American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Bailouts and the Preservation of Competition: The Case of the Federal Timber Contract Payment Modification Act
American Economic Journal: Microeconomics
vol. 8,
no. 3, August 2016
(pp. 257–88)
Abstract
We estimate the value of competition in United States Forest Service (USFS) timber auctions, in the context of the Reagan administration's bailout of firms that faced substantial losses on existing contracts. We use a model with endogenous entry by asymmetric firms, allowing survivors to respond to the exit of bailed-out firms by entering more auctions and for these marginal entrants to have lower values than firms that would choose to enter in any event, a selective entry effect. Observed asymmetries and selective entry contribute to us finding that the bailout may have increased USFS revenues in subsequent auctions quite substantially.Citation
Roberts, James W., and Andrew Sweeting. 2016. "Bailouts and the Preservation of Competition: The Case of the Federal Timber Contract Payment Modification Act." American Economic Journal: Microeconomics, 8 (3): 257–88. DOI: 10.1257/mic.20150070Additional Materials
JEL Classification
- D44 Auctions
- H81 Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
- H82 Governmental Property
- L73 Forest Products
- Q23 Renewable Resources and Conservation: Forestry
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