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on Payment Systems and Financial Technology |
| By: | Francesco C. Billari; Osea Giuntella; Luca Stella |
| Abstract: | There is a growing concern that the widespread use of computers, mobile phones and other digital devices before bedtime disrupts our sleep with detrimental effects on our health and cognitive performance. High-speed Internet promotes the use of electronic devices, video games and Internet addiction (e.g., online games and cyberloafing). Exposure to artificial light from tablets and PCs can alterate individuals’ sleep patterns. However, there is little empirical evidence on the causal relationship between technology use near bedtime and sleep. This paper studies the causal effects of access to high-speed Internet on sleep. We first show that playing video games, using PC or smartphones, watching TV or movies are correlated with shorter sleep duration. Second, we exploit historical differences in pre-existing telephone infrastructure that affected the deployment of high-speed Internet across Germany (see Falck et al., 2014) to identify a source of plausibly exogenous variation in access to Broadband. Using this instrumental variable strategy, we find that DSL access reduces sleep duration and sleep satisfaction. |
| Keywords: | Internet, Sleep Duration, Time use |
| JEL: | I1 J22 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp934&r=pay |
| By: | Jonathan Chiu (Bank of Canada); Thorsten Koeppl (Queen's University) |
| Abstract: | How well can a cryptocurrency serve as a means of payment? We study the optimal design of cryptocurrencies and assess quantitatively how well such currencies can support bilateral trade. The challenge for cryptocurrencies is to overcome double-spending by relying on competition to update the blockchain (costly mining) and by delaying settlement. We estimate that the current Bitcoin scheme generates a large welfare loss of 1.4% of consumption. This welfare loss can be lowered substantially to 0.08% by adopting an optimal design that reduces mining and relies exclusively on money growth rather than transaction fees to finance mining rewards. We also point out that cryptocurrencies can potentially challenge retail payment systems provided scaling limitations can be addressed. |
| Keywords: | Cryptocurrency, Blockchain, Bitcoin, Double Spending, Payment Systems |
| JEL: | E4 E5 L5 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1389&r=pay |
| By: | Lankisch, Clemens; Prettner, Klaus; Prskawetz, Alexia |
| Abstract: | We analyze the effects of automation on the wages of high-skilled and low- skilled workers and thereby on the evolution of wage inequality. Our model explains the simultaneous presence of i) increasing per capita GDP, ii) de-clining real wages of low-skilled workers, and iii) an increasing skill-premium. These developments are consistent with the experience in the United States over the past decades and have the potential to contribute to the explanation of the rise in overall incomeinequality that we have observed since the 1980s. |
| Keywords: | automation,declining real wages of low-skilled workers,income inequality,long-run economic growth,skill premium |
| JEL: | O11 O41 I24 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hohdps:292017&r=pay |
| By: | Daniel Björkegren (Brown University, Department of Economics, 64 Waterman Street, Providence RI 02912, USA) |
| Abstract: | Many modern technologies have network effects, and as a result lead to industries with natural monopolies. How should societies discipline these industries? This is a preliminary paper that analyzes the scope for competition to affect welfare and investment in the Rwandan mobile phone network during a 4.5 year period of dramatic growth. I use transaction data from nearly the entire network of Rwandan mobile phone subscribers at the time. I use the method and estimates of Bjorkegren (2017), which identify network effects based on usage after adoption. The Rwandan government eventually allowed competition; I evaluate what may have happened had competition been introduced at an earlier stage of the network’s growth. Had the monopolist simply charged the eventual competitive prices, welfare would have risen substantially. However, only a fraction of the revenue from building the rural tower network came from calls within rural areas; as a result, had the rest of the network been split among providers, there may have been lowered incentives to invest. A subsequent version of this paper will simulate the effects of competition under different policy regimes. |
| Keywords: | network goods, infrastructure, information technology |
| JEL: | O33 L96 O18 L51 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1710&r=pay |
| By: | Tilsa Ore Monago (Stony Brook University, Department of Economics, 100 Nicolls Road, Stony Brook, NY 11794-4384); |
| Abstract: | Based on a game theoretical model I previously developed, I present some evidence of the effect of the unlocked-handset policy recently implemented in Peru based on market analysis and reduced form empirical methods using consumer panel data. From the market analysis, declining prices are observed with the implementation of the policy in January 2015, also the switching rate rocketed since then. To retain consumers and attract rival's consumers, companies responded also with very low on-net prices through their "private network" with unlimited minutes, which may have increased the network effects in the market. From my estimation, I found a significant negative effect of switching costs on demand for voice traffic (which suggest a positive effect of the unlocked-handset policy on demand) and positive network effects on the demand. |
| Keywords: | switching costs; mobile telecommunications; unlocked-handsets policy |
| JEL: | L13 L43 L96 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1712&r=pay |
| By: | Pavel, Ciaian (European Commission – JRC); d'Artis, Kancs (European Commission – JRC); Miroslava, Rajcaniova (Department of Economic Policy Faculty of Economics and Management Slovak University of Agriculture) |
| Abstract: | This study empirically examines interdependencies between BitCoin and altcoin markets in the short- and long-run. We apply time-series analytical mechanisms to daily data of 17 virtual currencies (BitCoin + 16 alternative virtual currencies) and two Altcoin price indices for the period 2013-2016. Our empirical findings confirm that indeed BitCoin and Altcoin markets are interdependent. The BitCoin-Altcoin price relationship is significantly stronger in the short-run than in the long-run. We cannot fully confirm the hypothesis that the BitCoin price relationship is stronger with those Altcoins that are more similar in their price formation mechanism to BitCoin. In the long-run, macro-financial indicators determine the altcoin price formation to a greater degree than BitCoin does. The virtual currency supply is exogenous and therefore plays only a limited role in the price formation. |
| Keywords: | BitCoin, altcoins, virtual currencies, price formation, supply, demand, macroeconomic development |
| JEL: | E31 E42 G12 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:jrs:wpaper:201705&r=pay |
| By: | Magdalena Helfrich; Fabian Herweg |
| Abstract: | We provide an explanation for a frequently observed vertical restraint in ecommerce, namely that brand manufacturers partially or completely prohibit that retailers distribute their high-quality products over the internet. Our analysis is based on the assumption that a consumer’s purchasing decision is distorted by salient thinking, i.e. by the fact that he overvalues a product attribute - quality or price - that stands out in a particular choice situation. In a highly competitive low-price environment like on an online platform, consumers focus more on price rather than quality. Especially if the market power of local (physical) retailers is low, price tends to be salient also in the local store, which is unfavorable for the high-quality product and limits the wholesale price a brand manufacturer can charge. If, however, the branded product is not available online, a retailer can charge a significant markup on the high-quality good. As the markup is higher if quality rather than price is salient in the store, this aligns the retailer’s incentives with the brand manufacturer’s interest to make quality the salient attribute and allows the manufacturer to charge a higher wholesale price. We also show that, the weaker are consumers’ preferences for purchasing in the physical store and the stronger their salience bias, the more likely it is that a brand manufacturer wants to restrict online sales. Moreover, we find that a ban on distribution systems that prohibit internet sales increases consumer welfare and total welfare, because it leads to lower prices for final consumers and prevents inefficient online sales. |
| Keywords: | internet competition, relative thinking, retailing, salience, selective distribution |
| JEL: | D43 K21 L42 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6615&r=pay |
| By: | T. Tony Ke (MIT Sloan School of Management); Baojun Jiang (Washington University in St. Louis); Monic Sun (Boston University) |
| Abstract: | We consider a platform that matches service providers with potential customers. Ratings of a service provider reveal the quality of his service while ratings of a consumer reveal the cost to serve her. Under a competitive search framework, we study how bilateral ratings influence market competition and segmentation. Two types of equilibria exist under bilateral ratings. In the first type, low-cost consumers only apply to high-quality service providers, who post a higher price, have longer queues and are less likely to accept an application than low-quality providers. High-cost consumers apply to all service providers and have a lower acceptance rate. In the second type of equilibria, both high- and low-quality service providers serve all consumers. Across all equilibria, equilibrium prices may decrease as the fraction of high-quality providers increases, as consumers become more costly to serve, and as the platform's commission rate increases. Compared with a platform with unilateral ratings where only service providers are rated, a platform with bilateral ratings may soften service providers' competition, leading to higher equilibrium prices. Lastly, we find that in the case of incomplete market coverage, high-quality service providers may charge lower prices than low-quality providers in equilibrium, because by charging a lower price, a high-quality service provider attracts more consumer applications, which enables him to cherrypick a low-cost consumer, while a low-quality service provider faces with consumers with higher serving costs and thus charge a higher price to make up the serving cost. |
| Keywords: | Platform; Peer-to-Peer; Competitive Search; Matching; Reviews; Information Disclosure; Segmentation |
| JEL: | D82 D83 M31 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1701&r=pay |
| By: | Osea Giuntella |
| Abstract: | The spread of high-speed Internet epitomizes the digital revolution, affecting several aspectsof our life. Using German panel data, we test whether the availability of broadbandInternet influences fertility choices in a low-fertility setting, which is well-known for the difficultyto combine work and family life. We exploit a strategy devised by Falck et al. (2014) toobtain causal estimates of the impact of broadband on fertility. We find positive effects of highspeedInternet availability on the fertility of high-educated women aged 25 and above. Effectsare not statistically significant both for men, low-educated women, and under 25. We alsoshow that broadband access significantly increases the share of women reporting teleworkingor part-time working. Furthermore, we find positive effects on time spent with children andoverall life satisfaction. Our findings are consistent with the hypothesis that high-speed Internetallows high-educated women to conciliate career and motherhood, which may promotefertility with a “digital divide†. At the same time, higher access to information on the risksand costs of early pregnancy and childbearing may explain the negative effects on youngeradults. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:6256&r=pay |
| By: | Alexandre de Corniere (Toulouse School of Economics, France); Miklos Sarvary (Columbia Business School, USA) |
| Abstract: | The growing influence of internet platforms acting as content aggregators is one of the most important challenges facing the media industry. We develop a parsimonious model to understand the impact of content bundling by a social platform. In our model consumers can access news either directly through a newspaper's website, or indirectly through a platform, which also offers social content. Even though the platform shares revenues with newspapers whose content it publishes, content bundling harms newspapers. Its effect on news quality and news consumption depends on the media market structure and on whether the platform can personalize the content bundle. |
| Keywords: | User-Generated Content (UGC), Media Competition, News Quality |
| JEL: | L13 L43 L96 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1707&r=pay |
| By: | Francesco Decarolis (Einaudi Institute for Economics and Finance, Via Sallustiana, 62, Rome, Italy); Gabriele Rovigatti (University of Chicago Booth School of Business, 5807 S. Woodlawn Ave, Chicago, IL) |
| Abstract: | We present an empirical investigation of the role of marketing agencies in Google’s online ad auctions. By combining data on advertisers’ affiliation to marketing agencies with data on bidding in ad auctions, we analyze how changes in the concentration of clients in the same industry under the same ad network are associated with changes in keyword bidding in terms of entry, exit, and pricing strategies. Moreover, by exploiting the case of a recent merger between agencies, we estimate through a difference-in-differences strategy that an increase in concentration leads to reduction in the average cost-per-click of the keywords affected by the merger. |
| Keywords: | Online Advertising, Internet Auctions, Marketing Agency, Ad Network, Agency Trading Desk |
| JEL: | C72 D44 L81 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1708&r=pay |
| By: | Levrero, Enrico Sergio; Deleidi, Matteo |
| Abstract: | The aim of this paper is to assess – on both theoretical and empirical grounds – the two main views regarding the money creation process,namely the endogenous and exogenous money approaches. After analysing the main issues and the related empirical literature, we will apply a VAR and VECM methodology to the United States in the period 1959-2016 to assess the causal relationship between a number of critical variables that are supposed to determine the money supply, i.e., the monetary base, bank deposits and bank loans. The empirical analysis carried out supports several propositions of the endogenous money approach. In particular, it shows that for the United States in the years 1959-2016 (i) bank loans determine bank deposits and (ii) bank deposits in turn determine the monetary base. Our conclusion is that money supply is mainly determined endogenously by the lending activity of commercial banks. |
| Keywords: | Money endogeneity; USA; Money Supply |
| JEL: | C32 E40 E50 E51 G21 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81970&r=pay |
| By: | Alessandro Gavazza; Mattia Nardotto; Tommaso Valletti |
| Abstract: | We empirically study the effects of broadband internet diffusion on local election outcomes and on local government policies using rich data from the U.K. Our analysis suggests that the internet has displaced other media with greater news content (i.e., radio and newspapers), thereby decreasing voter turnout, most notably among less-educated and younger individuals. In turn, we find suggestive evidence that local government expenditures and taxes are lower in areas with greater broadband diffusion, particularly expenditures targeted at less-educated voters. Our findings are consistent with the idea that voters' information plays a key role in determining electoral participation, government policies and government size. |
| Keywords: | Internet, newspaper, media, elections, policy |
| JEL: | D72 C50 L86 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1691&r=pay |
| By: | Tedi Skiti (Fox School of Business, Temple University) |
| Abstract: | In this article, I present causal effects of institutional entry barriers to new firms on incumbents’ technological innovation. In particular, I investigate the effect of entry barriers to municipal providers on incumbents’ technology deployment in the U.S. broadband industry. I use a spatial regression discontinuity design for private incumbents’ investment behavior and different entry regimes as sharp cutoffs for municipal entry threat. I collect and combine unique firm-level data on cable investment decisions and state-level data on legal entry barriers. I find that in markets with these entry barriers incumbents invest less in new technologies. Specifically, I find that the local entry barriers lead to a 20% lower technology adoption rate by cable incumbents because of reduced entry threat. These results imply that institutions that restrict entry of new firms can lead to significantly decreased technological innovation and lower internet quality across local markets, not only by deterring new firms but also by altering incumbents’ strategic investment in broadband networks. |
| Keywords: | Innovation, Entry Barriers, Broadband, Municipal, Spatial Discontinuity |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1711&r=pay |
| By: | Helfrich, Magdalena; Herweg, Fabian |
| Abstract: | We provide an explanation for a brand manufacturer's rationale to prohibit retailers to distribute its products over the internet, based on the assumption that a consumer's purchasing decision is distorted by salient thinking. We find that banning online distribution of the branded good aligns retailers’ incentives with the manufacturer's interest to make quality the salient product attribute and allows it to charge a higher wholesale price than under free distribution. |
| JEL: | D43 K21 L42 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168276&r=pay |
| By: | William Gornall; Ilya A. Strebulaev |
| Abstract: | We develop a valuation model for venture capital-backed companies and apply it to 135 U.S. unicorns – private companies with reported valuations above $1 billion. We value unicorns using financial terms from legal filings and find reported unicorn post-money valuation average 50% above fair value, with 15 being more than 100% above. Reported valuations assume all shares are as valuable as the most recently issued preferred shares. We calculate values for each share class, which yields lower valuations because most unicorns gave recent investors major protections such as a IPO return guarantees (14%), vetoes over down-IPOs (24%), or seniority to all other investors (32%). Common shares lack all such protections and are 58% overvalued. After adjusting for these valuation-inflating terms, almost one-half (65 out of 135) of unicorns lose their unicorn status. |
| JEL: | G13 G24 G32 M13 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23895&r=pay |
| By: | Anthony Yezer (George Washington University) |
| Abstract: | When the Home Mortgage Disclosure Act was passed in 1975, it required selected depository institutions to report limited data from mortgage applications. This was collected and processed by the Federal Reserve Board in accordance with Regulation C. A subset of the reported information was then disclosed to the public. At the time, it was difficult to determine the identity of individual respondents in HMDA data. Since that time four things have changed. First, reporting requirements have been expanded to an increasing range of lenders. Second, the personal information reported and revealed has expanded. Third, over 30% of home purchases do not involve a HMDA reported mortgage and mortgage lending is increasingly internet based. Fourth, modern computing and big data techniques now allow the HMDA data releases to be matched with the names of individual borrowers in a fashion that violates standards for privacy established by the U.S. Bureau of the Census and appears to violate privacy standards of HMDA itself. Lack of privacy is particularly a problem for minority borrowers for whom the “risk†of re-identification is a virtual certainty. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:gwi:wpaper:2017-21&r=pay |
| By: | Abeliansky, Ana Lucia; Prettner, Klaus |
| Abstract: | A standard theoretical framework of accumulation of traditional physical capital and automation capital predicts that countries with a lower population growth rate are the ones innovating/adopting new automation technologies faster. We test the model prediction using panel data for 60 countries from 1993 to 2013. Empirical estimates suggest that a 1% increase in population growth is associated with an approximate 2% reduction in the growth rate of robot density. |
| JEL: | J11 O14 O33 O40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc17:168215&r=pay |
| By: | Brunnhuber, Stefan |
| Abstract: | This talk aims to provide an argument for a parallel, optional, complementary currency system in order to overcome the constraints of the global economy and finance social and ecological projects on a global level. This argument goes beyond regulatory efforts and co-financed redistribution. The advantages of implementing this or a similar mechanism are manifold: firstly, it can be implemented in a fast and targeted manner and is relatively cheap. Secondly, it would have an anticyclical, antiinflationary and resilient impact on our trading and payment system. Thirdly, it builds on findings in systems theory, thus avoiding the tedious discussion between the different schools of economics. Fourthly, it addresses the magnitude, volume and significance of the global challenges ahead. In short: this argument is based on a new kind of thinking on how to design a monetary ecosystem to make the world a better place. |
| Keywords: | Sustainable Development Goals (SDGs),financing global commons,parallel optional currency |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:128&r=pay |
| By: | Daniel Kosiorowski; Dominik Mielczarek; Jerzy P. Rydlewski |
| Abstract: | In this article, a new nonparametric and robust method of forecasting hierarchical functional time series is presented. The method is compared with Hyndman and Shang's method with respect to their unbiasedness, effectiveness, robustness, and computational complexity. Taking into account results of the analytical, simulation and empirical studies, we come to the conclusion that our proposal is superior over the proposal of Hyndman and Shang with respect to some statistical criteria and especially with respect to their robustness and computational complexity. The studied empirical example relates to the management of Internet service divided into four subservices. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1710.02669&r=pay |
| By: | Humberto Llavador; Marcus Giamattei |
| Abstract: | Classroom experiments as a teaching tool increase understanding and especially motivation. Traditionally, experiments have been run using pen-and-paper or in a computer lab. Pen-and-paper is time and resource consuming. Experiments in the lab require appropriate installations and impede the direct interaction among students. During the last two years, we have created fully elaborated packages to run a complete course in microeconomics principles using face-to-face experiments with mobile devices. The experiments are based on Bergstrom-Miller (2000), and we used classEx, a free online tool, to run them in the classroom.The packages were used at Universitat Pompeu Fabra with over 500 undergraduate students in the fall 2016. This paper presents our experience on classEx and the Bergstrom-Miller approach working in combination, and the lessons learned. |
| Keywords: | experiential learning, microeconomics, mobile devices, classroom experiments, classEx |
| JEL: | A22 C72 C90 D00 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1584&r=pay |
| By: | Angel Cuevas (Universidad Carlos III Madrid); Ruben Cuevas (Universidad Carlos III Madrid); Andrea Lassmann (KOF, ETH Zurich); Federica Liberini (KOF, ETH Zurich); Antonio Russo (KOF, ETH Zurich) |
| Abstract: | We study the effects of the taxation of digital platforms on the online advertising market. We exploit novel data on daily unit prices of Facebook ads targeted to country-specific audiences, collected around a major change in the firm's accounting practices following the introduction of the UK Diverted Profit Tax. We show that a substantial increase in ads prices followed such change, although with heterogeneous intensity across countries. These results are in line with a model of a platform operating in the global advertising market. We show that taxation of profits generated in one country makes the price charged to advertisers from that country (resp. other countries) increase (decrease). Accordingly, we demonstrate that aggregate advertising prices in OECD countries increased more, after the policy change, the larger is the market share of UK-based advertisers. |
| Keywords: | tax incidence; digital economy; online advertising |
| JEL: | H22 H25 F16 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1709&r=pay |
| By: | AfDB AfDB |
| Date: | 2017–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:adb:adbwps:2404&r=pay |