Topics in Industrial Organization

NBER Reporter, Fall 1989 | Go to article overview
Save to active project

Topics in Industrial Organization

Topics in Industrial Organization

The NBER held a conference on "Topics in Industrial Organization" in Cambridge on July 31 and August 1. NBER researchers Paul L. Joskow and Nancy L. Rose, both of MIT, organized the following program:

Severin Borenstein, University of Michigan, "Price

Discrimination in Retail Gasoline Markets"

Discussant: Andrea L. Shepard, MIT

Ann F. Friedlaender, MIT, "Efficient Rail Rates and


Discussant: John R. Meyer, Harvard University

Michael A. Salinger, Columbia University, "A Test of

Successive Monopoly and Foreclosure Effects:

Vertical Integration between Cable Systems and

Pay Service"

Discussant: Paul L. Joskow

Scott E. Masten and Edward A. Snyder, University of

Michigan, and James W. Meehan, Jr., Colby

College, "The Cost of Organization"

Discussant: Ingo Volgelsang, Boston University

Randal R. Rucker, North Carolina State University,

and Keith B. Leffler, University of Washington,

"Transaction Costs and Efficient Organization of

Production: A Study of Timber Harvesting"

Discussant: R. Glenn Hubbard, NBER and Columbia


William P. Rogerson, Northwestern University,

"Profit Regulation of Defense Contractors and Prizes

for Innovation" (This paper is summarized in

"Studies of Firms and Industries" in this issue.)

Discussant: Michael D. Whinston, NBER and Harvard


James Blumstein, Vanderbilt University; Randall

Bovbjerg, Urban Institute; and Frank A. Sloan,

NBER and Vanderbilt University, "Valuing Life and

Limb in Tort: A Common Law of Damages and

Insurance Contracts for Future Services"

Discussant: Joseph P. Newhouse, Harvard University

Michael Moore and W. Kip Viscusi, Duke University,

"The Effect of Product Liability on Innovation"

Discussant: Roger G. Noll, Stanford University

Ralph Winter, University of Toronto, "The Dynamics

of Competitive Insurance Markets"

Discussant: J. David Cummins, University of


Why is the retail margin on regular unleaded gasoline consistently higher than the retail margin on regular leaded gasoline? The average difference grew from less than one cent in 1979 to more than five cents in 1986 but since has fallen to about two-and-a-half cents in 1989. Borenstein finds that cost-based explanations --focusing on differences in inventory costs, average size of purchases, or use of credit cards--explain little, if any, of the levels or changes in margin differences. Using a panel of gasoline prices in 57 SMSAs from 1984 to 1989, Borenstein finds price discrimination based on heterogeneity in buyers' costs of switching sellers. As the average income of buyers of leaded gas has fallen relative to the average income of buyers of unleaded gas, the margin difference has widened. After 1986, many stations stopped selling leaded gas--increasing the relative switching costs of buyers of leaded gas--and the margin on leaded gas has risen relative to the margin on unleaded gas. Changes in relative incomes explain a small proportion of the changes in margin differences. But the decline in the availability of leaded gasoline explains between one-quater and one-half of the change in margin of differences since 1986.

Are "fair" rates to captive shippers compatible with "fair" rates of return for the railroads in the period of quasi-deregulation since 1980? To answer this, Friedlaender develops a model in which a public utility faces a breakeven constraint while selling in two sectors: a competitive one, in which price equals marginal cost, and a captive one, which has to bear the entire revenue burden.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Topics in Industrial Organization


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?