As part of the pension reform recently approved in Chile, the government introduced a centralized auction mechanism to provide the Disability and Survivors (D&S) Insurance that covers recent contributors among the more than 8 million participants in the mandatory private pension system. This paper is intended as a case study presenting the main distortions found in the decentralized operation o...

Firms that practice second-degree price discrimination may intentionally distort product characteristics away from their e¢cient levels (e.g., the small version of a product is “too small.”) This paper o¤ers the ...rst empirical study of this product design issue. Using data from a specialty co¤ee market, I estimate a structural utility model that allows for consumer screening under vertical pr...

Curbside parking regulation has been widely implemented in cities around the world and increasingly they are adopting market-oriented perspectives. However, policy-makers face a complex task when they seek to foster efficiency in this market due to its intrinsic distortions (most notably, cruising in search of a parking space and garage market power). Theoretical studies stress that the right p...

We consider the general problem of price discrimination with nonlinear pricing in an oligopoly setting where firms are spatially differentiated. We characterize the nature of optimal pricing schedules which in turn depends importantly upon the type of private information which the customer possesses – either horizontal uncertainty regarding brand preference or vertical uncertainty regarding qua...

In speculating that local public goods could be efficiently provided, Tiebout (1956) envisioned head taxes which would both finance public goods and price access to them. In practice, head taxes are not available, potentially leading to distortions. Hamilton (1975, 1976) responded that zoning can mimic a head tax by creating a price (or “admission ticket”) at the border. While the debate over t...

Abstract I exploit the leveraged exchange-traded funds’ (ETFs’) primary market to measure aggregate, uninformed, gambling-like demand, that is, speculation sentiment. The ETFs’ is a novel setting provides observable arbitrage activity attributed correcting mispricing between shares and their underlying assets. proxies for magnitude direction of speculative demand shocks use them form Speculatio...

This paper develops a framework to nonparametrically test whether discrete-valued irregularly-spaced financial transactions data follow a Markov process. For that purpose, we consider a specific optional sampling in which a continuous-time Markov process is observed only when it crosses some discrete level. This framework is convenient for it accommodates the irregular spacing that characterize...

Achieving and maintaining price stability is the bedrock principle of a sound monetary policy. Price stability promotes economic growth and welfare by increasing the efficiency of the market mechanism, facilitating long-term planning, and minimizing distortions created by the interaction of inflation and the tax code, accounting rules, financial contracts, and the like. Price stability also inc...

Risks embedded in asset price dynamics are taken to be accumulations of surprise jumps. AMarkov pure jumpmodel is formulated on making variance gamma parameters deterministic functions of the price level. Estimation is done by matrix exponentiation of the transition rate matrix for a continuous time finite state Markov chain approximation. The motion is decomposed into a space dependent drift a...

T single-product firms with different quality levels and fixed limited capacities engage in sequential price competition in an essentially deterministic model where customers have heterogeneous valuations for both products. We develop conditions under which the leader (she) can take strategic advantage of her limited capacity by pricing relatively low, purposefully creating shortages and leavin...