Lynne Pepall | Tufts University (original) (raw)

Papers by Lynne Pepall

SSRN Electronic Journal, 2006

Page 1. Crowding Out and Competition in the Religious Marketplace By Lynne Pepall*, Dan Richards*... more Page 1. Crowding Out and Competition in the Religious Marketplace By Lynne Pepall*, Dan Richards*, John Straub* and Michael DeBartolo* ABSTRACT We examine charitable spending by faith-based organizations on community services. We find ...

Contributions in Economic Analysis & Policy, 2004

The rise of managed healthcare organizations (MCOs) and the associated increased integration amon... more The rise of managed healthcare organizations (MCOs) and the associated increased integration among providers has transformed US healthcare and at the same time raised antitrust concern. This paper examines how competition among MCOs affects the efficiency gains of improved price coordination achieved through integration. MCOs offer differentiated services and contract with specialized and complementary upstream providers to supply these services. We identify strategic pricing equilibria under three different market structures: overlapping upstream physician-hospital alliances, upstream-downstream arrangements such as Preferred Provider Organizations, and vertically integrated Health Maintenance Organizations. The efficiency gains achieved depend not only on organizational form but also on the toughness of premium competition. We show that, contrary to popular thinking, providers and insurers do not earn maximum net revenue when they are monopolies or monopsonies, but rather at an in...

This paper examines the relationship between a differentiated downstream market and a specialized... more This paper examines the relationship between a differentiated downstream market and a specialized upstream market. We analyze four different ways price competition takes place between the upstream and downstream sectors when the upstream market supplies specialized and complementary inputs to a downstream product differentiated market. The first is the benchmark case of decentralized markets, the second is a network of alliances among upstream suppliers, the third is partial vertical integration and the fourth is an upstream consortium of suppliers. We identify the perfect equilibrium for a symmetric model in each case. The key factor affecting prices and the relative profitability of the different market organizations is the degree of product differentiation among the downstream firms. This factor is important not only because it affects profitability downstream, but also because it affects indirectly the intensity of competition among upstream suppliers. We also show that vertical...

This paper offers an analysis of the evolution of e-commerce markets. We develop a model in which... more This paper offers an analysis of the evolution of e-commerce markets. We develop a model in which an initial group of small, no-name “click ” firms create such markets by offering horizontally differentiated customized or “versioned ” products and competing in prices. Subsequently, a traditional “brick ” firm enters by stretching its brand name into the digital marketplace. Such entry causes many initial entrants to exit. Contrary to much popular and formal literature, we show that the volume of initial entry may well be inefficiently low despite the anticipated later exit. In addition, the conventional relationship between sunk cost and market structure is substantially weakened.

We model the choice of firms competing in prices in a differentiated products market to bundle ad... more We model the choice of firms competing in prices in a differentiated products market to bundle advertising messages with their goods in return for payment from advertisers. From the firms’ perspective, the potential to earn revenue from advertisers, makes advertising a “good”. However, because consumers in the product market dislike such advertising, the bundling dampens demand and in this sense is a “bad”. There is also a third role played by advertising, however. Since a firm that bundles advertisements with its good sells a less attractive good, it has to price more aggressively than one that does not do such bundling. Thus, bundling advertisements with the good can lead to more aggressive product pricing and thereby intensify product market competition. In this sense, advertising can make things “ugly”.

Recent empirical studies point to the need for a model of bilateral market power between health p... more Recent empirical studies point to the need for a model of bilateral market power between health plans and provider organizations. We develop such a model and use it to analyze the impact on cost and access of alternative contractual relationships between plans and providers. The plans differentiate themselves through distinct, albeit overlapping, provider networks of specialized, complementary inputs (physician groups and hospitals). We analyze subgame perfect strategic pricing equilibria for a range of possible contractual relationships between the upstream providers and the downstream insurers, including different internal organizational structures of vertically integrated health plans, such as group- and staff-model HMOs and PPOs. A decentralized market structure produces inefficiencies from pricing coordination failures. Integration may be able to overcome pricing inefficiencies, with performance affected by the internal organization of vertically integrated health plans. Provid...

Review of Industrial Organization, 2021

Digital markets provide firms with vast amounts of consumer data. Economists who have explored th... more Digital markets provide firms with vast amounts of consumer data. Economists who have explored this phenomenon have focused on how firms use data to implement price discrimination. Targeted advertising in this context transmits different price information to different consumers. However, advertising is itself often valued by consumers, and can be viewed as a complement to the advertised product. Such advertising may also be customized and targeted. We investigate how targeted value-enhancing advertising affects competition. Competing for consumers with targeted advertising leads overall to higher prices and increases consumer surplus but reduces profitability. In certain markets the advertising is inefficiently over-supplied.

Declining college matriculation rates, the unrelenting rise in net tuition costs and the question... more Declining college matriculation rates, the unrelenting rise in net tuition costs and the questionable quality of some accredited degree programs has led to heightened public scrutiny of the higher education sector. There is current political pressure on institutions to increase access in a manner that does not require a large and growing student debt burden. Selective and top ranked schools with large endowments that charge high tuition have been cast in unfavorable light, and yet expanding access could diminish the selectivity that makes their degrees highly valued. At the same time innovations in digital learning have enabled scalability in education that has previously not been feasible, presenting a potential disruption in traditional higher education. This paper explores these issues in a vertically differentiated model with both selective and nonselective institutions. Selective institutions offer a high quality of education where value added is gained by limiting enrollment. ...

About the Authors. Preface. PART I MICROECONOMIC FOUNDATIONS. 1 Industrial Organization and Imper... more About the Authors. Preface. PART I MICROECONOMIC FOUNDATIONS. 1 Industrial Organization and Imperfect Competition: What, How, and Why? 1.1 What Is Industrial Organization? 1.2 How We Analyze Imperfect Competition. 1.3 Why: Antitrust Policy and Industrial Organization Theory. Summary. Problems. References. Appendix-Excerpts from Key Antitrust Statutes. 2 Basic Microeconomics. 2.1 Competition versus Monopoly: The Poles of Market Performance. 2.2 Intertemporal Considerations and Constraints on Monopoly Power. Summary. Problems. References. 3 Technology and Cost Relationships. 3.1 Production Technology and Cost Function for Single-Product Firms. 3.2 Cost Relations for Multiproduct Firms. 3.3 Non-Cost Determinants of Market Structure. 3.4 Empirical Application: Cost Function Estimation, Scale and Scope Economies. Summary. Problems. References. 4 Market Structure and Market Power. 4.1 Measuring Market Structure. 4.2 Measuring Market power-the Lerner Index Again. 4.3 Empirical Application:...

This paper offers an analysis of the evolution of e-commerce markets. We develop a model in which... more This paper offers an analysis of the evolution of e-commerce markets. We develop a model in which an initial group of small, no-name click firms create such markets by offering horizontally differentiated customized or versioned products and competing in prices. Subsequently, a traditional brick firm enters by stretching its brand name into the digital marketplace. Such entry causes many initial entrants to exit. Contrary to much popular and formal literature, we show that the volume of initial entry may well be inefficiently low despite the anticipated later exit. In addition, the conventional relationship between sunk cost and market structure is substantially weakened.

Review of Industrial Organization

We examine the impact of advertising to children using Canadian data after the 1980 passage of th... more We examine the impact of advertising to children using Canadian data after the 1980 passage of the Consumer Protection Act (CPA) in Quebec province that prohibited advertising targeted to children under 13. Using difference-in-differences methodology, we estimate that the CPA significantly reduced household toy expenditures by 15–35% in Quebec from 1984 through 1992, with the largest impact (35%) 10 and 12 years after the ban’s imposition. The overall impact over time tentatively supports the view that advertising has cumulative exposure effects: Its sales impact increases as consumers are exposed to longer periods of targeted advertisements.

Oxford Economic Papers

ABSTRACT This paper uses clustering analysis to describe the effects of import penetration on pro... more ABSTRACT This paper uses clustering analysis to describe the effects of import penetration on product variety. The similarity of two goods is defined by the distance between them on the characteristics plane. If imports are not close substitutes for domestic goods, then the pattern of product clustering becomes less segmented. Alternatively, if imports are similar to domestic goods, then existing clusters become more densely packed with similar goods. This approach to studying the effects of imports on product variety is applied to the market for milling machine tools in Britain. Copyright 1988 by Royal Economic Society.

Research in Economics, 2016

Many retailers and social media sites trade their customer data to brokers who use these data to ... more Many retailers and social media sites trade their customer data to brokers who use these data to identify relevant market demographics and target segments. This information is valuable to a wide array of industries from trending fashion to health care. For consumers who value privacy however, trading data can be a “bad” and firms that do so may suffer a reputation loss. Our paper investigates whether a self-regulated market operating with transparent privacy policies will lead to an efficient market outcome. Competition in the product market is characterized by both horizontal and vertical differentiation, the latter being affected by the firms’ decisions whether or not to trade their consumer data. We identify market conditions under which, from the perspective of consumers, there is excessive selling of consumer data, but we also identify cases in which both consumers and firms would be better off with stricter privacy legislation or restrictions. We show that there are yet other cases where firms’ concern about loss of reputation leads to too little trading of data and both consumers and firms would be better off if there were more data trading.

We examine the bidding competition for a set of complementary assets arising between two firms wh... more We examine the bidding competition for a set of complementary assets arising between two firms who also compete in a differentiated product market. The bidding contest takes the form of an acquisition battle for a third firm initially holding the assets. Depending on the nature of product competition between the bidding firms, either both bidding firms are made worse off

SSRN Electronic Journal, 2006

Contributions in Economic Analysis & Policy, 2004

Review of Industrial Organization, 2021

This paper offers an analysis of the evolution of e-commerce markets. We develop a model in which... more This paper offers an analysis of the evolution of e-commerce markets. We develop a model in which an initial group of small, no-name click firms create such markets by offering horizontally differentiated customized or versioned products and competing in prices. Subsequently, a traditional brick firm enters by stretching its brand name into the digital marketplace. Such entry causes many initial entrants to exit. Contrary to much popular and formal literature, we show that the volume of initial entry may well be inefficiently low despite the anticipated later exit. In addition, the conventional relationship between sunk cost and market structure is substantially weakened.

Review of Industrial Organization

Oxford Economic Papers

Research in Economics, 2016