Joris Pinkse

Spatial Price Competition: A Semiparametric Approach

We investigate the nature of price competition among firms that produce differentiated products and compete in markets that are limited in extent. We propose an instrumental variables series estimator for the matrix of cross price response coefficients, demonstrate that our estimator is consistent, and derive its asymptotic distribution. Our semiparametric approach allows us to discriminate among models of global competition, in which all products compete with all others, and local competition, in which products compete only with their neighbors. We apply our semiparametric estimator to data from U.S. wholesale gasoline markets and find that, in this market, competition is highly localized.

Contracting in space: An application of spatial statistics to discrete-choice models

Abstract We develop tests for spatial-error correlation and methods of estimation in the presence of such correlation for discrete-choice models. The tests, which are based on the notion of a generalized residual, are a set of orthogonality conditions that should be satisfied under the null. When the restrictions are rejected, the full model can be estimated by generalized method of moments. These techniques are used to evaluate spatial patterns in retail-gasoline contracts. We examine whether the spatial configuration is random or whether there is a tendency towards clustering or dispersion of contract types. The data consist of all contracts between integrated oil companies and their branded service stations in the city of Vancouver. Six metrics or measures of closeness are examined: Euclidean distance, competition along streets, a combination of the first two, nearest neighbors along streets, nearest neighbors in Euclidean distance, and neighbors that share a common marked boundary.

The determinants of municipal tax rates in British Columbia

In this paper we study the regional pattern of municipal business property tax rates in the province of British Columbia. Reduced-form tax-setting equations produce some evidence that municipal governments respond to tax changes in neighbouring jurisdictions. A joint investigation of the determinants of tax base and municipal taxation decisions, however, reveals that it is difficult to interpret this response as arising primarily out of competition over tax base. There is also some evidence that municipal tax rates are sensitive to taxes set on the same base by super-municipal bodies.

Mergers, brand competition, and the price of a pint

Abstract Mergers in the UK brewing industry have reduced the number of national brewers from six to four. The number of brands, in contrast, has remained relatively constant. We analyze the effects of mergers on brand competition and pricing. Brand-level demand equations are estimated from a panel of draft beers. To model brand-substitution possibilities, we estimate the matrix of cross-price elasticities semiparametrically. Our structural model is used to assess the strength of brand competition along various dimensions and to evaluate the mergers. In particular, we compute equilibria of pricing games with different numbers of players.

Empirical Implications Of Equilibrium Bidding In First-Price, Symmetric, Common Value Auctions

This paper studies federal auctions for wildcat leases on the Outer Continental Shelf from 1954 to 1970. These are leases where bidders privately acquire (at some cost) noisy, but equally informative, signals about the amount of oil and gas that may be present. We develop tests of rational and equilibrium bidding in a common values model that are implemented using data on bids and ex post values. We also use data on tract location and ex post values to test the comparative static prediction that bidders may bid less aggressively in common value auctions when they expect more competition. We find that bidders are aware of the “winners curse” and their bidding is largely consistent with equilibrium. Copyright 2003, Wiley-Blackwell.

The Future of Spatial Econometrics

The purpose of this paper is threefold. First, we give an overview of the general direction the spatial econometrics literature has taken without attempting to provide a representative survey of all interesting work that has appeared. Second, we identify a number of problems in spatial econometrics that are as yet unresolved. Finally, we provide advocacy for the notion that new spatial econometric theory should be inspired by actual empirical applications as opposed to being directed by what appears to be the most obvious extension of what is currently available.

Those Taxes are all over the Map! A Test for Spatial Independence of Municipal Tax Rates in British Columbia

A test for spatial independence based on characteristic functions is introduced. The test is shown to be consistent against a fairly general class of alternatives, and the asymptotic distribution of the test statistic is determined. The test is then put to use in analyzing the spatial pattern of municipal property tax rates for the province of British Columbia. Results of the new test are compared with those of Morans test on this data set. Some intriguing differences are found.

Spillovers in Space: Does Geography Matter?

We simultaneously assess the contributions to productivity of three sources of research and development spillovers: geographic, technology and product-market proximity. To do this, we construct a new measure of geographic proximity that is based on the distribution of a firms inventor locations rather than its headquarters, and we report both parametric and semiparametric estimates of our geographic- distance functions. We find that: i) Geographic space matters even after conditioning on horizontal and technological spillovers; ii) Technological proximity matters; iii) Product-market proximity is less important; iv) Locations of researchers are more important than headquarters but both have explanatory power; and v) Geographic markets are very local.

A consistent nonparametric test for serial independence

Abstract We propose a nonparametric test for serial independence against serial dependence of fixed order that is consistent against all such alternatives. The conditions required are weak, the asymptotic distribution under the null is χ 1 2 , and the test works regardless of the underlying distribution. Also included are a nuisance parameter result, Monte Carlo simulations, a theoretical efficiency study, an empirical example, and a review of possible extensions. In addition, we derive a similar consistent test for lack of serial dependence of order one against serial dependence of order one.

Moran-Flavored Tests with Nuisance Parameters: Examples

Since Moran (1950b) originally proposed his test of correlation, many authors have investigated its properties under varying conditions. In this chapter I demonstrate how new technical results of Pinkse (1999) can be used to verify that the Moran test, or a cross-correlation variant thereof (see Box and Jenkins, 1976, for a detailed discussion of cross-correlation in time series models), indeed has a limiting normal distribution under the null hypothesis of independence.