Auctioning the Airwaves: The Contest for Broadband pcs Spectrum

The House and Senate of the United States Congress recently passed legislation that directs the FCC to establish a system for using auctions to allocate the use of radio spectrum for personal communications services. There is a unique and unprecedented set of issues that arise in this context, which are of interest to economists, industry analysts, regulators, and policymakers. We discuss these issues and evaluate their likely impact on the outcome of the spectrum auctions. In addition, we argue that there may be pitfalls in the auction procedure adopted by the FCC, and we discuss possible alternative procedures.     

The optimum size of the labor-managed firm

Ward's [1958] main result is that an increase in the output price of the labor-managed firm (LMF) decreases its output and members. However, Ward and his followers have not addressed two important elements: the benefit of sharing a public good among LMF members and the increased coordination costs among these members. This paper incorporates these elements to derive the LMF's optimal size and suggests conditions which may alter Ward's perverse result. The example of the Israeli Kibbutzim concerning both incorporating the public goods as well as coordination costs serves as a motivation to the model developed in this paper.     

Takeoffs

This paper identifies factors associated with takeoff—a sustained period of high growth following a period of stagnation. Countries that experience takeoffs average 2.3% annual growth following their stagnation episodes, while those that do not average 0%. Using probit, we find that de jure trade openness is positively and significantly associated with takeoffs. A one‐standard‐deviation increase in de jure trade openness is associated with a 55% increase in the probability of a takeoff in our default specification. Capital account openness encourages takeoff responses, but measures of de facto trade openness are found to be poor predictors of takeoffs. We also examine the determinants of nations achieving “sustained” takeoffs; i.e. those lasting eight years or longer. Takeoffs in countries with more commodity‐intensive output bundles are less likely to be sustained, suggesting that adverse terms‐of‐trade shocks may play a role in ending long‐term high growth episodes.     

Financial Turbulence and the Japanese Main Bank Relationship

Under the Japanese main bank relationship, a bank holds equity in a firm and plays a leading role in its decision-making and financing. This may leave a firm dependent on its main bank for financing due to its information advantage over other potential lenders. This dependency may be particularly severe during episodes of financial turbulence. We examine the sensitivity of returns on portfolios of Japanese firm equity to the returns of their main banks using a three-factor arbitrage-pricing model. We find no significant dependence when coefficient values are held constant over the entire sample. However, the data strongly suggest a structural break in the relationship subsequent to the last quarter of 1997, a turbulent period for Japanese financial markets. When a structural break is introduced, main bank sensitivity increases after the break, usually to significantly positive levels.     

Market price accounting and depositor discipline: The case of Japanese regional banks

We examine the determinants of Japanese regional bank pricing-to-market decisions and their impact on the intensity of depositor discipline, in the form of the sensitivity of deposit growth to bank financial conditions. To obtain consistent estimates, we first model and estimate the bank pricing-to-market decision and then estimate the intensity of depositor discipline after conditioning for that decision. We find that banks were less likely to adopt market price accounting the larger were their unrealized securities losses. We also find statistically significant evidence of depositor discipline among banks that elected to price to market. Our results indicate that depositor discipline was more intense for the subset of banks that adopted market price accounting.     

Price Discrimination by Coupons Restriction

In this paper we show how the use of a restricted number of coupons in the presence of different types of customers is an effective means of implementing a price discriminating policy. Hence, firm profits can be increased even when traditional price discrimination is forbidden.     

A theory of predictable excess returns in real estate

A principal-agent model is employed to characterize the equilibrium mortgage contract. The value of a house depends on the actions of its owner but affects the wealth of both the owner and the lender who writes the mortgage contract with which the house is purchased. Because of this, the buyer is exposed to moral hazard. In some situations, this can lead to inefficient maintenance and predictable excess returns to home ownership. Even though there are potential buyers willing to pay back more money, the bank will not write loans for these consumers because of the adverse incentive effects of such an action.     

A Theory of the Distribution of Underpriced Initial Public Offers by Investment Banks

It is well documented that a firm may choose to offer underpriced securities in an initial public offer. An open question is why investment banks do not retain underpriced offers in their portfolio. We argue that the distribution of underpriced securities allows banks of high qualify to signal their value to their customers, promoting in this way their other product lines. We show that the total dollar value of underpriced securities distributed (rather than the percentage value) acts as the signal. We also find that, all else equal, larger customers and those with more elastic demand functions receive n larger total dollar value of underpricing.     

Estimating the Dynamics of Mutual Fund Alphas and Betas

This article develops a Kalman filter model to track dynamicmutual fund factor loadings. It then uses the estimates to analyzewhether managers with market-timing ability can be identifiedex ante. The primary findings are as follows: (i) Ordinary leastsquares (OLS) timing models produce false positives (nonzeroalphas) at too high a rate with either daily or monthly data.In contrast, the Kalman filter model produces them at approximatelythe correct rate with monthly data; (ii) In monthly data, thoughthe OLS models fail to detect any timing among fund managers,the Kalman filter does; (iii) The alpha and beta forecasts fromthe Kalman model are more accurate than those from the OLS timingmodels; (iv) The Kalman filter model tracks most fund alphasand betas better than OLS models that employ macroeconomic variablesin addition to fund returns.