nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2019‒11‒18
twenty-six papers chosen by

  1. Why do social networks introduce virtual currencies? By Gaston Giordana; Paolo Guarda
  2. Transparency and Financial Inclusion : Experimental Evidence from Mobile Money (revision of CentER DP 2018-042) By Dalton, Patricio; Pamuk, H.; Ramrattan, R.; van Soest, Daan; Uras, Burak
  3. Development of Commercial Real Estate Crowd Funding Markets and Regulatory Environment: Evidence for Namibia from Theuk By U. Kahireke
  4. Crowdfunding dynamics By BELLEFLAMME Paul,; LAMBERT Thomas,; SCHWIENBACHER Armin,
  5. The Effect of Mobile Money Usage on Borrowing, Saving, and Receiving Remittances: Evidence from Tanzania By Askar Ismailov; Albert Benson Kimaro; Hisahiro Naito
  6. International digital currencies and their impact on monetary policy: An exploration of implications and vulnerability By Proettel, Thorsten
  7. LIBRA - a differentiated view on Facebook's virtual currency project By Brühl, Volker
  8. Crypto assets: the role of ICO tokens within a well-diversified portfolio By Saman Adhami; Dominique Guégan
  9. Digital inclusion and wellbeing in New Zealand By Arthur Grimes; Dominic White
  10. Electronic transmissions and international trade - shedding new light on the moratorium debate By Andrea Andrenelli; Javier López González
  11. The Mysterious Cross-Country Dispersion in Mobile Phone Price Trends By David M. Byrne
  12. LinkedIn(to) Job Opportunities: Experimental Evidence from Job Readiness Training By Wheeler, Laurel; Garlick, Robert; Johnson, Eric; Shaw, Patrick; Gargano, Marissa
  13. The Currency Composition of Foreign Exchange Reserves Retrospect and Prospect By Eichengreen, Barry; Mathieson, Donald J.
  14. Housing Information Centers - The Spark to African Real Estate Market Dynamism By F. Komu
  15. Job Prestige and Mobile Dating Success: A Field Experiment By Neyt, Brecht; Baert, Stijn; Vynckier, Jana
  16. China's Shadow Banking: Bank's Shadow and Traditional Shadow Banking By Guofeng Sun
  17. Scoping the OECD AI principles: Deliberations of the Expert Group on Artificial Intelligence at the OECD (AIGO) By OECD
  18. Some HCI Priorities for GDPR-Compliant Machine Learning By Veale, Michael; Binns, Reuben; Van Kleek, Max
  19. Money and Monetary Stability in Europe, 1300-1914 By Kamil Kivanc Karaman; Sevket Pamuk; Secil Yildirim
  20. Big Tech Acquisitions and the Potential Competition Doctrine: The Case of Facebook By Mark Glick; Catherine Ruetschlin
  21. Brief Remarks (via pre-recorded video) : a speech at "Supervision in a Digital Era," the 26th Annual Conference of the International Association of Insurance Supervisors, Abu Dhabi, the United Arab Emirates, November 14, 2019. By Quarles, Randal K.
  22. The Speed of Innovation Diffusion in Social Networks By H Peyton Young; Itai Arieli; Yakov Babichenko; Ron Peretz
  23. Friedrich Hayek and the Price System : a speech at "The Road to Serfdom at 75: The Future of Classical Liberalism and the Free Market" Ninth Annual Conference of the William F. Buckley, Jr., Program at Yale, New Haven, Connecticut, November 1, 2019. By Quarles, Randal K.
  24. The vagaries of the sea: evidence on the real effects of money from maritime disasters in the Spanish Empire By Adam Brzezinski; Yao Chen; Nuno Palma; Felix Ward
  25. “What’s the Point of the Task?” Exploring the Influence of Task Meaning on Creativity in Crowdsourcing By Thomas Görzen
  26. Tracking the Labor Market with "Big Data" By Tomaz Cajner; Leland Crane; Ryan Decker; Adrian Hamins-Puertolas; Christopher J. Kurz

  1. By: Gaston Giordana; Paolo Guarda
    Abstract: This paper models how internet platforms decide whether to introduce virtual currencies. Since platforms operate two-sided markets, virtual currencies may attract users who buy goods/services as well as external firms who accept virtual currency as payment. We find that platform incentives to introduce virtual currencies depend on the distribution of wages across the population of users as well as the distribution of preferences for online activities ("digital" preferences). We use Luxembourg data from the EU Survey on Information and Communication Technologies to test model predictions on user time allocation. In particular, we identify various individual socio-economic characteristics linked to time spent on social networks. Then, we use the user net income distribution (conditional on digital preferences) to evaluate conditions determining the platform’s choice of virtual currency design.
    Keywords: Private virtual currencies, social networks, retail payments
    JEL: E42 E5 G23 L5 L82 L86
    Date: 2019–10
  2. By: Dalton, Patricio (Tilburg University, Center For Economic Research); Pamuk, H. (Tilburg University, Center For Economic Research); Ramrattan, R.; van Soest, Daan (Tilburg University, Center For Economic Research); Uras, Burak (Tilburg University, Center For Economic Research)
    Abstract: Electronic payment instruments have the potential to spur the transparency of business transactions and thereby reduce information frictions. We design a field experiment to understand whether e-payments facilitate the financial inclusion of SMEs in developing world and to study adoption barriers. We encourage a random sample of Kenyan merchants to adopt a new mobile-money payment instrument and find that the decision to adopt is hampered by the combination of information, know-how and seemingly small transaction costs barriers. In addition, we nd that business owners who are more averse to transparency are more reluctant to adopt. Sixteen months after the intervention, we observe that treated firms have better access to finance in the form of mobile loans. The impact on financial access is more pronounced for smaller establishments, which also experience a considerable reduction in sales volatility. We conclude that e-payments can help un-collateralized firms become transparent and get financially integrated.
    Keywords: SME Finance; Transparency; payment technologies; Lipa Na M-Pesa
    JEL: D22 G00 G21 O33
    Date: 2019
  3. By: U. Kahireke
    Abstract: Following in with modern time’s trends where digital technology is transforming the world of business and society, new peer to peer (Crowd funding) on- line investment vehicles that offers inclusivity, is available to real estate entrepreneurs now a days. Crowd funding has been in existences ince the 2008 global economic downturn. This phenomenon is becoming a valuable alternative source of funding for entrepreneurs seeking external and emerging approaches for implementing their ideas despite not having traditional monetary resources such as banks and venture capital (Shengetal, 2016). The crowd funding market is an evolving market that has shown considerable growth over the last few years an estimate of the global markets how that at the end of 2015thevalue was $145.29 billion.According to Sonoman and Urguhart (1998), highrates of unemployment and very low salaries are proof that people in need of housing do not qualify for loans offered by the regular banks, more so in developing countries. This calls for innovative financing mechanism for the excluded and in most situations the majority of the population. A real estate crowd funding platform offers financing vehicles that are inclusive, open, democratic and unbiased than traditional property financing methods (Lakhani, Hutter etal.2014).Since Real Estate Crowd Funding CF is a form of securities-based crowd-funding, it is a regulated activity and most countries have developed regulatory frame works to better protect stakeholders. In the UK regulatory policy governing the crowd funding industry was introduced in March 2014 and is enforced by the Financial Conduct Authority(IPD,2016). The FCA distinguishes between equity based and debt based crowd funding platforms. Currently there are no specific crowd funding laws or regulatory frame works in Africa as in the UK or other established equity-based or debt-based crowd funding markets. Despite this regulatory absence, there were approximately 75 listed crowd funding platforms founded and headquartered in Africa during 2015. Most of the above-mentioned crowd funding platforms in Africa are operating without any industry specific regulatory framework, unless they opted for a license as a financial services or a registered credit provider (Afrik start, 2016). The absence of regulation limits the expansion of equity-based or debt-based crowd funding plat forms in Africa, as it deters potential investors to pool their money in platforms in which they have no basic investors’ protection rights and clear exit strategies ( Afrikstart, 2016).A regulatory frame work that controls the transparency, speed, and scale that advances in technology and the Internet can deliver to early-stage funding market place and protect investor is important because if not crowd funding becomes rife with fraud which could lead to market collapse (World Bank, 2013). Furthermore, the development of a regulatory environment for the crowd funding sector needs carefully consideration to ensure that new financial models can grow and innovate freely overtime. A balance need to be created by authorities to allow existing platforms to gradually become complaint overtime and not to suppress the potential of the nascent crowd funding industry during in fancy stage as too sudden restrictive regulations may harm a crowd funding market (WorldBank,2013)The aim of the study is examine what lessons can be learned by examining real estate crowd funding platforms regulations in the UK and the practicability of introducing these regulations in Namibia to help develop commercial real estate crowd funding plat forms. Both qualitative and quantitative techniques will be used in combination with primary and secondary data. Extensive study of existing literature from journal articles, media publications, academic publications, books will be undertaken. A review of the existing legal and regulatory frameworks for crowd funding in both the UK and Namibia will also be undertaken. Questionnaires developed from combined elements of literature review will provided at a analysis, and opinions and experiences from stakeholders in Namibia.
    Keywords: crowd funding; Namibia; Platforms; Regulations
    JEL: R3
    Date: 2018–09–01
  4. By: BELLEFLAMME Paul, (Université catholique de Louvain); LAMBERT Thomas, (Rotterdam School of Management); SCHWIENBACHER Armin, (Université Côte d’Azur, Euralille)
    Abstract: Various forms of social learning and network effects are at work on crowdfunding platforms, giving rise to informational and payoff externalities. We use novel entrepreneur-backer data to study how these externalities shape funding dynamics, within and across projects. We find that backers decide to back a particular project based on past contributions not only to that project - as documented by prior work - but also to other contemporaneous projects - a novel result. Our difference-in-differences estimates indicate that such ‘cross-project funding dynamics’ account for 4-5% in the increase of contributions that projects generate on a daily basis. We show that recurrent backers are the main transmission channel of cross-project funding dynamics: by initiating social learning about project existence and quality, recurrent backers encourage future funding by other backers. Our results demonstrate that even though contemporaneous projects compete for funding, they jointly benefit from their common presence on the platform. We finally show that these crowdfunding dynamics stir platform growth, with important consequences for competition among platforms.
    Keywords: crowdfunding, digital platforms, FinTech, network effects, social learning
    JEL: D43 G23 L14 L26 L86
    Date: 2019–07–10
  5. By: Askar Ismailov; Albert Benson Kimaro; Hisahiro Naito
    Abstract: This study examines the effect of the use of mobile money services on financial behavior using data from Tanzania. We estimate the causal effect of the use of mobile money on borrowing, receiving remittances, and saving by applying a two-stage least squares estimation using the shortest distance to the border of areas with multiple mobile phone networks, which is a proxy of accessibility to a mobile network, as an instrumental variable. We find that when a household experiences a negative shock, non-users of mobile money increase borrowing, while mobile money users do not. Further, the use of mobile money increases the probability of saving in mobile money savings accounts and of receiving remittances, while it decreases the probability of saving in less liquid assets such as livestock. In contrast, we find that the effect of the use of mobile money on receiving remittances is the same for those who experience a negative shock and those who do not. These evidences suggest that the use of mobile money increases the receipt of remittances regardless of negative shocks and changes the saving portfolio, so a household can prepare for negative shocks. Hence, a household that uses mobile money does not need to increase borrowing in the face of a negative shock. Consistent with this interpretation, the negative shock does not decrease the livelihood of the mobile money users while it decreases the livelihood of non-users.
    Date: 2019–11
  6. By: Proettel, Thorsten
    Abstract: The objective of this discussion paper is to explore the consequences for monetary policy from the establishment of an international digital currency modeled like Libra. For this purpose, a basic assessment of the behavior of economic agents is conducted and possible conflicts with monetary policy are analyzed. Furthermore, a simple approach is developed to estimate the nature and extent of vulnerability for 42 currencies. The results suggest that currencies from developing countries and from developed nations are vulnerable in different ways. In the end, a stronger convergence of central bank policies could result. Thus, the introduction of an international digital currency represents a turning point for monetary policy.
    Keywords: monetary policy,digital currency,blockchain,effective lower bound
    JEL: E42 E52 E58
    Date: 2019
  7. By: Brühl, Volker
    Abstract: Libra - a global virtual currency project initiated by Facebook - has been the subject of many controversial discussions since its announcement in June 2019. This paper provides a differentiated view on Libra, recognising that different development scenarios of Libra are conceivable. Libra could serve purely as an alternative payment system in combination with a dedicated payment token, the Libra coin. Alternatively, the Libra project could develop into a broader financial infrastructure for advanced financial services such as savings and loan products operating on the Libra blockchain. Based on a comparison of the Libra architecture with other cryptocurrencies, the opportunities and challenges for the development of the respective Libra ecosystems are investigated form a commercial, regulatory and monetary policy perspective.
    JEL: E42 E52 G20
    Date: 2019
  8. By: Saman Adhami (Vienna Graduate School of Finance;; Dominique Guégan (Université Paris1 Panthéon-Sorbonne, Centre d'Economie de la Sorbonne, - Ca' Foscari University of Venezia, University of Economics Ho Chi Minh City, Vietnam)
    Abstract: This paper re-examines the discussion on blockchain technology, crypto assets and ICOs providing also evidence that in crypto markets there are currently two classes of assets, namely standalone cryptocurrencies (or 'coins') and tokens which result from an ICO and are intrisically linked to the performance of the issuing company or venture. While the former have been arguments of various empirical studies regarding their price dynamics and their effect on the variance of a well-diversified portfolio, no such study has been done to analyze listed tokens, which in our sample are over 700 and with a backing of about §17.3Bn from their respective ICOs. Therefore, investors interested in optimizing their portfolios should first assess the diversifier, hedge or safe haven role of tokens vis-à-vis traditional assets, on top of 'coins' in order to sensibly use this new asset class. After constructing various indices to represent both the token asset class as a whole and its sub-classes, we model dynamic conditional correlations among all the assets in our sample to obtain time-varying correlations for each token-asset pair. We find that tokens are effective diversifiers but not a hedge or a safe haven asset. We evidence that tokens retain important systematic differences with the two other asset classes to which they are most generally compared to, namely 'coins' and equities
    Keywords: Cryptocurrency; DCC-MGARCH; Hedge; Initial Coin Offering; Safe Haven
    JEL: G11 G15
    Date: 2019–09
  9. By: Arthur Grimes (Motu Economic and Public Policy Research); Dominic White (Motu Economic and Public Policy Research)
    Abstract: We examine: (i) which groups have a lower likelihood of being digitally included in New Zealand, and (ii) how digital inclusion relates to wellbeing. Using four large-scale surveys, we identify several groups whose members are prone to relatively low internet access: people living in social housing; disabled individuals; Pasifika; M?ori; people living in larger country towns (10,000-25,000 people); older members of society (particularly those aged over 75 years); unemployed people and those not actively seeking work. Those in social housing and disabled people are particularly disadvantaged with respect to internet access. Disabled people are also at greater risk than others from a virus infection or other internet interference. We identify a number of associative (but not necessarily causal) relationships between internet access and wellbeing. Those with internet access tend to have higher wellbeing and richer social capital outcomes (e.g. voting) than those without access. For adolescents, as internet use on weekdays outside of school increases, students’ subjective wellbeing declines; once daily internet use exceeds about two hours, we find no positive association between internet use and adolescents’ wellbeing. These results are of particular interest given that 15% of 15-year olds (including 27% of M?ori students) report using the internet for more than 6 hours per day on a weekday outside of school, while over half report more than two hours’ use.
    Keywords: internet, digital inclusion, wellbeing, social capital
    JEL: H42 H54 I31
    Date: 2019–10
  10. By: Andrea Andrenelli (OECD); Javier López González (OECD)
    Abstract: The debate about whether or not to extend the WTO Moratorium on imposing customs duties on electronic transmissions has, to date, narrowly focused on its potential customs revenue implications. This paper sets out to broaden and deepen this debate. First, by putting current estimates of the customs revenue implications into perspective, showing that potential losses tend to be low relative to overall government revenue. Second, by deepening the debate on the cost of tariffs, arguing that these are unstable sources of revenue, that they are associated with lower output and productivity and that their burden falls mainly on domestic consumers, not foreign firms. Third, by broadening the debate to consider the benefits associated with electronic transmissions, including growing consumer welfare and export competitiveness. The paper argues that, overall, the revenue implications of the Moratorium are likely to be relatively small and that its lapse would come at the expense of wider gains in the economy.
    Keywords: customs duties, digital economy, digital trade, digitisable goods, e-commerce, electronic transmissions, trade policy
    JEL: F13 O33
    Date: 2019–11–13
  11. By: David M. Byrne
    Abstract: Mobile phones have been central to ICT innovation since the introduction of the smartphone and constant-quality prices are a barometer of their economic impact. Official consumer price indices (CPIs) indicate that impact differs wildly across countries: For the 2008-2018 period, average annual rates of mobile phone inflation range from no change to a 25 percent decline among 12 key countries examined in this paper. Although evidence indicates certain fundamental factors are at play, mis-measurement may lead the spread in rates to be overstated. Examination of methods employed in CPI calculation, including quality adjustment and index formulas, illuminates but does not resolve the mystery.
    Date: 2019–08–05
  12. By: Wheeler, Laurel (University of Alberta, Department of Economics); Garlick, Robert (Duke University); Johnson, Eric (RTI International); Shaw, Patrick (RTI International); Gargano, Marissa (RTI International)
    Abstract: Online professional networking platforms are widely used and offer the prospect of alleviating labor market frictions. We run the first randomized evaluation of training workseekers to join one of these platforms. Training increases employment at the end of the program from 70 to 77% and this effect persists for at least twelve months. Treatment effects on platform use explain most of the treatment effect on employment. Administrative data suggest that platform use increases employment by providing information to prospective employers and to workseekers. It may also facilitate referrals but does not reduce job search costs or change self-beliefs.
    Keywords: employment; information frictions; online platforms; social networks; field experiment
    JEL: J22 J23 J24 J64 M51 O15
    Date: 2019–09–12
  13. By: Eichengreen, Barry; Mathieson, Donald J.
    Abstract: The management of international reserves remains one of the understudied aspects of the international monetary system. There are now a number of reasons why this should change. On the supply side of the market there is the advent of the euro, creating a full-fledged rival to the dollar for the first time in more than 50 years. The existence of this attractive alternative, it is said, will produce major shifts in the currency composition of international reserves, requiring large movements in the euro-dollar exchange rate to restore equilibrium to international financial markets. On the demand side there is the rush by industrial-country central banks out of gold and changes in the trade relations, capital account restrictions, and exchange rate regimes of developing countries, which may have important repercussions for the composition of their reserves. A number these issues have been addressed in the recent literature. But one of them-their impact on the currency composition of reserves-has not been systematically addressed. We therefore analyse recent trends in currency composition in this paper, with special attention to emerging markets, where the impact of changes in the international financial environment is especially far-reaching, and with special reference to the euro, perhaps the single most important event on the reserve-currency scene. Our single most important finding is the striking stability over time not just of the currency composition of reserves but also of the relationship between the demand for reserves denominated in different currencies and its principal determinants: trade flows, financial flows and currency pegs. This is not something that would have been predicted from recent contributions to the literature, which have forecast sharp shifts in the currency composition of central banks' holdings of foreign exchange. The message would seem to be that in this, as in other respects, the international monetary system is in a mode of gradual, continuous evolution, not of rapid, discontinuous change. For the same reasons that, say, the share of countries operating a particular exchange rate arrangement tends to evolve gradually (rather than to shift all at once in response to some grand scheme for a new Bretton Woods or a global system of target zones), the composition of reserves similarly appears to evolve only gradually, despite the existence of quite marked changes in the wider financial environment. If the right metaphor is punctuated equilibrium, then we would appear to be in one of those long periods between punctuation marks.
    Keywords: International Development
  14. By: F. Komu
    Abstract: This paper is an attempt to examine the extent to which availability and quality of real estate information is influencing the working of real estate markets in Africa. It delves in the discourse of blockchains as applies to real estate market and makes case for the need to steer streamlined development of housing information systems in real estate markets. It is based on a contracted research project commissioned by the Bank of Tanzania in 2017 to design an information Centre for housing in Tanzania. Through direct interviews and questionnaires, the research reached 316 respondents in nine major cities of Tanzania and total of 15 institutions in three selected countries of Kenya, South Africa and Singapore.The study revealed a host of problems. These included low levels of awareness of the processes and procedures in real estate transactions by majority of the respondents (65%), disjointed information process flows in government land administration sectors, information retrieval problems, slow and delayed decision-making process in land and housing ownership transfer documentation, over-reliance of manual filing system, unreliable housing prices and rents in the press, social media and online platforms, unregulated estate agency and limited role of local government units in recording and storing real estate information. Information on options towards housing finance was also limited and only 20% of those interviewed perceived housing as an asset that could be used to create wealth.The paper recommends need for comprehensive and integrated real estate information system that takes advantage of the growing information technologies, changing business and investment environments.
    Keywords: blockchain; housing information asymmetry; Real Estate Markets
    JEL: R3
    Date: 2018–09–01
  15. By: Neyt, Brecht; Baert, Stijn; Vynckier, Jana
    Abstract: Research exploiting data on classic (offline) couple formation has confirmed predictions from evolutionary psychology in a sense that males attach more value to attractiveness and women attach more value to earnings potential. We examine whether these human partner preferences survive in a context of fewer search and social frictions. We do this by means of a field experiment on the mobile dating app Tinder, which takes a central place in contemporary couple formation. Thirty-two fictitious Tinder profiles that randomly differ in job status and job prestige are evaluated by 4,800 other, real users. We find that both males and females do not use job status or job prestige as a determinant of whom to show initial interest in on Tinder. However, we do see evidence that, after this initial phase, males less frequently begin a conversation with females when those females are unemployed but also then do not care about the particular job prestige of employed females.
    Keywords: job prestige,partner preferences,dating apps,online dating,Tinder
    JEL: J12 J16 J13 C93
    Date: 2019
  16. By: Guofeng Sun
    Abstract: Banks' shadow, or money creation by banks beyond traditional loans, plays an important role in China's money-creation process, posing a number of challenges to monetary policy operations and financial risk management. This paper analyzes the money-creation mechanisms of China's shadow banking sector in detail, provides accurate measurements, investigates its effects on financial risk, and surveys recent regulation. To strengthen supervision, China's regulators should closely track the evolution of various shadow banking channels, both on- and off-balance sheet. Specific macroprudential regulation tools, such as asset reserves and risk reserves, should be applied separately to banks' shadow and traditional shadow banking.
    Keywords: banks' shadow, traditional shadow banking, credit money creation, bank accounting, regulation
    JEL: E44 E51 G28
    Date: 2019–11
  17. By: OECD
    Abstract: Artificial intelligence (AI) is reshaping economies, promising to generate productivity gains, improve efficiency and lower costs. At the same time, AI is also fuelling anxieties and ethical concerns. As AI’s impacts permeate our societies, its transformational power must be put at the service of people and the planet. This document presents the work conducted by the Expert Group on Artificial Intelligence at the OECD (AIGO) to scope principles to foster trust in and adoption of AI. In particular, this paper presents a common understanding of what is an AI system as well as a framework that details the stages of the AI system lifecycle. This work informed the draft Recommendation of the Council on Artificial Intelligence. On 22 May 2019, the OECD Council adopted the Recommendation – also referred to as the OECD AI Principles – at the Ministerial level.
    Date: 2019–11–15
  18. By: Veale, Michael; Binns, Reuben; Van Kleek, Max
    Abstract: Cite as Michael Veale, Reuben Binns and Max Van Kleek (2018) Some HCI Priorities for GDPR-Compliant Machine Learning. The General Data Protection Regulation: An Opportunity for the CHI Community? (CHI-GDPR 2018), Workshop at ACM CHI'18, 22 April 2018, Montreal, Canada. In this short paper, we consider the roles of HCI in enabling the better governance of consequential machine learning systems using the rights and obligations laid out in the recent 2016 EU General Data Protection Regulation (GDPR)---a law which involves heavy interaction with people and systems. Focussing on those areas that relate to algorithmic systems in society, we propose roles for HCI in legal contexts in relation to fairness, bias and discrimination; data protection by design; data protection impact assessments; transparency and explanations; the mitigation and understanding of automation bias; and the communication of envisaged consequences of processing.
    Date: 2018–03–19
  19. By: Kamil Kivanc Karaman; Sevket Pamuk; Secil Yildirim
    Date: 2018–05
  20. By: Mark Glick (University of Utah); Catherine Ruetschlin (University of Utah)
    Abstract: The Big Tech companies, including Google, Facebook, Amazon, Microsoft and Apple, have individually and collectively engaged in an unprecedented number of acquisitions. When a dominant firm purchases a start-up that could be a future entrant and thereby increase competitive rivalry, it raises a potential competition issue. Unfortunately, the antitrust law of potential competition mergers is ill-equipped to address tech mergers. We contend that the Chicago School`s assumptions and policy prescriptions hobbled antitrust law and policy on potential competition mergers. We illustrate this problem with the example of Facebook. Facebook has engaged in 90 completed acquisitions in its short history (documented in the Appendix to this paper). Many antitrust commentators have focused on the Instagram and WhatsApp acquisitions as cases of mergers that have reduced potential competition. We show the impotence of the potential competition doctrine applied to these two acquisitions. We suggest that the remedy for Chicago School damage to the potential competition doctrine is a return to an empirically tractable structural approach to potential competition mergers.
    Keywords: Antitrust Law, Big Tech Companies, Digital Markets, Mergers, Potential Competition Big Tech Acquisitions and the Potential Competition Doctrine: The Case of Facebook
    JEL: K21 L40 L86
    Date: 2019–10
  21. By: Quarles, Randal K. (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2019–11–14
  22. By: H Peyton Young; Itai Arieli; Yakov Babichenko; Ron Peretz
    Abstract: New ways of doing things often get started through the actions of a few innovators, then diffuse rapidly as more and more people come into contact with prior adopters in their social network. Much of the literature focuses on the speed of diffusion as a function of the network topology. In practice the topology may not be known with any precision, and it is constantly in flux as links are formed and severed. Here we establish an upper bound on the expected waiting time until a given proportion of the population has adopted that holds independently of the network structure. Kreindler and Young [38, 2014] demonstrated such a bound for regular networks when agents choose between two options: the innovation and the status quo. Our bound holds for directed and undirected networks of arbitrary size and degree distribution, and for multiple competing innovations with different payoffs.
    Date: 2019–11–04
  23. By: Quarles, Randal K. (Board of Governors of the Federal Reserve System (U.S.))
    Date: 2019–11–01
  24. By: Adam Brzezinski (Department of Economics, University of Oxford); Yao Chen (Erasmus School of Economics, Erasmus University Rotterdam); Nuno Palma (Department of Economics, University of Manchester; Instituto de Ciências Sociais, Universidade de Lisboa; CEPR); Felix Ward (Erasmus School of Economics, Erasmus University Rotterdam)
    Abstract: We exploit a recurring natural experiment to identify the effects of money supply shocks: maritime disasters in the Spanish Empire (1531-1810) that resulted in the loss of substantial amounts of monetary silver. A one percentage point reduction in the money growth rate caused a 1.3% drop in real output that persisted for several years. The empirical evidence highlights nominal rigidities and credit frictions as the primary monetary transmission channels. Our model of the Spanish economy confirms that each of these two channels explain about half of the initial output response, with the credit channel accounting for much of its persistence.
    Keywords: Monetary Shocks, Natural Experiment, Nominal Rigidity, Financial Accelerator, DSGE, Minimum-Distance Estimation, Local Projection
    JEL: E43 E44 E52 N10 N13
    Date: 2019–11
  25. By: Thomas Görzen (University of Paderborn)
    Abstract: In pursuit of product innovation, companies increasingly use crowdsourcing for idea generation. Apart from financial motives, previous studies on the motivation of crowd workers identified intrinsic motivation, such as task meaningfulness, to play a key role. These studies, however, focused on routine tasks such as image labelling, using output quantity as the variable of interest. Since the primary goal for a creative task such as idea generation is not abundance but high quality, we investigate the influence of task meaning on workers’ effort and on output creativity. In a field experiment involving idea generation by an online crowdsourcing platform, we vary the task meaning in two different conditions, and evaluate the quality of the ideas generated. We find that higher task meaning has no positive influence on either the quantity or the creativity of the output, which carries practical implications for both commissioners and crowdsourcing platform designers.\\
    Keywords: crowd working, task meaning, creativity, crowdsourcing
    JEL: L86 C93 M55 O32
    Date: 2019–06
  26. By: Tomaz Cajner; Leland Crane; Ryan Decker; Adrian Hamins-Puertolas; Christopher J. Kurz
    Abstract: In our research, we explore the information content of the ADP microdata alone by producing an estimate of employment changes independent from the BLS payroll series as well as from other data sources.
    Date: 2019–09–20

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