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

The aim of this chapter is to survey the media economics literature on mergers. In particular, we try to accentuate where the effects of mergers differ between conventional one-sided markets and two-sided media markets (though not all media mergers are within two-sided markets). We focus on price effects in the first part of the chapter, and in the second part we discuss how mergers affect competing media platforms’ choice of genre. In the third part, we discuss how to take on merger control in two-sided media markets. Motivated by some actual merger cases, we also discuss how antitrust authorities might err if they use the conventional one-sided approach to evaluate mergers within media markets (even if a case-by-case assessment is undertaken).

Merger Policy and Regulation in Media Industries

This paper examines Norwegian gasoline pump prices using daily station-specific observations from March 2003 to March 2006. Whereas studies that have analyzed similar price cycles in other countries find support for the Edgeworth cycle theory (Maskin and Tirole, 1988), we demonstrate that Norwegian gasoline price cycles involve a form of coordinated behavior. Retail gasoline prices follow a fixed weekly pattern, where retail outlets all over Norway simultaneously increase their prices to the same level every Monday at noon. Consequently, the sharp price increase is tied to time rather than the current price level. The gasoline companies’ headquarters publish a recommended price that de facto is a RPM arrangement towards the retail outlets. The vertical arrangement is industry-wide adopted, and is used to coordinate the time and the level for retail price increases among the big four gasoline companies. Monday changed from being the low-price day to becoming the high-price day almost ‘overnight’ in April 2004, and we empirically establish that the change corresponds to a significant jump in the gross margin.

Gasoline prices jump up on Mondays: An outcome of aggressive competition?

Access price regulation is used in telecommunications to prevent a vertically integrated firm, which controls an essential input, from raising the rivals' costs. When the authorities remove the access price as a strategic tool, it becomes optimal for the regulated firm to use the transfer price as an alternative strategic device. Ironically, the tools authorities use to implement access price regulation, such as accounting separation and transparency, may facilitate the regulated firm's use of the transfer price to reduce competition. Furthermore, the transition from FAC to LRIC based access pricing makes strategic transfer pricing more relevant and provides a legitimate excuse for it. Consequently, the regulation may protect the rivals (and the regulated firm) from competition to the detriment of consumers.

Access Regulation and Strategic Transfer Pricing

In this paper we compare the profitability of a merger to the profitability of a partial ownership arrangement and find that partial ownership arrangements can be more profitable for the acquiring and acquired firm because they can result in a greater dampening of competition. We also derive comparative statics on the prices of the acquiring firm, the acquired firm, and the outside firms. In a dual context, we show that a cross-majority owner may have incentives to sell a fraction of the shares in one of the firms he controls to a silent investor who is outside the industry. Aggregate ex post operating profit in the two firms controlled by the cross-majority shareholder then increases, such that both the cross-majority shareholder and the silent investor will be better off with than without the partial divestiture.

Øystein Foros

Papers

Merger Policy and Regulation in Media Industries

Gasoline prices jump up on Mondays: An outcome of aggressive competition?

Access Regulation and Strategic Transfer Pricing

Mergers and Partial Ownership

Customer ignorance, price cap regulation and rent-seeking in mobile roaming