Tag: Bureau of Economics

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An all-units discount is a price reduction applied to all units purchased if the customer's total purchases equal or exceed a given quantity threshold. Since the discount is paid on all units rather than marginal units, the tariff is discontinuous and exhibits a negative marginal...
A Federal Trade Commission study of the U.S. credit reporting industry found that five percent of consumers had errors on one of their three major credit reports that could lead to them paying more for products such as auto loans and insurance. Overall, the congressionally mandated study on credit...
A game of herding with capacity constraints is studied experimentally. Differences between Level-k strategies depend on the cost of choosing an alternative that has reached capacity, with a maximum difference between Level-1 and higher levels when the cost is high.  This design makes...
Over the last 25 years, for-profit facilities have supplanted non-profits as the modal providers of hemodialysis treatment to American sufferers of end-stage renal disease. To understand what may underpin this dramatic change in industry structure, this paper uses a dynamic...
Economists at the Federal Trade Commission (FTC) pursue the agency’'s competition and consumer protection missions. In this year’'s essay, in antitrust, we discuss two recent mergers that involved Rx drugs: First, we describe key elements of the inquiry into the Express Scripts (ESI)/...
This study examines accuracy in consumer credit reports using a nationally representative sample of consumers with credit histories. Participants in the study examined their credit reports from the three national credit reporting agencies and identified potentially material errors....
This study estimates the price effects of horizontal mergers in the U.S. grocery retailing industry. We examine fourteen regions affected by mergers including both highly concentrated and relatively unconcentrated markets.
We analyze the effect of product quality on the output of a high-quality dominant firm facing a low-quality competitive fringe. Using a standard vertical differentiation model, we show that profit maximizing output decreases with product quality when the dominant firm's marginal cost...
An extensive literature shows that agency issues and transactions costs influence vertical integration. Another mature literature indicates that market structure influences competitive behavior. However, less consideration has been given to how vertical integration and market...
Analyses of organizational form's impact on economic behavior have been rarer than studies of the determinants of organizational form itself. To fill this gap, I develop a theoretical model tailored to the retail gasoline industry that endogenizes the choice of both organizational...
In many settings where spatial preemption might be expected to produce tightly concentrated industry structures, firms share the market instead. Using a strategic investment model, I show that this can be rationalized by heterogeneous brand preferences, which cause new product...
Economists at the Federal Trade Commission (FTC) pursue the agency’'s competition and consumer protection missions. In this year’'s essay, in antitrust, we discuss various aspects of our hospital merger analyses as well as the effects of authorized generic drugs on consumers and...
This paper measures market dynamics within the U.S. grocery industry (defined as supermarket, supercenter and club retailers). We find that the composition of outlets changes substantially, roughly 7%, each year, and that store sizes have increased as the result of growth by...
The Federal Trade Commission today issued a Bureau of Economics staff report examining trends in the petroleum industry and how they have affected gasoline prices between 2005 and early 2011.  It concludes that while a broad range of factors influence the price of gasoline, worldwide crude oil...
The Federal Trade Commission’s staff submitted a comment to the U.S. Federal Energy Regulatory Commission providing views on how energy regulators should apply the revised Horizontal Merger Guidelines.
In 2004, the Federal Trade Commission brought legal action retrospectively challenging the 2000 acquisition of Highland Park Hospital by Evanston Northwestern Healthcare in Evanston, Illinois. A major issue in the case was whether the merger had resulted in improved clinical quality...
Recent literature has shown that an incumbent can use exclusive contracts to maintain supra-competitive prices, but only if he completely prevents a more efficient potential entrant from entering, and if the entrant is exogenously prevented from making exclusive offers. Such models...
Economists at the Federal Trade Commission (FTC) pursue the agency'’s competition and consumer protection missions. In this year'’s essay, in antitrust, we discuss the new Merger Guidelines, three exclusion cases, and R&D issues in the Thoratec/HeartWare merger and the Google/...
Workers value job security. If at least some workers value it enough, then it is efficient for at least some firms to adopt policies in which they commit (implicitly or explicitly) not to dismiss employees except for “just-cause,” as opposed to policies in which employers are free to...

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