Market structure and pricing

• The Market for Acquiring Card Payments from Small and Medium-Sized Canadian Merchants

  Staff Discussion Paper 2020-5 Angelika Welte, Jozsef Molnar

  This note uses industry data and a unique dataset of small and medium-sized merchants to provide insights into the acquirer-merchant market in Canada.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Financial services, Market structure and pricing, Payment clearing and settlement systems JEL Code(s): C, C2, D, D2, E, E4, E42
• May 20, 2020

  Decisive actions in difficult times

  Speech summary Timothy Lane CFA Society Winnipeg and the Manitoba Association for Business Economics Winnipeg, Manitoba

  Deputy Governor Timothy Lane talks about the Bank’s decisive actions in response to COVID-19, and how these will help Canadians now and in the future.

  Content Type(s): Press, Speeches and appearances, Speech summaries Research Topic(s): Coronavirus disease (COVID-19), Credit and credit aggregates, Credit risk management, Domestic demand and components, Financial institutions, Financial markets, Financial services, Financial stability, Fiscal policy, Housing, Inflation and prices, Inflation targets, Interest rates, International financial markets, Labour markets, Lender of last resort, Market structure and pricing, Monetary policy, Monetary policy and uncertainty, Monetary policy implementation, Monetary policy transmission, Productivity, Recent economic and financial developments, Service sector, Trade integration
• May 20, 2020

  Policies for the Great Global Shutdown and Beyond

  Remarks (delivered virtually) Timothy Lane CFA Society Winnipeg and Manitoba Association for Business Economics Winnipeg, Manitoba

  Deputy Governor Timothy Lane explains how the Bank is helping Canadian households and businesses weather the COVID-19 crisis, and how our actions today are laying a solid foundation for our future economic recovery.

  Content Type(s): Press, Speeches and appearances, Remarks Research Topic(s): Coronavirus disease (COVID-19), Credit and credit aggregates, Credit risk management, Domestic demand and components, Financial institutions, Financial markets, Financial services, Financial stability, Fiscal policy, Housing, Inflation and prices, Inflation targets, Interest rates, International financial markets, Labour markets, Lender of last resort, Market structure and pricing, Monetary policy, Monetary policy and uncertainty, Monetary policy implementation, Monetary policy transmission, Productivity, Recent economic and financial developments, Service sector, Trade integration

• A Simple Method for Extracting the Probability of Default from American Put Option Prices

  Staff Working Paper 2020-15 Bo Young Chang, Greg Orosi

  A put option is a financial contract that gives the holder the right to sell an asset at a specific price by (or at) a specific date. A put option can therefore provide its holder insurance against a large drop in the stock price. This makes the prices of put options an ideal source of information for a market-based measure of the probability of a firm’s default.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Asset pricing, Financial markets, Market structure and pricing JEL Code(s): G, G1, G13, G3, G33

• Multi-Product Pricing: Theory and Evidence from Large Retailers in Israel

  Staff Working Paper 2020-12 Marco Bonomo, Carlos Carvalho, Oleksiy Kryvtsov, Sigal Ribon, Rodolfo Rigato

  Standard theories of price adjustment are based on the problem of a single-product firm, and therefore they may not be well suited to analyze price dynamics in the economy with multiproduct firms.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation and prices, Market structure and pricing, Monetary policy JEL Code(s): D, D2, D21, D22, E, E3, E31, E5, E52, L, L1, L11

• Optimal Taxation in Asset Markets with Adverse Selection

  Staff Working Paper 2020-11 Mohammad Davoodalhosseini

  What is the optimal tax schedule in over-the-counter markets, e.g., those for corporate bonds? I find that an optimal tax schedule is often non-monotonic. For example, trading of some high-price assets should be subsidized, and trading of some low-price assets should be taxed.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Financial markets, Financial system regulation and policies, Market structure and pricing JEL Code(s): D, D8, D82, D83, E, E2, E24, G, G1, G10, J, J3, J31, J6, J64

• Do Protectionist Trade Policies Integrate Domestic Markets? Evidence from the Canada-U.S. Softwood Lumber Dispute

  Staff Working Paper 2020-10 Jinggang Guo, Craig Johnston

  We consider the effects of protectionist trade policies on international and domestic market integration, using evidence from the long-standing softwood lumber trade dispute between Canada and the United States.

  Content Type(s): Staff research, Staff working papers Research Topic(s): International topics, Market structure and pricing, Trade integration JEL Code(s): F, F1, F13, Q, Q1, Q17

• Welfare Analysis of Equilibria With and Without Early Termination Fees in the US Wireless Industry

  Staff Working Paper 2020-9 Joseph Cullen, Nicolas Schutz, Oleksandr Shcherbakov

  The elimination of long-term contracts and early termination fees (ETFs) in the US wireless industry at the end of 2015 increased monthly service fees by 2 to 5 percent. Nevertheless, consumers are clearly better off without ETFs. While firms’ revenues from ETFs vanish, their profits from monthly fees increase. As a result, the overall effect on producer profits is less clear.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Econometric and statistical methods, Firm dynamics, Market structure and pricing JEL Code(s): D, D2, D22, L, L1, L15, L9, L96

• Identifying Consumer-Welfare Changes when Online Search Platforms Change Their List of Search Results

  Staff Working Paper 2020-5 Ryan Martin

  Online shopping is often guided by search platforms. Consumers type keywords into query boxes, and search platforms deliver a list of products. Consumers' attention is limited, and exhaustive searches are often impractical.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Econometric and statistical methods, Market structure and pricing JEL Code(s): C, C1, C14, D, D1, D11, D12, D6, D8, D83, L, L4, L40

• A Spatial Model of Bank Branches in Canada

  Staff Working Paper 2020-4 Heng Chen, Matthew Strathearn

  Using data on bank branch locations across Canada from 2008 to 2018, we explore an interesting aspect of bank branch competition—geographic concentration. We find that bank branch density does not correlate with geographic and market concentration; however, we do find strong correlation with postal-code demographics.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Firm dynamics, Market structure and pricing JEL Code(s): L, L1, R, R3