Bank panics, government guarantees, and the long-run size of the financial sector: Evidence from free-banking America

Governments often attempt to increase the confidence of financial market participants by making implicit or explicit guarantees of uncertain credibility. Confidence in these guarantees presumably alters the size of the financial sector, but observing the long-run consequences of failed guarantees is difficult in the modern era. We look to America's free-banking era and compare the consequences of a broken guarantee during the Indiana-centered Panic of 1854 to the Panic of 1857 in which guarantees were honored. Our estimates of a model of endogenous market structure indicate substantial negative long-run consequences to financial depth when panics cast doubt upon a government's ability to honor its guarantees

The Sales Effect of Word of Mouth: A Model for Creative Goods and Estimates for Novels

Weekly sales of creative goods – like music records, movies or books – usually peak shortly after release and then decline quickly. In many cases, however, they follow a hump-shaped pattern where sales increase for some time. A popular explanation for this phenomenon is word of mouth among a population of heterogeneous buyers, but previous studies typically assume buyer homogeneity or neglect word of mouth altogether. In this paper, I study a model of new-product diffusion with heterogeneous buyers that allows for a quantification of the sales effect of word of mouth. The model includes Christmas sales as a special case. All parameters have an intuitive interpretation. Simulation results suggest that the parameters are estimable for data that are not too volatile and that cover a sufficiently large part of a title’s life cycle. I estimate the model for four exemplary novels using scanner data on weekly sales.Meistens erreichen die wöchentlichen Verkäufe von kreativen Produkten wie Musikalben, Kinofilmen oder Büchern kurz nach Veröffentlichung ihren Höhepunkt und nehmen dann schnell ab. In einigen Fällen jedoch zeigen sie einen buckelartigen Verlauf mit zunächst ansteigenden Verkäufen. Eine populäre Erklärung für dieses Phänomen beruht auf der Existenz von Mundpropaganda unter heterogenen Käufern, doch bisherige Studien gehen typischerweise von der Annahme homogener Käufer aus oder vernachlässigen Mundpropaganda gänzlich. Dieses Papier betrachtet ein Modell der Verbreitung neuer Produkte unter heterogenen Käufern, welches eine Quantifizierung der Verkaufswirkung von Mundpropaganda ermöglicht. Das Modell beinhaltet Weihnachtsverkäufe als Spezialfall. Alle Modellparameter haben eine intuitive Bedeutung. Ergebnisse einer Simulation zeigen, dass die Parameter empirisch geschätzt werden können, wenn die Daten einen hinreichend großen Teil des Verkaufszyklus eines Titels abdecken und nicht zu volatil sind. Das Modell wird auf Scannerdaten für vier exemplarische Romane angewendet

Prostate-specific antigen testing accuracy in community practice

BACKGROUND: Most data on prostate-specific antigen (PSA) testing come from urologic cohorts comprised of volunteers for screening programs. We evaluated the diagnostic accuracy of PSA testing for detecting prostate cancer in community practice. METHODS: PSA testing results were compared with a reference standard of prostate biopsy. Subjects were 2,620 men 40 years and older undergoing (PSA) testing and biopsy from 1/1/95 through 12/31/98 in the Albuquerque, New Mexico metropolitan area. Diagnostic measures included the area under the receiver-operating characteristic curve, sensitivity, specificity, and likelihood ratios. RESULTS: Cancer was detected in 930 subjects (35%). The area under the ROC curve was 0.67 and the PSA cutpoint of 4 ng/ml had a sensitivity of 86% and a specificity of 33%. The likelihood ratio for a positive test (LR+) was 1.28 and 0.42 for a negative test (LR-). PSA testing was most sensitive (90%) but least specific (27%) in older men. Age-specific reference ranges improved specificity in older men (49%) but decreased sensitivity (70%), with an LR+ of 1.38. Lowering the PSA cutpoint to 2 ng/ml resulted in a sensitivity of 95%, a specificity of 20%, and an LR+ of 1.19. CONCLUSIONS: PSA testing had fair discriminating power for detecting prostate cancer in community practice. The PSA cutpoint of 4 ng/ml was sensitive but relatively non-specific and associated likelihood ratios only moderately revised probabilities for cancer. Using age-specific reference ranges and a PSA cutpoint below 4 ng/ml improved test specificity and sensitivity, respectively, but did not improve the overall accuracy of PSA testing

Consequences of omitting advertising in demand estimation: an application to theatrical movies

Abstract Given the difficulties of properly estimating demand in the presence of advertising, advertising has often been omitted. This paper uses a Monte Carlo experiment of price-and-ad-setters to show that the omission of advertising can cause substantial biases in estimation, even in markets with relatively low ad-sales ratios and when advertising appears to be statistically insignificant. I then validate the appropriateness of these Monte Carlo simulations with respect to advertising with an analysis of domestic theatrical movies. Results using actual movie data when advertising is omitted and included mimic those of the simulations. Omitting advertising from this context overstates the impact of theaters by 25% and substantially understates the impact of starring cast members (by 80%). Keywords: Advertising, motion pictures, differentiated products Despite being an active research area from the 1940s through the 1960s, the estimation of advertising's impact on demand and resulting strategic implications has not received much attention from economists in the last thirty years. Much of this lack of attention can perhaps be attributed to Consequently, controlling for unobserved product characteristics absorbs these relatively constant levels of advertising, and insufficient variation remains for the demand analysis, leaving statistically insignificant advertising estimates. Ignoring advertising, however, may itself have negative impacts, as I show in this paper that its omission can substantially distort estimation results even when instruments are used for all other endogenous variables

—The Day After Tomorrow: Longer Run Issues in Theatrical Exhibition

No abstract available.motion picture industry, entertainment industry, file sharing and piracy

Retailer entry conditions and wholesaler conduct: The theatrical distribution of motion pictures

I add to the empirical literature on vertical contracting and wholesaler conduct by using retailer entry conditions to infer unobserved choice variables and equilibrium responses to prices and advertising. After estimating the US demand for theatrical motion pictures from 1990-96, I apply these techniques to compare observed outcomes to predictions under various distributor-conduct hypotheses. While several caveats apply, results indicate that the hypothesis of competition among distributors fails to describe advertising levels or aggregate payments of theaters to studios. The hypothesis of some collusion among distributors, however, matches the data fairly well.

Who should handle retail? Vertical contracts, customer service, and social welfare in a Chinese mobile phone market -APPENDIX

Abstract Using data on mobile phone handset sales from a single retail store, we examine the impact of different retail responsibility designations and vertical contracts on seller service provision, firm profitability, and social welfare. During our sample, this store switched from retailer-managed retailing with linear pricing contracts to manufacturermanaged retailing with revenue sharing. We estimate consumer demand and manufacturer cost parameters. Demand estimates indicate a large positive shift that coincided with the vertical change, consistent with improved retail customer service. Welfare estimates suggest that consumers derived substantial surplus from the improved customer service in addition to that from lowered prices

PRICES AND ENDOGENOUS MARKET STRUCTURE IN OFFICE SUPPLY SUPERSTORES -super-*

We consider the relationship between prices and market structure for office supply superstores in the U.S. which was central to the Federal Trade Commission's opposition to the merger of Staples and Office Depot. Due to potential biases in a standard regression, we employ a two-stage approach in which a model of endogenous market structure provides correction terms for a second stage price regression. Using a cross-section of data on market structures and Staples' prices, we find that excluding the correction term substantially distorts the importance of competitors as the two-stage model yields stronger negative relationships between prices and market structure variables. Copyright 2008 The Authors.