The Impact of Spectrum Quality on Wireless Telecom Competition
By Stephen Zhu
This paper explores the metrics used by FCC and others for evaluating competition between wireless telecom carriers. It focuses on the impact of wireless spectrum quality on the results of FCC spectrum auctions and the estimated market shares of wireless carriers. In this case, it is revealed that quality is affected by the physical attributes of and the policies that are imposed at auction. Further, accounting for quality can lead to changes in the perception of concentration in local markets. The findings here give insights that can be used to better evaluate the competitive landscape of telecom in the future.
Advisor: Michelle Connolly | JEL Codes: L, L4
Empirical Evidence of Airline Merger Waves Based on A Selective Entry Model
By Peichun Wang
Ever since the Deregulation Act in 1978 in the U.S. airline industry, there have been series of major airline mergers and acquisitions, notably three major waves in the 1980’s, 1990’s, and late 2000’s. These mergers, especially the more recent multi-billion mergers (e.g. Delta- Northwest, United-Continental) have shown a trend of substantial market consolidation that inevitably worries consumers as well as the U.S. Department of Justice (DoJ). Most academic literature to date have tried to study mergers in a static setting where these mergers are assumed to be exogenous. However, the clear pattern of merger waves in the airline industry, as well as many other industries, suggests strong correlation between mergers. A few studies that attempted at a dynamic merger model remain theoretical due to computational barriers. In this paper, I found empirical evidence of merger waves by investigating the change of airline carriers’ incentive to merge after another merger between two other carriers. These results are based on a structural model of the U.S. airline industry, in which I estimate demand with a standard (for dierentiated product markets) discrete-choice nested logit model, but allow for selection on entrants’ costs and qualities, i.e. rms with lower costs and higher qualities would have been selected into the market before the merger, suggesting that post-merger entry is less likely than what non-selective entry models have predicted.
Advisor: James Roberts | JEL Codes: L13, L25, L93 | Tagged: Airline, Merger Wave, Selective Entry
Game Theory and The World Marathon Majors
By Benjamin Jones
The World Marathon Majors (WMM) Series Prize was enacted in 2006 as a million dollar prize handed out annually to the top man and woman competing at five of the most important marathons. This paper considers the motivations behind setting up this prize, as well as the theoretical rationale for its existence and whether the empirical data supports these results. We find that the game theory model supports the ideas that the World Marathon Majors organizers state as their goals in creating the prize, but at the same time, there is not much empirical support as of yet to support any quantifiable changes within marathoning in the past few years. The regressions do not produce statistically significant data for finishing times decreasing even though the world record has been broken three times in these races since the implementation of the WMM. This may be due to the small number of observations and the fact that the series is so new. However, there are other areas of interest, such as an increase in World Record-breaking times or an increase in overall publicity, that may justify such a lucrative prize for these races. These topics are not included within the regressions and could be an area for further study.
Advisor: Curtis Taylor, Michelle Connolly | JEL Codes: C7, C73, L83 | Tagged: Game Theory, Marathon, Sports Economics, Tournament Theory
Incentives in Professional Tennis: Tournament Theory and Intangible Factors
By Steven Seidel and Joshua Silverman
This paper analyzes the incentives of professional tennis players in a tournament setting, as a proxy for workers in a firm. Previous studies have asserted that workers exert more effort when monetary incentives are increased, and that effort is maximized when marginal pay dispersion varies directly with position in the firm. We test these two tenets of tournament theory using a new data set, and also test whether other “intangible factors,” such as firm pride or loyalty, drive labor effort incentives. To do this, we analyze the factors that incentivize tennis players to exert maximal effort in two different settings, tournaments with monetary incentives (Grand Slams) and tournaments without monetary incentives (the Davis Cup), and compare the results. We find that effort exertion increases with greater monetary incentive, and that certain intangible factors can often have an effect on player incentives.
Advisor: Curtis Taylor, Marjorie McElroy | JEL Codes: J31, J33, L38 | Tagged: Compensation, Sports, Tournament Theory
