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Price‐Parity Adjustments Shouldn'T Be A Trade Secret: State‐Level Price Parity And Assessment Of Covenants Not To Compete Enforceability

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  • Laurel J. Fish
  • Dennis Halcoussis
  • G. Michael Phillips

Abstract

This paper demonstrates the importance of making regional cost adjustments and questions the validity of papers using nationwide compensation to assess noncompete enforceability and other policies without regional price‐level adjustments. Numerous papers in recent years do not incorporate the cross‐sectional analog to inflation adjustments. Using the Bureau of Economic Analysis Regional Price Parity (RPP) index, the results of a representative policy analysis study are analyzed with, and without, parity adjustment. We show that typical results demonstrating broad negative economic effects from noncompete covenants may be an artifact of using nominal, nonparity‐adjusted data. (JEL C18, R1, J31)

Suggested Citation

  • Laurel J. Fish & Dennis Halcoussis & G. Michael Phillips, 2021. "Price‐Parity Adjustments Shouldn'T Be A Trade Secret: State‐Level Price Parity And Assessment Of Covenants Not To Compete Enforceability," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 220-235, January.
    • Handle: RePEc:bla:coecpo:v:39:y:2021:i:1:p:220-235
    DOI: 10.1111/coep.12496
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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