understanding agricultural policy in africa the contributions of robert bates abstract robert bates s writings on the determinants of agricultural policy in africa employ rational choice and dialectical approaches to political economy this paper discusses some of the strengths and weaknesses of each and proposes an alternative dynamic approach to understanding both the limitations and the sources of agricultural policy with particular reference to kenya

the state and economic stagnation in tropical africa abstract politics while only one strand in the explanation of africa s massive economic problems is nonetheless a significant factor a central conundrum facing postcolonial political leaders is how to govern and hold together unintegrated peasant societies in the absence of legitimacy personal rule a particular mode of patrimonial governance provides an answer permitting regime survival and the advancement of political insiders but personal rule has an economically destructive tendency that only shrewd political leadership and propitious world economic conditions can check if uncontrolled certain political practices corrode bureaucratic and legal rationality and promote the misallocation of scarce public resources the result can be a downward spiral of interrelated political and economic decline that is increasingly difficult to reverse

optimality versus practicality in market design a comparison of two double auctions we consider a market for indivisible items with m buyers and m sellers traders privately know their values costs which are statistically dependent two mechanisms are considered the buyer s bid double auction collects bids and asks from traders and determines the allocation by selecting a market clearing price it fails to achieve all possible gains from trade because of strategic bidding the designed mechanism is a revelation mechanism in which honest reporting of values costs is incentive compatible and all gains from trade are achieved this optimality however comes at the expense of plausibility i the monetary transfers among the traders are defined in terms of the traders beliefs about each other s value cost ii a trader may suffer a loss ex post iii the mechanism may run a surplus deficit ex post we compare the virtues of the simple yet mildly inefficient buyer s bid double auction to the flawed yet perfectly efficient designed mechanism

sources of stagnation in sub saharan africa abstract this paper investigates the sources of economic stagnation in sub saharan africa during the 1970s several policy variables are considered as well as a set of environmental variables which include climate violence export prices and other exogenous factors the paper uses statistical analysis in an attempt to identify the relative importance of the policy variables and the environmental variables taken as groups it also seeks to identify particular policy variables which seem to have been most significant in determining growth outcomes the technique employed for investigation is reduced form econometric estimation in a preliminary analysis the impact of the international trade environment on average economic performance in africa during the period since independence is investigated the results suggest an extremely close relationship between movements in export prices and average performance throughout the 20 year period a second econometric exercise investigates the joint impacts of environmental and policy variables on growth in a cross section of african states since 1970 the spirit of the approach is exploratory and a relatively large number of variables are constructed and tested through multivariate analysis a primary finding is that the environmental variables seem to have had more impact on growth as a group than the policy variables this finding must be qualified however by the continuing lack of some important policy variables agricultural price data have not yet become available in sufficient quantity for cross section analysis nor have several important human resource variables and indices of the use of resources in the public domain among the policy variables which have been used for the analysis those identified with retrenchment during periods of declining commodity prices seem most significant primary among these are the real effective exchange rate and some measures of effectiveness in foreign exchange reallocation during periods when imports must contract severely in the final section of the paper the cross section results are used for a counterfactual analysis of the growth experiences of individual african states measures of growth opportunity cost are constructed which suggest the degree to which errors in management and uncontrollable circumstances have held states below their potential growth paths the results suggest that some success stories may owe much to good luck while some failures may well be due less to bad management than to adverse circumstances

continuity in auction design abstract j cremer and r p mclean econometrica56 1988 1247 1257 have shown that the auctioneer can extract all the surplus when the private valuations of bidders are not statistically independent the paper shows that this result does not necessarily arise under limited liability or risk aversion under limited liability and or risk aversion we prove that the functions corresponding to the auctionner s optimal expected gain and to the maximum total surplus are continuous in the space of possible information distributions thus by continuity the auctioneer wil not be able to extract all the rents when bidders private valuations are approximately independent

specialized supplier networks as a source of competitive advantage evidence from the auto industry this study examines the relationship between interfirm asset specificity and performance in the auto industry more specifically i examine the extent to which differences in supplier automaker asset specialization may explain performance differences between japanese automakers nissan and toyota and u s automakers chrysler ford general motors the findings indicate a positive relationship between supplier automaker specialization and performance in particular the data suggest a positive relationship between interfirm human asset cospecialization and both quality and new model cycle time moreover site specialization is found to be positively associated with lower inventory costs the findings suggest that in the auto industry a tightly integrated production network characterized by proximity and a high level of human cospecialization will outperform a loosely integrated production network characterized by low levels of interfirm specialization

informational smallness and the scope for limiting information rents abstract for an incomplete information model of public good provision with interim participation constraints we show that efficient outcomes can be approximated with approximately full surplus extraction when there are many agents and each agent is informationally small the result holds even if agents payoffs cannot be unambiguously inferred from their beliefs the contrary result of neeman z neeman the relevance of private information in mechanism design j econ theory 117 2004 55 77 rests on an implicit uniformity requirement that is incompatible with the notion that agents are informationally small because there are many other agents who have information about them

inventory and price behaviour the point of this paper is that inventory adjustment attenuates downward pressure on price when realized demand is low because firms accumulate inventory hold overs speculating that demand will be stronger in the succeeding period when realized demand is high the firm draws down its inventories until a stock out occurs and price rises to clear the market

a model of inventory and layoff behaviour under uncertainty this paper develops a model of firm behavior under uncertainty designed to study the interac tion of inventories and layoffs the model is a blend of a buffer sto ck model of inventory behavior and an implicit contract model of layo ffs the model creates a distinction between inventory biased and lay off biased firms each of which exhibits inherently different pattern s of response of inventories and temporary layoffs to demand shocks in addition the model implies that the inventory layoff interaction tends to strengthen weaken the response of price and the work force to changes in anticipated demand real interest rates copyright 1988 by royal economic society

x inefficiency competition and market information whether competition forces firms toward efficient behaviour is an open question we consider a duopoly with firms run by managers and affected by adverse selection on costs in contrast to recent literature we point out that to have a genuine effect on firm x inefficiency competition must change managerial incentives by introducing the availability of some signal on the rivals behaviour we show that if costs are correlated the contractual use of that signal can render private managerial information uninfluential this result stresses the informational role of the market and suggests scope for future work

taking stock a critical assessment of recent research on inventories empirical and theoretical aspects of inventory behavior became hot topics in the 1950s and early 1960s no one seemed to notice the tension that was developing between the emerging macroeconomic and microeconomic views of inventories macroeconomists routinely thought of inventories as a destabilizing factor yet the prevailing micro theory viewed inventories as a stabilizing factor it was a fascinating question that was barely explored instead somewhat inexplicably interest in inventories dried up as if inventories were of minor economic significance and little intrinsic interest by the early 1980s then economists once again knew something they had known in the 1950s that inventory investment is of first order importance in business cycles but they were also beginning to realize that the standard production smoothing buffer stock model of inventories was in deep trouble this paper focuses on developments since that realization

a note on the econometric use of constant dollar inventory series abstract one dollar of finished goods inventories does not represent the same amount of physical goods as one dollar of sales when department of commerce constant dollar series are used this can cause seriously biased regression estimates

dynamic yardstick mechanisms abstract this paper shows that the inability of principals to commit to long term contracts is irrelevant when dealing with several agents whose private information is correlated this sharply contrasts with the dynamics of contracting without such correlation the paper also explores what limitations on yardstick mechanisms can justify the use of long term contracts we found that the inability of a principal to commit not to renegotiate long term contracts is without consequence even if there is a bound on transfers that an agent can be asked to pay in contrast short term contracting fails to implement the commitment solution with constraints on transfers second absent current yardstick the possibility of using correlated mechanisms in the future allows the principal to implement the first best with a renegotiation proof long term contract whereas this cannot be achieved with short term contracting

the determinants of manufacturing inventories in the uk the authors examine the determinants of inventory holding by the u k manufacturing sector over the period 1968 89 they find that inventory levels respond positively to output and its conditional variance and negatively to the level of gearing tehnological innovation in the form of computerized inventory control leads to a fall in the stock output ratio epirical results for inventories are examined in a cointegration and a general to specific error correction model with conditional variances estimated using an arch framework a backward looking error correction model is found to outperform a forward looking model although the latter also provides a reasonable fit to the data copyright 1993 by royal economic society

exploring the scope of neurometrically informed mechanism design a basic goal in mechanism design is to construct mechanisms that simultaneously satisfy efficiency voluntary participation and dominant strategy incentive compatibility previous work has shown that this is impossible unless the agents and planner have sufficient information about each other and common knowledge these results have remained largely theoretical because the required information is generally not available in practical applications however recent work has shown that these limitations can be overcome in simple settings using neurometric technologies that provide noisy signals of subjects preferences that can be used in the mechanism design problem here we build on this work by carrying out two new experiments designed to test the extent to which these neurometrically informed mechanisms nims can be applied to more complicated and realistic environments we find robustness to large type and action space and to the degrees of loss and risk aversion observed in most of our sample

the interrelationship between price and output decisions and investment decisions microfoundations and aggregate implications abstract this paper develops a model of firm behavior in which both price and output decisions and investment decisions are made the model permits an analysis of the dynamics of inventory and capital accumulation on price and output behavior there are two main results 1 short run price and output levels will differ from long run levels as desired stocks of inventory and capital diverge from actual levels 2 the size of the elasticities of price and output to changes in demand and cost variables depends on the speed with which gaps between desired and actual stocks are closed through investment

from bottom of the barrel to cream of the crop sequential screening with positive selection in a number of interesting environments dynamic screening involves positive selection in contrast with coasian dynamics only the most motivated remain over time the paper provides conditions under which the principal s commitment optimum is time consistent and uses this result to derive testable predictions under permanent or transient shocks it also identifies environments in which time consistency does not hold despite positive selection and yet simple equilibrium characterizations can be obtained

german inventory to sales ratios 1971 2005 an empirical analysis of business practice abstract the purpose of this study is to test empirically for the first time the general hypothesis that inventory to sales ratios have decreased over time in the german economy although inventory reduction has been a prevalent topic in the production and operations management literature there is a lack of empirically confirmed answers to questions they are as follows have inventories in german firms decreased overall during the past decades what sectors of german industry are leading lagging behind inventory reduction has inventory reduction developed differently for raw materials work in process or finished goods in which periods was marginal inventory reduction greatest to the best of our knowledge this empirical study is the first to broadly investigate inventory development from the 1970s until the present for a major european economy germany and will provide the first answers to the research questions stated above using aggregate industry level data provided by the deutsche bundesbank we show that inventory levels decreased overall in many sectors of german industry this reduction was mainly marked for raw materials and finished goods particularly for the second half of the time frame investigated

the production and inventory behavior of the american automobile industry understanding inventory movements is central to an understanding of business cycles this paper presents an empirical study of the behavior of inventories in the automobile industry it finds that inventory behavior is well explained by the assumption of intertemporal optimization with rational expectations the underlying cost structure appears to have substantial costs of changing production as well as substantial costs of being away from target inventory thelatter being a function of current sales given this cost structure whether inventory behavior is stabilizing or destabilizing depends on the characteristics of the demand process in the automobile industry inventory behavior is destabilizing the variance of production is larger than the variance of sales

business cycle stylized facts and inventory behaviour new evidence for the euro area abstract the purpose of this paper is for the first time to use business tendency survey data first to identify new facts that are useful for the interpretation of the decline in the volatility of real activity in the euro area and second to test the inventory management hypothesis as an explanation for the great moderation in europe we present stylized facts from the business tendency data on series for inventories current production current orders and expected production for the euro area emphasizing the decline in the volatility of the series further we investigate whether the decline in inventory volatility can be attributed to an endogenous change in the persistence of shocks to the accumulation dynamics of inventories or to an exogenous change in the shocks hitting the inventory optimisation process our results at euro level generally indicate that there is no evidence of a break in the inventory accumulation process on the contrary the impact of exogenous shocks on inventory volatility appears to be steadily declining over time beginning from the mid 1980s

the cyclical behavior of strategic inventories this paper presents a model in which inventories are used by a duopoly to deter deviations from an implicitly collusive arrangement higher inventories allow firms to punish cheaters more strongly and can thus help to maintain collusion we show that when demand is high the incentive to deviate increases so that increases in inventories may be optimal for the duopoly this rationalizes the observed positive correlation between inventories and sales in our empirical section we show that as our model predicts this correlation is more important in concentrated industries we also provide several examples where inventories have been a factor in cartel behavior

a dynamic mechanism and surplus extraction under ambiguity we study the question of auction design in an ipv setting characterized by ambiguity we assume that the preferences of agents exhibit ambiguity aversion in particular they are represented by the epsilon contamination model we show that a simple variation of a discrete dutch auction can extract almost all surplus this contrasts with optimal auctions under ipv without ambiguity as well as with optimal static auctions with ambiguity in all of these types other than the lowest participating type obtain a positive surplus an important point of departure is that the modified dutch mechanism is dynamic rather than static establishing that under ambiguity aversion even when the setting is ipv in all other respects a dynamic mechanism can have additional bite over its static counterparts a further general insight is that the standard revelation principle does not automatically extend to environments not characterized by subjective expected utility

joint production quasi fixed factors of production and investment in finished goods inventories inventory investment has long been an important area of inquiry for empirical work in macroeconomics this is due in large measure to the fact that inventory investment is a major source of fluctuations in aggregate output empirical work on inventories however has been dominated by the use of simple univariate flexible accelerators 1 the major objective of this paper is to propose and test a multivariate flexible accelerator model for inventory investment the model is tested with data on finished goods inventories from the manufacturing sector of the u s economy there are two reasons for undertaking such a task first at a theoretical level a univariate flexible accelerator model asserts that investment in say finished goods inventories is proportional to the gap between the desired and actual stocks of finished goods such a model presumes that decisions by firms on finished goods inventories are made independently of decisions on other stocks but theory suggests that when firms make simultaneous decisions on a variety of stocks which includes not only finished goods but also goods in process inventories the size of the work force etc decisions on finished goods will interact with decisions on

trade inventories and s s the paper presents empirical tests of the s s model of inventory behavior using aggregate retail trade data estimation and testing are based on the probability distributions of inventories derived by caplin 1985 the excess volatility of retailers demand over their consumers demand and the forgetfulness of inventories under s s are emphasized test results indicate that the time series properties of deliveries and sales are consistent with s s and not a quadratic cost model finally when autoregressions of inventories are given an s s rather than a stock adjustment interpretation traditional empirical problems such as low speeds of adjustment are explained

the variability of aggregate demand with s s inventory policies this paper develops a general theory of the aggregate implications of s s inventory policies it is shown that s s policies add to the variability of demand with the variance of orders exceeding the variance of sales overall the s s theory contradicts the widely held notion that retail inventories act as a buffer protecting manufacturers from fluctuating sales in 1951 arrow harris and marschak 3 introduced the s s form of inventory policy the policies are designed for retailers of finished goods who face economies of scale when placing orders with their suppliers to pursue an s s inventory policy the retailer establishes a lower stock point s and an upper stock point s no order is placed until inventories fall to s or below whereupon they are restored to the maximum of s a general proof of the optimality of these s s inventory policies was provided by scarf 13 at the microeconomic level the model has been extensively investigated formulae are available to compute optimal policies e g ehrhardt 6 and these policies are xidely used in industry e g schwartz ed 14 in addition the model has been extended to increasingly complex demand environments e g karlin and fabens 11 in contrast little is known about the macroeconomic implications of s s policies several recent papers have begun to correct this deficiency akerlof has suggested that pursuit of constant threshold money holding policies of the s s variety might be responsible for the observed low short run income elasticity of the demand for money akerlof 1 and akerlof and milbourne 2 in the operations research literature ehrhardt schultz and wagner 7 analyzed the demand environment of a wholesaler supplying several retailers they required that the distinct retailers have independent sales ruling out the analysis of common factors in sales finally simulation results of blinder 4 suggested a role for the s s model in understanding retail sector inventories however the theoretical difficulties with the model remained unresolved blinder commented if firms have a technology that makes the s s rule optimal aggregation across firms is inherently difficult indeed it is precisely this difficulty which has prevented the s s model from being used in empirical work to date blinder 4 p 459 in this paper we present a general theory of the aggregate implications of s s policies our central finding is that s s policies add to the variability of demand with the variance of orders exceeding the variance of sales this result holds even in the presence of common factors in retail sales in addition a close connection

supply chain efficiency value creation and the economic crisis an empirical assessment of the european automotive industry 2002 2010 abstract this paper seeks to evaluate the development of supply chain sc efficiency and the resulting impacts on company value in a secondary data analysis of the european automotive industry the trends of cost efficiency and working capital performance in the years 2002 2010 and the resulting value impacts are assessed it is detected that many companies failed to manage cost and working capital in a balanced and value adding way which resulted in considerable value losses the economic crisis is identified as an amplifier but not the major cause of these negative trends originality and value of the paper arise from the scarcity of financial analyses that focus on the car sector or that measure and compare several factors of sc efficiency or value creation

nonconvex costs and the behavior of inventories this paper explores one possible explanation for the apparent excess volatility of production relative to sales nonconvexities in the technology facing firms it is shown that if firms operate in a region of declining marginal costs then small shifts in demand can cause production to jump substantially estimates for six production to stock industries as well as the automobile industry suggest that all these industries behave as if they were operating in the region of nonconvex costs the results have important implications not only for inventory investment but also for the cyclical behavior of productivity and prices

correlated information and mechanism design in models of asymmetric information possession of private information leads to rents for the possessors this induces mechanism designers to distort away from efficiency the authors show that this is an artifact of the presumption that information is independently distributed rent extraction in a large class of mechanism design games is analyzed and a necessary and sufficient condition for arbitrarily small rents to private information is provided additionally the two person bargaining game is shown to have an efficient solution under first order stochastic dominance and a hazard rate condition similar conditions allow full rent extraction in milgrom weber auctions

rational expectations and the smoothing properties of inventories of finished goods abstract this paper formulates and estimates a dynamic rational expectations equilibrium model of inventories of finished goods and employment of labor the view that the primary role of inventories of finished goods is to act as a buffer stock in the face of fluctuating demand is examined both the model and estimation results indicate that this is the case because of differences in the costs involved for firms in changing their inventory stocks and labor force in addition to providing some new evidence on the behavior of inventories of finished goods and employment the paper illustrates a technology for maximum likelihood estimation of structural parameters under the hypothesis of rational expectations

vertical contracting with informational opportunism we consider vertical contracting arrangements between a manufacturer and a retailing network when retailers have private information and the organization is run through bilateral contracts we highlight a new form of informational opportunism arising when the manufacturer manipulates information learned separately in each relationship we characterize the set of allocations robust to such opportunism by means of simple ex post incentive compatibility constraints those constraints limit the manufacturer s ability to use yardstick competition among retailers they simplify contracts and restore a rent efficiency trade off even with correlated information we show that sell out contracts are optimal under a wide range of circumstances

auction design with endogenously correlated buyer types abstract this paper studies optimal auction design when the seller can affect the buyers valuations through an unobservable ex ante investment the key insight is that the optimal mechanism may have the seller play a mixed investment strategy so as to create correlation between the buyers otherwise conditionally independent valuations assuming that the seller announces the mechanism before investing the paper establishes conditions on the investment technology so that a mechanism exists which leaves buyers no information rent and leaves the seller indifferent between his investments under these conditions the seller can in fact extract the first best surplus almost fully

correlated information mechanism design and informational rents abstract cremer and mclean econometrica 56 1988 1247 1258 obtain a sufficient and necessary condition for full surplus extraction in bayesian nash equilibrium the rank condition which mcafee and reny econometrica 60 2 1992 395 421 later generalize for continuous type spaces this paper shows that if the principal does not know how noisy is the agent s signal or equivalently when signals available to an agent can be ranked by blackwell s informativeness and an agent s informativeness is independent of others information the rank condition fails to hold conversely when rank condition fails and informational rents are left to an agent the model can be interpreted as if the principal were uncertain about the informativeness of the agent s signal

inventories and the volatility of production a stylized fact associated with inventory behavior is that the variance of production exceeds the variance of sales this paper presents a model of production decisions with demand uncertainty that incorporates no nnegativity constraints on inventories even with no productivity shocks optimal behavior by the firm is consistent with this stylized fact either if demand exhibits positive serial correlation or if the firm can backlog excess demand the reason is that a demand shock affects both the actual inventory level given unchanged production and the desired level production must replenish the stock and adjust to the new desired level copyright 1987 by american economic association

optimal use of correlated information in mechanism design when full surplus extraction may be impossible we study the mechanism design problem when the principal can condition the agent s transfers on the realization of ex post signals that are correlated with the agent s types cremer and mclean econometrica 53 1985 345 361 56 1988 1247 1257 mcafee and reny econometrica 60 2 1992 395 421 and riordan and sappington j econ theory 45 1988 189 199 studied situations where the signals are such that full surplus can be extracted from every agent type we study optimal utilization of the signals when there are fewer signals than types and the riordan and sappington conditions do not always hold for some special cases we show the level of surplus that can be extracted and identify the agent types who obtain rent

operations research in inventory management a review and critique the objectives of inventory management including the relevant related costs are examined in this paper a brief review of standard problems that have been effectively solved is presented however we point out that a serious gap exists between theory and practice in many organizations suggestions are made for bridging this gap finally a list is provided of a number of research problems whose implementable solution would have a major beneficial impact on the practice of inventory management

the relevance of private information in mechanism design abstract recent results in mechanism design show that as long as agents have correlated private information and are sufficiently risk neutral it is possible to design mechanisms that leave agents with arbitrarily small information rents we show that these full rent extraction results hinge on the implicit assumption that the agents beliefs uniquely determine their preferences we present an example of the voluntary provision of a public good in which this assumption is relaxed and consequently even in highly correlated environments if agents beliefs do not uniquely determine their preferences then the extraction of the agents entire information rents is impossible

has inventory management in the us become more efficient and flexible a macroeconomic perspective abstract this paper examines the seeming eradication of evidence for improved inventory management since the early 1980s suggested by the aggregate data in the january 1993 revision of the bureau of economic analysis inventory and sales estimates for us manufacturing and trade it analyzes inventory sales output orders ratios at the published level of detail to determine whether at least some components continue to show clear evidence of increased long run efficiency after 1982 further it investigates three other potential avenues of improved inventory management greater cyclical flexibility adjusting of inventory levels more fully to cyclical peaks and troughs faster adjustment to near term desired levels and diminished buffer stock behavior for each aspect and each inventory component several indicators are examined jointly to assess the evidence for improved management the incidence of positive assessments is then viewed across components to judge their overall role substantial evidence for improved long run efficiency is largely confined to materials and work in process inventories in certain manufacturing industries rising inventory sales ratios for other components centered in retail trade are offsetting elements significantly greater cyclical flexibility and faster speeds of adjustment are more widespread although again centered in manufacturing there is virtually no evidence of diminished buffer stock behavior

trend breaks in us inventory to sales ratios abstract this paper documents econometrically that us inventory to sales ratios have time trends and that there have been significant breaks in these time trends at both the aggregate and industry level using techniques developed by bai rev econ stat 1997 551 and by bai and perron econometrica 66 1 1998 47 we simultaneously estimate the time trend parameters and the dates of statistically significant breaks in those trends using data from 1967 through 2001 it is estimated that aggregate manufacturing and trade inventory to sales ratio trended upwards at a 0 76 year rate before 1985 q3 and has trended downwards at a 1 29 year rate since then downtrends are estimated to have begun in manufacturing ratios in 1983 wholesalers in 1985 and retailers in 1990 before the mid 1990s nearly all the reductions in ratios occurred in industries carrying durable goods examination of the timing and possible explanations of trend breaks for the 20 two digit manufacturing industries suggests that breaks are much more likely to have occurred in recessions and may be related to changes in the variance of the industry s sales growth rate

extraction of surplus under adverse selection the case of insurance markets abstract we consider a principal agent setting with two types of risk averse agents with different abilities to avoid losses abilities types are characterized by two distributions f and g which are agents private information all agents have the same increasing and strictly concave utility function u under which g has a higher certainty equivalent in this environment we derive a characterization of pairs of distributions under which a first best outcome can be achieved or approximated we prove that a first best outcome can be achieved if and only if the distribution f is not absolutely continuous with respect to the distribution g if this condition is not satisfied the first best outcome can be approximated arbitrarily close if and only if the likelihood ratio df dg is unbounded journal of economic literature classification number d82

optimal contracts with contingent allocation abstract we study the contractual design problem of a seller that observes an ex post signal correlated with the buyer s valuation and can make the allocation but not payments contingent on it we show that to maximize her profit the seller should offer a menu of contracts whereby the good is transferred to the buyer only if the signal is sufficiently low the welfare implications of these contracts are also discussed

analysis and forecasting of demand during promotions for perishable items this study examines promotions for perishable products in a retail environment we analyze the impact of relative price discounts on product sales during a promotion and shed light on how to build models to forecast promotional demand for perishable products preliminary analyses based on regression models and a large dataset from a retailer do not reveal conclusive evidence for the presence of threshold and or saturation levels for price discounts for perishable products a potential explanation comes from the observation that although products like desserts on average allow 1 5 weeks time to consume their sales during promotions on average are equal to 14 weeks of regular sales this suggests that the success of a promotion is not so much determined by the restriction to stockpile due to the short time to consume but by the emergence of substitution effects consumers switching between different products of the same category we develop and test different models to forecast the demand during a promotion including a moving average forecast and several regression models within the class of regression models we find that modeling threshold and saturation effects leads to worse forecasting performance than modeling price reductions linearly or quadratically the largest improvements in forecast accuracy are gained by distinguishing between routine and non routine product categories routine categories with routine demand processes and a large number of observations perform best when applying a regression based on direct observations of the product category whilst non routine categories benefit from a regression which also uses observations from other product categories

the new development economics abstract the theory of rural organization based on rational peasants in environments where information is imperfect and costly provides a simple explanation for a wide variety of phenomena in ldcs it provides insights into both why sharecropping is so widespread and why it takes on the particular forms that it does it provides an explanation of the interlinkage of credit and land markets and of cost sharing the paper argues that this theory provides a better explanation of these phenomena than do the competing theories this theory can be viewed as an important application of a more general paradigm the imperfect information paradigm which has been useful in explaining economic phenomena under a wide variety of settings under competition oligopoly and monopoly in labor markets capital markets in insurance markets and product markets and in developed and less developed countries

pollution claim settlements under correlated information abstract agents have to decide whether a polluting plant will be operated or not agents disutility cost from pollution is privately known but correlated across agents incentive compatible mechanisms are characterized under the assumption that transfer payments are non negative the implementability constraint is similar to the independence case except that virtual utilities are diminished by a factor due to the correlation of agents types as correlation vanishes the implementability constraint approaches the implementability constraint of the independent types environment it is established that the free riding problem is relaxed as the number of agents increases with many agents ex post efficiency is achievable under ex ante budget balance journal of economic literature classification numbers d82 h41

inventory investment and sectoral characteristics in some oecd countries this paper discusses the effects of sectoral structure on the long run macroeconomic inventory behaviour of national economies data on 15 oecd countries are included in the analysis which is based on correlation and cluster analysis methodologies the study is part of a long term research project exploring factors influencing the inventory behaviour of national economies first we introduce some basic characteristics of macroeconomic inventory formation in the 15 oecd countries we argue that our previous results on the existence of specific characteristic features of macroeconomic inventory investment are justified hence it makes sense to study the factors influencing these features we then examine the contribution of various sectors to the production of in the countries involved and the relationship between sectoral structure and inventory intensity annual inventory change gross value added we find that the high share of agriculture and manufacturing increases inventory intensity that the increasing share of services has a negative effect and that the role of construction and trade is not obvious the relatively low stability of the statistical results warns us to be cautious with our judgements further case by case analysis would be required to obtain more solid results

equity and adverse selection with correlated costs abstract we show that agent concern with inequity is not constraining for a principal when the binary costs of two risk neutral agents are correlated

full extraction of the surplus in bayesian and dominant strategy auctions we consider auctions for a single indivisible object in the case where the bidders have information about each other which is not available to the seller we show that the seller can use this information to his own benefit and we completely characterize the environ ments in which a well chosen auction gives him the same expected payoff as that obtainable were he able to sell the object with full information about each bidder s willingness to pay we provide this characterization for auctions in which the bidders have dominant strate gies and for those where the relevant equilibrium concept is bayesian nash in both set ups the existence of these auctions hinges on the possibility of constructing lotteries with the correct properties we consider the situation in which an agent the seller possesses one indivisible unit of a good to which he attaches no value but the good has value to a number of potential buyers and its transfer to one of them would increase social welfare in particular the transfer to the buyer with the highest valuation maximizes social welfare in this paper we completely characterize environments in which the seller can design an auction that will enable him to capture for himself the full increase in social welfare induced by the transfer of the good to the bidder with the highest willingness to pay if the seller had full information about the reservation prices of potential buyers his optimal selling strategy would be very simple he would announce a price equal or very close to the highest reservation value the optimal strategy for the bidder with the highest evaluation would be to accept the offer note that we are treating a situation in which the seller can commit himself to a price as a result of the exchange the utility of the seller increases by the full amount of the increase in social welfare and he has been able to fully extract the surplus in many circumstances however a seller has only imperfect knowledge of the buyers willingnesses to pay in this case he must find some mechanism or auction which will enable him to maximize his benefit from the sale of the object the auction literature starts with this observation and shows how the seller can by an astute choice of auction extract the largest possible fraction of the surplus in general the literature has shown that this proportion is strictly less than one in some circumstances the bidders will have information about each other which is not available to the seller for instance in auctions for petroleum drilling rights bidders know the results of geological tests which they have

strategic ex ante contracts rent extraction and opportunity costs this article cosiders the possibility that a seller can contract with one uninformed buyer prior to an auction involving two potential buyers the seller s optimal strategic ex ante contract more accurately reflects joint opportunity costs of the seller and the contracted buyer and therefore extracts more rent from the entrant moreover this ex ante contract mitigates the seller s ex post rent seeking vis a vis the contracted buyer accordingly it may create more social welfare than the absence of ex ante contracts depending upon the contracted buyer s financial constraint and the distributions of trade surplus implementation of the optimal strategic ex ante contract and policy implications are discussed

optimal prize allocation in contests the role of negative prizes abstract in this paper we analyze the role of negative prizes in contest design with a fixed budget risk neutral contestants and independent private abilities the effort maximizing prize allocation rule features a threshold when the highest effort is above the threshold all contestants with lower efforts receive negative prizes these negative prizes are used to augment the prize to the contestant with the highest effort which better incentivizes contestants with higher abilities when no contestant s effort exceeds the threshold all contestants equally split the initial budget or a portion of it to ensure their participation we find that allowing negative prizes can increase the expected total effort dramatically in particular if no bound is imposed on negative prizes the expected total effort can be arbitrarily close to the highest possible effort inducible when all contestants have the maximum ability with certainty the above contest is shown to be the optimal mechanism for a more general class of mechanisms