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Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability: Implications for Road Pricing
- Econometrica
, 2005
"... forthcoming, Econometrica We apply recent econometric advances to study the distribution of commuters ’ preferences for speedy and reliable highway travel. Our analysis applies mixed logit to combined revealed and stated preference data on commuter choices of whether to pay a toll for congestion-fre ..."
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Cited by 132 (7 self)
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forthcoming, Econometrica We apply recent econometric advances to study the distribution of commuters ’ preferences for speedy and reliable highway travel. Our analysis applies mixed logit to combined revealed and stated preference data on commuter choices of whether to pay a toll for congestion-free express travel. We find that motorists exhibit high values of travel time and reliability and substantial heterogeneity in those values. We suggest that road pricing policies designed to cater to such varying preferences can improve efficiency and reduce the disparity of welfare impacts compared with recent pricing experiments.
What happens when Wal-Mart comes to town: An empirical analysis of the discount retailing industry
, 2006
"... In the past few decades multi-store retailers, especially those with a hundred or more stores, have experienced substantial growth. At the same time, there is widely reported public outcry over the impact of these chain stores on small retailers and local communities. This paper develops an empirica ..."
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Cited by 120 (0 self)
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In the past few decades multi-store retailers, especially those with a hundred or more stores, have experienced substantial growth. At the same time, there is widely reported public outcry over the impact of these chain stores on small retailers and local communities. This paper develops an empirical model to assess the impact of chain stores on the profitability and entry/exit decisions of small discount retailers and to quantify the size of the scale economies within a chain. The model has two key features. First, it allows for flexible competition patterns among all players. Second, for chains, it incorporates the scale economies that arise from operating multiple stores in nearby regions. In doing so, the model relaxes the commonly used assumption that entry in different markets is independent. The estimation exploits a unique data set that covers the discount retail industry from 1988 to 1997 and yields interesting results. First, Wal-Mart’s expansion from the late 1980s to the late 1990s explains about fifty to seventy percent of the net change in the number of small discount retailers. Failure to address the endogeneity of the firms ’ entry decisions would result in underestimating this impact by fifty to sixty percent. Second, scale economies were important for both Kmart and Wal-Mart, but the magnitude did not grow proportionately with the chains ’ sizes. Finally, direct government subsidies to either chains or small retailers are unlikely to be cost effective in increasing the number of firms or the level of employment.
2002), “Market Potential and the Location of Japanese Investment
- in the European
"... Very preliminary results, subject to change. We investigate the hypothesis that firms prefer to locate “where the markets are. ” We use theoretical model of location choice under imperfect competition to formalize this concept. The model yields an equilibrium profit equation incorporating a term clo ..."
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Cited by 119 (8 self)
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Very preliminary results, subject to change. We investigate the hypothesis that firms prefer to locate “where the markets are. ” We use theoretical model of location choice under imperfect competition to formalize this concept. The model yields an equilibrium profit equation incorporating a term closely connected to the market potential index introduced by Harris in 1954. The location decision is a function of demand expressed by consumers in all locations weighted by accessibility of those consumers. We also show that the spatial distribution of competitors should also be factored into the location choice. We then implement the model empirically, comparing our theoretically-derived measures of demand and competition “potentials ” with the more conventional demand and agglomeration variables. Our sample consists of firm-level location choices by Japanese firms between 1980 and 1995 and we use both the information on the choice of country and the choice of region inside each country in our analysis. JEL classification: F12, F15
A multiple discrete-continuous extreme value model: formulation and application to discretionary time-use decisions
- Transportation Research Part B
, 2005
"... Many consumer choice situations are characterized by the simultaneous demand for multiple alternatives that are imperfect substitutes for one another. A simple and parsimonious Multiple Discrete-Continuous Extreme Value (MDCEV) econometric approach to handle such multiple discreteness was formulated ..."
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Cited by 82 (27 self)
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Many consumer choice situations are characterized by the simultaneous demand for multiple alternatives that are imperfect substitutes for one another. A simple and parsimonious Multiple Discrete-Continuous Extreme Value (MDCEV) econometric approach to handle such multiple discreteness was formulated by Bhat (2005) within the broader Kuhn-Tucker (KT) multiple discrete-continuous economic consumer demand model of Wales and Woodland (1983). This paper examines several issues associated with the MDCEV model and other extant KT multiple discrete-continuous models. Specifically, the paper proposes a new utility function form that enables clarity in the role of each parameter in the utility specification, presents identification considerations associated with both the utility functional form as well as the stochastic nature of the utility specification, extends the MDCEV model to the case of price variation across goods and to general error covariance structures, discusses the relationship between earlier KT-based multiple discrete-continuous models, and illustrates the many technical nuances and identification considerations of the multiple discrete-continuous model structure through empirical examples. The paper also highlights the technical problems associated with the stochastic specification used in the KT-based multiple discrete-continuous models formulated in recent Environmental Economics papers.
Linking marketing and engineering product design decisions via analytical target cascading
- Journal of Product Innovation Management
, 2005
"... Firms design products that appeal to consumers and are feasible to produce. The resulting marketing and engineering design goals are driven by consumer preferences and engineering capabilities, two issues that conveniently are addressed in isolation from one another. This convenient isolation, howev ..."
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Cited by 72 (30 self)
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Firms design products that appeal to consumers and are feasible to produce. The resulting marketing and engineering design goals are driven by consumer preferences and engineering capabilities, two issues that conveniently are addressed in isolation from one another. This convenient isolation, however, typically will not result in optimal product decisions when the two problems are interrelated. A method new to the marketing community, analytical target cascading (ATC), is adopted here to explore such interrelationships and to formalize the process of coordinating marketing and engineering design problems in a way that is proven to yield the joint optimal solution. The ATC model is built atop well-established marketing methodologies, such as conjoint, discrete choice modeling and demand forecasting. The method is demonstrated in the design of dial-readout household scales, using real conjoint choice data and a parametric engineering product design model. Results indicate that the most profitable achievable product can fall short of predictions based on marketing alone but well ahead of what engineering may produce based on original marketing target specifications. A number of extensions can be accomplished
Distinguishing between Heterogeneity and Inefficiency: Stochastic Frontier Analysis of the World
- Health Organization’s Panel Data on National Health Care Systems, Health Economics
, 2004
"... The most commonly used approaches to parametric (stochastic frontier) analysis of efficiency in panel data, notably the fixed and random effects models, fail to distinguish between cross individual heterogeneity and inefficiency. This blending of effects is particularly problematic in the World Heal ..."
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Cited by 70 (5 self)
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The most commonly used approaches to parametric (stochastic frontier) analysis of efficiency in panel data, notably the fixed and random effects models, fail to distinguish between cross individual heterogeneity and inefficiency. This blending of effects is particularly problematic in the World Health Organization’s (WHO) panel data set on health care delivery, which is a 191 country, five year panel. The wide variation in cultural and economic characteristics of the worldwide sample of countries produces a large amount of unmeasured heterogeneity in the data. Familiar approaches to inefficiency estimation mistakenly measure that heterogeneity as inefficiency. This study will examine a large number of recently developed alternative approaches to stochastic frontier analysis with panel data, and apply some of them to the WHO data. A more general, flexible model and several measured indicators of cross country heterogeneity are added to the analysis done by previous researchers. Results suggest that in these data, there is considerable evidence of heterogeneity that in other studies using the same data, has masqueraded as inefficiency. Our results differ substantially from those obtained by
Sufficient Statistics for Welfare Analysis: A Bridge Between Structural and Reduced-Form Methods
- ANNUAL REVIEW OF ECONOMICS
, 2009
"... The debate between “structural” and “reduced-form” approaches has generated substantial controversy in applied economics. This article reviews a recent literature in public economics that combines the advantages of reduced-form strategies –transparent and credible identification – with an important ..."
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Cited by 61 (1 self)
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The debate between “structural” and “reduced-form” approaches has generated substantial controversy in applied economics. This article reviews a recent literature in public economics that combines the advantages of reduced-form strategies –transparent and credible identification – with an important advantage of structural models – the ability to make predictions about counterfactual outcomes and welfare. This literature has developed formulas for the welfare consequences of various policies that are functions of reduced-form elasticities rather than structural primitives. I present a general framework that shows how many policy questions can be answered by estimating a small set of sufficient statistics using program evaluation methods. I use this framework to synthesize the modern literature on taxation, social insurance, and behavioral welfare economics. Finally, I discuss problems in macroeconomics, labor, development, and industrial organization that could be tackled using the sufficient statistic approach.
