|
on Payment Systems and Financial Technology |
|
Issue of 2019‒10‒07
35 papers chosen by |
| By: | Jonathan Chiu; Thorsten Koeppl |
| Abstract: | A cryptocurrency system such as Bitcoin relies on a decentralized network of anonymous validators to maintain and update copies of the ledger in a process called mining. In such a permissionless system, someone can cheat by spending a coin twice, which leads to the so-called double-spending problem. A well-functioning cryptocurrency system must ensure that users do not have an incentive to double spend. We develop a general-equilibrium model of a cryptocurrency. We use the model to obtain a condition that rules out double spending and study the optimal design of cryptocurrencies. We also quantify the welfare costs of using a cryptocurrency as a payment instrument. We find that it is better to use the revenue from currency creation rather than transaction fees to finance the costly mining process. We estimate that Bitcoin generates a large welfare loss that is about 500 times bigger than the welfare loss in a monetary economy with 2 percent inflation. This welfare loss can be lowered in an optimal design to the equivalent of that in a monetary economy with moderate inflation of about 45 percent. |
| Keywords: | Digital Currencies and Fintech; Monetary Policy; Payment clearing and settlement systems |
| JEL: | E4 E5 L5 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:19-40&r=all |
| By: | Markus K. Brunnermeier; Harold James; Jean-Pierre Landau |
| Abstract: | The ongoing digital revolution may lead to a radical departure from the traditional model of monetary exchange. We may see an unbundling of the separate roles of money, creating fiercer competition among specialized currencies. On the other hand, digital currencies associated with large platform ecosystems may lead to a re-bundling of money in which payment services are packaged with an array of data services, encouraging differentiation but discouraging interoperability between platforms. Digital currencies may also cause an upheaval of the international monetary system: countries that are socially or digitally integrated with their neighbors may face digital dollarization, and the prevalence of systemically important platforms could lead to the emergence of digital currency areas that transcend national borders. Central bank digital currency (CBDC) ensures that public money remains a relevant unit of account. |
| JEL: | E41 E42 E51 E52 E58 G21 G23 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26300&r=all |
| By: | David Bounie (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, ECOGE - Economie Gestion - I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - CNRS - Centre National de la Recherche Scientifique); Youssouf Camara (IP Paris - Institut Polytechnique de Paris) |
| Abstract: | Disruptive innovations in digital payments are happening in a large number of countries around the world. While consumers may access to a wide variety of payment technologies, a natural question arises: does accepting a new payment technology allow merchants to increase their business sales? Using matching and difference-indifference techniques on a unique sample of about 275,580 merchants in France, we find that accepting contactless payments in 2018 increases on average the card-sales amount by 17 percent (and by 20 percent the card-sales count) compared to merchants who do not accept con-tactless payments. We also find evidence that accepting contactless payments exerts a positive spillover of about 3 percent in the amount of contact card sales, and is also more profitable for small merchants and new entrepreneurs. |
| Keywords: | difference-in-difference,card acceptance,contactless cards,digital payments |
| Date: | 2019–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02296302&r=all |
| By: | Constandina Koki; Stefanos Leonardos; Georgios Piliouras |
| Abstract: | Conventional financial models fail to explain the economic and monetary properties of cryptocurrencies due to the latter's dual nature: their usage as financial assets on the one side and their tight connection to the underlying blockchain structure on the other. In an effort to examine both components via a unified approach, we apply a recently developed Non-Homogeneous Hidden Markov (NHHM) model with an extended set of financial and blockchain specific covariates on the Bitcoin (BTC) and Ether (ETH) price data. Based on the observable series, the NHHM model offers a novel perspective on the underlying microstructure of the cryptocurrency market and provides insight on unobservable parameters such as the behavior of investors, traders and miners. The algorithm identifies two alternating periods (hidden states) of inherently different activity -- fundamental versus uninformed or noise traders -- in the Bitcoin ecosystem and unveils differences in both the short/long run dynamics and in the financial characteristics of the two states, such as significant explanatory variables, extreme events and varying series autocorrelation. In a somewhat unexpected result, the Bitcoin and Ether markets are found to be influenced by markedly distinct indicators despite their perceived correlation. The current approach backs earlier findings that cryptocurrencies are unlike any conventional financial asset and makes a first step towards understanding cryptocurrency markets via a more comprehensive lens. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1909.10957&r=all |
| By: | Sergei Guriev (Département d'économie); Nikita Melnikov (Higher School of Economics (HSE)); Ekaterina Zhuravskaya (Ecole d'Économie de Paris - Paris School of Economics) |
| Abstract: | How does the internet affect government approval? Using surveys of 840,537 individuals from 2,232 subnational regions in 116 countries in 2008-2017 from the Gallup World Poll and the global expansion of 3G networks, we show that an increase in internet access reduces government approval and increases the perception of corruption in government. This effect is present only when the internet is not censored and is stronger when traditional media is censored. Actual incidents of corruption translate into higher corruption perception only in places covered by 3G. In Europe, the expansion of mobile internet increased vote shares of anti-establishment populist parties. |
| Keywords: | Government Approval; 3G; Mobile; Internet; Corruption; Populism |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpecon:info:hdl:2441/5744igqofr9qr9hjd2eiomr7qc&r=all |
| By: | Qi Deng |
| Abstract: | The AIBC is an Artificial Intelligence and blockchain technology based large-scale decentralized ecosystem that allows system-wide low-cost sharing of computing and storage resources. The AIBC consists of four layers: a fundamental layer, a resource layer, an application layer, and an ecosystem layer. The AIBC implements a two-consensus scheme to enforce upper-layer economic policies and achieve fundamental layer performance and robustness: the DPoEV incentive consensus on the application and resource layers, and the DABFT distributed consensus on the fundamental layer. The DABFT uses deep learning techniques to predict and select the most suitable BFT algorithm in order to achieve the best balance of performance, robustness, and security. The DPoEV uses the knowledge map algorithm to accurately assess the economic value of digital assets. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1909.12063&r=all |
| By: | Ignacio Gonzalez Vazquez (European Commission - JRC); Santo Milasi (European Commission - JRC); Stephanie Carretero Gomez (European Commission - JRC); Joanna Napierala (European Commission - JRC); Nicolas Robledo Bottcher (European Commission - JRC); Koen Jonkers (European Commission - JRC); Xabier Goenaga Beldarrain (European Commission - JRC); Eskarne Arregui Pabollet (European Commission - JRC); Margherita Bacigalupo (European Commission - JRC); Federico Biagi (European Commission - JRC); Marcelino Cabrera Giraldez (European Commission - JRC); Francesca Caena (European Commission - JRC); Jonatan Castano Munoz (European Commission - JRC); Isabel Clara Centeno Mediavilla (European Commission - JRC); John Edwards (European Commission - JRC); Enrique Fernandez Macias (European Commission - JRC); Emilia Gomez Gutierrez (European Commission - JRC); Estrella Gomez Herrera (European Commission - JRC); Andreia Inamorato Dos Santos (European Commission - JRC); Panagiotis Kampylis (European Commission - JRC); David Klenert (European Commission - JRC); Montserrat Lopez Cobo (European Commission - JRC); Robert Marschinski (European Commission - JRC); Annarosa Pesole (European Commission - JRC); Yves Punie (European Commission - JRC); Songul Tolan (European Commission - JRC); Sergio Torrejon Perez (European Commission - JRC); Cesira Urzi Brancati (European Commission - JRC); Riina Vuorikari (European Commission - JRC) |
| Abstract: | This report aims to shed light on some of the key drivers which are worth taking into account when assessing the effect of new technologies on the future of work and skills. It combines a synthesis of the most recent and robust scientific evidence available with original JRC research on issues which have been often overlooked by existing studies. In particular, the report provides new insights on the interplay between automation and work organisation, the extent and nature of platform work, and the patterns of occupational changes across EU regions. The first chapter discusses the impact of technology on employment. It overviews the most recent estimates on technology-induced job creation and destruction, and provides new insights on the role of workplace organisation in shaping the effect of new technologies on labour markets. The second chapter discusses how skills needs are shifting towards digital and non-cognitive skills, showing evidence of an increasing shortage of these skills in the EU, which education systems are not fully tackling yet. The third chapter reviews the opportunities and challenges related to the recent upwards trend in new forms of employment in the EU, focusing on the results of the second wave of the COLLEEM survey on platform work in the EU. The final chapter presents results from a new JRC-Eurofound study on the patterns of occupational change in EU regions in the last 15 years which shows that low-wage jobs have increasingly concentrated in peripheral regions while higher-wage jobs are becoming more and more concentrated in capital regions, leading to increasing territorial disparities, both across and within EU Member States. |
| Keywords: | Automation, Technological change, Non-cognitive skills, Digital labour platforms, Future of work, Digital skills, Regional employment, Structural transformation |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc117505&r=all |
| By: | Jonathan Chiu (Bank of Canada); Janet Hua Jiang (Bank of Canada); Seyed Mohammadreza Davoodalhosseini (Bank of Canada); Yu Zhu (Bank of Canada) |
| Abstract: | This paper builds a model with imperfect competition in the banking sector. In the model, banks issue deposits and make loans, and deposits can be used as payment instruments by households. We use the model to assess the general equilibrium effects of introducing central bank digital currency (CBDC). We identify a new channel through which CBDC can improve the efficiency of bank intermediation and increase lending and aggregate output even if its usage is low, i.e., CBDC serves as an outside option for households, thus limiting banks' market power in the deposit market. We then calibrate the model to evaluate the quantitative implication of this channel. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:862&r=all |
| By: | Patrick Lecomte |
| Abstract: | As smart technologies are becoming increasingly prevalent in the built environment (e.g., smart cities, smart buildings), this paper explores the concept of space user in smart urban environments. Scaffolding on Lecomte (Eres 2018), the paper investigates the impact of digital technologies on the way humans engage with their physical surroundings. The paper concludes by laying out the fundamental principles for a phenomenology of space in smart real estate, as a necessary step towards the modelling of commercial real estate in smart cities. |
| Keywords: | commercial real estate; Digital Technologies; Phenomenology; Real estate analysis; Smart Cities |
| JEL: | R3 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2019_50&r=all |
| By: | Iizuka, Michiko (National Graduate Research Institute on Policy Studies (GRIPS), Tokyo, Japan); Ikeda, Yoko (Research Institute of Economy, Trade and Industry (RIETI), Tokyo, Japan) |
| Abstract: | Innovations using emerging technologies (artificial intelligence, robotics, the internet of things), are said to improve productivity and quality of life. On the other hand, the diffusion of such innovation involves risks and uncertainties regarding safety. Generally, these risks are managed by government by means of regulation. Yet it increasingly falls short on governing emerging technology due to innovations' global connectivity, commercialization and heightened risk & uncertainty. These pose challenges to firms for commercialization because emerging innovations often do not come under the existing product categories nor corresponding regulations. This study answers how product based on emerging technology commercialize, overcoming existing regulatory barriers on safety, using firm strategies and role of standards played, through an examination of the case of Cyberdyne, a successful medical/healthcare robotics company in Japan. Cyberdyne developed and commercialized the world's first product using cybernics in wearable medical/healthcare device. The case illustrates the increasing complexity of safety regulations and role of standards for firms to innovate applying emerging technologies. It concludes with an exploration of policy considerations regarding the regulation in dealing with emerging technologies under Industry 4.0. |
| Keywords: | Regulation, standards, Industry 4.0, emerging technology, robotics, institutional arbitration, governance, Japan |
| JEL: | O33 F23 I18 L15 |
| Date: | 2019–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2019038&r=all |
| By: | Anthony Chapman; Nan Liu; Bob Duncan |
| Abstract: | Distributed ledger technologies such blockchain, crypto-currencies, tokenization and smart contracts have recently received a lot of attention. Despite this increase in attention, industries and governments around the world are not using such technologies to their full potential. Real estate is one of such industries who could greatly benefit from adopting such distributed ledger technologies, mainly due to their automated confirmation and transaction transparency nature. In this paper, we explore some of the main distributed ledger technologies and evaluate their potential impact on the real estate market. Our aim is to show how they could improve current methods such as title deed transfer or property valuation as well as point out any issues which might arise from digitising real estate methods. We also review any reasons for why the technologies have not been adopted already and evaluate what impact they could have if they were to be implemented. |
| Keywords: | blockchain; Distributed Ledger Technology; Smart Contracts; tokenization |
| JEL: | R3 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2019_340&r=all |
| By: | René M. Stulz |
| Abstract: | Banks are unique in that they combine the production of liquid claims with loans. They can replicate most of what FinTech firms can do, but FinTech firms benefit from an uneven playing field in that they are less regulated than banks. The uneven playing field enables non-bank FinTech firms to challenge banks for specific products whose success is not tied to what makes banks unique, but they cannot replace banks as such. In contrast, BigTech firms have unique advantages that banks cannot easily replicate and therefore present a much stronger challenge to established banks in consumer finance and loans to small firms. Both Fintech and BigTech are contributing to a secular trend of banks losing their comparative advantage as they have less access to unique information about parties seeking credit. |
| JEL: | G21 G23 G24 G28 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26312&r=all |
| By: | Marcelo Cajias |
| Abstract: | In the era of internet and digitalization real estate prices of dwellings are predominantly collected live by multiple listing services and merged with supporting data such as spatio-temporal geo-information. Despite the computational requirements for analyzing such large datasets, the methods for analyzing big data have evolved substantially and go much far beyond the traditional regression. In this context, the usage of machine learning technologies for analyzing prices in the real estate industry is not commonplace. This paper applies machine learnings algorithms on a data set of more than 3 Mio. observations in the German residential market to explore the predicting accuracy of methods such as the random forests regressions, XGboost and the stacked regression among others. The results show a significant reduction in the forecasting variance and confirm that artificial intelligence understands real estate prices much deeper. |
| Keywords: | Big Data in real estate; German housing; Machine learning Algorithms; Random forest; XGBoost |
| JEL: | R3 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2019_232&r=all |
| By: | Janos Ferencz (OECD); Frédéric Gonzales (OECD) |
| Abstract: | Digital transformation has enabled easier tradability of traditional services across borders and the emergence of new services that create value from data. But the benefits derived from digitalisation risk being derailed by existing and emerging trade barriers. The OECD Digital Services Trade Restrictiveness Index (Digital STRI) is a new tool that identifies, catalogues, and quantifies cross-cutting barriers between 2014 and 2018 that affect trade in digitally-enabled services across all G20 countries. This index is comprised of a regulatory database of existing trade barriers based on publicly available laws and regulations, as well as composite indices that measure the trade restrictiveness of these policies. The Digital STRI shows that the regulatory environment is complex and diverse across G20 countries, and that there is scope to reduce trade barriers, particularly with respect to communications infrastructure and burdensome measures that affect cross-border data transfers. The Digital STRI can also map regulatory heterogeneity across the G20, and help monitor regulatory convergence, e.g. from regulatory cooperation in trade agreements. |
| Keywords: | digital trade, digitally enabled services, G20, services trade restrictions, trade policy |
| JEL: | F13 F14 |
| Date: | 2019–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:232-en&r=all |
| By: | Massimo Mariani; Alessandra Caragnano; Vittorio Placido; Marianna Zito |
| Abstract: | In the last few years there has been an increasing interest in the blockchain as well as the application of this technology within the global financial markets, also involving the Real Estate industry.In a greatly innovative way, the blockchain could represent a tool to gather financial resources targeted to the Real Estate industry through the issuance of tokens following an Initial Coin Offering (ICO). Therefore, this paper aims at comparing the IPOs and the ICOs concluded in the Real Estate industry in order to highlight similarities and differences as well as the potential developments of this innovative technology. In this perspective, we aim at investigating the destiny of the NAV discount and which new relations could be explored. |
| Keywords: | IPOs versus ICOs: a new challenge for Real Estate industry? |
| JEL: | R3 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2019_233&r=all |
| By: | Marcelo Cajias |
| Abstract: | Initial yields are used by institutional investors and investment managers to assess the pricing conditions of real estate markets. In contrast to commercial real estate, initial yields in the residential sector are hard to quantify, especially due to the lack of comparables. In the era of digitalisation and big data residential assets are mostly brought to the market via digital multiple listing systems. The paper develops semiparametric hedonic models for extracting the implicit information to calculate residential net initial yields for both a buy-to-hold and rental investment strategy based on more than 3 million observations. The results are robust and confirm that the pricing conditions of residential markets are captured by the hedonic approach, enhancing the transparency in real estate markets. |
| Keywords: | Big data; buy or rent; German residential; Net initial yields; semiparametric regression |
| JEL: | R3 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2019_155&r=all |
| By: | Jacques Bughin; Nicolas van Zeebroeck |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/283916&r=all |
| By: | Daron Acemoglu; Ali Makhdoumi; Azarakhsh Malekian; Asuman Ozdaglar |
| Abstract: | When a user shares her data with an online platform, she typically reveals relevant information about other users. We model a data market in the presence of this type of externality in a setup where one or multiple platforms estimate a user’s type with data they acquire from all users and (some) users value their privacy. We demonstrate that the data externalities depress the price of data because once a user’s information is leaked by others, she has less reason to protect her data and privacy. These depressed prices lead to excessive data sharing. We characterize conditions under which shutting down data markets improves (utilitarian) welfare. Competition between platforms does not redress the problem of excessively low price for data and too much data sharing, and may further reduce welfare. We propose a scheme based on mediated data-sharing that improves efficiency. |
| JEL: | D62 D83 L86 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26296&r=all |
| By: | Toyotaro Suzumura; Yi Zhou; Natahalie Barcardo; Guangnan Ye; Keith Houck; Ryo Kawahara; Ali Anwar; Lucia Larise Stavarache; Daniel Klyashtorny; Heiko Ludwig; Kumar Bhaskaran |
| Abstract: | Financial crime is a large and growing problem, in some way touching almost every financial institution. Financial institutions are the front line in the war against financial crime and accordingly, must devote substantial human and technology resources to this effort. Current processes to detect financial misconduct have limitations in their ability to effectively differentiate between malicious behavior and ordinary financial activity. These limitations tend to result in gross over-reporting of suspicious activity that necessitate time-intensive and costly manual review. Advances in technology used in this domain, including machine learning based approaches, can improve upon the effectiveness of financial institutions' existing processes, however, a key challenge that most financial institutions continue to face is that they address financial crimes in isolation without any insight from other firms. Where financial institutions address financial crimes through the lens of their own firm, perpetrators may devise sophisticated strategies that may span across institutions and geographies. Financial institutions continue to work relentlessly to advance their capabilities, forming partnerships across institutions to share insights, patterns and capabilities. These public-private partnerships are subject to stringent regulatory and data privacy requirements, thereby making it difficult to rely on traditional technology solutions. In this paper, we propose a methodology to share key information across institutions by using a federated graph learning platform that enables us to build more accurate machine learning models by leveraging federated learning and also graph learning approaches. We demonstrated that our federated model outperforms local model by 20% with the UK FCA TechSprint data set. This new platform opens up a door to efficiently detecting global money laundering activity. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1909.12946&r=all |
| By: | Yash Chawla; Anna Kowalska-Pyzalska; Anna Skowronska-Szmer |
| Abstract: | This papers focuses on the smart meters' roll-out in India - third largest economy, one of the developing countries with the fastest economic growth rate and third largest power producing nation. The Indian power system is weak and experiences severe problems and challenges that could be solved by means of the smart grid approach and broader implementation of smart meters (SM). Within this study, we focus on the consumers' preferences regarding SM. An empirical study has been conducted among Indian social media users, who are predicted to be potential early adopters or innovators in case of SM further market penetration. By dividing the respondents into a few market segments, the study highlights differences between consumers already having SM installed at their household, consumers in the process of installing SM, consumers who would like to have SM in the future, and consumers' preferences based on potential benefits and information availability. The study also outlines the profile of consumers who currently have SM installed in their household. Results show that tech-savviness of India's consumers, common access to the Internet for citizens, possession of smart phones by most of the population and ambitious goals of the Indian government, are a very productive mix for a nation wide roll-out of SM in India in the coming years. |
| Keywords: | Smart metering; Smart metering platforms; Consumer awareness; Stepwise discriminant analysis; On-line questionnaire; Social media |
| JEL: | D12 D90 D91 Q01 Q55 |
| Date: | 2019–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:wuu:wpaper:hsc1903&r=all |
| By: | Antoine Chardain (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Claudio Vitari (AMU - Aix Marseille Université, CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon) |
| Abstract: | L'arrivée de la technologie de la blockchain a conduit les acteurs en charge de la régulation du secteur financier français à prendre différentes décisions pour intégrer cette technologie potentiellement disruptive pour le secteur. L'analyse, sur la période 2008-2018, de l'évolution du champ organisationnel associé à ce secteur montre qu'un processus de changement institutionnel est en cours, avec des acteurs en charge de la régulation, actifs sur le sujet, qui se comportent en entrepreneurs institutionnels. Dans quelle mesure une technologie peut elle contribuer à initier un processus de changement institutionnel ? C'est cette question que propose d'éclairer ce cas empirique. |
| Keywords: | Régulation,technologie,théorie néo-institutionnelle,blockchain,fintech,théorie des organisations |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02293772&r=all |
| By: | Thomas Hellmann; Ilona Mostipan; Nir Vulkan |
| Abstract: | We use equity crowdfunding data to ask how fundraising amounts can be explained by what entrepreneurs ask for, versus what investors want to invest. The analysis exploits unique features of crowdfunding where entrepreneurs not only set investment goals, but also chose when to close their campaigns. More experienced and more educated founder teams ask for more. Their campaigns succeed more often, and they raise more money. Female teams ask for less, are equally successful, yet raise significantly less. They also wait longer before closing campaigns, suggesting they want to raise more than what they originally asked for. |
| JEL: | G20 G24 M13 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26275&r=all |
| By: | Antje Berndt (Australian National University); Sevin Yeltekin (Carnegie Mellon University) |
| Abstract: | We propose a model of entry and competition in the financial advisory market. Firms are heterogeneous with regard to the level of customization they offer to their clients. Customization measures advisors’ capacity to tailor their services, including the frequency of human interactions, towards individual clients’ needs. Low-customization firms such as robo advisors specialize in fully automated portfolio investing, whereas high-customization firms offer a higher level of human touch and provide more comprehensive and tailored wealth management services. Our model is able to generate stylized market features which we document, including high levels of concentration and low market participation in the absence of innovation and better price-quality tradeoffs and higher market participation when innovators enter. We use our framework to discuss the welfare implications of new digital technologies emerging and new entrants—such as RoboAdvisors—disrupting the market. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1585&r=all |
| By: | C. Y. Tan; Y. B. Koh; K. H. Ng; K. H. Ng |
| Abstract: | Structural Change Analysis of Active Cryptocurrency Market |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1909.10679&r=all |
| By: | Oksana Loginova (Department of Economics, University of Missouri) |
| Abstract: | The focus of this theoretical study is price competition when some firms operate their own branded websites while others sell their products through an online platform, such as Amazon Marketplace. On one hand, selling through Amazon expands a firm's reach to more customers, but on the other, starting a website can help the firm to increase the perceived value of its product, that is, to build brand equity. In the short run the composition of firms is fixed, whereas in the long run each firm chooses between Amazon and its own website. I derive the equilibrium prices and profits, analyze the firms' behavior in the long run, and compare the equilibrium outcome with the social optimum. Comparative statics analysis reveals some interesting results. For example, I find that the number of firms that choose Amazon may go down in response to an increase in the total number of firms. A pure-strategy Nash equilibrium may not exist; I show that price dispersion among the firms of the same type is more likely in less concentrated markets and/or when the increase in the perceived value of the product is relatively small. |
| Keywords: | pricing, competition, platforms, online marketplace, Amazon, brand equity |
| JEL: | C72 D43 L11 L13 M31 |
| Date: | 2019–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:1906&r=all |
| By: | Xintong Han (Concordia University, Department of Economics, 1455 Boulevard de Maisonneuve O, Montreal, QC H3G 1M8, Canada.); Pu Zhao (Boston University, Questrom School of Business, 595 Commonwealth Avenue, Boston, MA 02215, USA.) |
| Abstract: | In this paper, we use unique data from a popular Chinese content provision platform to examine three issues: first, content providers’ pricing strategies when each follower needs to pay an annual fee for access to content; second, content providers’ trade-offs between traffic and referral marketing expenses; and third, the effect of a platform policy on the welfare of content providers and their followers. We use a structural model for a content provider’s pricing and referral marketing decisions. The model estimates highlight the link between the referral effectiveness and potential revenue loss. Our counterfactual analysis shows vast difference in communities’ reactions towards increased platform commissions and potential homogeneity of content provision as well as huge demand loss beyond certain commission thresholds. |
| Keywords: | content pricing, referral marketing, platform policy, structural estimation |
| JEL: | L12 L14 L25 L51 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1903&r=all |
| By: | Miriam Steurer; Robert Hill; Norbert Pfeifer |
| Abstract: | The rapid expansion of Airbnb has led to concerns that it is crowding-out long-term rentals. We consider how strong is the incentive for landlords to switch properties to Airbnb. The Airbnb rent premium is defined here as the ratio of what a landlord can charge on Airbnb versus inthe long-term rental market. Using hedonic regression methods applied to micro-level data on long-term rentals (about a million observations) and Airbnb listings (about 190,000 observations), we calculate the size of the Airbnb rent premium for all the properties in our datasets. On average we find that landlords can earn about 90 percent more per week on Airbnb than in the long-term rental market. The premium is even larger for properties with three or more bedrooms. We find some evidence of a higher Airbnb premium in more expensive postcodes, and those with a higher Airbnb density. We also find that the Airbnb rent premium decreases slightly from 2015 to 2017. |
| Keywords: | Airbnb density; Airbnb rent premium; Hedonic regression; Sharing Economy; Size premium |
| JEL: | R3 |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2019_243&r=all |
| By: | Claudio Vitari (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Jean-Charles Pillet (ESC Grenoble - Ecole Supérieure de Commerce de Grenoble - GEM - Grenoble Ecole de Management) |
| Abstract: | As the French-speaking information systems research community grows in size, the need to understand its specificities is more and more pressing. This paper sheds the light on the structure of the social network that underpins the French information systems academic society « Association Information et Management » (AIM). It draws on an analysis of the co-authorship network in the « Systèmes d'Information et Management » (SIM) outlet, and at the conference AIM. This study of the social network, a missing piece in our understanding of the specificities of the French community, addresses three questions: What is the structure of the social network of co-authors? Who are the central players? And what factors of the professional path of the researchers influence their degree of centrality in the network? The purpose of this study is to contribute to the discussion on the specificities of the French-speaking information systems research community in order to reinforce its collective identity. It is also a mean through which its actors will question their own co-authorship practices, as well as the role they have in this social network of research. |
| Abstract: | À mesure que la communauté de recherche française en systèmes d'information s'agrandit, le besoin d'en comprendre les spécificités se fait de plus en plus pressant. Cet article s'attache à mettre en évidence la structure du réseau social qui sous-tend la communauté de l'Association Information et Management (AIM). Elle s'appuie sur l'analyse des réseaux de co-écritures dans la revue Systèmes d'Information et Management (SIM) et les communications au colloque de l'AIM. Cette étude du réseau social, qui manquait à la compréhension des particularismes de la communauté francophone, répond à trois questions : quelle est la structure du réseau social des co-écritures ? Qui sont les acteurs centraux ? Comment le parcours professionnel des chercheurs impacte-t-il leur niveau de centralité ? L'objet de cette étude est de contribuer à la discussion sur les spécificités de la communauté française des SI en vue de renforcer son identité collective. Elle est aussi un moyen pour chacun de ses acteurs de s'interroger sur ses pratiques de co-écritures et sur son rôle dans le réseau social de recherche. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02293764&r=all |
| By: | Guimarães, Luis; Gil, Pedro |
| Abstract: | We study the effects of an automation-augmenting shock in an economy with matching frictions and endogenous job destruction. In the model, tasks can be produced by workers or by machines, but workers have a comparative advantage in producing advanced tasks. Firms choose the input at the time of entry. And according to the evolution of the workers’ comparative advantage, some firms using labor prefer to fire the worker and automate the task. In our model, an automation-augmenting shock reduces the labor share, increases job creation, and increases job destruction. The effects on employment depend on how rapidly workers may lose their comparative advantage: an automation-augmenting shock increases employment in slow-changing environments but catastrophically reduces it in rapid-changing ones. |
| Keywords: | Automation; Employment; Labor-Market Frictions; Technology Choice |
| JEL: | E24 J64 L11 O33 |
| Date: | 2019–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96238&r=all |
| By: | Lukasz Drozd (Federal Reserve Bank of Philadelphia); Michal Kowalik (Federal Reserve Bank of Boston) |
| Abstract: | We analyze the role of promotional "teaser" rates on credit card plans prior, during, and after the 2007-08 financial crisis. We show that promotional offers were ubiquitous prior to the crisis. They were typically chained by borrowers to, in effect, borrow for the long term on low promotional rates. We then show that promotional activity collapsed in mid 2008, which coincided with a massive deleveraging on credit card plans between 2008 and 2011. We build a new equilibrium theory that can relate these phenomenona, analytically characterize equilibrium contracts, and take it to the data. The key insight from our analysis is that a decline in the availability of promotional offerings introduced as an exogenous shock can account for deleveraging. Our model suggests this shock had a discernible impact on consumption demand after 2008, consistent with the narrative that the credit card market played a more direct role in the transmission of the 2008 financial turmoil to aggregate demand. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1047&r=all |
| By: | Vasilios Mavroudis; Hayden Melton |
| Abstract: | While historically, economists have been primarily occupied with analyzing the behaviour of the markets, electronic trading gave rise to a new class of unprecedented problems associated with market fairness, transparency and manipulation. These problems stem from technical shortcomings that are not accounted for in the simple conceptual models used for theoretical market analysis. They, thus, call for more pragmatic market design methodologies that consider the various infrastructure complexities and their potential impact on the market procedures. First, we formally define temporal fairness and then explain why it is very difficult for order-matching policies to ensure it in continuous markets. Subsequently, we introduce a list of system requirements and evaluate existing "fair" market designs in various practical and adversarial scenarios. We conclude that they fail to retain their properties in the presence of infrastructure inefficiencies and sophisticated technical manipulation attacks. Based on these findings, we then introduce Libra, a "fair" policy that is resilient to gaming and tolerant of technical complications. Our security analysis shows that it is significantly more robust than existing designs, while Libra's deployment (in a live foreign currency exchange) validated both its considerably low impact on the operation of the market and its ability to reduce speed-based predatory trading. |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1910.00321&r=all |
| By: | Alex Chernoff |
| Abstract: | I use firm-product-level data for Canadian online retailers to study how product scope (the average number of product categories per firm) evolved from 1999 to 2012. During this period, product scope dropped monotonically from 59 to 5 product categories. Using a theoretical model of multi-product firms, I show that this reduction can be rationalized by increased online competition. Consistent with the model, I find that the percentage of Canadian online retailers with revenues in a product category falls when Amazon.com expands its varieties in the category. Overall, Amazon.com’s expansion accounts for 37 percent of the observed reduction in product scope. |
| Keywords: | Firm dynamics; Service Sector |
| JEL: | D22 L11 L81 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:19-42&r=all |
| By: | Alberto Cavallo (Harvard); Andres Drenik (Columbia University); Javier Cravino (University of Michigan) |
| Abstract: | We use a novel dataset from a large freelance website to document international wage differences for performing tasks that can be delivered online. We show large wage disparities across freelancers from different countries working on narrowly defined occupations. These wage differentials across countries cannot be explained by differences in observable worker characteristics. Instead, real exchange rate levels account for about 70 percent of the cross-country-variation in average wages, and the elasticity of relative wages with respect to the real exchange rate is about 0.4. The magnitudes of these findings are pervasive across different country groups and types of jobs. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:645&r=all |
| By: | Giorgio Presidente |
| Abstract: | This paper documents a positive relationship between labor-friendly institutions and investment in industrial robots in a sample of advanced economies. Institutions explain a substantial proportion of cross-country variation in automation. The relationship between institutions and robots is stronger in sunk cost-intensive industries, where producers are more vulnerable to holdup. This suggests that automation is used by producers as a tool to thwart rent appropriation by labor. |
| Keywords: | automation, robots, holdup, institutions, unions, sunk costs, appropriability, bargaining, frictions, rents, technology adoption |
| JEL: | O33 O43 O57 J50 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7834&r=all |
| By: | Eneko Hiriart (Université Bordeaux Montaigne, CNRS - Centre National de la Recherche Scientifique, LASCARBX - LabEx Sciences archéologiques de Bordeaux - UB - Université de Bordeaux - Université Bordeaux Montaigne, IRAMAT-CRP2A - IRAMAT-Centre de recherche en physique appliquée à l’archéologie - IRAMAT - Institut de Recherches sur les Archéomatériaux - UTBM - Université de Technologie de Belfort-Montbeliard - UO - Université d'Orléans - Université Bordeaux Montaigne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Our knowledge of the second Iron Age has evolved considerably over the past 30 years as shown by several recent syntheses (Buchsenschutz et al., 2015; Garcia, 2014; Krausz et al., 2013; Guilaine, Garcia, 2018). In the more specific field of numismatics, research has focused mainly on the civilization of the oppida (late 2nd-Ist centuries BC), a period when there was already a significant monetarization of economic activities. But the realities prior to the emergence of the oppida remain largely unknown. Looking further upstream, as early as the 3rd century BC, this study looks at the triggers for the monetarisation of the economy in protohistoric societies at various targeted points in Europe. Does the transformation of trading systems result from a structural change in European societies? |
| Abstract: | Nos connaissances sur le second âge du Fer ont considérablement évolué depuis 30 ans comme l'ont montré plusieurs synthèses récentes (Buchsenschutz et al., 2015 ; Garcia, 2014 ; Krausz et al., 2013 ; Guilaine, Garcia, 2018). Dans le domaine plus particulier de la numismatique, les recherches ont surtout porté sur la civilisation des oppida (fin IIe-Ier siècle avant notre ère), période où l'on constate une monétarisation déjà importante des activités économiques. Mais les réalités antérieures à l'apparition des oppida demeurent largement méconnues. En regardant plus en amont, dès le IIIe siècle avant notre ère, cette étude s'intéresse aux éléments déclencheurs de la monétarisation de l'économie dans les sociétés protohistoriques, en divers points ciblés de l'Europe. La transformation des systèmes d'échanges résulte-t-elle d'une modification structurelle des sociétés européennes ? |
| Keywords: | currency,archaeology,numismatics,monetarization,iron age,protohistory,coinage,money,economy,anthropology,social currency,exchanges,urbanization,open agglomerations,oppida,innovation,agglomérations ouvertes,monnaie,archéologie,numismatique,monétarisation,âge du Fer,protohistoire,économie,anthropologie,monnaie sociale,échanges,urbanisation |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02294060&r=all |