SQUEALER DEALERS: THE MARKET FOR INFORMATION IN FEDERAL DRUG TRAFFICKING PROSECUTIONS

Federal data on drug trafficking sentences are used to determine factors that affect market quantities of providing information against other defendants (i.e., defendant probabilities of receiving testimony‐related sentence reductions) and market prices of information (i.e., the sizes of such sentence reductions). Women and better‐educated defendants experience high demand (higher quantities and prices) for information. Blacks, Hispanics, and non‐U.S. citizens experience low demand. Defendants expecting longer sentences have higher supply of information. Conditional on expected sentence, crack dealers, high‐level dealers, and dealers with long criminal histories experience low demand, while low‐level dealers experience high demand. Women of all races experience high demand for information. (JEL K14, J15, J16)     

AN ECONOMETRIC MODEL OF THE DEMAND FOR CHILD CARE

Child care denotes any arrangement used by a working parent for care of a child, including self-care. This paper is concerned with the factors that influence the demand for market modes of child care by two parent families with working mothers. An econometric model is specified that relates the demand for child care to price, income, and other economic variables. Because of the discrete nature of the child care decision, the multinomial logit probability model is used to analyze the data. The empirical results suggest that the demand for child care is sensitive to both prices and income.     

TRANSACTION COST, TWO-PART TARIFFS, AND COLLUSION

When two goods exhibit demand complementarity, the sellers would generally charge lower prices under collusion than under rivalry–a cartel internalizes cross effects that independent firms ignore. For the particular case of "two-part" tariffs consisting of entrance fees and per-unit prices, this paper shows that entrance fees are indeed lower under collusion than under rivalry, but that per-unit prices are unaffected. The demand complementarity arises from transaction costs borne by consumers who enter the market. The policy implication is that collusion can be socially preferable to competition in the presence of such transaction costs.     

THE HAYEK HYPOTHESIS IN EXPERIMENTAL AUCTIONS: INSTITUTIONAL EFFECTS AND MARKET POWER

We report twelve market experiments utilizing a "seller market power" supply and demand structure where two of five sellers can unilaterally increase their profit by withholding supply. The data indicate that both the double auction and posted offer institutions result in traders extracting the bulk of the potential gains from exchange in the market; however, prices generally occur above the competitive equilibrium prediction. Market power in the form of strategic supply withholding does not appear to be responsible for the supra-competitive prices.     

THE HOME MARKET EFFECT IN INTERNATIONAL ARMS TRADE

I show that military spending contributes to international arms proliferation through a push effect: large demand encourages production growth in the domestic market if transport costs are non‐negligible. Under increasing returns to scale, the country can then supply weapons on the global market at low prices. This is a manifestation of the home market effect (HME), which states that countries with higher demand for a differentiated good will be net exporters of that good. I construct a monopolistic competition model of international trade that accounts for differences in demand across countries, and test its predictions using post‐Cold War data. (JEL F1, H5, R1)     

Demand Constraints on Agricultural Growth in East and Southern Africa: A General Equilibrium Analysis

This article analyses demand constraints on agricultural growth in seven countries of East and Southern Africa using an applied general equilibrium framework. It finds that both traditional and non‐traditional export crops have limited potential to raise incomes because of demand constraints (for traditional exports) or a relatively small base (for non‐traditional exports). The best prospects for agriculture‐led growth remain in the food sector, where domestic demand represents a large and growing market. Improvements in market efficiency and simultaneous growth in the livestock sectors can help spur demand further and avert falls in prices. Achieving rapid gains in farm incomes, however, also requires investment in rural infrastructure to reduce marketing costs, and demand‐ enhancing growth in the non‐agricultural sector to spur demand.     

Economywide Impact of Maize Export Bans on Agricultural Growth and Household Welfare in Tanzania: A Dynamic Computable General Equilibrium Model Analysis

Export bans have been frequently used by developing countries in recent years in an attempt to ensure domestic food supplies and insulate domestic market prices from international price hikes. This article uses Tanzania to examine the impact of export bans using a computable general equilibrium model. We find that banning cross‐border maize exports has very little effect on the national food price index and that the benefits from lower maize prices are captured primarily by urban households, while maize producer prices decrease significantly. The export ban further decreases the wage rate for low‐skilled labour and the returns to land, while returns to non‐agricultural capital and wage rates for skilled labour increase, further hurting poor rural households and thus increasing poverty for the country as a whole.     

A middleman in an ambiguous situation—Experimental evidence

This paper describes how undergraduates play intermediaries. A series of experiments was conducted to see how subjects play the monopolistic intermediary against given but unknown supply and demand. The results show that most subjects search for the bid and the ask prices that equalise the purchasing quantity with the selling quantity; then, keeping the trading quantity, they adjust the prices to obtain a locally maximum profit. This suggests that monopolistic firms can act as intermediaries even if they are not as informed as they are supposed to be discussed in the market microstructure theory. In addition, we investigate how people cope with ambiguity.     

A behavioral model of the dual motive approach to behavioral economics and social exchange

New findings in brain physiology, especially evolutionary neuroscience, have profound implications for behavioral economics. The new findings show that the transactional commercial market evolved from the interplay of our self-preservational (egoistic) and affectional (empathetic) neural circuitries. These fundamental brain circuitries, under homeostatic physiological regulation, are the neural substrate of our human social exchange activity—from sharing in primitive families to the gift exchange economy to the commercial market. Current microeconomic theory is structured on the assumption of a sole primary self-interest motive. The presence of the dual physiological motives, however, is clearly demonstrated in demand, supply, and equilibrium curves as well as in the basic calculus of price theory. This confirmed duality of motives opens the way for new and productive directions in research. The conflict systems neurobehavioral (CSN) model developed by the author in several recent publications expresses the reciprocal interactive dynamic of these circuitries in socio-economic exchange behavior.     

ADVANCE PRODUCTION,INVENTORIES, AND MARKET POWER: AN EXPERIMENTAL INVESTIGATION

We report an experiment that assesses the effects of alterations in production conditions and product durability on market power in Bertrand‐Edgeworth duopolies. Static equilibrium analysis predicts that advance (rather than “to demand”) production raises prices, but does not affect profits. The further addition of a simple inventory option causes prices to fall and seller earnings to increase. Contrary to these predictions, we observe similar prices in baseline and advance production treatments, but lower profits given advance production. An inventory option reduces both prices and earnings. Results are driven by the treatments' effects on sellers' capacities to tacitly collude. (JEL C9, D4, L4)     

CUSTOMER RACIAL DISCRIMINATION IN MAJOR LEAGUE BASEBALL

Most studies of racial discrimination concentrate on identifying the existence rather than the source of discrimination. In contrast, this paper tests directly for racial discrimination by major league baseball customers by examining the market for baseball cards. In Tobit regressions, the market prices of cards consistently reflect player performance records and other demand variables. When interactive race-productivity variables are included in the models, a significant and complex pattern of fan discrimination against black pitchers and black hitters is found. Discrimination against latin players is not found.     

DID THE EURO FOSTER ONLINE PRICE COMPETITION? EVIDENCE FROM AN INTERNATIONAL PRICE COMPARISON SITE

We study the impact of the Euro on prices charged by online retailers within the European Union. Our data span the period before and after the Euro was introduced, cover a variety of products, and include countries inside and outside of the Eurozone. After controlling for cost, demand, and market structure effects, we show that the pure Euro changeover effect is to raise average prices in the Eurozone by 3 % and average minimum prices by 7%. Finally, we develop a model of online pricing in the context of currency unions and show that these price patterns are broadly consistent with those of clearinghouse models. (JEL D400, D830, F150, L130, M370 )     

MARKET POWER IN ORAL DOUBLE AUCTIONS

This paper reports the results of a series of oral-double-auction experiments in which some traders possess market power. A market is set up in which the configuration of the supply and demand curves leads to an asymmetry between buyers and sellers in their abilities to influence transactions prices. This market structure does not always lead to convergence to the competitive equilibrium price despite the competitive nature of the oral-double-auction institution. The nonconvergence occurs most frequently in the experiments involving experienced subjects.     

The Commodification of International Marriages: Cross-border Marriage Business in Taiwan and Viet Nam

In this article, we attempt to place the issue of international marriage in an institutionalized profit-oriented social context, which is described as "the commodification process". The starting point included measuring the scale of the international marriage market in Taiwan.
Socio-demographic change in Taiwan and Viet Nam has created a market for profit-pursuing marriage agents. Agents scattered in different social spheres have gradually linked to form a profitable industry. Two different industrial organization types have emerged in the matchmaking process to meet different market constraints. As the cross-border marriage market matures, more and more people enter the market, and competitive price, good quality and delivery on time become the necessary conditions for success. In this competitive process, female migrant partners become increasingly commodified to conform to the new situation. They are required to accept reduced prices, to be "good enough" to marry and to be married when there is demand. The social networks of individuals are gradually transformed by agents in pursuit of profit.     

Assisted homeownership, investment and their roles in private property price dynamics in Hong Kong

Hong Kong not only has one of the most institutionally-involved housing markets, but also one of the most developed stock markets in the world. In the meantime, the function of real estate has become increasingly important, yet increasingly vague at the same time. This paper attempts to explore the significant factors in the price adjustments of residential properties. It is found that while most market fundamentals are not significant in explaining property price movements, the roles of investment concerns and of government policy changes in assisted homeownership (HOS) are much more critical in this regard. On the one hand, real estate prices are driven more by investor demand, rather than by user demand; and residential properties are used to hedge against price risks in the stock market, instead of against inflation. On the other hand, while the upgrading hypothesis is confirmed in this study, the situation of Hong Kong turns out to be a bit different from the Singapore experience. As the production of HOS flats is suspended until further notice, the resale HOS market has managed to pull a fraction of homebuyers from the private sector. This particular finding shows that the government’s decision to suspend HOS flat production and sale in Fall 2002 has not accomplished what was intended to achieve. Instead, this leads to several implications, which are then discussed.     

FORCED INFORMATION DISCLOSURE AND THE FALLACY OF TRANSPARENCY IN MARKETS

A theory advanced in regulatory hearings holds that market performance will be improved if one side of the market is forced to publicly reveal preferences. For example, wholesale electricity producers claim that retail electricity consumers would pay lower prices if wholesale public utility demand is disclosed to producers. Experimental markets studied here featured decentralized, privately negotiated contracts, typical of the wholesale electricity markets. Two conclusions emerge: (1) such markets generally converge to the competitive equilibrium and (2) forced disclosure works to the disadvantage of the disclosing side. Information disclosure would result in higher wholesale and thus higher retail electricity prices. (JEL L50 , L94 , D43 )     

A NOTE ON THE THEORY OF BLACK MARKETS UNDER PRICE CONTROLS

In a recent article in this Journal Browning and Culbertson (hereafter B-C) extended the theoretical investigation of the predicted effects of maximum price controls to the competitive firm and deduced an excess capacity result. In this note we extend their analysis to derive long-run adjustment paths for the industry for changes in market demand or control prices. The importance of such an extension is that the relevant industry adjustment path is different depending on whether one considers changes in the control price through such mechanisms as cost pass-throughs or through changes in industry demand. To make this extension meaningful, however, we must first consider the link between the firm and market diagrams in B-C's model. Section I is devoted to the analysis. Section II offers some concluding remarks.     

Analyzing consumers heterogeneity and self-reported tastes: An approach consistent with the consumer’s decision making process

This paper analyses whether self-reported valuation of goods is an adequate proxy for underlying tastes. In this case, different self-reported appraisals, which we can associate with different utility functions, would imply different demand curves. To estimate these kinds of relationships we have used data on reported tastes on new film releases and cinema attendance. We have used a latent class approach in order to imitate the data generating process underlying the demand functions, where consumer’s preferences are determined before consumers purchase. With this procedure we can reject the hypothesis of a unique demand function for all consumers. As expected, moreover, prices have a different influence depending on individuals’ self-reported tastes and specific market policies for each consumer group could therefore be designed.     

Demand cross elasticity without substitutability: An experiment

We study a market in which goods are produced under low marginal costs with a poor degree of substitutability among products. In this environment we ran an experiment to explain why prices are interdependent even when preferences are independent. We compare our results to previous theoretical and laboratory experimental literature on price fairness. We find that even in the absence of interaction among subjects, price fairness/unfairness does play a major role in the decision to accept or reject a deal. Subjects tend to be more resistant to a price increase and reject a deal when the preferred product is not referenced to price increases of not substitute products, if these products are considered to be a benchmark for fair conduct. Thus demand cross elasticity can arise between products that are not substitutes. This result has important implications for antitrust policy. In delineating a market perimeter, fairness concerns suggest that products that are similar but not interchangeable should be included in the relevant antitrust market.     

Scamming the Poor

Abstract

Because of the difficulty in securing traditional forms of credit, the poor are often driven into the fringe economy for check cashing, bill paying and short-term loans. These services involve high user fees and exorbitant interest rates that rival or even exceed those for illegal loan sharking. Fringe lending businesses function as a legal and virtually unregulated form of predatory loan-sharking. They neither offer nor promote savings-based financial products that build assets and increase household wealth. The predictable outcome is the depletion of the income and assets of low-income families and communities. Because many poor clients are vulnerable to fringe market lenders, social workers need to understand this market to better assist the poor in finding and developing alternative forms of borrowing. This article will explore the rapidly growing fringe economy and examine strategies to help curb the drain of income and assets from low-income communities.