nep-com New Economics Papers
on Industrial Competition
Issue of 2007‒01‒06
four papers chosen by
Russell Pittman
US Department of Justice

  1. Political Price Cycles in Regulated Industries: Theory and Evidence By Rodrigo Moita; Claudio Paiva
  2. Relative Efficiency, Scale Effect, and Scope Effect of Public Hospitals: Evidence from Australia By Jian Wang; Zhong Zhao; Amir Mahmood
  3. The Size Distribution of Firms, Cournot, and Optimal Taxation By Mark Gersovitz
  4. Banks as Coordinators of Economic Growth By Kenichi Ueda

  1. By: Rodrigo Moita; Claudio Paiva
    Abstract: This paper develops a model of political regulation in which politicians set the regulated price in order to maximize electoral support by signaling to voters a pro-consumer behavior. Political incentives and welfare constraints interact in the model, yielding an equilibrium in which the real price in a regulated industry may fall in periods immediately preceding an election. The paper also provides empirical support for the theoretical model. Using quarterly data from 32 industrial and developing countries over 1978-2004, we find strong statistical and econometric evidence pointing toward the existence of electoral price cycles in gasoline markets.
    Keywords: Political cycle , regulated prices , gasoline prices , Political economy , Price controls , Gasoline prices ,
    Date: 2006–11–27
  2. By: Jian Wang (Shandong University, China); Zhong Zhao (IZA Bonn, Germany); Amir Mahmood (University of Newcastle, Australia)
    Abstract: Using the 1997-1998 New South Wales public-hospitals comparison data, we investigate the hospital-level inefficiency by applying a stochastic-frontier multiproduct cost function. We use a flexible translog cost function to reduce the measurement errors of the outputs of the hospital. The main findings are: First, inefficiency accounts for 9.3% of total hospital costs in large hospitals and 11.3% in small hospitals, when including complexity indicators. Second, diseconomies of scale exist in very large hospitals, whereas scale economies appear in very small hospitals. Third, scope effects are found in both large and small hospitals. Fourth, small hospitals are more labor-intensive than large hospitals are.
    Keywords: translog cost function, economies of scale and scope, efficiency, public hospital
    JEL: I11 I18 C31
    Date: 2006–12
  3. By: Mark Gersovitz
    Abstract: Tax laws and administrations often treat different size firms differently. There is, however, little research on the consequences. As modeled here, oligopolists with different efficiencies determine the size distribution of firms. A government that maximizes a weighted sum of consumer surplus, profits, and tax receipts can tax firms with different efficiencies differently and provides a reference point for other, more restricted differential tax systems. Taxes include a specific sales tax, an ad valorem sales tax, and a profits tax with imperfect deductibility of capital cost, and a combination of the last two. In general there is a pattern of tax rates by efficiency of firm. It is heavily dependent on the social valuation of tax receipts. Analytic and simulation results are provided. When both ad valorem taxes and the imperfect profits tax are combined, simulations suggest that the former rate is higher and the latter rate is lower for relatively inefficient firms.
    Keywords: Optimal tax , size distribution , imperfect competition , Taxation , Profits , Tax rates , Economic models ,
    Date: 2006–12–12
  4. By: Kenichi Ueda
    Abstract: This paper formally identifies an important role of banks: Banks competitively internalize production externalities and facilitate economic growth. I formulate a canonical growth model with externalities as a game among consumers, firms, and banks. Banks compete for deposits to seek monopoly profits, including externalities. Using loan contracts that specify price and quantity, banks control firms' investments. Each bank forms a firm group endogenously and internalizes externalities directly within a firm group and indirectly across firm groups. This unique equilibrium requires a condition that separates competition for sources and uses of funds. I present a realistic institution that satisfies this condition.
    Keywords: Bank-oriented financial system , bank control , firm group , economic growth , Banks , Financial systems , Economic growth , Economic models ,
    Date: 2006–11–29

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