Political competition,tax salience and accountability. Theory and evidence from Italy

This paper argues that electoral competition may hinder rather than foster political accountability, especially when elected officers can choose among a number of tax instruments. We develop a political agency model showing that politicians in more competitive jurisdictions use less salient tax instruments more intensely. Defining salience as visibility or, analogously, as voters' awareness of the costs associated with specific government revenue sources, we argue that voters are less likely to hold politicians to account for the associated tax burden of a less salient instrument. This in turn implies that strategic politicians will more heavily rely on less salient revenue sources when electoral competition is stronger. Using data on Italian municipal elections and taxes over a 10-year period, we determine the degree of salience of various tax instruments, including property taxes (high salience) and government fees for official documents (low salience). We then show that mayors facing stronger competition for re-election use less salient tax instruments more intensely.     

Global energy forecasting competition 2017: Hierarchical probabilistic load forecasting

The Global Energy Forecasting Competition 2017 (GEFCom2017) attracted more than 300 students and professionals from over 30 countries for solving hierarchical probabilistic load forecasting problems. Of the series of global energy forecasting competitions that have been held, GEFCom2017 is the most challenging one to date: the first one to have a qualifying match, the first one to use hierarchical data with more than two levels, the first one to allow the usage of external data sources, the first one to ask for real-time ex-ante forecasts, and the longest one. This paper introduces the qualifying and final matches of GEFCom2017, summarizes the top-ranked methods, publishes the data used in the competition, and presents several reflections on the competition series and a vision for future energy forecasting competitions.     

Protection for sale under monopolistic competition: Beyond the CES

We extend the protection for sale model of Grossman and Helpman (1994) by introducing a general model of monopolistic competition with variable markups and incomplete pass-through. We show that the structure of protection emerging in the political equilibrium not only depends on the weight attached by the government to consumer welfare when making its policy decision, but also on the degree of market power of firms and on the terms-of-trade variations due to the degree of pass-through. Our results highlight the importance of preferences in shaping the structure of protection and are consistent with the occurring of protectionism also in unorganized industries.     

Above and beyond? How businesses can drive sustainable development by promoting lasting pro-environmental behaviour change: An examination of the IKEA Live Lagom project

Current global changes require new business approaches driving sustainable development on all fronts. To date, most business approaches have focused on sustainable marketing and corporate social responsibility initiatives. In this field study, we examine IKEA's Live Lagom project, a 3-year behaviour change initiative that aimed to explore how to go above and beyond conventional approaches demonstrating how businesses could support sustainable development by supporting their customers' attempts to live more sustainable lifestyles. We examined the effectiveness of the project involving multifaceted behaviour change interventions, testing for behavioural changes both during and after the project period. In addition, we explored changes in participants' attitudes towards the company. Findings show that the extensive set of interventions led to changes in pro-environmental behaviours across all three participant groups with potentially positive impacts on the customer–company relationship. The article thus provides a call for further businesses to engage in similar behaviour change projects that would allow citizens to engage in more sustainable lifestyles and behaviours across contexts.     

On pure-strategy Nash equilibria in price–quantity games

This paper examines the existence and characteristics of pure-strategy Nash equilibria in oligopoly models in which firms simultaneously set prices and quantities. Existence of a pure-strategy equilibrium is proved for a class of price–quantity games. If the demand function is continuous, then the equilibrium outcome is similar to that of a price-only model. With discontinuous demand and limited spillover, there are rationing equilibria in which combined production falls short of market demand. Moreover, there might again be an equilibrium reflecting the outcome of a price game. Competition in price and quantity thus yields Bertrand outcomes under a variety of market conditions.     

Beyond antitrust populism: Towards robust antitrust

The populist use of competition policies is on the rise again, associated with the growth of big-tech companies in the era of digital platforms. This article sees antitrust populism as a re-emerging force in the United States and Europe via greater politicisation of competition law enforcement. It addresses the basic tenets of antitrust populism in order to expose the fundamental problems that populist use of competition law entails. I argue for a rethink of antitrust policy on the intellectual foundations laid down by what Mark Pennington describes as ‘robust political economy’. We need greater regulatory humility and antitrust enforcement which takes both innovation and welfare seriously.     

Financial analyst coverage for U.S. firms facing foreign competition: Evidence from trade liberalization

This study examines financial analyst coverage for U.S. firms following an increase in foreign product market competition. To capture exogenous shocks to domestic firms' competitive environments, we exploit a quasi‐natural experiment from large import tariff reductions over the 1984 to 2005 period in the manufacturing sector. Using data for the years before and after large tariff reductions, our difference‐in‐differences analysis shows evidence of a significant decrease in analyst coverage for incumbent U.S. firms when they face greater entry threat from foreign competitors. We also find that analysts with less firm‐specific experience and less accurate prior‐period forecasts are more likely to stop following the domestic firm when foreign competition intensifies. Overall, the findings suggest that foreign product market competition from global trade liberalization is an important determinant of financial analysts' coverage decisions.     

Pricing used books on Amazon.com: a spatial approach to price dispersion

This paper estimates a spatial autoregressive (SAR) model of price dispersion using publicly available internet bookselling data. It uses a semiparametric adaptive estimator that does not require the usual Gaussian assumption of maximum likelihood (ML) estimators. The results suggest that both price competition and seller heterogeneity are key drivers of the observed price dispersion. The paper finds that sellers with large sales volume, newly established sellers and US mainland states-based sellers tend to price lower. The identified significant spatial interaction is evidence of spatial price competition. Controlling for everything else, a seller asks a lower price when large sellers charge relatively high prices, which is also evidence of price-based selling and undercutting.     

Parties,divided government,and infrastructure expenditures: Evidence from U.S. states

This paper examines the impact of parties and divided government on infrastructure expenditures for transportation, education, and social services in U.S. states. As infrastructure expenditures are considered a bi-partisan priority, we hypothesize that divided governments expand infrastructure spending compared to governments under true Democratic or Republican control. We test this hypothesis using U.S. state-level data over the period 1970 to 2008 and find that divided governments indeed increase expenditures for these budget categories. Specifically, divided governments spend more on transportation than unified Democratic governments, and more on education and social services than unified Republican governments. The effect is most pronounced for the core infrastructure of transportation and even stronger when only looking at capital outlays instead of total expenditures.