efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

scarce or abundant the economics of natural resource availability most natural resources that are used in production are non renewable when they become depleted they are lost for future use does it follow that the limited availability of natural resources will at some time in the future constrain economic growth as many environmentalists believe while classical economists have shared the belief in limits to growth the distinctive feature of modern neoclassical economics is its optimism about the availability of natural resources this survey suggests that resource optimism can be summarised in four propositions first a rise in the price of a resource leads to a substitution of this resource with another more abundant resource and to a substitution of products that are intensive in this resource second a rise in the price of a resource leads to increased recycling of the resource and to the exploration and extraction of lower quality ores third man made capital can substitute for natural resources fourth technical progress increases the efficiency of resource use and makes extraction of lower quality ores economical in a critical analysis of these four propositions it is shown that while the conjecture that natural resources will never constrain future economic growth is logically conceivable we do not and indeed cannot know whether it will be possible in practice to overcome any resource constraint jel classification q20 q30 q40

nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

bilateral trading with naive traders we introduce naive traders in bilateral trading these traders report their true types in direct mechanisms and bid ask their values costs in auctions we show that by expropriating naive traders in direct mechanisms the mechanism designer can subsidize additional trades by strategic traders and improve efficiency in fact complete expropriation of naive traders is a necessary condition for constrained efficiency a significant implication is that in the presence of naive traders ex post individually rational mechanisms are not constrained efficient in contrast if the traders must use a given mechanism then the introduction of naive traders has an ambiguous effect on efficiency

the effects of statistically dependent values on equilibrium strategies of bilateral k double auctions abstract this paper describes how introducing statistical dependency among trader values changes the equilibrium bidding strategies in bilateral k double auctions and uses the special case of affiliation to illustrate the range of equilibrium responses to a change in the value distribution consistent with standard intuition a change from independent to strictly affiliated valuations can result in high value buyers and low value sellers bidding closer to their actual values while low value buyers and high value sellers distort their bids farther from their true values however there also exist equilibria for which either type of trader responds to a change in the distribution of values in the opposite direction whether a given trader bids more aggressively or less aggressively can also be non monotonic with respect to the trader s value

how trading institutions affect financial market performance some laboratory evidence i introduction trading institutions vary considerably across contemporary financial markets 1 but most can be classified into one of two basic types the continuous double auction da allows traders to submit public offers to buy or to sell and to accept other traders offers at any moment in time the double auction institution offers immediacy but non uniform transaction prices the other basic trading institution the clearinghouse ch gathers offers and clears them at a unified price at a pre specified time it sacrifices immediacy for uniform transaction prices 2 the two types of institutions have co existed and evolved for centuries but now are emerging in new electronic versions market participants and policy makers would like to know which institution or variant or combination is most efficient but theoretical and empirical work to date provides little guidance this paper reports on a series of laboratory asset markets experiments designed to compare variants of the double auction and clearinghouse trading institutions the markets are small usually with eight or nine traders but the traders are profit motivated and experienced with the trading institutions the traded asset has uncertain market value and traders receive useful but inconclusive private information they can only learn the asset s true value during the course of trade laboratory markets offer several advantages for empirical study of financial market institutions first private information is observable even controllable in the laboratory and therefore the investigator can directly measure market efficiency 3 second the complexity of the environment can be varied systematically in the laboratory and its effects on market performance can be separated from the effects of the market institution and other forces finally the market institution itself is controllable in the laboratory so it is possible to make valid causal inferences on how the market institution shapes market performance i begin with a survey of relevant literature and other preliminaries in the rest of this section section ii outlines the laboratory procedures the creation of trading environments of varying complexity the electronic implementation of the clearinghouse and double auction trading institutions the computation of theoretical benchmark prices and allocations and the measurement of market performance section iii collects the results following an illustrative account of a double auction trading period and a clearinghouse trading period i use descriptive statistics to summarize market performance in each of the thirty nine experiments the main conclusions are based on statistical comparisons of market performance across alternative market institutions the clearinghouse institution does surprisingly well it delivers greater market depth than the double auction discovers prices at least as efficiently and produces final allocations almost as efficient as the double auction the main institutional variants examined in this paper concern the amount of information made public regarding order placement orderflow the data suggest that public display of the orderflow enhances double auction efficiency but may impair clearinghouse efficiency a study of trading volume shows higher volume in the double auction in both institutions volume increases when important private news arrives and when the trading period is about to end the paper concludes with a brief summary and discussion of the results a companion paper friedman 1991 considers the effects of awarding various privileges to some but not all traders copeland and friedman 1987 1991 provide useful background information on laboratory procedures and computerized double auction markets instructions for the current experiments are available on request the need for empirical work a skeptic might argue that empirical work is unnecessary the mere fact that the double auction and clearinghouse institutions both persist in major financial markets implies that both are highly efficient because a more efficient institution would displace less efficient institutions

balanced bayesian mechanisms in the transferable utility case a number of authors have identified conditions on beliefs that guarantee the existence of bayesian incentive compatible mechanisms with balanced transfers we present a new easy to interpret condition and we show that it is strictly more general than all the other conditions found in the literature we also study conditions guaranteeing the bayesian implementability of all social decision rules with balanced budget mechanisms

selection of entrepreneurs in the venture capital industry an asymptotic analysis we study a model of entrepreneurs who compete in an auction like setting for venture capital vc funding in a setting where limited capital dictates that the vc can only finance the best entrepreneurs with asymmetric information vcs can only assess entrepreneurs by the progress of development which in equilibrium reveals the quality of the new technology using an asymptotic analysis we prove that in attractive industries having a large number of entrepreneurs competing for vc funding could lead to underinvestment in technology by entrepreneurs as the effort exerted by losing entrepreneurs is wasted the study then proceeds to characterize the conditions under which a greater number of competing entrepreneurs is better the model also demonstrates that vcs could possibly increase their payoff by concentrating on a single industry in addition the study also provides some insights on the effects of multiple investments by vcs and the effects of competition among vcs on the same investments

bargaining and sharing innovative knowledge we consider the problem of bargaining over the disclosure of interimresearch knowledge between two participants in an r d race for an ultimate patentable invention licence fee schedules that are functions of the amount of knowledge disclosed by the leading to the laggingagent are examined for their abilities to attain efficient outcomes andvarying shares of the surplus arising from disclosure in hersequential offers bargaining games the uninformed buyer is able to elicitfull disclosures without sharing the incremental surplus with any type ofthe licensor and thus do as well as a perfectly informed and discriminatingknowledge licensee

bad and good news about the sealed bid mechanism some experimental results this paper surveys a set of experiments conducted by roy radner and myself 1989 and peter linhart radner and myself 1989a b all of which were conducted to investigate the properties of the sealed bid mechanism a mechanism used to structure bargaining under situations of incomplete information what we find is both bad news and good news for the mechanism the bad news is that the behavior of subjects seems quite sensitive to the parameters of the prior distribution of types used and the number of rounds over which the experiment is run as such prior distributions become more skewed in a sense to be defined below and the number of rounds in the experiment are increased to 75 bidder behavior becomes less linear such movements have a regular pattern however and this phenomenon is remarkably consistent the good news is that such behavioral shifts do not seem to interfere with the efficiency of the mechanism this is of course important for the acceptance of the mechanism in the real world since if efficiency were to change dramatically as we change the parameters of the environment adoption would have to proceed on a case by case basis the fact that our results imply robustness of efficiencies indicates that at least on a practical level the sealed bid mechanism may be a viable way to structure bargaining in many large scale economic organizations i the sealed bid mechanism

bargaining over perfect complements owned separately with experimental test this paper considers the situation in which two perfect complements belong to different owners we calculate the bayesian nash equilibrium in the mechanism of k 1 price bargaining with private value and did experiment to test the theory

trading complex assets we perform an experimental study of complexity to assess its eect on trading behavior price volatility liquidity and trade eciency subjects were asked to deduce the value of a particular asset from information they were given about the composition and price of several portfolios following that subjects traded with each other anonymously in a well dened simple bargaining process portfolio composition ranged from requiring simple analysis to more complicated computation in order to deduce the value of the asset complexity altered subjects bidding strategies decreased liquidity increased price volatility and decreased trade eciency however in follow up experiments we show that uncertainty over private values does not lead to the same changes in trading behavior therefore while complexity induces estimation errors and higher uncertainty this is not what drives our results

determining the optimal length of regulatory guarantee a length of contract auction we present an auction design to be used in the area of procurement that allows the length of the regulatory funding period to be determined via an auction it allows bidders to submit bids against a payment for periods of varying lengths say 25 and 30 years instead of a fixed 20 year contract this can be desirable for securing more favourable terms in financial markets it yields efficiency and delivers the optimal length of contract defined as where social value is maximised the auction is applicable to any infrastructure investment such as energy transportation or any area that uses contracts

an absence of transparency the charitable and political contributions of us corporations although stockholders may benefit from information regarding the frequently substantial charitable and political contributions of the corporations they own us corporations are typically not required to disclose any information about such payments in annual financial statements or information submitted periodically to regulatory agencies this lack of transparency is confounded by disclosure requirements of private foundations which a corporation may choose to establish for the purposes of administering charitable giving for the corporation the resulting disclosure fog engendered by extant regulations may be confusing to those corporation owners who would like to know what corporation contributions are being made to charities and politicians this article enumerates the magnitude of the charitable and political gifts of 40 of the most generous public corporations in the usa the current disclosure requirements for public companies the role of foundations rationales for withholding relevant information from owners and ethically questionable strategies that corporations may use to manage those disclosures for their benefit

dynamic matching two sided incomplete information and participation costs existence and convergence to perfect competition consider a decentralized dynamic market with an infinite horizon and participation costs in which both buyers and sellers have private information concerning their values for the indivisible traded good time is discrete each period has length and each unit of time continuums of new buyers and sellers consider entry traders whose expected utility is negative choose not to enter within a period each buyer is matched anonymously with a seller and each seller is matched with zero one or more buyers every seller runs a first price auction with a reservation price and if trade occurs both the seller and the winning buyer exit the market with their realized utility traders who fail to trade continue in the market to be rematched we characterize the steady state equilibria that are perfect bayesian we show that as converges to zero equilibrium prices at which trades occur converge to the walrasian price and the realized allocations converge to the competitive allocation we also show the existence of equilibria for sufficiently small provided the discount rate is small relative to the participation

equilibrium in strategic interaction the contributions of john c harsanyi john f nash and reinhard selten during the past 15 years or so a game theoretic revolution of economics has taken place microeconomic theory has been rewritten in the language of a game theory see kreps 1 990b i publications in industrial organization differ substantially from work published in this area two decades ago in macroeconomics issues of time consistency credibility and reputation have been analyzed by means of game theoretic tools trade theory has been cast in game theoretic terms in financial economics problems of market micro structure are analyzed by means of non cooperative games fundamental concepts and techniques developed by this year s nobel laureates have enabled this revolution to take place as kreps writes

the reeded edge and the phillips curve money neutrality common knowledge and subjective beliefs abstract i present a simple two person auction model in which a seller and a buyer make bids in terms of money however the value of a unit of money is uncertain i show 1 a monetary revaluation has purely nominal effects if and only if it is common knowledge 2 if seller and buyer have identical beliefs making the value of money common knowledge maximizes total gains from trade 3 if seller and buyer are equally well informed and have identical beliefs then monetary revaluations have no net effect 4 when the seller knows the value of money but the buyer does not the expected utilities of both seller and buyer are proportional to 1 1 2 where is the standard deviation of the value of money expressed as a fraction of the mean and 5 when beliefs are subjective monetary policy can improve total gains from trade as in friedman s explanation of the phillips curve and an optimal level of inflation can be determined journal of economic literature classification numbers c78 e52

bargaining under incomplete information this paper presents and analyzes a bargaining model of bilateral monopoly under uncertainty under the bargaining rule proposed the buyer and the seller each submit sealed offers that determine whether the good in question is sold and the transfer price the nash equilibrium solution of this bargaining game implies an offer strategy of each party that is monotonic in its own reservation price and depends on its assessment of the opponent s reservation price issues of relative bargaining advantage and efficiency are examined for a number of special cases finally we discuss the appropriateness of the nash solution concept

using game theory to model competition the article is an exposition of the basic concepts of noncooperative game theory and their application to advertising product and price competition

bargaining with incomplete information an infinite horizon model with two sided uncertainty the resolution of any bargaining conflict depends crucially on the relative urgency of the agents to reach agreement and the information each agent has about the others preferences this paper explores within the context of an infinite horizon bargaining model with two sided uncertainty how timing and information affect the rational behaviour of agents when commitment is not possible since the bargainers are uncertain about whether trade is desirable they must communicate some of their private information before an agreement can be reached this need for learning due to incomplete information about preferences results in bargaining inefficiencies trade often occurs after costly delay thus the model provides an explanation for the inefficient bargaining behaviour that appears to occur often in practice

a test for parameter homogeneity in co2panel ekc estimations this paper casts doubt on empirical results based on panel estimations of an inverted u relationship between per capita gdp and pollution using a new dataset for oecd countries on carbon dioxide emissions for the period 1960 1997 we find that the crucial assumption of homogeneity across countries is problematic decisively rejected are model specifications that feature even weaker homogeneity assumptions than are commonly used furthermore our results challenge the existence of an overall environmental kuznets curve for carbon dioxide emissions

optimal robust bilateral trade risk neutrality a risk neutral seller and buyer with private information bargain over an indivisible item we prove that optimal robust bilateral trade mechanisms are payoff equivalent to non wasteful randomized posted prices

toward a strategic foundation for rational expectations equilibrium a step toward a strategic foundation for rational expectations equilibrium is taken by considering a double auction with n buyers and m sellers with interdependent values and affiliated private information if there are sufficiently many buyers and sellers and their bids are restricted to a sufficiently fine discrete set of prices then generically there is an equilibrium in nondecreasing bidding functions that is arbitrarily close to the unique fully revealing rational expectations equilibrium of the limit market with unrestricted bids and a continuum of agents in particular the large double auction equilibrium is almost efficient and almost fully aggregates the agents information

durable goods monopoly with incomplete information this article reconsiders the durable goods monopoly problem when the monopolist s marginal cost is private information we show that the coase conjecture implies the no trade theorem in any equilibrium in which the lowest cost seller s initial offer approaches her marginal cost the aggregate probability of trade must vanish however we also construct non coasean equilibria which approximate the unique outcome of the rental version of the same model these stationary equilibria are comparatively efficient the results are equally applicable to the mathematically equivalent problem of sequential bargaining with two sided incomplete information where one party makes all the offers what are the consequences of monopoly in a market for a durable good present day understanding of this question divides into two strands of thought first the monopolist may effectively lack any ability to credibly precommit on her future output under this scenario the price will drop almost instantaneously to marginal cost apparently yielding the efficient outcome normally associated with perfect competition 1 second the monopolist may possess an explicit e g leasing the good rather than selling2 or implicit e g the maintenance of reputation3 device enabling her to adhere to an output restriction under such circumstances price will be maintained at a non competitively high level suggesting an outcome fraught with all the inefficiency of classical monopoly the conclusions of the first paragraph rest on analysis of a standard model in which the monopolist s payoff function is taken to be common knowledge a single firm with known constant marginal cost sells an infinitely durable good to consumers with a known distribution of valuations for the good 4 the firm has the ability to revise its posted price

corporate philanthropy in the u k 1985 2000 some empirical findings this paper briefly reviews the theories that seek to explain the phenomenon of corporate charitable donations and then provides a review of the empirical issues that have arisen in previous studies in this area the findings of an analysis of charitable donations data from the entire u k ftse index for the years 1985 2000 are then reported these findings include the observation of a time related increase in charitable donations which is compared with an earlier study to give a 24 year history of charitable donations in the u k the findings note little responsiveness of the monetary value of charitable donations to the economic performance of firms an international comparison over time against u s trends is also reported and shows how u s corporations have traditionally been more generous than u k firms but that the trend in the u s is downwards membership of a u k based tithing club the percent club is shown to be associated with higher profit performance against non members members charitable contributions against profit are shown to be higher than the ftse mean although short of the 0 5 target figure in cash terms the paper concludes with a brief discussion of these findings in relation to the theoretical positions advanced for corporate philanthropy

perfect competition and the creativity of the market from the perspective of the walrasian general equilibrium model entrepreneurial and opportunistic behavior seems foreign can the model be refashioned so that it can accommodate such behavior many would say no but we argue the contrary indeed we present a reformulation of the model that serves as a gateway to rather than a detour from such contemporary issues as innovation and incentives the trick is to reexamine what perfect competition means starting with an historical summary of general equilibrium we sketch an image of the perfect competitor as an active market opportunist seeking out profit potentials wherever he can

ex ante efficient ex post individually rational trade abstract consider a bilateral trade model with two sided incomplete information for a general set of independent beliefs an ex post individually rational mechanism generating the same level of ex ante expected gains from trade as an ex ante efficient interim individually rational mechanism is constructed thus imposing the stronger notion of ex post individual rationality on this mechanism design problem generates no loss of efficiency

corporate philanthropy in the united kingdom the increasing demands placed on private welfare services and calls for business to fulfil its social responsibilities have heightened interest in corporate charitable donations in the united kingdom adjustments to the corporation tax system have been made to encourage companies to give more the article outlines the legal and fiscal background to company giving examines its magnitude and reports on a survey of company practice

technical note revenue management with bargaining static game theoretic models of bilateral bargaining assume that the seller knows his valuation for the item that is up for sale that is how the seller may determine this quantity is exogenous to these models in this paper we develop and analyze a stylized markov decision process that endogenizes the seller s computation of his marginal inventory valuation in an infinite horizon revenue management setting when each sale occurs according to a given bilateral bargaining mechanism we use this model to compare both analytically and numerically the seller s performance under four basic bilateral bargaining mechanisms with a tractable information structure these comparisons provide insights into the seller s performance under the following trading arrangements buyer and seller posted pricing negotiated pricing and rule based pricing

a note on the seller s optimal mechanism in bilateral trade with two sided incomplete information it is shown with an example that in bilateral trade problems with two sided incomplete information some seller types may obtain higher expected payos in mechanisms other than the one where they make a take it or leave it oer contrary to popular belief if one looks at the mechanism selection problem of the informed seller then the op timality of a take it or leave it oer for the seller is restored journal of economic literature classi cation numbers c72 c78 d82

auction format and auction sequence in multi item multi unit auctions an experimental study we experimentally study the effect of auction format sealed bid versus closed clock versus open clock and auction sequence simultaneous versus sequential on bidding behaviour and auction outcomes in auctions of multiple related multi unit items prominent field applications are the sale of emission permits fishing rights and electricity we find that when auctioning simultaneously clock auctions outperform sealed bid auctions in terms of efficiency and revenues this advantage disappears when the items are auctioned sequentially in addition auctioning sequentially has positive effects on total revenues across all auction formats resulting from fiercer competition on the item auctioned first

make trade not war this paper analyses theoretically and empirically the relationship between military conflicts and trade we show that the conventional wisdom that trade promotes peace is only partially true even in a model where trade is economically beneficial military conflicts reduce trade and leaders are rational when war can occur because of the presence of asymmetric information the probability of escalation is lower for countries that trade more bilaterally because of the opportunity cost associated with the loss of trade gains however countries more open to global trade have a higher probability of war because multilateral trade openness decreases bilateral dependence to any given country and the cost of a bilateral conflict we test our predictions on a large data set of military conflicts on the 1950 2000 period using different strategies to solve the endogeneity issues including instrumental variables we find robust evidence for the contrasting effects of bilateral and multilateral trade openness for proximate countries we find that trade has had a surprisingly large effect on their probability of military conflict

cheap talk can matter in bargaining this paper describes an intuitive way in which cheap talk can matter in a twostage bargaining game in which talk may be followed by serious negotiation the intuition that all buyers would claim to have low reservation prices is incorrect in our model instead if good faith participation is endogenously determined then the parties can use talk to trade off bargaining position against the probability of continued negotiation our cheap talk equilibrium features bargaining behavior that could not be equilibrium behavior in the absence of talk

the effect of the discount rate on depletion of exhaustible resources this paper argues that despite its widespread acceptance in the literature the basic proposition that a reduction an increase in the discount rate leads to greater conservation faster depletion of an exhaustible resource is not generally valid it shows that the effect of the discount rate on the rate of resource depletion depends on capital requirements for production of the substitute and extraction of the resource and on the size of the resource stock in fact it shows that there always exist at least two ranges of the resource stock size for which the effect is opposite to that conventionally believed

banking and borrowing in the eu ets a review of economic modelling current provisions and prospects for future design this article deals with the issue of banking and borrowing in the context of the european union emissions trading scheme eu ets by attempting to provide a policy oriented unifying theoretical framework after describing the main features of the eu ets the core part of the article consists of variations of an inter temporal continuous time optimization model additional elements include flexibility measures currently discussed and proposed in other emissions trading systems usa australia which include the use of safety valves minimum price auctioning or offsets from domestic or international projects

should we worry about the failure of the hotelling rule abstract the continuing dependence of the global economy on fossil fuels is worrying because it imposes limits on growth due to the non renewable nature of these resources and also contributes to global climate change resource optimists believe that this is no reason to worry because the economy will always find a way to overcome these constraints their arguments however require that resource prices reflect the scarcity of non renewable resources which implies that they must obey the hotelling rule empirical analyses however show that the hotelling rule does not hold in reality which raises the question does the failure of the hotelling rule imply that social optimality is not achieved this paper argues that the answer depends on the reason for the failure if extraction and exploration costs or technological progress in these activities are the reasons for the failure a market failure is not implied and optimality may still be achieved but if the hotelling rule fails due to uncertain property rights or strategic interaction the market will surely fail to provide an optimal solution a market failure is likely to speed up resource consumption compared to the social optimum

trends in natural resource commodity prices an analysis of the time domain abstract this paper attempts to reconcile the theoretical predictions of increasing real prices for nonrenewable natural resource commodities obtained from hotelling style models with the empirical findings of falling prices for these commodities a theoretical model for relative price movements is derived for the case of exogenous technical change and endogenous change in the grade of ores mined the model suggests a u shaped time path for relative prices the implied price movements are tested for all the major metals and fuels and the model parameters are found to be statistically significant for 11 out of the 12 commodities tested

corporate political donations influences from directors networks motivated by contemporary debates concerning whether directors inappropriately deploy corporate funds for corporate political donations and the limited research into managerial influence on corporate political donations we examine the impact of director influences from a network perspective using a sample of large listed australian corporations and their political party donation activity during 2000 2007 we find that both the professional and non professional networks of directors influence corporate political donations we observe these influences in relation to donations at the federal and state levels and with respect to the choice of recipient political parties

on comparing monopoly and competition in exhaustible resource exploitation abstract it is widely believed that exhaustible resource monopolies do not enjoy as much market power as standard non resource monopolies and may even produce in a socially optimal way we argue that this paradoxical result arises from an inappropriate comparison methodology when similar assumptions are applied to the resource and the conventional cases we show that the resource monopoly behaves as expected i e restricts supply

how corruptible are you bribery under uncertainty abstract we model corruption in a society as a result of bargaining for bribes between private citizens and public officials we investigate the role that incomplete information with respect to the intrinsic moral cost of one s potential corruption partner plays out in his or her propensity to engage in bribery and consequently the equilibrium level of corruption in the society we assume that the cost of engaging in corruption is subject to strategic complementarities which may lead to multiple corruption equilibria we find that corruption is lowest when potential bribers and potential bribees are uncertain regarding each other s corruptibility and have asymmetric bargaining powers our uncertainty result provides theoretical support in favor of anti corruption strategies such as staff rotation in public offices aimed at decreasing the social closeness of bribers and bribees our bargaining power result suggests that under uncertainty monopolistic public good provision has the same corruption reducing effect as competitive public good provision

untested hypotheses in non renewable resource economics the present paper reviews the literature on the empirical implications of the hotelling rule and suggests directions for further research in this area

bargaining with endogenous information two ex ante identically informed agents play a double auction over the division of a trading surplus with endogenous information and common values this paper shows that if information acquisition is not observable three types of inefficiencies can arise if the information cost is in an intermediate range no pure strategy equilibrium with trade exists although the agents maintain symmetric information if the information cost is low any trading equilibrium exhibits costly information acquisition if the agents face asymmetric information cost the akerlof s lemons problem arises as a self fulfilling equilibrium and only partial trade occurs

the social return on investment in the energy efficiency of buildings in germany the german government has developed a variety of policy instruments intended to reduce national co2 emissions these instruments include a programme administered by kfw bank which aims at improving the energy efficiency of buildings it provides attractive credit conditions or subsidies to finance refurbishment measures which improve the energy efficiency of buildings significantly the refurbishment programme leads to a reduction in energy use which benefits private investors by reducing their energy bills in order to estimate whether the programme benefits society as a whole additional effects must be taken into account such as the amount of employment generated and the impact on the public budget the aim of this paper is to evaluate the social benefits of the german co2 refurbishment programme for the years 2005 2007 an extended input output model is used to estimate the effect of the refurbishment works on public revenue via taxes and social security contributions the value of avoided co2 emissions is approximated using a range of marginal damage estimates from the literature from these social benefits the programme cost is deducted the net social benefit thus computed turns out to be positive this finding suggests that the refurbishment programme is a reasonable investment of public funds

efficiency of large double auctions we consider large double auctions with private values values need be neither symmetric nor independent multiple units may be owned or desired participation may be stochastic we introduce a very mild notion of a little independence we prove that all nontrivial equilibria of auctions that satisfy this notion are asymptotically efficient for any alpha 0 inefficiency disappears at rate 1 n 2 alpha