155 research outputs found

    When Should Sellers Use Auctions?

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    A bidding process can be organized so that offers are submitted simultaneously or sequentially. In the latter case, potential buyers can condition their behavior on previous entrants' decisions. The relative performance of these mechanisms is investigated when entry is costly and selective, meaning that potential buyers with higher values are more likely to participate. A simple sequential mechanism can give both buyers and sellers significantly higher payoffs than the commonly used simultaneous bid auction. The findings are illustrated with parameters estimated from simultaneous entry USFS timber auctions where our estimates predict that the sequential mechanism would increase revenue and efficiency.

    The effect of falling market concentration on prices, generator behaviour and productive efficiency in the England and Wales electricity market

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    A universal prediction of the various oligopoly models used to predict and explain behaviour in the England and Wales (E&W) electricity wholesale market is that divestiture of plants by the two large incumbent generators and new entry should have led to lower prices and mark-ups. However, even though the market has become significantly less concentrated over the 1990s through both of these mechanisms the regulator (OFGEM, formerly OFFER) has continued to complain about high prices and generator manipulation of prices. This led to OFGEM taking two generators (AES and British Energy) to the Competition Commission in a (failed) attempt to have market abuse conditions inserted in their licences, and has led to the Pool being replaced by a new set of arrangements (NETA) in Spring 2001. These new arrangements are controversial (see Sweeting (2000) for a discussion), and their success is likely to be partly determined by how much market power the generators still have. This paper gathers evidence on what happened to prices and mark-ups during the last five years of the Pool, which have been studied relatively little compared to the first five years, and also seeks to make several more original contributions.Supported by the MIT Center for Energy and Environmental Policy Research

    The Strategic Timing Incentives of Commercial Radio Stations: An Empirical Analysis Using Multiple Equilibria

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    Commercial radio stations and advertisers have potentially conflicting interests about when commercial breaks should be played. This paper estimates an incomplete information timing game to examine stations' equilibrium timing incentives. It shows how identification can be aided by the existence of multiple equilibria when appropriate data are available. It finds that stations want to play their commercials at the same time, suggesting that mechanisms exist which align the incentives of stations with the interests of advertisers. It also shows that coordination incentives are much stronger during drivetime hours, when more listeners switch stations, and in smaller markets.

    Equilibrium Price Dynamics in Perishable Goods Markets: The Case of Secondary Markets for Major League Baseball Tickets

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    This paper analyzes the dynamics of prices in two online secondary markets for Major League Baseball tickets. Controlling for ticket quality, prices tend to decline significantly as a game approaches. The paper describes and tests alternative theoretical explanations for why this happens in equilibrium, considering the problems of both buyers and sellers. It shows that sellers cut prices (either fixed prices or reserve prices in auctions) because of declining opportunity costs of holding onto tickets as their future selling opportunities disappear. Even though prices can be expected to fall, the majority of observed early purchases can be rationalized by plausible ticket valuations and return to market costs given product differentiation and uncertainties about ticket availability.

    Dynamic Product Repositioning in Differentiated Product Markets: The Case of Format Switching in the Commercial Radio Industry

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    The ability of firms to reposition their products can determine the effects of demand shocks, mergers and policy interventions in differentiated product markets. This paper estimates a dynamic oligopoly model to measure repositioning costs in the commercial radio industry. Based on a set of markets where industry revenues were around 88billion,Ifindthatstationsmayhavespentasmuchas88 billion, I find that stations may have spent as much as 6 billion on repositioning. However, repositioning costs are not large enough to prevent radio markets adapting quite quickly to demand shocks.

    Coordination Games, Multiple Equilibria and the Timing of Radio Commercials

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    Multiple Equilibria, Coordination Games, Media

    Running records and the automated reconstruction of historical narrative

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    Die sozialwissenschaftliche Forschung befaßt sich mit dem Studium der Veränderung, obwohl die meisten Wissenschaftler, die quantitative Methoden benutzen - Historiker, Soziologen und auch Wirtschaftswissenschaftler -, bis jetzt nicht in der Lage sind, die Datenquellen voll auszuschöpfen, die erläutern, wie soziale Veränderungen tatsächlich eintreten. Es wird eine Methodologie entwickelt - bekannt als 'laufende Aufzeichungen', die es Forschern erlaubt, nicht nur Datenquellen wie Steuer- und Zensuslisten auszunutzen, die im wesentlichen statisch sind, sondern auch durch Gebrauch des Computers die ungeheure Menge von Material zu nutzen, das die Geschehnisse und Transaktionen des Alltagslebens von weiten Teilen der Bevölkerung festhält - Quellen, die den Prozeß der Veränderung selbst dokumentieren, sowie er sich auf bestehende Strukturen und Institutionen bezieht. (KWübers.)'All social science research is concerned with the study of change, yet most scholars who use quantitative methods - historians, sociologists, and economists alike - have been unable to exploit fully data sources which illuminate how social change actually occurs. We have developed a methodology, known as 'running records' (1), which allows researchers not only to use data sources, such as census schedules and tax lists which are essentially static, but also by exploiting the power of the computer, to utilize the vast of materials which record the events and transactions of everyday life for large populations - sources which document the process of change itself, as it relates to existing structures and institutions.' (author's abstract

    Coordination, differentiation and the timing of radio commercials

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    This paper examines whether commercial radio stations try to play their commercials at the same time. A simple model shows that stations may want to choose the same times (coordination) or different times (differentiation) depending on how listeners behave. It also shows that how much commercials overlap in equilibrium should vary with observable market characteristics, such as the number of stations, and that how these characteristics affect equilibrium overlap should depend on whether stations want to coordinate or differentiate. Panel data on the timing of commercials by 1,094 contemporary music radio stations in 147 metro-markets provides consistent support for the version of the model where stations want to coordinate on timing with commercials overlapping more in markets with fewer stations, less listening to out-of-market stations, more concentrated ownership and more asymmetric distributions of listenership across stations

    The wholesale market for electricity in England and Wales : recent developments and future reforms

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    The England and Wales wholesale electricity market is about to undergo major reform (NETA). I describe and analyse the proposed arrangements, contrasting them with those currently in operation. I argue that while NETA will remove one or two of the Pool's problems, particularly by eliminating capacity payments, there is no reason to expect that it will significantly improve outcomes. Market power could continue to be a problem and, despite NETA's attempt to decentralise the market, the complex rules of the centralised phase operating close to real time are likely determine the level of wholesale electricity prices. Future arrangements for transmission are also considered. I argue that, if generators have local market power, these may exacerbate rather than reduce current problems.Supported by the MIT Center for Energy and Environmental Policy Research
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