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STICERD Industrial Organisation Seminars


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These seminars are held on Mondays in term time at 12:30-14:00 in room 32L 2.04 (2nd Floor, 32 Lincoln's Inn Fields, WC2A 3PH), unless specified otherwise.

Entry is on a first-come first-served basis. No registration is required but places are limited. A light lunch will be available for everyone attending.

Seminar organisers: Alessandro Gavazza and Pasquale Schiraldi.

For further information please contact Lubala Chibwe

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Monday  09 December 2019  12:30 - 14:00

The persistence of healthy behaviors in food purchasing

Marit Hinnosaar (Collegio Carlo Alberto)

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32L 2.04, 2nd Floor Conference Room, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH
calendar
Monday  28 October 2019  12:30 - 14:00

Common Ownership in America: 1980-2017; and Testing for Common Ownership (joint with Matthew Backus and Christopher Conlon)

Michael Sinkinson (Yale)

When competing firms possess overlapping sets of investors, maximizing shareholder value may provide incentives that distort competitive behavior, affecting pricing, entry, contracting, and virtually all strategic interactions among firms. We propose a structurally consistent and scaleable approach to the measurement of this phenomenon for the universe of S&P 500 firms between 1980 and 2017. Contrary to popular intuition, this is not primarily associated with the rise of BlackRock and Vanguard: instead, the trend in the time series is driven by a broader rise in diversified investment strategies, of which these firms are only the most recent incarnation. In the cross-section, there is substantial variation that can be traced, both in the theory and the data, to observable firm characteristics. We show how common ownership can theoretically give rise to incentives for expropriation of undiversified shareholders via tunneling. Finally, we develop a framework for testing for price effects of common ownership in differentiated goods markets. We apply this test to the US market for ready-to-eat cereals.


32L 2.04, 2nd Floor Conference Room, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH
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Monday  11 November 2019  12:30 - 14:00

Buying Data from Consumers: The Impact of Monitoring in U.S. Auto Insurance

Yizhou Jin (Berkeley)

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We study the impact of a voluntary monitoring program by a major U.S. auto insurer, in which drivers accept short-term tracking in exchange for potential discounts on future premiums. We acquire a detailed proprietary dataset from the insurer and match it with competitor price menus. We first quantify the degree to which monitoring incentivizes safer driving and allows more accurate risk-based pricing. We then model the demand and supply forces that determine the amount of information revealed in equilibrium: structural demand estimates capture correlations among cost and demand for insurance and for monitoring; a dynamic pricing model links the firm's information on driver risk to prices. We find large profit and welfare gains from introducing monitoring. Safer drivers self-select into monitoring, with those who opt in becoming 30% safer when monitored. Given resource costs and price competition, a data-sharing mandate would have reduced short-term welfare


32L 2.04, 2nd Floor Conference Room, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH
calendar
Monday  18 November 2019  12:30 - 14:00

Resolving Failed Banks: Uncertainty, Multiple Bidding & Auction Design

Robert Clark (Queen's University)

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The FDIC resolves insolvent banks using an auction process in which bidding is multidimensional and the rule used to evaluate bids along the different dimensions is proprietary. Uncertainty about the scoring rule leads banks to simultaneously submit multiple differentiated bids. This resolution mechanism typically results in considerable losses for the FDIC—$90 billion during the crisis. Our objective is to see whether the mechanism could be improved. To do so, we propose a methodology for analyzing auction environments where bids are ranked according to multiple attributes chosen by bidders, but where there is uncertainty about the scoring rule used to evaluate the different components of the bids. Using this framework, which extends structural estimation techniques for combinatorial auctions, and FDIC data summarizing bids, we back out the underlying preferences of banks for failed institutions. With these we perform counterfactuals in which we eliminate uncertainty and/or multiple bidding. Our findings suggest that the FDIC could reduce the cost of resolution by around 17% by announcing the scoring rule before bidding begins.


32L 2.04, 2nd Floor Conference Room, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH
calendar
Monday  25 November 2019  12:30 - 14:00

The surprising effectiveness of minimum unit prices on alcohol

Rachel Griffith (IFS and University of Manchester) , joint with Martin O'Connell and Kate Smith

All OECD countries have policies that aim to reduce the externalities associated with alcohol consumption. Policies that increase the price of alcohol face the inherent trade-off of reducing externalities while minimising allocative distortions. Scotland and Ireland have recently introduced minimum unit prices, and other countries looks set to follow suit. Advocates of the minimum unit price argue that it targets alcohol misuse and problem drinking (while limiting the impact on light and moderate drinkers), because it raises the price of cheap alcohol, which is disproportionately purchased by the heaviest drinkers. Economists have been critical of this policy; price fixing is illegal in competition law, which includes agreements not to sell something below a minimum price, and it leads to substantial transfer from government tax receipts to industry revenues. When the externalities from alcohol consumption are homogeneous, a tax levied on alcohol content is more efficient than a minimum unit price. However, if externalities are heterogeneous (e.g. if the marginal cost of drinking is larger the more someone drinks), then the relative effectiveness of policies depends on how those who generate different externalities respond to policy intervention. We find that, in the UK, if externalities are sufficiently concentrated among heavy drinkers, then a minimum unit price is more efficient than a flat tax levied on alcohol content.


32L 2.04, 2nd Floor Conference Room, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH
calendar
Monday  09 December 2019  12:30 - 14:00

The persistence of healthy behaviors in food purchasing

Marit Hinnosaar (Collegio Carlo Alberto)

[pdf] Download Paper


When some healthy foods are temporarily subsidized, how does that affect diet and how long does the impact last? I study the U.S. Special Supplemental Nutrition Program for Women, Infants, and Children, which gives vouchers for healthy foods. Using household-level scanner data and exploiting a reform of the program, first, I find that the subsidies make diet healthier. The effect is driven by increased purchases of subsidized products without sizable externalities on other product categories. Second, there is little evidence of a long-term impact on food purchases—when households become ineligible, the effect of the program diminishes. Third, demand model estimates show that in the first years after the end of eligibility, households are still more likely to prefer the previously subsidized products. The estimates imply that price differences between healthy and unhealthy foods play a large role in the decrease in the program’s impact.


32L 2.04, 2nd Floor Conference Room, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH
There are also future events listed for this series. Please see STICERD Industrial Organisation Seminars listed for Next Term