[Show abstract][Hide abstract] ABSTRACT: Shocks to world commodity prices and the depreciation of sterling led to a large increase in the price of food in the UK.
It also resulted in large changes in the relative prices of different foods. We document these changes, and consider how they
affected the composition of households’ shopping baskets. We isolate the impact of changes in relative food prices from variation
in preferences using data on purchasing decisions made by a representative panel of British households. We show that changes
in relative food prices led to a worsening in the nutritional quality of households’ shopping baskets, though this was partially
mitigated by offsetting changes in preferences.
[Show abstract][Hide abstract] ABSTRACT: Revenues from corporate income taxes have remained relatively stable as a share of national income over the last three decades despite reductions in corporate tax rates and increased opportunities for multinational tax avoidance. This is largely explained by an increase in the share of corporate profits in national income. In this paper, we discuss the sources of corporate profits, and specifically corporate taxable profits; these include a normal return to capital investment, returns to labour or entrepreneurial effort that are realised as dividends or capital gains, and returns to market power. We relate these components of profits to the ways that corporate taxes can change incentives to invest or exert effort, and we discuss some implications for policy.
[Show abstract][Hide abstract] ABSTRACT: Intellectual property accounts for a growing share of firms’ assets. It is more mobile than other forms of capital, and could be used by firms to shift income offshore and to reduce their corporate income tax liability. We consider how influential corporate income taxes are in determining where firms choose to legally own intellectual property. We estimate a mixed (or random coefficients) logit model that incorporates important observed and unobserved heterogeneity in firms’ location choices. We obtain estimates of the full set of location specific tax elasticities and conduct ex ante analysis of how the location of ownership of intellectual property will respond to changes in tax policy. We find that recent reforms that give preferential tax treatment to income arising from patents are likely to have significant effects on the location of ownership of new intellectual property, and could lead to substantial reductions in tax revenue.
Journal of Public Economics 04/2014; 112. DOI:10.1016/j.jpubeco.2014.01.009 · 1.46 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: Existing hedonic methods cannot be easily adapted to estimate willingness to pay for product characteristics when willingness to pay depends on a very large basket of goods. We show how to marry these methods with revealed preference arguments to estimate bounds on willingness to pay using data on purchases of seemingly impossibly high dimensional baskets of goods. This allows us to use observed purchase prices and quantities on a large basket of products to learn about individual household’s willingness to pay for characteristics, while maintaining a high degree of flexibility and also avoiding the biases that arise from inappropriate aggregation.We illustrate the approach using scanner data on food purchases to estimate bounds on willingness to pay for the organic characteristic.
[Show abstract][Hide abstract] ABSTRACT: Food purchases differ substantially across countries. We use detailed household level data from the US, France and the UK to (i) document these differences; (ii) estimate a demand system for food and nutrients, and (iii) simulate counterfactual choices if households faced prices and nutritional characteristics from other countries. We find that differences in prices and characteristics are important and can explain some difference (e.g., US-France difference in caloric intake), but generally cannot explain many of the compositional patterns by themselves. Instead, it seems an interaction between the economic environment and differences in preferences is needed to explain cross country differences.
American Economic Review 02/2013; 104(3). DOI:10.1257/aer.104.3.382 · 2.69 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: We adapt the Bresnahan and Reiss (1991. Entry and competition in concentrated markets. The Journal of Political Economy 99, no. 5: 977–10095.
Bresnahan , T. and Reiss , P. 1991 . Entry and competition in concentrated markets . The Journal of Political Economy , 99 ( 5 ) : 977 – 1009 . [CrossRef], [Web of Science ®]View all references) model to allow for multiple store formats. We estimate the model using data for English supermarkets, and evaluate the impact of restrictive planning regulation on entry into the English grocery retail industry. We find that more restrictive planning regulation reduces the number of large format supermarkets in equilibrium. However, the impact is overstated if variation in demographic characteristics across markets is not also controlled for. Our estimates suggest that restrictive planning regulation leads to a loss to consumers of up to £10 m per annum. This cost must be offset against any benefits that arise, e.g. due to reduced congestion.
The International Review of Retail Distribution and Consumer Research 02/2012; Distribution and Consumer Research(1-Vol. 22):1-25. DOI:10.1080/09593969.2011.634071
[Show abstract][Hide abstract] ABSTRACT: The research activities of multinational firms is increasingly mobile raising concerns about displacement of high-skilled employment in headquarter countries. We estimate of the impact offshoring inventors has on firms' use of inventors at home using within firm variation across industries. We use a instrumental variables to tackle possible endogeneity and identify robust bounds on the estimate. We cannot rule out the possibility that foreign inventors displace home inventors, but our main result suggests that a 10% increase in the number of inventors abroad results in a 1.9% increase in the number of inventors at home.
[Show abstract][Hide abstract] ABSTRACT: There is policy interest in using tax to change food purchasing behaviour. The literature has not accounted for the oligopolistic structure of the industry. In oligopoly the impact of taxes depend on preferences, and how firms pass tax onto prices. We consider a tax on saturated fat. Using transaction level data we find that the form of tax and firms' strategic behaviour are important determinants of the impact. Our results suggest that an excise tax is more efficient than an ad valorem tax at reducing saturated fat purchases and an ad valorem tax is more efficient at raising revenue.
[Show abstract][Hide abstract] ABSTRACT: We examine whether discretionary government grants influence the location of
new plants, and how effective these incentives are in the presence of agglomeration and
urbanisation externalities. We find evidence that regional industrial structure affects the
location of new entrants. Firms in more agglomerated industries locate new plants near to
others in the same industry. Firms are also attracted to industrially diversified locations.
Foreign multinationals locate new plants near to other foreign-owned plants in the same
industry. Fiscal incentives in the form of grants are found to have some effect in attracting
plants to specific geographic areas eligible for such aid.
[Show abstract][Hide abstract] ABSTRACT: This paper investigates whether there is convergence in Total Factor Pro-ductivity at the establishment level, to the technological frontier. We find evidence of convergence to the frontier, which suggests the existence of tech-nological spillovers. The speed of catch-up does not appear to vary with the extent of foreign presence in the industry. But foreign multinationals do make up a significant proportion of establishments at the technological frontier. This implies that high productivity firms, both domestic and foreign-owned, make a contribution to productivity growth through technology transfer. Acknowledgements: This work was funded by the Gatsby Trust. This report has been produced under contract to the ONS. We are grateful to semi-nar participants at the Institute for Fiscal Studies, the Royal Economic Society Conference, and the University of Nottingham for helpful comments. Respon-sibility for any results, opinions, and errors lies with the authors alone.
[Show abstract][Hide abstract] ABSTRACT: We examine the “home bias” of knowledge spillovers (the idea that knowledge spreads more slowly over international boundaries than within them) as measured by the speed of patent citations. We present econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed estimator controls for correlated fixed effects and censoring in duration models, and we apply it to data on over two million patent citations between 1975 and 1999. Home bias is exaggerated in models that do not control for fixed effects. The fall in home bias over time is weaker for the pharmaceuticals and information/communication technology sectors where agglomeration externalities may remain strong.
[Show abstract][Hide abstract] ABSTRACT: The literature suggests that tax rates on mobile activities should fall to zero. Intellectual property is very mobile and has grown in importance. Firms can use intellectual property to shift income offshore and reduce their corporate income tax liability. Yet most intellectual property is held in relatively high tax countries. We estimate the impact of corporate taxes on where firms hold patents. We consider domestic and international taxes, and control for the potential non-tax costs and benefits associated with different locations. We allow heterogeneity across industries, firm size and, most importantly, unobservable patent specific heterogeneity in the responsiveness of patent location to tax. Our results suggest that, on average, corporate tax rates have a negative impact on the likelihood of a firm choosing a location, and that there is substantial heterogeneity in responses. We simulate the impact of recent reforms that apply a lower tax rate to patent income, finding that they attract patent income but result in losses in government revenues.
[Show abstract][Hide abstract] ABSTRACT: In 2010 China was the world's fourth largest filer of patent applications. This followed a decade of unprecedented increases in investment in skills and Research and Development. If current trends continue China could rank first in the very near future. We provide evidence that the growth in Chinese patenting activity has been accompanied by a growth in Chinese inventors creating technologies that are near to the science base. Part of the success of China has been to attract the investment of foreign multinationals. This is also true for a number of other Emerging Economies. Europe's largest multinational firms increasingly file patent applications that are based on inventor activities located in emerging economies, often working alongside inventors from the firm's home country.
[Show abstract][Hide abstract] ABSTRACT: Governments around the world are increasingly concerned about the rise in diet-related chronic disease and there has been increased interest in policy interventions targeted at changing eating habits. In this paper, we discuss the ways in which food markets might fail to deliver the optimal outcome and how this may justify government intervention. We consider how well different types of policies – information campaigns, taxes and regulations – are able to counteract these market failures and we consider some of the implementation issues associated with targeting different consumers and anticipating firms' strategic responses.
[Show abstract][Hide abstract] ABSTRACT: This paper investigates the determinants of vertical integration. We first derive a number of predictions regarding the relationship between technology intensity and vertical integration from a simple incomplete contracts model. Then, we investigate these predictions using plant-level data for the UK manufacturing sector. Most importantly, and consistent with theory, we find that the technology intensities of downstream (producer) and upstream (supplier) industries have opposite effects on the likelihood of vertical integration. Also consistent with theory, both these effects are stronger when the supplying industry accounts for a large fraction of the producer's costs. These results are generally robust and hold with alternative measures of technology intensity, with alternative estimation strategies, and with or without controlling for a number of firm and industry-level characteristics.
Journal of the European Economic Association 09/2010; 8(5). DOI:10.1162/jeea_a_00013 · 1.36 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: European Union countries have implemented widespread reforms to product markets in order to stimulate competition, innovation and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. In our analysis we exploit exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth.
[Show abstract][Hide abstract] ABSTRACT: The theoretical effects of labour regulations such as employment protection legislation (EPL) on innovation is ambiguous, and empirical evidence has thus far been inconclusive. EPL increases job security and the greater enforceability of job contracts may increase worker investment in innovative activity. On the other hand EPL increases adjustment costs faced by firms, and this may lead to under-investment in activities that are likely to require adjustment, including technologically advanced innovation. In this paper we find empirical evidence that both effects are at work - multinational enterprises locate more innovative activity in countries with high EPL, however they locate more technologically advanced innovation in countries with low EPL.
Review of Economics and Statistics 01/2010; 96(W10/01). DOI:10.1162/REST_a_00348 · 2.66 Impact Factor
[Show abstract][Hide abstract] ABSTRACT: The recent literature has brought together the characteristics model of utility and classic revealed preference arguments to learn about consumers' willingness to pay. We incorporate market pricing equilibrium conditions into this setting. This allows us to use observed purchase prices and quantities on a large basket of products to learn about individual household's willingness to pay for characteristics, while maintaining a high degree of flexibility and also avoiding the biases that arise from inappropriate aggregation. We illustrate the approach using scanner data on food purchases to estimate bounds on willingness to pay for the organic characteristic. We combine these estimates with information on households' stated preferences and beliefs to show that on average quality is the most important factor affecting bounds on household willingness to pay for organic, with health concerns coming second, and environmental concerns lagging far behind.
[Show abstract][Hide abstract] ABSTRACT: Data from market research firms are increasingly being used by social science researchers. These data provide potentially useful information, including detailed nutritional information and well-measured prices, and their panel structure is appealing as it permits researchers to control for unobservable time-invariant household characteristics and to model dynamic aspects of household behaviour. We summarise the information on the nutrients in foods that is contained in one source of market research data. We show that there is a lot of variation in nutrients at the individual product level, even within narrowly defined food categories such as butter. We also show that the duration of time over which data are collected can have important implications for analysis of household-level nutrient purchases.
Fiscal Studies 12/2009; 30(Special Issue on Measuring Consumption and Saving):339-365. DOI:10.1111/j.1475-5890.2009.00099.x · 0.49 Impact Factor