Do firms employing undocumented workers have a competitive advantage? Using administrative data from the state of Georgia, this paper investigates the incidence of undocumented worker employment across firms and how it affects firm survival. Firms are found to engage in herding behavior, being more likely to employ undocumented workers if competitors do. Rivals’ undocumented employment harms firms ’ ability to survive, while firms ’ own undocumented employment strongly enhances their survival prospects. This suggests that firms enjoy cost savings from employing lower-paid undocumented at wages less than their marginal revenue product. The herding behavior and competitive effects are found to be much weaker in geographically broad product markets, where firms have the option to shift labor-intensive production out of state or abroad. The views expressed in this paper are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Valuable research

In broad terms, one can say that price discrimination exists when two “similar ” products which have the same marginal cost to produce are sold by a firm at different prices. 1 This practice is often highly controversial in terms of its impact on both consumers and rivals.

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Abstract. Patent and antitrust policy are often presumed to be in conflict. As an important example, there is ongoing controversy about whether price discrimination by a patent holder is an illegal or socially undesirable exploitation of monopoly power. In this article. we show that no conflict exists in many price discrimination cases. Even ignoring the (dynamic) effects on incentives for innovation, third-degree price discrimination by patent holders can raise (static) social welfare. In fact, Pareto improvements may well occur. Welfare gains occur because price discrimination allows patent holders: (a) to open new markets and (b) to achieve economies of scale or learning. Further, even in cases where discrimination incurs static welfare losses, it may be efficient relative to other mechanisms,

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According to the folk history of transaction costs, the concept is due to a seminal article by Ronald H. Coase, written in the 1930s. Failing to provide an operational framework, Coase’s article was neglected for a long time, or so the story continues. 1 In the 1970s, after the limits of the Arrow-Debreu paradigm

The collection of personal data in business-to-consumer transactions and respecting the consumers’ privacy preferences are fundamentally competing goals. This paper studies the effects of emerging user-controlled privacy-enhancing technologies on supply-side decision making with respect to technology adoption and pricing strategies. In particular, identity management systems that allow buyers to interact pseudonymously with online stores thwart the sellers’ efforts to discriminate prices based on personal data. We present stylised microeconomic models (1) to compare self-regulated and government-enforced regimes towards the adoption of privacy-enhancing technologies, (2) to analyse the conditions under which it is profitable for sellers to support such technologies, and (3) to study implication on social welfare

We develop an efficiency wages model, to study the effects of the imposition of a higher minimum wage on employment of heterogeneous workers, when employers use the wage and monitoring intensity to induce motivation. It is shown that when effort is adjusted to exogenous shocks then the wage and supervision, and employment and supervision can be either strategic complements or strategic substitutes. This finding provides a theoretical explanation of why the results of studies that try to identify the wage-supervision trade-off(Neal 1993, Kruse 1992, Leonard 1987), and do not control for effort may be hindered by omitted variable bias and thus are misleading. The total effect of a higher minimum wage on employment can be decomposed into two distinct effects; the 'partial' wage effect and the 'supervision' effect. We show that, when the wage and supervision are complements in providing incentives then employment and supervision are strategic complements, the supervision and the wage effect are counteractive and the total employment effect of a higher minimum wage is ambiguous. On the other hand if there is a trade-off between *I would like to thank my supervisors Mr. Paul Gregg and Dr. Hedley Rees and my advisor Professor Simon Burgess for support as well as valuable feedback. Participants in the fourth IZA European Summer School in Labour Economics on "The Economics of Low-Income and Low-Pay" and participants in the National Minimum Wage Conference, organized by CEP, LSE are thankfully acknowledged for helpful suggestions. Finally, I am grateful to Dr. Thibeau Verge, Professor Alan Manning and Professor Juan Jose Dolado for comments that significantly improve the material of the paper.

The literature on non-parametric production analysis has formulated tests for profit maximizing behavior that do not require a parametric specification of technology. Negative test results have conventionally been interpreted as inefficiency, or have been attributed to data perturbations. In this paper, we exploit the possibility that negative test results reveal violations of the underlying neoclassical assumption that prices are exogenously fixed and perfectly certain. We propose non-parametric tests that do allow for endogenous price formation and price uncertainty. In addition, we investigate how to recover the technology and how to forecast behavior in new economic situations.