The demand for labor in the long run should be important to labor economists for a variety of reasons. So long as the supply of labor to an occupation, industry or area is not perfectly elastic in the long run, the nature of demand for labor in that subsector interacts with the shape of the supply function to determine the level of wages. As in the market for a commodity, so too in the market f...

We explore how private drug plans set cost-sharing in the context of Medicare Part D. While publicly-provided drug coverage typically involves uniform cost-sharing across drugs, we document substantial heterogeneity in the cost-sharing for different drugs within privately-provided plans. We also document that private plans systematically set higher consumer cost sharing for drugs or classes ass...

This paper investigates the large and unexpected increase in cigarette prices that followed the 1997 Master Settlement Agreement (MSA). We integrate key features of rational addiction theory into a discrete-choice model of the demand for a differentiated product. We find that, following the MSA, firms set prices on a more elastic region of their demand curves. Using these estimates, we predict ...

Although much has been written about the implications of monopoly power for the rate of extraction of natural resources, the specific case in which the resource can be sold in two markets with different elasticities of demand has escaped notice. We find that a monopolist facing two markets with differing iso-elastic demand schedules extracts more rapidly than the social planner, whether or not ...

This paper discusses the incentive to bundle when consumer valuations are nonadditive and/or when products are supplied by separate sellers. Whether integrated or separate, firms have an incentive to introduce a bundle discount when demand for the bundle is elastic relative to demand for stand-alone products. A simple formula is derived for when an integrated firm supplying substitute products ...

We use a novel approach to identify price effects in a differentiated products demand system for drugs used to treat ADHD and find that the demand for ADHD drugs is elastic and there are significant substitution possibilities within and across molecules and delivery mechanisms. The first-time introduction of a generic drug shows large welfare gains due to expansion of the market to price sensit...

How the brain processes cigarette cost-benefit decision making remains largely unknown. Using functional magnetic resonance imaging (fMRI), this study investigated the neural correlates of decisions for cigarettes (0-10 cigarettes) at varying levels of price during a Cigarette Purchase Task (CPT) in male regular smokers (N = 35). Differential neural activity was examined between choices classif...