Cooperative Institutions for Sharing in the Oil Industry

Exploration for oil and natural gas often produces an information externality for other resource owners. In isolation, this arrangement can lead to suboptimal exploration patterns. However, private institutions have evolved in the oil industry to provide markets for the external information. In this paper, the exploration process is modeled in a game theoretic framework in which the existence and performance of the private trading institutions are examined

A Theory of Jump Bidding in Ascending Auctions

Jump bidding is a commonly observed phenomenon that involves bidders in ascending auctions submitting bids higher than required by the auctioneer. Such behavior is typically explained as due to irrationality or to bidders signaling their value. We present field data that suggests such explanations are unsatisfactory and construct an alternative model in which jump bidding occurs due to strategic concerns and impatience. We go on to examine the impact of jump bidding on the outcome of ascending auctions in an attempt to resolve some policy disputes in the design of ascending auctions.auction theory, ascending auctions, jump bidding

Price Controls and the Behavior of Auction Markets: An Experimental Examination

Price ceilings and price floors are common in all market systems. The ancient Greeks and Hellenistic era Egyptians are known to have utilized price controls (see H. Michele, p. 272, and J. P. Levy, p. 41), and numerous public policy questions today involve them. Apparently for as long as price controls have existed, their effects have been debated. For example, Diocletion's favorable view of his price ceilings' was disputed by the religious philosopher, Lactantius, who charged that the policy led to "scarcity and... low grade articles" (p. 145)

The Inherent Disadvantage of the Presidential Party in Midterm Congressional Elections

The almost inevitable midterm election loss suffered by the president's congressional party still lacks a complete explanation. It is argued here that the policy positions of the president help shape voters' perceptions of the positions of congressional candidates. Because the president implements policies before the midterm campaign begins, and because he has goals apart from winning seats in Congress, his party's candidates are at a disadvantage, relative to their opponents, in communicating the most favorable positions possible to their voters. This model of the midterm campaign not only explains midterm losses, but also accounts for rare failures of this phenomenon, as occurred in 1934

In Search of Predatory Pricing

Focuses on the reproduction of predatory pricing in laboratory environment. Definition on predatory pricing; Methods used to construct experimental design; Effect of predation on price increase and efficiency. Focuses on the reproduction of predatorypricing in laboratory environment. Definition on predatorypricing; Methods used to construct experimental design; Effect of predation on price increase and efficiency

Theories and Tests of Blind Bidding in Sealed-bid Auctions

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Public Goods Provision in an Experimental Environment

A voluntary contribution process for providing public good finance in a replicating economic environment was studied. Contributions during the first period were on the order of 38 percent of the Lindahl optimum but during later periods contributions decayed to very low levels. Some perturbations of the process involving the announcement of Lindahl prices and the agents' abilities to communicate were also studied

Alternative Methods of Allocating Airport Slots: Performance and Evaluation

This study analyzes alternative methods of allocating scarce airport capacity (slots) among competing airlines. The findings are as listed below. 1. The method of allocating slots at airports can substantially influence the competitive structure and the efficiency of the air transportation industry. 2. The current method of allocating slots at the four high-density airports (the slot committee process) is inadequate in almost all dimensions of economic efficiency. • The allocations are very sensitive to the regulatory political climate. The current climate is fostering the following tendencies. • The process places downward pressure on the carriers with the largest number of slots at a given airport. • The process prevents the growth of large and medium-sized firms even if the economics suggest growth. • Entry is allowed independent of the efficiency of the entering firms and possibly at the expense of more efficient firms. • The ability of committees to coordinate operations at the systems level (the multiairport level) is not good. • The committee allocations are generally unresponsive to changing economic conditions. • The committees provide a forum in which possible anticompetitive agreements can be forged and enforced. • The committees provide no vehicle for the economic expansion of airport capacity. 3. The study surveys several alternative methods of allocating slots. From these a process is recommended with the following features. • A primary market for slots organized as a sealed-bid one-price auction operating at regular, timely intervals, • a computerized aftermarket with "block transaction" capabilities, • special provisions for small communities, • special provisions for changes in the definition of a "slot," • provisions requiring that the funds be used for expanding airport capacity, • the possibility of "negative bids" for off-peak periods at airports for which a "zero-sum" feature is appropriate, • sanctions to prevent the "non use" and/or monopolization of slots, • a gradual introduction. While this process has never been used to allocate airport slots, various aspects of it have been used successfully to allocate critical resources in other industries. It meets the goals of the 1978 Airline Deregulation Act and all experiences with the process within controlled environments suggest that the process will operate at economic efficiency levels near 100 percent. 5. The above process is recommended on the assumption that some problems can be solved which are not addressed in this study. The problem of how slots are to be defined is left open even though some guidelines are suggested. The funds from the sale of slots should be used to provide additional airport capacity. The study makes no recommendations about how this will be guaranteed. While the study recommends a vehicle for the establishment and maintenance of service to major hubs for small communities, no attempt was made to define such areas. 6. Among the options considered, aside from the one recommended, the one with the second most favorable features is a slot lottery with an aftermarket. This process itself involves several problems which are referenced in the text