Showing papers in "Topics in Economic Analysis & Policy in 2004"
TL;DR: In this article, the authors use data on U.S. patent applications and grants to ask who is affected by longer grant lags, and they augment this analysis with interviews of patent examiners, leading to a better understanding of the examination process.
Abstract: As patent applications increase, and the range of patentable technologies increases, the length of time it takes for an invention to go through the examination process at the U.S. Patent Office has increased. Concerns over the distributional effects of these changes have been expressed during policy debates. We use data on U.S. patent applications and grants to ask who is affected by longer grant lags. We augment this analysis with interviews of patent examiners, leading to a better understanding of the examination process. Our analysis finds that differences across technology are most important. These differences do not erode over time, suggesting that learning effects alone will not reduce grant lags. Inventor characteristics have statistically significant effects, but the magnitudes are small.
114 citations
TL;DR: In this article, the authors examined the variation in facilities-based investment in loops across U.S. states and over time, and found that facility-based line growth relative to UNE growth was faster in states where the cost of UNEs was higher relative to the costs of facilities based investment.
Abstract: An expanding economics literature has examined the theoretical linkages between mandatory unbundling in the telecommunications sector and the incentives to invest in facilities by both incumbent local carriers and competitive carriers. Recent empirical evidence that substantiates the theory has emerged. That literature documents CLECs’ reluctance to make facilities-based investments instead of availing themselves of incumbents’ UNEs at low regulated prices that are based on total element long-run incremental costs (TELRIC). By examining the variation in facilities-based investment in loops across U.S. states and over time, we find that facilities-based line growth relative to UNE growth was faster in states where the cost of UNEs was higher relative to the cost of facilities-based investment.
80 citations
TL;DR: This paper conducted a county-level analysis of economic voting in United States presidential elections and found that national conditions are more important for determining people's votes, national or local economic conditions, what time frame do people consider in economic voting, which demographic groups are most sensitive to the economy in their voting behavior, and how does economic voting depend on the political context.
Abstract: In United States presidential elections, the incumbent party’s fortunes depend significantly on recent economic conditions, as numerous studies have shown. Many details of how economic voting takes place, however, are still not well understood. Here we present evidence on four issues. 1) Which is more important for determining people’s votes, national or local economic conditions? 2) What time frame do people consider in economic voting? 3) Which demographic groups are most sensitive to the economy in their voting behavior? 4) How does economic voting depend on the political context—in particular, whether a candidate is running for re-election, and whether the incumbent party also controls Congress? Our study includes the first county-level analysis of economic voting in presidential elections. We find the answers to our four questions are: 1) national conditions, by far; 2) the most recent year; 3) blacks, females, and the non-elderly; and 4) no.
47 citations
TL;DR: In this paper, the authors used field experiment methodology and market data to study the "Buy-it-Now" (BIN) function in a series of eBay coin auctions and found that price is directly related to seller reputation, though not affected by negative comments.
Abstract: This paper utilizes field experiment methodology and market data to study the "Buy-it-Now" (BIN) function in a series of eBay coin auctions. BIN auctions are typically listed by sellers with higher reputations. The probability an auction will end BIN increases with seller reputation and is not significantly affected by negative comments. Auctions listed by new sellers average lower prices and are less likely to end BIN. Buyer use of the BIN option increases as the BIN price decreases. We find that price is directly related to seller reputation, though not affected by negative comments, and is negatively related to buyer reputation. This result is driven by those auctions that start with a BIN price.
44 citations
TL;DR: In this paper, the authors show that such a rule could lead to an increased use of threat of withdrawal to extract concessions in intergovernmental negotiations, which would be exacerbated by national electorates facing an incentive to elect more confrontational politicians.
Abstract: In its draft treaty establishing a constitution for the European Union, Convention suggests that each member state may withdraw from the European Union following its own constitutional requirements. We show that such a rule could lead into an increased use of threat of withdrawal to extract concessions in intergovernmental negotiations. This problem would be exacerbated by national electorates facing an incentive to elect more confrontational politicians. We also suggest a remedy: EU constitution should require that withdrawal from EU membership must be approved by the voters of the withdrawing member state in a referendum.
42 citations
TL;DR: In this article, the authors study the effect of private roads with congestion on price competition and find sufficient conditions for the existence of an equilibrium in pure strategies with strictly positive tolls, which runs counter to what is expected form price competition.
Abstract: A growing number of roads are currently financed by the private sector via Build-Operate-and -Transfer (BOT) schemes. When the franchised road has no close substitute, the government must regulate tolls. Yet when there are many ways of getting from one point to another, regulation may be avoided by allowing competition between several franchise owners. This paper studies toll competition among private roads with congestion. The paper derives two main results. First, we find sufficient conditions for the existence of an equilibrium in pure strategies with strictly positive tolls. Equilibrium congestion is less than optimal, which runs counter to what is expected form price competition. While a lower toll reduces the out-of-pocket cost paid by a user, it increases the congestion cost thereby reducing the drivers' willingness to pay for using the road. Franchise holders partially internalize congestion costs when setting tolls, which softens price competition. Second, when demand and the number of roads increase at the same rate, tolls converge to the socially optimal level -- that is, in the limit equilibrium tolls are just enough to make each driver internalize the congestion externality.
40 citations
TL;DR: In this paper, a summary measure of the possible new commitments in the area of market access undertaken by the European Union and the United States, using the Trade Restrictiveness Index (TRI) as the tariff aggregator, is provided.
Abstract: Summary. This paper provides a summary measure of the possible new commitments in the area of market access undertaken by the European Union and the United States, using the Trade Restrictiveness Index (TRI) as the tariff aggregator. Indicators such as the TRI, based on welfare theory, integrate economic behavioural assumptions within a balance of trade framework. We take the 2000 bound tariffs as the starting point and attempt to assess how much liberalisation in agriculture could be achieved in the European Union and the United States as a result of the present negotiations. We compute the index for agricultural commodity aggregates assuming a specific (Constant Elasticity of Substitution) functional form for import demand. The present levels of the TRI under the actual commitments of the Uruguay Round are computed and compared with three hypothetical cases: a repetition of the same set of commitments of the Uruguay Round, a uniform 36 percent reduction of each tariff, an harmonization formula based on the “sliding scale” scheme. This makes it possible to infer how reducing tariff dispersion would help improve market access in future trade agreements.
33 citations
TL;DR: Findings indicate that the warnings have not had a discernible impact on smoking prevalence and the evidence of their impact on quantity smoked is positive, though only at a relatively low level of confidence.
Abstract: New health warnings on tobacco packaging in Canada became mandatory in January 2001. As of that time producers were required to print large-font warning text and graphic images describing the health consequences of using tobacco. This study uses micro data from two waves of Health Canada's Canadian Tobacco Use Monitoring Surveys bordering the legislation to investigate if the introduction of the warnings had any significant impacts on smokers. The recently drafted Framework Convention on Tobacco Control, under the sponsorship of the World Health Assembly, assigns a central role for this type of message. Our findings indicate that the warnings have not had a discernible impact on smoking prevalence. The evidence of their impact on quantity smoked is positive, though only at a relatively low level of confidence.
32 citations
TL;DR: In this article, the authors proposed a structural regression to estimate productivity growth based on more general production and cost functions and found that without these assumptions, while both TFP growth accounting measures remain equal if factor shares are constant, they are also equally bad at measuring productivity growth.
Abstract: For both primal and dual TFP growth accounting to properly account for productivity growth, assumptions of constant returns to scale and perfect competition are necessary. This paper shows that without these assumptions, while both TFP growth accounting measures remain equal if factor shares are constant, they are also equally bad at measuring productivity growth. This paper proposes a structural regression to estimate productivity growth based on more general production and cost functions. Using Singapore's industries as illustrations, this paper finds that the assumptions are widely rejected, and the estimated productivity growth exceeds both the accounting measures. When the same methodology is applied to the aggregate Singapore data, the estimated productivity growth is 4.4 percent per year, significantly higher than that of Young's (1992) and Hsieh's (2002).
26 citations
TL;DR: The authors provided an empirical analysis of the comparative evolution of intranational and international trade in the Canadian provinces since 1981 and established a striking empirical fact, the L curve, that characterizes the relative evolution of intra-provincial and intra-international trade shares to GDP between 1981 and 2000.
Abstract: This paper provides an empirical analysis of the comparative evolution of intranational and international trade in the Canadian provinces since 1981. We establish a striking empirical fact, the L curve, that characterizes the comparative evolution of intranational (interprovincial) and international trade shares to GDP between 1981 and 2000. We also use a panel data model to evaluate the impact of changing trade costs induced by the CUSFTA on the intensity of international and interprovincial trade. The analysis casts doubt on the intranational trade diversion hypothesis, common in trade models such as the structural gravity model of Anderson and van Wincoop (2003) that was used recently to revisit the Canada–U.S. border effect. International trade appears to complement rather than substitute for interprovincial trade.
24 citations
TL;DR: In this article, a simple dynamic model was used to generate the Philipson-Posner conjecture, i.e., disclosure of HIV status may result in higher disease prevalence, and the results showed that very little altruism seems needed for testing to become beneficial.
Abstract: The consequences of HIV testing are unclear. Some infected individuals, assuming they behave selfishly, would tend to increase their number of partners. Meanwhile, non-infected ones or those ignorant of their status would decrease theirs, the result of which, on the equilibrium level of infection, is uncertain. Simulations from a simple dynamic model show how to generate the Philipson-Posner conjecture, i.e., that disclosure of HIV status may result in higher disease prevalence. In this benchmark case, testing would also lower welfare. Those results, however, appear to be fragile. In particular, very little altruism seems needed for testing to become beneficial, and the public health literature tells us that a large proportion of individuals behave altruistically when tested positive and appropriately counseled. Beyond the mere availability of testing, the findings further suggest combining existing prevention measures with universal or mandatory testing to help eradicate the disease.
TL;DR: In this article, the effects of alcohol and marijuana use on the probability of being sexually active by race, ethnicity, and gender were estimated using an instrumental variables approach to control for the possible endogeneity of substance use.
Abstract: Previous researchers have noted that the positive correlation between substance use and sexual behavior is stronger for white adolescents than for their black and Hispanic counterparts. Using an instrumental variables approach to control for the possible endogeneity of substance use, and data from The National Longitudinal Study of Adolescent Health, we estimate the effects of alcohol and marijuana use on the probability of being sexually active by race, ethnicity, and gender. Our results suggest that there exist potentially important racial, ethnic and gender differences in the relationship between substance use and sexual behavior. This information may be valuable for policymakers interested in reducing sexual activity among teens.
TL;DR: In a democracy, however, reforms require the support of the majority. as discussed by the authors proposed a reform that aims at reducing the size of unfunded pension systems, which is supported by the young and opposed by the old.
Abstract: The impending demographic crisis calls for fundamental reforms of old-age security. In a democracy, however, reforms require the support of the majority. A reform that aims at reducing the size of unfunded pension systems is supported by the young and opposed by the old. As long as the young have the majority, this reform is feasible; as soon as society becomes a gerontocracy, there is risk of further expansion.
TL;DR: In this article, the authors provide new descriptive evidence on the link between work hours of married couples and the likelihood that a couple will get divorced, using samples of working couples from the Survey of Income and Program Participation.
Abstract: Despite frequent claims in the popular press that Americans are working longer hours to the detriment of their families, little academic research has directly tested this proposition. I provide new descriptive evidence on the link between work hours of married couples and the likelihood that a couple will get divorced. Using samples of working couples from the Survey of Income and Program Participation, I uncover several key facts: First, the incidence of divorce is much greater when both spouses are working than when only one spouse is employed. Second, the work hours of women are more highly correlated with divorce than are the work hours of men. Finally, despite these robust correlations, it is difficult to attribute a causal effect of work hours to divorce propensity.
TL;DR: When foreigners became the major shareholders of publicly traded firms in the Czech Republic, those firms experienced improvements in performance and increases in investment as mentioned in this paper, while controlling for ownership type, ownership concentration had no independent effect on performance or investment.
Abstract: When foreigners became the major shareholders of publicly traded firms in the Czech Republic, those firms experienced improvements in performance and increases in investment. In contrast, controlling for ownership type, ownership concentration had no independent effect on performance or investment. The results are robust to the estimation technique used, the choice of independent variables, and the methods used to control for selection bias.
TL;DR: In this paper, the authors used a selection corrected probit to estimate the probability that patents will be found valid and infringed at trial using detailed adjudication data with detailed patent data, and found that the selection effects for validity adjudications and infringement adjudications differ systematically.
Abstract: Using a selection corrected probit, I estimate the probability that patents will be found valid and infringed at trial. I combine for the first time detailed adjudication data with detailed patent data. I find that the selection effects for validity adjudications and infringement adjudications differ systematically. Additionally, infringement estimates do not appear to suffer from a substantial selection bias. The results highlight the importance of correctly specifying the selection mechanism in policy analysis. In contrast with previous studies, I find that the win rate for patents that go to trial is biased towards 50%. The bias is much more substantial for validity decisions, where I find unconditional win rates of 75% for adjudicated patents and 85% for matched patents. Win rates conditional on adjudication are below 60%.
TL;DR: In this article, a computational equilibrium model of spatially differentiated Bertrand competition is applied to merger analysis, and two pricing paradigms are studied: one where firms cannot price discriminate among customers and another where firms can.
Abstract: We consider a computational equilibrium model of spatially differentiated Bertrand competition and apply it to merger analysis. Two pricing paradigms are studied: one where firms cannot price discriminate among customers and one where firms can. The model encompasses many details that make it highly realistic. A detailed example illustrates several insights into merger analysis that are not readily apparent through traditional means. The most important of these is that merger of substitute products under Bertrand price competition need not result in a price increase.
TL;DR: The authors show that weak double-dividends need not hold in a world with multiple distortions. But they do not hold well in a tax reform where environmental taxes are used to lower distorting taxes.
Abstract: A weak double-dividend is the proposition that the welfare improvement from a tax reform, where environmental taxes are used to lower distorting taxes, must be greater than the welfare improvement from a reform where the environmental taxes are returned in a lump sum fashion. A general consensus has emerged that the weak double-dividend is an uncontroversial idea. We show in this note that a weak double-dividend need not hold in a world with multiple distortions.
TL;DR: The authors developed a model that incorporates occupational choice and informational asymmetries with regard to the ability of entrepreneurs and supply of effort, and determined the optimal supply of entrepreneurship, financial assistance, and managerial advice provided by a public venture capital program.
Abstract: New businesses face constraints in the form of limited access to capital and managerial expertise. Many governments have developed public venture capital programs for the purpose of easing these constraints and assisting young firms in generating growth in output and employment. The paper develops a model that incorporates occupational choice and informational asymmetries with regard to the ability of entrepreneurs and supply of effort, and determines the optimal supply of entrepreneurship, financial assistance, and managerial advice provided by a public venture capital program.
TL;DR: In this paper, the authors study the long run growth implications of the presence of information acquisition and transmission costs and show that these costs are sufficient to rule out the strong scale effect at all levels of the intertemporal returns to ideas.
Abstract: This paper studies the long run growth implications of the presence of information acquisition and transmission costs. We assume that vertical innovation requires researchers to be informed on the current version of the product they want to improve upon; and we also assume that quasi-fixed managerial inputs are required for production in the manufacturing sector. Despite the fact the increases in total factor productivity cause R&D and managerial quasi-fixed labor costs to decrease in the same way as variable labor costs, the presence of these costs is sufficient to rule out the strong scale effect at all levels of the intertemporal returns to ideas. More importantly, the upper bound of long run growth rates crucially depends on information transmission costs.
TL;DR: In this article, the authors compared two strategies for dealing with the problem when estimating welfare exit hazard models: stratification of baseline hazards by state and the inclusion of state fixed effects in the hazards.
Abstract: Previous studies of welfare durations in the US have analyzed the role of welfare benefits on the length of time recipients remain on welfare Typically these studies use individual data and estimate the benefit effects based on both cross-sectional variation across locations and time variation within locations Cross sectional results on benefit effects may be biased due to unobserved state specific differences in welfare programs or attitudes This paper compares two strategies for dealing with the problem when estimating welfare exit hazard models: stratification of baseline hazards by state and the inclusion of state fixed effects in the hazards Although the results show that high benefit states appear to have unobserved characteristics that lead to longer spells, the results also show that increases in welfare benefits do not directly increase welfare durations once one controls for state specific effects
TL;DR: The authors examined the extent to which convergence in mathematics course-taking behavior is responsible for narrowing the Hispanic-white and the black-white test score gaps during the 1980s and found that changes in curriculum account for about 60 percent of the narrowing Hispanic white test score gap between 1982 and 1992.
Abstract: This study examines the extent to which convergence in mathematics course-taking behavior is responsible for narrowing the Hispanic-white and the black-white test score gaps during the 1980s. Mathematics curriculum is measured in detail using high school transcript data from both High School and Beyond and the National Education Longitudinal Study of 1988. After controlling for demographic, family, and school characteristics, changes in curriculum account for about 60 percent of the narrowing Hispanic-white test score gap between 1982 and 1992. However, the black-white test score gap did not drop significantly.
TL;DR: In this paper, the authors analyzed gambling addiction in Taiwan by using lottery data from 1978 to 1984 and found that lottery play is strongly addictive in Taiwan, and the results are consistent with the theory of rational addiction.
Abstract: This study analyzes gambling addiction in Taiwan by using lottery data from 1978 to 1984. Two main conclusions can be drawn from the empirical evidence of this study. First, lottery play is strongly addictive in Taiwan, and the results are consistent with the theory of rational addiction. Second, the estimated short-run and long-run price elasticities are -0.136, and -1.463, respectively. Because consumers are very likely rational, the concerns of public policy toward gambling should focus on the negative externalities rather than on its addictive nature.
TL;DR: This paper used a maximum likelihood procedure that accounts for unobserved heterogeneity in the sample to implement a preference-based model to assess factors that influence parents' likelihood of losing their composure and physically abusing their children.
Abstract: This paper uses a maximum likelihood procedure that accounts for unobserved heterogeneity in the sample to implement a preference-based model to assess factors that influence parents' likelihood of losing their composure and physically abusing their children. A basic supposition of the model is that parents prefer to deal with parent-child conflict by choosing tactics and behaviors that do not exceed a specified level of violence; however, endogenous parent and child behaviors and exogenous circumstances may arouse parents' emotions that cause this level to be exceeded. Our results suggest policy interventions that influence such circumstances and associated behaviors may strongly influence the incidence of physical child abuse. We estimate the ex ante annual value parents attach to risk reductions of self-composure losses associated with excessive parent-child violence. This value is shown to be greater than currently estimated annual savings in ex post costs associated with a comparable decrease in U.S. physical child abuse incidence.
TL;DR: In this article, the authors developed a franchise bidding mechanism for postal services under the Universal Service Obligation (USO) in rural areas for collection and delivery of mail on rural routes and for small town counter operations.
Abstract: In this paper, we develop a franchise bidding mechanism for postal services under the Universal Service Obligation (USO) in rural areas. For the collection and delivery of mail on rural routes and for small town counter operations, monopoly franchises are awarded. Deficits caused by the USO are balanced by transfers between the government and the incumbent postal operator, i.e. the franchiser. We analyze the efficiency properties of the mechanism and discuss the drawbacks when extending the mechanism to urban areas.
TL;DR: It is found that prices and quality will differ depending on which policy regimen is followed, and a level for the policy maker’s elasticity of utility is identified under which government insured patients are unambiguously better off with policy commitment.
Abstract: This paper analyzes the welfare effect from government sponsored insurance under two policy regimes for reimbursement levels – the first under which policy makers commit to a specific reimbursement schedule, the second which allows discretion in setting reimbursement schedules. We find that prices and quality will differ depending on which policy regimen is followed. We are able to identify a level for the policy maker’s elasticity of utility with respect to its policy tool under which government insured patients are unambiguously better off with policy commitment. The ordering of welfare is reversed if the elasticity of utility is reversed. In either case, privately insured patients may be better or worse off.
TL;DR: In this paper, the authors examine a club model in which the club's policies are controlled by a homogeneous group of insiders, whose policy decision is to determine the number they will admit from two outsider groups.
Abstract: We examine a club model in which the club's policies are controlled by a homogeneous group of insiders. Their policy decision is to determine the number they will admit from two outsider groups. Countries have immigration policies, private clubs have membership policies, and professional practices also have membership criteria in which individuals may be screened. In all these organizations new members bring a material benefit to the organization, but do so at the cost of introducing a socially differentiated population of outsiders that the majority typically dislikes. It is the interplay of the material benefit and the social cost on which we focus. We characterize steady state equilibria and examine comparative statics results.