The price effects of cross‐market mergers: theory and evidence from the hospital industry

We consider the effect of mergers between firms whose products are not viewed as direct substitutes for the same good or service, but are bundled by a common intermediary. Focusing on hospital mergers across distinct geographic markets, we show that such combinations can reduce competition among merging hospitals for inclusion in insurers' networks, leading to higher prices (or lower‐quality care). Using data on hospital mergers from 1996–2012, we find support that this mechanism operates within state boundaries: cross‐market, within‐state hospital mergers yield price increases of 7%–9 % for acquiring hospitals, whereas out‐of‐state acquisitions do not yield significant increases.     

Shorting costs and profitability of long–short strategies

We examine how the profitability of long–short arbitrage strategies based on anomalies is affected after adjustment for two shorting costs: implicit cost due to unavailability of stocks in the short-leg to sell short and loan fees actually paid to stock lenders. The combined shorting cost amounts to almost 40 percent of long–short gross returns over the sample period from January 2006 to December 2017. After adjustment for these shorting costs, long–short arbitrage profits are thus reduced by almost 40 percent. Even after adjustment for risk, the proportion of shorting costs is also substantial. If other trade-related transaction costs are considered, long–short arbitrage profits would be reduced further. Our results provide explicit evidence that casts doubt on the profitability of long-short arbitrage strategies based on anomalies.     

Three current account balances: A “Semi-Structuralist” interpretation

Three current account imbalances – one very large deficit (the United States) and two surpluses (Japan and the Euro area) – are subjected to a minimalist structural interpretation. Though simple, this interpretation enables us to assess how much of each of the imbalances require a real exchange rate adjustment. According to the estimates, a large part of the U.S. current account deficit (nearly 2 percentage points of the 2006 deficit of 5(1/2)% of GDP) will undergo an adjustment process that involves real depreciation in its exchange rate. For Japan, a little more than 1 percentage point (of GDP) of the current account surplus is found to require an exchange rate movement (real appreciation) as the surpluses adjust down. For the Euro area, less than half a percentage point of its current account surplus is found to require an adjustment via real appreciation.     

Activation and variation of the United Nation’s cluster coordination model: a comparative analysis of the Haiti and Japan disasters

The coordinated response to extreme events is critical as illustrated by recent disasters in Haiti and Japan. As a way for coordinated provision of international humanitarian assistance to disaster-hit countries, the Office for the Coordination of Humanitarian Affairs (OCHA) developed cluster coordination model (CCM). With content analysis and network analysis of OCHA situation reports, this study checked four premises regarding activation of CCM, interaction between national and international actors, roles of proximity country, and level of cluster coordination. This study found that there were meaningful variations in implementing the CCM for 2010 Haiti and 2011 Japan disasters. From the analyses, we found that the current CCM may be vulnerable to black swan disasters; thus, extensive and active estimation of national disaster management capacities should be conducted to prevent collapse of national disaster management system. However, the reconciliation of state sovereignty and international humanitarian assistance also should be considered.     

Entry deterrence and innovation in durable-goods monopoly

This paper investigates the efficiency of innovation investments in a durable-goods monopoly when a potential entrant threatens to innovate as well. We show that the durability of the good endows the monopolist with the power to discourage rival innovation since current sales alter the demand for a new generation of the good. The equilibrium is therefore determined not only by the incentive for intertemporal price discrimination in durable-goods monopoly, but also by the incumbent's concern for maintaining the technological leadership. We demonstrate that entry deterrence followed by no innovation always implies underinvestment in innovation.     

When and Why Do Takeovers Lead to Fraud?

This paper develops a model explaining how acquisitions of controlling block ownership can facilitate post‐takeover fraud by new managers when investor protection is poor. Based on disclosures of embezzlement or breach of fiduciary duty in Korean firms, we find that the probability of explicit looting in takeover targets is 13%, almost five times as large as a matched sample of non‐targets. Post‐takeover frauds are primarily driven by transfers of minority blocks, while the corresponding probability in majority acquisitions is statistically indistinguishable from the non‐targets. These findings may explain why minority acquisitions of controlling blocks are popular under poor investor protection.     

Resolving the impasse on hospital scale economics: a new approach

The existence of scale economies in hospitals in important for both public and managerial policy, yet production and cost function studies have found conflicting evidence. More recently, more sophisticated studies have typically found scale diseconomies, which is inconsistent with the views of industry participants and observers. In the early 1980s. California deregulated both private and public health insurance (Medical), which provides a natural laboratory for examining hospital efficiency. Using Stigler's original and multivariate survivor analysis, we resolve the conflict in favour of scale economies, and reconcile the controversy. The survivorship methodology in simple to apply, and a useful tool in conjunction with statistical cost and production studies.     

Patterns of technology life cycles: stochastic analysis based on patent citations

Patent analysis has been considered as an effective means of estimating phases of a technology life cycle. However, previous studies have not considered the dynamic and idiosyncratic aspects of a technology’s progression since they were based on deterministic methods, mainly fitting s- or double s-shaped curves to patent application counts. Moreover, previous methods cannot be executed at the individual patent level. We propose a stochastic technology life cycle analysis to trace the phases of a technology’s progression based on patent citations and identify the patterns of technology life cycles at the individual patent level. At the heart of the proposed approach are a hidden Markov model to estimate the probability of a system being at a certain hidden state from observation and cluster analysis to group a set of objects according to their similarities. A case study of patents about laser technology in lithography is presented.     

Explorations - Introduction: Towards Lesbian,Gay, and Bisexual Perspectives in Economics: Why and How They May Make a Difference

The economics profession has only recently begun to include research on lesbians and gay men, but we argue that a lesbian economics has long existed, with documentation of anti-lesbian discrimination, discussion of its private and social costs, and practical work for change. This tradition, along with the newer traditions built upon work with gay men and bisexual people, provides a basis for feminists to expand work in economics on lesbian and gay issues. The articles in the symposium propose ideas for future research, for learning from other disciplines, and for creating a more welcoming academic climate.