Brandon Schaufele

• Schaufele, B., 2023, "Merger Bonds: A New Remedy for an Old Problem", Canadian Competition Law Review, June 36(1): 29 - 45.
  Abstract: Merger control is beset with uncertainty. Mergers promise to unlock potential economic efficiencies yet introduce the prospect that the newly merged firms may behave anti-competitively. Denying a merger for which efficiencies outweigh anti-competitive harm forgoes socially beneficial combinations. The opposite is equally true: approving a merger that yields few efficiencies but leads to anti-competitive conduct harms consumers. Competition authorities, as regulators, must weigh the probabilities of these future outcomes, potential efficiencies versus potential anti-competitive conduct, when making an ex-ante decision whether to challenge a transaction. That is, they must take a decision before the uncertainty is resolved. This paper introduces a novel behavioural remedy, referred to as a merger bond, that may help alleviate and transfer some of the risks arising from ex-ante merger control. Merger bonds are financial contracts that act as assurances against anti-competitive conduct, bridging the gap between ex-ante and ex-post merger review. They offer several advantages that complement existing merger control remedies.

  Link(s) to publication:

  https://cbaapps.org/cba_cclr/search.aspx?_gl=1*1jj40v9*_ga*MTQ2MTQwODAxMi4xNjkzNTIzNzYw*_ga_YTMHKDEBK2*MTY5MzUyMzc1OS4xLjAuMTY5MzUyMzc1OS42MC4wLjA

• Schaufele, B.; Winter, J., 2023, "Production Controls in Heavy Oil and Bitumen Markets: Surplus Transfer Due to Alberta’s Curtailment Policy", Energies, February 16(3)
  Abstract: In January 2019, the Canadian province of Alberta enacted limits on crude oil and bitumen production. These production controls, a policy referred to as curtailment, represent a shift for a government that historically avoided market intervention. The policy was designed to shrink a growing and prolonged price differential between the Western Canadian Select price of oil, the key benchmark for Alberta’s heavy oil production, and the West Texas Intermediate benchmark. The curtailment created artificial scarcity, shrinking the price differential from more than $40 USD per barrel in November 2018 to less than $15 USD per barrel in February 2019. In the process, this policy transferred market surplus from refiners, mainly those in the US Midwest, to producers in Alberta. We review this large-scale market intervention and calculate the magnitude of the economic transfer. We find the curtailment increased producer surplus by $659M CAD per month and reduced consumer surplus by $763M per month. At the margin, every $1 reduction in consumer surplus translates into a $0.71 gain in producer surplus. We further show that if the Government of Alberta’s objective was to maximize short-run producer surplus, it should further scale back production, setting the curtailment rate at 25% rather than the initial 8.7%.

  Link(s) to publication:

  http://dx.doi.org/10.3390/en16031389

• Schaufele, B., 2022, "Curvature and Competitiveness: Carbon Taxes in Cattle Markets", American Journal Of Agricultural Economics, August 104(4): 1268 - 1292.
  Abstract: Environmental regulation can interact with agricultural markets to produce underappreciated competitiveness and leakage effects. This paper measures effective carbon tax stringency by structurally recovering the domestic supply schedule for a trade-exposed beef cattle industry such that elasticities and carbon tax rates change with product prices (i.e., due to the curvature of the supply function). Two basic propositions from the economics of taxation -- that excess burdens increase in elasticities and tax rates -- are shown to cause the stringency of uniform carbon policy to vary nonlinearly with output prices. Based on the domestic supply function, the relationship between marginal excess burden, a measure of policy stringency from the industry's perspective, and product prices is estimated. Several policy-relevant counterfactual scenarios are explored. Results show that with moderately high output prices, supply elasticities are small and the efficiency cost of a $40/tCO2e carbon tax (gross of environmental benefits) is less than $0.01 per dollar tax revenue. As prices decline, supply curves become increasingly elastic and marginal excess burdens grow rapidly.

  Link(s) to publication:

  http://dx.doi.org/10.1111/ajae.12272

• Rao, V. K.; Schaufele, B., 2021, "Interacting Corporate Political Activities with Evidence from the Tobacco Industry", Business and Politics, December 23(4): 456 - 473.
  Abstract: Research on firm-level corporate political activity often treats firm-government interactions as independent of the market competition between firms. Yet, firms that compete in the market will consider rivals when making strategic non-market decisions. Ignoring market rivalry when studying non-market strategy introduces fundamental endogeneity problems and potentially overlooks a central mechanism explaining firms' political choices. Our study demonstrates this by investigating the strategic non-market interactions of large US tobacco manufacturers, a case study that is independently interesting. From 1992 to 2008, the US tobacco industry experienced dramatic upheaval in its business environment as regulatory authority shifted from the state to federal-level, under the Food and Drug Administration. Using firm-candidate-cycle data, a complete information campaign contributions game, played in the non-market environment, is estimated for two of the US's largest tobacco manufacturers. Results demonstrate that, rather than acting in isolation, US tobacco firms strategically coordinated their firm-level political campaign contributions.

  Link(s) to publication:

  http://dx.doi.org/10.1017/bap.2021.7

• Schaufele, B., 2021, "Lessons from a Utility-Sponsored Revenue Neutral Electricity Conservation Program", Energy Policy, March 150
  Abstract: Using monthly account level data for over 27,000 households between 2007 and 2014, this study evaluates a revenue neutral municipal electricity conservation program. Rebates for the purchase of energy efficient appliances were financed via a small surcharge on high consuming households. The results demonstrate that the program mainly transferred money between residents with almost no effect on electricity consumption. Using variation in the timing of the rebate checks, none of the energy efficiency incentives yielded a statistically or economically meaningful reduction in electricity consumption compared with a counterfactual where no rebate was offered. Using a bunching estimator and exploiting changes in behavior around the high consumption threshold, a small reduction in electricity consumption is attributable to the surcharge, suggesting that prices are better than subsidies at reducing electricity consumption. Overall, the change in behavior attributable to the electricity conservation program is small, supporting recent evidence that many energy efficiency programs underperform in real-world settings.

  Link(s) to publication:

  http://dx.doi.org/10.1016/j.enpol.2021.112157

• Rivers, N.; Saberian, S.; Schaufele, B., 2020, "Public transit and air pollution: Evidence from Canadian transit strikes", Canadian Journal of Economics, December 53(2): 496 - 525.
  Abstract: Little is known about the causal impacts of public transit on local air pollution. Exploiting variation in transit availability resulting from transit strikes in 18 Canadian cities between 1974–2011, this study identifies the short-run effect of public transit on air pollution. Our findings indicate that transit leads to a 3.5 part-per-billion increase in nitrogen oxides while having no statistically significant effect on carbon monoxide or PM2.5. Estimates are robust to a series of specification tests and magnitudes are consistent with a calibrated simulation model. Overall, the results suggest that expanding the current configuration of public transit in North American cities is unlikely to yield improvements in local air quality.

  Link(s) to publication:

  http://dx.doi.org/10.1111/caje.12435

• Heyes, A.; Rivers, N.; Schaufele, B., 2019, "Pollution and Politician Productivity: The Effect of PM on MPs", Land Economics, May 95(2): 157 - 173.
  Abstract: Applying methods of textual analysis to all 119,225 speeches made in the Canadian House of Commons between 2006 and 2011, we establish that air pollution reduces the speech quality of Canadian Members of Parliament (MPs). Exposure to fine particulate matter concentrations exceeding 15 µg/m3 causes a 2.3% reduction in the quality of MPs speech (equivalent to a 2.6 month decrease in education). For more difficult communication tasks the decrement in quality is equivalent to the loss of 6.5 months of schooling. Our design accounts for the potential endogeneity of exposure and controls for many potential confounders including individual fixed effects.

  Link(s) to publication:

  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2852886

  http://dx.doi.org/10.3368/le.95.2.157

• Fremeth, A.; Richter, B. K.; Schaufele, B., 2018, "Spillovers from Regulating Corporate Campaign Contributions", Journal of Regulatory Economics, December 54(3): 244 - 265.
  Abstract: Populist clamor and recent Supreme Court decisions have renewed calls for increased regulation of corporate money in politics. Few empirical estimates exist, however, on the implications of existing rules on firms' political spending. Exploiting within firm-cycle cross-candidate variation and across firm-cycle variation, we demonstrate that the regulation of PAC campaign contributions generates large spillovers into other corporate political expenditures such as lobbying. Using both high dimensional fixed effects and regression discontinuity designs, we demonstrate that firms constrained by campaign contribution limits spend between $549,000 and $1.6M more on lobbying per election cycle, an amount that is more than 100 times the campaign contribution limit. These results demonstrate that, similar to regulations in other domains of the economy, constraining specific corporate political activities often yields unintended effects.

  Link(s) to publication:

  http://dx.doi.org/10.1007/s11149-018-9369-7

• Rivers, N.; Schaufele, B., 2017, "Gasoline Price and New Vehicle Fuel Efficiency: Evidence from Canada", Energy Economics, October 68: 454 - 465.
  Abstract: Using data on all new vehicles registered in Canada from 2000 to 2010, we estimate the elasticity of the fuel economy of the new vehicle stock with respect to gasoline price. We find that a 10% increase in gasoline price causes a 0.8% improvement in the fuel economy of new vehicles. However, we also show that consumers respond much more strongly to fuel taxes than to other components of the gasoline price. Finally, we provide evidence that consumers in dense urban areas are more responsive to changes in fuel prices than consumers living on the urban periphery.

  Link(s) to publication:

  https://doi.org/10.1016/j.eneco.2017.10.026

• Rivers, N.; Schaufele, B., 2017, "New Vehicle Feebates", Canadian Journal of Economics, February 50(1): 201 - 232.
  Abstract: New vehicle feebate programs encourage improved fleet-wide vehicle fuel efficiency yet analyses of these policies have been limited to ad hoc proposals. In this paper, we exploit an extensive, multi-year dataset which includes more than 16 million observations to evaluate the welfare implications of a long-standing vehicle feebate program in the Canadian province of Ontario. We (1) show that second-best optimal feebates can be written as a function of new vehicle Pigouvian taxes (2) find that Ontario’s feebate program was welfare-enhancing relative to a no feebate scenario but that a second-best optimal benchmark would have yielded additional welfare while reducing fleet-wide emissions and (3) that Ontarian consumers responded asymmetrically to fees versus rebates.

  Link(s) to publication:

  http://dx.doi.org/10.1111/caje.12255

• Schaufele, B., 2016, "Taxes, Volatility and Resources in Canadian Provinces", Canadian Public Policy, December 42(4): 469 - 481.
  Abstract: Tax policy often breeds controversy, especially when rate changes are motivated by volatile resource sectors. This paper examines how provincial tax policies respond to changes in resource revenues. Specifically, it (i) estimates the "tax-resource" elasticity for Canadian provinces and (ii) measures the resource sector's contribution to the volatility of provincial GDP. Empirical results suggest that a 1,000 decrease in per capita resource revenue leads to a 150bps increase in a province's marginal personal income tax rate and a 3% increase in excise taxes on gasoline. A variance decomposition demonstrates that resource-induced volatility accounts, respectively, for 76.2%, 50.8% and 42.1% of the variance of Newfoundland and Labrador, Alberta and Saskatchewan's GDPs.

  Link(s) to publication:

  https://ssrn.com/abstract=2798279

  http://dx.doi.org/10.3138/cpp.2015-068

• Fremeth, A.; Richter, B. K.; Schaufele, B., 2016, "Motivations for Corporate Political Activity", Advances in Strategic Management, May 34: 161 - 191.
  Abstract: Campaign contributions are typically seen as a strategic investment for firms recent empirical evidence, however, has shown few connections between firms’ political investments and regulatory or performance improvements, prompting researchers to explore agency-based explanations for corporate politics. By studying intra-firm campaign contributions of CEOs and political action committees (PACs), we investigate these two hypotheses surrounding public politics and demonstrate that strategic and agency-based motivations may hold simultaneously. Exploiting transaction-level data, with over 6.8 million observations, we show that (i) when PACs give to specific candidates, executives give to the same candidates, especially those who are strategically important to the firm and (ii) when executives give to candidates who are not strategically important, PACs give to the same candidates potentially due to agency problems within the firm.

  Link(s) to publication:

  http://dx.doi.org/10.1108/S0742-332220160000034006

• Schaufele, B.; Rivers, N., 2015, "Salience of Carbon Taxes in the Gasoline Market", Journal of Environmental Economics and Management, November 74(1): 23 - 36.
  Abstract: We demonstrate that the carbon tax imposed by the Canadian province of British Columbia caused a decline in short-run gasoline demand that is significantly greater than would be expected from an equivalent increase in the market price of gasoline. That the carbon tax is more salient, or yields a larger change in demand than equivalent market price movements, is robust to a range of specifications. As a result of the large consumer response to the tax, we calculate that during its first four years, the tax reduced carbon dioxide emissions from gasoline consumption by 2.4 million tonnes.

  Link(s) to publication:

  http://dx.doi.org/10.1016/j.jeem.2015.07.002

• Rivers, N.; Schaufele, B., 2015, "The Effect of Carbon Taxes on Agricultural Trade", Canadian Journal of Agricultural Economics, May 63(2): 235 - 257.
  Abstract: This study evaluates the implications of an existing carbon tax on international trade in the agricultural sector. Applying uniformly to all fossil fuels combusted within its borders, the province of British Columbia unilaterally introduced a carbon tax on July 1, 2008. In 2012, the province granted an exemption from the tax to certain agricultural sectors. Using commodity-specific trade flows and exploiting cross-provincial and intertemporal variation, we find little evidence that the carbon tax is associated with any meaningful effects on agricultural trade despite the sector being singled out as at risk by the provincial government. Our findings suggest that there is not compelling evidence to support exempting the agricultural sector from the tax. Discussion of potential policy remedies to address the tax's potential effects on firm profitability and international competitiveness is also included.

  Link(s) to publication:

  http://dx.doi.org/10.1111/cjag.12048

• Fremeth, A.; Richter, B. K.; Schaufele, B., 2013, "Campaign Contributions over CEOs' Careers", American Economic Journal-Applied Economics, July 5(3): 170 - 188.
  Abstract: Individuals dominate money in politics, accounting for over 90% of campaign contributions, yet studies of drivers of individuals’ giving are scarce. We collected data on all contributions made between 1991 and 2008 by all 2,198 people who were S&P 500 CEOs for anyportion of that interval. We exploit variation in leadership status over these individuals’ careers to identify that being an S&P 500 CEO causes a 4,000 or 131% jump per election-cycle inpersonal giving. While some fraction of CEOs’ contributions can be attributed to long-standing preferences, the striking changes in behavior cannot be explained by these factors alone.

  Link(s) to publication:

  http://dx.doi.org/10.1257/app.5.3.170

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