Texas A&M University
College Station, TX 77843-4228
NBER Working Papers and Publications
|March 2010||Estimating Network Economies in Retail Chains: A Revealed Preference Approach|
with Paul B. Ellickson, Christopher Timmins: w15832
We measure the effects of chain economies, business stealing, and heterogeneous firms' comparative advantages in the discount retail industry. Traditional entry models are ill-suited for this high-dimensional problem of strategic interaction. Building upon recently developed profit inequality techniques, our model admits any number of potential rivals and stores per location, an endogenous distribution network, and unobserved (to the econometrician) location attributes that may cause firms to cluster their stores. In an application, we find that Kmart and Target benefit most from local chain economies; Wal-Mart's advantage is more global. We explore these results with counterfactual simulations highlighting these offsetting effects.
Published: "Estimating Network Economies in Retail Chains: A Revealed Preference Approach," with Stephanie Houghton and Paul Ellickson. RAND Journal of Economics. Vol.44, No.2 (2013):169-193.
|February 2006||Bidding for Incomplete Contracts: An Empirical Analysis|
with Patrick Bajari, Steve Tadelis: w12051
Procurement contracts are often incomplete because the initial plans and specifications are changed and refined after the contract is awarded to the lowest bidder. This results in a final cost to the buyer that differs from the low bid, and may also involve significant adaptation and renegotiation costs. We propose a stylized model of bidding for incomplete contracts and apply it to data from highway paving contracts. Reduced form regressions suggest that bidders respond strategically to contractual incompleteness and that adaptation costs, broadly defined, are an important determinant of the observed bids. We then estimate the costs of adaptation and bidder markups using a structural auction model. The estimates suggest that adaptation costs on average account for about ten percent of th...