Kevin E. Henrickson

SPATIAL COMPETITION AND STRATEGIC FIRM RELOCATION

Firms compete spatially for customers who have some degree of brand loyalty. The number and attractiveness of the alternatives available to these customers dictates the level of competition facing firms. In this study, data on ticket pricing in four professional sports leagues are used to empirically examine the existence of spatial competition in sports, and the impact of space on team relocations. Results, allowing for structural breaks over time while using spatial autoregressive techniques, suggest that sports franchises spatially compete when pricing their tickets, and that spatial characteristics, including the level of spatial competition, have influenced the relocation of teams. (JEL D40, L11, R30, L83)

Model of Spatial Market Areas and Transportation Demand

A model of transportation demand and the interrelated supply decisions of agricultural shippers is derived over a geographic space. These shippers use prices to procure grain and to make output, mode, and market decisions. Each decision is affected by the characteristics of the region and the level of spatial competition between the shipper and its rivals. All of these factors are integrated into the model of derived demand and spatial competition. The model is applied to data that represent barge elevators on the upper Mississippi and Illinois Rivers to estimate transportation demands and gathering areas. The results provide demand elasticity estimates for annual volumes between -1.4 and -1.9, which are sizably larger than previous estimates of similar traffic. The results also indicate that inbound transportation rates to the barge shipper as well as distance to the nearest competitor have a significant influence on annual volumes. A second model, explaining the size of the market areas of elevators, is also estimated. The rates of alternative modes that compete for barge traffic as well as distance to the nearest competitor influence market areas. The results provide for a strong argument that transportation demands are elastic and that spatial market areas vary substantially with transportation rates.

The Demand for Spatially Complementary National Parks

Using a panel dataset on annual visits to each U.S. national park, we empirically analyze the demand for these parks using a spatial lag model, which accounts for the complementary nature of the parks. Our results suggest that increases in fuel costs, temperature increases of greater than 3 °F, and restrictions on foreign tourism all lower visitation to U.S. national parks, causing associated decreases in money spent by tourists, jobs created, and income generated. These results can also be used to analyze the possible implications of proposed public policies, such as international visa requirements, gas taxes, and carbon taxing/trading. (JEL H41, Q21)

Compensation, Unionization, and Deregulation in the Motor Carrier Industry

Previous research on the deregulation of the motor carrier industry has concluded that firms have become more efficient under deregulation and that costs have fallen, largely at the expense of labor. Most studies that examine the effects on labor use Current Population Survey data and find that wage premiums to union labor have fallen as a result of deregulation. This study uses firm data and finds that deregulation had a very small effect on the average compensation paid by surviving union firms. For nonunion firms, the impact of deregulation is much larger. These results suggest that the compensation premium for the labor of surviving union firms has increased, but this increase applies only to surviving union labor. In the paper, we also point to and note a major exodus of union firms with the result that union labor levels have fallen, and fallen dramatically.

The Convergence of Low-Cost and Legacy Airline Operations

Abstract Following deregulation, the airline industry has dramatically changed. In addition to numerous mergers and bankruptcies, the industry has also seen an influx of small, “low-cost” carriers who offer differentiated competition to the traditional legacy carriers. These low-cost carriers traditionally avoided the hub-and-spoke networks of legacy carriers, offering point-to-point service often on adjacent routes. However, events of the past 10–15 years, including the terrorist attacks of 9/11, rising fuel prices, and economic recessions, have led to a shift in the operations of these airlines. The legacy carriers have unbundled many of their services, most notably through baggage fees, seeking to improve efficiency. Low-cost carriers have expanded services into major airports and have shifted to more direct route level competition with the legacy carriers as they use their cost efficiency advantages to their advantage. In this chapter, we examine airport and route choice decision to serve by legacy and low-cost carriers over time. Our descriptive and econometric models point to convergence of operations in terms of the airports and routes that low-cost and legacy carriers serve, with the implication that the current competitive atmosphere improves efficiency as the distinctions between legacy and low-cost carriers have become less obvious.

A Classroom Labor Market Game Illustrating the Existence, and Implications of, Statistical Discrimination

Many undergraduate students report a lack of concern about facing labor market discrimination throughout their careers. However, there is ample evidence that discrimination based on race, gender, and age still persists within the labor market. The author outlines a classroom experiment demonstrating the existence of discrimination, even when the participants consider themselves above discriminating against others. The results can be used to facilitate discussions surrounding various labor market outcomes and the prevalence of discrimination within labor markets. As such, this experiment is appropriate for many business courses, including courses in economics, management, and ethics.

Spatial competition and geographic grain transportation demand on the Mississippi and Illinois rivers

Using a model of spatial competition between grain elevators, I estimate a model of transportation demand for grain elevators located along the Mississippi and Illinois rivers. This analysis uses a unique set of interview data collected by the Tennessee Valley Authority (TVA). Both the theory and the data suggest that there are geographic patterns in barge demand elasticity–patterns which are empirically uncovered using an endogenous switch point model. These results are of central importance to policy-makers as they call into question assumptions made by the models currently used for measuring the benefits of inland waterway improvements.

Do online instructor lessons complement on-campus teaching?

Purpose – The purpose of this paper is to examine the use of online video mini-lectures, intended to complement in-class teaching by allowing students to review the more technical aspects of the course. Design/methodology/approach – Online video mini-lectures/tutorials, covering the technical components of the course, were introduced two-thirds of the way through a Principles of Microeconomics course. This methodology allows for the estimation of the impact of incorporating this technology on student performance. In addition, comparisons using results from previous terms, in which these videos were not available at any point during the course, allow for an examination of the overall impact of this technology on student performance in the last portion of the course. Findings – The results point to online lectures improving student achievement, but that this improvement is mostly achieved by the lower achieving students, and exhibits significant diminishing returns to the number of times the videos are watc...