Information transmission among consumers (i.e., word of mouth) has received little empirical examination. I offer a technique that can identify and measure the impact of word of mouth, and apply it to data from U.S. theatrical movie admissions. While variables and movie fixed effects comprise the bulk of observed variation, the variance attributable to word of mouth is statistically significant. Results indicate approximately 10% of the variation in consumer expectations of movies can be directly or indirectly attributed to information transmission. Information appears to affect consumer behavior quickly, with the length of a movie's run mattering more than the number of prior admissions.

In this paper we present a technique for assessing data quality based on conformity with Benford's Law, which states that the first digits of numbers generated from natural phenomena do not occur with equal frequency. If data do not conform to the Benford distribution, then questions arise about the process that generated it. Because neutral transformations should preserve conformity to Benford's Law, any macroeconomic adjustment that destroys this conformity should make those calculations suspect.Benford's Law is applied to one of the most commonly used data sets in economics: international macroeconomic statistics. We find that the World Bank international GDP data and purchasing power parity (PPP) corrected Penn World tables for OECD countries conform well to Benford's Law. But some subsets of the data -particularly GDP figures from the developing world -show non-conformity consistent with deliberate manipulation of the underlying series. The test also flags potential problems with a variety of standard macro transformations of the data.

We consider the relationship between prices and market structure for office supply superstores in the U.S. which was central to the Federal Trade Commission's opposition to the merger of Staples and Office Depot. Due to potential biases in a standard regression, we employ a two-stage approach in which a model of endogenous market structure provides correction terms for a second stage price regression. Using a cross-section of data on market structures and Staples' prices, we find that excluding the correction term substantially distorts the importance of competitors as the two-stage model yields stronger negative relationships between prices and market structure variables.

Abstract-We exploit variation in gasoline and cigarettes taxes in adjacent political jurisdictions for northern Illinois and Indiana to examine consumers' trade-off between prices and travel. We develop a model that relates activity in the retail gasoline industry around the tax borders to consumer locations. Our results indicate that the willingness of a typical Chicagoland consumer to travel an additional mile to buy gasoline corresponds to about $0.065 to $0.084 per gallon. According to our estimates, the observed area of Chicago, the jurisdiction with the highest taxes, is missing approximately 40% of the capacity that would exist were taxes equalized.

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