growth and unemployment this paper analyses the effects of growth on long run unemployment using a search model of equilibrium unemployment where growth arises explicitly from the introduction of new technologies that require labour reallocation for their implementation the analysis uncovers and compares between two competing effects of growth on unemployment the first is a capitalisation effect whereby an increase in growth raises the capitalised returns from creating jobs and consequently reduces the equilibrium rate of unemployment the second is a creative destruction effect whereby an increase in growth reduces the duration of a job match thereby raising the equilibrium level of unemployment both directly by raising the job separation rate and indirectly by discouraging the creation of job vacancies this paper asks the question of how the rate of economic growth affects unemployment in the long run the main consideration that leads us to think that this is an interesting question has to do with the re allocative aspect of growth in the long run faster economic growth must come from a faster increase in knowledge to the extent that the advancement of knowledge is embodied in industrial innovations it is likely to raise the job destruction rate through automation skill obsolescence and the bankruptcy associated with the process of creative destruction in short increased growth is likely to produce an increased rate of job turnover and the search theories of lucas and prescott 1974 and pissarides 1990 imply that an increased rate of job turnover will result in a higher natural rate of unemployment this conclusion is also consistent with the empirical results of davis and haltiwanger 1990 which show that periods of high unemployment tend to be periods of high job turnover at the establishment level it suggests the possibility of a positive longrun tradeoff between growth and unemployment at least over some range there has been relatively little attention paid to our question in the literature on longrun determinants of unemployment for example the recent empirical examination by layard nickell and jackman 1991 of unemployment rates among oecd countries did not even consider the rate of economic growth as a possible explanatory variable this is consistent with the seminal theoretical work of phelps 1968 which implies that the natural rate of unemployment is independent of the rate of productivity growth the only

political influence motives and the choice between tariffs and quotas abstract tariffs and quotas are not symmetric under a variety of circumstances this paper pursues the implications of one such circumstance domestic market power for the political choice of protectionist instrument in the context of a political support maximization model tariffs dominate quotas in the political model in the absence of revenue seeking motives in the presence of revenue seeking ambiguity arises but limits can be placed on the range of tariff or quota levels also some welfare implications emerge

quantity competition with access fees abstract we analyze an oligopoly model where firms choose both quantities and access fees per unit prices are determined endogenously to equate quantity demanded with quantity supplied at each firm in a nash equilibrium of the game played by firms the per unit prices equal marginal cost and access fees may or may not extract all consumer surplus as the number of firms increases access fees fall below net consumer surplus and toward zero existence is guaranteed if marshallian consumer surplus is not too concave with open entry quantity competition with access fees may be less efficient than without access fees

the low skill trap recently it has become popular to argue that certain workers have fallen into a trap in which they have poor skills few job opportunities and a low return on training while others have not this paper demonstrates how such a trap can occur within a simple matching model with rent sharing rent sharing diminishes the worker s incentive to acquire skills however since firms also benefit from training rent sharing likewise induces job creation the subsequent improved matching prospects may offset the initial disincentive to invest however for this mechanism to be effective firms and workers must coordinate their actions if they do not the trap occurs

skill biased technological change and rising wage inequality some problems and puzzles the recent rise in wage inequality is usually attributed to skill biased technical change sbtc associated with new computer technologies we review the evidence for this hypothesis focusing on the implications of sbtc for overall wage inequality and for changes in wage differentials between groups a key problem for the sbtc hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology sbtc also fails to explain the evolution of other dimensions of wage inequality including the gender and racial wage gaps and the age gradient in the return to education

does online search crowd out traditional search and improve matching efficiency evidence from craigslist ever since the seminal work of stigler 1962 economists have recognized that information in markets is costly to acquire and can lead to search frictions the remarkable growth in online search has substantially lowered the cost of information acquisition despite this there is little evidence concerning the extent to which this has altered the search process and raised overall matching efficiency to address this issue we analyze the expansion of the website craigslist which allows users to post job ads and apartment and housing rental ads at virtually no cost exploiting the sharp geographic and temporal variation in the availability of online search induced by craigslist we produce three key findings craigslist significantly lowered classified job advertisements in newspapers caused a significant reduction in the apartment and housing rental vacancy rate and had no effect on the unemployment rate

multiproduct two part tariffs abstract two part pricing by a multiproduct monopoly and a differentiated oligopoly are examined and compared two part pricing policies are seen to depend on whether products are complements or substitutes and on whether or not the market is segmented a principle result is that although competition tends to lower unit prices there is no corresponding tendency for competition to reduce entry fees the unit pricing rule is related to the ramsey pricing rule oligopoly equilibrium unit prices equal marginal cost when there is one consumer type

competitive nonlinear tariffs abstract this paper generalizes the study of nonlinear tariffs i e those depending nonlinearly on the quantity purchased to the case of a symmetric oligopoly competitive equilibria and the corresponding tariffs are analyzed in a cournot framework various equilibria are obtained which depend both upon the number of competing suppliers and the choice of market parameters used to characterize the competitors strategies buyers are classified by type each selecting an optimal consumption level in response to the prevailing tariff the phenomena of buyer self selection found in monopoly nonlinear pricing and the scaling of equilibrium demand elasticity found in cournot models both appear in the results

can the scala mobile explain the fall and rise of earnings inequality in italy a semiparametric analysis 1977 1993 this article uses survey of households income and wealth microdata to investigate the role the scala mobile played in the initial fall and subsequent rise in earnings inequality in italy between 1977 and 1993 the scala mobile was a wage indexation mechanism granting the same absolute wage increase to all employees as prices rose thereby potentially compressing wage differentials over time the potential equalizing effect of this mechanism fell this article argues that the rise in inequality from the mid 1980s was a response to the compression of differentials operated over the previous years by the scala mobile

firm wage premia industrial relations and rent sharing in germany the authors use three distinct methods to investigate the influence of industrial relations on firm wage premia in germany first ordinary least squares ols regressions for the firm effects from

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

wages profits and capital intensity evidence from matched worker firm data swedish data on workers matched with firms balance sheet reports are used to examine the relation between wages and firms ability to pay results indicate that experienced and highly educated workers are sorted into profitable firms wages are positively correlated with profits and the capital labor ratio after controlling for worker quality degree of effort supervision job characteristics local unemployment firms employment history and employer size lester s range of pay due to rent sharing is around 12 24 of the mean wage in sweden which is close to the estimates for the united states and united kingdom

comparative statics for utility maximization models with nonlinear budget constraints this paper investigates the properties of demand functions generated by nonlinear budget constraints and relates them to those of demand functions generated by linear budget constraints the analysis shows that the properties of nonlinear and linear demand functions in some respects are similar but in other respects differ substantially the study gives conditions under which properties of the linear demand functions carry over to the nonlinear ones the implications for the nonlinear demand functions of various separability assumptions are also studied copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

product variety and competitive discounts abstract a market with free entry monopolistic competition is studied nonlinear pricing is shown to be the bertrand nash equilibrium strategy for firms given small per capita fixed costs the nonlinear pricing equilibrium approaches the perfectly competitive equilibrium with marginal cost pricing nonlinear pricing is associated with greater product variety than linear pricing increased variety leads to efficient pricing

on two part tariff competition in a homogeneous product duopoly abstract we explore aspects of two part tariff competition between duopolists providing a homogeneous service when consumers differ with respect to their usage levels competition in only one price component the fee or the rate may allow both firms to enjoy positive profits if the other price component has been set at levels different enough between firms fixing one price component alters the nature of competition indirectly introducing an element of product differentiation endogenous market segmentation emerges with the heavier users choosing the lower rate firm and the lighter users choosing the lower fee firm when no price component can be negative competition becomes softer profits tend to be higher but there is also a disadvantage for the firm that starts with a higher fee than that of its rival

taxation within cournot oligopoly abstract when the production of output causes pollution we often consider taxation as a means to reduce it this paper examines various forms of taxation to control pollution within cournot oligopoly it shows that two commonly used forms can actually increase pollution in contrast both of these forms unambiguously reduce pollution within the competitive model the paper provides conditions in terms of demand and technology that make taxation effective in the cournot oligopoly case another implication of the analysis is that outside the price taking framework asymmetry of cost functions is particularly important and deserves careful attention when we examine the effect of taxation

redundant tariffs as rational endogenous protection i introduction in a competitive market tariff protection is redundant whenever the tariff exceeds the difference between the domestic autarky price and the world price with redundant protection domestic price rises by less than the full nominal tariff since a smaller tariff would be sufficient to generate prohibitive protection such excess protection is easily dismissed as economic ignorance on the part of lobby groups and or policy makers yet redundant tariff protection also called water in the tariff is a common feature of 19th and early 20th century u s tariff history more recently the developing nations penchant for redundant nominal tariffs has complicated world bank attempts to calculate effective rates of protection this paper develops political economy models in which the endogenous tariff may be redundant when the world price is uncertain even if agents themselves are risk neutral the possibility of world price declines or domestic cost increases creates positive expected benefits to producers from tariffs that are initially redundant these positive expected benefits provide the rationale or demand for redundant protection embedding this demand within simple political economy models generates endogenous tariffs that appear redundant to casual observation these political economy models also permit us to assess the comparative static effects of changes in the mean preserving spread of the world price an extensive literature explores the links between protection and world price uncertainty most authors address one or more of the following i the optimal choice of protective instrument ii risk aversion by private agents or iii protection as social insurance young and anderson 1980 show that the optimal policy to maximize expected consumer surplus given a constraint on expected imports on expected import expenditure is a specific an ad valorem tariff using the same constraint on expected imports they demonstrate 1982 that quantitative restraints dominate tariffs if consumers exhibit risk aversion toward real income fluctuations in the same vein but in a dynamic setting falvey and lloyd 1986 show that producers prefer non tariff barriers since they concentrate protection on down side risk cassing hillman and long 1986 examine trade policy as social insurance in a ricardo viner model given sufficient risk aversion both mobile and immobile factors exhibit an ex ante preference for reduced domestic price variability under terms of trade uncertainty these papers however do not address the empirically relevant case of above prohibitive protection an existing rationale for tariffs that exceed the prohibitive level is that they facilitate cartel formation fishelson and hillman 1979 show that a domestic monopoly benefits from tariff protection that exceeds the prohibitive level since the tariff that yields full monopoly profit and beyond which additional protection is redundant may exceed the tariff that drives imports to zero an interesting example of this is the formation in 1898 of the american tin plate company this trust was formed to exploit tariff protection that exceeded the prohibitive level the company sold stock whose par value was set at four to five times the cash price of the assets of other tin plate manufacturers that it acquired 1 the existence of potential domestic market power forces a distinction between prohibitive and redundant protection and in this example the above prohibitive tariff is clearly not redundant since domestic price rises by the full amount of the tariff 2 in the u s the 19th century protectionist weapon of choice was the specific tariff usually in the form of a minimum valuation proviso so that all products worth less than a certain amount were taxed as if they were worth the specified minimum specific tariffs generated high and often redundant levels of protection for domestic producers of the coarser grades of manufactures while allowing continued imports of the finer grades that were not produced domestically

the creation and capture of rents wages and innovation in a panel of u k companies this paper examines the impact of technological innovation on wages using a panel of british firms a head count measure of major innovations between 1945 and 1983 is combined with share price and accounting information innovating firms are found to have higher average wages but rival innovation tends to depress own wages this appears consistent with a model where wages are partly determined by a sharing in the rents generated by innovation in other words innovation may be a good instrument for proxies for rents such as profitability quasi rents or tobin s average q instrumental variable estimates of the elasticity between wages and quasi rents are about 0 29

wage compression within the firm evidence from an indexation scheme we revisit the role of labour market institutions by showing how they affect the sharing of firm specific rents between employers and employees we look at an italian wage indexation mechanism scala mobile that compressed the distribution of wages imposing real wage increases at the bottom of the distribution after developing a simplified version of a search model with intra firm bargaining and on the job search we document that skilled workers received lower wage adjustments when employed at firms with many unskilled workers and they tended to move towards more skill intensive firms moreover the system drove the least skill intensive firms out of the market

incremental protection and efficient political choice between tariffs and quotas this paper offers a new political economy explanation for the increasing use in recent years of quotas instead of or in combination with tariffs as a form of trade protection we show that under domestic monopoly the comparative efficiency of tariffs and quotas in achieving political objectives will vary depending on the nature of the mark et and the level of protection at high levels of protection quotas can become more politically efficient than tariffs we also show that at low levels of protection a price equivalent quota may not exist

stackelberg cournot and collusive monopoly performance and welfare comparisons this article compares and evaluates performance and welfare in three classical oligopoly models stackelberg leader cournot and collusive monopoly hahn s stability conditions render an unambiguous ranking of market price the monopoly price is highest and the stackelberg price is lowest welfare comparisons are less clear cut due to additional effects coming from reallocation of outputs among sellers conditions under which these reallocation effects will enhance or offset the unambiguous price effects on welfare are discussed and examples are given possible implications for antitrust policy regarding constraints on market share of large producers in noncompetitive markets are examined

two part pricing for a multi product monopolist this paper examines profit maximizing multi part pricing arrangements by multi product monopolists the results indicate that prices set by such firms will deviate from the marginal cost pricing efficiency norm when multi part tariffs can be set on only a subset of the firm s product line per unit prices will be set above marginal cost when the monopolist sells goods that are substitutes while per unit prices for complements may be set above or below marginal cost in either case the pricing strategy will involve increasing the demand for goods on which an entry fee can beset

rent sharing holdup and wages evidence from matched panel data rent sharing by workers can reduce the incentives for investment if some of the returns to sunk capital are captured in higher wages we propose a simple measure of this holdup effect based on the size of the wage offset for firm specific capital accumulation using social security earnings records for workers in the veneto region of italy linked to detailed financial data for their employers we find strong evidence of rent sharing with an elasticity of wages with respect to potential rents per worker of around 4 arising mainly at larger firms with higher price cost margins on the other hand we find little evidence that bargaining lowers the return on investment instead firm level bargaining appears to split the rents after deducting the full cost of capital

two part tariffs in a contestable natural monopoly when contestability constrains the profits of a natural monopoly to zero consumers can benefit from a two part tariff in this case a uniform price schedule would be both pareto dominated and unsustainable copyright 1987 by the review of economic studies limited

minimum wage effects throughout the wage distribution this paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage including wages hours employment and ultimately labor income not surprisingly the evidence indicates that low wage workers are most strongly affected while higher wage workers are little affected workers who initially earn near the minimum wage experience wage gains nevertheless their hours and employment decline and the combined effect of these changes on earned income suggests adverse consequences on net for low wage workers

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

spatial competition and spatial price discrimination the analysis of spatial competition under conditions of free entry which derives its major impetus from the seminal work of losch 1954 has been conducted in general on the assumption that the competitive firm will adopt an f o b pricing scheme see for example capozza and van order 1978 and holahan 1978 greenhut 1956 does consider some of the implications of discriminatory pricing within competitive markets but his analysis adopts an essentially short run view and provides little rationale for the choice of such a pricing policy by competitive firms this is in contrast with developments in the analysis of spatial monopoly the early work of singer 1937 and hoover 1937 and subsequent developments by for example greenhut 1956 beckmann 1976 beckmann and ingene 1976 greenhut and greenhut 1977 holahan 1975 and norman 1977 indicate that the spatial monopolist should adopt a discriminatory spatial pricing policy where spatial price discrimination is taken conventionally to mean that delivered prices do not follow an f o b scheme but that all concumers equidistant from a particular supplier pay the same price it is rarely however that the results generated by the analysis of spatial monopoly are reconsidered in the analysis of spatial competition in particular although we know that spatial price discrimination will in general increase a monopolist s profit the assumption that profit maximising spatially competitive firms will adopt f o b pricing schemes has rarely been questioned and has not been questioned within the loschian competitive framework greenhut and ohta 1975a chapter 8 and chapter 8 appendix i are notable exceptions but in both cases they depart from the loschian scheme the first objective of this paper is therefore to show that when loschian competitive firms are allowed the option of discriminatory pricing i e are free of institutional constraints which require f o b pricing they will be forced to exercise that option in order to maintain normal profits secondly we shall show that if competitive conditions change the form of price discrimination will also change and that under certain competitive conditions the degree of discrimination will increase with the degree of competition leading eventually to uniform pricing thirdly we compare two competitive cases with multi plant monopoly and derive the spatial analogue of the conventional spaceless monopoly perfect competition comparison the monopolist s plants will be larger in area and total output than each competitive firm but will supply less per consumer at a higher average price welfare comparisons are less clear cut in that they are dependent upon the type of competition we assume we show however that welfare maximisation requires marginal cost pricing where marginal cost includes transport costs and so requires f o b pricing if there are economies of scale to production it follows that welfare maximisation will require production subsidy

people i know job search and social networks we assess the strength of information spillovers relating unemployment duration of workers displaced by firm closures to their former colleagues current employment status displaced specific networks are recovered from a 20 year panel of matched employer employee data spillovers are identified by comparing performances of codisplaced workers a one standard deviation increase in the network employment rate reduces unemployment duration by about 8 the effect is magnified if contacts recently searched for a job and if their current employer is spatially and technologically closer to the displaced worker stronger ties and lower competition for information favor reemployment several indirect tests exclude other interaction mechanisms

a theory of wages and labor demand with intra firm bargaining and matching frictions this article provides a model of labor market equilibrium with search and within firm strategic bargaining we yield explicit closed form solutions with heterogeneous labor inputs and capital the solution exhibits overemployment we show that higher relative bargaining power for some groups of workers may lead to overemployment relative to other groups with such other groups being underemployed instead if they have a lower relative bargaining power similarly the hold up problem between capitalists and employees does not necessarily lead to underinvestment in physical capital beyond the neo classical analysis firms are the field of several strategic interactions between capital owners and labor between marginal employees and incumbents and more generally between different groups with various bargaining positions within the firm it is usually considered that the bargaining power of workers entails an employment level that is lower than in a competitive labor market and any increase in the bargaining power of workers raises unemployment these results are true for a wide class of models and notably in the now standard framework to analyze unemployment namely search and matching models of pissarides 2000 however stole and zwiebel 1996a 1996b show that the above results are totally changed in the intra firm bargaining model where employees engage in individual wage negotiation with the firm in fact under the assumption that contract incompleteness does not enable either party to commit to future wages and employment decisions they show that intra firm bargaining yields no rent for employees and gives rise to overemployment compared to a competitive labor market the basic idea of stole and zwiebel is that a firm with a diminishing marginal productivity of labor can decrease the bargained wage which increases in the marginal productivity of labor by raising employment in stole and zwiebel s setting firms overemploy strategically up to the point where workers get their reservation wage

profit maximizing clubs abstract we study a nash equilibrium among profit maximizing clubs which choose facility size and admission price the number of clubs is endogenous entry is deterred whenever the symmetric nash equilibrium with one additional firm would yield negative profit equilibrium exists with positive profit the equilibrium price is higher than the congestion price and the equilibrium number of clubs is bounded below by one fewer than the efficient number in general there will be too much entry than too little one can choose an economy sufficiently large that the equilibrium price is within epsilon of the competitive price

spatial monopoly and spatial monopolistic competition with two part pricing this paper develops a model of spatial price discrimination by two part pricing when bearing freight and nonlinear pricing are impossible the two part tariff comprises a membership fee and a price per visit when fixed costs per store are low a monopolist makes membership compulsory and builds stores too close together with higher fixed cost the monopolist offers consumers a choice between membership and nonmembership and builds stores too far apart nearby consumers become members more distant consumers nonmembers competition leads to closer spacing than monopoly and lower welfare except at high levels of fixed cost per store copyright 1988 by the london school of economics and political science

nonlinear pricing advertising and welfare advertising is generally provided by firms with market power that stand to gain from increased demand informative advertising has the characteristics of a public good and is usually provided by firms free of charge thus the monopoly power of firms and the public good nature of advertising may cause departures from the socially optimal level of advertising in this paper the social welfare consequences of advertising supplied by a nonlinear pricing monopolist are examined it is shown that price discrimination on the basis of quantity purchased may lessen the monopoly and public good distortions in the supply of advertsing given information about the distribution of consumer characteristics a monopolist may price discriminate through quantity dependent prices if advertising is complementary to the firm s product it will increase each consumer s marginal willingness to pay the share of each consumer s surplus captured by nonlinear pricing will affect the amount of advertising provided in turn the level of advertising will affect the firm s nonlinear price schedule

rent sharing and collective bargaining coverage evidence from linked employer employee data using a linked employer employee data set this paper analyses the relationship between firm profitability and wages particular emphasis is given to the question of whether the sensitivity of wages to firm specific rents varies with collective bargaining coverage to address this issue we distinguish sector specific wage agreements firm specific wage agreements and wage determination without any bargaining coverage our findings indicate that individual wages are positively related to firm specific rents in the non union sector and under firm specific contracts industry wide wage contracts however seem to suppress firm level rent sharing while pooled ols estimates yield a positive correlation between wages and quasi rents under centralised contracts estimates accounting for unobserved individual and establishment heterogeneity point to a coefficient of zero differenced gmm estimates accounting for the endogeneity of our profitability measure even point to a negative relationship under centralised contracts

insurance within the firm we evaluate the allocation of risk between firms and their workers using matched employer employee panel data unlike previous contributions this paper focuses on idiosyncratic shocks to the firm which are the correct empirical counterpart of the theoretical notion of diversifiable risk we allow for both temporary and permanent shocks to output and find that firms absorb temporary fluctuations fully but insure workers against permanent shocks only partially risk sharing considerations can account for about 15 percent of overall earnings variability the remainder originating from idiosyncratic shocks to individual workers our welfare calculations indicate that firms are an important vehicle of insurance provision

cost of living escalators in major union contracts this paper analyzes the price indexation provisions of a sample of major canadian collective bargaining agreements concluded between 1968 and 1975 under these contracts escalated wage increases comprised about one third of total wage increases and represented a major source of erosion in the relative wages of skilled workers the author argues that indexation provisions are usefully characterized by the marginal elasticity of the contractual wage rate to increases in prices measures of this responsiveness indicate that on average contractual wage rates are only slightly less than unit elastic with respect to price increases there is considerable variation across industries however in the extent to which wages respond to price changes

two tier pricing of shared facilities in a free entry equilibrium we explore how well the market will provide shared facilities which are subject to congestion it is usually efficient to have multiple facilities because it is more efficient to spend resources on facilities than to endure crowding costs we assume firms can charge a membership price and a visit price we present a symmetric nash equilibrium in these two prices we show that ifthe number offirms is large the membership price will be small thus the membership price is a measure of market power when entry occurs in response to positive profit but such that entry is deterred by the prospect of negative profit in a symmetric nash equilibrium the endogenous number offirms is bounded below by one fewer than the efficient number thefees paid by a client converge to an appropriately defined competitive price as the economy is replicated

building a composite help wanted index abstract this paper builds a measure of vacancy posting over 1951 2009 that captures the behavior of total print and online help wanted advertising and can be used for time series analysis of the us labor market

welfare and non linear pricing in a cournot oligopoly a simple second degree price discrimination model involving nonlinear pricing of packets of a homogeneous product is shown to exhibit a welfare loss compared to the situation when nonlinear pricing is prohibited the result holds for a cournot oligopoly as well as monopoly further analysis considers the welfare loss from the market supplying too large a packet copyright 1991 by royal economic society

the existence and computation of competitive equilibria in markets with an indivisible commodity abstract this paper considers an exchange economy called a generalized assignment market in which sellers and buyers trade one indivisible commodity possibly with product differentiation for a perfectly divisible commodity the existence of a competitive equilibrium in this economy is proved using kakutani s fixed point theorem this existence theorem is applied to a production economy in which sellers are formulated as producers with convex cost functions two examples of housing markets are provided and their competitive equilibria are numerically calculated

risk aversion and optimal trade restrictions if the representative consumer of a country is risk averse then the choice of trade controls must take account of their effects on the fluctuations of domestic real income if the world price of the importable is uncertain and risk aversion is high then the optimal policy for achieving a ceiling on expected imports involves a reduction in imports and a rise in the domestic price as the world price falls moreover a quota is superior to a tariff in achieving the ceiling under domestic uncertainty a tariff is superior to a quota but it could be optimal to reduce the domestic price as imports increase economists have long recognized the equivalence of price and quantity controls under certainty the comparison of these control modes and the characterization of the optimal form of control under uncertainty has been undertaken by two groups of authors weitzman 1974 1978 considered a planning authority which faces uncertainty about the costs and benefits of producing a good he showed that the ranking of price and quantity controls depends on the curvature of the cost and benefit functions and that an optimal policy can be considered as a mixture of price and quantity controls his work was developed by laffont 1977 ireland 1977 malcomson 1978 and yohe 1978 in the context of international trade the comparison of tariffs and quotas under uncertainty has been undertaken by fishelson and flatters 1975 pelcovits 1976 dasgupta and stiglitz 1977 young 1979 1980a b and helpman and razin 1980 recently young and anderson 1980 showed that the policy maximizing expected consumer s surplus given a constraint on expected imports expected import expenditure is a specific tariff an ad valorem tariff in contrast to weitzman s planning model the price instrument is superior to the quantity instrument whatever the curvature of the benefits function 2 the conclusion of young and anderson appears to provide a strong argument against using quantity instruments to restrict trade however the expected surplus criterion is a valid welfare measure only if the marginal utility of income is constant in this paper we characterize the optimal form of trade restriction if the representative consumer of the importing country exhibits risk aversion toward income fluctuations the optimal policy can have surprising properties properties which with high risk aversion are better approximated by a quota rather than a tariff hence the second best justification for using quantity controls to restrict trade turns out to depend on

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

the stability of the cournot oligopoly model a reassessment abstract the stability properties of the cournot oligopoly model are examined for the continuous adjustment process sufficient conditions for instability are established which are shown to be of significance when the number of firms n is small local and global stability are shown under appropriate conditions which for global stability include the restriction n 5 the proof of global stability corrects a well known proof by f hahn rev econ stud 29 1962 329 331 results for the discrete time adjustment process are reported and the restrictiveness of the model s assumptions are discussed

sectoral differences in the use of information technology and matching efficiency in the us labour market the present study examines how the heterogeneity of use of information technology in production affects the probability that an unemployed worker will be matched with a vacancy using us time series from 1967 to 2007 i construct measures of dispersion of the stocks of software and hardware per worker across 13 industries the measures exhibit three waves whose timing roughly corresponds to the diffusion of mainframe computers in the 1960s and 1970s personal computers in the 1980s and the internet in the late 1990s after controlling for other influences i find that the probability of transitioning from unemployment to employment responds negatively to an increase in either measure the results imply that by enhancing technical heterogeneity the diffusion of a new technology may suppress the job finding rate

nonuniform bertrand competition the feasibility of bertrand undercutting with nonuniform prices is established and properties are derived for bertrand equilibrium in nonuniform price strategies with free entry equilibrium entails zero profit minimum average cost production if there is more than one producing firm all prices collapse to a minimum average cost uniform price an existence condition is compared to conditions from uniform price theory without free entry equilibrium prices may not collapse to a uniform price positive profit may occur but all firms earn equal profit and incur equal marginal cost while consumers pay average outlay no greater than marginal cost copyright 1992 by the econometric society

internet job search and unemployment durations after decades of stability the technologies used by workers to locate new jobs began to change rapidly with the diffusion of internet access in the late 1990 s which types of persons incorporated the internet into their job search strategy and did searching for work on line help these workers find new jobs faster we address these questions using measures of internet job search derived from the december 1998 and august 2000 cps computer and internet supplements matched with job search outcomes from subsequent cps files we find that internet searchers are positively selected on observables but negatively selected on unobservables a beneficial unemployment duration reducing causal effect of internet job search is consistent with our estimates only if negative selection on unobservables is especially strong in other words only if the population of on line resumes is strongly adversely selected

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

transaction cost two part tariffs and collusion i introduction this paper studies a situation in which cartelization serves to reduce prices and improve social welfare the unusual outcome can be attributed to demand complementarity that exists between the goods under consideration because market demand functions exhibit such complementarity a reduction in either seller s price raises the demand for the other seller s product a cartel internalizes this cross effect and sets prices at relatively low levels whereas the same firms acting as rivals ignore the interdependence and set prices somewhat higher the complementarity originates from transaction costs that customers pay in order to participate in exchange hence complementarity exhibits a specific mathematical form in market demand functions one could even adopt the view that these transaction costs are the underlying circumstance that makes collusion socially more attractive than rivalry another feature that must be mentioned is firms use of two part tariffs under this pricing scheme the customer pays a seller an entrance fee to obtain the privilege of purchasing merchandise then also pays a per unit price on merchandise actually obtained in the context of two part tariffs the paper s main finding can be stated as follows the sum of entrance fees facing customers is smaller when sellers form a cartel than when they set prices independently however per unit prices are the same whether sellers collude or not this model with transaction costs appropriately describes a geographical marketplace such as a shopping mall or central business district in which potential customers face expenses for transportation within the centralized shopping area a department store assesses customers an annual fee for the privilege of shopping this is the store s entrance fee in addition to per unit prices on merchandise a health spa next door imposes membership dues and pay as you go fees on its services a theater sells passes another type of entrance fee that entitle holders to special rates on movies attended later a similar situation is tourism in which case the tourist encounters expenses when traveling to a vacation or convention site at this location hotels charge a daily entrance fee for lodging plus something additional for each meal and telephone call rental cars are available for a fixed charge plus an added price per mile driven entertainment e g disneyland might be marketed through a two part tariff as well a different sort of transaction cost is the expense of educating oneself before being able to effectively utilize certain goods and services speculating in the stock market say requires prior study of finance and irs rules after paying this initial transaction cost the ready investor encounters two part tariffs through which related services are sold entrance fees might take several forms a stock broker levies an annual maintenance charge on accounts an advisory service s newsletter is available at a fixed subscription rate a mutual fund charges new shareholders a roughly constant load it is argued below that these entrance fees would all be lower if the vendors formed a cartel two part tariffs have been studied in this journal before murphy 1977 computes a monopolistic seller s profit maximizing multi part tariff although the seller cannot discriminate between rich and poor customers ex ante self sorting occurs if the seller designs the correct price schedule scott and morrell 1985 investigate a two good monopoly that employs two part tariffs if one good s entrance fee must be set equal to zero for exogenous reasons then optimal values of the remaining price parameters hinge on the exact nature of demand interdependence strong results are obtained when customers are identical levin 1988 compares the stackelberg nash and collusive behavior of firms that employ ordinary pricing in another journal stahl 1982 analyzes rivalry and collusion when buyers pay transportation costs and vendors use ordinary linear pricing

competition for exclusive customers comparing equilibrium and welfare under one part and two part pricing this paper compares one part pricing and two types of two part pricing in a general discretecontinuous choice model providing more extensive welfare results than prior literature under two part pricing rms may set xed fees with or without unit price commitment when unitprice commitment is present both xed fees and unit prices are set before consumers choose their exclusive suppliers in the absence of unit price commitment consumers choose exclusive suppliers based on known xed fees and anticipated future unit prices resulting in high unit prices consistent with models of aftermarket monopolization of the three possible pricing policies we nd that two part pricing with unit price commitment is rms dominant unilateral pricing policy and it also yields the highest joint pro ts under appropriate demand assumptions in terms of both consumer and social welfare two part pricing without unit price commitment is dominated by the other pricing policies with su ciently elastic usage demand and su ciently small customerspeci c xed costs one part pricing produces the highest consumer and social welfare but the lowest rm pro ts of the three pricing policies jel classi cation l1 d4 keywords two part pricing aftermarket monopolization bertrand competition discrete continuous random utility model

how many firms should be leaders beneficial concentration revisited we investigate how the number of stackelberg leaders and followers aects economic welfare first we discuss the model with m leaders and n m followers compete in a homogeneous good market daughety 1990 nds that under constant marginal costs the stackelberg model m2 0 n yield a higher welfare than the cournot model m 0 or

on the existence of cournot equilibrium this paper examines the existence of n firm cournot equilibrium in a market for a single homogeneous commodity it proves that if each firm s marginal revenue declines as the aggregate output of other firms increases which is implied by concave inverse demand then a cournot equilibrium exists without assuming that firms have nondecreasing marginal cost or identical technologies also if the marginal revenue condition fails at a potential optimal point there is a set of firms such that no cournot equilibrium exists the paper also contains an example of nonexistence with two nonidentical firms each with constant returns to scale production