Browsing by Subject "L13"
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Item Open Access (Mis)Allocation, Market Power, and Global Oil Extraction(American Economic Review, 2019-04-01) Asker, J; Collard-Wexler, A; De Loecker, J© 2019 American Economic Association. All Rights Reserved. We propose an approach to measuring the misallocation of production in a market that compares actual industry cost curves to undistorted (counterfactual) supply curves. As compared to traditional, TFPR- based, misallocation measures, this approach leverages cost data, such that results are readily mapped to welfare metrics. As an application, we analyze global crude oil extraction and quantify the extent of misallocation therein, together with the proportion attributable to market power. From 1970 to 2014, we find substantial misallocation, in the order of US$744 billion, 14.1 percent to 21.9 percent of which is attributable to market power.Item Open Access “Nash-in-Nash” Bargaining: A Microfoundation for Applied Work(2019-02-01) Collard-Wexler, A; Gowrisankaran, G; Lee, RS© 2019 by The University of Chicago. All rights reserved. A “Nash equilibrium in Nash bargains” has become a workhorse bargaining model in applied analyses of bilateral oligopoly. This paper proposes a noncooperative foundation for “Nash-in-Nash” bargaining that extends Rubinstein’s alternating offers model to multiple upstream and downstream firms. We provide conditions on firms’ marginal contributions under which there exists, for sufficiently short time between offers, an equilibrium with agreement among all firms at prices arbitrarily close to Nash-in-Nash prices, that is, each pair’s Nash bargaining solution given agreement by all other pairs. Conditioning on equilibria without delayed agreement, limiting prices are unique. Unconditionally, they are unique under stronger assumptions.