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Author: Eddy Bekkers Publisher: Rozenberg Publishers ISBN: 905170903X Category : Languages : en Pages : 144
Book Description
The thesis is organized as follows. Chapter 2 contains a survey of the three most in‡fluential models on fi…rm heterogeneity and of the most important empirical work on firrm heterogeneity. The chapter starts with a brief review of the homogeneous productivity imperfect competition literature. Chapter 2 …finishes with a comparison of the three most in‡fluential models of fi…rm heterogeneity and the oligopoly model put forward in the thesis. Chapter 3 addresses exporting uncertainty under heterogeneous popularity. Chapter 4 contains the chapter on …firm heterogeneity under oligopoly. Chapter 5 constitutes the models on …firm heterogeneity and endogenous quality. Chapter 6 points out the within-sector specialization model. Chapter 7 addresses the effect of importer characteristics on unit values and the role of markups and quality to explain this effect. Chapter 8 concludes.
Author: Eddy Bekkers Publisher: Rozenberg Publishers ISBN: 905170903X Category : Languages : en Pages : 144
Book Description
The thesis is organized as follows. Chapter 2 contains a survey of the three most in‡fluential models on fi…rm heterogeneity and of the most important empirical work on firrm heterogeneity. The chapter starts with a brief review of the homogeneous productivity imperfect competition literature. Chapter 2 …finishes with a comparison of the three most in‡fluential models of fi…rm heterogeneity and the oligopoly model put forward in the thesis. Chapter 3 addresses exporting uncertainty under heterogeneous popularity. Chapter 4 contains the chapter on …firm heterogeneity under oligopoly. Chapter 5 constitutes the models on …firm heterogeneity and endogenous quality. Chapter 6 points out the within-sector specialization model. Chapter 7 addresses the effect of importer characteristics on unit values and the role of markups and quality to explain this effect. Chapter 8 concludes.
Author: Colin Hottman Publisher: ISBN: Category : Business enterprises Languages : en Pages : 0
Book Description
We estimate a structural model of heterogeneous multiproduct firms to examine the sources of firm heterogeneity emphasized in the recent trade and macro literatures. Using Nielsen barcode data on prices and sales, we estimate elasticities of substitution within and between firms, and use the estimated model to recover unobserved qualities, marginal costs and markups. We find that variation in firm quality and product scope explains at least four fifths of the variation in firm sales. Most firms are well approximated by the monopolistic competition benchmark of constant markups, but the largest firms that account for most of aggregate sales depart substantially from this benchmark. Although the output of multiproduct firms is differentiated, cannibalization is quantitatively important for the largest firms. This imperfect substitutability of products within firms, and the fact that larger firms supply more products than smaller firms, implies that standard productivity measures are not independent of demand system assumptions and probably dramatically understate the relative productivity of the largest firms.
Author: Daniel S. Wills Publisher: ISBN: Category : Languages : en Pages : 176
Book Description
In this dissertation, I study the implications of taxation--and other regulations--in environments with financial frictions and firm entry. The first chapter asks if there is a role for the regulation of the market of funds for firms that lack collateral and have a large uncertainty about their ability to generate profits. To answer the question, it characterizes optimal financial contracts in a competitive environment with risk, adverse selection, and limited liability. In this environment, competition among financial intermediaries always forces them to fund projects with negative expected returns both from a private and from a social perspective. Intermediaries use steep payoff schedules to screen entrepreneurs, but limited liability implies this can only be done by giving more to all entrepreneurs. In equilibrium, competition for the profitable entrepreneurs forces intermediaries to offer better terms to all customers. There is cross-subsidization among entrepreneurs and intermediation profits are zero. The three main features of the framework (competition, adverse selection, and limited liability) are necessary in order to get the inefficient laissez-faire outcome and a role for financial regulation. The result remains robust when firms can collateralize some portion of the credit as long as there is an unsecured fraction. These results provide a motive for regulating the market for unsecured financing to business start-ups. The second chapter quantifies the effect of replacing the corporate income tax by a tax on business owners. This is done by constructing a model with heterogeneous firms, borrowing constraints, costly equity issuance and endogenous entry and exit. Calibrating the model to the U.S. economy, the chapter documents that replacing the corporate income tax with a revenue-neutral common tax on shareholders, the steady-state output would increase by 6.8% and total factor productivity (TFP) by 1.7%. Due to financial frictions, taxes levied at the corporate income level and at the shareholder level are not perfect substitutes because they distort different margins. In the model, firms are hit by productivity shocks and aim to adjust their capital stock in pursuit of optimal size. Optimal firm behavior often dictates reliance on retained earnings for growth. The corporate income tax reduces retained earnings available for investment, thereby delaying capital accumulation. As the retained earnings are not paid back to shareholders, the friction described does not occur when taxes are levied at the dividend level. The mechanism is amplified by endogenous entry and exit and by general equilibrium feedback.
Author: Ryo Sakamoto (Ph.D.) Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
One of the central questions in industrial organization is whether firms compete or collude in oligopolistic markets, given the significant implications of collusion for market outcomes and competition policy. An extensive body of literature has emerged, focusing on empirically analyzing the degree of collusion and measuring its impact on welfare. However, this task is challenging because observed higher prices may be attributed to various factors such as a high degree of collusion, increased product differentiation, or higher marginal costs-all of which are unobserved. In this dissertation, I propose a new structural model of demand and supply that enables the flexible estimation of firm conduct as continuous conduct parameters in differentiated products markets. A significant advantage of the framework is its empirical tractability, even when our focus is on the conduct of a large number of firms. This innovation is achieved through my unique setup of the supply-side modeling. Unlike the previous studies, I construct the supply side of the model using an oligopolistic model developed by d'Aspremont, Dos Santos Ferreira, and Gérard-Varet (2007). Their model captures competition among firms in two dimensions: one is competition for market share and the other is competition for market size. This dichotomous characterization reduces the number of conduct parameters, making the estimation feasible for a larger number of firms. Importantly, the model retains flexibility on the degree of competition from monopolistic competition to collusion. I apply the model to analyze the US corn seed industry using a proprietary dataset on farm-level transactions for genetically modified seeds. Despite concerns regarding the ramifications of the growing market power of large biotech firms, there is limited understanding of whether firms compete or collude in their pricing strategies. My estimation results show that the five largest firms are all engaged in imperfect collusion, and I reject benchmark conduct such as price and quantity competition. The low degree of competition translates into high price-cost margins, which I estimate at approximately 38%-51%. The results of counterfactual simulations indicate that seed companies extract substantial rent from farmers through non-competitive pricing, and total welfare loss is measured at $3.65 billion over the period 2008-2014.
Author: Mario Rafael Silva Publisher: ISBN: 9780355307344 Category : Languages : en Pages : 200
Book Description
I study the interactions between liquidity constraints, monopolistic competition, and search frictions for product markets, labor markets, and credit markets. Monopolistic competition is especially important for three different reasons. First, there is an externality that links the demand of firms to the state of the economy. Second, under free entry, the product space is influenced by policy and interacts with liquidity constraints. Third, monopolistic competition generates markups, which can augment other wedges and thereby interact with liquidity constraints.The first chapter considers the role played by endogenous variety and monopolistic competition in the long-run transmission of monetary policy. The combination of free entry and product variety gives rise to both an intensive margin (quantity of particular good) and extensive margin (extent of variety), and search frictions imply that firm entry involves a congestion externality. Inflation generally reduces variety. Under constant-elasticity-of-substitution (CES) preferences, firms are inefficiently small, with the inefficiency increasing in product differentiation and the extent of search frictions. The Friedman rule, which involves contracting the money supply at the rate of time preference, is the best policy under CES preferences. In contrast, with variable elasticity of demand, inflation can increase firm size, reduce markups, and raise welfare, even though output is lower. Under CES preferences, the welfare cost of inflation is high; moreover, it increases monotonically with the markup and is higher with endogenous variety than with a fixed variety alternative.The second chapter departs from the dramatic growth of revolving credit since 1970 relative to both consumption and consumer credit. Importantly, revolving credit primarily determines short-run household liquidity and comoves positively with product variety. I augment the Mortensen-Pissarides model with an endogenous borrowing constraints and free entry of monopolistically competitive firms. Unemployment is amplified from a two-way feedback: higher debt limits encourage firm entry and raise product variety (the entry channel), and greater variety makes default more costly and thereby raises the equilibrium debt level (the consumption value channel). I compare the model to a counterfactual economy in which either channel is shut down and find that mean amplification exceeds 50%. Furthermore, only the model economy generates a procyclical response of the credit-to-consumption ratio, as observed in the data.The third chapter examines the role of corporate finance and imperfect competition in the pass through of monetary policy to the real lending rate and its transmission into investment. Monopolistically competitive entrepreneurs can finance investment opportunities using bank-issued credit or money. They seek loans in an over-the-counter market where the terms of the contract (loan size, interest rate, and down payment) are negotiated subject to pledgeability constraints. I investigate pass through of the policy rate to the real lending rate and its transmission to output and investment, taking into account the interplay of (1) heterogeneous financial frictions from limited enforcement and (2) aggregate demand externalities from monopolistic competition. Whereas returns to scale or product diversity are not important for the pass through, the former substantially affect the transmission of policy to investment and output. Furthermore, financial frictions interact positively with demand complementarities from monopolistic competition. Greater dispersion of financial frictions reduces investment and output and also increases transmission unevenly across the range of nominal policy rates, having a maximal effect at about a policy rate of 9%.
Author: Eddy Bekkers
Author: Eddy Bekkers
Author: Andrew Lewis
Author: Konstantinos Costas Arkolakis
Author: Colin Hottman
Author: Daniel S. Wills
Author: Lawrence Abbott
Author: Ryo Sakamoto (Ph.D.)
Author: Umut Senalp
Author: Andrea Alati
Author: Mario Rafael Silva