Competition Among Spatially Differentiated Firms: An Empirical Model with an Application to Cement

The theoretical literature of industrial organization shows that the distances between consumers and firms have first-order implications for competitive outcomes whenever transportation costs are large. To assess these effects empirically, we develop a structural model of competition among spatially differentiated firms and introduce a GMM estimator that recovers the structural parameters with only regional-level data. We apply the model and estimator to the portland cement industry. The estimation fits, both in-sample and out-of-sample, demonstrate that the framework explains well the salient features of competition. We estimate transportation costs to be $0.30 per tonne-mile, given diesel prices at the 2000 level, and show that these costs constrain shipping distances and provide firms with localized market power. To demonstrate policy-relevance, we conduct counter-factual simulations that quantify competitive harm from a hypothetical merger. We are able to map the distribution of harm over geographic space and identify the divestiture that best mitigates harm.

Impact of the Agricultural Sector on the Arkansas Economy in 2003

Agriculture and associated agricultural activities are major contributors to the Arkansas economy. Agriculture is defined as the sum of agricultural production and processing activities, unless otherwise specified, and includes crop and animal production and processing, agricultural support industries, forestry and forest products, and textile goods. Agriculture contributes to the economy through direct agricultural production and value-added processing, and also leads to economic activity in other parts of the economy

Automobile Prices, Gasoline Prices, and Consumer Demand for Fuel Economy

The relationship between gasoline prices and the demand for vehicle fuel efficiency is important for environmental policy but poorly understood in the academic literature. We provide empirical evidence that automobile manufacturers price as if consumers respond to gasoline prices. We derive a reduced-form regression equation from theoretical micro-foundations and estimate the equation with nearly 300,000 vehicle-week-region observations over the period 2003-2006. We find that vehicle prices generally decline in the gasoline price. The decline is larger for inefficient vehicles, and the prices of particularly efficient vehicles actually rise. Structural estimation that ignores these effects underestimates consumer preferences for fuel efficiency.Automobiles, Gasoline, Consumer Preference, Demand, Fuel Efficiency

The Entry Incentives of Complementary Producers: A Simple Model with Implications for Antitrust Policy

We model competition between two firms in a vertical upstream-downstream relationship. Each firm can pay a sunk cost to enter the other’s market. For equilibria in which both firms enter, the downstream price can be lower than the joint profit maximizing level, and coordination (e.g., through merger) is anticompetitive.

Personal Fall Protection: A Look at the Differences Among Industries

Fall prevention and protection is a mandatory part of nearly every type of construction. This project took a closer look at the fall protection equipment used in the construction industry relative to the equipment used in other industries. These industries include high rise window washing, rock climbing, utility lineman, and tree trimming. All of these industries rely on some form of fall protection and the equipment used varies per each unique application. In the construction industry, falls are the highest ranked cause of injury and account for roughly one third of all construction fatalities annually. A closer look at the differences in equipment may provide a more suitable solution to the problems that occur in a post-fall situation. Even with the most modern harnesses in use, there is still a risk for a fatal type of post-fall suspension trauma called orthostatic incompetence. This occurrence is not uniquely dangerous to the construction industry; any fall victim that is suspended for a prolonged period of time can be affected by it. There are products on the market to counter the effects of this phenomenon, but they are not yet used in common practice

Measurement, Uncertainty, and the Dataspace

New digital technologies are dramatically transforming our environments and behaviors. Today’s vast communication networks, comprised of over 140 quadrillion transistors, filter volumes of information at rates unimaginable just two decades ago