Papers Containing Tag(s): 'Herfindahl Hirschman Index'
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Authors
Hyunseob Kim - 3
Kevin Rinz - 3
Viewing papers 31 through 40 of 44
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Working PaperThe Role of Agents and Brokers in the Market for Health Insurance
December 2013
Working Paper Number:
CES-13-58
Health insurance markets in the United States are characterized by imperfect information, complex products, and substantial search frictions. Insurance agents and brokers play a significant role in helping employers navigate these problems. However, little is known about the relation between the structure of the agent/broker market and access and affordability of insurance. This paper aims to fill this gap by investigating the influence of agents/brokers on health insurance decisions of small firms, which are particularly vulnerable to problems of financing health insurance. Using a unique membership database from the National Association of Health Underwriters together with a nationally representative survey of employers, we find that small firms in more competitive agent/broker markets are more likely to offer health insurance and at lower premiums. Moreover, premiums are less dispersed in more competitive agent/broker markets.View Full Paper PDF
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Working PaperThe Real Effects of Hedge Fund Activism: Productivity, Risk, and Product Market Competition
July 2012
Working Paper Number:
CES-12-14
This paper studies the long-term effect of hedge fund activism on the productivity of target firms using plant-level information from the U.S. Census Bureau. A typical target firm improves its production efficiency within two years after activism, and this improvement is concentrated in industries with a high degree of product market competition. By following plants that were sold post-intervention, we also find that efficient capital redeployment is an important channel via which activists create value. Furthermore, our analyses demonstrate that measuring performance using the Compustat data is likely to lead to a downward bias because target firms experiencing greater improvement post-intervention are also more likely to disappear from the Compustat database. Finally, consistent with recent work in asset-pricing linking firm investment decisions and expected returns, we show how changes to target firms' productivity are associated with a decline in systemic risk, particularly in competitive industries.View Full Paper PDF
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Working PaperAgglomerative Forces and Cluster Shapes
June 2012
Working Paper Number:
CES-12-09
We model spatial clusters of similar firms. Our model highlights how agglomerative forces lead to localized, individual connections among firms, while interaction costs generate a defined distance over which attraction forces operate. Overlapping firm interactions yield agglomeration clusters that are much larger than the underlying agglomerative forces themselves. Empirically, we demonstrate that our model's assumptions are present in the structure of technology and labor flows within Silicon Valley and its surrounding areas. Our model further identifies how the lengths over which agglomerative forces operate influence the shapes and sizes of industrial clusters; we confirm these predictions using variations across both technology clusters and industry agglomeration.View Full Paper PDF
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Working PaperIPO Waves, Product Market Competition, and the Going Public Decision: Theory and Evidence
March 2012
Working Paper Number:
CES-12-07
We develop a new rationale for IPO waves based on product market considerations. Two firms, with differing productivity levels, compete in an industry with a significant probability of a positive productivity shock. Going public, though costly, not only allows a firm to raise external capital cheaply, but also enables it to grab market share from its private competitors. We solve for the decision of each firm to go public versus remain private, and the optimal timing of going public. In equilibrium, even firms with sufficient internal capital to fund their new investment may go public, driven by the possibility of their product market competitors going public. IPO waves may arise in equilibrium even in industries which do not experience a productivity shock. Our model predicts that firms going public during an IPO wave will have lower productivity and post-IPO profitability but larger cash holdings than those going public off the wave; it makes similar predictions for firms going public later versus earlier in an IPO wave. We empirically test and find support for these predictions.View Full Paper PDF
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Working PaperProfessional Employer Organizations: What Are They, Who Uses Them and Why Should We Care?
September 2010
Working Paper Number:
CES-10-22
More and more U.S. workers are counted as employees of firms that they do not actually work for. Among such workers are those who staffed by temporary help service (THS) agencies and leased employees who are on the payroll of professional employment organizations (PEOs) but work for PEOs' client firms. While several papers study firms' use of THS services, few examine firms' use of PEO services. In this article, we summarize PEOs' business practices and examine how the intensity of their use varies across industries, geographic areas, and establishment characteristics using both public and confidential data.View Full Paper PDF
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Working PaperInformation and Industry Dynamics
August 2010
Working Paper Number:
CES-10-16R
This paper develops a dynamic industry model in which firms compete to acquire customers over time by disseminating information about themselves under the presence of random shocks to their efficiency. The properties of the model's stationary equilibrium are related to empirical regularities on firm and industry dynamics. As an application of the model, the effects of a decline in the cost of information dissemination on firm and industry dynamics are explored.View Full Paper PDF
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Working PaperEmployee Capitalism or Corporate Socialism? Broad-Based Employee Stock Ownership
December 2009
Working Paper Number:
CES-09-44
How employee share ownership plans (ESOPs) affect employee compensation and shareholder value depends on the size. Small ESOPs, defined as those controlling less than 5% of outstanding shares, benefit both workers and shareholders, implying positive productivity gains. However, the effects of large ESOPs on worker compensation and shareholder value are more or less neutral, suggesting little productivity gains. These differential effects appear to be due to two non-value-creating motives specific to large ESOPS: (1) To form management-worker alliances ala Pagano and Volpin (2005), wherein management bribes workers to garner worker support in thwarting hostile takeover threats and (2) To substitute wages with ESOP shares by cash constrained firms. Worker compensation increases when firms under takeover threats adopt large ESOPs, but only if the firm operates in a non-competitive industry. The effects on firm valuation also depend on the strength of product market competition: When the competition is strong (weak), most of the productivity gains accrue to employees (shareholders). Competitive industry also implies greater job mobility within the industry, enabling workers to take a greater portion of productivity gains.View Full Paper PDF
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Working PaperOn Spatial Heterogeneity in Environmental Compliance Costs
September 2009
Working Paper Number:
CES-09-25R
This paper examines the extent of variation in regulatory stringency below the state level, using establishment-level data from the U.S. Census Bureau's Pollution Abatement Costs and Expenditures (PACE) survey to estimate a county-level index of environmental compliance costs (ECC). County-level variation is found to explain 11-18 times more of the variation in ECC than state-level variation alone, and the range of ECC within a state is often large. At least 34% of U.S. counties have ECC that are statistically different from their states'. Results suggest that important spatial variation is lost in state-level studies of environmental regulation.View Full Paper PDF
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Working PaperConcentration Levels in the U.S. Advertising and Marketing Services Industry: Myth vs. Reality
August 2009
Working Paper Number:
CES-09-16
We analyze changes in concentration levels in the U.S. Advertising and Marketing Services industry using data from the U.S. Census Bureau's quinquennial Economic Census and the Service Annual Survey. Heretofore largely ignored, these data allow us to redress some of the measurement problems surrounding estimates found in the existing literature Firm level concentration as measured by the Herfindahl-Hirschman Index varies across the sectors comprising the industry, but all are within the range generally considered as indicative of a competitive industry. At the holding company level, the four largest organizations account for about a quarter of the industry's total revenue, a share lower by an order of magnitude than that frequently cited in the trade press.View Full Paper PDF
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Working PaperEconomic Factors Underlying the Unbundling of Advertising Agency Services
August 2009
Working Paper Number:
CES-09-15
This paper addresses a longstanding puzzle involving the unbundling of services that has occurred over more than two decades in the U.S. advertising agency industry: How can the shift from the bundling to the unbundling of services be explained and what accounts for the slow pace of change? Using a cost-based theoretical framework of bundling due to Evans and Salinger (2005, 2008), we develop a simple model of an advertising agency's decision to unbundle its services as a tradeoff between the fixed cost to the advertiser of establishing and maintaining a relationship with an advertising agency and pecuniary economies of scale available in providing media services. The results from an econometric analysis of cross-sectional and pooled data collected by the U.S. Census Bureau for quinquenial censuses conducted between 1982 and 2002 support the key predictions of the model. We find that advertising agency establishments are more likely to unbundle if they are large and diversified in their service offerings and are less likely to do so with increasing age and greater geographical scope. We also find a strong trend toward unbundling over time, a result that is partially explained by increases in media prices over time.View Full Paper PDF
