The problem of market size for Canadian cable television regulation

The policy of the Canadian radio television and telecommunications commission of awarding an exclusive right to provide cable television (CATV) service within a given licensed service area (LSA) rests partly on the presumption that CATV costs reflect economies of scale that are large relative to market size. Cost estimates from crosssections of CATV operations from 1985–1991 show increasing returns to scale and suggest that many LSAs were too small to capture these economies. The results also indicate that economies of scale for basic service declined over the 1980s and that the ‘natural monopoly’ characteristics of CATV may be eroded by further technological and regulatory changes.     

Measuring the degree of market power in the Greek manufacturing industry

This paper investigates the competitive conditions in the Greek manufacturing industry, estimates the net and the total welfare losses due to the possible existence of market power and investigates factors affecting the market power at sectoral level and over time. The bootstrap method is applied to assign measures of accuracy to the statistical estimates. The empirical results imply the presence of imperfect competition in the Greek manufacturing industry and the existence of welfare losses. Furthermore, the findings indicate that labor intensity, the sector size and the openness influence the market power at the sectoral level and labor intensity, while the number of firms and the openness affect the market power over time.     

The impact of the regulation of the cable television industry: the effect on quality-adjusted cable television prices

Between the mid-1980s and early 1990s, cable television rates increased substantially. Simple price comparisons over the regulated and deregulated eras are difficult as the programming changed simultaneously. Using a modified hedonic framework to allow for the lack of competition on the supply side of the industry, this paper imputes the price for regulation era cable packages using consumers’ estimated willingness to pay for individual satellite networks during the unregulated period. Then a ‘quality adjusted’ price for the cable package offered in 1985 is estimated. On average, regulation benefited consumers by keeping prices below monopolist's profit maximizing price.     

Measuring market power in multi-product oligopolies: the US meat industry

This paper develops and estimates an economic model for measuring market power in a quantity-setting oligopoly engaged in the joint production of demand-related goods. The model, which allows for firms' conjectures about both same and cross-market responses to own output variation, is applied to the US meat (beef and pork) industry. He hypothesis that the industry's equilibrium reflects price taking behaviour is rejected. The hypothesis of no cross effects cannot be rejected. Roughly, half of the farm-to-retail price spreads for beef and pork appear to be attributable to market power.     

Technology adoption in response to changes in market conditions: Evidence from the US petroleum refining industry

This paper analyzes the determinants of the levels and rates of technology adoption for petroleum refineries that survived the period 1980–1989, during which the conditions of product demand and crude oil supply changed significantly. Regression models are specified to investigate the growth of technology-related capacity, the growth of technology complexity, and the rates of adoption estimated from a diffuse model of technology use. Both levels and rates of adoption are hypothesized to be affected by refinery size, regulatory status, elements of local markets, and geographical factors. Empirical results generally suggest that compared with the supply-side factors of crude oil sources and regulatory subsidies, refinery size and demand-side factors, such as total consumption, consumption growth and fluctuation, and changes of the consumption mix, are responsible for the most part of the determination of technology adoption for refineries surviving the 1980s.     

The market response to product safety litigation

This paper examines the stock market impact of 29 product liability lawsuits reported in the Wall Street Journal from 1970–1985, an additional series of Agent Orange events, and a set of regulatory events involving product risks. If these events and the costs associated with them were fully anticipated, then there would be no effect on the stock market price. Adverse stock market effects increase if the event involves a product liability action, bodily injury, or a court decision. Lengthy newspaper coverage and initial reports also have a strong effect. If there are multiple defendants, the market cost per firm is reduced. One widely publicized good news event—the final Agent Orange decision—led to a dramatic increase in stock prices.     

Labour market institutions and the industry wage distribution

The paper studies the industry wage structures of Austria, Norway, the union sector of the U. S. as well as the non-union sector of the U. S. We make comparable regressions for each country, and are thus able to compare the sectoral earnings patterns controlling for the usual individual characteristics. Our results confirm the hypothesis that the pattern of the inter-industry pay structure is largely independent of labour market institutions: High paying industries in a non-union environment tend to pay high wages also in regimes where bargaining is very centralised and coordinated.This, however, does not mean that collective bargaining does not matter. The influence is mainly on the amount of wage dispersion: We find considerably lower industry pay gaps in centralised Austria and Norway than in decentralised U. S. Within the U. S., pay differentials within the union sector slightly exceed those of the non-union sector.The results give support to non-competitive explanations of the labour market. If efficiency wage mechanisms are the reason for wage differentials we expect central bargainers to internalise these effects. Competitive explanations, on the other hand, would predict no difference between the non-union outcome and a central agreement aiming at achieving full employment.This work was conducted while we were both affiliated with the University of California at Berkeley, and we thank the Institute of Industrial Relations at the University of California, Berkeley, for its support and hospitality. The research was supported by the Austrian Fonds zur Förderung der wissenschaftlichen Forschung under the project JO548-SOZ (Zweimüller) and the Norwegian NORAS under the LOS program (Barth). A preliminary version of the paper was presented at the Labour Seminar at the University of California, Berkeley. We thank the participants, especially Bill Dickens and Jonathan Leonard for valuable comments. We are indebted to Bill Dickens also for giving us access to the U. S. data set CPS 1983. Thanks also to Herbert Walther for useful comments.     

高科技产业发展中的政府与市场

知识经济呼唤高科技产业的快速发展,高科技产业的发展离不开政府和市场。本文拟对高科技产业发展过程中,政府的支持与市场机制的作用作一些探讨,以期找到政府调控和市场力量的最佳结合点,从而探寻促进高科技产业发展的途径。一、高科技企业的生命周期和资本需求特点高科技企业的生命周期一般可细分为6个阶段:即研究开发期、创业期、早期成长期、加速成长期、稳定成长期和成熟期。各个阶段具有不同的企业特征、组织结构和资金来源。表1描述了美国高科技企业的生命周期及其特征和资金来源。在高科技企业不同的成长阶段上,企业对资金的需求呈现出不同的特征。     

The market response to corporate scandals involving CEOs

This article examines corporate scandals of both a financial and nonfinancial nature between 1993 and 2011 which is expressly linked to a firm’s CEO. Findings suggest that in the short run, investors react adversely to such events and that recalcitrant CEOs end up costing their shareholders dearly. Such scandals are more likely to occur among large firms, firms with insiders on the board and where the value of options granted to a firm’s managers is substantial. However, firms with more cash flows are less likely to be mired in such scandals, and their stock returns are less likely to be affected. There is an increase in stock price volatility of affected firms in the days following the announcement of the scandal. A point of respite for investors is the damage being confined to the short run. The stock price performance of the firms affected by the scandals matches the performance of control firms in the long run post-announcement. However, the operating performance of the sample firms is better than their matched counterparts in the years after the scandal. We contribute to the extant literature by considering corporate scandal events that are the doings of a firm’s CEO and not necessarily financially motivated.     

Power laws and the market structure of tourism industry

In this article, we use both graphical and analytical methods to investigate the market structure of one of the world’s fastest growing industries. For the German and Italian datasets, we show that the size distribution of tourism industry is heavy-tailed and consistent with a power-law behavior in its upper tail. Such a behavior seems quite persistent over the time horizon covered by our study, provided that during the period 2004–2009, the shape parameter is always in the vicinity of 2.5 for Germany and 2.6 for Italy. Size of the tourism industry has been proxied by the lodging capacity of hotel establishments: hotels, boarding houses, inns, lodging houses, motels, apartment hotels, tourist villages, and tourist apartments. Data belonging to the EUROSTAT and ISTAT databases have been used for Germany and Italy, respectively. Our aim is not to provide the best fit to the data but simply to focus our attention on the right tail of the size distribution of tourism industry. Understanding the behavior of the upper tail is indeed fundamental to capture the structure of the market. This study adds a new evidence to the list of empirical phenomena for which power laws hold.     

Effects of the single market on the Austrian insurance industry

The integration of European services markets and the implementation of associated European Union directives open up formerly closed national markets to competition from the Single Market. The purpose of this study is to measure the effects of liberalization on technical efficiency and the productivity development of the insurance industry. As an example we construct efficiency frontiers for the years 1992 through 1999 for the Austrian insurance industry using Data Envelopment Analysis. We use the resulting efficiency scores also to construct a Malmquist productivity index for the transition period. In search for effects from the Single Market, returns to scale, economies of diversification, and distribution channels we relate efficiency and productivity measures to several firm specific characteristics. For this purpose we use unbalanced and balanced panels of individual firm data.All correspondence to Thomas Url. The authors gratefully acknowledge valuable comments from David Cummins, Finn Forsund, Shawna Grosskopf, Michael Theil, seminar participants at the University of Vienna, the University of Business Administration Vienna, the Austrian Institute of Economic Research, the Austrian Insurance Association, and the SOR-Conference Jena, the EOR Conference Brussels, the 25th EGRIE Conference Vienna, and two anonymous referees. Ursula Glavninger provided valuable research assistance.     

E-commerce and the market structure of the recorded music industry

In this article, we study the impact of the development of e-commerce on the concentration of the recorded music industry in France, for the period 2003–2010. First, we find that over the whole period, CD sales, measured at the distributor level, are less concentrated online than offline. Second, we find that sales concentration online has increased between the early period of e-commerce (2003–2006) and the later period (2007–2010).     

Measuring market power and the efficiency of Alberta's restructured electricity market: An energy‐only market design

We measure the degree of market power execution and inefficiencies in Alberta's restructured electricity market. Using hourly wholesale market data from 2008 to 2014, we find that firms exercise substantial market power in the highest demand hours with limited excess production capacity. The degree of market power execution in all other hours is low. Market inefficiencies are larger in the high demand hours and elevate production costs by 6.7%–19% above the competitive benchmark, with an average of 13%. This reflects 2.1% of the average market price across all hours. A recent regulatory policy clarifies that certain types of unilateral market power execution is permitted in Alberta. We find evidence that suggests that strategic behaviour changed after this announcement. Market power execution increased. We illustrate that the observed earnings are often sufficient to promote investment in natural gas based technologies. The rents from market power execution can exceed the estimated capacity costs for certain generation technologies. However, we demonstrate that the energy market profits in the presence of no market power execution are generally insufficient to promote investment in new generation capacity. This stresses the importance of considering both short‐run and long‐run electricity market performance measures.     

Measuring technical progress in matching models of the labour market

Technical Progress in matching models of the labour market has not received serious attention. This article examines the impact on the results of these models when an attempt is made to allow time to enter in a realistic fashion, and finds that recently published results on the possibility of multiple equilibria are overturned. Also, different parametric representations of the matching technology are compared, with problems of more general forms not satisfying regularity conditions being identified. While the possibility of Pareto-improving government intervention due to multiple equilibria arising out of increasing returns to scale cannot be supported, the results suggest a role for government intervention in the labour market.     

Measuring the cyclicality of labour market flows using individual transitions

We investigate whether the choice of a business cycle measure affects estimates of the cyclicality of labour market flows. We exploit precise administrative data on individual labour market transitions and study the association of alternative business cycle measures with individual transitions between employment and unemployment. We find indeed substantial heterogeneities across business cycle indicators that may have affected the results of prior studies on labour market transitions.     

Solvency regulation in the property-liability insurance industry

This paper evaluates guaranty funds and solvency regulations. One main question addressed is how solvency regulations will benefit consumers. Many previous studies have found that most forms of solvency regulations do not have significant deterrent effects on insolvency. Even when solvency regulations are effective, they might still adversely affect consumers. This could happen because increasing the probability of solvency usually requires raising premiums. Therefore, it is interesting to see how regulators should design insurance regulations that benefit consumers. Insolvency of insurance firms provides a unique environment under which one is able to analyze the effects of solvency regulations and guaranty funds on the quality of insurance products and on consumers. This paper shows that guaranty funds are always desirable, but solvency regulations are of certain value only when they have the effect of protecting guaranty funds and alleviating the disincentives which they create.     

Is the stock market sticker shocked? A study of market response to recent CAFE regulations in the US

In response to increasing environmental concerns, to improve energy security and to conserve energy use, the US government has proposed a new round of Corporate Average Fuel Economy (CAFE) standards. Many studies have focused on how the CAFE standard can be met by various automakers that have sales in the US market, and the costs and benefits of the companies meeting the standard. However, the stock markets’ view on the impact of the standard on automakers’ profitability is largely absent. We study the more recent episode of the CAFE regulation in an effort to try to detect the market response using the standard event study method. Our empirical findings suggest that while the stock market had some responses to the regulation, the large-scale and systematic reaction to the regulation is absent. In addition, the market response pattern to the regulation appears to be tied to the individual company’s compliance condition if there is any significant response at all.     

Income distribution, market size and the evolution of industry

An industry typically experiences initial mass entry and later shakeout of producers over its life cycle. However, the timing of the evolution varies substantially across markets. By exploring the dynamic interactions between technology progress and demand diffusion, our theory suggests that the cross-market differences of industrial evolution are largely the result of underlying demand factors. Particularly, higher consumer income or larger market size tends to drive faster demand diffusion and earlier industry shakeout. A comparative study on the US and UK television industries supports the theoretical findings.