Discussion Paper No. 418
August 25, 2023
Structural Shocks and Political Participation in the US
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Abstract:
This paper examines the impact of the large structural shocks -- automation and import competition -- on voter turnout during US federal elections from 2000 to 2016. Although the negative income effect of both shocks is comparable, we find that political participation decreases significantly in counties more exposed to industrial robots. In contrast, the exposure to rising import competition does not reduce voter turnout. A survey experiment reveals that divergent beliefs about the effectiveness of government intervention drive this contrast. Our study highlights the role of beliefs in the political economy of technological change.
Keywords:
automation; trade; labor demand; voter turnout;
JEL-Classification:
D72; J23; F16;
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Discussion Paper No. 417
August 23, 2023
The Behavioral Additionality of Government Research Grants
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Abstract:
There are different forms of public support for industrial R&D. Some attempt to increase innovation by prompting firms to undertake more challenging projects than they would otherwise do. Access to a dataset from one such program, the Austrian Research Promotion Agency, allows me to examine the effect of research grants on firms' patenting outcomes. My estimates suggest that a government research grant increases the propensity to file a patent application with the European Patent Office by around 12 percentage points. Stronger effects appear for more experienced firms of advanced age. Additional evidence indicates that grants induce experienced firms to develop unconventional patents and patents that draw on knowledge novel to the firm. I interpret the findings in a "exploration vs. exploitation" model, in which grants are targeted at ambitious projects that face internal competition from more conventional projects within firms. The model shows that this mechanism is more salient in experienced firms, leading to a stronger response in behavior for this group of firms.
Keywords:
JEL-Classification:
O38;
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Discussion Paper No. 415
August 10, 2023
Whom to Inform about Prices? Evidence from the German Fuel Market
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Abstract:
Combining a theoretical model of imperfect information with empirical evidence, we show how the effect of providing price information to consumers depends on how well informed they are beforehand. Theoretically, an increase in consumer information decreases prices more, the fewer ex ante informed consumers there are. Empirically, we study mandatory price disclosure in the German fuel market for two fuel types that differ in ex ante consumer information. The decline in prices is stronger when there are fewer ex ante informed consumers. The magnitude of the treatment effect declines over time but is intensified by local follow-on information campaigns.
Keywords:
mandatory price disclosure; consumer information; retail fuel market;
JEL-Classification:
D83; L41;
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Discussion Paper No. 414
Imperfect Price Information, Market Power, and Tax Pass-Through
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Abstract:
Pass-through determines how consumers respond to taxes. We investigate the impact of imperfect price information on pass-through of commodity taxes. Our theoretical model predicts that the pass-through rate increases with the share of well-informed consumers. Pass-through is higher for the minimum price, paid by well-informed consumers, than for the average price, paid by uninformed consumers. Moreover, pass-through to the average price is non-monotonic with respect to the number of sellers. An empirical analysis of multiple recent tax changes in the German and French retail fuel markets confirms our theoretical predictions. Our results have implications for tax policy and shed light on the relative effectiveness of Pigouvian taxes versus regulation.
Keywords:
pass-through ; taxes; imperfect information; competition;
JEL-Classification:
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Discussion Paper No. 413
Mergers, Foreign Competition, and Jobs: Evidence from the U.S. Appliance Industry
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Abstract:
Policy choices often entail trade-offs between workers and consumers. I assess how foreign competition changes the consumer welfare and domestic employment effects of a merger. I construct a model accounting for demand responses, endogenous product portfolios, and employment. I apply this model to the acquisition of Maytag by Whirlpool in the household appliance industry. I compare the observed acquisition to one with a foreign buyer. While a Whirlpool acquisition decreased consumer welfare by $250 million, it led to 1,300 fewer domestic jobs lost. Jobs need to be worth above $220,000 annually for domestic employment effects to offset consumer harm.
Keywords:
JEL-Classification:
F61; L13; L40;
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Discussion Paper No. 396
May 15, 2023
Antitrust and (Foreign) Innovation: Evidence from the Xerox Case
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Abstract:
How does antitrust enforcement against patent-based monopolies affect innovation? I address this question by empirically studying the US antitrust case against Xerox, the monopolist in the market for plain-paper copiers. In 1975, Xerox was ordered to license all its copier-technology patents in the US and abroad. I show that this promoted innovation by other firms in the copier industry, measured by a disproportionate increase in patenting in technologies where Xerox patents became available for licensing. This positive effect is driven by increased innovation by Japanese competitors. They started developing smaller desktop copiers and their innovation became more diverse.
Keywords:
antitrust; innovation; patents; compulsory licensing; Japan; Xerox;
JEL-Classification:
O30; O34; L41; K21;
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Discussion Paper No. 389
February 27, 2023
“No Man is an Island”: An Empirical Study on Team Formation and Performance
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Abstract:
Do self-formed teams perform better than other team structures? Using unique data from Virgo, a Nobel-prize-winning scientific organization with self-formed teams, first, I uncover new evidence on team formation and performance. Then, I develop a structural model to i) estimate which teams perform better controlling for self-formation and ii) evaluate the performance of counterfactual team structures. Regarding i), estimation results show that small teams perform better than large teams. Regarding ii), counterfactual results show that randomly formed teams perform worse than the observed self-formed teams, and teams with a more diverse membership perform better.
Keywords:
teamwork; entry game; structural estimation; knowledge production; organizational economics;
JEL-Classification:
C57; C72; L02; M50; O32;
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Discussion Paper No. 388
Reciprocal Preferences in Matching Markets
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Agents with reciprocal preferences prefer to be matched to a partner who also likes to collaborate with them. In this paper, we introduce and formalize reciprocal preferences, apply them to matching markets, and analyze the implications for mechanism design. Formally, the preferences of an agent can depend on the preferences of potential partners and there is incomplete information about the partners’ preferences. We find that there is no stable mechanism in standard two-sided markets. Observing the final allocation of the mechanism enables agents to learn about each other's preferences, leading to instability. However, in a school choice setting with one side of the market being non-strategic, modified versions of the deferred acceptance mechanism can achieve stability. These results provide insights into non-standard preferences in matching markets, and their implications for efficient information and mechanism design.
Keywords:
market design; matching; reciprocal preferences; non-standard preferences; gale-shapley deferred acceptance mechanism; incomplete information;
JEL-Classification:
C78; D47; D82; D83; D91;
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Discussion Paper No. 378
January 30, 2023
Mergers, Foreign Competition, and Jobs: Evidence from the U.S. Appliance Industry
Author:
Abstract:
Policy choices often entail trade-offs between workers and consumers. I assess how foreign competition changes the consumer welfare and domestic employment effects of a merger. I construct a model accounting for demand responses, endogenous product portfolios, and employment. I apply this model to the acquisition of Maytag by Whirlpool in the household appliance industry. I compare the observed acquisition to one with a foreign buyer. While a Whirlpool acquisition decreased consumer welfare by $250 million, it led to 1,300 fewer domestic jobs lost. Jobs need to be worth above $220,000 annually for domestic employment effects to offset consumer harm.
Keywords:
JEL-Classification:
F61; L13; L40;
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Discussion Paper No. 366
January 4, 2023
Everyone Likes to Be Liked: Experimental Evidence from Matching Markets
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Abstract:
Matching markets can be unstable when individuals prefer to be matched to a partner who also wants to be matched with them. Through a pre-registered and theory-guided laboratory experiment, we provide evidence that such reciprocal preferences exist, significantly decrease stability in matching markets, and are driven both by belief-based and preference-based motives. Participants expect partners who want to be matched with them to be more cooperative, and are more altruistic themselves. This leads to higher cooperation and larger profits when participants can consider each other's preferences.
Keywords:
experiment; market design; matching; reciprocal preferences; incomplete information; Gale-Shapley deferred acceptance mechanism;
JEL-Classification: