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Topics in Empirical Industrial Organization: A Structural Approach

Paper Session

Saturday, Jan. 5, 2019 10:15 AM - 12:15 PM

Atlanta Marriott Marquis, International 2
Hosted By: Korea-America Economic Association
  • Chair: Yoosoon Chang, Indiana University

Couples' and Singles' Savings After Retirement

Eric French
,
University College London, CEPR and IFS
Mariacristina De Nardi
,
Federal Reserve Bank of Minneapolis, University College London, CEPR and NBER
John Bailey Jones
,
Federal Reserve Bank of Richmond
Rory McGee
,
University College London and IFS

Abstract

Not only retired couples hold more assets than singles, but high-income couples grow their savings during most of their retirement period. Why are they saving so much? Do they expect high medical expenses, do they deeply care about the welfare of their surviving spouse upon death, or do they want to leave bequests to others? What happens to savings when one of the members of the couple dies and why? We build a model of retired couples and singles facing uncertain longevity and medical expenses in which couples and singles can have different bequest motives. Both might care about heirs, but couples might also care about their surviving spouse. We use the AHEAD data and the method of simulated moments to estimate our model and disentangle the importance of saving motives of couples and singles. We also evaluate the effects of a Medicaid expansion on the savings and bequests of couples and singles.

Endogenous and Selective Service Choices After Airline Mergers

Andrew Sweeting
,
University of Maryland and NBER
Sophia Li
,
Uber
Joe Mazur
,
Purdue University
Yongjoon Park
,
University of Maryland
Jun Zhang
,
University of Maryland

Abstract

We estimate a model of service choice and price competition in airline markets, allowing for the carriers that provide nonstop service to be a selected subset of the carriers competing in the market. Our model can be estimated without an excessive computational burden and we use the estimated model to illustrate the effects of selection on equilibrium market structure and to show how accounting for selection can change predictions about post-merger market power and repositioning, in ways that are consistent with what has been observed after actual mergers, and possible merger remedies.

Wholesale Market Power and the Limited Profitability of Retail Zone Pricing

Katja Seim
,
University of Pennsylvania and NBER
Eugenio Miravete
,
University of Texas-Austin
Jeff Thurk
,
University of Notre Dame

Abstract

This paper presents a first estimation of the magnitude of arbitrage costs limiting geographical price discrimination. Using spirit sales data across all liquor stores in Pennsylvania, we take advantage of the extreme alcohol price regulation enforced by the Pennsylvania Liquor Control Board (PLCB) to estimate a model of demand for differentiated products that incorporates wholesalers' optimal price responses to any change in the PLCB's pricing strategy. Counterfactual analysis allows us to evaluate the profitability of alternative zone pricing strategies for multiple realistic configurations of local markets. By comparing foregone profits across these market configurations we obtain a lower bound estimate of arbitrage costs that we can relate to average distance across stores and other socioeconomic characteristics of markets.

Mortgage Pricing and Monetary Policy

Alessandro Gavazza
,
London School of Economics

Abstract

TBD
Discussant(s)
Ami Ko
,
Georgetown University
Jihye Jeon
,
Boston University
Myongjin Kim
,
University of Oklahoma
Boyoung Seo
,
Indiana University
JEL Classifications
  • D1 - Household Behavior and Family Economics
  • L0 - General