Leonardo J. Basso

Automobile Fuel Demand: A Critical Assessment of Empirical Methodologies

Abstract Many surveys have attempted to convey and synthesize the information of hundreds of studies on automobile fuel demand. In most cases, the focus has been placed in giving assessments of the most likely values of various elasticities, particularly price and income, while trying to explain the differences between results. However, given the summary characteristic of these surveys, the most popular approaches and methodologies—such as dynamic reduced‐form demand models with time‐series data—have dominated the core values obtained. The present survey focuses instead on the various approaches and methods that have been used. It reviews and classifies them, showing that there are relevant findings, raised by studies using less popular approaches, which seem to challenge some of the accepted core results in the literature. These other approaches include: co‐integration techniques, use of disaggregate data at the household level and flexible functional forms, and structural models of automobile fuel consumption.

A multioutput cost function for the services of Spanish ports' infrastructure

A long run multioutput cost function for the infrastructure services of Spanish ports is estimated using 286 observations on 26 ports during 11 years. Cargo specific marginal costs and the degree of economies of scale and scope are calculated up to a port level. Results show that liquid bulk and non-containerised general cargo present the lowest and largest marginal cost, respectively. Increasing returns to scale are present in general and for each and every port. A scope analysis indicates that port specialisation is not appropriate from the viewpoint of infrastructure.

Sequential Peak-Load Pricing: The Case of Airports and Airlines

We investigate airport peak-load pricing using a vertical structure of airport and airlines. We find that a profit-maximizing airport would charge higher peak and off-peak runway prices and a higher peak/off-peak price differential than a public airport. Consequently, airport privatization would lead to both fewer total passengers and fewer passengers in the peak period. Although peak-travelling passengers benefit from fewer delays, this low level of peak congestion is not efficient, suggesting that airport privatization cannot be judged based on its effect on congestion alone. We also examine pricing behaviour of a public airport constrained to charge a time independent price.

Measuring the True Harm from Price-Fixing to Both Direct and Indirect Purchasers

Legal actions by direct and indirect purchasers to recover damages from price-fixing, common in the United States for years, are now appearing in a number of other countries. Traditional measures of damages are flawed as measures of the true harm suffered and will often significantly understate that true harm. This paper provides measures of the degree of understatement of the true harm when traditional approaches are used and shows how the size of the error depends on the degree of competitiveness of downstream markets. The paper also provides measures of distribution of the true harm between direct and indirect purchasers.

Are Returns to Scale with Variable Network Size Adequate for Transport Industry Structure Analysis

It is customary to analyze transport industry structure using two indices: (1) economies of density and (2) economies of scale with variable network size. The latter has been defined to analyze the behavior of costs when output and network size expand simultaneously. After reviewing in detail what is intended with the calculation of RTS under this definition, we show analytically that, when the spatial aspects underlying transport production are taken into account, the seemingly reasonable conditions imposed on the aggregate output descriptions and the network variable conceal implicit output expansions that are not uniquely defined: they happen to depend on the specification of variables and on the evaluation point. Furthermore, most of the multiple output expansions analyzed correspond to cases that are hardly instructive. We conclude that this index is inherently ambiguous, hardly contributes to an adequate analysis of transport industry structure, and should be replaced by the calculation of economies of spatial scope (Journal of Economic Literature L91, L11, D40).

On input market surplus and its relation to the downstream market game

In order to analyze the welfare effects of price changes in input markets - following for example a price-fixing conspiracy - economists have studied the relationship between the surplus measured in the input markets and the surplus in the output markets. The latest results hinge on simplifying assumptions, which are relaxed here by linking the input markets surplus question to another stream of literature, which characterizes functions that oligopolists collectively, yet unintentionally, maximize. It is shown that the area under the input demands is equal to the change in a function for which critical points coincide with the equilibria of the downstream game. A particular case of these functions is the exact potential function.

MEASURING THE TRUE HARM FROM PRICE-FIXING TO BOTH DIRECT AND INDIRECT PURCHASERS*: MEASURING THE TRUE HARM FROM PRICE-FIXING

Legal actions by direct and indirect purchasers to recover damages from price-fixing, common in the United States for years, are now appearing in a number of other countries. Traditional measures of damages are flawed as measures of the true harm suffered and will often significantly understate that true harm. This paper provides measures of the degree of understatement of the true harm when traditional approaches are used and shows how the size of the error depends on the degree of competitiveness of downstream markets. The paper also provides measures of distribution of the true harm between direct and indirect purchasers.

Monopoly regulation under asymmetric information: prices versus quantities

We compare two instruments to regulate a monopoly that has private information about its demand: fixing the price or the quantity produced. For each instrument, we consider two classes of mechanisms: sophisticated (screening menus) and simple (single menus). We characterize the optimal mechanisms for every instrument and make between- and within-welfare comparisons. When demand is unknown and marginal costs are increasing, the sophisticated price mechanism dominates that of quantity, while the sophisticated quantity mechanism may prevail when marginal costs are decreasing. The simple price mechanism dominates that of quantity when marginal costs are decreasing, but the opposite may arise if marginal costs are increasing. We explore what proportion of welfare gains achievable by sophisticated regulation can be secured using simpler mechanisms and also discuss the case regarding private information about the monopoly’s costs

On Input Market Surplus and its Relation to the Downstream Market Game (A Propos Du Surplus Dans Les Marchés Des Intrants Et Sa Relation Avec Le Jeu Du Marché En Aval)

In order to analyze the welfare effects of price changes in input markets – following for example a price‐fixing conspiracy – economists have studied the relationship between the surplus measured in the input markets and the surplus in the output markets. The latest results hinge on simplifying assumptions, which are relaxed here by linking the input markets surplus question to another stream of literature, which characterizes functions that oligopolists collectively, yet unintentionally, maximize. It is shown that the area under the input demands is equal to the change in a function for which critical points coincide with the equilibria of the downstream game. A particular case of these functions is the exact potential function.Afin d’analyser les effets de bien‐etre des changements de prix dans le marche des intrants ‐ a la suite par exemple d’une conspiration pour fixer les prix ‐ les economistes ont etudie la relation entre le surplus mesure dans les marches des intrants et le surplus dans les marches des produits. Les derniers resultats dependent de postulats simplificateurs qu’on relaxe ici en reliant la question du surplus dans les marches des intrants avec un autre courant de la litterature specialisee qui caracterise les fonctions que les oligopoleurs (collectivement mais sans en faire leur but avoue) maximisent. On montre que l’espace sous les courbes de demandes des intrants est egal au changement dans une fonction pour laquelle les points critiques coincident avec les equilibres dans le jeu de marche en aval. Un cas particulier de ces fonctions est la fonction potentielle exacte.