We investigate whether short-termism distorts the investment decisions of stock market-listed firms. To do so, we compare behavior observably similar public and private firms, using a new data source on U.S. firms assuming for identification that closely held are subject to fewer short-termist pressures. Our results show compared with invest substantially less responsive changes in opportunities, especially industries which prices most sensitive earnings news. These findings consistent...

We investigate the role of dynamic production inputs and their associated adjustment costs in shaping dispersion static measures capital misallocation within industries (and countries). Across nine data sets spanning 40 countries, we find that exhibiting greater time-series volatility productivity have cross-sectional marginal revenue product capital. use a standard investment model with to show variation across these economies can explain large share (80–90 percent) cross-industry cross-country)

This article studies scoring auctions, a procedure commonly used to buy differentiated products: suppliers submit offers on all dimensions of the good (price, level nonmonetary attributes), and these are evaluated using rule. We provide systematic analysis equilibrium behavior in auctions when suppliers' private information is multidimensional (characterization expected utility equivalence). In addition, we show that dominate several other procedures for buying products, including menu...

This paper examines bidding in over 1,700 knockout auctions used by a cartel (or ring) of stamp dealers the 1990s. The was conducted using variant model studied Daniel Graham, Robert Marshall, and Jean-Francois Richard (1990). Following reduced form examination these data, damages, induced inefficiency, ring's benefit from colluding are estimated structural spirit Emmanuel Guerre, Isabelle Perrigne, Quang Vuong (2000). A notable finding is that nonring bidders suffered damages were same...

A buyer seeks to procure a good characterized by its price and quality from suppliers who have private information about their cost structure (fixed marginal of providing quality). We characterize the buyer's optimal buying mechanism. then use mechanism as theoretical numerical benchmark study simpler procedures such scoring auctions bargaining. Scoring can extract significant proportion strategic surplus (the difference between expected utility efficient auction). Bargaining does less well...

Resale price maintenance (RPM), slotting fees, loyalty rebates, and other related vertical practices can allow an incumbent manufacturer to transfer profits retailers. If these retailers were accommodate entry, upstream competition could lead lower industry the breakdown of profit transfers. Thus, in equilibrium, internalize effect accommodating entry on incumbent’s profits. Consequently, if requires downstream accommodation, be deterred. We discuss policy implications this aspect...

We propose an approach to measuring the misallocation of production in a market that compares actual industry cost curves undistorted (counterfactual ) supply curves. As compared traditional, TFPR-based, measures, this leverages data, such results are readily mapped welfare metrics. application, we analyze global crude oil extraction and quantify extent therein, together with proportion attributable power. From 1970 2014, find substantial misallocation, order US$744 billion, 14.1 percent...

Abstract The behavior of artificial intelligence (AI) algorithms is shaped by how they learn about their environment. We compare the prices generated AIs that use different learning protocols when there market interaction. Asynchronous occurs AI only learns return from action it took. Synchronous conducts counterfactuals to returns would have earned had taken an alternative action. two lead markedly prices. When future profits are not given positive weight AI, (perfect) synchronous updating...

We show that information flows between investment banks and their clients affect relationships shocks to these corporate investment. Firms avoid sharing in industry, but only when they engage product market competition. This suggests concerns about disclosure of confidential strategic rivals determine firms' bank choices. Using exogenous arising from mergers, we the desire has a substantial effect on These effects help us understand how banking industry is structured, compete, prices are set.

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Exclusive dealing arrangements, in which a distributor agrees to work exclusively with single manufacturer, can be efficiency enhancing or an anticompetitive means foreclose markets. This paper evaluates the effect of exclusive distribution arrangements on competition Chicago beer market 1994. A diagnostic test is provided judge whether lead foreclosure. To implement this model consumer demand and firm behavior estimated that incorporates industry details allows for through shared channels....

We calculate the time path of prices generated by algorithmic pricing games that differ in their learning protocols. Asynchronous occurs when algorithm only learns about return from action it actually took. Synchronous artificial intelligence conducts counterfactuals to learn returns would have earned had taken an alternative action. In a simple market setting, we show synchronous updating can lead competitive pricing, while asynchronous close monopoly levels. However, building economic...

Exclusive dealing arrangements, in which a distributor contracts to work exclusively with single manufacturer, can be efficiency enhancing or they an anticompetitive means foreclose markets. This paper evaluates the effect of exclusive distribution arrangements on competition Chicago beer market 1994. A diagnostic test is provided judge whether between brewers and their distributors lead foreclosure. To implement this I estimate model consumer demand firm behavior that incorporates industry...

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We show that information flows between investment banks and firms issuing securities affect the pattern of bank-firm relationships shocks to these real economy. Firms appear disinclined share with other in same industry, but only when engage product-market competition. This is consistent concerns about disclosure commercially sensitive strategic rivals governing firms’ bank choices. Using exogenous arising from mergers among banks, we desire avoid sharing has a substantial effect on affected...

Abstract This article develops a computational framework to analyze dynamic auctions and uses it investigate the impact of information sharing among bidders. We show that allowing for dynamics implicit in many auction environments enables emergence equilibrium states can only be reached when firms are responding incentives. The depends on extent provides support claim sharing, even strategically important data, need not welfare reducing. Our methodological contribution is how adapt...

A buyer seeks to procure a good characterized by its price and quality from suppliers who have private information about their cost structure (fixed + marginal of providing quality). We solve for the optimal buying procedure, i.e. procedure that maximizes buyer's expected utility. then use as theoretical numerical benchmark study practical simple procedures such scoring auctions negotiation. Specifically, we derive restrictions these simpler place on allocations compare them with generate...