Robert H. Porter

The effect of public capital in state-level production functions reconsidered

Using a panel data set for the forty-eight contiguous states from 1970 to 1983, several estimates are provided of a Cobb-Douglas production function with three types of public capital as inputs. Various specification tests are systematically applied to test for both random and fixed state effects, nonstationarity, endogeneity of the private inputs, and measurement error. In the preferred specification, which is first differences with fixed state effects, the public capital variables are not significant, while the fixed state effects and private input variables are significant. Copyright 1996 by MIT Press.

Ohio School Milk Markets: An Analysis of Bidding

We examine the institutional details of the school milk procurement process, bidding data, statements of dairy executives, and supply characteristics in Ohio during the 1980s. We compare the bidding behavior of a group of firms in Cincinnati to a control group. We find that the behavior of these firms is consistent with collusion. The estimated average effect of collusion on market prices is about 6.5%, or roughly the cost of shipping school milk about 50 miles.

Optimal cartel trigger price strategies

Abstract A dynamical model of industry equilibrium is described in which a cartel deters deviations from collusive output levels by threatening to produce at Cournot quantities for a period of fixed duration whenever the market price falls below some trigger price. In this model firms can observe only their own production level and a common market price. The market demand curve is assumed to have a stochastic component, so that an unexpectedly low price may signal either deviations from collusive output levels or a “downward” demand shock.

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.

SWITCHING REGRESSION MODELS WITH IMPERFECT SAMPLE SEPARATION INFORMATION - WITH AN APPLICATION ON CARTEL STABILITY

An exogenous switching regression model with imperfect reginme classificationi information is specified and applied to a study of cartel stability. An efficient estimation method is proposed which takes this imperfect information into account. The consequences of misclassification are analyzed. The direction of the least squares bias is derived. An optimal regime classification rule is obtained and compared theoretically and empirically with other classification rules. We then examine the Joint Executive Committee, a railroad cartel in the 1880s. The econometric evidence indicates that reversions to noncooperative behavior did occur for the firms in our sample, and these reversions involve a significant decrease in market price. THIS ARTICLE IS CONCERNED WITH the possibility of estimating a switching regression model and its application to a study on cartel stability. The switching regression model is the exogenous switching model proposed by Quandt [24], which generalized a problem of mixture distributions (Day [4]). The sample in this model is generated from distinct regression equations or regimes for each time period. If the investigator has a priori information on how the sample is partitioned into the underlying regimes, it is a switching regression model with known sample separation; otherwise, it is a model with unknown sample separation. Estimation of these latter models has been considered by Quandt [24]. Goldfeld and Quandt [8], and Kiefer [14, 16], among others. A switching regression model is appropriate for the study of cartel behavior when there are price wars, as firms will revert from cooperative to noncooperative behavior, and so the industry supply function shifts occasionally. This model will allow us to exploit the fact that there will be periodic stochastic switches or reversions between cooperative and noncooperative conduct, in order to identify collusive episodes.

The Role of Information in U.S. Offshore Oil and Gas Lease Auctions

A double acting working piston drives a connecting rod and crankshaft. A smaller valve piston is fastened to each end of the working piston. Each valve piston withdraws briefly from its bore so as to introduce scavenge air into a respective annular working chamber. The valve pistons have a centering means and are provided with novel radially restrained piston rings so as to smoothly re-enter their bores without impacting. Other novel features are: inlet nozzle and vanes, rear slide tubes for conducting coolant (such as water) to the pistons, an oil seal which permits the wrist pin to be full floating, and long tie bolts passing through water passages formed in the exhaust port bridges.

Collusion in Auctions

Despite substantial legal evidence of collusion in auctions, there has been very little theoretical or empirical work on this subject by economists. This survey paper discusses mechanisms that are likely to facilitate collusion in auctions, as well as methods of detecting the presence of these schemes. The principal message of this paper is that the presence and the characteristics of collusive mechanisms depend critically on the nature of the object being auctioned, and on the particular auction rules. Accordingly, empirical work should be tailored to specific cases.

Information, Returns, and Bidding Behavior in OCS Auctions: 1954-1969

This paper examines federal auctions for leases on the Outer Continental Shelf in the light of the predictions of the first-price, sealed-bid, common-values model of auctions. The authors find that the data strongly support the model for auctions in which one bidder is better informed than the other bidders. The evidence for auctions in which bidders have noisy, but qualitatively similar, information is less conclusive but is consistent with a model in which each bidder does not know either the actual or potential number of bidders on a lease. Copyright 1987 by Blackwell Publishing Ltd.

Auctions for Oil and Gas Leases with an Informed Bidder and a Random Reservation Price

The authors analyze a first-price, sealed bid auction of an object with unknown common value, but one buyer has better information. The reservation price is correlated with the informed buyers assessment of the value and of the probability of rejection. If all random variables are affiliated, the rate of increase in the distribution of the uninformed bid is never greater than that of the informed bid, the distributions are identical above the support of the reservation price, and the informed buyer is more likely to submit low bids. Bids for offshore oil and gas leases on drainage tracts satisfy these restrictions. Copyright 1994 by The Econometric Society.

Uniform Pricing or Pay-as-Bid Pricing: A Dilemma for California and Beyond

Any belief that a shift from uniform to as-bid pricing would provide power purchasers substantial relief from soaring prices is simply mistaken. The immediate consequence of its introduction would be a radical change in bidding behavior that would introduce new inefficiencies, weaken competition in new generation, and impede expansion of capacity.