Posts

New

Institutions, Comparative Advantage, and the Environment

Joseph S. Shapiro

This paper proposes that strong institutions provide comparative advantage in clean industries, and thereby improve a country’s environmental quality. I study financial, judicial, and labor market institutions. Five complementary tests evaluate and assess implications of this hypothesis. First, industries that depend on institutions are clean. Second, strong institutions increase relative exports in clean industries. Third, an industry’s complexity helps explain the link between institutions and clean goods.

New

A Network Formation Model Based on Subgraphs

Arun G. Chandrasekhar and Matthew O. Jackson

We develop a new class of random graph models for the statistical estimation of network formation—subgraph generated models (SUGMs). Various subgraphs—e.g., links, triangles, cliques, stars—are generated and their union results in a network. We show that SUGMs are identified and establish the consistency and asymptotic distribution of parameter estimators in empirically relevant cases. We show that a simple four-parameter SUGM matches basic patterns in empirical networks more closely than four standard models (with many more dimensions).

New

Simultaneous Search and Adverse Selection

Sarah Auster, Piero Gottardi, and Ronald Wolthoff

We study the effect of diminishing search frictions in markets with adverse selection by presenting a model in which agents with private information can simultaneously contact multiple trading partners. We highlight a new trade-off: facilitating contacts reduces coordination frictions but also the ability to screen agents’ types. We find that, when agents can contact sufficiently many trading partners, fully separating equilibria obtain only if adverse selection is sufficiently severe. When this condition fails, equilibria feature partial pooling and multiple equilibria co-exist.

New

Affiliated Common Value Auctions with Costly Entry

Pauli Murto and Juuso Välimäki

Many auctions and procurement contests entail nontrivial bidding costs, which makes the bidders’ participation decisions endogenous to the auction design. We analyze the effect of different auction rules on potential bidders’ incentives to participate. We focus on first-price auctions with affiliated common values and a large pool of potential bidders. Our main interest is on auctions where the realized number of bidders is unknown at the bidding stage.

New

Industrial Policy Implementation: Empirical Evidence from China’s Shipbuilding Industry

Panle Jia Barwick, Myrto Kalouptsidi, and Nahim Bin Zahur

Industrial policies are widely used across the world. In practice, designing and implementing these policies is a complicated task. In this paper, we assess the long-term performance of different industrial policy instruments, which include production subsidies, investment subsidies, entry subsidies, and consolidation policies. To do so, we examine a recent industrial policy in China aiming to propel the country’s shipbuilding industry to the largest globally.

New

Arbitration with Uninformed Consumers

Mark Egan, Gregor Matvos, and Amit Seru

This paper studies the impact of the arbitrator selection process on consumer outcomes. Using data from consumer arbitration cases in the securities industry over the past two decades, where we observe detailed information on case characteristics, the randomly generated list of potential arbitrators presented to both parties, the selected arbitrator, and case outcomes, we establish several motivating facts. These facts suggest that firms hold an informational advantage over consumers in selecting arbitrators, resulting in industry-friendly arbitration outcomes.

New

“Bid Shopping” in Procurement Auctions with Subcontracting

Raymond Deneckere and Daniel Quint

We analyze the equilibrium effects of “bid shopping” – a contractor soliciting a subcontractor bid for part of a project prior to a procurement auction, then showing that bid to a competing subcontractor in an attempt to secure a lower price. Such conduct is widely criticized as unethical by professional organizations, and has been the target of legislation at both the federal and state level, but is widespread in procurement auctions in many places.

New

A Theory of Cash Flow-Based Financing with Distress Resolution

Barney Hartman-Glaser, Simon Mayer, and Konstantin Milbradt

We develop a dynamic contracting theory of asset- and cash flow-based financing that demonstrates how firm, intermediary, and capital market characteristics jointly shape firms’ financing constraints. A firm with imperfect access to equity financing covers financing needs through costly sources: an intermediary and retained cash. The firm’s financing capacity is endogenously determined by either the liquidation value of assets (asset-based) or the intermediary’s going-concern valuation of the firm’s cash flows (cash flow-based).

Follow us

The Review of Economic Studies Follow

The official account of the Review of Economic Studies, one of the world's top economics journals.

RevEconStudies

In their paper, recently accepted to #REStud, Milgrom & Watt @MitchLWatt introduce “Walrasian markup mechanisms”—feasible, nearly efficient, and nearly incentive compatible mechanisms for nonconvex markets using linear prices.

https://www.restud.com/a-walrasian-mechanism-with-markups-for-nonconvex-markets/

#econtwitter

Reply on Twitter 1952475860185096331 Retweet on Twitter 1952475860185096331 8 Like on Twitter 1952475860185096331 28 Twitter 1952475860185096331

In their paper, recently accepted to #REStud, Frakes @MichaelFrakes2 and Gruber find a reduction in racial health disparities among chronic-disease patients following an increase in the racial diversity of the surrounding medical providers.

https://www.restud.com/the-effect-of-provider-diversity-on-racial-health-disparities-evidence-from-the-military/

#econtwitter

Reply on Twitter 1952458235639656871 Retweet on Twitter 1952458235639656871 1 Like on Twitter 1952458235639656871 5 Twitter 1952458235639656871

"State schools aimed to secularize Indonesia, but religious schools adapted, competing for students and strengthening Islamic identity instead."

Recently accepted to #REStud, from @samuelbazzi, Hilmy and @benjaminmarx:

https://www.restud.com/religion-education-and-the-state/

#EconTwitter

Reply on Twitter 1952115679513223439 Retweet on Twitter 1952115679513223439 50 Like on Twitter 1952115679513223439 185 Twitter 1952115679513223439

Recently accepted to #REStud, "Homeownership, Polarization, and Inequality," from Andrii Parkhomenko:

https://www.restud.com/homeownership-polarization-and-inequality/

#EconTwitter

Reply on Twitter 1952113714456383537 Retweet on Twitter 1952113714456383537 19 Like on Twitter 1952113714456383537 89 Twitter 1952113714456383537
Load More