Michael W. Pustay

Interorganizational Coordination in the Airline Industry, 1925-1938: A Transaction Cost Approach

Transaction cost theory is used to examine the decision of horizontally linked firms to compete or cooperate in interorganizational exchange. It is argued that this decision depends on those dimensions of the environment that affect the level of transaction costs. Furthermore, it is argued that when transaction costs become too high for voluntary cooperation to occur in the market, firms seek hierarchical or third party solutions for managing interorganizational exchange. A qualitative analysis of the airline industry is presented as a case study that demonstrates empirically the effect of changes in transaction costs on the level of coordination over time.

Does transferability affect the social costs of licensing

Occupational licensing that restricts entry into various occupations may be imposed in order to create monopoly profits. Such licensing has traditionally been associated with the creation of two types of social costs: first, a deadweight loss due to the reduction in output (Harberger, 1954) and second, the rent-seeking costs of monopoly (Tullock, 1967). A recent contribution to the literature (Lott, 1987) suggests that the total social costs of licensing depend on whether the licenses are transferable; to wit, nontransferability will add production inefficiency costs to the traditional Harberger-Tullock costs. Specifically, if the skills of the initial licensees atrophy, nontransferability will preclude the production of services by more efficient would-be license holders. This implies that the traditional HarbergerTullock analysis underestimates the total social cost of licensing in the case where licenses are nontransferable. The purpose of this note is to argue that the size of the total social costs associated with licensing are independent of transferability. Transferability does

Competitive Cross-Couponing: A Comparison of French and U.S. Perspectives

Coca-Colas practice of cross-couponing violated French competition law. The authors provide a review of U.S. and French competition laws and then compare price discrimination with product-switching explanations for Coca-Colas cross-couponing practice. The authors argue that cross-couponing is used to entice customers of rival brands to sample the firms product and is economically efficient.

Social costs of monopoly and regulation: an empirical evaluation

The author examines the empirical importance of Posners assumption that scarce resources are consumed without producing social benefits when income is redistributed from users to producers. Applying Posners simplifying assumption to a case study of a domestic airline industry, he demonstrates that serious overestimates can result when a regulated monopoly uses its rent to attract customers from non-regulated competitors or when there is too small a difference between a monopolys regulated price and competitive unregulated prices. 10 references. (DCK)