The creation of a charge for long distance companies to access the local telephone companies' switched network created the incentive to bypass the local switched network in order to avoid access charges that were substantially above cost. This book explores the implications of a federal regulatory policy of a target total dollar switched access revenue requirement. In particular, the book focuses on the so called "Brandon Effect" in which bypass incentives are attenuated when there is a target total dollar switched access revenue. Empirical analysis confirms the "Brandon Effect" on bypass...

This book models procurement auctions when suppliers face increasing costs. It is shown than an asymmetric equilibrium exists whereby one bidder bids different prices on each project in a series of simultaneous auctions, while its competitor bids the same price on each project. This existence of such an equilibrium may provide an explanation for observed bidding behavior in industries plausibly - characterized by increasing costs. Further, it is shown that the price paid in simultaneously-held auctions will be less than the prices paid in sequentially-held auctions. Hence, the existence of an...

This book develops more general conditions for identifying when a cost increase may be profitable for incumbent firms. Given those conditions, it then shows that advertising restrictions can act as rent increasing costs and raise the profits of association members. As with previous theories, prices increase as a result of the advertising restrictions. But in contrast with common intuition, measured output actually may increase with restrictions.

Anecdotal evidence reveals that an import quota is not always filled when the quota is specified in terms of a market-share limit instead of a quantity limit. In a simple Cournot duopoly, we provide a theoretical rationale for this outcome. Imposing a market-share quota eliminates pure strategy equilibria. Instead, a mixed-strategy equilibrium arises where only the domestic firm mixes choices. The quota is binding under one of the two equilibrium domestic strategies, but it is not binding under the other. Compared to a tariff that restrains the foreign market share to an equivalent level,...

Resale price maintenance (RPM) continues to be a contentious topic, both in economics and in antitrust. During the 1980s economists derived new efficiency motivations for RPM while the Supreme Court reaffirmed the per se ban on its use and Congress threatened to extend that ban. While economists have proposed a number of different efficiency explanations for RPM, such theorizing has been performed largely without the help of businesses that actually use RPM. This book seeks to find out why businesses may believe they benefit from RPM by examining which efficiency rationales were advanced by...

We examine antidumping policy in a model where a foreign firm is a monopolist in the foreign market, but competes with a native firm in the home market. An antidumping policy changes strategic behavior by giving firms an incentive to manipulate the price differential between home and foreign markets. Under quantity-setting behavior, an antidumping policy often improves the home country's welfare. The welfare of the foreign country may also improve. Under price setting behavior, an antidumping policy worsens the home country's welfare unless the foreign firm has a large cost advantage or...

This book examines the degree of employment and hours per worker adjustment among comparable British, Canadian, and U.S. manufacturing industries. The standard adjustment cost model of dynamic labor demand, assuming nonmyopic firm expectations of the forcing variables, serves as the empirical framework. The results indicate that the estimated speeds of employment adjustment and average hours worked adjustment among British manufacturing industries resemble those of North American manufacturing industries. In addition to the analysis of comparative adjustment behavior, empirical results are...

We are in the era of big data. With a smartphone now in nearly every pocket, a computer in nearly every household, and an ever-increasing number of Internet-connected devices in the marketplace, the amount of consumer data flowing throughout the economy continues to increase rapidly. The analysis of this data is often valuable to companies and to consumers, as it can guide the development of new products and services, predict the preferences of individuals, help tailor services and opportunities, and guide individualized marketing. At the same time, advocates, academics, and others have...