nep-mic New Economics Papers
on Microeconomics
Issue of 2005‒01‒16
24 papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. On the Existence of Linear Equilibria in the Rochet-Vila Model of Market Making By Georg Nöldeke; Thomas Tröger
  2. The Impact of Resale on 2-Bidder First-Price Auctions where One Bidder's Value is Commonly Known By Thomas Tröger
  3. Envy Freeness in Experimental Fair Division Problems By Dorothea K. Herreiner; Clemens Puppe
  4. A Review of the Monitoring of Market Power The Possible Roles of TSOs in Monitoring for Market Power Issues in Congested Transmission Systems By Paul Twomey; Richard Green; Karsten Neuhoff; David Newbery
  5. Preference heterogeneity and willingness to pay for travel time By Francisco Javier Amador; Rosa Marina González; Juan de Dios Ortúzar
  6. Designing Benefit Rules for Flexible Retirement with or without Redistribution By András Simonovits
  7. Umbrella Branding and the Provision of Quality By Hendrik Hakenes; Martin Peitz
  8. Progressive Taxation and Irreversible Investment under Uncertainty By Luis H. R. Alvarez; Erkki Koskela
  9. Risk-return preferences in the pension domain: are people able to choose? By Maarten van Rooij; Clemens Kool; Henriëtte Prast
  10. The impact of interest-rate subsidies on long-term household debt: evidence from a large program By Nuno Martins; Ernesto Villanueva
  11. Multi Pollutant Yardstick Schemes as Environmental Policy Tools By Laurent Franckx; Alessio D’Amato†, Isabelle Brose; Isabelle Brose
  12. Bidding for Incompete Contracts By Patrick Bajari; Stephanie Houghton; Steven Tadelis
  13. Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions By Jonathan Levin; Susan Athey; Enrique Seira
  14. Behavioral Biases of Dealers in U.S. Treasury Auctions By David Goldreich
  15. How to Win Twice at an Auction. On the Incidence of Commissions in Auction Markets By Victor Ginsburgh; Patrick Legros; Nicolas Sahuguet
  16. Sequential vs. Single-Round Uniform-Price Auctions By Claudio Mezzetti; Aleksandar Pekec; Ilia Tsetlin
  17. Quid Pro Quo in IPOs: Why Book-building is Dominating Auctions By François Degeorge; François Derrien; Kent L. Womack
  18. Multidimensional Mechanism Design: Revenue Maximization and the Multiple-Good Monopoly By Alejandro M. Manelli; Daniel R. Vincent
  19. A microeconometric model for analysing efficiency and distributional effects of tax reforms: a review of results for Italy and Norwayƒx By Rolf Aaberge; Ugo Colombino
  20. Control of Complex Economy through Fiscal Variables. Economics & Complexity - Spring - 1998 - Vol2 N1 By Salzano Massimo
  21. Eliciting Public Preferences For Managing Cultural Heritage By Ugo Colombino; Annamaria Nese; Patrizia Riganti
  22. Nonparametric Tests of Optimizing Behavior in Public Service Provision: Methodology and an Application to Local Public Safety By Laurens Cherchye; Bruno De Borger; Tom Van Puyenbroeck
  23. Mergers, Investment Decisions and Internal Organisation By Albert Banal-Estaño; Inés Macho-Stadler; Jo Seldeslachts
  24. Fixed, Focal, Fair? Book Prices Under Optional Resale Price Maintenance By Jonathan Beck

  1. By: Georg Nöldeke; Thomas Tröger
    Abstract: This paper derives necessary and sucient conditions for the existence of linear equilibria in the Rochet-Vila model of market making. In contrast to most previous work on the existence of linear equilibria in models of market making, we do not impose independence of the underlying random variables. For distributions that are determined by their moments we show that a linear equilibrium exists if and only if the joint distribution of noise trade and asset payoff is elliptical.
    Keywords: Market Microstructure, Market Making, Linear Equilibria
    JEL: G14 D82
    Date: 2004–10
  2. By: Thomas Tröger
    Abstract: We consider 2-bidder first-price auctions where one bidder's value is commonly known. Such auctions induce an ineffcient allocation. We show that a resale opportunity, where the auction winner can make a take-it-or-leave-it offer to the loser, increases (reduces) the ineffciency of the market when the buyer with the commonly known value is weak (strong). Resale always reduces all bidders' payoffs and increases the initial seller's revenue.
    Keywords: asymmetric first-price auctions, resale, effciency
    JEL: D44
    Date: 2004–09
  3. By: Dorothea K. Herreiner; Clemens Puppe
    Abstract: In the recent experimental literature several social preference models have been suggested that address observed behavior not reducible to the pursuit of self-interest. Inequality aversion is one such model where preferences are distributional. Frequently, envy is suggested as the underlying rationale for inequality aversion. Envy is a central criterion in the theoretical literature on fair division, whose definition (Foley 1967) differs from the more casual use of the word in the experimental literature. We present and discuss results from free-form bargaining experiments on fair division problems where the role of envy in Foley’s sense can be analyzed and compared to social preferences. We find that envy freeness does matter as a secondary criterion.
    Keywords: Fairness, Envy Freeness, Social Preferences, Bargaining
    JEL: A13 C78 C91 D63
    Date: 2004–12
  4. By: Paul Twomey; Richard Green; Karsten Neuhoff; David Newbery
    Abstract: The paper surveys the literature and publicly available information on market power monitoring in electricity wholesale markets. After briefly reviewing definitions, strategies and methods of mitigating market power we examine the various methods of detecting market power that have been employed by academics and market monitors/regulators. These techniques include structural and behavioural indices and analysis as well as various simulation approaches. The applications of these tools range from spot market mitigation and congestion management through to long-term market design assessment and merger decisions. Various market-power monitoring units already track market behaviour and produce indices. Our survey shows that these units collect a large amount of data from various market participants and we identify the crucial role of the transmission system operators with their access to dispatch and system information. Easily accessible and comprehensive data supports effective market power monitoring and facilitates market design evaluation. The discretion required for effective market monitoring is facilitated by institutional independence.
    Keywords: Electricity, liberalisation, market power, regulation
    JEL: D43 L13 L51 L94
    Date: 2005–01
  5. By: Francisco Javier Amador (Universidad de La Laguna; Instituto Universitario de Desarrollo Regional and Departamento de Análisis Económico; Tenerife; Spain); Rosa Marina González (Universidad de La Laguna; Instituto Universitario de Desarrollo Regional and Departamento de Análisis Económico; Tenerife; Spain); Juan de Dios Ortúzar (Pontificia Universidad Católica de Chile;Departament of Transport Engineering; Santiago; Chile)
    Abstract: We examined different model specifications to detect the presence of preference heterogeneity in a mode choice context. The specification that worked best allows for both systematic and random variations in tastes. Using parameters obtained at the individual level through Bayesian inference methods, subjective values of travel time (SVT) and expected individual compensated variation were derived and aggregated to obtain measures of social welfare. Results suggest that the benefit measures, both at the individual and at the social level, are sensitive to preference heterogeneity assumptions. SVT and welfare changes derived from travel time reductions could be underestimated if the traditional assumption of taste homogeneity is made (we detected differences up to 30% in both types of measures). We also obtained an empirical value for the error made when evaluating changes in social welfare using an approximation of the expected individual compensated variation (expressed as a function of individual SVT) rather than its exact expression.
    Keywords: Preference heterogeneity, subjective value of travel time, compensated variation, random parameters logit, Bayesian methods.
    Date: 2004–12
  6. By: András Simonovits
    Abstract: The traditional approach to flexible retirement (e.g. NDC) neglects the impact of asymmetric information on actuarial fairness (neutrality). The mechanism design approach (e.g. Diamond, 2003) gives up the requirement of neutrality and looks for a redistributive second-best benefit-retirement-age schedule. Trying to combine the two approaches, the present paper determines the neutral (redistribution-free) second-best solution. This neutral solution is, however, often Pareto-dominated by the redistributive one.
    Keywords: flexible retirement, asymmetric information, actuarial fairness (neutrality), mechanism design
    JEL: D82 D91 H55
    Date: 2004
  7. By: Hendrik Hakenes; Martin Peitz
    Abstract: Consider a two-product firm that decides on the quality of each product. Product quality is unknown to consumers. If the firm sells both products under the same brand name, consumers adjust their beliefs about quality subject to the performance of both products. We show that if the probability that low quality will be detected is in an intermediate range, the firm produces high quality under umbrella branding whereas it would sell low quality in the absence of umbrella branding. Hence, umbrella branding mitigates the moral hazard problem. We also find that umbrella branding survives in asymmetric markets and that even unprofitable products may be used to stabilize the umbrella brand. However, umbrella branding does not necessarily imply high quality; the firm may choose low-quality products with positive probability.
    Keywords: umbrella branding, reputation transfer, signaling, experience goods
    JEL: D82 L14 L15 M37
    Date: 2004
  8. By: Luis H. R. Alvarez; Erkki Koskela
    Abstract: We analyze the impact of progressive taxation on irreversible investment under uncertainty. We show that if tax exemption is lower than sunk cost, higher tax rate will decelerate optimal investment by increasing the optimal investment threshold, while if tax exemption exceeds sunk cost, three different regimes arise. For "small" volatilities the optimal investment threshold is a positive function of volatility, but independent of tax rate. For "medium" volatilities it is independent of both tax rate and volatility. Finally, for "high" volatilities the optimal investment threshold depends positively on volatility, but negatively on tax rate so that we have "tax paradox".
    Keywords: irreversible investments under uncertainty, progressive taxation
    JEL: D80 G31 H25
    Date: 2005
  9. By: Maarten van Rooij; Clemens Kool; Henriëtte Prast
    Abstract: In this paper we investigate pension preferences and the effect of individual freedom of choice on risk taking in the context of pension arrangements based on a representative survey of about 1000 Dutch citizens. The attitude towards pension schemes and portfolio choices is explained by individual characteristics. Our main conclusions are the following. Risk aversion is domain dependent and highest in the pension domain. The vast majority of respondents is in favour of compulsory saving for retirement and favours a defined benefit pension system. If offered a combined defined benefit/defined contribution system, the majority of the respondents would like to have a guaranteed pension income of 70% or more of their net labour income. Self-assessed risk tolerance and financial expertise are important explanatory variables of pension system attitude. Respondents are on average conservative in their investment policy. If given investor autonomy, they are willing to change the composition of their retirement savings portfolio in response to their personal financial situation, general economic conditions, and expectations of financial markets. Respondents may be inconsistent in their preferences. Especially respondents who have chosen a relatively safe portfolio (less stock, more bonds) appear to prefer the retirement income streams of the median investment portfolio to their own portfolio choice. Finally, the average respondent considers himself financially unsophisticated, but is not very eager to take control of retirement savings investment when offered the possibility to increase expertise.
    JEL: D12 D80 G11 J26
    Date: 2005–01
  10. By: Nuno Martins; Ernesto Villanueva
    Abstract: The responsiveness of long-term household debt to the interest rate is a crucial pa-rameter for assessing the effectiveness of public policies aimed at promoting specific types of saving. This paper estimates the effect of a reform of a large program that subsidized mortgage interest rates on long-term household debt. The reform established a ceiling in the price of the house that could be Þnanced through the program, and provides plau- sibly exogenous variation in incentives. Using a unique dataset of matched household survey data and administrative records of debt, we document that loss of access to the subsidy decreased the probability of signing a new loan.
    Keywords: Consumer Borrowing; Mortgage interest rate subsidies; Quasi-natural
    JEL: D91 H20
    Date: 2005–01
  11. By: Laurent Franckx (Department of Economics and Management, Royal Military Academy); Alessio D’Amato†, Isabelle Brose (University of Rome “Tor Vergata”); Isabelle Brose (Department of Economics and Management, Royal Military Academy)
    Abstract: We consider environmental regulation of n risk-averse, multiple pollutant firms. We develop a “yardstick competition” scheme where the regulatory scheme depends on the dierence between a firm’s “aggregate” performance and the average “aggregate” performance of the industry. Whether this instruments dominates Pigovian taxation depends on the complete structure of the covariance matrix of the “common” random terms in measured pollution. Moreover, if the number of firms is large enough, the “yardstick scheme” is always superior to Pigovian taxation. This analysis also provides new arguments in favor of strict liability rather than negligence liability as regulatory tool.
    Keywords: yardstick competition, multitasking, environmental regulation, asymmetric information
    Date: 2004
  12. By: Patrick Bajari (Duke University and NBER); Stephanie Houghton (Duke University); Steven Tadelis (Stanford University)
    Abstract: When procurement contracts are incomplete, they are frequently changed after the contract is awarded to the lowest bidder. This results in a final cost that differs from the initial price, and may involve significant transaction costs due to renegotiation. We propose a stylized model of bidding for incomplete contracts and apply it to data from highway repair contracts. We estimate the magnitude of transaction costs and their impact using both reduced form and fully structural models. Our results suggest that transactions costs are a significant and important determinant of observed bids, and that bidders strategically respond to contractual incompleteness. Our findings point at disadvantages of the traditional bidding process that are a consequence of transaction costs from contract adaptations.
    Keywords: Procurement, Construction
    JEL: D23 D82 H57 L14 L22 L74
    Date: 2004–12
  13. By: Jonathan Levin (Stanford University); Susan Athey (Stanford University and NBER); Enrique Seira (Stanford University)
    Abstract: We study entry and bidding patterns in sealed bid and open auctions with heterogeneous bidders. Using data from U.S. Forest Service timber auctions, we document a set of systematic effects of auction format: sealed bid auctions attract more small bidders, shift the allocation towards these bidders, and can also generate higher revenue. We propose a model, which extends the theory of private value auctions with heterogeneous bidders to capture participation decisions, that can account for these qualitative effects of auction format. We then calibrate the model using parameters estimated from the data and show that the model can explain the quantitative effects as well. Finally, we use the model to provide an assessment of bidder competitiveness, which has important consequences for auction choice.
    Keywords: Auctions, Timber
    JEL: Q23 D44
    Date: 2004–12
  14. By: David Goldreich (London Business School and CEPR)
    Abstract: This paper provides evidence of bounded rationality by large dealers in U.S. Treasury auctions. I argue that these dealers use a heuristic of yield-space bidding which leads to biases manifested in three ways: they submit dominated bids, i.e., those that could be improved without raising the bidding price; they bid in a manner that disregards the unevenly spaced price grid; and they round bids in yield space. Consistent with bounded rationality, I show that bidders are less susceptible to bias when the cost of suboptimal bidding is high. While the literature provides substantial evidence of behavioral biases among individual investors, they are less well documented for large sophisticated institutions that are likely to be important for setting asset prices. These primary bond dealers who regularly bid for billions of dollars in Treasury bill auctions are precisely such economic agents.
    Keywords: Treasury auctions, Behavioral finance
    JEL: H63 H74 D44
    Date: 2004–12
  15. By: Victor Ginsburgh (How to Win Twice at an Auction. On the Incidence of Commissions in Auction Markets); Patrick Legros (ECARES, Université Libre de Bruxelles and CEPR); Nicolas Sahuguet (ECARES, Université Libre de Bruxelles)
    Abstract: We analyze the welfare consequences of an increase in the commissions charged by the organizer of an auction. Commissions are similar to taxes imposed on buyers and sellers and the economic problem that results looks similar to the question of tax incidence in consumer economics. We argue, however, that auction markets deserve a separate treatment. Indeed we show that an increase in commissions makes sellers worse off, but some (or all) buyers may gain. The results are therefore strikingly different from the standard result that all consumers lose after a tax or a commission increase. We apply our results to comment on the class action against Christie’s and Sotheby’s and argue that the method used to distribute compensations was misguided.
    Keywords: Auction, Intermediation, Commissions, Welfare
    JEL: D44 D80
    Date: 2004–12
  16. By: Claudio Mezzetti (University of North Carolina); Aleksandar Pekec (The Fuqua School of Business, Duke University); Ilia Tsetlin (INSEAD)
    Abstract: We study sequential and single-round uniform-price auctions with affiliated values. We derive symmetric equilibrium for the auction in which k1 objects are sold in the first round and k2 in the second round, with and without revelation of the first-round winning bids. We demonstrate that auctioning objects in sequence generates a lowballing effect that reduces first-round revenue. Thus, revenue is greater in a single-round, uniform auction for k = k1 + k2 objects than in a sequential uniform auction with no bid announcement. When the first-round winning bids are announced, we also identify two informational effects: a positive effect on second-round price and an ambiguous effect on first-round price. The expected first-round price can be greater or smaller than with no bid announcement, and greater or smaller than the expected price in a single-round uniform auction. As a result, total expected revenue in a sequential uniform auction with winning-bids announcement can be greater or smaller than in a single-round uniform auction.
    Keywords: Multi-unit auctions, Sequential auctions, Uniform-price auction, Affiliated values, Information revelation
    JEL: D44 D42
    Date: 2004–12
  17. By: François Degeorge (University of Lugano); François Derrien (Rotman School of Management, University of Toronto); Kent L. Womack (Tuck School of Business, Dartmouth College)
    Abstract: The book-building procedure for selling initial public offerings to investors has captured significant market share from auction alternatives in recent years, despite significantly lower costs in both direct fees and initial underpricing when using the auction mechanism. This paper shows that in the French market, where the frequency of book-building and auctions was about equal in the 1990s, the ostensible advantages to the issuer using book-building were advertising-related quid pro quo benefits. Specifically, we find that book-built issues were more likely to be followed and positively recommended by the lead underwriters and were also more likely to receive “booster shots” post issuance if the shares had fallen. Even non-underwriters’ analysts appear to promote book-built issues more, but only when their underwriters stood to gain from acquiring shares in future issues from the recommended firm’s lead underwriter. Bookbuilt issues also appeared to garner more press in general (but only after they had chosen book-building, not before). Yet, we do not observe valuation or return differentials to suggest that these types of promotion have any value to the issuing firm. We conclude that underwriters using the book-building procedure have convinced issuers of the questionable value of advertising and promotion of their shares.
    Keywords: Auction, IPOs
    JEL: D44 D42
    Date: 2004–12
  18. By: Alejandro M. Manelli (Arizona State University); Daniel R. Vincent (University of Maryland)
    Abstract: The seller of N distinct objects is uncertain about the buyer’s valuation for those objects. The seller’s problem, to maximize expected revenue, consists of maximizing a linear functional over a convex set of mechanisms. A solution to the seller’s problem can always be found in an extreme point of the feasible set. We identify the relevant extreme points and faces of the feasible set. With N = 1, the extreme points are easily described providing simple proofs of well-known results. The revenue-maximizing mechanism assigns the object with probability one or zero depending on the buyer’s report. With N > 1, extreme points often involve randomization in the assignment of goods. Virtually any extreme point of the feasible set maximizes revenue for a well-behaved distribution of buyer’s valuations. We provide a simple algebraic procedure to determine whether a mechanism is an extreme point.
    Keywords: Extreme point, Exposed point, Faces, Non-linear pricing, Monopoly pricing, Multidimensional, Screening, Incentive compatibility, Adverse selection, Mechanism design
    JEL: D44
    Date: 2004–12
  19. By: Rolf Aaberge (Research Department, Statistics Norway, Oslo, Norway); Ugo Colombino (Department of Economics, University of Turin, Italy)
    Abstract: In this contribution we illustrate various applications of a behavioural microsimulation model that we have been developing during the last years. Behavioural models are complex and costly tools to develop, use and maintain, but also very powerful ones as we wish to show through the examples that follow. In Section 1 we present the main features of the microeconometric model. In Section 2 we comment upon the labour supply elasticities implied by the estimates. In Section 3 we illustrate a simulation of the behavioural and welfare effects of some tax reform proposals. In Section 4 we report on an exercise where we look for the optimal tax system. In Section 5 we report on an on-going project aimed at integrating the microeconometric model and a Computable General Equilibrium model. Last, in Section 6, we show an out-of-sample test of the model, where we compare the predictions of a model estimated on 1994 data to the observed effects of a reform in 2001.
    Keywords: Tax reforms, Microeconometric models, Micro-Macro models
    JEL: D6 D7 H
    Date: 2005–01–07
  20. By: Salzano Massimo (Università di Salerno Dipartimento di Scienze Economiche e Statistiche)
    Abstract: The aim of this work is that of exemplifying some applications of the modern theory of the complexity to the economic sector; we will highlight some of the possibilities of control of chaotic systems and some of that possibilities which are opened by the study of such systems. Remembering how a simple traditional macroeconomic model can give place to deterministic chaotic phenomena we will highlight: a) how it is possible to control such a system using opportune values of the fiscal variables; b) how it is possible to foresee the trend of the objective variable through a neural network, and, therefore, subsequently to control it on the basis of the value instruments chosen by the neural network. This will be done either in the presence of casual noises or in the case of a completely deterministic model; c) finally a different and more recent method of controlling chaotic systems will be indicated.
    Keywords: Public Finance, Complexity, Control of Economics, Macroeconomics
    JEL: D6 D7 H
    Date: 2005–01–07
  21. By: Ugo Colombino (Department of Economics, University of Turin, Italy); Annamaria Nese (Department of Economics, University of Salerno, Italy); Patrizia Riganti (School of Architecture, Queen's University, Belfast, Northern Ireland)
    Abstract: This paper reports results from a survey using conjoint choice approach questions to elicit people’s preferences for cultural heritage management strategies for an outstanding world heritage site: the Temples of Paestum, in Italy. The potential of the above-mentioned methodologies’ within the current cultural heritage research scenario is also discussed.
    Keywords: Conjoint Analyis, Evaluation of Cultural Goods
    JEL: D6 D7 H
    Date: 2005–01–12
  22. By: Laurens Cherchye; Bruno De Borger; Tom Van Puyenbroeck
    Abstract: We develop a positive non-parametric model of public sector production that allows us to test whether an implicit procedure of cost minimization at shadow prices can rationalize the outcomes of public sector activities. The basic model focuses on multiple C-outputs and does not imply any explicit or implicit assumption regarding the trade-offs between the different inputs (in terms of relative shadow prices) or outputs (in terms of relative valuation). The proposed methodology is applied to a cross-section sample of 546 Belgian municipal police forces. Drawing on detailed task-allocation data and controlling, among others, for the presence of state police forces, the cost minimization hypothesis is found to provide a good fit of the data. Imposing additional structure on output valuation, derived from available ordinal information, yields equally convincing goodness-of-fit results. By contrast, we find that aggregating the labor input over task specializations, a common practice in efficiency assessments of police departments, entails a significantly worse fit of the data.
    Keywords: Public agencies, optimizing behavior, nonparametric production, local police departments
    JEL: C14 C61 D21 D24
    Date: 2004
  23. By: Albert Banal-Estaño; Inés Macho-Stadler; Jo Seldeslachts
    Abstract: We analyse the effects of investment decisions and firms’ internal organisation on the efficiency and stability of horizontal mergers. In our framework synergies are endogenous and there might be internal conflict within merged firms. We show that often stable mergers do not lead to more efficiency and may even lead to efficiency losses. These mergers lead to lower welfare, suggesting that a regulator should be careful in assuming that possible efficiency gains of a merger will be effectively realised. Moreover, the paper offers a possible explanation for merger failures. <br> <br> <i>ZUSAMMENFASSUNG - (Fusionen, Investitionsentscheidungen und unternehmensinterne Organisation) <br> Wir analysieren die Auswirkungen von Investitionsentscheidungen und internen Organisationsstrukturen auf die Effizienz und Stabilität von horizontalen Firmenzusammenschlüssen. In unserer Untersuchung sind Synergien endogen und es können interne Konflikte in dem fusionierten Unternehmen auftreten. Es zeigt sich, dass "stabile" Fusionen häufig nicht zu mehr Effizienz, sondern sogar zu Effizienzverlusten führen können. Da solche Firmenzusammenschlüsse zu einer geringeren Wohlfahrt führen, sollte der Regulierer nicht ungeprüft annehmen, dass potentielle Wohlfahrtsgewinne auch immer tatsächlich erreicht werden. Außerdem bietet das Papier eine mögliche Erklärung für das Scheitern von Fusionen.</i>
    Keywords: Horizontal Mergers, Investment, Efficiency gains, Internal Conflict.
    JEL: L22 D43
    Date: 2004–12
  24. By: Jonathan Beck
    Abstract: In media markets, products are highly differentiated but prices are often bunched at apparent focal points. I use a comprehensive cross-section data set on the German book market to assess whether such focal points are a result of upstream coordination and whether the option to impose resale price maintenance (RPM) played a facilitating role. Therewith, I provide empirical evidence to a long-lasting policy debate. Results suggest that focal prices are used to coordinate competition rather than collusion. Focal prices are mostly lower than expected from hedonic projections. In cases where the decisions on focal pricing and RPM are positively correlated, controlling for endogeneity and a number of other factors, RPM does not seem to facilitate above average focal pricing in particular. <br> <br> <i>ZUSAMMENFASSUNG - (Fixiert, fokal, fair? Buchpreise bei optionaler Preisbindung) <br> Produkte in Medienmärkten sind hochgradig differenziert, Preise sammeln sich jedoch häufig an augenscheinlich fokalen Punkten. Ich verwende einen umfassenden Satz von Querschnittsdaten aus dem deutschen Buchmarkt, um zu untersuchen, ob derartige Fokalpunkte das Ergebnis von Koordination auf der Verlagsseite sind und ob optionale Preisbindung eine begünstigende Rolle dabei spielte. Damit bereichere ich eine langlebige Politikdebatte mit empirischer Evidenz. Die Ergebnisse legen nahe, dass Fokalpreise eher der Koordination von Wettbewerb als Kollusion dienen. Fokalpreise sind meistens niedriger als von hedonischen Projektionen erwartet. In den Fällen, in welchen die Entscheidungen über fokale Preissetzung und Preisbindung positiv korreliert sind, unter Kontrolle des Einflusses von Endogenität und einer Reihe von anderen Faktoren, scheint optionale Preisbindung die Setzung von überdurchschnittlichen Fokalpreisen nicht insbesondere zu begünstigen.</i>
    Keywords: resale price maintenance; focal prices; vertical restraints; collusion; simultaneous probit; book industry.
    JEL: D4 L11 L13 L42 L82
    Date: 2004–12

This nep-mic issue is ©2005 by Joao Carlos Correia Leitao. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.