Economics - Research Publications

Permanent URI for this collection

Search Results

Now showing 1 - 10 of 165
  • Item
    Thumbnail Image
    Intra-industry spill-over effect of default: Evidence from the Chinese bond market
    Hu, X ; Luo, H ; Xu, Z ; Li, J (WILEY, 2021-09)
    Abstract We investigate the intra‐industry spill‐over effect of defaults in the Chinese bond market by using a sample of public corporate debt securities for the period 2014–2018. We find that both industry portfolios and individual firms witness a strong contagion effect, which further spreads to the primary bond market, triggering a surge in the debt financing cost for default industries. Moreover, this contagion effect is stronger for low‐competition industries and regulated industries, as well as when a default happens to state‐owned enterprises. Better information access and higher bond liquidity alleviate the contagion effect, lending support to the information updates and liquidity dry‐up hypotheses.
  • Item
    No Preview Available
    When Walras meets Vickrey
    Delacrétaz, D ; Loertscher, S ; Mezzetti, C (The Econometric Society, 2022-11)
    We consider general asset market environments in which agents with quasilinear payoffs are endowed with objects and have demands for other agents' objects. We show that if all agents have a maximum demand of one object and are endowed with at most one object, the VCG transfer of each agent is equal to the largest net Walrasian price of this agent. Consequently, the VCG deficit is equal to the sum of the largest net Walrasian prices over all agents. Generally, whenever Walrasian prices exist, the sum of the largest net Walrasian prices is a nonnegative lower bound for the deficit, implying that no dominant‐strategy mechanism runs a budget surplus while respecting agents' ex post individual rationality constraints.
  • Item
    No Preview Available
    Bilateral Trade with Multiunit Demand and Supply
    Loertscher, S ; Marx, LM (INFORMS, 2022-05-02)
    We study a bilateral trade problem with multiunit demand and supply and one-dimensional private information. Each agent geometrically discounts additional units by a constant factor. We show that when goods are complements, the incentive problem—measured as the ratio of second-best to first-best social surplus—becomes less severe as the degree of complementarity increases. In contrast, if goods are substitutes and each agent’s distribution exhibits linear virtual types, then this ratio is a constant. If the bilateral trade setup arises from prior vertical integration between a buyer and a supplier, with the vertically integrated firm being a buyer facing an independent supplier, then the ratio of second-best to first-best social surplus is, in general, not monotone in the degree of complementarity when products are substitutes and is increasing when products are complements. Extensions to profit maximization by a market maker and a discrete public good problem show that the broad insight that complementarity of goods mitigates the incentive problem generalizes to these settings. This paper was accepted by Joshua Gans, business strategy. Funding: Financial support from the Samuel and June Hordern Endowment, the University of Melbourne Faculty of Business & Economics [Eminent Research Scholar Grant], and the Australian Research Council [Grant DP200103574] is acknowledged.
  • Item
    No Preview Available
    Double Markups, Information, and Vertical Mergers
    Loertscher, S ; Marx, LM (SAGE Publications, 2022-09-01)
    In vertical contracting models with complete information and linear prices, double markups that arise between independent firms provide an efficiency rationale for vertical mergers since these eliminate double markups (EDM). However, the double markups vanish even without vertical integration if the firms are allowed to use two-part tariffs. Hence, the efficiency rationale for vertical mergers in models of complete information requires restrictions on the contracts that firms can use. In a sense, with complete information, two-part tariffs are simply too powerful. If instead one allows incomplete information and removes the restriction on contract forms, then vertical mergers continue to have an effect that is analogous to EDM, but they also have the potential to affect the overall efficiency of the market to the detriment of society. Consequently, the social surplus effects of vertical integration depend on the underlying market structure, and vertical mergers are, in and of themselves, neither good nor bad. We illustrate through an example that with incomplete information, the private benefits from vertical integration tend to be excessive; that is, vertical mergers remain profitable even when they are socially harmful.
  • Item
    No Preview Available
    Monopoly Pricing, Optimal Randomization, and Resale
    Loertscher, S ; Muir, EV (UNIV CHICAGO PRESS, 2022-03-01)
  • Item
    No Preview Available
    Better understanding how uncertainty impacts the economy: Insights from internet search data on the importance of disaggregation
    Shields, K ; Trung, DT (CAMBRIDGE UNIV PRESS, 2022-06-21)
    Abstract We study the impact of uncertainty shocks using a disaggregated model featuring US state-level unemployment, and uncertainty measured using state-level Google search data. Importantly, the model captures spillovers across states and identifies substantial differences in peak responses and time dynamics. Moreover, the importance of national factors in propagating the effect of uncertainty is also heterogeneous across states, but less relevant than state-level factors. These heterogeneous effects are related to state-specific industry compositions and fiscal positions. In addition, we highlight the usefulness of disaggregated data in models of uncertainty and economic activity for the USA, based on the superior ability of the disaggregate model to predict aggregate uncertainty and unemployment.
  • Item
    No Preview Available
    Leadership selection: Can changing the default break the glass ceiling?
    Erkal, N ; Gangadharan, L ; Xiao, E (ELSEVIER SCIENCE INC, 2022-03-17)
  • Item
    No Preview Available
    Income and saving responses to tax incentives for private retirement savings
    Chan, MK ; Morris, T ; Polidano, C ; Vu, H (ELSEVIER SCIENCE SA, 2022-01-20)
  • Item
    No Preview Available
  • Item
    No Preview Available
    To sell public or private goods
    Loertscher, S ; Marx, LM (SPRINGER HEIDELBERG, 2022-08-04)