RAND Journal of Economics articles from June 2006

RAND Journal of Economics archives from June 2006

Explaining the distribution of firm growth rates.
June 22, 2006... Empirical analyses on aggregated datasets have revealed a common exponential behavior in the shape of the probability density of corporate growth rates. We present clear-cut evidence on this topic using disaggregated data. We explain the...

Using price distributions to estimate search costs.
June 22, 2006... We show how the equilibrium restrictions implied by standard search models can be used to estimate search-cost distributions using price data alone. We consider both sequential and nonsequential search strategies, and develop estimation...

Ownership, incentives, and the hold-up problem.
June 22, 2006... Vertical integration is often proposed as a way to resolve hold-up problems. This ignores the empirical fact that division managers tend to maximize divisional (not firmwide) profit when investing. I develop a model with asymmetric information...

Markets, torts, and social inefficiency.(product safety)
June 22, 2006... We provide a model wherein oligopolists produce differentiated products that also have a safety attribute. Consumption of these products may lead to harm (to consumers and/or third parties), lawsuits, and compensation, either via settlement or...

Coordinating on lower prices: pharmaceutical pricing under political pressure.
June 22, 2006... We investigate the effects of political activity on pharmaceutical prices, focusing on the health care reform period in the early 1990s. We characterize firms based on their vulnerability to future price regulation and find that the more...

Reputation and turnover.
June 22, 2006... We consider a repeated duopoly game where each firm privately chooses its investment in quality, and realized quality is a noisy indicator of the firm's investment. We focus on turnover equilibria in which a low-quality realization is penalized...

Monopoly with resale.
June 22, 2006... We examine the intricacies associated with the design of revenue-maximizing mechanisms for a monopolist who expects her buyers to resell. We consider two cases: resale to a third party who does not participate in the primary market and...

Optimal incentives for sequential production processes.
June 22, 2006... I study optimal incentive schemes in organizations where agents perform their tasks sequentially. I consider a model in which agents' effort decisions are mapped into the probability of the project's success. An optimal investment-inducing...

Budget or target: the choice between input and output strategies.
June 22, 2006... In many competitive environments, players need to commit either to a specific goal they will achieve (an output target) or to the resources they are willing to expend in pursuit of that goal (an input budget). We model this situation as a...

Store characteristics in retail oligopoly.(Statistical data)
June 22, 2006... I use a consumer choice model for the British supermarket industry to compare the incentives of firms, selecting store characteristics, with the interests of consumers. I perform a series of counterfactual changes to store size and location and...

Optimal state-contingent regulation under limited liability.
June 22, 2006... We consider an optimal regulation model in which the regulated firm's production cost is subject to random, publicly observable shocks. The distribution of these shocks is correlated with the firm's cost type, which is private information. The...

Price-matching guarantees.
June 22, 2006... Are price-matching guarantees anticompetitive? We examine the incentives for price-matching guarantees in markets where information about prices is costly. The conventional explanation of price matching as facilitating cartel pricing finds some...

Estimating a continuous hedonic-choice model with an application to demand for soft drinks.
June 22, 2006... Using micro-level scanner data, I study empirically the consumer demand for soft drinks, which is characterized by multiple-product, multiple-unit purchasing behavior, I develop a continuous hedonic-choice model to investigate how consumers...