nep-cul New Economics Papers
on Cultural Economics
Issue of 2004‒12‒20
three papers chosen by
Roberto Zanola
Università degli Studi del Piemonte Orientale

  1. Culutral Biases in Economic Exchange By Luigi Guiso; Paola Sapienza; Luigi Zingales
  2. The College Football Association Television Broadcase Cartel By John J. Siegfried; Molly Gardner Burba
  3. The Graffiti Problem By JS Armstrong

  1. By: Luigi Guiso; Paola Sapienza; Luigi Zingales
    Abstract: How much do cultural biases affect economic exchange? We try to answer this question by using the relative trust European citizens have for citizens of other countries. First, we document that this trust is affected not only by objective characteristics of the country being trusted, but also by cultural aspects such as religion, a history of conflicts, and genetic similarities. We then find that lower relative levels of trust toward citizens of a country lead to less trade with that country, less portfolio investment, and less direct investment in that country, even after controlling for the objective characteristics of that country. This effect is stronger for good that are more trust intensive and doubles or triples when trust is instrumented with its cultural determinants. We conclude that perceptions rooted in culture are important (and generally omitted) determinants of economic exchange.
    JEL: G0 G3 F1
    Date: 2004–12
  2. By: John J. Siegfried (Department of Economics, Vanderbilt University; American Economics Association); Molly Gardner Burba (Private Investment Banking Company LLC, New York)
    Abstract: The College Football Association (CFA) sold rights to broadcast live games of its members from 1984 through 1995. It competed directly with the Big Ten and Pac Ten universities that sold an alternative broadcast package. Each of the duopolists dominated certain geographic areas, so that they retained much of the monopoly power of the single NCAA cartel that they replaced. The CFA restricted output in order to elevate rights fees, and limited entry into the Association. The broadcast rights fees it collected substantially exceeded marginal cost. This article examines how the number of sellers, entry conditions, product homogeneity, and the elasticity of demand fostered the cartel, and how the cartel prevented cheating on the agreement. Eventually, disputes over the distribution of the rents led to defections. Penn State and Notre Dame left in 1990 and 1991. When the Southeastern Conference struck out independently after 1995, the CFA collapsed. It sealed its books on June 30, 1997.
    Keywords: Cartels, CFA, College football, football television broadcasting, NCAA
    JEL: L83
    Date: 2003–09
  3. By: JS Armstrong (The Wharton School - University of Pennsylvania)
    Abstract: Graffiti is regarded by many as a blight on our cities because it contributes to visual pollution. City governments spend vast sums in an effort to clean the ubiquitous graffiti from urban walls. I suggest that the “cleansing strategy” is an expensive, ineffective way of dealing with the problem; well-known management techniques can solve the problem more efficiently.
    Keywords: graffiti problem, cleansing strategy, management
    JEL: A
    Date: 2004–12–10

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