Andrew Eckert

Retail Price Cycles and Response Asymmetry

Weekly retail gasoline prices in Windsor, Ontario, from 1989 to 1994 appear to respond faster to wholesale price increases than to decreases, but exhibit a cyclic pattern inconsistent with a common explanation of response asymmetry. I reconcile these observations through a model of price cycles. Prices on the downward portion of the cycle appear insensitive to costs, compared with price increases, supporting the theory that price decreases result from battles over market share. This pattern resembles a faster response to cost increases than to decreases, and the conclusion that asymmetry indicates a role for competition policy may be inappropriate.

Retail price cycles and the presence of small firms

In the Canadian retail gasoline market, two price patterns have emerged. In one pattern, gasoline prices remain constant. In the other pattern, gasoline prices fluctuate—dramatic increases coupled with slow declines. According to the 1988 gasoline price model by Maskin and Tirole, each pattern can exist in equilibrium. However, their model does not predict which patterns will emerge in different markets. A revised version of the Maskin and Tirole model is developed which demonstrates that the existence of equilibrium in both gasoline price cycles and rigid price markets was dependent upon the number and size of retail outlets operated by the firms. These findings broadly support the empirical finding that the presence of small chains negatively impacts the pattern of gasoline prices.(SFL)

Retail Gasoline Price Cycles across Spatially Dispersed Gasoline Stations

Studies of volatility in retail gasoline prices have used either weekly averages of the prices at a small subset of stations in a city or daily observations on prices at a small number of stations. This paper uses daily observations on station‐specific prices within a large Canadian metropolitan area to address whether weekly average prices or prices for a small number of stations provide an accurate description of pricing in a market with volatility. This paper considers whether researchers using restricted data can draw meaningful conclusions about the appropriate theoretical model and the policy response to allegations of anticompetitive behavior.

Empirical Studies of Gasoline Retailing: A Guide to the Literature

This paper surveys the empirical literature on gasoline retailing, which has been growing rapidly over the last three decades, possibly in response to antitrust and regulatory concerns and increased availability of pricing data. Studies of both pricing and non‐price decision variables are considered. In general, it is found that crude oil prices are the primary driver of national price movements over time. However, market structure has been identified as playing a role in price dynamics, equilibrium selection and price differentials across markets and stations. The economic literature emphasizes the importance of heterogeneity across stations and coordination problems faced by retailers. Several directions for future work are suggested, including the development of theory and demand estimation using high‐frequency station level data.

A SURVEY OF THE ECONOMICS OF PATENT SYSTEMS AND PROCEDURES

The last several decades have seen increases in patenting activity worldwide, as well as growing issues related to patent quality. In response to these quality issues a recent patent literature has emerged, that investigates the behavior and incentives of patent examiners, applicants, and third parties. In this paper, we provide an overview of patent procedures, patent systems and a survey of the new economic literature on patent systems. Both theoretical and empirical papers are considered. Policy implications coming from this literature are presented.

Exit and Upgrading in Response to Entry: The Case of Gasoline Retailing

Abstract Spatial competition models have established the importance of localized competition in determining competitive outcomes. However, few empirical studies attempt to determine to what extent actual local market conditions affect strategic decisions. This paper uses data provided by the acquisition of the Vancouver area Super‐Save chain of retail gasoline stations by ARCO to study the role of geographic space in competition, and the spatial response of the major competitors in the market to entry. The possibility of both accommodating and aggressive capacity responses by the major incumbent firms to entry are considered. While the empirical results show that proximity to ARCO increased the probability that a station shuts down, proximity to ARCO can explain only a limited amount of shutdown after ARCO’s entry. There is no evidence that incumbent firms used station locations and capacity changes to respond aggressively to ARCO’s entry with a spatial predation strategy.

Predatory Pricing and the Speed of Antitrust Enforcement

A common complaint is that in certain industries antitrust action against predation istoo slow to ensure that a true victim can survive until the antitrust process has beenconcluded. This paper discusses, in the context of two recent antitrust cases, the sources of delay in the antitrust process, and different policy reforms aimed at speeding up the process or otherwise protecting a true victim.

Daily Price Cycles and Constant Margins: Recent Events in Canadian Gasoline Retailing

Positions Held: Professor, Department of Economics, University of Alberta, Edmonton, AB, July 2016 – present Associate Professor, Department of Economics, University of Alberta, Edmonton, AB, July 2006 – June 2016 Visiting Scholar, Alberta Utilities Commission, Calgary, AB, June 2014-February 2015 Associate Chair (Undergraduate Programs), Department of Economics, University of Alberta, Edmonton, AB, July 2008 – June 2010 Assistant Professor, Department of Economics, University of Alberta, Edmonton, AB, 2000 – June 2006 Economist, Competition Bureau, Gatineau, QC, 1999-2000

Radius Restrictions on Retail Chains and the Similarity of Neighboring Shopping Centers

Abstract In Canada and the US, shopping center developers may impose ‘radius restrictions’ on tenants in their shopping centers, prohibiting tenants in a particular shopping center from opening another store within a certain radius. Whether a radius restriction is imposed on a chain will depend upon the relative bargaining positions of the chain and the developer. This paper presents an empirical analysis of regional shopping center composition in Canada, using variables that reflect the bargaining power of retail chains and shopping center developers. We find that large, well established, and growing chains are more likely to enter neighboring malls, consistent with the hypothesis that whether a chain enters neighboring malls depends upon its bargaining power. As well, we find that a chain is more likely to enter neighboring malls owned by large developers, consistent with large developers trying to keep retail chains out of the malls of small developers.

Environmental Liability and Harmonization in the Presence of Transboundary Effects and Hidden Assets

Within the context of transboundary disputes, this paper seeks to determine which liability concept, negligence or strict liability, performs better when assets are secure against foreign claims for transboundary damages. Our results indicate that, if assets are hidden from foreign claims, strict liability will not implement the socially optimal outcome, but neither will negligence. However, even though the socially optimal outcome is not always achieved, strict liability weakly dominates negligence. These results suggest that the harmonization of statues that deal with transboundary pollution should be based on strict liability not negligence.