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on Contract Theory and Applications |
| By: | Kai Hao Yang (Cowles Foundation, Yale University) |
| Abstract: | A data broker sells market segmentations created by consumer data to a producer with private production cost who sells a product to a unit mass of consumers with heterogeneous values. In this setting, I completely characterize the revenue-maximizing mechanisms for the data broker. In particular, every optimal mechanism induces quasi-perfect price discrimination. That is, the data broker sells the producer a market segmentation described by a cost-dependent cutoff, such that all the consumers with values above the cutoff end up buying and paying their values while the rest of consumers do not buy. The characterization of optimal mechanisms leads to additional economically relevant implications. I show that the induced market outcomes remain unchanged even if the data broker becomes more active in the product market by gaining the ability to contract on prices; or by becoming an exclusive retailer, who purchases both the product and the exclusive right to sell the product from the producer, and then sells to the consumers directly. Moreover, vertical integration between the data broker and the producer increases total surplus while leaving the consumer surplus unchanged, since consumer surplus is zero under any optimal mechanism for the data broker. |
| Keywords: | Price discrimination, Market segmentation, Mechanism design, Virtual cost |
| JEL: | D42 D82 D61 D83 L12 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2258&r=all |
| By: | Bernardo Fanfani (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore) |
| Abstract: | This paper studies the wage and employment e ects of Italian collective bargaining, analysing monthly data on the population of private-sector employees matched with information on contractual pay levels settled in industry-wide agreements bargained by trade unions' and employers' representatives at the national level. The research design exploits the generalised wage growth induced by changes in contractual pay levels, whose timing and size di ers across collective agreements, and it compares the outcomes of interest within sectors and geographical locations between workers subject to di erent contracts. The specification adopted controls for space-specific sectoral unobserved time-varying disturbances in a fully non-parametric way. Results show that a growth in contractual wages increases actual pay levels, determining at the same time negative effects on employment. The confidence interval of the implied own-price labour demand elasticity ranges between -0.4 and -1.2 in the preferred model specification. The interactions of this parameter with firm-level outcomes {value added per worker, size, the labour share and capital intensity{ are broadly consistent with Hicks-Marshall laws and with traditional models of centralized wage bargaining. Further analyses carefully document the dynamics of employment adjustments to contractual wage levels across time and assess the overall robustness of the results. |
| Keywords: | collective bargaining, labour demand, employment, industrial relations, minimum wage. |
| JEL: | J01 J08 J21 J23 J38 J52 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie1:def095&r=all |
| By: | Joseph E. Stiglitz |
| Abstract: | This paper analyzes the economic impact of the pandemic, providing insights into the consequences of alternative policies. Our framework focuses on three key features: (a) Covid-19 is a sectoral shock of unknown depth and duration affecting some sectors and technologies more than others; (b) there are constraints in shifting resources across sectors; and (c) there is a high level of uncertainty about the disease and its economic aftermath, inducing a high level of precautionary behavior by some agents and leading to others facing more severe credit constraints. Because of macroeconomic externalities, precautionary behavior exacerbates the downturn, and even sectors where Covid-19 does not directly affect consumption or production may face unemployment. Multipliers associated with different government expenditure programs differ markedly. The paper describes policies that can mitigate precautionary behavior, leading to reduced unemployment. Greater wage flexibility may lead to increased unemployment. The precautionary behavior is the antithesis of equilibrium behavior, suggesting that standard equilibrium approaches may not provide the appropriate framework for analyzing the pandemic: individuals know that they don’t know the future, that existing and newly made contracts and plans may be broken, and that they need to be able to respond to these unknowable contingencies. |
| JEL: | B22 E21 E23 E24 E61 E63 G28 J21 J23 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27992&r=all |