关注"溢出源",尤其是基于市场竞争视角和中国背景的经验研究.文章首先讨论了Wang-Blomstrom假说,进而借助"市场结构-技术创新"关系的研究成果提出"市场竞争-外资技术引进"关系的有关假说,并探讨了异于常规的、面向外资企业的"竞争"的定义和度量,最后基于中国制造业面板数据进行实证检验.实证检验结果表明,外资企业在东道国市场面临更大竞争会促进其增加技术引进,对于发展中东道国,需要具有一定规模和优势的企业而不是接近完全竞争的市场结构,才能提高外资企业面临的竞争程度.