Journal of Industrial Economics最新文献

We use panel data on the location, prices, and quality of the universe of gas stations in Mexico to study the competitive effects of entry on incumbent firms. Using more than 1000 entry events and defining local markets based on the road network, we find that the entry of a new station within 3 min driving time decreases regular gasoline prices by 6% of the retail price spread. Competitive effects decline with travel time and are largest in markets that previously had only one station. Entry of stations with the same owner as the incumbent has near-zero effects. The effect of competition on quality is less clear, with suggestive evidence of improved service quality in some specifications.

Evidence from TV shows suggests that failed contract negotiations may lead to inefficient show cancellation. We propose a theoretical model of bargaining with asymmetric information that allows for this possibility. We derive various testable implications, all of which are borne by the data. We show that an increase in asset specificity of the actor-show match implies an increase in the probability of an agreement under efficient bargaining but a decrease under asymmetric information. We use this result as an identification strategy to place a 2% lower bound on the probability that a TV show is cancelled even though it would be efficient for it to continue.

We consider a model featuring a single-product natural monopoly, which faces evaders, that is, individuals who may not pay the price. By exerting costly effort, the firm can deter evasion. To maximize total surplus, a regulator sets the price, the level of deterrence effort, and socially costly transfers to ensure the monopoly's participation. We obtain a modified Ramsey formula, which clearly shows that the mere existence of evaders dampens the use of the price as a means to finance the firm's deficit. The regulated price is always below the monopoly price and, under sufficient conditions, also below marginal cost. We find conditions under which the regulated price decreases if society departs from fully crediting evaders' utilities to welfare. Then, we generalize the model to incorporate moral hazard.

The lack of information on quantities presents significant challenges for estimating production functions. As shown by Klette and Griliches in 1996, deflating nominal variables using aggregate price indices leads to biased estimators. In this paper, we show that a similar problem arises when firm-specific prices are recovered from reported firm-specific price changes via a recursive formula. This recursion formula depends on an initial condition given by the unobserved price level in the base year, which then appears in the empirical production function as a firm-specific fixed effect. The standard practice is to ignore these fixed effects by setting the firm-specific prices in the base year to a constant value common to all firms, usually unity (zero in logs). We show that this practice generates biased estimators. We examine this bias via Monte Carlo simulations and with an empirical application. Solving this problem is not straightforward and requires further assumptions because these fixed effects generate nonlinear measurement errors.

How do information provision and consumer choices affect market efficiency in a market with misallocation and rationing? We investigate the introduction of a mobile-phone-based outpatient appointment app that provides real-time hospital information and streamlines appointment booking in China's public hospital market. We find the app can significantly improve healthcare access and the matching between patients and providers, achieved through facilitating patient sorting over time and across hospitals based on medical needs. Patients with mild conditions are directed to primary-care providers, while acute-care hospitals are better able to serve patients with severe conditions. We also observe improved patient health outcomes and reduced medical spending. Our findings underscore the power of lightweight healthcare IT innovations in enhancing medical resource utilization and patient welfare.

If a retailer invests in alternative sourcing for a product otherwise provided by a dominant supplier, it may gain leverage to pressure the supplier into lowering the wholesale price (bargaining effect). The reduced wholesale price, in turn, strengthens the retailer's competitive position, enabling it to capture additional market shares (business-stealing effect). To counter the latter effect, and thus reduce the retailer's incentive to invest in alternative sourcing, the supplier might commit to uniform wholesale pricing. However, we demonstrate that this strategy is unprofitable when retailers are sufficiently differentiated. Instead, if retailers differ in size, supplier profitability is maximized through size-based price discrimination. This might harm consumers. Interestingly, when substitutability is at an intermediate level, supplier and consumer preferences align.