Pub Date : 2000-06-01DOI: 10.1007/978-1-4757-3161-3_2
R. Gordon
{"title":"Interpreting the \"One Big Wave\" in U.S. Long-Term Productivity Growth","authors":"R. Gordon","doi":"10.1007/978-1-4757-3161-3_2","DOIUrl":"https://doi.org/10.1007/978-1-4757-3161-3_2","url":null,"abstract":"","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2000-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133149547","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes a capacity‐planning and pricing problem of a monopolist facing uncertain demand. The model incorporates “soft” and “hard” capacity constraints (soft constraints can be relaxed at a cost while hard constraints cannot be relaxed) and demand uncertainty. The firm receives additional demand information within the plan‐ning horizon. The solution to the planning problem depends crucially on what is known about demand at the time of the capacity decision as well as the pricing decision. Historical acquisition costs of capacity are relevant for pricing whenever the same information is available for capacity planning and pricing. However, when the firm re‐ceives additional demand information before making the pricing decision, only marginal cost is relevant for pricing. Different types of capacity constraints, i.e., soft vs. hard, affect how much capacity the firm obtains, but not how the firm sets prices.
{"title":"Capacity Planning and Pricing Under Uncertainty","authors":"R. Göx","doi":"10.2139/ssrn.229530","DOIUrl":"https://doi.org/10.2139/ssrn.229530","url":null,"abstract":"This paper analyzes a capacity‐planning and pricing problem of a monopolist facing uncertain demand. The model incorporates “soft” and “hard” capacity constraints (soft constraints can be relaxed at a cost while hard constraints cannot be relaxed) and demand uncertainty. The firm receives additional demand information within the plan‐ning horizon. The solution to the planning problem depends crucially on what is known about demand at the time of the capacity decision as well as the pricing decision. Historical acquisition costs of capacity are relevant for pricing whenever the same information is available for capacity planning and pricing. However, when the firm re‐ceives additional demand information before making the pricing decision, only marginal cost is relevant for pricing. Different types of capacity constraints, i.e., soft vs. hard, affect how much capacity the firm obtains, but not how the firm sets prices.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2000-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129521539","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper empirically examines patents for financial formulas and methods, whose patentability was recently confirmed in the litigation between State Street Bank and Trust and Signature Financial Group. Awards by the U.S. Patent and Trademark Office have been accelerating in recent years, with a total of 445 financial patents awarded through February 2000. While the two largest recipients of these patents are major financial institutions, other awardees are very heterogeneous, including many computer hardware manufacturers and individual inventors. The role of universities in financial patenting has been modest, and the role of academic finance in delineating patent awards minimal. The final sections of the paper discuss the challenges that these developments pose to finance researchers and universities more generally.
本文对最近在道富银行信托与签名金融集团之间的诉讼中确认的金融公式和方法专利进行了实证研究。近年来，美国专利商标局(U.S. Patent and Trademark Office)授予的专利数量不断增加，截至2000年2月，总共授予了445项金融专利。虽然这些专利的最大两个接受者是主要的金融机构，但其他获奖者非常多样化，包括许多计算机硬件制造商和个人发明家。大学在金融专利中的作用一直不大，学术金融在划定专利奖励方面的作用最小。论文的最后部分讨论了这些发展给金融研究人员和大学带来的挑战。
{"title":"Where Does State Street Lead?: A First Look at Finance Patents, 1971-2000","authors":"J. Lerner","doi":"10.2139/ssrn.224895","DOIUrl":"https://doi.org/10.2139/ssrn.224895","url":null,"abstract":"This paper empirically examines patents for financial formulas and methods, whose patentability was recently confirmed in the litigation between State Street Bank and Trust and Signature Financial Group. Awards by the U.S. Patent and Trademark Office have been accelerating in recent years, with a total of 445 financial patents awarded through February 2000. While the two largest recipients of these patents are major financial institutions, other awardees are very heterogeneous, including many computer hardware manufacturers and individual inventors. The role of universities in financial patenting has been modest, and the role of academic finance in delineating patent awards minimal. The final sections of the paper discuss the challenges that these developments pose to finance researchers and universities more generally.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2000-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134531424","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes a two-stage sealed-bid auction that is frequently employed in privatization, takeover, and merger and acquisition contests. This auction format yields the same expected revenue as the open ascending (English) auction, yet is less susceptible to preemptive bidding and collusion.
{"title":"A Sealed-Bid Auction that Matches the English Auction","authors":"Motty Perry, Elmar G. Wolfstetter, S. Zamir","doi":"10.1006/game.1999.0780","DOIUrl":"https://doi.org/10.1006/game.1999.0780","url":null,"abstract":"This paper analyzes a two-stage sealed-bid auction that is frequently employed in privatization, takeover, and merger and acquisition contests. This auction format yields the same expected revenue as the open ascending (English) auction, yet is less susceptible to preemptive bidding and collusion.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2000-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116558161","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The essay examines the genesis of the concept of the market, the conditions that must be met for it to be used in economic analysis, and the reasons why the concept is questionable. In order for the concept of market to play a significant and non-contradictory role in economic (and antitrust) analysis, two conditions must be fulfilled. First, the characteristics of demand must be such as to demarcate a market unequivocally. Second, the competition in a specific market must have limited interaction with the rest of economy. In general, these conditions cannot be met. First, the non-constancy of the elasticity of the demand function means that the size of the market depends on its structure and on the behavior of its agents. Second, given differentiated products, the competitive relations between them will be dishomogeneous, giving rise to as many market segments as there are individual products. Third, supply-side substitutability, i.e. the possibility of using a given technique to produce several products (not all in the same market) ensures that intraindustry economic dynamics prevail over intra-market ones. And finally, multimarket contacts between firms generate overall strategic conduct, making analysis of any particular market irrelevant. These four objections do not appear pertinent to markets in which perfect competition obtains. Accordingly, it is only in such markets that the concept of market itself can be analyzed consistently. It is therefore amusing, if disconcerting, to find this concept regularly employed in antitrust proceedings, which are presumed to deal with situations of imperfect competition.
{"title":"The Concept of the Market and Antitrust","authors":"P. Sabbatini","doi":"10.2139/ssrn.182468","DOIUrl":"https://doi.org/10.2139/ssrn.182468","url":null,"abstract":"The essay examines the genesis of the concept of the market, the conditions that must be met for it to be used in economic analysis, and the reasons why the concept is questionable. In order for the concept of market to play a significant and non-contradictory role in economic (and antitrust) analysis, two conditions must be fulfilled. First, the characteristics of demand must be such as to demarcate a market unequivocally. Second, the competition in a specific market must have limited interaction with the rest of economy. In general, these conditions cannot be met. First, the non-constancy of the elasticity of the demand function means that the size of the market depends on its structure and on the behavior of its agents. Second, given differentiated products, the competitive relations between them will be dishomogeneous, giving rise to as many market segments as there are individual products. Third, supply-side substitutability, i.e. the possibility of using a given technique to produce several products (not all in the same market) ensures that intraindustry economic dynamics prevail over intra-market ones. And finally, multimarket contacts between firms generate overall strategic conduct, making analysis of any particular market irrelevant. These four objections do not appear pertinent to markets in which perfect competition obtains. Accordingly, it is only in such markets that the concept of market itself can be analyzed consistently. It is therefore amusing, if disconcerting, to find this concept regularly employed in antitrust proceedings, which are presumed to deal with situations of imperfect competition.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"298 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2000-01-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116877134","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop a model of competition between interconnected networks, with separate local and long-distance markets, allowing for various degrees of symmetry between carriers. Assuming two part pricing, we show that effective competition can be achieved with simple regulations involving mandatory interconnection and reciprocal access charges. We find that not only will interconnected local networks want to agree on cost based interconnection charges, but that through competition for local market shares they will also solve the familiar one-way access pricing problem between local providers and long-distance competitors. We analyze the implications of allowing for integrated firms and non-reciprocal access agreements in our model.
{"title":"Local and Long-Distance Network Competition","authors":"M. Carter, Julian Wright","doi":"10.2139/ssrn.201977","DOIUrl":"https://doi.org/10.2139/ssrn.201977","url":null,"abstract":"We develop a model of competition between interconnected networks, with separate local and long-distance markets, allowing for various degrees of symmetry between carriers. Assuming two part pricing, we show that effective competition can be achieved with simple regulations involving mandatory interconnection and reciprocal access charges. We find that not only will interconnected local networks want to agree on cost based interconnection charges, but that through competition for local market shares they will also solve the familiar one-way access pricing problem between local providers and long-distance competitors. We analyze the implications of allowing for integrated firms and non-reciprocal access agreements in our model.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"63 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116067324","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A model of competition between two interconnected cellular networks is presented which shows the effects of cellular termination charges on competition and market penetration in the cellular sector. We show that the determination of cellular termination charges is quite different to standard access pricing problems. Higher termination charges lead to more aggresive cellular pricing to attract customers (and thus termination revenue). In a calibrated model, the socially optimal termination charges are nearly three times cost when there is a monopoly fixed-to-cellular provider and almost five times cost when the fixed-to-cellular prices are determined under perfect competition.
{"title":"Competition and Termination in Cellular Networks","authors":"Julian Wright","doi":"10.2139/ssrn.201988","DOIUrl":"https://doi.org/10.2139/ssrn.201988","url":null,"abstract":"A model of competition between two interconnected cellular networks is presented which shows the effects of cellular termination charges on competition and market penetration in the cellular sector. We show that the determination of cellular termination charges is quite different to standard access pricing problems. Higher termination charges lead to more aggresive cellular pricing to attract customers (and thus termination revenue). In a calibrated model, the socially optimal termination charges are nearly three times cost when there is a monopoly fixed-to-cellular provider and almost five times cost when the fixed-to-cellular prices are determined under perfect competition.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126326365","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The authors assess the macroeconomic and distributional effects of the privatization that Argentina began in 1989 in gas, electricity, telecommunications, and water and sanitation. Using a computable general equilibrium model, they track the effects of the changes observed between 1993, the first year by which all the major privatizations had taken place, and 1995, the most recent year for which data are available. In an innovative use of the model, they also assess the importance of the regulator in determining the distribution of gains and losses from utility privatization among sectors and income groups. They conclude that when regulators are effective, the annual gains from the private operation of utilities are about $3.3 billion, or 1.25 percent of GDP, and that all income classes benefit. Ineffective regulation cuts the gains from the reform by $1 billion or 0.35 percent of GDP. This cut in gains represents an implicit tax of 16 percent on the average consumer, paid directly to the owner of the utility rather than to the government. For the poorest income classes, this implicit tax is about 20 percent, meaning that good regulation is in the interest of the poor. The authors also show that the privatization of utilities cannot be blamed for the significant increase in unemployment observed in Argentina since 1993. Effective regulation can lead to a decline in unemployment, and ineffective regulation leads to only a small increase in unemployment. But the gains from utility privatization were not sufficient to offset the negative efficiency and distributional impact on the economy of the Tequila effect, which increased unemployment dramatically by limiting access to credit for users and producers alike.
{"title":"Winners and Losers from Utility Privatization in Argentina: Lessons from a General Equilibrium Model","authors":"Omar O. Chisari, A. Estache, C. Romero","doi":"10.1596/1813-9450-1824","DOIUrl":"https://doi.org/10.1596/1813-9450-1824","url":null,"abstract":"The authors assess the macroeconomic and distributional effects of the privatization that Argentina began in 1989 in gas, electricity, telecommunications, and water and sanitation. Using a computable general equilibrium model, they track the effects of the changes observed between 1993, the first year by which all the major privatizations had taken place, and 1995, the most recent year for which data are available. In an innovative use of the model, they also assess the importance of the regulator in determining the distribution of gains and losses from utility privatization among sectors and income groups. They conclude that when regulators are effective, the annual gains from the private operation of utilities are about $3.3 billion, or 1.25 percent of GDP, and that all income classes benefit. Ineffective regulation cuts the gains from the reform by $1 billion or 0.35 percent of GDP. This cut in gains represents an implicit tax of 16 percent on the average consumer, paid directly to the owner of the utility rather than to the government. For the poorest income classes, this implicit tax is about 20 percent, meaning that good regulation is in the interest of the poor. The authors also show that the privatization of utilities cannot be blamed for the significant increase in unemployment observed in Argentina since 1993. Effective regulation can lead to a decline in unemployment, and ineffective regulation leads to only a small increase in unemployment. But the gains from utility privatization were not sufficient to offset the negative efficiency and distributional impact on the economy of the Tequila effect, which increased unemployment dramatically by limiting access to credit for users and producers alike.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115400897","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
While the Telecommunications Act of 1996 introduces competition into local telephone markets at a national level, prior to the Act many states had already restructured their regulatory methods. In particular, many states allowed for competition in both local service and "local long distance" markets prior to 1996. In addition to the expansion of competition, there has been an increased use of price regulation (price caps and price freezes), rather than traditional cost based regulatory methods in determining and updating rates for local exchange and local long distance toll services. Using a three-dimensional panel data set, I investigate whether price regulation and differences in entry conditions in local exchange and local long distance toll markets have had an impact on rate changes for residential local service, business local service, and local long distance toll service for the incumbent local exchange companies. In doing so, I estimate an empirical model that accounts for the stickiness of rates in regulated industries. The model, based on (S,s) models that have developed in a number of literatures, treats firms as maximizing expected profits in the price adjustment costs and regulatory uncertainty resulting from rate hearings, and regulators as controlling profits in the presence of adjustment costs. I find that competition has prompted a significant amount of rate rebalancing that has reduced the amount of cross-subsidization present in these markets. In addition, the findings suggest that price cap regulation leads to higher rates, relative to rate-of-return regulation.
{"title":"Regulatory Restructuring and Incumbent Local Exchange Pricing: An Application of a Conditional (S,S) Model to Regulated Price Dynamics","authors":"Christopher R. Knittel","doi":"10.2139/ssrn.199048","DOIUrl":"https://doi.org/10.2139/ssrn.199048","url":null,"abstract":"While the Telecommunications Act of 1996 introduces competition into local telephone markets at a national level, prior to the Act many states had already restructured their regulatory methods. In particular, many states allowed for competition in both local service and \"local long distance\" markets prior to 1996. In addition to the expansion of competition, there has been an increased use of price regulation (price caps and price freezes), rather than traditional cost based regulatory methods in determining and updating rates for local exchange and local long distance toll services. Using a three-dimensional panel data set, I investigate whether price regulation and differences in entry conditions in local exchange and local long distance toll markets have had an impact on rate changes for residential local service, business local service, and local long distance toll service for the incumbent local exchange companies. In doing so, I estimate an empirical model that accounts for the stickiness of rates in regulated industries. The model, based on (S,s) models that have developed in a number of literatures, treats firms as maximizing expected profits in the price adjustment costs and regulatory uncertainty resulting from rate hearings, and regulators as controlling profits in the presence of adjustment costs. I find that competition has prompted a significant amount of rate rebalancing that has reduced the amount of cross-subsidization present in these markets. In addition, the findings suggest that price cap regulation leads to higher rates, relative to rate-of-return regulation.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129575903","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many policy-makers are currently weighing the advantages of deregulating electricity markets over more traditional regulatory methods. However, within this traditional regulatory environment many options exist. In particular, the use of incentive regulation programs in US electricity markets has grown during the past two decades. These programs differ in both their goals and how they attempt to meet these goals. In this paper, I discuss the wide array of programs that have been utilized, and investigate the impact of individual programs on the technical efficiency of a large set of coal and natural gas generator units. Within a stochastic frontier framework, I allow the distribution of inefficient production to be a function of the regulatory environment the plant operates under. The results suggest that while certain incentive regulations increase observed technical efficiency, others have either no effect or even lead to a reduction in efficiency.
{"title":"Does Incentive Regulation Provide the Correct Incentives?: Stochastic Frontier Evidence the U.S. Electricity Industry","authors":"Christopher R. Knittel","doi":"10.2139/ssrn.199050","DOIUrl":"https://doi.org/10.2139/ssrn.199050","url":null,"abstract":"Many policy-makers are currently weighing the advantages of deregulating electricity markets over more traditional regulatory methods. However, within this traditional regulatory environment many options exist. In particular, the use of incentive regulation programs in US electricity markets has grown during the past two decades. These programs differ in both their goals and how they attempt to meet these goals. In this paper, I discuss the wide array of programs that have been utilized, and investigate the impact of individual programs on the technical efficiency of a large set of coal and natural gas generator units. Within a stochastic frontier framework, I allow the distribution of inefficient production to be a function of the regulatory environment the plant operates under. The results suggest that while certain incentive regulations increase observed technical efficiency, others have either no effect or even lead to a reduction in efficiency.","PeriodicalId":151613,"journal":{"name":"Industrial Organization & Regulation eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129619447","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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