Comparing Nonparametric Regression Quantiles

This paper investigates how conditional quantiles of a given distribution relate to each other. Given two conditional quantiles estimated nonparametrically, we investigate their relation by linking them through a parametric transformation. Asymptotic normality of the associated parameter vector is established, and the method is illustrated with data from the Family Expenditure Survey (FES) of UK households. The FES records expenditures of households on six broad categories of goods (alcohol, clothing, food, fuel, transport, and "other goods"), and the methodology is applied by estimating and comparing the conditional quantiles of the Engel relation. The only category for which expenditure can explain the shift in the quantile curves is for "other goods" relationship, indicating an increase in heterogeneity for better off households, suggesting a "taste for variety" effect as the expenditure level increases. For the remaining categories one cannot reject the null of a parallel shift of the quantile curvesQuantile Regression, Semiparametric Estimation, Specification Testing, Engel Curve, Household Expenditure, Budget Shares.

Policies aimed at encouraging the take-up of green cars may have unexpected results on both emissions and markets.

Road transportation currently contributes to 19 per cent of CO2 emissions in Sweden, a figure that is higher than the EU’s average. From 2007 to 2009, the Swedish government put in place a Green Car Rebate to encourage people to buy lower emission cars. Cristian Huse and Claudio Lucinda assess the effectiveness of the policy, finding that while it did reduce CO2 emission levels, there was also little need to subsidise the purchase of vehicles that can use both petrol and alternative fuels

Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy

In the first year after the inception of the Swedish Green Car Rebate (GCR), green cars had carved over 25 percent market share in the new vehicle market, an effect of unprecedented scale if compared to recent policies incentivizing the purchase of fuel-efficient vehicles. By awarding vehicles satisfying certain emission criteria a rebate, but giving alternative fuel vehicles (AFVs, those able to run on alternative fuels) a more lenient treatment than regular fuel vehicles (RFVs, those able to run only on gasoline and diesel), the GCR created a regulatory loophole which led carmakers to increase the emissions of AFVs as compared to RFVs. This paper examines the impact of regulation on market developments comparing CO2 emissions (and fuel economy) of AFVs and RFVs. Once carmakers adjust their product lines to the policy, CO2 emissions of AFVs increased significantly as compared to those of RFVs, thus undermining the very objectives of the GCR

Essays in applied econometrics.

This thesis is divided in three essays. The first essay examines the reactions by incumbent airhnes to the threat and actual entry of the low-cost carrier Gol in the Brazilian domestic air transport market. By estimating the reactions in prices, quantities and supply variables, it investigates the plausibility of theories of entry deterrence and accommodation. The second essay proposes and implements a parsimonious three-factor model of the term structure whose dynamics is driven uniquely by observable state variables. The method allows comparing alternative views on the way state variables - macroeconomic variables, in particular - influence the yield curve dynamics, avoids curse of dimensionality problems commonly appearing in traditional models, and provides more reliable inference by using both the cross-sectional and the time series dimension of the data. I conduct in- and out-of-sample studies using a comprehensive set of US data. I show that even a parsimonious model where the level, slope and curvature factors of the term structure are driven by, respectively, measures of inflation, monetary policy and economic activity consistently outperforms the (latent-variable) benchmark model out-of-sample, when considering the five NBER-dated recessions of the last three decades. In the third essay I empirically evaluate the incentives to tacitly collude in differentiated product markets. Tacit collusion plays an important role in merger policy: competition agencies sometimes block mergers on the grounds that they will generate 'coordinated effects', an increased likelihood of collusion. I thus propose an approach to coordinated effects merger simulation in markets where multi-product firms operate in differentiated product markets. To the best of my knowledge, this is the first full empirical implementation of a coordinated effects merger simulation model in a differentiated product market. I use the model to study the network server market and, specifically, examine the effect of the merger between HP and Compaq on their and their rivals' collective incentives and ability to sustain tacit collusion. The results suggest that the incentives to collude in the network server market are substantial, but actively decreased following the merger between HP and Compaq. In addition to exploring the incentives for collusion on one market I also examine the impact of (i) multi-market contact on firms' incentive and ability to sustain tacit coordination and (ii) a competitive fringe of smaller players who co-exist with a subset of the larger players in an industry who tacitly collude. By taking the economic theory of tacit collusion seriously in an empirical example, I show that the intuition many economists have for the effect of mergers on the incentives to tacitly collude is actually wrong

Common-ownership versus cross-ownership: evidence from the automobile industry

Overlapping ownership has gained considerable momentum in the last decades, yet little is known about the role of its sources. We quantify the relative importance of common-ownership (by shareholders external to an industry) and cross-ownership (by firms within the industry). We focus on the global automobile industry, over the period 2007–2021, and document that common-ownership links constitute between 31% and 39% of the equity ownership of automobile manufacturers, while cross-ownership links amount to 6%–9%. We show that not accounting for these relatively modest cross-ownership links has important implications: it can increase the average weight assigned by managers to the profit of competitors by between 33% and 68%.info:eu-repo/semantics/publishedVersio

The relative roles of common- and cross-ownership

Overlapping ownership has gained considerable momentum in the last decades, yet little is known about the role of its sources. We quantify the relative importance of common-ownership (by shareholders external to an industry) and cross-ownership (by firms within the industry). We focus on the global automobile industry, over the period 2007–2021, and document that common-ownership links constitute between 31% and 39% of the equity ownership of automobile manufacturers, while cross-ownership links amount to 6%–9%. We show that not accounting for these relatively modest cross-ownership links has important implications: it can increase the average weight assigned by managers to the profit of competitors by between 33% and 68%.info:eu-repo/semantics/publishedVersio

Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy

In the first year after the inception of the Swedish Green Car Rebate (GCR), green cars had carved over 25 percent market share in the new vehicle market, an effect of unprecedented scale if compared to recent policies incentivizing the purchase of fuel-efficient vehicles. By awarding vehicles satisfying certain emission criteria a rebate, but giving alternative fuel vehicles (AFVs, those able to run on alternative fuels) a more lenient treatment than regular fuel vehicles (RFVs, those able to run only on gasoline and diesel), the GCR created a regulatory loophole which led carmakers to increase the emissions of AFVs as compared to RFVs. This paper examines the impact of regulation on market developments comparing CO2 emissions (and fuel economy) of AFVs and RFVs. Once carmakers adjust their product lines to the policy, CO2 emissions of AFVs increased significantly as compared to those of RFVs, thus undermining the very objectives of the GCR

Bailing on the car that wasn’t bailed out: bounding consumer reactions to financial distress

This paper examines how consumers react to the financial distress of durable goods manufacturers by looking at the Swedish new car market. We employ a difference-in-differences matching methodology whereby we compare sales of carmaker Saab with those of a carefully constructed control group of substitute products. To account for possible substitution between products in the treatment and control groups, we propose and apply bounds to our difference-in-differences matching estimator. We then refine the bounds and provide conditions under which they depend only on the products’ own- and cross-price elasticities. We find that even accounting for potential substitution, there was a significant decrease in the sales of Saab following its filing for administration. These findings are robust to a number of robustness checks and alternative hypotheses

Bailing on the car that wasn’t bailed out: bounding consumer reactions to financial distress

This paper examines how consumers react to the financial distress of durable goods manufacturers by looking at the Swedish new car market. We employ a difference-in-differences matching methodology whereby we compare sales of carmaker Saab with those of a carefully constructed control group of substitute products. To account for possible substitution between products in the treatment and control groups, we propose and apply bounds to our difference-in-differences matching estimator. We then refine the bounds and provide conditions under which they depend only on the products’ own- and cross-price elasticities. We find that even accounting for potential substitution, there was a significant decrease in the sales of Saab following its filing for administration. These findings are robust to a number of robustness checks and alternative hypotheses