Empirical Industrial Organization

Using objective measures of investor protections in 170 countries, I establish that the level of investor protection matters for cross-country differences in GDP growth: countries with stronger protections tend to grow faster than those with poor investor protections.

This article concerns the extent to which corrupt behavior is dependent on the organizational power structure and the resources available for illegal exchange. This qualitative study is based on 42 in-depth interviews with organizational actors in different organizations in Hungary. Four core themes emerged from the analysis of the interviews: (a) isolated corruption at the bottom, (b) the middle level’s own corruption, (c) “technicization” when middle-level professionals and expert groups are used to legalize the corruption of the dominant coalition, and (d) “turning-off controls” when organizational elites intentionally deactivate internal and external controls to avoid detection.

"Corruption has become one of the most popular topics in the social scientific disciplines. However, there is a lack of interdisciplinary communication about corruption. Models developed by different
academic disciplines are often isolated from each other. The purpose of this paper is to review several major approaches to corruption and draw them closer to each other. Most studies of corruption fall
into three major categories: (i) rational-actor models where corruption is viewed as resulting from cost/benefit analysis of individual actors; (ii) structural models that focus on external forces that determine corruption; and (iii) relational models that emphasize social interactions and networks among corrupt actors. Focusing on actors’ behavior and the social context, this article explains corruption concepts taken from sociology, economics, organization studies, political science, social anthropology, and social psychology."

Recent literature tried to explain the Indian growth miracle in different ways, ranging from trade liberalization to industrial reforms. Using data on Indian manufacturing firms, this paper analyzes the relationship between firm's productivity and export market participation during 1991–2004. While it provides evidence of the self-selection hypothesis by showing that more productive firms become exporters, the results do not show that entry into export markets enhances productivity. The paper examines the explanation of self selection hypothesis for total factor productivity differences across 33,510 exporting and non-exporting firms. It uses propensity score matching to test the learning-by-exporting hypothesis. In line with the prediction of recent heterogeneous firm models of international trade, the main finding of the paper is: more productive firms become exporters but it is not the case that learning by exporting is a channel fuelling growth in Indian manufacturing.

This qualitative study examines the role of clients in petty corruption by analyzing actual corrupt exchanges between ordinary citizens and low level public and private employees in post-communist Hungary. Using a grounded theory approach, interviews reveal how clients from different social strata deal with low-level agents in corrupt situations. Findings suggest two contrasting forms of low-level corruption: transactions where the client and the agent do not have a prior relationship and where external factors dominate the relationship; and cases with stronger social ties between the actors, where the client has more freedom to structure the transaction. However, a client's social background frequently determines the form of corrupt transaction and the form of resources illegally exchanged in the deal.

This article concerns the extent to which corrupt behavior is dependent on the organizational power structure and the resources available for illegal exchange. This qualitative study is based on 42 in-depth interviews with organizational actors in different organizations in Hungary. Four core themes emerged from the analysis of the interviews: (a) isolated corruption at the bottom, (b) the middle level's own corruption, (c) "technicization" when middle-level professionals and expert groups are used to legalize the corruption of the dominant coalition, and (d) "turning-off controls" when organizational elites intentionally deactivate internal and external controls to avoid detection.

Greece yearly allocates a substantial part of its national income to defence and its defence burden is the highest among EU and NATO members. To meet the demand for military hardware it relies almost exclusively on imports, ranking among the largest conventional arms importers in the world. Despite efforts to develop a domestic defence industry, indigenous production only covers a limited proportion of Greece's demand for military equipment. The majority of weapons, including sophisticated and technologically advanced systems, are imported from the major arms producers. This paper critically surveys the Greek defence industrial base, its structure and recent performance, and assesses its future options.

This paper deals with the influence of economies of scale and postponement on the efficiency and effectiveness of reverse logistics systems (RLSs). It is a qualitative approach over two case studies carried out in Portugal and Brazil dealing with end of life tires. One deals with management system while the other deals with the reverse logistics system. As conclusions, the efficiency of RLSs is aided by economies of scale. Postponement has positive effects on efficiency by increasing the system capacity reducing logistics costs which indirectly leads to economies of scale, having a positive influence on the effectiveness of RLSs.

Mergers lead to larger firms and a less competitive market structure, but their effects on innovation are not clear. Mergers may improve innovation incentives by promoting economies of scope and scale, R&D activities, and increasing the ability to deal with uncertainties. However, mergers may also discourage innovation by reducing competition, increasing costs, and decreasing production and R&D efficiencies. In this study, we investigate merger impacts on innovation using a panel data consisting of four different data sets on publicly traded US manufacturing firms from 1980 to 2003. Our proxy for innovation is based on citation-weighted patent stocks. In our estimation model, we control for endogeneity using instrumental variables and factors such as market share, size, industry, and time. We find that mergers are positively and significantly correlated with firms' innovation. Our findings also indicate that merger effect on innovation is heterogeneous across industries, increases with market share, and is greater in the long run. Our findings are robust to alternative measures of innovation.

This paper aims at analyzing the current situation of music copyright collecting societies in the European landscape. The music sector has been strongly subject to the radical changes brought about by technological innovations such as the Internet and the new communication platforms and devices; the rules that once held true are now urging to be questioned and evaluated. Following a review of the different economic theories underlying the practice of copyright intermediation and the legal framework currently enforced, the research progresses by providing data and evidence on the economic performance of the major European copyright collectives assessing the results under a comparative manner. The objective is to evaluate whether the dynamics of copyright management comply with the common standards of social efficiency and sustainability, drawing conclusions and suggestions from the obtained results.

This research paper is a statistical comparative study of a few average case asymptotically optimal sorting algorithms namely, Quick sort, Heap sort and K- sort. The three sorting algorithms all with the same average case complexity have been compared by obtaining the corresponding statistical bounds while subjecting these procedures over the randomly generated data from some standard discrete and continuous
probability distributions such as Binomial distribution, Uniform discrete and continuous distribution and Poisson distribution. The statistical analysis is well supplemented by the parameterized complexity analysis.

This paper develops a novel approach to the analysis of market definition. The paper empirically investigates the main components of market definition such as market power, substitution, and the simultaneous interaction between the demand and its determinants for the fixed and mobile voice services. For this aim, we employ the multivariate Johansen co-integration methodology and analyze the Turkish voice telecommunications industry. While the VECM analysis confirms the presence of a simultaneous long-term causality relationship among the variables, the Johansen normalization results reveal demand elasticities that enable to analyze market power and fixed to mobile substitution. The findings suggest that the fixed and mobile voice services that are traditionally defined as the separate markets can be defined as the products that compete in the single market.

This paper investigates the determinants of firm growth for Indian manufacturing enterprises. The study uses the data obtained from the Prowess database, provided by the Centre for Monitoring Indian Economy (CMIE), covering the period 1991-2010. The study explores the growth of Indian manufacturing firms with respect to 1) its cross-sectional distribution, 2) its dynamics over time, and 3) its determinants. The cross-sectional distributional analysis exhibits high levels of heterogeneity in firm growth patterns, even across firms operating within the same sector, which increases over time. The inter-temporal dynamics observed with the help of transition probabilities matrices suggests that firm growth rates are not highly persistent in time, which is in contrast with the evidence from developed countries. It also reveals the coexistence of firms with very different characteristics and performance within sectors. Given the wide heterogeneity and non-persistent behavior of firm growth rates, this paper resorts to quantile regression analysis to identify the differential effect of regressors at different deciles of the conditional distribution.

The aim of this paper is to investigate the determinants of survival for Italian firms according to their ownership status distinguishing manufacturing and service firms in three categories: foreign multinationals (FMNEs), domestic multinationals (DMNEs) and domestic non-multinationals (NMNEs). In an empirical analysis for the period 2004-2008, based on Cox proportional hazard estimates, we control for several firm-and industry-specific characteristics. We also classify the manufacturing and services sectors according to a fine industrial classification to determine whether the sector of activity in which the firm operates affects its survival rate. Our main findings reveal that FMNEs are more likely to exit the market than national firms in most of the manufacturing and services sectors considered although we observe heterogeneity of patterns at the sector level which highlight that the footloose behaviour is not confirmed in a few sectors (food, textiles, electrical machinery, transport equipment, tourism, finance, and other services). In contrast, DMNEs have a higher chance of survival compared with the other firm categories in the clothing sector for manufacturing and in wholesale trade for services but a higher exit risk with respect to domestic firms in wood and furniture and in mechanical and office machinery. We also find that the share of foreign FDI in a 3 digit sector has a positive impact on firms survival across all the services sectors. JEL classification: L25, F23, C41, J31

This paper analyses the relation between competition and concentration in a monopolistic competition model where banks compete in branching and interest rates and market structure is endogenous. The model is applied on individual bank data in Italy and France using a maximum likelihood approach to derive a measure of the degree of competition in each local market. We propose an empirical test to evaluate ex-ante the impact of horizontal mergers on this measure. Depending on the pre-merger market structure and geographic distribution of branches, we find either cases where the merger is pro-competitive or anti-competitive. It proves its relevance as a tool for competition policy analysis. In addition, thanks to its theoretical foundation, it encompasses more information than traditional measures of competition while it is parsimonious in terms of data requirements.

This paper analyzes the impact of wage premium increases on airline competition and the role of economies of density in creating competitive advantage when firms face cost pressures. We develop an oligopoly model of product differentiation and price competition to examine the competitive interaction between major Full Service Carriers (FSC) and Low Fare Carriers (LFC). We then simulate increases in unit labor costs to investigate the effects of wage hikes caused by stronger union power, scarcity of qualified labor and resulting higher labor market rents. We apply the model to an expanding airline market with rapid growth in the demand for cabin crew and high labor costs -the Brazilian airline industry of the late nineties. After estimating demand, costs and wages (and accounting for asymmetry and endogeneity), we assess the effects of labor cost shifts and compute the wage-elasticities of price-cost markups and other key variables. We find that the markups of FSCs are considerably more affected by shocks in wage premiums than LFCs in all scenarios, even considering that the cost-price passthrough of FSCs is slightly higher than that of LFCs. The results are amplified by weaker economies of density, higher price-elasticities of demand and lower economic growth. Our final conclusions suggest that FSCs have an incentive to engage in cost reductions and restructuring to sustain existing market power. Additionally, the competitive advantage of LFCs is eroded as they expand in the market unless they continue to engage in the creation of new demand.

The paper develops a comparative statics model of long-run industry equilibrium in the presence of size-based environmental regulation stringency and applies the model to the U.S. hog industry. The economic model shows that when size-based environmental stringency is also size biased, large farms downsize, expand, or do neither depending on how environmental stringency shifts their marginal production cost relative to their average cost. Empirical testing using data from the top-ten hogproducing states suggests that environmental regulation stringency has limited impact on small farms and leads to a reduction in the number of large farms. Results cannot reject positive size bias at the farm level due to the stringency of environmental regulation.

This paper analyses the relation between competition and concentration in the banking sector. The empirical answer is given by testing a monopolistic competition model of bank branching behaviour on individual bank data at county level (départements and provinces) in France and Italy. We propose a measure of the degree of competiveness in each local market that is function also of market structure indicators. We then use the econometric model to evaluate the impact of horizontal mergers among incumbent banks on competition and discuss when, depending on the pre-merger structure of the market and geographic distribution of branches, the merger is anti-competitive. The paper has implications for competition policy as it suggests an applied tool to evaluate the potential anti-competitive impact of mergers. JEL classifications: G21 (Banks); L13 (Oligopoly); L59 (Regulation and industrial policy).

The global crisis has called to further reflection on the role of multinationals in host economies during crisis. The evidence on this matter is scarce and no definite conclusions were achieved. Using panel data analysis, this paper examines the link between foreign ownership, firm employment and turnover growth over twenty years and during economic downturns in particular. We analyse the determinants of firm employment and turnover growth and investigate whether there are significant differences in both variables among domestic and foreign firms when controlling for firm and industry specificities. Additionally we assess if the foreignness effect alters during economic downturns. After controlling for several firm and industry characteristics, we find no significant differences between domestic and foreign firms in what concerns employment growth. However, our results suggest that foreign ownership may affect positively firms' sales turnover growth during recessions.

This paper investigates the effects of wage premiums on the competition between Full Service Carriers (FSC) and Low Fare Carriers (LFC) in the airline industry. We study the impact of changes in the labor market and the resulting effects on performance in the product market and examine the role of economies of density. We develop an oligopoly model of airline competition with endogenous wages and simulate increases in labor costs. We apply the model to the case of the most important domestic route of Brazil using airline/route-specific demand and costs data. Our chief contribution relies on the empirical model of asymmetric economies of density for the competing business models. We estimate that LFCs have higher economies of density than FSCs. With the empirical models of demand, costs and wages, we compute the wage-elasticities of price-cost markups. We find that, on account of the higher sensitivity of marginal costs to labor costs of the FSCs, their markups are more affected by wage premium increases than the markups of the LFCs. The results are attenuated by higher economies of density, but amplified by higher price-elasticities of demand and lower economic growth.

The current economic crisis has raised concerns about the persistent increasing duration of unemployment. Although lay-offs at large firms normally make headlines during crises, we still know little about the potential impact of firm size on firms' adjustment behavior under a crisis context. We study firm size effects on employment growth during economic slowdowns, using a rich microeconomic database for the 1988-2007 period in the Portuguese manufacturing industry. The results show that economic downturns impacted negatively upon firm growth. This negative impact is found to be higher for larger firms, either during or also immediately after crisis periods. Small and medium sized enterprises (SMEs) emerge as potential stabilizers in downturn periods. However, larger firms seem to be able to quickly recover from downturn periods.

The static differentiated product demand model when applied to products with rapid product turnover and declining prices, yields implausible results. One response is to explicitly model the inter-temporal choices of consumers but computational demands require restrictive assumptions on consumer heterogeneity and limits on the characteristics included in the model. We propose, instead, to supplement the static model with a control for the age that each product has been in the market. This approach is applied to the US digital camera market and we find we obtain more plausible estimates. Our results are consistent with intertemporal price discrimination by firms. Furthermore, our results suggest that ignoring the effects of product ageing may result in substantially overestimated price elasticities and technological progress and underestimated price-cost markups. . We are grateful to seminar participants at La Trobe University and the University of Melbourne for their constructive comments. The Gauss code used in this paper is based on the code post on the webpage of James Levinsohn and we would like to thank Steven Berry, James Levinsohn and Ariel Pakes for making the computation code publicly available. We also thank Gautam Gowrisankaran and Alex Shcherbakov, and Amil Petrin for providing their Gauss codes, and Pradeep Chingtahua and Junji Xiao for providing information about data sources.

Antitrust economists routinely use simulation models to predict the price effect of a transaction or agreement that involves collective pricing and/or collective profit maximization, such as a merger. Proportionality-Calibrated Almost Ideal Demand System (PCAIDS) model is a variant of the Almost Ideal Demand System (AIDS) model used to locally approximate a demand system for a differentiated-product market where the competitors are engaged in Bertrand conduct. PCAIDS model exploits the independence of irrelevant alternatives (IIA) assumption to simulate firms' (collective or unilateral) pricing conduct even where only a few pieces of market-level and firm-level information are available. We apply this model to actual and hypothetical proposed merger cases in Turkey, both as a market test and to predict the unilateral price increase effect of each transaction. We also calculate the minimum level of marginal cost savings that the merging firms would need, in order to maintain postmerger prices at pre-merger levels.

The static differentiated product demand model when applied to products with rapid product turnover and declining prices, yields implausible results. One response is to explicitly model the inter-temporal choices of consumers but computational demands require restrictive assumptions on consumer heterogeneity and limits on the characteristics included in the model. We propose, instead, to supplement the static model with a control for the age that each product has been in the market. This approach is applied to the US digital camera market and we find we obtain more plausible estimates. Our results are consistent with intertemporal price discrimination by firms. Furthermore, our results suggest that ignoring the effects of product ageing may result in substantially overestimated price elasticities and technological progress and underestimated price-cost markups. . We are grateful to seminar participants at La Trobe University and the University of Melbourne for their constructive comments. The Gauss code used in this paper is based on the code post on the webpage of James Levinsohn and we would like to thank Steven Berry, James Levinsohn and Ariel Pakes for making the computation code publicly available. We also thank Gautam Gowrisankaran and Alex Shcherbakov, and Amil Petrin for providing their Gauss codes, and Pradeep Chingtahua and Junji Xiao for providing information about data sources.

The aim of this work is to study the effects of mergers among
firms in the European car market. We examine the changes in the
market structure: prices, quantities, elasticities and mark-ups. Our
findings are useful to derive analysis in terms of competition policies.
In order to check the robustness of our results we compare them with
the empirical evidence.

This paper analyses the relation between competition and concentration in a monopolistic competition model where banks compete in branching and interest rates and market structure is endogenous. The model is applied on individual bank data in Italy and France using a maximum likelihood approach to derive a measure of the degree of competition in each local market. We propose an empirical test to evaluate ex-ante the impact of horizontal mergers on this measure. Depending on the pre-merger market structure and geographic distribution of branches, we find either cases where the merger is pro-competitive or anti-competitive. It proves its relevance as a tool for competition policy analysis. In addition, thanks to its theoretical foundation, it encompasses more information than traditional measures of competition while it is parsimonious in terms of data requirements.

We develop a conceptual model of entrepreneurial exit which includes exit through liquidation and firm sale for both firms in financial distress and firms performing well. This represents four distinct exit routes. In developing the model, we complement the prevailing theoretical framework of exit as a utility-maximizing problem among entrepreneurs with prospect theory and its recent applications in liquidation of investment decisions. We empirically test the model using two Swedish databases which follow 1,735 new ventures and their founders over eight years. We find that entrepreneurs exit from both firms in financial distress and firms performing well. In addition, commonly examined human capital factors (entrepreneurial experience, age, education) and failure-avoidance strategies (outside job, reinvestment) differ substantially across the four exit routes, explaining some of the discrepancies in earlier studies.

When the well-known BLP model is applied to products with rapid technological changes and declining prices it tends to yield implausible results. A sequence of increasingly sophisticated dynamic demand models, most recently Gowrisankaran and Rysman (2009, hereafter GR), have been developed to overcome these problems. We apply both models to new data on the US digital camera market. In addition, we demonstrate that the GR model can be specified as a BLP model plus an additional set of terms. This suggests that a dynamic model can be estimated as a BLP model plus a non-parametric function which is less computationally demanding. As a first step to implementing this semi-parametric approach we estimate a BLP model augmented with age as a proxy for the non-parametric component. We find that demand for digital cameras is more elastic when demand dynamics is accounted for in both the dynamic model and the BLP model with the age proxy. This suggests that the market is more competitive though the results are consistent with firms engaging in intertemporal price discrimination. Merger simulations predict the lowest price and quantity changes using the GR model.

An empirical version of the Lerner index is used to investigate the market power effects of U.S. firms seeking protection under current antidumping law. The market power consequences are examined for each of the three possible resolutions of an antidumping investigation: petition for relief
accepted (and duties levied), petition rejected, or petition withdrawn. For each outcome an industry case study is presented and the market power analysis conducted. The results contained herein support the hypothesis that U.S. firms receiving protection enhance their domestic market power, while firms having their petition rejected experience a decrease in market power. The evidence is less clear for
plaintiffs who withdraw their antidumping petition prior to its final resolution.

The aim of this paper is to investigate the determinants of survival for Italian firms according to their ownership status distinguishing manufacturing and service firms in three categories: foreign multinationals (FMNEs), domestic multinationals (DMNEs) and domestic non-multinationals (NMNEs). In an empirical analysis for the period 2004-2008, based on Cox proportional hazard estimates, we control for several firm-and industry-specific characteristics. We also classify the manufacturing and services sectors according to a fine industrial classification to determine whether the sector of activity in which the firm operates affects its survival rate. Our main findings reveal that FMNEs are more likely to exit the market than national firms in most of the manufacturing and services sectors considered although we observe heterogeneity of patterns at the sector level which highlight that the footloose behaviour is not confirmed in a few sectors (food, textiles, electrical machinery, transport equipment, tourism, finance, and other services). In contrast, DMNEs have a higher chance of survival compared with the other firm categories in the clothing sector for manufacturing and in wholesale trade for services but a higher exit risk with respect to domestic firms in wood and furniture and in mechanical and office machinery. We also find that the share of foreign FDI in a 3 digit sector has a positive impact on firms survival across all the services sectors. JEL classification: L25, F23, C41, J31

The present work examines the effects of parameters of the input distribution on the average time
complexity of the singleton sort algorithm.. Previous work on this field has shown that for certain
algorithms such as sorting, the parameters of the input distribution singularly as well as interactively are
important factors, besides the size of the input which motivated us to study the parameterized complexity
of the singleton sort algorithm.

The economic crisis of the late 2000s has led many manufacturing companies to exit the market, due to poor performance or financial difficulties. The purpose of this study is to analyze which characteristics, both static and dynamic, play a role in the shaping of the firms’ exit decision. For this goal, we apply survival analysis techniques to an Italian regional case study, Tuscany, accounting for features of the firms observed both before and during the crisis. Our findings evidence that the selection process hits younger businesses, companies belonging to supplier-dominated sectors and industrial districts and, more in general, firms that before the crisis were already characterized by a low level of productivity or a poor overall efficiency. Results also suggest that lack of liquidity and inability to cover interest expenses are likely to bring to the exit during the crisis.

Application service providers (ASP), who host and maintain information technology (IT) applications across the Internet, emerged as an innovation in the way IT services are delivered to client firms. In spite of many potential benefits of this model, ASPs experienced business failure and high rates of exit. Drawing on agency theory, we argue that the efficiency of contracting arrangements between ASPs and client organizations is an important determinant of ASP survival. We test this prediction using a unique data set combining multiple sources that allows us to track an ASP from the year of founding through the beginning of 2006. Contractual misalignment, or adopting contracts mismatched with the underlying agency costs, significantly lowers the probability of survival of service providers in the ASP marketplace. The impact of misalignment is particularly severe when coupled with adjustment costs that impede the transition to aligned contracts. To account for potential heterogeneity in ASPs' knowledge of contracting, we test for endogenous self-selection of ASPs in the relationship between contractual misalignment and survival. Our results are robust to a variety of model specifications as well as alternate explanations of survival from multiple theoretical domains.

This paper analyzes the evolution of the Lerner index for Costa Rican banks between 2008 and 2019. We document a significant drop in market power during this period, which we relate to less concentration in loans and deposits. The market became less consolidated as a fringe of 29 small banks gained market share at the expense of large and medium banks. We find that for individual banks, a greater market share of loans, and greater loan specialization are related to higher profitability, while a greater market share of deposits and greater size are related to lower profit margins.

This paper looks into the application of the theory of “the persistence of profits” and how it can be used to model manufacturing industries in Colombia. By explaining where the theory of “persistence of profits” comes from, what it is, and what its determinants are brief descriptions of the theory is given. This paper proposes a model for examining persistence of profits in Colombian manufacturing industry. By analyzing the literature and the modeling in developed countries the model takes into account the characteristics of the manufacturing industry.

We develop a conceptual model of entrepreneurial exit which includes exit through liquidation and firm sale for both firms in financial distress and firms performing well. This represents four distinct exit routes. In developing the model, we complement the prevailing theoretical framework of exit as a utility-maximizing problem among entrepreneurs with prospect theory and its recent applications in liquidation of investment decisions. We empirically test the model using two Swedish databases which follow 1,735 new ventures and their founders over eight years. We find that entrepreneurs exit from both firms in financial distress and firms performing well. In addition, commonly examined human capital factors (entrepreneurial experience, age, education) and failure-avoidance strategies (outside job, reinvestment) differ substantially across the four exit routes, explaining some of the discrepancies in earlier studies.

The paper examines the impact of regulatory intervention on store card interest rates, for a panel of UK store cards. Panel data estimation methods are used in conjunction with intervention analysis so that the impact of the investigations on store card interest rates can be examined. Results suggest that there is a significant negative impact on store card interest rates. The impact of macroeconomic factors and credit card interest rates on store card interest rates are also taken into account, results indicating that store cards and credit cards should be considered as competing sources of credit.

The static differentiated product demand model when applied to products with rapid product turnover and declining prices, yields implausible results. One response is to explicitly model the inter-temporal choices of consumers but computational demands require restrictive assumptions on consumer heterogeneity and limits on the characteristics included in the model. We propose, instead, to supplement the static model with a control for the age that each product has been in the market. This approach is applied to the US digital camera market and we find we obtain more plausible estimates. Our results are consistent with intertemporal price discrimination by firms. Furthermore, our results suggest that ignoring the effects of product ageing may result in substantially overestimated price elasticities and technological progress and underestimated price-cost markups. . We are grateful to seminar participants at La Trobe University and the University of Melbourne for their constructive comments. The Gauss code used in this paper is based on the code post on the webpage of James Levinsohn and we would like to thank Steven Berry, James Levinsohn and Ariel Pakes for making the computation code publicly available. We also thank Gautam Gowrisankaran and Alex Shcherbakov, and Amil Petrin for providing their Gauss codes, and Pradeep Chingtahua and Junji Xiao for providing information about data sources.

The static differentiated product demand model when applied to products with rapid product turnover and declining prices, yields implausible results. One response is to explicitly model the inter-temporal choices of consumers but computational demands require restrictive assumptions on consumer heterogeneity and limits on the characteristics included in the model. We propose, instead, to supplement the static model with a control for the age that each product has been in the market. This approach is applied to the US digital camera market and we find we obtain more plausible estimates. Our results are consistent with intertemporal price discrimination by firms. Furthermore, our results suggest that ignoring the effects of product ageing may result in substantially overestimated price elasticities and technological progress and underestimated price-cost markups. . We are grateful to seminar participants at La Trobe University and the University of Melbourne for their constructive comments. The Gauss code used in this paper is based on the code post on the webpage of James Levinsohn and we would like to thank Steven Berry, James Levinsohn and Ariel Pakes for making the computation code publicly available. We also thank Gautam Gowrisankaran and Alex Shcherbakov, and Amil Petrin for providing their Gauss codes, and Pradeep Chingtahua and Junji Xiao for providing information about data sources.

The paper examines the impact of regulatory intervention on store card interest rates, for a panel of UK store cards. Panel data estimation methods are used in conjunction with intervention analysis so that the impact of the investigations on store card interest rates can be examined. Results suggest that there is a significant negative impact on store card interest rates. The impact of macroeconomic factors and credit card interest rates on store card interest rates are also taken into account, results indicating that store cards and credit cards should be considered as competing sources of credit.

A pplication service providers (ASP), who host and maintain information technology (IT) applications across the Internet, emerged as an innovation in the way IT services are delivered to client firms. In spite of many potential benefits of this model, ASPs experienced business failure and high rates of exit. Drawing on agency theory, we argue that the efficiency of contracting arrangements between ASPs and client organizations is an important determinant of ASP survival. We test this prediction using a unique data set combining multiple sources that allows us to track an ASP from the year of founding through the beginning of 2006. Contractual misalignment, or adopting contracts mismatched with the underlying agency costs, significantly lowers the probability of survival of service providers in the ASP marketplace. The impact of misalignment is particularly severe when coupled with adjustment costs that impede the transition to aligned contracts. To account for potential heterogeneity in ASPs' knowledge of contracting, we test for endogenous self selection of ASPs in the relationship between contractual misalignment and survival. Our results are robust to a variety of model specifications as well as alternate explanations of survival from multiple theoretical domains.

Organizations choose strategies based on their attributes and industry conditions. Studies found that strategy choice is endogenous and self-selected. Empirical models (stereotypes, opinions, speculations, etc.) that do not account for this and regress performance measures on strategy choice variables are potentially erroneously specified and their conclusions incorrect.