L1 - Market Structure, Firm Strategy, and Market Performance

• On Causal Networks of Financial Firms: Structural Identification via Non-parametric Heteroskedasticity

  Staff Working Paper 2020-42 Ruben Hipp

  Banks’ business interactions create a network of relationships that are hidden in the correlations of bank stock returns. But for policy interventions, we need causality to understand how the network changes. Thus, this paper looks for the causal network anticipated by investors.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Financial markets, Financial stability JEL Code(s): C, C1, C3, C32, C5, C58, L, L1, L14

• Non-competing Data Intermediaries

  Staff Working Paper 2020-28 Shota Ichihashi

  I study a model of competing data intermediaries (e.g., online platforms and data brokers) that collect personal data from consumers and sell it to downstream firms.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models JEL Code(s): D, D4, D42, D43, D8, D80, L, L1, L12

• Why Fixed Costs Matter for Proof-of-Work Based Cryptocurrencies

  Staff Working Paper 2020-27 Rodney J. Garratt, Maarten van Oordt

  Can Bitcoin survive? Some say it will become vulnerable to attacks as the rewards for processing Bitcoin transactions continue to decline. The economics of fixed costs suggest the specialized hardware used to mine Bitcoin may be key to its survival.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): G, G1, G10, L, L1, L11

• Trading on Long-term Information

  Staff Working Paper 2020-20 Corey Garriott, Ryan Riordan

  Investors who trade based on good research are said to be the backbone of stock markets: They conduct research to discover the value of stocks and, through their trading, guide financial prices to reflect true value. What can make their job difficult is that high-speed, short-term traders could use machine learning and other technologies to infer when informed investors are trading.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial markets, Market structure and pricing JEL Code(s): G, G1, G14, G2, G20, L, L1

• Multi-Product Pricing: Theory and Evidence from Large Retailers in Israel

  Staff Working Paper 2020-12 Marco Bonomo, Carlos Carvalho, Oleksiy Kryvtsov, Sigal Ribon, Rodolfo Rigato

  Standard theories of price adjustment are based on the problem of a single-product firm, and therefore they may not be well suited to analyze price dynamics in the economy with multiproduct firms.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Market structure and pricing, Monetary policy JEL Code(s): D, D2, D21, D22, E, E3, E31, E5, E52, L, L1, L11

• Welfare Analysis of Equilibria With and Without Early Termination Fees in the US Wireless Industry

  Staff Working Paper 2020-9 Joseph Cullen, Nicolas Schutz, Oleksandr Shcherbakov

  The elimination of long-term contracts and early termination fees (ETFs) in the US wireless industry at the end of 2015 increased monthly service fees by 2 to 5 percent. Nevertheless, consumers are clearly better off without ETFs. While firms’ revenues from ETFs vanish, their profits from monthly fees increase. As a result, the overall effect on producer profits is less clear.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Firm dynamics, Market structure and pricing JEL Code(s): D, D2, D22, L, L1, L15, L9, L96

• Demand for Payment Services and Consumer Welfare: The Introduction of a Central Bank Digital Currency

  Staff Working Paper 2020-7 Kim Huynh, Jozsef Molnar, Oleksandr Shcherbakov, Qinghui Yu

  Using a two-stage model, we study the determinants of Canadian consumers’ choices of payment method at the point of sale. We estimate consumer preferences and adoption costs for various combinations of payment methods. We analyze how introducing a central bank digital currency would affect the market equilibrium.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Digital currencies and fintech, Financial services JEL Code(s): C, C5, C51, E, E4, E42, L, L1, L14, L5, L52

• A Spatial Model of Bank Branches in Canada

  Staff Working Paper 2020-4 Heng Chen, Matthew Strathearn

  Using data on bank branch locations across Canada from 2008 to 2018, we explore an interesting aspect of bank branch competition—geographic concentration. We find that bank branch density does not correlate with geographic and market concentration; however, we do find strong correlation with postal-code demographics.

  Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Market structure and pricing JEL Code(s): L, L1, R, R3

• Contagion in Dealer Networks

  Staff Working Paper 2020-1 Jean-Sébastien Fontaine, Adrian Walton

  Dealers connect investors who want to buy or sell securities in financial markets. Over time, dealers and investors form trading networks to save time and resources. An emerging field of research investigates how networks form.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, Market structure and pricing, Payment clearing and settlement systems JEL Code(s): E, E4, G, G1, G2, G21, L, L1, L14