A New Approach to Estimating the Production Function for Housing

By Dennis Epple, Brett Gordon, and Holger Sieg

American Economic Review, June 2010

Dating to the classic works of Alonso, Mills, and Muth, the production function for housing has played a central role in urban economics and local public finance. This paper provides a new flexible approach for estimating the housing production function ...

Technology Adoption with Exit in Imperfectly Informed Equity Markets

By Katrin Tinn

American Economic Review, June 2010

This paper focuses on the importance of equity markets in facilitating the exit of entrepreneurs investing in technology. Entrepreneurs' willingness to invest and aggregate output is affected in two opposite ways. First, uncertainty about equity price or...

Is a Donor in Hand Better Than Two in the Bush? Evidence from a Natural Field Experiment

By Craig E. Landry, Andreas Lange, John A. List, Michael K. Price, and Nicholas G. Rupp

American Economic Review, June 2010

This study examines why people initially give to charities, why they remain committed to the cause, and what factors attenuate these influences. Using an experimental design that links donations across distinct treatments separated in time, we present sev...

Pinocchio's Pupil: Using Eyetracking and Pupil Dilation to Understand Truth Telling and Deception in Sender-Receiver Games

By Joseph Tao-yi Wang, Michael Spezio, and Colin F. Camerer

American Economic Review, June 2010

We report experiments on sender-receiver games with an incentive for senders to exaggerate. Subjects "overcommunicate" -- messages are more informative of the true state than they should be, in equilibrium. Eyetracking shows that senders look at payoffs i...

Trade Shocks and Labor Adjustment: A Structural Empirical Approach

By Erhan Artuç, Shubham Chaudhuri, and John McLaren

American Economic Review, June 2010

The welfare effects of trade shocks turn on the nature and magnitude of the costs workers face in moving between sectors. Using an Euler-type equilibrium condition derived from a rational expectations model of dynamic labor adjustment, we estimate the m...

Investment and Usage of New Technologies: Evidence from a Shared ATM Network

By Stijn Ferrari, Frank Verboven, and Hans Degryse

American Economic Review, June 2010

The success of new technologies depends on both the firms' investment and consumers' usage decisions. We study this problem in a shared ATM network. Inefficiencies may arise because banks coordinate investment, and consumers may not make proper use of t...

Intertemporal Consumption and Credit Constraints: Does Total Expenditure Respond to an Exogenous Shock to Credit?

By Søren Leth-Petersen

American Economic Review, June 2010

There is continuing controversy over the importance of credit constraints. This paper investigates whether total household expenditure and debt is affected by an exogenous increase in access to credit provided by a credit market reform that enabled Danish...

A Theory of Optimal Random Crackdowns

By Jan Eeckhout, Nicola Persico, and Petra E. Todd

American Economic Review, June 2010

An incentives based theory of policing is developed which can explain the phenomenon of random "crackdowns," i.e., intermittent periods of high interdiction/ surveillance. For a variety of police objective functions, random crackdowns can be part of the...

Peddling Influence through Intermediaries

By Wei Li

American Economic Review, June 2010

A sender may communicate with a decision maker through intermediaries. In this model, an objective sender and intermediary pass on information truthfully, while biased ones favor a particular agenda but also have reputational concerns. I show that the bia...

The Burden of the Nondiversifiable Risk of Entrepreneurship

By Robert E. Hall and Susan E. Woodward

American Economic Review, June 2010

Entrepreneurship is risky. We study the risk facing a well-documented and important class of entrepreneurs, those backed by venture capital. Using a dynamic program, we calculate the certainty-equivalent of the difference between the cash rewards that e...

What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns

By Glenn Ellison, Edward L. Glaeser, and William R. Kerr

American Economic Review, June 2010

Why do firms cluster near one another? We test Marshall's theories of industrial agglomeration by examining which industries locate near one another, or coagglomerate. We construct pairwise coagglomeration indices for US manufacturing industries from the ...

Specific Capital and Vintage Effects on the Dynamics of Unemployment and Vacancies

By Burcu Eyigungor

American Economic Review, June 2010

In a reasonably calibrated Mortensen and Pissarides matching model, shocks to average labor productivity can account for a small portion of the fluctuations in unemployment and vacancies (Shimer (2005)). I add heterogeneity in jobs (matches) with respect ...

Are Risk Aversion and Impatience Related to Cognitive Ability?

By Thomas Dohmen, Armin Falk, David Huffman, and Uwe Sunde

American Economic Review, June 2010

This paper investigates whether there is a link between cognitive ability, risk aversion, and impatience, using a representative sample of roughly 1,000 German adults. Subjects participate in choice experiments with monetary incentives measuring risk aver...

Policy Reversal

By Espen R. Moen and Christian Riis

American Economic Review, June 2010

We analyze the existence of policy reversal, the phenomenon sometimes observed that a certain policy (say extreme left-wing) is implemented by the "unlikely" (right-wing) party. We formulate a Downsian signaling model where the incumbent government, throu...

Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California: Comment

By Christopher T. Taylor, Nicholas M. Kreisle, and Paul R. Zimmerman

American Economic Review, June 2010

In a paper in the March 2004 AER, Justine Hastings concludes that the acquisition of an independent gasoline retailer, Thrifty, by a vertically integrated firm, ARCO, is associated with sizable price increases at competing stations. To better understand t...

Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California: Reply

By Justine Hastings

American Economic Review, June 2010

In their comment, Taylor, Kreisle and Zimmerman use gasoline price data taken from fleet card transactions at selected gasoline stations to re-examine a subset of results presented in Hastings (2004). Bringing new data to re-examine the question is a help...

Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates: Comment

By Brian D. Kelly

American Economic Review, June 2010

Blonigen and Haynes (2002) calculated that pass-through of antidumping duty estimates to U.S. pricing of 200% would be required to eliminate potential antidumping duties. However, this calculation was based on an error in interpretation of U.S. antidumpin...

Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates: Reply

By Bruce A. Blonigen and Stephen E. Haynes

American Economic Review, June 2010

This reply responds to a comment that correctly identifies an invalid assumption in our original article that antidumping (AD) duties are subtracted from the U.S. price when calculating AD duties in administrative reviews. While this point invalidates our...

Independent Auditor's Report

American Economic Review, June 2010

Front Matter

American Economic Journal: Applied Economics, July 2010