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A number of recent papers have argued that US firms exert increasing market power, as measured by their markups of price over marginal cost. I review three of the main approaches to estimating economy-wide markups and show that all are based on the hypothesis of firm cost minimization. Yet different assumptions and methods of implementation lead to quite different conclusions regarding the levels and trends of markups. I survey the literature critically and argue that some of the startling findings of steeply rising markups are difficult to reconcile with other evidence and with aggregate data. Existing methods cannot determine whether markups have been stable or whether they have risen modestly over the past several decades. Even relatively small increases in markups are consistent with significant changes in aggregate outcomes, such as the observed decline in labor's share of national income.

This article assesses several aspects of recent macroeconomic market power research. These include the ways market power is defined and measured; the use of accounting data to estimate markups; the quantitative implications of theoretical connections among markups, prices, costs, scale elasticities, and profits; and conflicting evidence on whether greater market power has led to lower investment rates and a lower labor share of income. Throughout this discussion, I characterize the congruencies and incongruencies between macro evidence and micro views of market power and, when they do not perfectly overlap, explain the open questions that need to be answered to make the connection complete.

This article introduces a new way to measure competition based on firms' profits. Within a general model, we derive conditions under which this measure is monotone in competition, where competition can be intensified both through a fall in entry barriers and through more aggressive interaction between players. The measure is shown to be more robust theoretically than the price cost margin. This allows for an empirical test of the problems associated with the price cost margin as a measure of competition.

Tropical deforestation is estimated to cause about one-quarter of anthropogenic carbon emissions, loss of biodiversity, and other environmental services. United Nations Framework Convention for Climate Change talks are now considering mechanisms for avoiding deforestation (AD), but the economic potential of AD has yet to be addressed. We use three economic models of global land use and management to analyze the potential contribution of AD activities to reduced greenhouse gas emissions. AD activities are found to be a competitive, low-cost abatement option. A program providing a 10% reduction in deforestation from 2005 to 2030 could provide 0.3-0.6 Gt (1 Gt = 1 x 10⁵ g) CO₂·yr⁻¹ in emission reductions and would require $0.4 billion to $1.7 billion·yr⁻¹ for 30 years. A 50% reduction in deforestation from 2005 to 2030 could provide 1.5-2.7 Gt CO₂·yr⁻¹ in emission reductions and would require $17.2 billion to $28.0 billion·yr⁻¹. Finally, some caveats to the analysis that could increase costs of AD programs are described.

As both a regulator and an academic, Fred Kahn argued that end-use electricity consumers should face prices that reflect the time-varying marginal costs of generating electricity. This has been very slow to happen in the US, even in light of recent technological advances that have lowered costs and improved functionality for meters and automated demand response technologies. We describe these recent developments and discuss the remaining barriers to the proliferation of time-varying electricity pricing.

The economics literature is replete with examples of monotone comparative statics; that is, scenarios where optimal decisions or equilibria in a parameterized collection of models vary monotonically with the parameter. Most of these examples are manifestations of complementarity, with a common explicit or implicit theoretical basis in properties of a super-modular function on a lattice. Supermodular functions yield a characterization for complementarity and extend the notion of complementarity to a general setting that is a natural mathematical context for studying complementarity and monotone comparative statics. Concepts and results related to supermodularity and monotone comparative statics constitute a new and important formal step in the long line of economics literature on complementarity. This monograph links complementarity to powerful concepts and results involving supermodular functions on lattices and focuses on analyses and issues related to monotone comparative statics. Don Topkis, who is known for his seminal contributions to this area, here presents a self-contained and up-to-date view of this field, including many new results, to scholars interested in economic theory and its applications as well as to those in related disciplines. The emphasis is on methodology. The book systematically develops a comprehensive, integrated theory pertaining to supermodularity, complementarity, and monotone comparative statics. It then applies that theory in the analysis of many diverse economic models formulated as decision problems, noncooperative games, and cooperative games.

We provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection. We then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance. Such variation, together with quantity data, allows us to estimate the demand for insurance. The same variation, together with cost data, allows us to estimate how insurers' costs vary as market participants endogenously respond to price. The slope of this estimated cost curve provides a direct test for both the existence and the nature of selection, and the combination of demand and cost curves can be used to estimate welfare.We illustrate our approach by applying it to data on employer-provided health insurance from one specific company. We detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small, in both absolute and relative terms.

Purpose of Review Competitive electricity systems arose in the context of thermal generation with dispatchable production and increasing variable costs. This paper addresses key impacts on efficient market design with increasing reliance on renewable energy sources such as solar and wind that are intermittent and have very low marginal costs. Recent Findings The basics of efficient electricity markets design have been adopted by all the organized electricity markets in the USA. This is the only competitive electricity market design that supports the principles of open access and non-discrimination. Summary An expansion of intermittent zero-marginal cost generation does not change the fundamentals of efficient electricity market design. Rather, it increases the importance of implementing the design and associated reforms that have been identified from market experience. These include improved scarcity pricing, demand participation, and carbon pricing.

This research aims to assess the impact of digitization on management efficiency and strategic decision-making, a pivotal aspect in the contemporary business world. By integrating digital technologies with traditional mathematical models and analyzing survey data from 250 management professionals, the study provides a comprehensive understanding of the multifaceted effects of digitization.The principal outcomes from the mathematical analyses, including Marginal Cost Analysis, Break-Even Analysis, and Linear Programming, indicate substantial improvements in operational efficiency following digitization. Specifically, Marginal Cost Analysis shows a significant decrease in the cost of production, and Break-Even Analysis reveals a reduction in the break-even point by approximately 15%, underscoring enhanced cost-effectiveness. Linear Programming results demonstrate a 20% improvement in resource allocation efficiency. The survey analysis complements these findings, revealing a positive perception of digitization in enhancing managerial adaptability, efficiency, and decision-making effectiveness, with average rating improvements of 0.3, 0.4, and 0.5 points, respectively, on a 5-point scale. Regression analysis further highlights the positive influence of technological affinity on decision-making effectiveness. However, ANOVA results suggest variability in the impact of digitization across different industry sectors, necessitating sector-specific digital strategies.Digitization significantly elevates management efficiency and strategic decision-making capabilities. The integration of digital tools with traditional management techniques results in more informed, efficient, and strategic business decisions. However, the varied impact across sectors and the rapid pace of technological advancement calls for continuous adaptation and sector-specific strategies. These findings provide vital insights for businesses navigating the digital era, emphasizing the strategic integration of digital tools in management practices for sustained success and competitiveness.

We use exogenous variation in tax benefit functions to estimate firm-specific cost of debt functions that are conditional on company characteristics such as collateral, size, and book-to-market. By integrating the area between the benefit and cost functions, we estimate that the equilibrium net benefit of debt is 3.5% of asset value, resulting from an estimated gross benefit (cost) of debt equal to 10.4% (6.9%) of asset value. We find that the cost of being overlevered is asymmetrically higher than the cost of being underlevered and that expected default costs constitute only half of the total ex ante costs of debt.