Wedeveloptestsforcommonvaluesatfirst-price sealed-bid auctions. Our tests are nonparametric, require observation only of the bids submitted at each auction, and are based on the fact that the “winner’s curse ” arises only in common values auctions. The tests build on recently developed methods for using observed bids to estimate each bidder’s conditional expectation of the value of winning the auction. Equilibrium behavior implies that in a private values auction these expectations are invariant to the number of opponents each bidder faces, while with common values they are decreasing in the number of opponents. This distinction forms the basis of our tests. We consider both exogenous and endogenous variation in the number of bidders. Monte Carlo experiments show that our tests can perform well in samples of moderate sizes. We apply our tests to two different types of U.S. Forest Service timber auctions. For unit-price (“scaled”) sales often argued to fit a private values model, our tests consistently fail to find evidence of common values. For “lumpsum ” sales, where aprioriarguments for common values appear stronger, our tests yield mixed evidence against the private values hypothesis.

This paper is motivated by the empirical regularity that industries differ greatly in the level of firm turnover, and that entry and exit rates are positively correlated across industries. Our objective is to investigate the effect of sunk costs and, in particular, market size on entry and exit rates, and hence on the age distribution of firms. We analyze a stochastic dynamic model of a monopolistically competitive industry. Each firm's efficiency is assumed to follow a Markov process. We show existence and uniqueness of a stationary equilibrium with simultaneous entry and exit: efficient firms survive while inefficient ones leave the market and are replaced by new entrants. We perform comparative statics with respect to the level of sunk costs: entry costs are negatively and fixed production costs positively related to entry and exit rates. A central empirical prediction of the model is that the level of firm turnover is increasing in market size. The intuition is as follows. In larger markets, price-cost margins are smaller since the number of active firms is larger. This implies that the marginal surviving firm has to be more efficient than in smaller markets. Hence, in larger markets, the expected life span of firms is shorter, and the age distribution of firms is first-order stochastically dominated by that in smaller markets. In an extension of the model with time-varying market size, we explore the comovements between market size and entry

We investigate how to make poverty comparisons using multidimensional indicators of well-being, showing in particular how to check whether the comparisons are robust to the choice of poverty indices and poverty lines. Our methodology applies equally well to either of what can be defined as ”union ” and ”intersection ” approaches to dealing with multidimensional indicators of well-being. When one of two variables is discrete, our methods specialize to those that Atkinson (1991), Jenkins and Lambert (1993) and others have developed to deal with household composition heterogeneity. The results also extend the statistical results recently derived in Davidson and Duclos (2000) to cases where well-being is measured in two or more dimensions. We thus derive the sampling distribution of various multidimensional poverty estimators, including estimators of the ”critical ” frontiers of poverty lines above which multidimensional poverty comparisons are no longer ethically robust.

This paper explores competition in the post 1996 long distance telephony market by employing an unusually detailed data set. New evidence of third degree price discrimination is found with rural and low income customer groups facing higher prices. Results indicate that individuals who are less willing to switch carriers frequently pay significantly higher prices. A multi-dimension mixture model is used to characterize switching behavior and finds significant heterogeneity in subscriber switching costs. The switching behavior model provides insight into price differential ranges which support resale firm survival. These findings can be useful for determining optimal firm response as well as optimal telecommunications market policy. Acknowledgement: This research would not have been possible without the help of certain telephony firm executives whose identities remain anonymous. Special thanks to my advisors and committee members Martin Pesendorfer, Steve Berry and Penny Goldberg for their invaluable comments, criticisms, and encouragement. I also received useful

recherche of Université de Sherbrooke. Abstract: This paper extends the previous literature on the ethical links between the measurement of poverty, social welfare and inequality. We show inter alia, how, when the range of possible poverty lines is unbounded above, a robust ranking of absolute poverty may be interpreted as a robust ranking of social welfare, and a robust ranking of relative poverty may be interpreted as a robust ranking of inequality, and this, for any order of stochastic dominance.

This research addresses three questions: (i) how have the incidence of poverty and the distribution of income changed? (ii) what factors are associated with rural household income change? and (iii) what factors are associated with moving out of or into poverty in the short-run? The analysis presented is based on a nationally representative twoperiod panel data set from Mozambique, covering the years 2001/2 and 2004/5. We cannot unambiguously argue that poverty headcount in 2005 (a year of more widespread drought) was higher than poverty headcount in 2002, but the poverty gap and squared poverty gap measures were both higher in the second period. Poverty has spatial, demographic, and asset holding dimensions. The diversification of off-farm income sources is strongly associated with increases in household income, and thus poverty reduction. For agricultural activities, especially crop production, reduction in vulnerability to drought is important for poverty reduction. Access to price information is positively correlated with income and poverty reduction in all areas, and the cultivation of tobacco is also significant in reducing poverty in the central part of the country. The impact on poverty of growing tobacco or cotton in the north was not significant, however. We also found that increases in landholding size can reduce poverty in rural Mozambique but will require additional inputs such as labor, fertilizers, and animal traction. DEDICATION To my dad, for his encouragement in pursuing graduate studies. To my son, for his sacrifice during the two years of graduate studies. To my wife, for her love, sacrifice, and support in everything. To my mom and brothers, for their support and love. iii ACKNOWLEDGMENTS

We develop a general class of nonparametric tests for treatment effects conditional on covariates. We consider a wide spectrum of null and alternative hypotheses regarding conditional treatment effects, including (i) the null hypothesis of the conditional stochastic dominance between treatment and control groups; (ii) the null hypothesis that the conditional average treatment effect is positive for each value of covariates; and (iii) the null hypothesis of no distributional (or average) treatment effect conditional on covariates against a one-sided (or two-sided) alternative hypothesis. The test statistics are based on L1-type functionals of uniformly consistent nonparametric kernel estimators of conditional expectations that characterize the null hypotheses. Using the Poissionization technique of Giné et al. (2003), we show that suitably studentized versions of our test statistics are asymptotically standard normal under the null hypotheses and also show that the proposed nonparametric tests are consistent against general fixed alternatives. Furthermore, it turns out that our tests have non-negligible powers against some local alternatives that are n −1/2 different from the null hypotheses, where n is the sample size. We provide a more powerful test for the case when the null hypothesis may be binding only on a strict subset of the support

PRELIMINARY VERSION. COMMENTS ARE WELCOME. This paper proposes a fully nonparametric procedure to evaluate the effect of a counterfactual change in the distribution of some covariates on the unconditional distribution of an outcome variable of interest. In contrast to other methods, we do not restrict attention to the effect on the mean. In particular, our method can be used to conduct inference on the change of the distribution function as a whole, its moments and quantiles, inequality measures such as the Lorenz curve or Gini coefficient, and to test for stochastic dominance. The practical applicability of our procedure is illustrated via a simulation study and an empirical application.

Inequality and polarization analyses are complementary but conceptually different. They are usually implemented independently in practice, with different a priori assumptions and different tools. In this paper, we develop a unique method to study simultaneously these different and complementary concerns. Based on mixture models, the method we develop includes at the same time: an estimation of income distribution with no a priori assumptions- a decomposition in several homogeneous subpopulations- an explanatory model to study the structure of the income distribution.

www.ifpri.org IFPRI Division Discussion Papers contain preliminary material and research results. They have not been subject to formal external reviews managed by IFPRI’s Publications Review Committee, but have been reviewed by at least one internal or external researcher. They are circulated in order to stimulate discussion and critical comment.