recursive equilibria in dynamic economies with stochastic production in this paper we prove the existence of recursive equilibria in stochastic production economies with infinitely lived agents and incomplete financial markets we consider a general dynamic model with several commodities which encompasses heterogeneous agent versions of both the lucas asset pricing model and the stochastic neo classical growth model as special cases our main assumption is that there are atomless shocks to fundamentals that have a purely transitory component and a component that does not depend on last period s shocks directly

industry dynamics with stochastic demand we study the dynamics of an industry subject to aggregate demand shocks where the productivity of a firm s technology evolves stochastically over time to characterize the intertemporal evolution of the distribution of firms we discuss in particular how exit decisions aggregate output profits and distributions of firm productivities vary a across different demand realization paths b along a demand history path detailing the effects of continued good or bad market conditions and c for different anticipated future market conditions we show how poor demand conditions can lead to increased exit of low productivity firms at all future dates and states and raise welfare due to the impact on exit decisions

egyptian consumers willingness to pay for carbon labeled products a contingent valuation analysis of socio economic factors abstract carbon emissions from products contribute to anthropogenic climate change because of the growing concern over the environmental impact of production and consumption of consumer goods carbon footprint information started to appear on labels of several products in this paper we use both parametric and non parametric econometric models in order to estimate egyptian consumers willingness to pay wtp for carbon labeled products contingent valuation methods based on log logistic log normal and weibull regression models revealed that consumers in egypt are willing to pay a price premium of approximately 75 egyptian pounds ep for carbon labeled products based on the single bound dichotomous choice sbdc model and up to 90 ep based on the double bound dichotomous choice dbdc model from a socio economic perspective results have also revealed that income age gender and educational level have a significant influence on the respondent s wtp implications of this study highlight the fact that understanding consumers preferences for eco friendly products may play an important role in formulating environmental policy changes to face complex problems as diverse as environmental pollution or global climate change

information disclosure policies evidence from the electricity industry i introduction developed nations environmental policies have evolved substantially in the past several decades early pollution control programs involved command and control approaches policies then frequently included pollution charges tradable permits and other market based instruments most recently a third wave of environmental policy has emerged that emphasizes information provision as an integral part of the risk mitigation strategy here government regulation is replaced or augmented by publicly provided information presumed to assist more cost effective private market and legal forces common examples include the toxics release inventory lead paint disclosures drinking water quality notices and eco labels the empirical effects of such programs however remain largely undetermined this paper examines the impact of a prominent mandatory disclosure program on the fuel mix percentages of large electric utility corporations the prominence of mandatory information policies is not restricted to environmental arenas for example developed countries equity markets generally require firm level financial information provision in many countries agricultural goods require country of origin and other health labels domestic colleges and universities are required by law to inform current and prospective students of crime statistics equity data and performance metrics even significant medical errors must now be disclosed to the community there are several potential advantages of information provision policies and theory suggests that disclosure programs may effectively achieve their goals healy and palepu 2001 provided a survey of the evidence in capital markets brouhle and khanna 2007 demonstrated that information provision can improve product quality in the environmental area kennedy laplante and maxwell 1994 arora and gangopadhyay 1995 maxwell lyon and hackett 2000 kirchhoff 2000 and khanna 2001 showed that the provision of information about pollution may correct a market failure improve performance and enhance welfare despite the literature s theoretical findings the empirical effects of disclosure programs remain inconclusive early studies of securities regulation found mixed results see stigler 1964 robbins and werner 1964 and benston 1973 a more recent literature suggested that disclosure programs in financial markets can achieve their desired effects la porta and lopez de silanes 2006 and greenstone oyer and vissing jorensen 2006 found that both market size and market returns were positively influenced by mandatory disclosure programs in product quality settings chipty and witte 1998 established that resource and referral agencies significantly influenced childcare prices but had no impact on the quality of care in contrast jin and leslie 2003 found that mandatory hygiene grade cards positively affected restaurant quality and health outcomes studies of environmental performance yielded similarly mixed results desvousges smith and rink 1992 found that information based programs influenced attitudes favorable to radon testing but testing itself only increased when mass media dissemination was coupled with community based implementation programs konar and cohen 1997 and khanna quimio and bojilova 1998 found that stock movements associated with toxics release inventory tri announcements led to increased abatement and reduced emissions however bui 2005 found that the declines in emissions after tri reporting events may have been attributable to regulation rather than investor pressure bennear and olmstead 2006 found that drinking water quality notices lowered violations for some systems but not others this paper is the first empirical economic study of the impacts of mandatory information provision in the electric utility industry the disclosure programs considered here differ significantly from the tri information programs examined previously

macroeconomic policy in a two party system as a repeated game this paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward looking wage setters if discretionary policies are followed an economic cycle related to the political cycle results in equilibrium this cycle is significantly different from the traditional political business cycle reputational mechanisms due to the repeated interaction of the two parties and the public or commitments to a common policy rule can improve upon the discretionary outcome by reducing or eliminating the magnitude of the economic fluctuations

existence of stationary bargaining equilibria abstract this paper addresses the question of existence of stationary markov perfect equilibria in a class of dynamic games that includes many known bargaining models and models of coalition formation general sufficient conditions for existence of equilibria are currently lacking in a number of interesting environments e g models with non convexities consumption lower bounds or an evolving state variable the main result establishes existence of equilibrium under compactness and continuity conditions without the structure of convexity or strict comprehensiveness used in the extant literature the proof requires a precise selection of voting equilibria following different proposals using a generalization of fatou s lemma

interval estimates of non market resource values from referendum contingent valuation surveys contingent valuation methods cvm have attracted considerable attention in recent years as researchers have begun to resort to survey methods to elicit individual values for non market goods such as environmental resources or public goods cummings brookshire and schulze 1986 and mitchell and carson 1989 offer comprehensive assessments of these methods cvm survey questions come in a variety of forms one format which has proven to be popular is called the discrete choice or take it or leave it referendum or closedended question originally implemented in the literature by bishop and heberlein 1979 since respondents find it very difficult to identify precisely their true point value of access to some resource or public good open ended valuation questions can be unreliable or can discourage response in contrast most people are familiar with being confronted by a posted price for a good and with deciding whether or not they would buy at that price this is the strategy behind discrete choice cvm questions a different hypothetical price is offered to each respondent and by their yes no response to the question of whether they would be willing to pay this price the researcher gains information about their true underlying point value one persistent difficulty with the econometric techniques that are currently used most widely to analyze referendum contingent valuation data is the absence of confidence intervals for the ultimate value estimates early empirical applications approximate mean valuations using a truncated mean based on a logit model with the upper limit being the highest bid value in the sample unfortunately the variance of this estimated mean cannot easily be recovered from the numerical integration procedure commonly used to calculate the

a theory of collective reputations with applications to the persistence of corruption and to firm quality the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by his past behaviour and because his track record is observed only with noise by the group s past behaviour as well the paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality 1 collective reputations collective reputations play an important role in economics and the social sciences countries ethnic racial or religious groups are known to be hard working honest corrupt hospitable or belligerent some firms enjoy substantial rents from their reputations for producing high quality products some departments are reported to treat their faculty or students fairly the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by her past behaviour and because her track record is observed only with noise by the group s past behaviour as well the paper studies the joint dynamics of individual and collective reputations in a model in which current generations are progressively replaced by new ones and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature see section 2 for a detailed comparison with the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality let us spell out the building blocks of our theory in more detail a a group s reputation is only as good as that of its members each member is characterized by individual traits such as talent diligence or honesty past individual behaviour conveys information about these traits and generates individual reputations

stationary markov perfect equilibria in discounted stochastic games abstract the existence of stationary markov perfect equilibria in stochastic games is shown under a general condition called decomposable coarser transition kernels this result covers various earlier existence results on correlated equilibria noisy stochastic games stochastic games with finite actions and state independent transitions and stochastic games with mixtures of constant transition kernels as special cases a remarkably simple proof is provided via establishing a new connection between stochastic games and conditional expectations of correspondences new applications of stochastic games are presented as illustrative examples including stochastic games with endogenous shocks and a stochastic dynamic oligopoly model

nudging and corporate environmental responsibility a natural field experiment abstract we devise a nudging natural field experiment to test the impact of a simple form of advertising on environmentally responsible products with without the increase of the responsible product price we find that the simple use of a small shelf poster explaining the importance of buying a green product with without a concurring price increase generates significant changes in market shares for some of the product classes for both food and non food products part of the effect is generated by the reduced price elasticity of consumers to the poster plus price increase treatment

credibility and policy convergence in a two party system with rational voters the traditional approach to modeling political parties behavior based upon the contribution of anthony downs 1957 assumes that the parties unique objective is to win elections thus they maximize their popularity the crucial implication of this assumption for a two party system is that if the two parties have the same information about voters preferences full convergence of policies results from electoral competition this is the crucial implication of the median voter theorem more generally it may be argued that different parties are motivated differently because they represent different constituencies parties may not care only about winning elections per se but also about the quality of the policies resulting from an election in this case the candidates of the two parties view winning an election not only as a goal per se but also as a means of implementing a better policy for their respective constituencies this paper shows that electoral competitions imply dynamic inconsistency if the voters are modeled as rational and forwardlooking agents and parties do not care exclusively about being elected but also about which policy to implement once elected the dynamic inconsistency arises as follows the parties have an incentive to announce convergent platforms to increase their chances of election however if the elected party is not committed to its electoral platform it has an incentive to follow its most preferred policy rather than the policy announced in its platform if voters are rational they account for this incentive thus in general in a one shot electoral game the only timeconsistent equilibrium is one in which no convergence is possible the two parties follow their most preferred policies and the voters rationally expect this outcome full convergence of parties platforms results only as a limiting case when the parties are completely indifferent with respect to the quality of the policies resulting from the election thus these results differ from the existing literature on ideologically motivated politicians for instance donald wittman 1977 1983 randall calvert 1985 which implicitly assumes the possibility of binding commitments to electoral platforms complete or partial policy convergence can be the outcome of political competition if the interaction between the parties and the voters is modeled as an infinitely repeated game in fact if the candidates have concave objective functions the welfare maximizing policy rule implies a complete convergence of parties policies however this cooperative and agreed upon policy may or may not be sustainable as a subgame perfect equilibrium depending on parameter values in particular it depends on the discount rates of the two parties the degree of polarization of their preferences and the relative popu graduate school of industrial administration carnegie mellon university pittsburgh pa 15213 and national bureau of economic research cambridge ma 02138 this paper is based upon a chapter of my unpublished doctoral dissertation at harvard university i am greatly indebted to jeffrey sachs for directing my attention toward these issues and for many conversations i also wish to thank andrew abel dilip abreu olivier blanchard ramon caminal andrew caplin alex cukierman morris fiorina benjamin friedman herschel grossman howard rosenthal and the referees for very useful comments the responsibilitv af anv n mtnkieis af calrirp nfnlv mine the result of policy convergence in a two party system is more general than the median voter theorem for discussions of convergence results not at the median see john ledyard 1984 peter coughlin 1984 coughlin and shmuel nitzan 1981 melvin hinich 1977 for earlier work on spatial competition see richard mckelvey 1975 hinich ledyard and peter ordeshook 1972 1973 and the references quoted therein the present paper focuses on the result of convergence rather than on the median voter theorem per se

how do policy and information shocks impact co movements of china s t bond and stock markets abstract we investigate the impacts of policy and information shocks on the correlation of china s t bond and stock returns using originally the asymmetric dynamic conditional correlation dcc model that allows for the coexistence of opposite signed asymmetries the co movements of china s capital markets react to large macroeconomic policy shocks as evidenced by structural breaks in the correlation following the drastic 2004 macroeconomic austerity we show that the t bond market and the bond stock correlations bear more of the brunt of the macroeconomic contractions we also find that the bond stock correlations respond more strongly to joint negative than joint positive shocks implying that investors tend to move both the t bond and stock prices in the same direction when the two asset classes have been hit concurrently by bad news but tend to shift funds from one asset class to the other when hit concurrently by good news however the stock stock correlation is found to increase for joint positive shocks indicating that investors tend to herd more for joint bullish than joint bearish stock markets in shanghai and shenzhen

continuous stochastic games of capital accumulation with convex transitions abstract we consider a discounted stochastic game of common property capital accumulation with nonsymmetric players bounded one period extraction capacities and a transition law satisfying a general strong convexity condition we show that the infinite horizon problem has a markov stationary subgame perfect equilibrium and that every finite horizon truncation has a unique markovian equilibrium both in consumption functions which are continuous and nondecreasing and have all slopes bounded above by 1 unlike previous results in strategic dynamic models these properties are reminiscent of the corresponding optimal growth model journal of economic literature classification codes c73 o41 q20

purification of bayes nash equilibrium with correlated types and interdependent payoffs abstract we establish purification results for bayes nash equilibrium in a large class of bayesian games with finite sets of pure actions we allow for correlated types and interdependent payoffs and for type dependent feasible action sets the latter feature allows us to prove existence and purification results for pure bayes nash equilibria in undominated strategies we give applications to auctions global games and voting to illustrate the usefulness of our results

sparkling wine choice from supermarket shelves the impact of certification of origin and production practices we report the results of a study based on revealed and stated preference data on choice of prosecco wines in retail stores close to the origin of production in northern italy emphasis is placed on ability to reconcile the utility structure of stated preference data with that underlying revealed preference data we extend the analysis to cover nonattendance of key attributes such as price and certification of origin while controlling for the large range of brand effects

hedonic price functions and the measurement of preferences the case of swedish wine consumers abstract a hedonic price function for wine is estimated using swedish data 1989 1991 implicit prices for quality attributes are determined not from a regression of variety price on a vector of quality attributes but rather from a regression of quantity sold adjusted for weeks of availability on price and quality attributes such a reduced form is justified by the assumption that prices and attribute contents can be taken as exogenous to the swedish consumer price elasticity is estimated to be about 1 65 holding quality constant showing that swedish consumers are highly sensitive to price estimates of the implicit valuations of quality attributes are shown to differ greatly from those obtained from the more usual hedonic regression with price as the dependent variable

rethinking new wines implications of local and environmentally friendly labels abstract new wine production areas around the world are encountering challenges in creating a reputation for high quality products in order to help these new wine growing areas numerous labeling programs claiming local origin and environmentally friendly practices are being implemented in this study consumer response toward wine grown in a new production area such as colorado is researched using an interval probit model the mean willingness to pay wtp for colorado environmentally friendly and colorado regular wines are calculated in summary the results in this paper highlight the need to improve quality perceptions to garner a premium in differentiated wine markets as a consequence environmentally friendly labeling in wine is an inefficient marketing tool for wines perceived as low quality

the pricing of experience goods the example of en primeur wine the market for primeur wine in the bordeaux region allows producers to sell wine that is still in barrels as with all experience goods producers send quality signals to uninformed buyers using original data on bordeaux wines we show that the pricing behavior of producers depends to a large extent on their reputation and much less on short term changes in quality as measured by experts grades we also find that the primeur price has an informative role since a 10 increase in primeur price leads to a 3 increase in prices on the market for bottled wine

organic price premium or penalty a comparative market analysis of organic wines from tuscany abstract previous literature suggests that the price of wine is a function of its intrinsic and extrinsic attributes studies have examined the price of wines from various wine producing regions using the hedonic price model to determine the correlation between wine attributes and price however few studies have examined the relationship between organic production or certification and price this study uses a hedonic pricing model to examine the price premiums associated with organic production and organic certification for tuscan red wines produced between 2000 and 2008 in both the italian and american wine markets controlling for a variety of wine attributes the analysis finds that wines produced with organic practices but not certified as organic and wines certified but not labeled as organic receive a higher price compared to conventional wine for wines with low quality ratings however as the wine s quality rating increases the positive effects of organic practices and certification on price decrease and for wine with higher quality ratings organic practices and certification is associated with lower prices relative to otherwise comparable conventional wines

noisy stochastic games this paper establishes existence of a stationary markov perfect equilibrium in general stochastic games with noise a component of the state that is nonatomically distributed and not directly affected by the previous period s state and actions noise may be simply a payoff irrelevant public randomization device delivering known results on the existence of correlated equilibrium as a special case more generally noise can take the form of shocks that enter into players stage payoffs and the transition probability on states the existence result is applied to a model of industry dynamics and to a model of dynamic electoral competition

consumers perceptions preferences and willingness to pay for wine with sustainability characteristics a review abstract the aim of this review article is to identify the state of the art and research gaps in consumer perceptions preferences and willingness to pay wtp towards wine with sustainability characteristics in an effort to cover all relevant literature we searched for scientific articles published between january 2000 and march 2016 the search resulted in 34 articles which were analysed in detail to assess the reviewed articles the alphabet theory which is a framework for explaining environmentally significant behaviour was used the review differentiates the results for consumers wine choice by the type of production method e g sustainable environmental friendly organic or local a considerable number of consumers across different countries had positive perceptions regarding these different production methods and reported a willingness to pay a premium for wine with characteristics of sustainable production however on average consumers awareness of the broad concept of sustainability regarding wine seemed low in some european countries and north america in particular organic and sustainability labels were often perceived as quality indicators in most cases the studies focused on the environmental aspects of sustainability environmental soundness was given most often as a determining factor in purchase decisions regarding wine with characteristics of sustainable production overall social and economic aspects were only just examined the results suggest that producing and marketing wine with sustainability characteristics is a promising strategy for quality differentiation particularly for wine that is both local and organic moreover marketers retailers and producers will likely profit from developing information campaigns with a focus on environmental as well as social and economic aspects to increase consumers knowledge of sustainable wine production thus creating preferences and influencing purchase behaviour gaining a deeper understanding of consumers attitudes and their buying motives regarding different sustainability attributes is recommended for future studies since none of the articles examined purchase behaviour in real market scenarios with real market transactions future research should focus for example on the analysis of household panel data as evidence of an attitude behaviour gap was found

the political economy of dynamic elections accountability commitment and responsiveness we survey the literature on dynamic elections in the traditional settings of spatial preferences and rent seeking under perfect and imperfect monitoring of politicians we define stationary electoral equilibrium which encompasses notions used by barro 1973 ferejohn 1986 banks and sundaram 1998 and others we show that repeated elections mitigate the commitment problems of politicians and voters and that a responsive democracy result holds under general conditions term limits however attenuate the responsiveness finding we also touch on related applied work and we point to areas for fruitful future research including the connection between dynamic models of politics and economics

extremal choice equilibrium with applications to large games stochastic games endogenous institutions abstract we prove existence and purification results for strategic environments possessing a product structure that includes classes of large games stochastic games and models of endogenous institutions applied to large games the results yield existence of pure strategy equilibria allowing for infinite dimensional externalities applied to stochastic games the results yield existence of stationary markov perfect equilibria with extremal payoffs which in turn yields existence of pure strategy stationary markov perfect equilibria for games with sequential moves applied to the model of institutions we obtain equilibrium existence with general group decision correspondences

estimation of a hedonic price equation for bordeaux wine does quality matter in this paper the hedonic price technique is applied to bordeaux wine in the hedonic price function we include not only the objective characteristics appearing on the label of the bottle but also the sensory characteristics of the wine our data come from an experimental study in which juries have evaluated and graded a sample of bordeaux wines the estimation of the hedonic price equation shows that the market price is essentially determined by the objective characteristics the estimation of a jury grade equation shows that quality unlike the market price is essentially determined by the sensory characteristics