Safe Harbours in Merger Guidelines: What Should They Be?

Safe harbours in merger guidelines define post‐merger market concentration or concentration change thresholds below which proposed mergers are unlikely to be anti‐competitive; anti‐competitiveness is usually measured as a ‘substantial lessening of competition’. Yet competition agencies have different safe harbours. We used merger models to run many simulations involving a wide range of market structures and merger‐induced aggregations. The post‐merger unilateral price increases in these scenarios were used to gauge what the safe harbours should be to keep price increases below a specified threshold. The safe harbour thresholds commonly used were found typically to be too restrictive, in that they failed to screen out mergers that were almost certainly competitively benign.     

Measuring lifetime poverty

This paper presents an axiomatic framework for measuring lifetime poverty over multiple periods. For an individual, we argue that lifetime poverty is influenced by both the “snapshot” poverty of each period and the poverty level of the “permanent” lifetime consumption; it is also influenced by how poverty spells are distributed over the lifetime. We axiomatically characterize classes of lifetime poverty indices and derive dominance conditions of poverty orderings for both individual and societal lifetime poverty measurements.     

Fiscal Autonomy and Total Government Expenditure: An Austrian Case-study

The ongoing debate on the efficiency of a federal system versus a centralized system has lead to a diverse and unclear empirical picture of the effects of fiscal decentralization on public sector growth. For analyzing these effects it is crucial to consider the sub-national decision power on taxing and spending. In the current paper, we test for the effects of fiscal autonomy on total government expenditure using time series from 1955 to 2007 for Austria. Determinants of government expenditure are economic growth, fiscal illusion of policy makers, and the unemployment rate. We additionally account for different degrees of sub-national fiscal autonomy. Our econometric results suggest that the often-hypothesized dampening effects of fiscal autonomy cannot be corroborated for the Austrian system.     

STATE DEPENDENT PRICING AND BUSINESS CYCLE ASYMMETRIES*

We present a tractable, dynamic general equilibrium model of state‐dependent pricing and study the response of output and prices to monetary policy shocks. We find important nonlinearities in these responses. For empirically relevant shocks, this generates substantially different predictions from time‐dependent pricing. We also find a distinct asymmetry with state‐dependent pricing: Prices respond more to positive shocks than they do to negative shocks. This is due to a strategic linkage between firms in the incentive for price adjustment. Our state‐dependent model can account for business cycle asymmetries in output of the magnitude found in empirical studies.     

IMPLEMENTING A TRADE FACILITATION AGREEMENT IN THE WTO: WHAT MAKES SENSE?

Abstract.  In the Doha Round, trade facilitation is the negotiating issue in which the 'implementation issue' is most prominent. At the WTO (the Doha Development Agenda) the international community has approached the implementation problem as a challenge to restore mercantilist balance rather than as a need to build good economics into future agreements. The international community has taken on aggressively the development dimensions of trade facioitation through the development banks, bilateral aid agencies and other specialized institutions. Considerable funding has been provided. Though little progress has been made through WTO negotiations, the content of these development programs is supportive of development.     

Worth waiting for: increasing satisfaction by making consumers wait

A truism in the marketing literature, and among many marketing practitioners, is that requiring consumers to wait negatively impacts quality evaluations, purchase intentions and a range of other important outcomes. However, it is also true that consumer waiting or queuing has historically been considered from an operations perspective. The present research takes a different approach and examines waits in the context of their ability to function as a signal of quality. Four experiments demonstrate a required wait can indeed signal quality to consumers and increase, rather than decrease, both purchase intentions and actual experienced satisfaction. Three moderators of this effect are examined: preexisting knowledge, consumption motivations, and the extent to which quality is difficult to objectively determine. The results suggest in situations where quality is important, unknown or ambiguous, managers may increase consumer satisfaction by making consumers wait.     

Natural Resource Exports,Fiscal Policy Volatility and Growth

The combination of poor institutions and erratic macroeconomic policy, as measured by the volatility of fiscal policy, is associated with slower growth. We show that macroeconomic policy is more erratic in countries that are rich in natural resources, especially minerals and fuels, and in those that receive large aid inflows. Poor institutions also play a role. Although Africa is a major receiver of aid and exporter of natural resources, this is not purely an African phenomenon. Output volatility is not associated with slower growth after controlling for institutions and the volatility of fiscal policy.