The Year in Review: Economics at the Antitrust Division, 2007–2008

This paper covers the activities of the Economic Analysis Group (EAG) of the Antitrust Division, U.S. Department of Justice, during 2007–2008. It describes the economic analysis undertaken by EAG in several important investigations, and in other activities as an advocate for competition. The views in this paper are those of the authors and do not necessarily reflect those of the Antitrust Division.     

Choice under restrictions

Nearly every decision a person makes is restricted in some way. While we are painfully aware of some of these restrictions, others go largely undetected. This paper presents a conceptual framework for understanding how restrictions interact with situational and individual characteristics, as well as goals to influence behavior. Implications for overlooked research opportunities in choice modeling are presented and discussed.     

Initial evidence on the market impact of the XBRL mandate

In 2009, the SEC mandated that financial statements be filed using eXtensible Business Reporting Language (XBRL). The SEC contends that this new search-facilitating technology will reduce informational barriers that separate smaller, less-sophisticated investors from larger, more-sophisticated investors, thereby reducing information asymmetry. However, if some larger investors can leverage their superior resources and abilities to garner greater benefits from XBRL than smaller investors, information asymmetry is likely to increase. Using a difference-in-difference design, we find evidence of higher abnormal bid-ask spreads for XBRL adopting firms around 10-K filings in the year after the mandate, consistent with increased concerns of adverse selection. We also find a reduction in abnormal liquidity and a decrease in abnormal trading volume, particularly for small trades. Additional analyses suggest, however, that these effects may be declining somewhat in more recent years. Collectively, our evidence suggests that a reduction in investors’ data aggregation costs may not have served its intended purpose of leveling the informational playing field, at least during the initial years after mandatory adoption.     

Goals and values of farmers revisited: Gasson fifty years on

Fifty years have passed since the Journal of Agricultural Economics published an article by Ruth Gasson on the goals and values of farmers in England. Gasson's research demonstrated the complexity of motives and, in particular, the importance farmers attached to the activities of farming (their intrinsic orientation), even among the operators of larger farms. Gasson's article has been widely cited as seminal by subsequent researchers on farmer behaviour. Governments have acknowledged the importance of understanding the motives of farm decision-makers when explaining their responses to economic and policy signals and designing schemes to shape farmers' behaviour. Brexit and the creation of national agricultural policies for each constituent UK country have highlighted the need for this better understanding, though precisely how this information can be used remains difficult. The continued dominance of an intrinsic orientation is particularly important for policies encouraging retirement and for the agri-environment. Gasson's legacy is also important in the quantification of goals and values to segment, and hence model, the heterogeneity of likely farmer responses to market and policy signals.     

Industry structure and labor market flexibility in the South African manufacturing sector: A time series and panel data approach

This paper presents a joint analysis of labor market flexibility and product market structure. Our investigation confirms earlier results of imperfect competition in South African manufacturing where we find an average mark-up of 50% for the period 1970 to 2004 that is without consistent trend over time. The contribution of the paper is to provide a theoretically grounded means of linking output market conduct to labor market flexibility. We infer the proportion of labor associated with rigidities in the labor market from the mark-up, and find that two thirds of total labor employed in South African manufacturing is associated with rigidities. We find that this proportion falls during the 1980s and rises during the 1990s, suggesting an increase in labor flexibility followed by a decrease.     

Wet and wild: results from a pilot study assessing injuries among recreational water users in Western Australia

To identify, describe and compare injuries among three water sport activities: kite surfing (KS), personal watercraft (PWC) and towed water sports (TWS). The study was a cross sectional, online survey. The setting was on Perth, Western Australia's popular beaches and riverbanks. Main outcome measures were number of injuries and level of severity; level of exposure and protection measures. Overall, 43% reported at least one injury in the past 12 months, a rate of 22.3 injuries per 100 h. Kite surfers were more likely to report an injury than PWC or TWS. One-half of injuries occurred while on the water. Most injuries were caused by landing awkwardly (56%) and/or trying new tricks (41%). Despite 90% of respondents having used at least one personal protective equipment (PPE) item, half (49%) reported always using a personal floatation device. This study provided information on KS, PWC and TWS injuries as well as a range of safety behaviours. It is recommended that these results form the basis of further research to reduce injury rates and encourage the use of PPE items.