Firm Organization and Retail Industry Dynamics

This paper investigates the spatial organization and dynamics of retail markets using establishment level data on entry, exit, and location choice in the retail alcoholic beverage industry. Establishments are classified into two groups based on firm affiliation: chain vs. stand-alone stores. Stand-alone stores are further broken down into two categories according to product lines offered: diversified vs. specialized stores. The organization and dynamics of the various groups differ markedly. The number of chain stores per capita declines significantly with market size, and these stores exhibit lower entry and exit rates in larger markets. This behavior cannot be readily reconciled with the competitive industry theory. In contrast, both the number per capita and the turnover rates of stand-alone stores are invariant to market size, a behavior consistent with that of a competitive industry. These findings suggest a dominant firms-competitive fringe organization as one potential characterization of retail markets.

The diffusion of electronic business in the United States

The authors provide a recent account of the diffusion of electronic business in the U.S. economy using new data from the U.S. Bureau of the Census. They document the extent of the diffusion in three main sectors of the economy: retail, services, and manufacturing. For manufacturing, they also analyze plants' patterns of adoption of several Internet-based processes and conclude with a look at the future of the Internet's diffusion and a prospect for further data collection by the U.S. Census Bureau.Electronic commerce ; Internet

The diffusion of electronic business in the U.S.

We provide a recent account of the diffusion of electronic business in the U.S. economy using new data from the U.S. Bureau of the Census. We document the extent of the diffusion in three main sectors of the economy: retail, services, and manufacturing. For manufacturing, we also analyze plants' patterns of adoption of several Internet-based processes. We conclude with a look at the future of the Internet's diffusion and a prospect for further data collection by the U.S. Census Bureau.Electronic commerce

Did "right-to-work" work for Idaho?

The Idaho legislature passed their right-to-work law in 1986. Idaho provides an interesting case study for the effects of the law because it adopted the law during a period in which unionization had already declined substantially in the United States. This paper provides evidence on the industrial organization consequences of right-to-work laws by jointly examining the trends in Idaho’s unionization rate and industrial performance before and after 1986, using neighboring states as controls. We find that unionization declined substantially starting a few years before the passage of the law, and this decline persisted thereafter. Furthermore, the post-law growth rates in manufacturing employment and the number of establishments far exceeded their pre-law counterparts. As a result, Idaho gradually became more like an “average” right-to-work law state in terms of its unionization rate and the employment share of manufacturing, diverging from the patterns exhibited by states without a right-to-work law.Idaho ; Employment - Idaho ; Regional economics

Information and drug prices: evidence from the Medicare discount drug card program

In early 2004, the U.S. Government initiated the Medicare Discount Drug Card Program (MDDCP), which created a market for drug cards that allowed elderly and handicapped subscribers to obtain discounts on their prescription drug purchases. Pharmacy-level prices for many drugs were posted on the program website weekly from May 29, 2004 to December 31, 2005, as the largest undertaking in the history of government-sponsored information release began with the hope of promoting competition by facilitating access to prices. A large panel of pharmacy-level drug price data collected from the Medicare website indicates that there was significant and persistent dispersion in prices across cards throughout the program. Moreover, the time-path of prices was non-monotonic; the prices declined initially when consumers were choosing cards but rose later when subscribers were unable to switch from one card to another. In contrast, contemporaneous control prices from on-line drug retailers, which were unrelated to the program, rose steadily over time, indicating that MDDCP prices evolved in a way different from the general evolution of prices outside the program. In view of the fact that the program rules prevented consumers from changing their cards at will, the evolution of MDDCP prices is consistent with certain models of dynamic price competition with consumer switching costs, such as Klemperer’s (1987a,b). Estimates of potential savings from purchasing at program prices are also provided.Drugs ; Medical care, Cost of

Informative advertising by heterogeneous firms

This paper introduces a model to analyze the role of the cost of information dissemination in large markets where firms have varying degrees of intrinsic efficiency reflected in their marginal costs. Firms enter a market and discover how efficient they are. Those firms with high enough efficiency stay, others exit. Remaining firms then compete to attract consumers by disseminating information about their existence and their prices using a common advertising technology. The properties of the model's equilibrium are analyzed. The model is then used to study the effect of the cost of information dissemination on the competitiveness of the market and key industry aggregates, such as price distribution and the distribution of firm value.