RESALE PRICE MAINTENANCE AND INTERLOCKING RELATIONSHIPS*

Dampening of interbrand as well intrabrand competition is often advanced to justify per se illegality of RPM. We analyze this argument in a context where rival manufacturers distribute their products through the same competing retailers. We show that RPM indeed limits the exercise of competition at both levels and can generate industry‐wide monopoly pricing. The impact on prices depends on the extent of potential competition at either level as well as on the parties' influence in determining the terms of the contracts. Our analysis sheds a new light on ongoing legal developments and is supported by recent empirical studies.     

Cream‐Skimming in Financial Markets

We propose a model in which investors may choose to acquire costly information that identifies good assets and purchase these assets in opaque (OTC) markets. Uninformed investors access an asset pool that has been cream‐skimmed by informed investors. When the quality composition of assets for sale is fixed, there is too much information acquisition and the financial industry extracts excessive rents. In the presence of moral hazard in origination, the social value of information varies inversely with information acquisition. Low quality origination is associated with large rents in the financial sector. Equilibrium acquisition of information is generically inefficient.     

Les conséquences de la proximité de l’information contenue dans les états financiers et de l’information rétroactive relative aux prévisions de flux de trésorerie

Le Financial Accounting Standards Board (FASB) et l’International Accounting Standards Board (IASB), dans leur projet conjoint de norme relative à la présentation des états financiers, remettent à l’étude les éléments de base de la présentation des états financiers. Les discussions préliminaires des deux organismes dans le cadre de ce projet indiquent qu’ils entendent modifier les états financiers exigés de manière à accroître la proximité de l’information liée à la performance relative à chaque période. Les auteurs apportent des preuves en ce qui a trait à ce changement potentiel en analysant l’incidence de la proximité de l’information contenue dans les états financiers sur la capacité des investisseurs d’assimiler les propriétés sérielles des données relatives aux flux de trésorerie et aux régularisations qui sont présentées, pertinentes à la formulation de prévisions. Ils examinent également le rôle que joue l’information rétroactive dans cette relation. Les résultats expérimentaux de l’étude semblent indiquer que les investisseurs non professionnels sont en mesure d’assimiler plus rapidement la relation entre les flux de trésorerie et les régularisations de la période courante et la matérialisation des flux de trésorerie futurs lorsque l’information contenue dans les états financiers est présentée dans un seul état plutôt que lorsqu’elle est subdivisée en deux états. Les auteurs constatent en outre que les investisseurs non professionnels affichent des degrés plus faibles d’erreurs prévisionnelles absolues et une dispersion des prévisions moins grande lorsque l’information contenue dans les états financiers leur est communiquée dans un seul état. Enfin, les auteurs démontrent que les investisseurs non professionnels à qui sont communiquées sur une seule page des observations rétroactives exhaustives quant aux résultats assimilent plus rapidement l’information au départ et, une fois l’apprentissage intégré, formulent des prévisions exactes avec plus de régularité que les investisseurs à qui sont communiquées en deux pages des observations rétroactives, exhaustives ou limitées. Dans l’ensemble, les résultats de l’étude tendent à démontrer l’efficacité des solutions de rechange quant à la présentation des états financiers et l’utilité potentielle de la communication d’observations rétroactives plus exhaustives.     

Income Taxation with Labor Responses

When incomes are exogenously given, U. Jakobsson ( Journal of Public Economics s 5 (1976), 161–168) proved that a progressive tax structure always reduces inequality. We investigate the implications for effective progression of relaxing the assumption of exogenous incomes when individuals have the same preferences but different talents. We extend the standard result and conclude that it is generally impossible to disentangle the respective contributions to inequality reduction of the tax schedule and agents' preferences. For a linear tax schedule to result in less unequally distributed incomes it is sufficient that the elasticity of labor supply be nonincreasing in exogenous income and nondecreasing in productivities. The latter condition proves to be necessary and sufficient when the tax schedule is proportional.     

Consumption, retailing, and medicine in early-modern London

This article examines the early development of specialized retail shops in early modern London. It argues that apothecaries' shops were sites of innovative shop design and display. These practices were responses to attitudes to consumption, the problematic nature of the medical commodities which apothecaries sold, and, particularly, contemporary concerns about their reliability, trustworthiness, and honesty. The article concludes that analyses of the rise of the shop need to be revised to incorporate early developments by producer-retailers, such as apothecaries and goldsmiths, and suggests that investments in retailing were driven more by worries about commodities than enticing customers.     

Relationship between Tobacco Advertising and Youth Smoking: Assessing the Effectiveness of a School‐Based,Antismoking Intervention Program

A significant consumer issue today concerns tobacco advertising and youth smoking behavior and what is being done in the interest of these young consumers to reduce smoking. Since the Master Settlement Agreement earmarked resources for consumer education, progress is being made researching the effectiveness of antismoking advertising and of school‐based, antismoking interventions. This paper explores the effectiveness and potential of one such program to encourage additional interdisciplinary research attention and to provide direction in reducing smoking uptake behavior among youth.     

Why Consumers Choose Managed Mutual Funds Over Index Funds: Hypotheses from Consumer Behavior

Much evidence exists which suggests that the vast majority of equity mutual fund managers do not possess differential information (or skills) which allow them to achieve above average market returns for their investors. Thus, when investors pay fees to equity mutual fund managers for investment advice and management, the very probable outcome is that they are reducing the return that they would otherwise achieve by investing in a nonmanaged index fund that tracks the total stock market (e.g., Wilshire 5000) or some significant portion of it (e.g., the Standard & Poor's 500). The long-term negative consumer welfare implications are large, very possibly in the hundreds of thousands of dollars for individual consumer investors. Drawing largely on insights from the psychology, consumer behavior, and behavioral finance literatures, we offer a series of hypotheses that may partially account for such consumer choices. We conclude with a call for increased government- and employer-sponsored education programs aimed at creating a more informed consumer investor.