WHO BIDS THE MOST FOR MARKET POWER?

In the traditional industrial organization literature market structure is an exogenous variable. However, sometimes market structure is a matter of choice. Firms can choose to operate as monopolists, but only if they pay for this right. When market structure is chosen a natural question is, “What types of firms will pay the price to operate as monopolists, and how will they differ from their competitive counterparts?” This paper develops a model which addresses this question and arrives at results that are novel when compared to the results of the traditional structure-conduct-performance paradigm.     

ENTRY LEVEL SALARIES OF ACADEMIC ECONOMISTS: DOES GENDER OR AGE MATTER?

This study uses the results of a survey of entry level economists to investigate whether gender or age influence beginning salaries once other determinants of earnings are taken into account. We consider and control for terminal degree status, the quality of Ph.D. granting and hiring departments, field of specialization, costs of living across areas, and other institutional factors that can influence academic salaries. Gender is found to have no significant effect. Age seems to matter but only in departments that have faculty who do not publish in top journals and only through interactions with other variables.     

MORAL HAZARD AND THE EFFECTS OF THE DESIGNATED HITTER RULE REVISITED

New evidence seems to cast doubt on the hypothesis that the American League's adoption of the designated hitter (DH) rule in 1973 created a moral hazard problem for pitchers. In particular, the substitution of hard-hitting DHs for weak-hitting pitchers in the American League supposedly explains the lion's share of inter-league differences in hit batsmen. However, theoretical and empirical questions about the explanatory power of this alternative hypothesis lead us to the conclusion that moral hazard remains the most plausible reason why more AL than NL batters have been hit by pitches in 22 of the past 25 seasons. ( JEL D81, J28)     

ECONOMICS COURSEWORK AND LONG‐TERM BEHAVIOR AND EXPERIENCES OF COLLEGE GRADUATES IN LABOR MARKETS AND PERSONAL FINANCE

Using survey data from over 2,000 students who attended one of four large public universities in 1976, 1986, or 1996, we investigate the relationship between taking more coursework in economics, or choosing economics as an undergraduate major, and a wide range of later decisions and outcomes in labor markets and personal finance, many of which have not been analyzed in earlier research. Generally, economics coursework and majoring in economics are significantly related to higher levels of earnings, home equity, and savings. They are also associated with working more hours and negatively related to completing graduate degrees (except the MBA). Among graduates with positive savings, those with more economics coursework invest more in individual stocks and money market accounts, and are more likely to have employer‐provided life insurance. They have fewer credit cards, which are more often paid in full each month. Most of these findings also hold for graduates who majored in business, but on average economics majors worked more hours and earned more than business majors, were more likely to have been self‐employed, and expected to retire at an older age. Business majors were more likely to have experienced a layoff, and were even less likely than economics majors to complete graduate degrees (except the MBA). Economics majors expected to save even more than business majors by retirement, and viewed short‐term and precautionary motives for saving as more important. Finally, our results suggest that exposure to economics through course‐taking is more important for later outcomes than actual performance in those courses. (JEL A22, J3, D12)