The OMDS/VGSE Vienna Joint Economics seminar is held weekly on Thursdays during the term.
VJE-Seminars scheduled in October:
- Speaker: Nicolas de Roos (The University of Liverpool)
- Title: Negotiating Coordination: A Study in Retail Gasoline
- Time: Thursday, Oct. 23, 1:15 – 2:45 pm
- Location: Lecture Hall 9 (1-floor), OMP-1
- Abstract: This paper studies the role of market prices in coordinating and renegotiating market outcomes absent direct communication. We examine a gradual, sometimes disruptive, equilibrium transition with these characteristics using a unique dataset of daily and hourly station-level prices from an urban gasoline market. Aided by an information-sharing platform, the firms transition over seven years from a coordinated pricing structure with focal pricing rules to another with price signaling. Along the path, we observe recurrent deviations from focal pricing rules that entail substantial price undercutting and business stealing without immediate punishment. We also uncover a price war involving renegotiation, punishments, and resolution strictly through prices. Lastly, we document how, absent direct communication, firms can actively evolve a pricing structure to limit rivals’ deviation and undercutting incentives to enable long-lasting price-enhancing coordination. Overall, our findings establish that prices can yield a sufficiently rich communication medium for implementing and renegotiating collusive pricing structures, yet involve firms needing to overcome significant strategic uncertainty in doing so. We discuss implications for theories of collusion in economics and policies for detecting and prosecuting cartels.
- Speaker: Elisa Giannone (CREI)
- Title: Unpacking Moving - A Quantitative Spatial Equilibrium Model with Wealth
- Time: Thursday, Oct. 2, 1:15 – 2:45 pm
- Location: Lecture Hall 9 (1-floor), OMP-1
- Abstract: We argue that incomplete markets and income risk explain a large fraction of moving rates, especially for low-wealth individuals. We reach this conclusion by developing a quantitative dynamic spatial equilibrium model with endogenous wealth accumulated through liquid and illiquid assets (homeownership) under income risk and incomplete markets. Given the rich individual and spatial heterogeneity, our model is well-suited to compare people- to place-based policies aimed at reducing inequality. Do moving vouchers (people-based) or reduction in housing regulations (place-based) enhance welfare relatively more for the poor? Moving vouchers only marginally increase the welfare of eligible households, and those who receive the vouchers tend to move to locations with lower house prices and wages. In contrast, lower housing regulations in Vancouver can substantially decrease the welfare gap between the rich and poor nationwide. As this policy increases housing affordability in more productive cities, it reduces the incentive for low-wealth families to move precautionarily to low housing costs locations. Lower housing costs increases the insurance value of high-income cities and allows for higher wealth accumulation through homeownership for poorer households.
