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Research and Perspectives

This page is dedicated to the current research and insights of the faculty and PhD students of the Department of Economics.

The opinions expressed in the blogs are those of the individual authors and do not necessarily represent the views of Northeastern University.

Blogs:

 


https://www.brookings.edu/blog/the-avenue/2016/08/23/summer-jobs-programs-what-do-we-know/


Recently Published:

 

Professor James Danas research on product bundling and tying, co-authored with Professor Kathryn Spier at Harvard University, has been published in the Spring 2018 issue of the RAND Journal of Economics.  Professors Dana and Spier extend a basic model of experience goods (goods whose quality is difficult to observe) with private monitoring to allow firms selling two experiences to require to consumers to purchase both products as a bundle.  Bundling improves consumer monitoring and raises the effectiveness of consumer punishment.  They show that bundling can make both consumers and the firm better off.  They also characterize the types of experience goods for which these benefits might be largest, suggesting a guide for policy makers to understand when the benefits of product bundling could exceed the well-known anticompetitive effects.
Abstract:
With imperfect private monitoring, a firm selling two experience goods can increase both producer and consumer surplus by bundling. Bundling constrains consumers to buy two products, making consumers better informed and ensuring that they use tougher punishment strategies. Both increased monitoring and increased punishment benefit other consumers, so bundling overcomes a free-rider problem. The social value of bundling is even larger if consumers cannot attribute a negative signal to the specific product that generated it, or if one of the two goods is a durable and the other is a complementary nondurable. Our results are robust to mixed bundling.

Link to paper: Bundling and quality assurance


The Antitrust Revolution 7th edition by John Kwoka  (Neal F. Finnegan Distinguished Professor of Economics) and New York University’s Larry White has been released. This book examines the critical role of economic analysis in recent antitrust

case decisions and policy.

This fully updated edition contains 23 case studies – 17 of which are new – written by prominent economists who participated in the proceedings of their respective cases. The case studies provide insight into how economists think about

 

antitrust issues as well as the influences of economics in antitrust processes.

Read more at the Oxford University Press website.


Professor John Kwoka’s paper, “The Structural Presumption and the Safe Harbor in Merger Review: False Positives or Unwarranted Concerns” has been published in the recent issue (Volume 81, No. 3) of the Antitrust Law Journal.

Excerpt:

Crucial areas of antitrust in the United States have undergone tectonic shifts in the past 30 or 40 years. Views of strategic pricing, vertical restraints, monopoly practices, and mergers that dominated policy until the 1960s have been transformed, resulting in approval of firm conduct and market structures that would have been unthinkable some years earlier. While the extremes of past practice have few advocates, some observers have expressed concern that the transformation may have gone too far and tipped the balance in favor of policy that is too permissive. Of course, it is not easy to get the balance right. Individual cases differ, evidence varies in quality, and alternative explanations abound; hence, some policy errors are inevitable. It is, on the other hand, easyto get the balance wrong, and in this article I will provide some evidence that recent policy in the area of merger control has gotten that balance wrong. The specific issue is the role of market structure in merger review, and the balance in question concerns errors of omission versus commission

Link to paper


The paper, Nonprice Effects of Mergers: Issues and Evidence, by John Kwoka (Neal F. Finnegan Distinguished Professor of Economics) and PhD candidate Shawn Kilpatrick has been published in the June 2018 issue of  The Antitrust Bulletin.

Abstract:

Mergers may impact price as well as non-price forms of competition in the form of product quality,
variety, service, and innovation. This special issue of the Antitrust Bulletin examines the increasing
importance of non-price dimensions of competition in merger analysis, the challenges that non-price
effects pose for antitrust merger enforcement, and approaches for enhancing the analysis and role of
non-price competition in merger enforcement decisions and competition policy responses. This is a
critical discussion that informs the debate over the importance and adequacy of the consumer welfare
standard, which is the prevailing standard for evaluating the competitive effects of mergers and
nonmerger conduct.


Northeastern University Visiting Assistant Teaching Professor Madhavi Venkatesan is the co-editor of the latest issue of The Journal of International Women’s Studies which features selected papers of the Third World Conference on Women’s Studies that was held in Colombo, Sri Lanka.  Madhavi Venkatesan presently serves as a member of the Editorial Board and going forward will be the book review editor.

The Journal of International Women’s Studies is an on-line, open-access, peer reviewed feminist journal that provides a forum for scholars, activists, and students to explore the relationships among theories of gender and sexuality and various forms of organizing and critical practice.

Link to journal


The Cost of Financing Education: Can Student Debt Hinder Entrepreneurship?

Management Science

Karthik Krishnan and Pinshuo Wang

In May, Pinshuo Wang, PhD 2018  had the research paper “The Cost of Financing Education: Can Student Debt Hinder Entrepreneurship?” co-authored with Professor Karthik Krishnan in Finance department of Northeastern’s D’Amore-McKim School of Business, published in  Management Science.

They find that student debt is negatively related to the propensity of individuals to start a firm. They show that an exogenous change due to the Higher Education Amendments of 1998, which made student debt completely non-dischargeable through personal bankruptcy, reduced the likelihood of entrepreneurship by student loan borrowers. Moreover, an exogenous shock to the level of student debt, due to the Higher Education Amendments of 1992, negatively impacted entrepreneurship rates for students already in four-year college at the time of this regulation. They conclude that student debt inhibits entrepreneurship by exacerbating the effect of negative business outcomes on the individual.


Working Papers

 

Alicia Sasser Modestino  2017. “How Do Summer Youth Employment Programs Improve Criminal Justice Outcomes, and for Whom?” Federal Reserve Bank of Boston, Community Development Discussion Paper No. 17-01.

https://www.bostonfed.org/publications/community-development-discussion-paper/2017/how-do-summer-youth-employment-programs-improve-criminal-justice-outcomes-and-for-whom.aspx

 

Alicia Sasser Modestino Daniel Shoag, and Joshua Ballance 2016. “Downskilling: Changes in Employer Skill Requirements Over the Business Cycle.” Federal Reserve Bank of Boston, Working Paper No. 16-7.

https://www.bostonfed.org/publications/research-department-working-paper/2016/downskilling-changes-in-employer-skill-requirements-over-the-business-cycle.aspx


Policy Reports:

 

Alicia Sasser Modestino, Rachel Sederberg, Liana Tuller 2016. “An Evaluation of the Boston Youth Credit Building Initiative: Baseline Report.” Office of Financial Empowerment, City of Boston, May.

https://owd.boston.gov/wp-content/uploads/2017/06/Boston-Youth-Credit-Building-Initiative_report.pdf

Rachel Sederberg is a PhD candidate in the Economics department who is graduating in the spring of 2019

 

Alicia Sasser Modestino and Trinh Nguyen.  2016. “The Potential for Summer Youth Employment Programs to Reduce Inequality: What Do We Know?” Federal Reserve Bank of Boston, Regional and Community Outreach Issue Brief 16-03.

https://www.bostonfed.org/publications/community-development-issue-briefs/2016/the-potential-for-summer-youth-employment-programs-to-reduce-inequality-what-do-we-know.aspx