Robert P. McComb

Privatization, competition, and supercompetition in the Mexican commercial banking system

Abstract Much literature before and after the privatization of Mexicos commercial banking system in 1991–1992 argued that the system was collusive and noncompetitive and would likely continue to be for years. Banks would collude to underloan so that – at least in comparison with what would happen in a competitive system – they could overcharge. Because a parallel literature on lending after bank privatization suggests that the problem is often not too little, but too much, we resolved to test for competitive behavior in the Mexican banking system. Using an empirical approach developed by Shaffer (Econom. Lett. 29 (1989) 321, J. Money Credit Bank. 25 (1993) 49, Federal Reserve Bank of Philadelphia, Working paper no. 93-28R), we find a structural break in the middle of the privatization period that signals the start of an episode of what Shaffer calls “supercompetitive” behavior. In such a supercompetition, banks run at levels of output where marginal cost exceeds marginal revenue. This behavior is consistent with a struggle in which banks take losses now because they think the market share they get in the bargain offers a positive present value of expected future return. The behavior can also be consistent with just the sort of banking crises that ensued in Mexico.

Research Universities and Regional High‐Tech Firm Start‐Up and Exit

If localized knowledge spillovers are present in the university setting, higher rates of both start-up and/or survival would be observed in areas that are geographically proximate to the university. Using a detailed industry data set for Texas for 1999:3–2005:2, we analyze start-up and exit rates for high-tech firms. Based on a Poisson quasi-maximum likelihood estimation, we find evidence that the level of R&D and proximity of a research institution positively affects the likelihood of technology start-ups. However, using both the Cox proportional hazards model and Kaplan–Meier approach, our results suggest that geographic proximity to knowledge centers does not reduce hazard rates. (JEL R12, R53, O18)

Geographic Concentration and Firm Survival

If localization economies are present, firms within denser industry concentrations should exhibit higher levels of performance than more isolated firms. Nevertheless, research in industrial organization that has focused on the influences on firm survival has largely ignored the potential effects from agglomeration. Recent studies in urban and regional economics suggests that agglomeration effects may be very localized. Analyses of industry concentration at the MSA or county-level may fail to detect important elements of intra-industry firm interaction that occur at the sub-MSA level. Using a highly detailed dataset on firm locations and characteristics for Texas, this paper analyses agglomeration effects on firm survival over geographic areas as small as a single mile radius. We find that greater firm density within very close proximity (within 1 mile) of firms in the same industry increases mortality rates while greater concentration over larger distances reduces mortality rates.

What Blows in with the Wind

The shift toward renewable forms of energy for electricity generation in the electricity generation industry has clear implications for the spatial distribution of generating plant. Traditional forms of generation are typically located close to the load or population centers, while wind- and solar-powered generation must be located where the energy source is found. In the case of wind, this has meant significant new investment in wind plant in primarily rural areas that have been in secular economic decline. This article investigates the localized economic impacts of the rapid increase in wind power capacity at the county level in Texas. Unlike input-output impact analysis that relies primarily on levels of inputs to estimate gross impacts, we use traditional econometric methods to estimate net localized impacts in terms of employment, personal income, property tax base, and key public school expenditure levels. While we find evidence that both direct and indirect employment impacts are modest, significant increases in per capita income accompany wind power development. County and school property tax rolls also realize important benefits from the local siting of utility scale wind power, although peculiarities in Texas school funding shift localized property tax benefits to the state.

Entry, growth and survival in the green industry

ABSTRACT Entry, growth and survival in the green industry. Regional Studies. Economists are interested in the factors that induce firm entry, lead to growth and help firms succeed in various markets. Such information can be helpful to policy-makers, but, unfortunately, such patterns have not been considered for ‘green industries’. This paper takes advantage of a recent definition of green industries proposed by the US Bureau of Labor Statistics (BLS) to investigate patterns characterizing these industries within the State of Texas.

Industrial Agglomeration and Spatial Persistence of Employment in Software Publishing

We estimate the effects of industrial localization on the spatial persistence of employment in the software industry. Locations with an initial concentration of software employment retain an excess number of employees, beyond that expected from job turnover and job persistence at the establishment level. This is not driven by differential establishment growth or survival, but it is due to (a) the retention by establishments in a location of jobs lost by other establishments in that location, and (b) the propensity of software establishments to enter in locations with prior software establishment presence. These findings are more consistent with labor channel effects than with human capital spillovers.

Do production subsidies have a wage incidence in wind power

Employment in electricity generation from renewable resources has expanded rapidly in the US and in Texas during the last decade. Availability of the Production Tax Credit has been an important driver of this growth. Using a fully-disclosed establishment-level employment and payroll data set for Texas at the NAICS-6 level, we analyze the differences in average wages between firms generating electricity from fossil fuels and those generating electricity from wind power. We compare relative average wages before and after the rapid expansion of wind power development that followed the ex ante renewal of the Production Tax Credit (PTC) in 2006. Using QCEW data, our main finding using both least squares and the nonparametric estimation technique proposed by Racine and Li (2004), is that average payrolls for wind power generators increased relative to fossil fuel-based electricity generators after 2006. As far as we know, this is the first paper that attempts to estimate the indirect impact of the PTC on wind energy industry wages.

Migration and Wages: A Natural Experiment from Hurricane Katrina

The objective of this paper is to employ the Hurricane Katrina evacuation into Houston, TX as a natural experiment to estimate the effect of large scale in-migration on regional earnings. Given the characteristics of the evacuees, their influx would have caused the supply of applicants for lower skilled jobs to increase proportionately more than for higher skilled jobs. We utilize a differences-in-differences-in-differences methodology in which we compare differences in average earnings in the low-skill, non-traded goods industries to the corresponding differences in the set of high skill industries in the Houston and Dallas-Fort Worth MSAs before and after the Katrina-induced migration. Unlike previous studies, we include a measure of the post-storm increase in demand for local goods and services on the demand for labor. We find evidence that the relative average payroll in the low-skill non-tradable goods industries in Houston decreased by .7% when compared to the relative change for the same group of industries in Dallas. Our findings also suggest that failure to account for demand-side influences following the migration results in significant under-estimation of wage effects due to the shift in labor supply.