A central question in the analysis of fuel economy policy is whether consumers are myopic with regards to future costs. We provide first evidence on consumer valuation from a natural experiment that provides exogenous variation ratings. examine short-run equilibrium effects restatement ratings affected 1.6 million vehicles. Using implied changes willingness pay, we find act myopically: indiffer...

I survey a number of stylized facts pertaining to the dynamics of firm entry, growth, and exit in competitive industries. I focus particularly on data for Portugal, although I also consider, for comparison purposes, data from other countries. I then present a series of theoretical models that attempt to explain the stylized facts and evaluate the welfare impact of market distortions. Finally, I...

Sutton (1998) has recently proposed a theoretical lower bound to firm size inequality when a market is made of several independent submarkets. His results are valid asymptotically, as the number of submarkets becomes arbitrarily large. We show that, in small samples, his results can be interpreted as a positive relationship between an index of firm size inequality and the number of submarkets. ...

We derive a measure of firm speed of price adjustment that is directly inversely related to market power and compare this to the measure derived by Martin (1993). However, both measures are incorrect when firms have non-zero price conjectural variations and treat competing price levels as exogenous. This is because Taylor series expansions of the demand function implicitly assume that firms inf...

This paper studies a model of product variety with flexible manufacturers when, contrary to prior work, atomistic entry occurs prior to horizontal integration. In this model, more lax antitrust laws that allow for fewer and more concentrated merged firms lead to a greater extent of excess entry. Optimal policy permits no horizontal mergers when demand is perfectly inelastic, but may permit some...

Using data from a unique pricing experiment, we test Vickrey’s conjecture that responsive pricing can be used to smooth demand shocks. Our evidence shows that increasing the responsiveness of price to demand conditions reduces the magnitude of deviations in capacity utilization rates from a pre-determined target level. We discuss implications for the use of demand-side incentives to deal with c...

We report an experiment designed to study whether inefficient firms are systematically driven from overcrowded markets. Our data set includes a series of 3,800 wars of attrition of a type modeled by Fudenberg and Tirole in 1986. We find that exit tends to be efficient and exit times conform surprisingly well to point predictions of the model. Moreover, subjects respond similarly to implementati...

This paper uses Granger non–causality tests to analyze if channel competition exists between the companion websites of 93 German newspapers observed between I/1998 and II/2005. It provides econometric evidence for significant negative effects of companion website traffic on the print circulation of national newspapers and for significantly positive effects on local newspapers, at least for the ...

Amino acid-deprived rplK (previously known as relC) mutants of Escherichia coli cannot activate (p)ppGpp synthetase I (RelA) and consequently exhibit relaxed phenotypes. The rplK gene encodes ribosomal protein L11, suggesting that L11 is involved in regulating the activity of RelA. To investigate the role of L11 in the stringent response, a derivative of rplK encoding L11 lacking the N-terminal...