RAND Journal of Economics articles from December 2007

RAND Journal of Economics archives from December 2007

The price of advice.
December 22, 2007... We develop a model of consulting (advising) where the role of the consultant is to reveal signals to her client that refine the client's original private estimate of the profitability of a project. Although the client can perfectly observe and...

Innovation, endogenous overinvestment, and incentive pay.
December 22, 2007... We analyze how two key managerial tasks interact: that of growing the business through creating new investment opportunities and that of providing accurate information about these opportunities in the corporate budgeting process. We show how...

The rules of standard-setting organizations: an empirical analysis.
December 22, 2007... This article empirically explores standard-setting organizations' policy choices. Consistent with our earlier theoretical work, we find (i) a negative relationship between the extent to which an SSO is oriented to technology sponsors and the...

Influence through ignorance.
December 22, 2007... An individual (the leader) with free access to information decides how much public evidence to collect. Conditional on this information, another individual with conflicting preferences (the follower) undertakes an action that affects the payoff...

Downstream mergers and producer's capacity choice: why bake a larger pie when getting a smaller slice?
December 22, 2007... In this article, the effect of downstream horizontal mergers on the upstream producer's capacity choice was studied. Contrary to conventional wisdom, I find a nonmonotonic relationship: horizontal mergers induce a higher upstream capacity if...

Unraveling yields inefficient matchings: evidence from post-season college football bowls.
December 22, 2007... Many markets have "'unraveled" and experienced inefficient, early, dispersed transactions, and subsequently developed institutions to delay transaction timing. It has previously proved difficult, however, to measure and identify the resulting...

Resale price maintenance and collusion.
December 22, 2007... The article revisits the conventional wisdom according to which vertical restrictions on retail prices help upstream firms to collude. We analyze the scope for collusion with and without resale price maintenance (RPM) when retailers observe...

Semiparametric estimation of multinomial discrete-choice models using a subset of choices.
December 22, 2007... Nonlogit maximum-likelihood estimators are inconsistent when using data on a subset of the choices available to agents. I show that the semiparametric, multinomial maximum-score estimator is consistent when using data on a subset of choices. No...

A model of mixed signals with applications to countersignalling.
December 22, 2007... We develop a job-market signalling model where signals convey two pieces of information. This model is employed to study countersignalling (signals nonmonotonic in ability) and the GED exam. A result of the model is that countersignalling is...

Tacit collusion and capacity withholding in repeated uniform price auctions.
December 22, 2007... This article analyzes tacit collusion in infinitely repeated multiunit uniform price auctions in a symmetric oligopoly with capacity-constrained firms. Under two popular definitions of the uniform price, when each firm sets a price-quantity...

Relational delegation.
December 22, 2007... We analyze a cheap talk game with partial commitment by the principal. We first treat the principal's commitment power as exogenous and then endogenize it in an infinitely repeated game. We characterize optimal decision making for any...

Bidding to lose? Auctions with resale.
December 22, 2007... A losing bidder can still purchase the prize from the winner after the auction. We show why a strong bidder may prefer to drop out of the auction before the price has reached her valuation and acquire the prize in the aftermarket: a strong...

Moonlighting: public service and private practice.
December 22, 2007... We study job incentives in moonlighting, when public-service physicians may refer patients to their private practices. Some doctors in the public system are dedicated, and behave sincerely, but others--the moonlighters--are utility maximizers....

Do enhancements to loyalty programs affect demand? The impact of international frequent flyer partnerships on domestic airline demand.(Company overview)
December 22, 2007... Frequent flyer programs (FFPs) may allow airlines to exercise market power on routes that depart from airports at which they are dominant. Prior research, however, has not disentangled the effects of FFPs from other advantages that dominant...

Market effects of environmental regulation: coal, railroads, and the 1990 Clean Air Act.
December 22, 2007... Many environmental regulations encourage the use of "clean" inputs. When the suppliers of such an input have market power, environmental regulation will affect not only the quantity of the input used but also its price. We investigate the...