Access to Bottleneck Inputs under Oligopoly: A Prisoners' Dilemma?

We analyze the incentives of vertically integrated oligopolists to concede access to their bottleneck inputs to an entrant in the downstream market. First, two vertically integrated incumbents make access price offers to an entrant that chooses which one to accept, if any. Second, firms compete on Salop's circle. The firms may be asymmetrically located on the circle, to reflect differences in consumer shares. For some levels of asymmetry, the incumbents face a prisoners' dilemma with respect to conceding access to their bottleneck inputs. Entry by a downstream firm may lead to lower retail prices. However, entry may also lead to higher retail prices for the access provider and for the entrant. We also consider the cases where there are several incumbents and where the entrant makes the access price offers.     

Quality of schooling and inequality of opportunity in health

This paper explores the role of quality of schooling as a source of inequality of opportunity in health. Substantiating earlier literature that links differences in education to health disparities, the paper uses variation in quality of schooling to test for inequality of opportunity in health. Analysis of the 1958 NCDS cohort exploits the variation in type and quality of schools generated by the comprehensive schooling reforms in England and Wales. The analysis provides evidence of a statistically significant and economically sizable association between some dimensions of quality of education and a range of health and health-related outcomes. For some outcomes the association persists, over and above the effects of measured ability, social development, academic qualifications and adult socioeconomic status and lifestyle.     

International migration and universal healthcare access: evidence from Mexico’s ‘Seguro Popular’

Although ‘Seguro Popular’ (SP), a healthcare programme for the uninsured, has been in place in Mexico for more than a decade, its consequences for international migration both to and from the country have received little scholarly attention. Using the spatial variation in the programme’s coverage generated through the rollout over time, this paper examines the effects of SP on the number of emigrants and return migrants per household. Based on data from Mexico’s National Survey on Demographic Dynamics for 1997–2014, the analysis confirms that being affiliated to SP does not reduce the number of emigrants per household, but such affiliation is, however, positively related to the number of returnees per household. These results are valid across different subsamples of the population and time periods and are robust to omitted variable bias. Our findings have important implications for understanding the effects of social protection policies on international migration patterns.     

Impacts of Hedonic and Utilitarian User Motives on the Innovativeness of User‐Developed Solutions

When individual consumers develop products for their own use, they in part expect to be rewarded by the use value of what they are creating (utilitarian user motives), and in part expect to be rewarded intrinsically by such things as the fun and learning experience derived from creating it (hedonic user motives). This paper shows a first‐of‐type study to understand the relationship between individual consumers' motives to innovate and the novelty and utility of the solutions they develop. The theoretical framework integrates self‐determination theory and goal‐setting theory. The major findings of this study are that utilitarian user motives positively affect the utility of user‐developed innovations. In contrast, hedonic user motives drive solution novelty; the more an innovator is “in it for fun,” the more novel the solution developed. However, hedonic user motives also have an inverted U‐shaped relationship with solution utility. When the dominant motive for developing an innovation is the joy of the creative process rather than use value, the utility of what is developed is negatively affected. These findings are of research interest, and can be of significant practical interest to producers hoping to benefit from user‐developed innovations. For the first time, it has been possible to show that the adjustment of hedonic rewards, for example by means such as gamification, can affect the nature and utility of solutions individuals create.     

Unobserved Heterogeneity,Exit Rates,and Re‐Employment Wages

Exit rates from unemployment and re‐employment wages decline over a period of unemployment, after controlling for worker observable characteristics. We study the role of unobserved heterogeneity in an economy with asymmetric information and directed search. We show that the unique equilibrium is separating and that skilled workers have more job opportunities and higher wages. The composition of the unemployed varies with the duration of unemployment, so average exit rates and wages fall with time. The separating equilibrium relies on performance‐related pay schemes and the ability of firms to commit to renting an input that is complementary to worker skills.     

Extension services,product quality and yields: the case of grapes in Argentina

This article studies the impact of publicly subsidized agricultural extension services on yields and product quality. We use panel data from grape producers in Mendoza, Argentina to estimate the impacts of farmer trainings. We find a negative overall impact on yields and evidence of a positive average impact on the adoption of higher‐quality grape varieties. By analyzing the dynamic pattern of the estimated effects, we find evidence of a temporary decrease in yields suggesting the existence of an adjustment process following the introduction of higher‐quality grapes. The overall negative effect on yield is driven by a sharp drop in the year of participation. This fades after year one, and two to three years after treatment we observe increases in higher‐quality grape production. Findings reinforce the importance of temporal dimension of extension services.     

Market Power and Multimarket Contact: Some Evidence from the Spanish Hotel Industry

This paper analyses the effect of multimarket contact on firms’ behaviour. According to Bernheim and Whinston [1990], firms that meet in several markets for an infinite number of periods may find it profitable to redistribute market power among markets where they are operating. We present evidence supporting this prediction by using data from the Spanish hotel industry. Moreover, we also find that the omission of variables measuring multimarket contact creates a downward bias on the effect of concentration on prices. This result questions previous conclusions about the role of competition in industries where multimarket behaviour is expected.     

Universal Service and Entry: The Role of Uniform Pricing and Coverage Constraints

Universal service objectives are pervasive in telecommunications, and have gained new relevance after the introduction of competition in many markets. Despite their policy relevance, little work has been done allowing for a thorough discussion of instruments designed to achieve universal service objectives under competition. We intend to fill this gap, and disaggregate the problem into interacting forms of regulatory intervention such as uniform pricing and coverage constraints. It is shown that these are not competitively neutral and may have far-reaching strategic effects. Under uniform pricing, equilibrium coverage of both incumbent and entrant may be lower than without regulation. These effects depend on which measures are imposed at the same time, thus no single measure can be evaluated in isolation. We also point out that different groups of consumers are affected in different ways, making welfare comparisons difficult.     

Social norms,cooperation and inequality

This paper analyzes the outcomes that can be supported by social norms in a society of infinitely lived and patient agents that are randomly matched in pairs every period to play a given game. I find that any mutually beneficial outcome can be supported by a self-enforcing social norm under both perfect information and a simple local information system. These Folk Theorem results explain not only how social norms can provide incentives that support cooperation in a community, providing support to the concepts of social capital and corporate culture, but also how they can support inequality and discrimination.I am grateful to David Levine for invaluable guidance and ideas. I also thank Anna Aizer, Hongbin Cai, Walter Cont, Ernesto Dal Bó, Jean-Laurent Rosenthal, Federico Weinschelbaun, William Zame, anonymous referees and seminar participants at Universidad de Buenos Aires, UCLA, Universidad T. Di Tella, Harvard Business School and Stockholm School of Economics for very useful comments and discussions     

Strategies for Fiscal Reform in the Context of the EMU: the Case of Portugal

The authors use an endogenous growth dynamic general‐equilibrium model, which accommodates the institutional constraints of the Stability and Growth Pact, to study tax reform in Portugal. Simulation results suggest that tax cuts financed in a nondistortionary way increase long‐term GDP; i.e., they are efficiency improving, but do not always increase welfare. The tradeoff between efficiency and welfare is alleviated when reductions in public spending or increased public indebtedness finance the tax cuts. Since these mechanisms are not realistic under the institutional setting of the Stability and Growth Pact, tax reform in Portugal must involve trading off distortionary tax margins. In this case, the best strategy to increase both efficiency and welfare is to increase investment tax credits and finance them either through personal income taxes or through employers’ social security contributions.