durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

durable goods monopoly learning by doing and the coase conjecture abstract the coase conjecture states that if a durable goods monopolist can make offers to sell arbitrarily frequently then in equilibrium she will charge the competitive price and the market will be saturated quickly this conjecture is shown to be refuted when production of the durable good is subject to learning by doing for the linear case it is shown that there exist a stationary strategy perfect equilibrium in which the monopolist charges competitive prices but the market is saturated slowly an interesting analogy between bargaining and durable goods monopoly with learning by doing is also pointed out

guns and butter and government popularity in britain britain under the government of prime minister thatcher provides a unique opportunity to probe the effects of both war and macroeconomic performance on government popularity monthly ratings for thatcher and conservative party support june 1979 to july 1985 are examined by way of box tiao intervention models the model that best captures the impact of the falklands war of 1982 is of the gradual temporary variety popularity gains accrued through the three month war shrink in a geometric fashion nevertheless they prove to be worth over five percentage points for the conservative party a year later in the 1983 election macroeconomic performance meanwhile is found to have an asymmetric effect on government popularity with unemployment strongly significant but inflation not significant at all apparently the british public is punishing failure on employment while letting success on inflation go unrewarded qualifications of the positive effect of war and the negative effect of macroeconomic performance are suggested

the value of shelf registration for new debt issues the securities and exchange commission sec rule 415 shelf registration allows eligible firms to register securities that they intend to issue in the next two years once the registration is declared effective firms can enter the market instantaneously ineligible issuers however are required to notify the sec at least forty eight hours before entry supporters of the shelf rule contend that the rule provides valuable flexibility in timing issues the authors examine this contention by comparing the market timing performance of shelf and nonshelf debt issues the results indicate that the shelf rule does provide valuable market timing flexibility copyright 1989 by the university of chicago

the rule 415 experiment equity markets rule 415 allows a firm to register all the securities it reasonably expects to sell over the next two years and then at the management s option to sell those securities over these two years whenever it chooses this paper examines whether equity offerings made under rule 415 shelf offerings differ in issuing costs from equity offerings not sold under this rule we find that shelf offerings cost 13 less for syndicated issues and 51 less for nonsyndicated issues we also investigate the empirical relevance of the market overhang argument which suggests that shelf registrations depress the price of the registering firm s shares more than traditional registrations our data does not support the market overhang argument the securities and exchange commission s sec rule 415 which was permanently adopted for large firms in november 1983 allows a firm to register all the securities that it reasonably expects to sell over the next two years and then sell those securities whenever it chooses this procedure is known as shelf registration investment bankers securities regulators and corporate issuers vigorously debate the effect of rule 415 on firms issuing cost for new securities some mostly investment bankers argue that rule 415 increases new issue costs while others mostly issuers argue that rule 415 decreases new issue costs in addition many investment bankers argue that placing common stock on the shelf depresses the price of a firm s outstanding shares of stock most issuers

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

bargaining with arrival of new traders we study dynamic bargaining with asymmetric information and arrival of exogenous events which represent arrival of traders or information we char acterize the unique limit of stationary equilibria with frequent offers the possi bility of arrivals changes equilibrium dynamics there is delay in equilibrium and the seller slowly screens out buyers with higher valuations the seller pay off equals what he can achieve by simply awaiting an arrival in applications when buyer valuations fall average prices drop and delay increases surplus division depends on relative arrival rates of buyers sellers and expected time to trade is a nonmonotonic function of the arrival rate

modeling government popularity in postwar britain a methodological example economic theory suggests that government popularity may be related to the rate of change of nonstationary economic quantities and the level of stationary financial variables like inflation or interest rates political theory suggests that this relationship may not be stable over time we find that there is a well defined relationship between u k government popularity in the postwar period and a small set of economic variables i e unemployment inflation and real interest rates unusual political events are also important voters appear to discount history at a high rate remarkably the estimated equation is very stable and passes a battery of stability tests including postsample parameter stability tests furthermore estimation using the kalman filter shows no tendency for the parameters to vary systematically over time implying that voter preferences have remained broadly constant throughout the postwar years

expectations and preferences in british general elections t a te address two questions how do people form their expectations about the likely winner of the next general election and what are the links between expectations and votes using v v data collected by the gallup organization in great britain we find that the expectations formation process 1 has a significant inertia component but also a rapid adjustment to current information 2 reflects voters ability to translate economic expectations into political forecasts and 3 is time bounded possessing special characteristics immediately before and after a general election the analysis also confirms the existence of a small bandwagon effect whereby expectations that one party will win inflate that party s vote the ability of voters to make reasonable forecasts without being unduly influenced by their own preferences suggests that under normal circumstances voters are expressing real preferences and not simply following the crowd

oligopolies and product durability abstract we analyze a simple two period quantity setting model where firms rent all of their output we compare the durability chosen by an oligopolist to the competitive socially optimal durability the model shows in subgame perfect equilibria the durability chosen by oligopolists will be cost minimizing independent of their output levels thus swan s independence result can be extended to oligopoly markets if the firms rent their output we also demonstrate the independence result can be extended to certain corner solutions

monopoly production of durable exhaustible resources we examine monopoly production of a durable exhaustible resource previous authors have implicitly assumed that the monopolist is able to make binding commitments about future decisions we consider the more plausible case in which the monopolist lacks this ability and must choose from dynamically consistent plans two models are considered a discrete time model in which there is a strictly finite initial stock of the resource and a continuous time model in which costs are an increasing function of cumulative production we find that as a general result monopoly leads to overconservation the monopolist who cannot precommit produces the efficient quantity ultimately but does so too slowly by contrast the monopolist who can precommit produces less than the efficient stock even in the limit we also find that increased importance of exhaustibility hastens the extraction of the resource copyright 1990 by the london school of economics and political science

the vp function a survey of the literature on vote and popularity functions after 25 years vp functions explain the support for the government at votes and polls by economic and political variables most studies analyze macro time series we also cover studies of individual voters socio economic groups and regional cross sections the theory starts from the responsibil ity hypothesis voters hold the government responsible for economic conditions it works in two party block systems but not else voters in most countries are found to be sociotropic egotropic voting also occurs voters myopia is well established voting is retrospective as expectations are static it costs the average government almost 2 of the vote to rule

political business cycles and macroeconomic credibility a survey there is clear evidence that government popularity and election performance is affected in part by economic performance suggesting that governments may manipulate the economy to political advantage simple models incorporating adaptive expectations which allowed the government to exploit this relationship were developed in the 1970s but fell out of fashion with the advent of new classical economics however modern theories of the political business cycle which are closely related to the macroeconomic policy game literature assume rational expectations and lead to forms of political business cycle driven by the existence of uncertainty of one type or another the international evidence suggests that some aspects of the theories apply although definitive conclusions are as we might expect hard to come by

gaining on the swings the changing geography of the flow of the vote and government fortunes in british general elections 1979 1992 pattie c j johnston r j and fieldhouse e 1993 gaining on the swings the changing geography of the flow of the vote and government fortunes in british general elections 1979 1992 reg studies 28 141 154 the results of british elections during the 1980s produced a politically polarized country with the labour party increasingly thrown back on support in the urban industrial areas of the north and the conservatives making gains throughout much of the south the first general election of the 1990s is investigated to see whether this trend has continued into the new decade analysis of the constituency flow of the vote suggests that britain is less polarized in the 1990s than in the 1980s but that the electoral geography of the country still favours the conservatives pattie c j johnston r j et fieldhouse e 1994 un revirement d opinion l evolution des tendances electorales et le sort du gouvernement au moment des elections legislatives en grande bretagne de 1979 a 1992 reg studies 28

reputation in bargaining and durable goods monopoly this paper analyzes durable goods monopoly in an infinite horizon discrete time game we prove that as the time interval between successive offers approaches zero all seller payoffs between zero and static monopoly profits are supported by subgame perfect equilibria this reverses a well known conjecture of coase alternatively one can interpret the model as a sequential bargaining game with one sided incomplete information in which an uninformed seller makes all the offers our folk theorem for seller payoffs equally applies to the set of sequential equilibria of this bargaining game

durable services monopolists do better than durable goods monopolists the authors consider a monopolist who can commit to a price path when selling a good for which individual consumers demand at most one unit only if the monopolist can also commit to destroying unpurchased stock and the timing of stock release can she earn more than a static monopolist this additional commitment power has empirical revelance for a wide range of goods that the authors term durable services the inability to store output facilitates price discrimination by a durable services monopolist by permitting the credible threat of rationing the authors detail sufficient conditions for a durable services monopolist to produce more than a static or durable goods monopolist produces

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

licensing information goods abstract a significant amount of research on patent licensing and the diffusion of knowledge is organized around static frameworks of analysis patent holders however may face a dynamic problem namely the intertemporal consistency problem of the durable goods monopolist that is induced by durability on the demand side licensing practices such as exclusive licensing contracts and most favored customer clauses allow patentees to solve or mitigate this dynamic consistency problem there are situations however where these practices are not possible either due to the nature of the patent the case of information goods or due to compulsory patenting laws we study the effects of the intertemporal consistency problem on patent licensing in these situations relative to the existing literature we obtain the following main results i all of the firms that remain in the industry will be using the innovation ii royalty licensing may be superior to fixed fee or auction licensing from the licensor s point of view iii social welfare and consumer surplus may be lower than when the patent holder can commit not to make additional sales iv even for non drastic innovations the price of the good that is produced may be lower than the competitive price corresponding to the initial situation before the innovation was discovered

the politics of structural change swedish social democracy and thatcherism in comparative perspective the 1930s and the 1980s were decades of significant political economic change in the capitalist democracies depression and the rise of the industrial working class created opportunities for the establishment of social democracy in the 1930s stagflation and the decline of the working class made possible waves of radical rightist reform however this article suggests that only governments that do not have to concentrate myopically on the exigencies of winning the next election have the political space to undertake structural changes the benefits of which may only be manifest in the medium term in turn successful reforms are likely to entail changes in underlying social structural conditions such as the strengthening or weakening of organized labor movements that both expand the electoral constituencies of the government s partisanpreferred policies and improve their macroeconomic efficacy these propositions are examined with respect to the construction social democracy in sweden in the 1930s and the

stability and centrality of legislative choice in the spatial context majority rule spatial voting games lacking a core still always present a near core outcome more commonly known as the copeland winner this is the alternative that defeats or ties the greatest number of alternatives in the space previous research has not tested the copeland winner as a solution concept for spatial voting games without a core lacking a way to calculate where the copeland winner was with an infinite number of alternatives we provide a straightforward algorithm to find the copeland winner and show that it corresponds well to experimental outcomes in an important set of experimental legislative voting games we also provide an intuitive motivation for why legislative outcomes in the spatial context may be expected to lie close to the copeland winner finally we show a connection between the copeland winner and the shapley value and provide a simple but powerful algorithm to calculate the copeland scores of all points in the space in terms of the modified power values of each of the voters and their locations in the space

bridging the gap bargaining with interdependent values abstract we study dynamic bargaining with asymmetric information and interdependent values we base our analysis on the equilibria characterized by deneckere and liang 2006 for the gap case we show that as the gap between the cost and value of the weakest type shrinks to zero the continuous time limit of equilibria changes dramatically from rare bursts of trade with long periods of inactivity to smooth screening over time in the double limit prices are independent of the shape of the distribution of values when the uninformed agent s ability to commit to prices disappears so do her rents yet trade still exhibits delay

costly search with adverse selection solicitation curse versus acceleration blessing we analyze a dynamic trading model of adverse selection where a seller can increase the frequency of strategic price quotes a low quality seller benefits more from trade and therefore searches more intensively than a high quality seller this makes a seller s contact carry negative information but a seller s availability become a stronger indicator of high quality in the stationary environment the two effects exactly offset each other and reducing search costs is weakly beneficial to the seller in the nonstationary environment the relative strengths of the two effects vary over time and reducing search costs can be detrimental to the seller

depreciation erodes the coase conjecture if a durable good monopolist produces at constant marginal costs and the good depreciates there exists a family of strong markov perfect equilibrium smpe one member of this family entails instantaneous production of the level of stock produced in a competitive equilibrium this is consistent with the coase conjecture other smpe in the family entail steady state production at a stock level lower than in the competitive equilibrium there may be a jump to these steady states or they may be approached asymptotically monopoly profits are positive in these equilibria and the coase conjecture fails

sequential bargaining with correlated values the paper analyzes an infinite horizon sequential bargaining game with one sided offers between a buyer and a seller when the buyer s valuation depends on the seller s the seller knows the value of the object and the buyer does not the influence of relative discount factors on the solution is studied it is shown for example that an impasse may result if the buyer offeror is too impatient relative to the seller the buyer makes a single take it or leave it offer

bargaining with common values this paper examines a bargaining model with asymmetric information in which the private valuations of the two bargaining agents are correlated it shows that equilibria in such models typically exhibit a significant probability of a significant delay to agreement the paper characterizes the unique perfect bayesian equilibrium to the game in which an uninformed buyer makes offers to a privately informed seller it also shows by example that in this framework bargainers may rationally break off negotiations even in the presence of commonly known gains from trade

fulfilled expectations of entry i develop a two period model of entry deterrence with endogenous market demands such that the consumer s expectation about the future market structure is fulfilled in equilibrium i find that both expectations duopoly and monopoly are fulfilled in the incumbent s price setting game while there is a unique equilibrium in the quantity setting game i also find that quantity is more entry deterring than price in the sense that the maximum value of the entry cost that allows entry in the price setting game is higher than or equal to that of the quantity setting game

does the liquidity of a debt issue increase with its size evidence from the corporate bond and medium term note markets to investigate the liquidity of large issues this study tests for yield differences between corporate bonds and medium term notes mtns in the sample mtns have an average issue size of 4 million compared with 265 million for bonds among mtns that have the same issuance date the same maturity date and the same corporate issuer we find no relation between size and yields moreover bonds and mtns have statistically equivalent yields thus rather than suggesting that large issues have greater liquidity these findings indicate that large and small securities issued by the same borrower are close substitutes the objective of this study is to test for a relation between the size of corporate debt offerings and their yields if investors value large offerings for their greater liquidity then large issues will have lower yields than small issues alternatively if investors view securities of the same borrower as close substitutes there may be no relation between issue size and yields to investigate whether issue size is a significant determinant of liquidity we test for yield differences between medium term notes mtns and bonds of the same corporate issuers in most respects mtns are similar to corporate bonds however mtns have an average issue size of around 5 million in contrast most offerings in the bond market raise at least 100 million thus if liquidity increases with issue size bonds will have lower yields than mtns and large mtns will have lower yields than small mtns the data we use consist of 4 182 mtns and 68 bonds offered by four large borrowers between october 1987 and december 1992 the issues in the sample range in size from 102 000 to 1 2 billion a disperse distribution that allows us to make reliable inferences about the relation between issue size and yields to test for a size effect within the mtn market we create subsamples of mtns that have the same issuance date the same maturity date and the same corporate issuer mtns in these subsamples are identical except for their yields and size on average yields on large mtns in the subsamples are 0 35 basis point higher than yields on small mtns a finding that is inconsistent with the liquidity hypothesis we also test for a yield difference between bonds

network externalities and the coase conjecture abstract this paper addresses two general questions first what is the effect of market structure on the development of a network in a dynamic model with rational expectations secondly is the intuition that network externalities are economies of scale on the demand side correct these questions are examined in a model of durable good production in the presence of network externalities two results are presented first the coase conjecture fails in its strongest sense when network benefits are increasing in the current network size secondly a committed monopolist may be socially preferable to a time consistent producer when network externalities are sufficiently large the analysis indicates an analogy between network externalities and learning by doing

durable goods monopoly with discrete demand we analyze a dynamic game between consumers and the sole seller of a durable good unlike previous analyses we assume that there exists a finite collection of buyers rather than a continuum none of the main conclusions of the literature on durable goods monopoly survives this change in assumption coase s conjecture that a durable goods monopolist cannot earn supracompetitive profits in the continuous time limit bulow s proposition that renting a durable is always more profitable than selling it and stokey s proposition that precommitting to a time path of prices is always optimal are all false when the set of buyers is finite thus the assumption of a continuum of consumers so innocuous and useful a simplification in other contexts has proved misleading in the context of durable goods monopoly

the dynamics of public support for coalition governments this article investigates the relationship between economic conditions and party support for coalition parties in denmark and the netherlands the article argues that the simple reward punishment model cannot fully account for changes in citizens support for parties given variable economic performance using aggregate public support data for political parties the article shows that citizens differentiate between coalition partners depending on the parties issue priorities instead of blaming or rewarding all coalition parties in a uniform fashion citizens shift support from one coalition party to another depending on the perceived competence of a party to deal with particular economic problems the article finds that the structure of responsibility in parliamentary democracies ruled by coalition governments is more complex than is often assumed therefore it is argued that students of economics and public opinion should pay particular attention to the institutional context in which citizens make ch