Eric Rasmusen wants paper comments and will thank EJMR if they’re useful

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Eric Rasmusen wants paper comments and will thank EJMR if they’re useful

Economist
29b1

^"Consumer products companies might want to commit to lower prices to encourage Walmart and Target to set up more stores."

Uh-huh. Sure they will. Walmart and Target have thousands of stores and thousands of suppliers. Let's say they open a new store because a single supplier wants to give them cheap inputs. After the new shop is open, it reneges. Wal-mart wouldn't be in a position to punish it?

Movie theaters and car dealerships sound like better bets. But I bet each industry has its own peculiarities.

5 years ago # QUOTE 3 Volod 0 Vlad !
Economist
1515

There was another guy that recently asked ejmr for feedbacks (something related to banks if I remember correctly). If this is the beginning of a new trend and a new era for ejmr, Kirk has in his hands something whose potential is even hard to imagine. Let's hope everything goes in the right direction.

5 years ago # QUOTE 15 Volod 0 Vlad !
Economist
4efe

There was another guy that recently asked ejmr for feedbacks (something related to banks if I remember correctly). If this is the beginning of a new trend and a new era for ejmr, Kirk has in his hands something whose potential is even hard to imagine. Let's hope everything goes in the right direction.

he should repost that...

5 years ago # QUOTE 1 Volod 0 Vlad !
Economist
8539

Possible example/relationship to existing literature: the patent hold-up problem.

Suppose a monopolist obtains a patent on some basic invention. In order to create any surplus from the basic research, it is necessary for some third parties to invent downstream commercial products built on the underlying basic technology.

Often, it will not be practical to contract ex ante on the long-run royalty rate for use of the patent. Instead, the downstream firms go away and sink a fixed cost into research effort to develop the follow-on product. Once they have "entered" with their new invention, they must pay a per-unit royalty to the upstream patent holder, which seems functionally akin to payment of a wholesale price to a retailer.

Paul Belleflamme has a nice blog post on the issue: http://www.ipdigit.eu/2016/06/what-is-patent-holdup-should-it-be-regulated-if-yes-how/

5 years ago # QUOTE 5 Volod 0 Vlad !
Economist
9b32

There was another guy that recently asked ejmr for feedbacks (something related to banks if I remember correctly). If this is the beginning of a new trend and a new era for ejmr, Kirk has in his hands something whose potential is even hard to imagine. Let's hope everything goes in the right direction.

Once the novelty factor is over, it'll be the same as refereeing for free, without even getting social credits with editors.

5 years ago # QUOTE 0 Volod 0 Vlad !
Economist
1515

There was another guy that recently asked ejmr for feedbacks (something related to banks if I remember correctly). If this is the beginning of a new trend and a new era for ejmr, Kirk has in his hands something whose potential is even hard to imagine. Let's hope everything goes in the right direction.

Once the novelty factor is over, it'll be the same as refereeing for free, without even getting social credits with editors.

OK, but suppose you create an account and use it to referee, you'd get social credit at least here as a (usually anonymous I suppose) poster. Isn't this what several users in various forums try to do?
And regarding ejmr a s a whole it can be an incredible boost in its standing.

5 years ago # QUOTE 1 Volod 0 Vlad !
Economist
5708

^You can still email him privately so that your name shows up. Acknowledgements aren't important anyway, it's about having constructive discussion about a paper. No one forces you to referee either.

5 years ago # QUOTE 3 Volod 0 Vlad !
Economist
4f50

And regarding ejmr a s a whole it can be an incredible boost in its standing.

And people have been complaining for a long time about lack of econ discussion on EJMR, so we are trying to reverse that trend to make the forum useful.

5 years ago # QUOTE 3 Volod 0 Vlad !
Economist
f340

asked for feedback about the paper before, not a lot of comments, finally published in a journal suggested in the thread though

5 years ago # QUOTE 1 Volod 0 Vlad !
Economist
e249

Good luck Eric! I'm pretty drunk or I'd try to give some helpful comments.

Thanks. Probably you're sober now, and your excuse is gone. (The paper's not so boring that I think I'll make you an alcoholic trying to maintain the excuse)

5 years ago # QUOTE 2 Volod 0 Vlad !
Economist
e249

^"Consumer products companies might want to commit to lower prices to encourage Walmart and Target to set up more stores."
Uh-huh. Sure they will. Walmart and Target have thousands of stores and thousands of suppliers. Let's say they open a new store because a single supplier wants to give them cheap inputs. After the new shop is open, it reneges. Wal-mart wouldn't be in a position to punish it?
Movie theaters and car dealerships sound like better bets. But I bet each industry has its own peculiarities.

The effects I'm talking about would usually be at the margin, since most retailers sell many products. The manufacturer may be selling to 3,000 retailers, and the effect of committing to a lower price might be to induce 1 new retailer to open up--- but that might be worth it.

5 years ago # QUOTE 1 Volod 0 Vlad !
Economist
e249

Can I comment just based on the abstract, without reading the paper?

Yes, that's useful. Most people don't read beyond abstracts anyway unless the paper is a hit.

1. The idea sounds okay, but not AER level. RAND or another IO journal seems more realistic.

1.
Probably not, taking into account that my high opinion of the paper is biased. Of course, even if it's really medium-level, my personal incentive is to try high-level and hope for a mistaken acceptance

2. The result does not depend on the manufacturer having a monopoly. Imperfectly competitive manufacturers might also like to commit to lower prices to induce retailer entry.

2. Correct. Just before I put up the original post I took out a few words in the abstract saying that by "monopoly" I meant any firm with market power, downward sloping demand. Maybe I should put that back in.

3. Real world examples could be any industry with different firms that manufacture and distribute. Movie studios might want to commit to lower prices to encourage more movie theaters to enter. Car companies and fast food companies might want to commit to lower prices to encourage more dealers or franchises to open. Consumer products companies might want to commit to lower prices to encourage Walmart and Target to set up more stores.

4. Could this problem be solved by a contract in which the manufacturer agrees to pay part of the retailers' entry costs?

4. Yes, that is definitely a solution.

5 years ago # QUOTE 4 Volod 0 Vlad !
Economist
e249

There was another guy that recently asked ejmr for feedbacks (something related to banks if I remember correctly). If this is the beginning of a new trend and a new era for ejmr, Kirk has in his hands something whose potential is even hard to imagine. Let's hope everything goes in the right direction.

Once the novelty factor is over, it'll be the same as refereeing for free, without even getting social credits with editors.

No-- you can always sign your comments. I think that's socially OK, even if the goal is to get credit for the quality of your comments.

Note, by the way, that if you sign your comment and you comment using your ordinary login (e.g., WackyGuyFromTheMoon), your ordinary login loses its anonymity. Thus, you need to do what I did in the original post: comment "anonymously" but sign your real name to the end of your post (or, in my case, in the original post title).

5 years ago # QUOTE 0 Volod 0 Vlad !
Economist
c259

p.s.: If you do give me good comments and want another reward, I’m willing to provide you with the answer for another EJMR thread, “What’s the point of trying to date a single woman in her 40’s?”

Is it because of this?

https://www.swarthmore.edu/SocSci/bdorsey1/41docs/51-fra.html

5 years ago # QUOTE 1 Volod 0 Vlad !
Economist
dc91

The monopolist would set a two part tariff that extracts all of each retailers quasi rent. Hence there will be no independent retailers. This implication is not borne out in the world.

5 years ago # QUOTE 3 Volod 0 Vlad !
Economist
e249

I was thinking of exactly that Franklin memo. I was thinking of adding my own thoughts too.

p.s.: If you do give me good comments and want another reward, I’m willing to provide you with the answer for another EJMR thread, “What’s the point of trying to date a single woman in her 40’s?”

Is it because of this?
https://www.swarthmore.edu/SocSci/bdorsey1/41docs/51-fra.html

5 years ago # QUOTE 1 Volod 0 Vlad !
Economist
e249

The monopolist would set a two part tariff that extracts all of each retailers quasi rent. Hence there will be no independent retailers. This implication is not borne out in the world.

Sort of. In one theoretical world, the monopolist would, once the retailers entered, use something like a two part tariff to extract all the quasi rents, so no retailers would enter. If he can do that, though, probabably you want to model it that he can make a contract to pay the retailers their entry costs before they enter, so they ahve zero profits, and there is no hold-up problem and so the problem of my paper is gone.

Both of those contracts, though, have the problem that when you're dealing with a continuum of retailers, transaction costs make fancy contracting impractical.

5 years ago # QUOTE 1 Volod 0 Vlad !
Economist
e249

Possible example/relationship to existing literature: the patent hold-up problem.
Suppose a monopolist obtains a patent on some basic invention. In order to create any surplus from the basic research, it is necessary for some third parties to invent downstream commercial products built on the underlying basic technology.
Often, it will not be practical to contract ex ante on the long-run royalty rate for use of the patent. Instead, the downstream firms go away and sink a fixed cost into research effort to develop the follow-on product. Once they have "entered" with their new invention, they must pay a per-unit royalty to the upstream patent holder, which seems functionally akin to payment of a wholesale price to a retailer.
Paul Belleflamme has a nice blog post on the issue: http://www.ipdigit.eu/2016/06/what-is-patent-holdup-should-it-be-regulated-if-yes-how/

That's definitely related. The Belleflamme blog post is good and I'll contact him about whether my paper fits what he's talking about. I'll have to think more about this. Saturday I present my paper at the Int. Indus.Org. Soc. conference in Boston, so I can't procrastinate past Friday.

5 years ago # QUOTE 3 Volod 0 Vlad !
Economist
dc91

The monopolist would set a two part tariff that extracts all of each retailers quasi rent. Hence there will be no independent retailers. This implication is not borne out in the world.

Sort of. In one theoretical world, the monopolist would, once the retailers entered, use something like a two part tariff to extract all the quasi rents, so no retailers would enter. If he can do that, though, probabably you want to model it that he can make a contract to pay the retailers their entry costs before they enter, so they ahve zero profits, and there is no hold-up problem and so the problem of my paper is gone.
Both of those contracts, though, have the problem that when you're dealing with a continuum of retailers, transaction costs make fancy contracting impractical.

Quantity discounting is not super fancy. But anyway, I don't see why this not a pretty standard hold-up problem.

5 years ago # QUOTE 0 Volod 0 Vlad !
Economist
2bc9

It's just the downstream firm won't invest knowing the upstream firm can extract some of the quasi rent. The fact there are lots of downstream firms and the underinvestment takes form of too few firms does not make this fundamentally novel. I might say no even if submitted as EL.

5 years ago # QUOTE 2 Volod 0 Vlad !

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Eric Rasmusen wants paper comments and will thank EJMR if they’re useful

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