Bagwell Center Funded Faculty Research

The Bagwell Center provides funding to support faculty in conducting basic and applied academic research, in-line with our mission. The expectation is that funded projects will ultimately advance the understanding of markets and potentially inform policymaking decisions.

Funds are committed to a principal investigator based upon a project proposal, but before research is conducted. The final research output is an expression of the findings and/or views of the researchers (and not the Bagwell Center). No party had the right to review the research output prior to circulation. The outputs of these research projects are eligible for publication in peer-reviewed academic journals.

Summer 2021

  • Author(s)
    Brian C. Albrecht, Assistant Professor of Economics, Bagwell Center Affiliated Faculty
    Shruti Rajagopalan, Senior Research Fellow, Mercatus Center at George Mason University, and Fellow, NYU School of Law

    Title
    "Inframarginal Externalities: COVID-19, Vaccines, and Universal Mandates"

    Abstract
    SARS-CoV-2 (commonly called COVID-19) vaccine mandates are in place or being
    debated across the world. Standard neoclassical economics argues that the marginal social benefit
    from vaccination exceeds the marginal private benefit; everyone vaccinated against a given infectious
    disease protects themselves and protects others by not transmitting the disease. Consequently,
    private levels of vaccination will be lower than the socially optimal levels due to
    underconsumption/free-rider problems, requiring mandates to overcome the problem. We that the
    economic argument for mandates is less compelling for COVID-19. First, most of the benefits of
    the COVID-19 vaccine are internalized, vaccinated individuals are protected from the worst effects
    of the disease and may even exclude others from the benefits of the vaccine by transmitting the
    infection. Therefore, the externality may be inframarginal or policy irrelevant. Even when all the
    benefits are not internalized to the individual, the externalities are mainly local, even in a global
    pandemic, therefore requiring local institutional (private and civil society) arrangements to boost
    vaccine rates. We find that the economic case for universal vaccine mandates, based on externality
    and free-riding, is weak in the case of the COVID-19 vaccines, and that economists and politicians
    must justify such vaccine mandates on some other basis.

  • Author(s)
    James Boudreau, Assistant Professor of Economics, Bagwell Center Affiliated Faculty Member
    Justin Ehrlich
    Shane Sanders

    Title
    "Simpson's Paradox in Nonparametric Statistical Analysis: Theory, Computation, & Susceptibility in Public Health Data"

    Abstract
    This study establishes sufficient conditions for observing instances of Simpson’s (data aggregation) Paradox under rank sum scoring (RSS ), as used, e.g., in the Wilcoxon-Mann-Whitney (WMW ) rank sum test. The WMW test is a  primary nonparametric statistical test in FDA drug product evaluation and other prominent medical settings. Using computational nonparametric statistical methods, we also establish the relative frequency with which paradox-generating Simpson Reversals occur under RSS  when an initial data sequence is pooled with its ordinal replicate. For each 2-sample, n-element per sample or 2 x n case of RSS considered, strict Reversals occurred for between 0% and 1.74% of data poolings across the whole sample space, roughly similar to that observed for 2 x 2 x 2 contingency tables and considerably less than that observed for path models. The Reversal rate conditional on observed initial sequence is highly variable. Despite a mode at 0%, this rate exceeds 20% for some initial  sequences. Our empirical application identifies clusters of Simpson Reversal susceptibility for publicly-released mobile phone radiofrequency exposure data. Simpson Reversals under RSS are not simply a theoretical concern but can reverse nonparametric or parametric biostatistical results even in vitally important public health settings. Conceptually, Paradox incidence can be viewed as a robustness check on a given WMW statistical test result. When an instance of Paradox occurs, results constituting this instance are found to be data-scale dependent. Given that the rate of Reversal can vary substantially by initial sequence, the practice of calculating this rate conditional on observed initial sequence represents a potentially important robustness check upon a result.

  • Author(s)
    Marcus Marktanner, Associate Professor of Economics, Bagwell Center Affiliated Faculty Member
    Almuth Merkel

    Title
    "When Does Economic Freedom promote Equitable Social Development?"

    Abstract
    Why do some countries successfully combine economic freedom with equitable social development while others fail to do so? We focus on three sectors in which government is supposed to play a strong role according to the history of economic thought. These are health, education, and social safety. Yet, identifying the exact role of government in these sectors – either through the provision of public goods or the regulation of markets - is difficult. Necessary data is often not available or comparable. We therefore suggest focusing on revealed policy strengths. This approach rests on the assumption that higher incomes, all else equal, allow for better public health, higher human capital, and improved social safety. Thus, when two countries have the same income per capita, but one country performs better in any of our three focus sectors, then, we conclude, the better performing country must reveal a relative policy strength in that sector. Our findings suggest that countries with greater revealed policy strengths in public health, human capital and, social safety are more effective in combining market freedom with equitable social development. In fact, we find that it is the revealed policy strengths that drive economic freedom with equitable social development, not the other way around.

  • Author(s)
    Jomon Paul, Director of Research for the Coles College of Business and Professor of Quantitative Analysis

    Title
    Immigration, Terrorism, and the Economy

    Abstract
    In this paper, we look at the interaction of terrorism with the quality of life of immigrants (measured by the foreign-born unemployment rate and globalization level) for OECD countries, and its impact on GDP per capita and exports-to-GDP ratio. We find strong evidence that GDP per capita is adversely affected by domestic terrorism. The magnitude of this effect is also substantial: at the sample mean, a one-standard-deviation increase in the number of domestic incidents is found to decrease GDP per capita between 5.7% and 7.8% of the sample average depending on the specification used. We also find strong evidence that domestic terrorism increases the exports-to-GDP ratio, but transnational terrorism tends to decrease this ratio. These results contrast with previous research which finds that transnational terrorism primarily affects these economic indicators. We also find strong evidence that when we factor in the interaction of the foreign-born unemployment rate with either type of terrorism, an increase in the foreign-born unemployment rate decreases GDP per capita. Also, an increase in the foreign-born unemployment rate is found to increase the export-to-GDP ratio when we interact the unemployment rate with domestic terrorism.

    Summary of Findings

  • Author(s)
    Robert Gmeiner, Visiting Assistant Professor, Bagwell Center Affiliated Faculty Member

    Title
    "The Phage Therapy Solution to Antibiotic Resistance: Regulatory Changes to Avert a Looming Crisis"

    Abstract
    Antibiotic resistance is a growing public health concern, although phage therapy is an effective alternative treatment that can mitigate this problem. The pharmaceutical regulatory regime in the United States keeps phage therapy from being economically viable. This paper evaluates the incentives created by this regulatory regime in light of their contributions to antibiotic resistance and stifling of phage therapy. From, it proposes a new regulatory regime that can make phage therapy viable and avert the crisis of widespread antimicrobial resistance. This proposed regulatory regime alters the approval process for phage therapy treatments, imposes requirements on reporting their use, and gives doctors and drug manufacturers broad freedom to refine and perfect treatments.

    Summary for Practitioners

  • Author(s)
    Gohar S. Sedrakyan, Bagwell Center Affiliated Faculty

    Title
    "Spillover Effects of Sanctions on Migration and Remittances (the Case of Transition Economies)"

    Abstract
    We study possible spillovers of the economic sanctions against the Russian Federation on changes in migrant stock and remittance flow between this country and transition economies, and vice versa. This analysis focuses on twenty-seven transition economies of the Former Soviet Union, and Central and Eastern Europe. We use gravity models to assess the impact of sanctions for the period from 2014 to 2019. Using Poisson pseudo-maximum likelihood (PPML) econometric technique, we show that emigration from transition economies to Russia declined as a result of imposed Western and US sanctions. We also estimate that the sanctions significantly contracted the flow of remittances to transition economies from Russia. A 1% increase in Western/US sanctions resulted in the decline of emigration by 11/9 individuals and of remittances to transition economies by $0.014/0.01 million. In light of our further findings that the flow of migrant remittances to transition economies from Russia also had a function of poverty alleviation through providing financial means to the families with higher numbers of dependent elderly and children as well as to the countries with higher levels of income inequality, we conclude that their contraction affected the most vulnerable groups of population of those countries. Our recommendation is, simultaneous to imposing sanctions against a large open economy, to provide targeted financial aid of welfare nature to its neighboring small open economies, which would restore the distortions spilled over by sanctions.

    Summary of Findings

Summer 2020

  • Author(s)
    JC Bradbury, Professor of Economics, Bagwell Center Affiliated Faculty Member

    Title
    "The Impact of Sports Stadiums on Localized Commercial Activity: Evidence from a Business Improvement District"

    Abstract
    Local government funding of sports stadiums is frequently justified as stimulating economic activity despite consensus contrary findings in the academic literature. Though some studies have identified positive neighborhood effects from stadiums on nearby residential property, scant research exists on highly-localized commercial activity that is hypothesized to spur development. This analysis exploits the recent relocation of a professional baseball team from downtown Atlanta to a pre-existing Georgia Business Improvement District (Community Improvement District or CID) in suburban Cobb County to estimate the impact of the stadium development on commercial property values. The existence of multiple CIDs in the metro-Atlanta area provides the opportunity to estimate a counterfactual comparison absent the stadium to draw causal inference regarding the stadium’s impact on economic activity using the synthetic control method. Estimates indicate that the stadium decreased commercial property values in the district, which is consistent with past studies that find little to no positive impact on economic activity. The results indicate that previous findings of positive impacts on residential property may not be applicable to commercial activity.

  • Author(s)
    James Boudreau, Assistant Professor of Economics, Bagwell Center Affiliated Faculty Member

    Title
    "Prevalence of Simpson’s Paradox in Nonparametric Statistical Analysis of Medical and Other Scientific Data: Theoretical, Computational, and Empirical Analysis"

    Introduction
    Simpson’s Aggregation Paradox, also known as the Yule-Simpson Aggregation Paradox, represents an anomaly in statistics whereby two qualitatively equivalent statistical test results—each arising from one of two distinct constituent data sets—disappears when the same statistical test is applied to the pooled data. The paradox was first put forth by Yule (1903) and later developed by Simspon (1951). While first considered strictly for the domain of parametric testing, its presence in non-parametric statistical results has recently been studied (Haunsperger, 2003; Haunsperger and Saari ,1991; Bargagliotti, 2009). Of particular importance to the present study, Haunsperger and Saari (1991) find conditions for Simpson reversals in rank sum statistical testing, where the term Simpson reversal is used synonymously with the term instances of Simpson’s Aggregation Paradox herein. In general, the paradox has been found to affect statistical results in many important scientific domains, including environmental and related ecological research (see, e.g., Pineiro et al., 2006 or Allison and Goldberg, 2002). In studying global temperature over time, Foster and Rahmstorf (2011) note that the scale of data (time scale of study) can influence the statistical results of a study, for example.

    Summary for Practitioners

  • Author(s)
    Robert Gmeiner, Visiting Assistant Professor, Bagwell Center Affiliated Faculty Member
    Mario Harper, Assistant Professor of Computer Science, Utah State University

    Title
    "Artificial Intelligence and Economic Calculation"

    Abstract
    In a day and age when socialism is ascendant in the United States and computer technology continually improves, it is reasonable to ask if economic planning is more viable than it once was. The classic arguments against central planning, put forward by Ludwig von Mises and F.A. Hayek are now decades old and do not account for the rapid and vast changes in technology. Since that time, a small amount of research has been done on the viability of socialism with modern advances in computing power. There are arguments for and against socialism guided by artificial intelligence (AI) and computer technology (see sections 2.1 and 3), but none of them takes a comprehensive view of the realistic capabilities and shortcomings of an AI-planned economy.

    Summary for Practitioners

  • Author(s)
    Alex Maslov, Lecturer, Department of Economics, Central Michigan University

    Title
    Imperfect Competition in Online Auctions

    Abstract
    We study online auctions, where two sellers sequentially choose reserve prices and then hold ascending auctions. Buyers are able to bid in both auctions and can switch between them as frequently as they like. In contrast to competition in traditional auctions, where sellers simultaneously choose reserve prices and each buyer commits to participating in a single auction, in which an equilibrium exists only in mixed strategies, we show that the sequential online auction game has a pure strategy equilibrium. This equilibrium is inefficient because both seller choose a reserve price higher than the marginal costs (but still smaller than a collusive outcome).

    Summary for Practitioners

  • Author(s)
    Luc Noiset, Associate Professor of Economics, Bagwell Center Affiliated Faculty Member

    Title
    “Competition and the Productivity of Local Governments”

Summer 2019

  • Author(s)
    Farah Hasin, Part-Time Assistant Professor of Economics

    Title
    "Microfinance and Sustainable Entrepreneurship Development in Developing Countries: Lessons from Bangladesh"

    Abstract
    Microenterprises (MEs) play a big role in the Bangladesh economy and significantly contributes to economic and social well-being of the people. It is now increasingly felt that the Bangladesh’s journey to the middle-income country status demands a pivotal role on the part of MEs towards promoting more inclusive growth as drivers of economic transformation, especially in the rural areas. On this note a study was conducted on the potentials of microfinancing program of one of the largest and longest serving NGOs of Bangladesh, BRAC (Bangladesh Rural Advancement Committee) by considering some of BRAC Progoti financed microenterprises in the Comilla district of Bangladesh. Using newly collected empirical evidence and primary data, the study confirms how small interventional change through microfinancing and non-financial support services can induce sustained and positive larger differences in the economic lives of the microenterprise households and contribute towards economywide inclusive growth. The study also highlights on the relative investment potentials of diversified microenterprises pursued in the sample area of rural Bangladesh in terms of accrued economic and welfare benefits for the households.

  • Author(s)
    Aniruddha Bagchi, Professor of Economics, Bagwell Center Affiliated Faculty Member

    Title
    "Tax policy – is it a better alternative to patent policy?"

    Abstract
    It is believed that if there is no informational asymmetry between the firms and the government, firms could be remunerated for innovation using optimal taxation rather than patents. We show that under reasonable conditions (such as the government’s inability to customize the tax rate for each firm), patent protection is preferable than a tax/subsidy scheme if the marginal costs of the imitators are sufficiently higher than that of the innovator. Production inefficiency created by imitation is the reason for our result. If the marginal costs of the imitators are similar to that of the innovator, the authority can choose an appropriate patent breadth to replicate the outcome of the tax/subsidy scheme. Our result holds under both Cournot and Bertrand competition

  • Author(s)
    J.C. Bradbury, Professor of Economics, Bagwell Center Affiliated Faculty Member

    Title
    Can Movie Production Incentives Grow the Economy? Evidence from Georgia and North Carolina

    Abstract
    Most US states have adopted movie production incentives with the intention to stimulate state economic growth through film industry investment and related economic activity. Previous cross-state studies of film incentives have not identified a stimulus effect; however, the zero-sum nature of interstate competition to attract business through targeted incentives complicates the identification of economic effects. If benefits accrue only to the few states offering the greatest incentives, then the impact might not be evident through interstate comparisons. This study uses the synthetic control method to examine the economic impact of relatively large film tax credit and grant subsidies offered by Georgia and North Carolina. Both states experienced lower per capita income than expected after implementing film incentives, indicating that economic benefits did not accrue to the winners of this economic incentives arms race.

  • Author(s)
    Alexander Maslov, Lecturer, Department of Economics, Central Michigan University

    Title
    "Skill Mismatch of Indigenous Peoples in Canada: Findings from PIAAC"

    Abstract
    Using the Programme for the International Assessment of Adult Competencies (Canadian sample) the paper examines overskilling among Indigenous off-reserve peoples and compares the outcomes to the other Canadian born. We construct several measures of skill mismatch in literacy and numeracy finding no statistically significant difference between aboriginal and non-aboriginal Canadian-born populations. We then use the developed measures in the analysis of wages and find that among First Nations, Metis and Inuit only the males of the former aboriginal group earn significantly less than their non-aboriginal Canadian-born counterparts.

Summer 2018

  • Author(s)
    James Boudreau, Assistant Professor of Economics, Bagwell Center Affiliated Faculty Member

    Title
    A Knife-Point Case for Sion and Wolfe’s Game

    Abstract
    Sion and Wolfe’s (1957) game is relatively well-known in the game theory literature for possessing almost of all of the properties sufficient for the existence of Nash equilibrium, yet still lacking one. Here we make a slight but specific alteration to their game that allows for the existence of equilibria, in an effort to explore just why equilibria failed to exist in the original case. We then connect our case to several other examples in the literature to show that these games all lack equilibria because they feature what we call hiding spots, which are crucial violations of the payoff security properties that have been established as sufficient for equilibrium existence. Since identifying hiding spots in some games is quite easy, relative fully verifying other conditions, this paper therefore serves as another step toward identifying conditions for the (non-)existence of equilibria.

  • Author(s)
    J.C. Bradbury, Professor of Economics, Bagwell Center Affiliated Faculty Member

    Title
    Do Movie Production Incentives Generate Economic Development?

    Abstract
    Movie production incentives (MPI) are a popular economic development strategy employed by US states. Film subsidies are intended to encourage external investment into an untapped industry that spills over onto complementary industries to generate economic growth through a multiplier. Despite their widespread use, the positive impact of MPIs on state economies has not been documented, and several states have halted MPI programs due to high costs and questionable efficacy. This study exploits the staggered implementation, suspension, and elimination of film incentive programs across states to estimate the macroeconomic impact of MPIs. Instrumental variable estimates that permit causal inference do not support the hypothesized positive impacts of film incentives on state economies.

  • Author(s)
    Marcus Marktanner, Associate Professor of Economics, Bagwell Center Affiliated Faculty Member

    Title
    An Estimator of the Economic Dividend from Economic Freedom

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