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This paper examines the numerical properties of the nested fixed-point algorithm (NFP) using Monte Carlo experiments in the estimation of Berry, Levinsohn, and Pakes's (1995) random coefficient logit demand model. We find that in speed, convergence and accuracy, nested fixed-point (NFP) approach using Newton's method performs well like a mathematical programming with equilibrium constraints (MPEC) approach adopted by Dube, Fox, and Su (2012).

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This paper studies the impact of fairness and reciprocity on collusion between firms competing in quantities in infinitely repeated games. A reciprocal firm responds to unkind behavior of rivals with unkind actions (destructive reciprocity), while at the same time, it responds to kind behavior of rivals with kind actions (constructive reciprocity). The paper shows that when firms are reciprocal, collusive quantity profiles are easier to sustain for reasonable perceptions of fair quantities of rivals. However, if only very low quantities deemed as fair, then sustaining collusion could be more difficult when the firms have fairness concerns.

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This paper examines whether the legalization of share repurchase in 1982 by the U.S. Securities and Exchange Commission had a significant impact on the relationship between dividend payout and dividend tax preference, which measures tax rates on dividends relative to tax rates on capital gains. A bi-variate time series model of dividend and dividend tax preference is employed in which the dividend payout ratio relates to the mean of dividend tax preference, which follows a three-state Markov regime switching process, and depends upon the legitimacy of share repurchase. For the period covering 1929-2011, which covers multiple large changes in tax rates, we find that stock buybacks have a significant impact on the relationship in the high mean regime of dividend tax preference. This result suggests that share repurchases are a close substitute for cash dividends.

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We consider a vertical relationship between a single upstream firm and a single downstream firm and examine the economic effects of the profit transfer program, where the downstream firm transfers a predetermined share of its profit to the upstream firm. We analyze the effects under two scenarios, according as how the price is determined in the upstream market. One is where the upstream firm sets the price of the intermediate good and the downstream firm takes the price as given. The other is where the downstream firm acts as a monopsonist and sets the price of the intermediate good. In the former scenario, the profit transfer alleviates the problem of `double marginalization' and enhances economic efficiency. The downstream firm will hire more intermediate good and will produce more output. And the upstream firm will increase the effort level to reduce the production cost. The consumer surplus and the social welfare will rise. On the other hand, in the latter scenario, the profit transfer has opposite effects. It induces the downstream firm to hire less intermediate good. The upstream firm's effort level to reduce the production cost decreases. As a result, the output of the final good, the consumer surplus, and the social welfare decrease. We will also examine how the profit transfer affects the individual firms' profits.