Institute of Applied Economics
3000, chemin de la Cote-Sainte-Catherine
Montreal (Quebec) H3T 2A7
Tel: (514) 340-7034
Fax: (514) 340-6469
NBER Working Papers and Publications
|February 2014||Search Frictions and Market Power in Negotiated Price Markets|
with Jason Allen, Jean-François Houde: w19883
This paper develops and estimates a search and bargaining model designed to measure the welfare loss associated with frictions in oligopoly markets with negotiated prices. We use the model to quantify the consumer surplus loss induced by the presence of search frictions in the Canadian mortgage market, and evaluate the relative importance of market power, inefficient allocation, and direct search costs in explaining the loss. Our results suggest that search frictions reduce consumer surplus by almost $20 per month per consumer, and that 17% of this reduction can be associated with discrimination, 30% with inefficient matching, and the remainder with the search cost.
|June 2013||The Effect of Mergers in Search Market: Evidence from the Canadian Mortgage Industry|
with Jason Allen, Jean-François Houde: w19126
We examine the relationship between concentration and price dispersion using variation induced by a merger in the Canadian mortgage market. Since interest rates are determined through a search and negotiation process, consolidation eliminates a potential negotiation part- ner, weakening consumers bargaining positions. We combine reduced-form techniques to es- timate the mergers distributional impact, with a structural model to measure market power across consumers with different search costs. Our results show that competition benefits only consumers at the bottom and middle of the transaction price distribution. Estimates from a search and negotiation model attribute these differences to the presence of large search frictions.
Published: Jason Allen & Robert Clark & Jean-Fran?ois Houde, 2014. "The Effect of Mergers in Search Markets: Evidence from the Canadian Mortgage Industry," American Economic Review, American Economic Association, vol. 104(10), pages 3365-96, October. citation courtesy of
|January 2010||Virtual Borders: Online Nominal Rigidities and International Market Segmentation|
with Jean Boivin, Nicolas Vincent: w15642
Do prices respond to macro shocks? Does the mere presence of international frontiers hinder trade? We revisit these questions by studying a dataset of online book prices for a number of US and Canadian retailers. We believe our dataset is well suited to this task for a number of reasons: (1) data for multiple retailers are available; (2) the products sold are identical across retailers; (3) the sample spans a period of large fluctuations in the bilateral exchange rate; (4) the nature of the industry is such that physical distance is irrelevant beyond shipping costs which are observable; (5) nominal frictions in the form of menu costs are arguably minimal; and (6) proxies for sales are available for most retailers. Given the unique nature of our dataset, the first objective of the paper is ...
Published: Jean Boivin & Robert Clark & Nicolas Vincent, 2012. "Virtual borders," Journal of International Economics, vol 86(2), pages 327-335.