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#1477.

Charles Beach

A Nifty Fix for Published Distribution Statistics: Simplified Distribution-Free Statistical Inference

This paper applies the tool box measures of disaggregative income inequality characterization and the statistical methodology of Beach (2021) to percentile-based distribution statistics such as quintile income shares and decile means typically published by official statistical agencies. It derives standard error formulas for those measures which are distribution-free and easy to implement. The approach is illustrated with Canadian Labour Force Survey data over 1997-2015. It is found that widely shared real earnings gains were experienced over this period, but that the gains were very…

#1476.

Samuel Brien

Wealth Inequality, Uninsurable Entrepreneurial Risk and Firms Markup

This paper examines the effect of wealth concentration on firms’ market power
when firm entry is driven by entrepreneurs facing uninsurable idiosyncratic risks. Under
greater wealth concentration, households in the lower end of the wealth distribution are
more risk averse and less willing (or able) to bear the risk of entrepreneurial activities.
This has implications for firm entry, competitiveness, and market power.

I calibrate a Schumpeterian model of endogenous growth with heterogeneous risk
averse entrepreneurs competing to catch up with…

#1475.

Robert Clark, Yiran Gong

Why Do Some New Products Fail? Evidence from the Entry and Exit of Vanilla Coke

The analysis of new product introduction using discrete-choice demand models has focused on successful products (e.g. the minivan) and their welfare impacts. Instead, we apply this approach to unsuccessful products to provide insight into the reasons for their failure. Our case study is the introduction and subsequent exit of Coca Cola's Vanilla Coke. Using IRI scanner data we estimate demand and supply and simulate counterfactual scenarios in which Vanilla Coke was not introduced. We then estimate Coca Cola's profit gains from the new brand and find they would not cover fixed costs.…

#1474.

Robert Clark, Christopher Anthony Fabiilli, Laura Lasio

Collusion in the US Generic Drug Industry

We study cartels that operated in the US generic drug industry, leveraging quarterly Medicaid data from 2011-2018 and a difference-in-differences approach comparing the evolution of prices of allegedly collusive drugs with a group of competitive control drugs. Our analysis highlights (i) the difficulty of establishing a suitable control group when collusion is pervasive, (ii) the importance of accounting for market structure changes when defining the control period, and (ii) the existence of across- and within-drug heterogeneity. We focus on six drug markets that that were part of the…

#1473.

Robert Clark, Ig Horstmann, Jean-Francois Houde

Hub-and-spoke cartels: Theory and evidence from the grocery industry

Numerous recently uncovered cartels operated along the supply chain, with firms at one end facilitating collusion at the other { hub-and-spoke arrangements. These cartels are hard to rationalize because they induce double marginalization and higher costs. We examine Canada's alleged bread cartel and provide the first comprehensive analysis of hub-and-spoke collusion. We make three contributions: i) Using court documents and pricing data we provide evidence
that collusion existed at both ends of the supply chain, ii) we show that collusion was effective, increasing inflation by about…

#1472.

Ardyn Nordstrom

Can Interventions Targeting Community Attitudes Improve Education for Marginalized Students? Evidence from a Mixed-Methods Experimental Design in Zimbabwe

This paper uses a quasi-randomized field experiment in Zimbabwe to understand the impact of a large-scale intervention targeting community attitudes. I measure the impact that the program has had on attitudes, the behaviour of teachers and caregivers, and the learning and progression outcomes of at-risk youth. The quantitative survey and learning assessment data I use for this is complemented by transcripts from focus groups and interviews, which I analyze using innovative text mining methods to measure changes in community sentiment towards marginalized groups. I find that the program…

#1471.

Luca Corazzini, Christopher Cotton, Enricol Longo, Tommaso Reggiani

The Gates Effect in Public Goods Experiments: How Donors Focus on the Recipients Favored by the Wealthy

Experiments involving multiple public goods with contribution thresholds capture many features of charitable giving environments in which donors try to coordinate their contributions across various potential recipients. We present results from a laboratory experiment that introduces endowment and preference differences into such a framework to explore the impact of donor heterogeneity on public good success and payoffs. We observe that donors tend to focus on the recipients preferred by the wealthiest contributors, ignoring other recipients, as they try to coordinate their donations to…

#1470.

Raphael Boleslavsky, Bruce Carlin, Christopher Cotton

A Model of Challenge Funds: How Funding Availability and Selection Rigor Affect Project Quality

Challenge funds (CF) induce competition between grant applicants as they develop proposals to address important social problems. We develop a game-theoretic model to study how funding availability and proof of concept requirements (e.g., pilots or other forms of early-stage screening) influence investments by applicants and the ultimate success of the CF. Larger budgets and more rigorous proof of concept requirements can reduce applicant investments and lead to less effective funding initiatives. The results show how the design of a CF affects the incentives of those competing for funding…

#1468.

Seyedmajid Hashemi, Glenn Jenkins

The Economic Benefits of Mitigating the Risk of Unplanned Power Outages