nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒12‒11
23 papers chosen by

  1. Modelling the joint impact of R&D and ICT on productivity: A frontier analysis approach By Fabio Pieri; Michela Vecchi; Francesco Venturini
  2. Does Economic Freedom Affect The Production Frontier? A Semiparametric Approach With Panel Data By Fan Zhang; Joshua Hall; Feng Yao
  3. Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data By Diego Restuccia; Tasso Adamopoulos
  4. Plant Capacity and Attainability: Exploration and Remedies By Kristiaan Kerstens; Jafar Sadeghi; Ignace Van de Woestyne; Gary D. Ferrier
  5. Efficiency, But At What Cost? Evidence from a DEA Analysis of WV School Districts By Eduardo Minuci; Amir B. Ferreira Neto; Joshua Hall
  6. Foreign Investment and Domestic Productivity: Identifying Knowledge Spillovers and Competition Effects By Vadym Volosovych; Carolina Villegas Sanchez; Bent Sorensen; Sebnem Kalemli-Ozcan
  7. Contract Farming, Farm Mechanization, and Agricultural Intensification: The Case of Rice Farming in Cote d’Ivoire By Yukichi Y.; Mano Yukichi Y.; Takahashi Kazushi; Otsuka Keijiro
  8. The Impact of Bank Credit on Labor Reallocation and Aggregate Industry Productivity By John (Jianqiu) Bai; Daniel Carvalho; Gordon M. Phillips
  9. Capital misallocation and financial development: A sector-level analysis By Daniela Marconi; Christian Upper
  10. Union Density, Productivity, and Wages By Alex Bryson; Erling Barth; Harald Dale-Olsen
  11. Resource allocation and productivity across provinces in China By Peng Bin; Xiaolan Chen; Andrea Fracasso; Chiara Tomasi
  12. Who Creates Jobs and Who Creates Productivity? Small versus Large versus Young versus Old By Heyman, Fredrik; Norbäck, Pehr-Johan; Persson, Lars
  13. Boosting productivity in Switzerland By Patrice Ollivaud
  14. What's Behind the Figures? Quantifying the Cross-Country Exporter Productivity Gap By Kozo Kiyota; Toshiyuki Matsuura; Lionel Nesta
  15. What Explains the Post-2004 U.S.Productivity Slowdown? By Alexander Murray
  16. Confronting the zombies: Policies for productivity revival By Dan Andrews; Muge Adalet McGowan; Valentine Millot
  17. Credit Rationing and the Relationship Between Family Businesses and Banks in Italy By Giovanni Ferri; Pierluigi Murro; Marco Pini
  18. What twenty years of regulations have to say about M&As of U.S. banks? By Leledakis, George; Mamatzakis, Emmanuel; Pirgiotakis, Manos; Travlos, Nikolaos
  19. An Empirical Test for Costs Subadditivity in the Fishery Sector By Laura Onofri; Francesc Maynou
  20. The Real Exchange Rate, Innovation and Productivity By Laura Alfaro; Alejandro Cuñat; Harald Fadinger; Yanping Liu
  21. Structural change, expanding informality and labour productivity growth in Russia By Voskoboynikov, Ilya B.
  22. Informality and productivity: do firms escape EPL through shadow employment? Evidence from a regression discontinuity design By Giuseppina Gianfreda; Giovanna Vallanti
  23. The Effects of a Day Off from Retail Price Competition: Evidence on Consumer Behavior and Firm Performance in Gasoline Retailing By Foros, Øystein; Nguyen-Ones, Mai; Steen, Frode

  1. By: Fabio Pieri; Michela Vecchi; Francesco Venturini
    Abstract: This study explores the channels through which technological investments affect productivity performance of industrialized economies. Using a Stochastic Frontier Model (SFM) we estimate the productivity effects of R&D and ICT for a large sample of OECD industries between 1973 and 2007, identifying four channels of transmission: input accumulation, technological change, technical efficiency and spillovers. Our results show that ICT has been particularly effective in reducing production inefficiency and in generating inter-industry spillovers, while R&D has raised the rate of technical change and favoured knowledge spillovers within sectors. We also quantify the contribution of technological investments to output and TFP growth documenting that R&D and ICT accounted for almost 95% of TFP growth in the OECD area.
    Keywords: Research & Development, Information and Communication Technology, Productivity, Stochastic frontier models
    JEL: O14 O32 O47
    Date: 2017
  2. By: Fan Zhang (Ripon College, Business Management Program); Joshua Hall (West Virginia University, Department of Economics); Feng Yao (Shenzhen University, China Center for Special Economic Zone Research)
    Abstract: This paper applies a multi-step semiparametric stochastic production frontier estimator proposed by Yao et al. (2017) to investigate the effects of economic freedom on the production frontier and technical efficiency. We allow output elasticities and technical efficiency to depend on the economic freedom variable, estimate a smooth coefficient stochastic production frontier, and compare with parametric alternatives, the Cobb-Douglas and translog estimates. Our results add to the literature on economic freedom and growth in three ways. First, our results highlight the flexibility of semiparametric approaches as we find the commonly used parametric approaches to be too restrictive in estimating the marginal productivity of inputs. Second, we find that the output elasticities of labor, human capital, and physical capital vary with the level of economic freedom. Third, our average efficiency estimates are at least 20% higher than those obtained from the parametric counterparts, suggesting that previous papers have mismeasured the impact of economic freedom on technical efficiency.
    Keywords: Economic freedom, Technical efficiency, Semiparametric smooth coefficient model
    JEL: C14 O43
    Date: 2017–11
  3. By: Diego Restuccia (University of Toronto); Tasso Adamopoulos (York University)
    Abstract: What accounts for the extremely low agricultural productivity in poor countries? We assess the quantitative role of geography and land quality for agricultural productivity differences across countries using high-resolution micro-geography data and a simple spatial accounting framework. Our rich spatial data provide in each plot of land covering the entire globe actual yields for crops produced and potential yields for 18 main crops that account for soil quality, climate conditions, and terrain topography. There is considerable heterogeneity in land quality across space, even within narrow geographic regions. Yet, we find that low agricultural productivity in poor countries is not due to poor land endowments. If countries produced current crops according to potential yields, the rich-poor agricultural yield gap would virtually disappear, from more than 200 percent to less than 5 percent. If in addition countries produced in each location the crop with the highest potential yield, the yield gap turns into a gain of 23 percent. Our evidence indicates that the rich-poor yield gap is mostly due to low efficiency in producing existing crops within plots in poor countries, with a smaller role for the composition of crops within plots and the distribution of crop production across plots within countries.
    Date: 2017
  4. By: Kristiaan Kerstens (CNRS-LEM and IESEG School of Management); Jafar Sadeghi (CNRS (LEM-UMR 9221) and IÉSEG School of Management); Ignace Van de Woestyne (KU Leuven, Belgium); Gary D. Ferrier (University of Arkansas)
    Abstract: The output-oriented plant capacity notion has been around since more than two decades. It has mainly been applied empirically in the fishery and the hospital sectors. A problem known since its introduction into the literature is that it may not be attainable, in that it presupposes potentially unlimited amounts of variable inputs to determine the maximum of outputs available. This issue of the lack of attainability has never been explored. This paper fills this void both theoretically and empirically. It finds that the attainability may be problematic, and that bounds on the amounts of variable inputs may well need to be imposed.
    Keywords: Technology; Plant Capacity; Attainability
    JEL: D24
    Date: 2017–11
  5. By: Eduardo Minuci (West Virginia University, Department of Economics); Amir B. Ferreira Neto (West Virginia University, Department of Economics); Joshua Hall (West Virginia University, Department of Economics)
    Abstract: West Virginia schools are consistently below the national average on the NAEP. Using Data Envelopment Analysis, we estimate the technical efficiency of West Virginia school districts. We find less variation in technical efficiency in West Virginia than in similar studies conducted in other states. This appears to be because of state policy imposing homogeneity of input usage. Due to the limited variation in technical efficiency across districts, we cannot analyze how non-school inputs such as socioeconomic factors affect technical efficiency across districts. Summary statistics organized by county economic status, however, suggest that socioeconomic status plays a role. Our results highlight an important limitation of DEA analysis on schools.
    Keywords: Data Envelopment Analysis, Efficiency, Government, Public Schools
    JEL: H41 H76 I29
    Date: 2017–11
  6. By: Vadym Volosovych (Erasmus University Rotterdam); Carolina Villegas Sanchez (ESADE Business School); Bent Sorensen (University of Houston); Sebnem Kalemli-Ozcan (University of Maryland)
    Abstract: We identify knowledge spillovers from foreign investment to domestic firms using novel measures of ``closeness'' of foreign-owned and domestic and domestic firms in product space and in technology space. We rely on a new data set that spans six advanced countries connecting firms internationally in order to, a) separate competition effects on domestic firms from knowledge spillovers when domestic and foreign-owned firms are close in product space, and b) identify spillovers from foreign-owned firms that are close to domestic firms in technology space. We find strong negative competition effects on domestic firms that produce in the same {four-digit} sector as the foreign firms and positive knowledge spillovers to domestic firms operating in the same {two-digit} sector (but in different four-digit sectors). Using a measure of ``technological closeness,'' building on the work of Bloom, Schankerman, and van Reenen (2013), we find significant knowledge spillovers to firms which are close in technology space. On average, knowledge spillovers explain 60 percent of the total factor productivity improvement for domestic firms that are technologically close to foreign firms.
    Date: 2017
  7. By: Yukichi Y.; Mano Yukichi Y.; Takahashi Kazushi; Otsuka Keijiro
    Abstract: It is critically important to intensify farming systems by disseminating proper agronomic practices and promoting the increased application of inputs to raise agricultural productivity in sub-Saharan Africa. However, the region’s public agricultural extension systems are weak, and their input and output markets often fail to function properly. Under these circumstances, contract farming (CF) is expected to be a promising way to overcome market imperfections by providing inputs, production training, and marketing services. We examine this possibility by analyzing the case of rice production CF in Cote d’Ivoire. We find that CF did not lead to farming intensification, due mainly to the inadequate and uncertain provision of tractor services. Further analysis reveals a complementarity between tractor use and labor inputs, whereby tractor use in land preparation enhanced the adoption of input- and labor-intensive practices in subsequent farming activities, thereby increasing labor use and improving land productivity. The diffusion of tractors is thus likely to be key to the intensification of rice farming systems in sub-Saharan Africa.
    Keywords: contract farming, rice production, tractor, farm mechanization, agricultural intensification, Green Revolution, sub-Saharan Africa, Cote d’Ivoire
    Date: 2017–11
  8. By: John (Jianqiu) Bai; Daniel Carvalho; Gordon M. Phillips
    Abstract: We provide evidence that the deregulation of U.S. state banking markets leads to a significant increase in the relative employment and capital growth of local firms with higher productivity and that this effect is concentrated among young firms. Using financial data for a broad range of firms, our analysis suggests that this effect is driven by a shift in the composition of local bank credit supply towards more productive firms. We estimate that this effect translates into economically important gains in aggregate industry productivity and that changes in the allocation of labor play a central role in driving these gains.
    JEL: G2 G21 G3 G31 G32 J01 J21 J24 L22 L23 L25 O11 O12
    Date: 2017–11
  9. By: Daniela Marconi; Christian Upper
    Abstract: This study investigates how financial development affects capital allocation across industries in a panel of countries at different stages of development (China, India, Mexico, Korea, Japan and the US) over the period 1980-2014. Following the approach proposed by Chari et al (2007) and Aoki (2012), we compute wedges for capital and labour inputs for 26 industrial sectors in the six countries and add them up to economy-wide measures of capital and labour misallocation. We find that more developed financial systems allocate capital investment more efficiently than less developed ones. If financial development is low, faster capital accumulation is associated with a worsening of allocative efficiency. This effect reverses for higher levels of financial development. Sectors with high R&D expenditures or high capital investment benefit most from financial development. These effects are not only statistically significant, they are also large in economic terms.
    Keywords: factor allocation, total factor productivity, financial development
    JEL: E22 E23 O16 O47
    Date: 2017–11
  10. By: Alex Bryson; Erling Barth; Harald Dale-Olsen
    Abstract: We exploit tax-induced exogenous variance in the price of union membership to identify the effects of changes in firm union density on firm productivity and wages in the population of Norwegian firms over the period 2001 to 2012. Increases in union density lead to substantial increases in firm productivity and wages having accounted for the potential endogeneity of unionization. The wage effect is larger in more productive firms, consistent with rent-sharing models.
    Date: 2017–08
  11. By: Peng Bin; Xiaolan Chen; Andrea Fracasso; Chiara Tomasi
    Abstract: The rapid economic development in China has been characterized by levels of income and productivity very heterogeneous across local areas. This work investigates a previously unexplored aspect of such heterogeneity by assessing the degree of within-industry allocative e ciency across provinces in China over the period 1998-2007. Us- ing firm-level data from the surveys conducted by the National Bureau of Statistics on the Chinese manufacturing firms, we measure the degree of resource misallocation by computing the within-industry covariance between size and productivity at the provincial level. The results suggest that within-industry allocative e ciency varies considerably across local areas and that some place-based factors strongly influence resources mobility. Our work sheds some light on the mechanisms at play in the dis- tribution of resources in China and it contributes to the literature investigating the degree of allocative effciency.
    Keywords: Allocative effciency, Resource allocation, Regional disparities, China
    JEL: D24 L25 O47 F41
    Date: 2017
  12. By: Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: This paper examines employment and productivity dynamics in the Swedish business sector during the period 1996–2013. In order to analyze employment and productivity in a consistent way we apply a novel implementation of a method, which previously has been used extensively to analyze job dynamics, on both job and productivity dynamics. Our results, based on detailed matched employer-employee data for Sweden, indicate substantial heterogeneity in terms of job and productivity dynamics for different types of firms. We find that most of the net jobs were created in young, small firms, but at the same time we also find that most of the productivity gains were created in large old incumbent firms, thus suggesting a division of labor between the two. Our analysis provides new insights into the importance of age and size of firms in the restructuring process, stressing the dichotomy between employment growth and productivity growth in different types of firms.
    Keywords: Job dynamics; Productivity; Matched employer-employee data; Industrial structure and structural change
    JEL: E24 J23 L16 L25 L26
    Date: 2017–11–20
  13. By: Patrice Ollivaud
    Abstract: Swiss GDP per capita stands amongst the top OECD performers. However, to face medium-term challenges productivity developments will be key to allow the country to maintain its enviable position. Recent trends have not been favourable, with productivity growth underperforming peer countries. Based on macroeconomic analysis and supported by firm-level data, results point to a significant role for competition, innovation, education, firm characteristics and entrepreneurship. The regulatory environment is a crucial element driving productivity and could explain some of the differences across cantons. It is also an important factor for productivity differences across sectors. Other issues weighing on Switzerland’s future performance include risks from ageing, which can have major consequences on productivity via its influence on economic sectors and also via the age structure and the evolution of productivity through working life. Fully utilising the potential of underrepresented population segments would also be beneficial, notably encouraging full-time participation of women and better integrating immigrants. More enterprise creation could be achieved with increased entrepreneurship education, expanded non-bank financing and a reduced regulatory burden. R&D, while an obvious success in Switzerland, has apparently not produced commensurate returns in output. Diversification, more knowledge sharing, a stronger role for higher education institutions and promotion of start-ups would help reinforce the links from R&D to productivity. This Working Paper relates to the 2017 OECD Economic Survey of Switzerland ( y-switzerland.htm).
    Keywords: firm-level data, labour productivity, research and development, Switzerland
    JEL: O10 O30 O40 O52
    Date: 2017–12–12
  14. By: Kozo Kiyota (Keio Economic Observatory, Keio University); Toshiyuki Matsuura (Keio Economic Observatory, Keio University); Lionel Nesta (Université Côte d'Azur; GREDEG CNRS; OFCE Sciences Po.; SKEMA Business School)
    Abstract: We present a simple framework that allows us to examine the cross-country exporter productivity gap without accessing confidential firm-level data. This gap depends on the three readily available statistics: the productivity gap between two countries; the export participation rates; and export premia. This gap holds irrespective of the data generating process and independent of sunk costs of entering domestic markets. Under specific conditions, allocative efficiency may affect the exporter productivity gap. Additional assumptions on the log-normality of the productivity distribution of firms allow one to recover the export threshold and heterogeneity parameters. The empirical analysis globally validates this exercise.
    Keywords: International productivity gap, Export premia, Competitiveness, Meta analysis
    JEL: F1 D24
    Date: 2017–11
  15. By: Alexander Murray
    Abstract: Based on original data analysis and a review of existing literature, this report summarizes the state of knowledge on the causes of the post-2004 slowdown in U.S. productivity growth.
    Keywords: Economic Theory, Labour Productivity, Living Standards, Growth, U.S., Recession, Academics, Literature,
    JEL: E24 J24 J11 F43
    Date: 2017–08
  16. By: Dan Andrews; Muge Adalet McGowan; Valentine Millot
    Abstract: Policies that spur more efficient corporate restructuring can revive productivity growth by targeting three inter-related sources of labour productivity weakness: the survival of “zombie” firms (low productivity firms that would typically exit in a competitive market), capital misallocation and stalling technological diffusion. New OECD policy indicators show that there is much scope to improve the design of insolvency regimes in order to reduce the barriers to restructuring of weak firms and the personal costs associated with entrepreneurial failure. Insolvency regime reform can not only address the aforementioned sources of productivity weakness but also enhance the productivity impacts of reducing entry barriers in product markets. As the zombie firm problem may partly stem from bank forbearance, complementary reforms to insolvency regimes are essential to ensure that a more aggressive policy to resolve non-performing loans is effective. Distortions in the banking sector highlight the importance of market-based financing instruments for productivity growth with the inherent debt bias in corporate tax systems emerging as a key barrier to technological diffusion. Finally, well-designed job search and retraining policies are effective at returning workers displaced by firm exit to work, particularly in environments where barriers to firm entry are low.
    Keywords: banks, capital misallocation, firm exit, insolvency, Productivity, zombie firms
    JEL: D24 G21 G32 G33 G34 J63 J68 K35 L25 O16 O40 O43 O47
    Date: 2017–12–06
  17. By: Giovanni Ferri (LUMSA University); Pierluigi Murro (LUMSA University); Marco Pini (Unioncamere)
    Abstract: We investigate whether family businesses (FBs) suffer stiffer credit rationing in the post-crisis Italian economy. FBs are, in fact, typically more opaque than other firms, possibly deterring bank lending to them. Moreover, regulatory changes may lead many banks to abandon relationship lending, weakening their ability to evaluate opaque firms. Using detailed firm data, our estimates reach nuanced conclusions. First, credit rationing is not more intense at FBs. However, it systematically intensifies if FBs engage in firm-bank arrangements less able to overcome information asymmetries either coupling with a main bank that uses transactional lending or diluting relationships across various banking partners.
    Keywords: Family firms, Firm-bank relationship, Bank lending technologies, Credit Rationing
    JEL: D22 G32
    Date: 2017–12
  18. By: Leledakis, George; Mamatzakis, Emmanuel; Pirgiotakis, Manos; Travlos, Nikolaos
    Abstract: We extend the U.S. bank M&As literature by examining announcement returns for acquisitions of both listed and unlisted targets by U.S. banking firms for a long period of time from the eighties till to date. Over these decades there have been implemented several regulation changes, notably the Dodd-Frank Act that would be of interest to examine whether they have any impact, and if indeed they have to which direction, on value creation in M&As in the U.S. banking industry. Contrary to the conventional wisdom that bidding banks lose upon the announcement of a merger, we find positive abnormal returns for these firms that choose to acquire privately-held targets. Further, returns for acquirers in private offers do not depend on the method of payment, legislative changes, size, or geographical scope. However, we find that the use of a financial advisor on the part of the bidder can better explain the variation in abnormal returns for such offers. Our results are not influenced by any unobserved bidder-specific component or sample selection issues.
    Keywords: Mergers and Acquisitions; Regulations, Banks; Value Creation
    JEL: G2 G3 G34
    Date: 2017–11–27
  19. By: Laura Onofri; Francesc Maynou
    Abstract: The seminal work by Baumol et al. (1982) has highlighted the importance of analyzing firms’ costs structure. This allows to design proper policy measures and to understand the impacts of those policies in markets. The note presents an original method and an application for testing costs subadditivity in the fishery sector, by using a system of supply functions under strict conditions and assumptions. The method is practical, though robust, and can be applied in the absence of detailed data on costs structures. Under stringent hypothesis (that delimit the application) they can be inferred from the supply functions. Subadditivity in costs, in fact, is a more proper economic definition (and methodological approach) than traditional economies of scale in fishery. The latter, in fact, does not depend from the vessel technology, but on the degree of quantity and variety of fish species in the ocean.
    Keywords: Cost subadditivity, vessel, fishery, simultaneous equations model, 2SLS
    JEL: C01 C30 D24 Q22
    Date: 2017–11–10
  20. By: Laura Alfaro (Harvard Business School, Business, Government and the International Economy Unit); Alejandro Cuñat (University of Vienna); Harald Fadinger (University of Mannheim); Yanping Liu (University of Mannheim)
    Abstract: We evaluate manufacturing firms' responses to changes in the real exchange rate (RER) using detailed firm-level data for a large set of countries for the period 2001-2010. We uncover the following stylized facts: In emerging Asia, real depreciations are associated with faster growth of firm-level TFP, sales and cash-ow, higher probabilities to engage in R&D and export. We find no significant effects for firms from industrialized economies and negative effects for firms in other emerging economies, which are less export-intensive and more import-intensive. Motivated by these facts, we build a dynamic model in which real depreciations raise the cost of importing intermediates, but increase demand and the profitability to engage in exports and R&D, thereby relaxing borrowing constraints and enabling more firms to overcome the fixed-cost hurdle for financing R&D. We decompose the effects of RER changes on productivity growth into these channels and explain regional heterogeneity in the effects of RER changes in terms of differences in export intensity, import intensity and financial constraints. We estimate the model and quantitatively evaluate the different mechanisms by providing counterfactual simulations of temporary real exchange rate movements. Effects on physical TFP growth, while different across regions, are non-linear and asymmetric.
    Keywords: real exchange rate, firm level data, innovation, productivity, exporting, importing, credit constraints
    JEL: F O
    Date: 2017–11
  21. By: Voskoboynikov, Ilya B.
    Abstract: Intensive growth, structural change and expanding informality has characterized many developing and emerging economies in recent decades. Yet most empirical investigations into the relationship between structural change and productivity growth overlook informality. This paper includes the informal sector in an analysis of the effects of structural changes in the Russian economy on aggre-gate labour productivity growth. Using a newly developed dataset for 34 industries covering the period 1995–2012 and applying three alternative approaches, aggregate labour productivity growth is decomposed into intra-industry and inter-industry contributions. All three approaches show that the overall contribution of structural change is growth-enhancing, significant and attenuating over time. Labour reallocation from the formal sector to the informal sector tends to reduce growth through the extension of informal activities with low productivity levels. Sectoral labour reallocation effects are found to be highly sensitive to the methods applied.
    JEL: O11 O17 C82 N14
    Date: 2017–11–29
  22. By: Giuseppina Gianfreda (Università della Tuscia); Giovanna Vallanti (LUISS "Guido Carli")
    Abstract: Compliance with labour law has costs and benefits which may depend on the institutional environment in which firms operate. Although several studies have documented a negative effect of informality on firms productivity and growth it is a fact that firms may resort to undeclared employment to escape excessive tax or regulatory burden. We argue that firms may respond to strict employment protection legislation through accrued informality thus (partially) offsetting the negative effect of informality on productivity. We exploit the Italian dismissal legislation imposing higher firing costs for firms with more than 15 workers and show that informality reduces the turnover of formal jobs for firms above the 15 workers threshold; furthermore, while the overall effect of informality on firms productivity is negative, the differential effect for firms above the threshold as compared to smaller firms is positive and significant.
    JEL: D02 D22 D24
    Date: 2017–12
  23. By: Foros, Øystein; Nguyen-Ones, Mai; Steen, Frode
    Abstract: First, we analyze how regular days off from competition and a time-dependent price pattern affect firm performance. Second, we examine the effects on firms' profitability from consumers' changing search- and timing behavior. We use microdata from gasoline retailing in Norway. Since 2004, firms have practiced an industry-wide day off from competition, starting on Mondays at noon, by increasing prices to a common level given by the recommended prices (decided and published in advance). In turn, a foreseeable low-price window is open before every restoration. During the data period, we observe an additional weekly restoration on Thursdays at noon. The additional day off from competition increases firm performance. As expected, a conventional price search of where to buy reduces firms' profitability. In contrast, consumers who are aware of the cycle and spend effort on when to buy have a positive impact on firms' profitability. If consumers spend effort on when to buy, they attempt to tank during low price windows. By its very nature, this shrink consumers' ability to compare prices at several outlets. Consequently, more attention to when to buy may soften price competition.
    Keywords: firm performance; Gasoline markets; Pricing cycles
    JEL: D22 L25 L42 L81
    Date: 2017–12

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