macroeconomic implications of production bunching factor demand linkages abstract existing empirical evidence suggests that output is more variable than consumption so that production smoothing is not apparently present in this paper we investigate some macroeconomic implications of the proposition that the empirical evidence reflects the presence of some firms in the economy that produce with nonconvex technologies overall when activities are sufficiently complementary and inventory holding is sufficiently costly nonconvexities at the firm level can generate a pattern of output and sales such that the variance of output exceeds that of sales at an aggregate level in this way nonconvexities at the individual firm level may have macroeconomic consequences

analysis of the changing influences on traditional households ownership patterns abstract sociological and economic forces have begun to alter ownership patterns in ways not yet captured by movements in the aggregate ownership rate while demographic factors such as marital status and family structure remain influential in determining tenure choice their impact has waned particularly among the best educated households and those with rising real incomes labor market conditions as evidenced by increasing returns to skill are more strongly felt than ever before in the housing market the impact on owning of being highly educated now rivals the influence of being married with minor children increasingly delayed ownership is a reality even for traditional family units with 36 to 45 year old heads that have not prospered in the labor market the rising real cost of even relatively inexpensive suburban housing is also beginning to be reflected in a heightened impact for real family income on tenure choice finally race currently is more adversely influential in determining suburban ownership for young middle aged minority families than it was in 1960 particularly if the household head is not well educated we suspect this is due to racially disparate impacts of increasingly rigorous zoning regulations and higher impact fees in the suburbs

inventory investment and asymmetric adjustment some evidence for the uk abstract there is now a plethora of non linear time series models of output over the business cycle and considerable empirical evidence that there are key non linear poorly understood mechanisms at work though they account for a small part of the total flow of national income inventories play a disproportionately large role in fluctuations in output it would seem natural to try to determine what role inventories play in the non linear behaviour of the business cycle the first question is are there economic models of firm behaviour suggesting that the movement of inventories over the business cycle is non linear the second issue is whether we can detect such non linearity in the data in this paper we use data on the aggregate behaviour of uk manufacturing but disaggregated according to the stage of fabrication we find that the asymmetric adjustment of inventories varies with the stage of fabrication

life cycle and housing adjustment as explanations of residential mobility the paper develops a typology of reasons for residential mobility and systematises the many survey analyses of reasons for moving the relative importance of life cycle and housing adjustment mecha

housing careers in the united states 1968 93 modelling the sequencing of housing states the research in this paper focuses on the housing career during a household s life course the housing career is the sequence of housing states defined in terms of tenure and the quality price of t

classical and variance bounds tests of the production smoothing hypothesis in this paper we test the controversial production smoothing role of inventories by applying both classical econometric techniques and variance bounds tests we use seasonally unadjusted data measured in physical units for five industries the model used is a version of the familiar holt et al 1960 inventory model we also use the data on one industry disaggregated at the district level to investigate potential bias which may arise from aggregation overall the empirical evidence suggests production smoothing in the great majority of the industries examined

inventories rational expectations and the business cycle abstract the simplest macroeconomic models in which markets clear instantaneously and expectations are rational preclude the existence of business cycles that is of serially correlated deviations of output from trend this paper studies one of several mechanisms that can be used to make these so called new classical models produce business cycles the mechanism is the gradual adjustment of inventory stocks two macroeconomic models of inventory holdings are formulated both imply first that current output should be a decreasing function of the stock of inventories and second that inventories once perturbed from equilibrium levels should adjust only gradually these two features are then embedded into an otherwise standard macroeconomic model in which markets clear instantaneously and expectations are rational two principal conclusions are reached first disturbances such as unanticipated changes in money will set in motion serially correlated deviations of output from trend second if desired inventories are sensitive to the real interest rate then even fully anticipated changes in money can affect real variables

housing careers life cycle and residential mobility implications for the housing market the concept of a housing career provides a useful way of integrating the residential mobility and filtering literatures in understanding the operation of the housing market using data from a survey in adelaide the paper examines these careers in terms of moves to and from both rental accommodation and home ownership it shows how the progression of households through the stock is influenced by the circumstances that prompt moves economic resources and stage in the family life cycle the results suggest that acceleration and postponement of advancement along housing careers provide the principal mechanisms by which household demand adjusts to available housing supply over the short term

the uneven distribution of capital gains in times of socio spatial inequality evidence from swedish housing pathways between 1995 and 2010 housing wealth is the largest component of wealth for a majority of swedish households whereas investments in housing are merely defined by income the returns on this investment capital gains a

stochastic asymmetric blotto games an experimental study we consider a model where two players compete for n items having different common values in a blotto game players must decide how to allocate their common budgets across all n items the winner of each item is determined stochastically using a lottery mechanism which yields a unique equilibrium in pure strategies we analyze behavior under two competing payoff objectives found in the blotto games literature that have not been previously compared i players aim to maximize their total expected payoff and ii players maximize the probability of winning a majority value of all n items we report results from an experiment where subjects face both payoff objectives and we find support for the differing theoretical predictions

contests with limited resources abstract many interesting phenomena electoral competition r d races lobbying are instances of multiple simultaneous contests with unconditional commitment of limited resources specifically the following game is analyzed two players compete in a number of simultaneous contests the players have limited resources budgets and must decide how to allocate these to the different contests in each contest the player who expends more resources than his adversary wins a corresponding prize mixed strategy equilibria are characterized in the case of identical values and budgets and the connections with the classical blotto game are analyzed

markups aggregation and inventory adjustment in this paper i suggest a unified explanation for two puzzles in the inventory literature first estimates of inventory speeds of adjustment in aggregate data are very small relative to the apparent rapid reaction of stocks to unanticipated variations in sales second estimates of inventory speeds of adjustment in firm level data are significantly higher than in aggregate data the paper develops a multisector model where inventories are held to avoid stockouts and price markups vary along the business cycle the omission of countercyclical markup variations from inventory targets introduces a downward bias in estimates of adjustment speeds obtained from partial adjustment models when the cyclicality of markups differs across sectors this downward bias is shown to be more severe with aggregate rather than firm level data similar results apply not only to inventories but also to labor and prices montercarlo simulations of a calibrated version of the model suggest that these biases are quantitatively significant

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

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

racing with uncertainty and strategic interaction between competitors as the race unfolds most of the existing literature examines one or other of these features but not the two combined our aim is to see how the efforts of competitors in a race vary with the intensity of rivalry between them in our principal model whch is of a one dimensional race it is shown that the leader in the race makes greater efforts than the follower and efforts increase as the gap between competitors decreases under certain conditions the same results hold in our second related model which is of a two dimensional race

uncertainty in sales and inventory behaviour in the u s trade sectors this paper investigates uncertainty in sales and inventory behavior for the u s wholesale and retail trade sectors first using a vector error correction model with garch m the authors find that the uncertainty measured by forecast error variance in sales does not affect inventory behavior in both trade sectors second using forecast error variance decomposition and estimated permanent components they observe that the uncertainty may be attributed more to demand shocks than to cost shocks

sunk costs entry deterrence and financial constraints this paper studies how sunk costs affect a financially constrained incumbent s ability to deter entry into its market sunk costs make it less attractive to the incumbent to accommodate entry by liquidating assets in place and exiting the market this may render entry by a prospective rival unprofitable and thereby facilitate entry deterrence however sunk costs also make it harder for the incumbent to pledge valuable collateral to outside investors to make up for the poor collateral value the incumbent will have to give stronger liquidation rights to its lenders consequently a larger fraction of the incumbent s assets will be liquidated in the event of a liquidity default this potentially creates room for profitable entry the overall effect of sunk costs on the incumbent s ability to deter entry into its market is thus ambiguous

modelling the choice of tenure and building type a multinomial logistic mnl model and a naive nested logistic model are estimated to relate differences in household size age income and housing prices to differences in the choice of tenure and building type the estimated models show that the demand for lower density options decreases with a reduction in household size and increases with increasing age and real income higher rents increase the demand for owner occupied single family detached houses higher price levels for the ownership option shift demand toward all of the higher density options particularly toward high rise rental apartments the key assumption underlying the mnl model is examined and shown to not hold true however the differences in the predictions made by the two models are too small to matter in the study of the choices among the major building types issues regarding the choice of models are discussed in the conclusions

tenure changes in the context of micro level family and macro level economic shifts almost all the work to date on tenure changes specifically the move from rent to own has been derived from cross sectional analysis of this important housing market decision economists have emphasised the investment nature of the housing consumption decision while demographers and geographers have investigated tenure change in relationship to the demographic characteristics of the household now the developing notions of life course analysis and the availability of longer panel series enable us to investigate not just the demographic relatives of tenure change but the critical aspects of timing as well specifically many couples choose to buy and make the transition to a family within 2 3 years we show also that tenure change is influenced by both spatial and temporal economic contexts

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

primaries and the new hampshire effect candidates for u s presidential elections are determined through sequential elections in single states the primaries we develop a model in which candidates can influence their winning probability in electoral districts by spending money on campaigning the equilibrium replicates several stylized facts very well campaigning is very intensive in the first district the outcome of the first election then creates an asymmetry in the candidates incentives to campaign in the next district which endogenously increases the equilibrium probability that the first winner wins in further districts on the normative side our model oers a possible explanation for the sequential organization it leads in expectation to a lower level of advertising expenditures than simultaneous elections moreover if one of the candidates is the more eective campaigner sequential elections also perform better with regard to the selection of the best candidate

aggressive pricing as a source of funding abstract the role of aggressive pricing as a source of internal funding is studied we find that during recessions excepting the 1990 1 recession smaller firm industries reduce markups more than large firm industries moreover markup reductions increase in inventory intensity

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

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

inventories financial structure and market structure abstract in this paper we study the effect of different financial contracts on the firm s inventory policy doing so will allow to define the best financial instruments to diminish the stock variability of a profit maximizing firm in a given economic environment expansion or recession and for a given market structure we show that in periods of recession expansion reducing increasing the amount of short term debt is an optimal strategy independently of the market structure

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

some empirical evidence on the production level and production cost smoothing models of inventory investment the production smoothing model of inventories has long been the basic paradigm within which empirical research on inventories has been conducted the basic hypothesis embedded in this model is that inventories of finished goods serve primarily to smooth production levels in the face of fluctuating demand and convex cost functions however once we allow for shocks to technology and the costs of producing output firms will also use inventories to shift production from periods in which production costs are relatively high to periods in which production costs are relatively low in this sense inventories can serve to smooth production costs rather production levels in this paper we examine the empirical plausibility of the production level and production cost smoothing models of inventories our basic strategy is to derive and contrast a set of unconditional moment restrictions implied by these models in a way that minimizes the role of auxiliary assumptions regarding market structure and industry demand we find overwhelming evidence against the production level smoothing model and very little evidence against the production cost smoothing mode1 we conclude that the variance of production exceeds the variance of sales in most manufacturing industries because the production cost smoothing role of inventories is quantitatively more important than the production level smoothing role of inventories this abstract was borrowed from another version of this item

competition under financial distress this paper presents a link between product market competition and the financial situation in particular asset composition of firms based on capital market imperfections consistent with the popular view the model shows that firms under financial distress use aggressive pricing to generate cash firms resort to aggressive pricing in order to reshape their asset composition between nonliquid and liquid assets when new information renders their current composition nonoptimal in contrast to the vast literature on inventories that has given little attention to pricing the model links pricing and inventory behavior low pricing is used as a source of internal funding copyright 1996 by blackwell publishing ltd

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

the speed of adjustment and production smoothing bayesian estimation abstract the models used for empirical studies of inventory behavior typically include the lagged stock of inventories as a result of the partial adjustment assumption and also exhibit serial correlation in the residuals some researchers suggested that the very low speed of adjustment of the actual inventories to their desired levels and also the lack of empirical support for the production smoothing hypothesis may be the results of applying inappropriate estimation methods to the data recently a bayesian estimator that applies to models containing both lagged dependent variables and autocorrelated disturbances was developed in this paper we examine the empirical evidence on the speed of adjustment of inventories to their desired levels and the degree to which firms smooth production by applying this new estimation method to monthly industry data the results show that the low speeds of adjustment reported in the literature as well as the low degree or lack of production smoothing also reported in the literature may indeed be artifacts of the estimation procedures used

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

inventory investment and production in europe during the great recession is there a pattern abstract the paper examines the nexus between inventory investment and the change in aggregate production during the great recession of 2008 09 for 29 european countries a fairly uniform pattern emerges inventory investment is positively correlated with changes in production and follows the latter with a time lag of two to three quarters very few countries austria greece spain and switzerland diverge from the typical pattern this might hint to problems with respect to data quality

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

quantifying consumer perception of a financially distressed company to measure how consumers respond to negative information about the financial health of a durable goods producer i use the prices at which vehicles sell in secondary markets to quantify consumer perception of the chrysler corporation during the period surrounding the chrysler loan guarantee act of 1979 i focus on chrysler s july 31 1979 announcement of financial distress and request for assistance from the u s government the trend in the prices of used chrysler vehicles relative to those of its american competitors provides strong support for the claim that consumers reduce their willingness to pay for the goods of a financially distressed company

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

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

best of three contest experiments strategic versus psychological momentum abstract we conduct an experimental analysis of a best of three tullock contest intermediate prizes lead to higher efforts while increasing the role of luck as opposed to effort leads to lower efforts both intermediate prizes and luck reduce the probability of the contest ending in two rounds the patterns of players efforts and the probability that a contest ends in two rounds are consistent with strategic momentum i e a momentum generated due to strategic incentives inherent in the contest we do not find evidence for psychological momentum i e a momentum which emerges when winning affects players confidence similar to the previous studies of contests we find significantly higher efforts than predicted and strong heterogeneity in effort between the subjects

multi battle contests abstract we study equilibrium in a multistage race in which players compete in a sequence of simultaneous move component contests players may win a prize for winning each component contest as well as a prize for winning the overall race each component contest is an all pay auction with complete information we characterize the unique subgame perfect equilibrium analytically and demonstrate that it exhibits endogenous uncertainty even a large lead by one player does not fully discourage the other player and each feasible state is reached with positive probability in equilibrium pervasiveness expected effort in the component contests may be non monotonic in the closeness of the race and realized individual effort may exceed the value of the prize by a factor that is proportional to the maximum number of stage victories required

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

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

multi battle contests an experimental study this study examines behavior of subjects in simultaneous and sequential multi battle contests in simultaneous contests subjects make positive bids in each battle 80 of the time and bids fall within the predicted boundaries however 35 of the time subjects make positive bids in only two instead of all three battles and they significantly overuse moderately high bids in sequential contests theory predicts sizable bids in the first battle and no bids in the subsequent battles contrary to this prediction subjects significantly underbid in the first battle and overbid in subsequent battles consequently instead of always ending in the second battle contest proceeds to the third battle 38 of the time finally in both simultaneous and sequential settings subjects make higher aggregate bids than predicted resulting in negative expected payoffs

adaptive expectations and perfect foresight in a nonlinear metzlerian model of the inventory cycle it has long been known that the motions of aggregate inventory investment are an important facet of the business cycle see e g blinder and maccini 1991 some elementary insights into the dynamic feedback effects between inventories production and sales were provided by metzler 1941 in a small theoretical model the present note adopts his framework but seeks to overcome the limitation of its linear specifications our basic idea corresponds to the concept of a flexible inventory accelerator while metzler postulated that desired inventory investment in discrete time is equal to the gap between desired and actual stocks of inventories some later studies have introduced a constant proportionality factor for the adjustment of inventories here we go one step further and hypothesize a variable stock adjustment speed as it turns out fast adjustments in a vicinity of the stationary equilibrium cause local instability but if for

from custer to thermopylae last stand behavior in multi stage contests abstract in a multi stage contest known as a two player race players display two fundamental behaviors 1 the laggard will make a last stand in order to avoid the cost of losing and 2 the player who is ahead will defend his lead if it is threatened last stand behavior in particular contrasts with previous research where the underdog simply gives up the distinctive results are achieved by introducing losing penalties and discounting into the racing environment this framework permits the momentum effect typically ascribed to the winner of early stages to be more thoroughly examined i study the likelihood that the underdog will catch up i find that neck and neck races are common when the losing penalty is large relative to the winning prize while landslide victories occur when the prize is relatively large closed form solutions are given for the case where players have a common winning prize and losing penalty

the production smoothing model is alive and well abstract monthly data in physical units for seven industries are used to examine the production smoothing hypothesis the results strongly support this hypothesis significant effects of expected future sales on current production are found for four industries and the estimated decision equations for all seven industries imply production smoothing behavior the previous negative results appear to be due to the use of data biased against the hypothesis the shipments and inventory data of the department of commerce the paper also shows that sensible results can be obtained from estimating approximations to decision equations as opposed to estimating euler equations

multi player race abstract we present a model of race with multiple players and study players effort choices and expected prizes in equilibrium we show that in equilibrium once any two players win one battle each the remaining players do not exert any effort anymore this turns the continuation game into a two player race this is different than the results in previous two player models of race which report that all states of the game are reached with positive probabilities we also provide a set of comparative static results on the effects of the number of players and the victory threshold

inventories and sticky prices more on the microfoundations of macroeconomics the role of inventories in making prices sticky is studied by analyzing a dynamic linear quadratic model of a monopoly firm facing stochastic demand but able to store its finished goods in inventory it is shown that in contrast to the usual presumption firms that exhibit the smallest output responses to demand fluctuations may also exhibit the smallest price fluctuations specifically firms which have very flexible inventory storage facilities or are subjected to very transitory demand shocks will rely on inventories as buffers and will change neither production nor price very much on the other hand firms which have very inflexible storage facilities or whose demand shocks are quite permanent will display large swings in both price and output the standard assumption about inventory carrying costs that has been used in the literature that they are linear is shown to imply that production is impervious to fluctuations in demand it is also established that prices may respond more strongly to positive demand shocks than to negative ones if it is impossible to hold negative inventories i e to have unfilled orders the model offers an explanation for stickiness in relative prices however under certain circumstances it may help explain the persistence of inflation this abstract was borrowed from another version of this item

can the production smoothing model of inventory behavior be saved the production smoothing model of inventory behavior has a long and venerable history and theoretical foundations that seem very strong yet certain overwhelming facts seem not only to defy explanation within the production smoothing framework but actually to argue that the basic idea of production smoothing is all wrong most prominent among these is the fact that the variance of detrended production exceeds the variance of detrended sales this paper first documents the stylized facts then it derives the production smoothing model rigorously and explains how the model can be amended to make it consistent with the facts finally it reviews the theoretical and empirical evidence and tries to draw some tentative conclusions

non convex costs and capital utilization a study of production scheduling at automobile assembly plants i study detailed data from eleven automobile assembly plants these data display considerable cross plant heterogeneity in production scheduling to explain the observed heterogeneity i solve a dynamic programming model when desired production is below the plant s minimum e cient scale non convexities induce production bunching the plant uses less than full capital utilization on average and production is more volatile than sales when desired production is above the plant s minimum e cient scale the plant operates in a convex region of the cost curve in this case it uses high levels of capital utilization and production is less volatile than sales 2000 elsevier science b v all rights reserved jel classixcation e23 d21 l23

the housing ladder the housing life cycle and the housing life course upward and downward movement among repeat home buyers in a us metropolitan housing market this research models us home owners decisions to move up or down in price the models are based on three common conceptualisations the housing ladder the housing life cycle and the housing life