Wireless Communications

Are natural resources a “curse” or a “blessing”? The empirical evidence suggests either outcome is possible. The paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization and bad growth prospects, and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law, corruption, presidential democracies, and underdeveloped financial systems. Another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad, induces corruption especially in non-democratic countries, and keeps in place bad policies. Finally, resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets. The survey also offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.

Natural Resources: Curse or Blessing?

Are natural resources a "curse" or a "blessing" The empirical evidence suggests that either outcome is possible. This paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources. These include that a resource bonanza induces appreciation of the real exchange rate, deindustrialization, and bad growth prospects, and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law, corruption, presidential democracies, and underdeveloped financial systems. Another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad, induces corruption especially in nondemocratic countries, and keeps in place bad policies. Finally, resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets. The survey also offers some welfare-based fiscal rules for harnessing resource windfalls in developed and developing economies.

/pdf/natural-resources-curse-or-blessing-43sxsn9q20.pdf

The article reviews the book “Information Rules: A Strategic Guide to the Network Economy,” by Carl Shapiro and Hal R. Varian.

Information Rules: A Strategic Guide to the Network Economy

One important goal of this study is to develop a methodology of inference for a widely used Cliff-Ord type spatial model containing spatial lags in the dependent variable, exogenous variables, and the disturbance terms, while allowing for unknown heteroskedasticity in the innovations. We first generalize the generalized moments (GM) estimator suggested in Kelejian and Prucha (1998,1999) for the spatial autoregressive parameter in the disturbance process. We prove the consistency of our estimator; unlike in our earlier paper we also determine its asymptotic distribution, and discuss issues of efficiency. We then define instrumental variable (IV) estimators for the regression parameters of the model and give results concerning the joint asymptotic distribution of those estimators and the GM estimator under reasonable conditions. Much of the theory is kept general to cover a wide range of settings. We note the estimation theory developed by Kelejian and Prucha (1998, 1999) for GM and IV estimators and by Lee (2004) for the quasi-maximum likelihood estimator under the assumption of homoskedastic innovations does not carry over to the case of heteroskedastic innovations. The paper also provides a critical discussion of the usual specification of the parameter space.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1296549_code459177.pdf?abstractid=1296549&mirid=3

Specification and Estimation of Spatial Autoregressive Models with Autoregressive and Heteroskedastic Disturbances

In a Hotelling duopoly model, we introduce quality that is more appreciated by closer consumers. Then higher common quality raises equilibrium prices, in contrast to the standard neutrality result. Furthermore, we allow consumers to buy one out of two goods (single-purchase) or both (multi-purchase). Prices are strategically independent when some consumers multi-purchase because suppliers price the incremental benefit to marginal consumers. In a multi-purchase regime, there is a hump-shaped relationship between equilibrium prices and quality when quality functions overlap. If quality is sufficiently good, it might be a dominant strategy for each supplier to price high and eliminate multi-purchase.

Product quality, competition, and multi-purchasing

We consider two different qualities of broadband access, one that simply means greater access speed to Internet applications and content, and a premium version that also gives access to interactive TV services. Based on a market survey we find that potential consumers of this premium broadband access do not consider basic broadband Internet access as a substitute. The price of basic broadband does not constrain the price that may be charged for the premium broadband that allows for interactive TV services.

Are Interactive TV-Pioneers and Surfers Different Breeds? Broadband Demand and Asymmetric Cross-Price Effects

In a model where two competing downstream firms establish an input joint venture (JV), we analyze how different royalty rules for covering fixed costs affect channel profits. Under running royalties, the downstream firms’ perceived marginal costs are above the true marginal costs since fixed costs are incorporated. We find that tougher competition between the JV partners may actually increase channel profit under such a scheme. However, lump-sum royalties are preferable if the competitive pressure is weak.

/pdf/on-the-choice-of-royalty-rule-to-cover-fixed-costs-in-input-3sf11zefpk.pdf

On the Choice of Royalty Rule to Cover Fixed Costs in Input Joint Ventures

Standard models of advertising-financed media assume consumers patronize a single media platform, precluding effective competition for advertisers. Such competition ensues if consumers multi-home. The principle of incremental pricing implies that multi-homing consumers are less valuable to platforms. Then entry of new platforms decreases ad prices, while a merger increases them, and ad-financed platforms may suffer if a public broadcaster carries ads. Platforms may bias content against multi-homing consumers, especially if consumers highly value overlapping content and/or second impressions have low value.

Competition for advertisers and for viewers in media markets

The theoretical literature on mobile termination rates (MTRs) is inconclusive on how the level of MTRs affects overall consumer charges and firms' profits. We show that when firms offer bundles with fixed included usage – a tariff structure that has become more common in recent years – an identical change in all MTRs does not affect firms' retail prices or profits. We use a panel dataset from saturated European markets to estimate the effect of MTRs on mobile operators' profits. As predicted by the theoretical model, we cannot reject the fact that firms' profits are unaffected by an identical change in all MTRs.

http://www.snf.no/Admin/Public/Download.aspx?file=Files%2fFiler%2fPublications%2fA27_12.pdf

Øystein Foros

Papers

Product quality, competition, and multi-purchasing

Are Interactive TV-Pioneers and Surfers Different Breeds? Broadband Demand and Asymmetric Cross-Price Effects

On the Choice of Royalty Rule to Cover Fixed Costs in Input Joint Ventures

Competition for advertisers and for viewers in media markets

Empirical Evidence on the Relationship between Mobile Termination Rates and Firms' Profits†