TRANSPARENCY IN MARKETS FOR EXPERIENCE GOODS: EXPERIMENTAL EVIDENCE

We propose an experimental design to investigate the role of information disclosure in the market for an experience good. The market is served by a duopoly of firms that choose both the quality and the price of their product. Consumers differ in their taste for quality and choose from which firm to buy. We compare four different treatments in which we vary the degree to which consumers are informed about quality. Contrary to theoretical predictions, firms do not differentiate quality under full information. Rather, both tend to offer products of similar, high quality, entailing more intense price competition than predicted by theory. Under no information, we observe a “lemons” outcome where quality is low. At the same time, firms manage to maintain prices substantially above marginal cost. In two intermediate treatments, quality is significantly higher than the no‐information level, and there is evidence that prices become better predictors of quality. Taken together these findings suggest that information disclosure is a more effective tool to raise welfare and consumer surplus than theory would lead one to expect. (JEL L15, C91, D82)     

QUALITY DIFFERENCES,THIRD‐DEGREE PRICE DISCRIMINATION,AND WELFARE

We propose a model with two markets to analyze the welfare implications of price discrimination with quality differences. In each market a local firm that operates in that market only competes against a global firm that operates in both markets. Local firms produce higher‐quality goods than the global firm. If the quality levels of the local firms' products are the same, price discrimination is never welfare‐decreasing. If they differ, discrimination is welfare‐increasing if quantity increases. Because of a positive allocation effect of price discrimination, there are parameter values such that welfare increases while total output decreases with price discrimination. (JEL D43, D60)     

SENTIMENT BIAS AND ASSET PRICES: EVIDENCE FROM SPORTS BETTING MARKETS AND SOCIAL MEDIA

Previous research using attendance‐based proxies for sentiment bias in sports betting markets confirmed the presence of investor sentiment in these markets. We use data from social media (Facebook “Likes”) to proxy for sentiment bias and analyze variation in bookmakers' prices investor sentiment. Based on betting data from seven professional sports leagues in Europe and North America, we find evidence that bookmakers increase prices for bets on teams with relatively more Facebook “Likes,” indicating the presence of price‐insensitive investors with sentiment bias. These price changes do not affect informational efficiency in this market. (JEL L81, G14)     

AN EXPERIMENT ON INNOVATION AND COLLUSION

This paper examines the relationship between product innovation and the success of price collusion using novel laboratory experiments. Average market prices in low innovation (LO) experiments are significantly higher than those in high innovation, but otherwise identical experiments. This price difference is attributed to LO experimental subjects' greater common market experience. The data illustrate how collusion can be perceived as the “only way to make it” in LO markets where product innovation is not a viable strategy for increasing profits. They suggest that product homogeneity can be a proximate cause, and product innovation an ultimate cause, of collusion. (JEL L41, L10, C92)     

THE IMPACT OF A PUBLIC OPTION IN THE U.S. HEALTH INSURANCE MARKET

We develop a game‐theoretical framework to examine the implications of the introduction of a nonprofit “public option” in the U.S. health insurance market. In this model, heterogeneous consumers have to choose between two competing insurance plans. One plan is offered by a profit‐maximizing private insurer; the other by social‐welfare‐maximizing public option. In equilibrium, the distinct objectives of the two insurers induce adverse selection in consumer choice: the public option covers the less healthy consumers, yielding the more profitable segment of market to the private insurer. However, our empirical results suggest that both insurers will capture significant parts of the health insurance market. (JEL I11, L10, L21, L32)     

LEFT FOR DEAD: ANTI‐COMPETITIVE BEHAVIOR IN ORBITAL SPACE

In a dynamic investment framework with depreciation, we show incumbent satellite operators have incentives to “warehouse” a fraction of their assigned spectrum and orbital slots, keeping nonoperational assets in place, which reduces output, increases prices, and diminishes social welfare. Exploring three distinct market structures, we model firms' incentives to warehouse, and show conditions under which firms choose to warehouse rather than replace nonfunctioning satellites. We find a dominant firm with a competitive fringe produces more and longer duration warehousing relative to perfect competition or monopoly. Regulators could remediate warehousing by increasing a firm's marginal costs, or by increasing the probability of reallocating orbital slots that do not have a fully functioning satellite. (JEL L9, L5)     

France and the Unknown Second Generation: Preliminary Results on Social Mobility

The growing concern about the future of the offspring of immigrants in France has prompted the rise of a “second generation question.” Access of “new second generations” (i.e., those born from the waves of immigration of the 1950s and 1960s) to the job market and their visibility in social and cultural life have challenged the “French model of integration.” Moreover, the ebbing of social mobility in the France of the 1970s led to a process of social downgrading which may affect significantly the second generation due to their social background and the persistence of ethnic and racial discrimination. It is thus important to investigate what kind of social mobility is actually experienced by people of immigrant ancestry, and what could hinder their mobility. This article uses the data from a new survey, the Enquête Histoire Familiale (family history survey) conducted in 1999 and based on 380,000 individuals, which analyzes the positions of second generations of Turkish, Moroccan and Portuguese origin. We argue that they follow different paths: a reproduction of the positions of the first generation; a successful social mobility through education; or a mobility hindered by discrimination.     

Innenansichten eines Wohlfahrtsmarkts

The 2001 pension reform act (“Riester reform”) has recast old-age security in Germany by placing more emphasis on private provisions. The new policy draws on markets and competitive structures in social welfare, as done earlier in long-term care and in public utilities. In the social welfare sector in Germany, such privatisation mostly goes hand in hand with a far-reaching “social” regulation of markets. Old-age pensions are the most recent case in point. For the first time, financial markets figure as welfare markets. This is done in the politically most sensitive sector of the German welfare state, old-age security. In theoretical terms, we interpret the change as a structural transformation of German “social capitalism”. Empirically, we investigate the structure of the new welfare market and the attitudes of the providers, based on a survey of all providers of private pensions in Germany. The findings include: (1) Markets can produce the welfare good “income security in old-age” only by way of a complex arrangement of three markets – financial markets, pension markets and markets for financial consultancy services. (2) The pension reform of 2001 has given rise to a new welfare market: an old-age pension market as a distinct sub sector of the wider market for financial investment and saving. The pension market constitutes a new field of business, with new actors, new products and new arenas of competition. The new market is created and shaped by politics. (3) The new private pension market combines market principles with welfare state principles. The providers conceive of their business as contributing to social security, and they recognise that the state sustains and structures the market.     

DISCOUNT PRICING

We investigate the practice of framing a price as a discount from an earlier price, with information such as “was $200, now $100.” We discuss two reasons why a discounted price—rather than a merely low price—can make a consumer more willing to purchase. First, a high initial price can indicate the seller has chosen to supply a high-quality product. Second, when a seller with limited stock runs a clearance sale, later consumers infer that unsold stock has higher expected quality when its initial price was higher. We also suggest a behavioral explanation, which is that consumers with reference-dependence preferences are more likely to buy if they perceive the price as a bargain relative to the earlier price. Discount pricing is therefore an effective marketing technique, and a seller may wish to deceive potential customers by offering a false discount. The welfare effects of regulation to prevent fictitious pricing are subtle, with potential unintended consequences, and depend on whether consumers are sophisticated or naive. (JEL D18, D42, D83, L15, M31)     

Crafting the Neoliberal State: Workfare,Prisonfare, and Social Insecurity1

In Punishing the Poor, I show that the ascent of the penal state in the United States and other advanced societies over the past quarter‐century is a response to rising social insecurity, not criminal insecurity; that changes in welfare and justice policies are interlinked, as restrictive “workfare” and expansive “prisonfare” are coupled into a single organizational contraption to discipline the precarious fractions of the postindustrial working class; and that a diligent carceral system is not a deviation from, but a constituent component of, the neoliberal Leviathan. In this article, I draw out the theoretical implications of this diagnosis of the emerging government of social insecurity. I deploy Bourdieu’s concept of “bureaucratic field” to revise Piven and Cloward’s classic thesis on the regulation of poverty via public assistance, and contrast the model of penalization as technique for the management of urban marginality to Michel Foucault’s vision of the “disciplinary society,” David Garland’s account of the “culture of control,” and David Harvey’s characterization of neoliberal politics. Against the thin economic conception of neoliberalism as market rule, I propose a thick sociological specification entailing supervisory workfare, a proactive penal state, and the cultural trope of “individual responsibility.” This suggests that we must theorize the prison not as a technical implement for law enforcement, but as a core political capacity whose selective and aggressive deployment in the lower regions of social space violates the ideals of democratic citizenship.     

CREDIBLE SIGNALS OF THE RELEASE OF NEW VERSIONS

Prices can credibly signal whether a durable‐goods monopolist will offer an improved good in the future. When the future release of a new version is private information, a monopoly seller will reveal a failure to develop and market a new version with a lower price than he or she would charge in full information. A firm would be willing to pay more to innovate when consumers are uncertain than if they are informed ex ante because a failure to innovate is punished by a low equilibrium price. Consumers' uncertainty about innovation intensifies an unsuccessful innovator's Coasian problem and increases consumer welfare. (JEL D82, L12, L15)     

INFORMATION DISCLOSURE POLICIES: EVIDENCE FROM THE ELECTRICITY INDUSTRY

While theory suggests that information programs may correct market failures and improve welfare, the empirical impacts of these policies remain undetermined. We show that mandatory disclosure programs in the electricity industry achieve stated policy goals. We find that the proportion of fossil fuels decreases, and the proportion of clean fuels increases in response to disclosure programs. However, the programs may produce unintended consequences. For example, programs may make “clean” firms cleaner, while leaving “dirty” firms relatively unchanged. If the marginal benefits of pollution abatement are larger at dirty firms than at clean firms, disclosure programs may induce inefficient abatement allocations. (JEL D83, Q58, D21)     

Cognitive Claims-Making,Enclosure, and the Depoliticization of Social Problems*

One of the most important contributions of recent social problems theory is the insight that social problems are inherently political phenomena. Existing scholarship on this characteristic has not dealt systematically with (1) the degree of overt politicality of social issues, or (2) the dynamic element of this politicality. This paper first reviews recent literature in the “medicalization of deviant behavior,” and sugests that this literature illustrates how the political element of social problem phenomena can be suppressed and replaced with a seemingly apolitical and technical perspective. Then it is proposed that interpretive social problems theory might deal more adequately with this pattern by incorporating a continuum ranging from “open” to “closed” social problems and analyzing the dynamics of social problem “enclosure,” and that certain sorts of claims—cognitive as opposed to normative—are especially conducive to the depoliticization and enclosure of social problems.     

“No Place Like Home?”

Abstract

The concept of “home” is subject to individual interpretations; a “home” may be conceived of as a physical space, such as a building/house, a geographical space such as a street, a town or a community, or a place where meaningful social relationships and/or kinship are fostered. Consider, then, what would happen to our understandings of “home” if seen from the perspectives of young people that are “home-less” and estranged from their families and kin groups, sometimes due to their sexual orientation. This article presents results from a research project conducted together with Kentish homelessness charity Porchlight. The aim of the research is to formulate an understanding of the lived realities of homeless LGBT (lesbian, gay, bisexual, transgender) youth (ages 16–25). Young people who identify as LGB or T are often victims of hate crime, bullying, harassment, violence, oppression, discrimination, and social exclusion in the home, in schools, and in the community at large. In many cases, these factors can contribute to alienation from the family home and subsequently result in homelessness. Here, I look specifically at how young people experience home and homelessness in relation to kin and social relationships, and drawing from anthropological literature on “the house”, “home”, kinship and “liminality”, I consider how these concepts can better inform our understanding of LGBT youth homelessness.     

SEPARATING BETWEEN UNOBSERVED CONSUMER TYPES: EVIDENCE FROM AIRLINES

We propose an alternative approach to identify unobserved consumer types and assess whether firms price discriminate. Unlike other screening schemes that rely on quantity discounts or product differentiation, in our finite mixture structure individuals have unit demands and the product is homogeneous. We implement the model using an original U.S. airlines data set. The results support the existence of two demand types. The high‐type “business” traveler is less price sensitive, has a higher valuation, and pays a higher price than the low type “tourist.” The proportion of high types also increases as the departure date nears. (JEL C23, L93, R41)     

Ties that Bind: Cultural Interpretations of Delayed Adulthood in Western Europe and Japan1

Throughout the developed world, young adults hit hard by declining labor market opportunities and rising housing costs have been staying in the natal home. Particularly hard hit are the weak welfare states of southern Europe and Japan, while the social democracies have continued to support the residential independence of young people at very early ages. This article considers the divergent cultural interpretations of this pattern of “delayed departure” in order to show that the same demographic configurations may be coded quite differently.     

SUPERSTITION IN THE HOUSING MARKET

We provide the first solid evidence that Chinese superstitious beliefs can have significant effects on house prices in a North American market with a large immigrant population. Using real estate data on close to 117,000 house sales, we find that houses with address number ending in “4” are sold at a 2.2% discount and those ending in “8” are sold at a 2.5% premium in comparison to houses with other addresses. These price effects are found either in neighborhoods with a higher than average percentage of Chinese residents, consistent with cultural preferences, or in repeated transactions, consistent with speculative behavior. (JEL D03, R2, Z1)     

MIXED OLIGOPOLY, SEQUENTIAL ENTRY, AND SPATIAL PRICE DISCRIMINATION

This paper is the first to examine the welfare consequences of a public firm in a traditional model of spatial price discrimination. It demonstrates that when a private firm acts as a Stackelberg location leader, the presence of a public firm always improves welfare. Moreover, when three firms locate sequentially, the presence of a public firm improves social welfare unless it locates last. Thus, despite examining a variety of location timings, including simultaneous location, privatization never improves welfare and usually harms welfare. This conclusion differs from several currently in the literature in which privatization often improves welfare. ( JEL L13, L32, L33, L52)     

Workfare Oz-Style

Summary

Traditional approaches to the promotion of welfare have disappeared in Australia, replaced by a new institutional order represented by welfare-cum-workfare. This has impacted on social work—both as a collective entity and as a set of practices. This paper maps the shift to workfare in Australia and examines its impacts on and implications for social work. We briefly discuss the Australian model of social protection, illustrating our own brand of “exceptionalism,” and lay out what we have termed “Workfare Oz-style.” Drawing upon neo-institutional theory, we review and analyze two key contexts where “Workfare Oz-style” is operationalized—the Job Network and Centrelink. Some tentative conclusions are given and the dimensions of a research agenda, which will put any emerging propositions to empirical test, are proposed.     

A Qualitative Sociological Approach to Address Issues of Diversity for Social Work

ABSTRACT

This article identifies prevailing conceptual approaches employed to formulate issues of diversity for social work research and practice. It argues that the notions of “welfare” and “diversity” are customarily defined within unduly narrow realms. “Welfare” is normally defined from the ideological perspective of modern mainstream society, even though competing minority ideologies of “welfare” are both possible and evident. “Diversity” is normally organized around the central concept of “ethnicity,” even though the universality of this notion is questionable. In response a research approach to address these limitations is proposed which employs a sociological perspective and qualitative methodology to discern appropriate conceptual frameworks.