European Center for Advanced Research in Economics and Statistics

“Cultural Exception? The Impact of Price Regulation on Prices andVariety in the Italian Book Market”

Christos Genakos, Mario Pagliero, Lorien Sabatino andTommaso Valletti

Abstract

Fixed book price (FBP)agreements are a form of resale price maintenance commonly applied to books invarious countries. FBP restricts retail price competition with the aim ofpromoting book production variety. Yet, despite its popularity and applicationin many countries, there is no empirical evidence on its effects. We offersystematic evidence on the impact of FBP on book variety and prices using adetailed new dataset from Italy that includes the universe of books publishedand bought, before and after the introduction of FBP. Our results indicate thatFBP raises prices without significantly affecting the number of new bookspublished in the marketplace. However, it also increases considerably thevariety of books actually bought, especially from independent bookstores. We estimate a structural model of demand that accounts for both effects,finding that consumers overall benefited from the regulation.

Efficient Transport-based Estimation of Time-Varying Factor Models

The study of economic policies in the economy and financerequires efficient reduction of datasets into informative unobserved factors(UF) to account for agents' expectations and forecast future behavior.Principal Component Analysis (PCA) is a widely used statistical method for thispurpose. Recently the statistical and econometric literature is focusing on theimplication of the use of Optimal-Transport (OT) as a tool for implementing theprecision of data reduction when data are particularly complex. We discuss thepitfall of two nove PCA-based methods: NIPCA (Nonlinear Independent ComponentAnalysis) and Target PCA (T-PCA).  The former, despite its superiorcapability of fitting and reducing data under nonlinear representation, is computationally intensive. Moreover, it is based on a two-phase/hybridapproach. The latter, uses a linear factor structure with novel theoreticalcontributions relating the informativeness of datasets directly to the factors.However, it assumes informativeness, observability, and constancy of thefactors. We argue that a UF parametrization à la Mikkelsen et al. (2019)combined with modified NIPCA can address these problems. Namely, we propose analgorithm that combines Brenier mapping and diagonalization as a potentialsolution.

Our seminarspeaker, Ross Levine, informed us that he is unable to travel and thus cancelshis trip to Europe and the visit to the NBB (scheduled for October 19). For thesame personal reasons, he is also not in the possibility to hold the seminaronline on the scheduled day.

He agreed,however, to an ONLINE seminar on Thursday December14, 2023 at 4.30pm CET.

It can be followed byclicking on the MSTeams link in the attached .ics calendar invitation (which you can add to your calendar).

The topicwill remain the same: “Credit market conditions and mental health”

“Research offersconflicting predictions about the impact of credit conditions on mental health.We first assess howbank regulatory reforms that improved credit conditions, e.g., by enhancing theefficiency of credit allocation and lowering lending rates, impacted mentalhealth. We discover that among low-income individuals, these regulatory reformsreduced mental depression, boosted labor market outcomes, eased access tomortgage debt, and reduced the ranks of the “unbanked.” We also find thatmergers of large regional banks that led to branch closures and tighter creditconstraints in affected counties harmed the mental health of lower-incomeindividuals in treated counties.”

(joint work with  QingHu, Chen Lin, and Mingzhu Tai)