Northwestern Events Calendar

Oct
2
2023

Industrial Organization Grad Student Seminar

When: Monday, October 2, 2023
12:00 PM - 1:30 PM CT

Where: Kellogg Global Hub, 3301, 2211 Campus Drive, Evanston, IL 60208 map it

Audience: Faculty/Staff - Post Docs/Docs - Graduate Students

Contact: Mariya Acherkan   (847) 491-5213

Group: Department of Economics: Industrial Organization Lunch

Category: Academic

Description:

Speaker: Gaston Lopez

Abstract: We study the nationalization of YPF, Argentina’s leading gasoline company. We find that the nationalization led to lower gasoline prices, particularly for inelastic demand products, and varying price reductions across geographic regions, favoring consumers who have political ties with the firm. We develop and estimate a model of supply and demand of gasoline and recover the objective function of the State-Owned Enterprise (SOE), allowing for heterogeneity in how the SOE internalizes different groups of consumers and firms. Our analysis reveals a dual impact of the nationalization: reduced economic price discrimination, benefiting consumers on average and increasing total welfare, but increased political price discrimination, favoring particular groups over others based on political attributes. We then use the model to evaluate the firm’s response to policy alternatives, including privatization and regulations that limit SOEs’ discretion, to inform the current debate surrounding SOEs in different countries. We found that limiting government discretion effectively reduces political price discrimination but negatively affects overall welfare and government revenues. These findings shed light on the complexities of public provision, emphasizing the role of interest groups and politics in shaping government decision-making and their distributional consequences.

 

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