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Abstract
Two studies explore the potential for demand models to inform policy decisions when only aggregated price and quantity data are available. The first is a study of the Atlantic City casino industry. Legislation recently adopted by Pennsylvania and New York is generating new growth in the casino industry in the northeastern United States. Studies have shown that product differentiation is the best way for existing casinos to remain competitive under these conditions. The state of New Jersey and the Atlantic City casinos have undertaken several improvements in and around the casinos to improve the overall gaming experience. While these improvements will go a long way toward ensuring that the casinos maintain market share of gaming revenues and that the state continues to reap the economic benefits of the industry, unexploited potential may remain. This study estimates a discrete-choice model to determine which product characteristics will have the greatest impact on demand. Results suggest the overall number of recipients of complementary goods is more important than the total value of these goods. Additionally, consumers appear to prefer newer casinos and newer gaming technology indicating that regular upgrades in casino facilities may be justified.
The second is a study of California's energy markets. Evidence of energy conservation in California during the deregulation crisis of 2000-2001 raises questions about the role of altruism, or social responsibility, in household and firm behavior. The crisis provides a unique opportunity to reexamine the theories and empirical findings previously developed in the context of over-compliance (cases in which firms reduce pollution emissions below the levels required by regulations). This study capitalizes on the fact that retail energy prices are constant over a significant portion of the observation period, thereby eliminating rising prices as a cause for reduced energy consumption. The study attempts to shed new light on the subject of social responsibility by examining the behavior of economic agents across sectors. Monthly panel data, aggregated by sector, for the period beginning February 1997 and ending December 2001 are used in the analysis. Results suggest that households may be more sensitive to public media announcements than firms.
