patterns of co authorship among economics departments in the usa given the steady increase in co authored papers in economics journals this paper reports a study of the patterns of co authorship between us universities and colleges a majority of institutions produce more co authored than single authored papers contacts with researchers from the same institution are still an important source of co authored papers even though slightly decreasing in frequency the determinants of co authorship outside the own institution are tested in a gravity model and it is found that distance and other geographical variables do not matter however the quality of co authors institutions measured by rankings of institutions has a significant impact on the number of co authored papers in top economics journals

productivity dispersion and output fluctuations an evolutionary model we develop a model of technology choice with search costs innovators develop technology of varying quality or productivity firms acquire technology after paying a search cost to find high productivity technology the resulting model has mixed equilibria with productivity dispersion however such mixed equilibria are unstable under the logit dynamic from evolutionary game theory instead the economy converges to limit cycles whose existence we verify numerically we conclude therefore that mixed equilibria is not a robust explanation of productivity dispersion in our model instead such productivity dispersion is a cyclical phenomenon an additional implication is that cyclical productivity dispersion contributes to endogenous fluctuations in aggregate output

some examples of dynamic cournot duopoly with inventory this article analyzes a two period game where firms can produce inventory in the first period for sale in the second period we assume that revenues and costs are time invariant and that the firms are symmetric we focus on the nature and the existence of the subgame perfect equilibrium of this model we use examples to show that the nash value functions defined on the joint inventory vector are likely to be ill behaved in particular they need not be concave nor even continuous in the firm s own inventory as a result asymmetric equilibrium is possible when average production costs are falling single firm operation can occur in equilibrium nonexistence is also a distinct possibility

returns to foreign languages of native workers in the european union most of the literature on returns to languages is concerned with immigrants the authors study which uses the european community household panel survey for the period 1994 2001 infers returns to non native languages by native workers in nine countries of the european union the study differs from other studies that deal with the same issue in three respects first instead of using a dummy for each language they use the ratio of the population not proficient in a given country s national language and compare the results with the more traditional approach using dummies second they correct for time independent measurement errors in self reporting and find that the resulting iv estimates are much larger than those obtained by ols they also suggest that there is little room for time persistent errors and heterogeneity and that therefore their estimates should suffer ostensibly little from unobserved ability biases finally they estimate iv quantile regressions to illustrate how returns to languages vary at different points of the distribution of earnings

the stability of price dispersion under seller and consumer learning in many markets it is possible to find rival sellers charging different prices for the same good earlier research has attempted to explain this phenomenon by demonstrating the existence of dispersed price equilibria when consumers must make use of costly search to discover prices we ask whether such equilibria can be learned when sellers adjust prices adaptively in response to current market conditions with consumer behavior fixed convergence to a dispersed price equilibrium is possible in some cases however once consumer learning is introduced the monopoly outcome first found by diamond journal of economic theory3 1971 156 68 is the only stable equilibrium

churn versus diversion in antitrust an illustrative model an important question in horizontal merger analysis is what share of a firm s lost output from a unilateral price increase will divert to its merger partner this diversion ratio is often estimated using data on customer switching from a firm to its rivals churn we use a tractable oligopoly model to investigate the potential biases of such estimates depending on what caused the churn shifts in quality or marginal cost of the firm or of a rival or demand side shifts due to changed circumstances or learning about product attributes with demand side shifts churn can be greater between more distant competitors

speculative storage in imperfectly competitive markets markets for many commodities are characterized by imperfectly competitive production as well as substantial storage by speculators who are attracted by significant price volatility we examine how speculative storage affects the behavior of an oligopoly producing a commodity for which demand is subject to random shocks speculators compete with consumers when purchasing the commodity and then subsequently compete with producers when selling their stocks resulting in two opposing incentives on the one hand producers would like to increase production to capture future sales in advance by selling to speculators while on the other hand they would like to withhold production to deter speculation thereby eliminating the additional supply from speculators in future periods we find that the incentive to sell to speculators can be quite strong potentially resulting in prices sufficiently high to drive consumers from the market furthermore these incentives are non monotonic in the number of producers speculative storage occurs more frequently in a relatively concentrated oligopoly than in the extremes of monopoly or perfect competition

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

price dispersion in the small and in the large evidence from an internet price comparison site this paper examines four million daily price observations for more than 1 000 consumer electronics products on the price comparison site http shopper com we find little support for the notion that prices on the internet are converging to the law of one price in addition observed levels of price dispersion vary systematically with the number of firms listing prices the difference between the two lowest prices the gap averages 23 per cent when two firms list prices and falls to 3 5 per cent in markets where 17 firms list prices these empirical results are an implication of a general clearinghouse model of equilibrium price dispersion

price and variety in the spokes model the spokes model of nonlocalized spatial competition provides a new analytical tool for dierentiated oligopoly and a representation of spatial monopolistic competition an increase in the number of rms leads to lower equilibrium prices when consumers have relatively high product valuations but surprisingly to higher equilibrium prices for in termediate consumer valuations new entry alters consumer and social welfare through price market expansion and matching eects with free entry the market may pro vide too many or too few varieties from a social welfare perspective and the equilibrium price remains above marginal cost even when the number of rms is arbitrarily large

inventories market structure and price volatility abstract the effect of inventories on the level and volatility of price is analyzed under alternative market structures in a fairly general setting it is shown that inventories have no effect on the average level of prices in a cournot duopoly in the absence of depreciation the effect of storage on price volatility is analyzed in a more restrictive linear quadratic setting in which it is found that imperfectly competitive producers make less use of inventories for smoothing random fluctuations than is efficient the effect of market structure on price volatility depends on whether demand shocks or cost shocks are more important

the distribution of price changes in oligopoly econometric analysis of the skew of price change distributions for an eighty industry sample over an eleven year period indicates that the distributions are less skewed in times of rapidly changing prices in concentrated oligopolies and in markets with little product heterogeneity the results provide evidence of less price staggering and greater pricing coordination by firms in times of high inflation and in oligopolistic markets respectively tight oligopolies also appear to have more symmetric distributions when prices are falling than when they are rising suggesting that price decreases are more readily followed than increases copyright 1993 by blackwell publishing ltd

market structure marketing method and price instability data for metals sold on commodity exchanges and at prices set by producers are used to test the relationship between the organization of markets and the behavior of prices on the production side the question is whether prices are more stable in concentrated industries and on the sales side the question is whether markets where buyers are consumers have more stable prices than those with consumers and speculators the recent increase in metal price instability is explained by changes in the market structure and organization variables foremost is increased reliance on commodity exchanges declines in concentration are of less importance

commodity price stabilization in imperfect or cartelized markets most studies of commodity price stabilization assume that all agents behave competitively however many commodities suitable for stockpiling are produced by countries with a significant share of the world market and commodity agreements themselves often result in cartelization of the market the paper explores the consequences of market power for the choice of storage rule and the degree of price stabilization it finds that with linear demand dominant producers choose more stable prices than under perfect competition and price stability increases with their market share with constant elastic demand the competitive degree of price stabilization is achieved

bilingualism and network externalities the authors develop a model in which the benefit of language acquisition is increasing in the number of individuals who speak the language this gives rise to a network externality and if language acquisition is costly the language acquisition decisions by individuals may be inefficient if the available policy instruments affect all members of a language group homogeneously then policies that effectively subsidize language acquisition are warranted only for the majority language

free entry and social inefficiency our goal is to provide a simple yet general exposition of the conditions under which the number of entrants in a free entry equilibrium is excessive insufficient or optimal our analysis compares the number of firms that enter a market when there is free entry with the number that would be desired by a social planner who is unable to control the behavior of firms once they are in the market that is we consider the second best problem of choosing the welfare maximizing number of firms while we take as given their noncompetitive behavior after entry we demonstrate that the crucial conditions for establishing the presence of an entry bias can be stated quite simply in terms of the outcome of the postentry game played by entrants in contrast to previous work we do not need to model this postentry game explicitly

the cyclical behavior of strategic inventories this paper presents a model in which inventories are used by a duopoly to deter deviations from an implicitly collusive arrangement higher inventories allow firms to punish cheaters more strongly and can thus help to maintain collusion we show that when demand is high the incentive to deviate increases so that increases in inventories may be optimal for the duopoly this rationalizes the observed positive correlation between inventories and sales in our empirical section we show that as our model predicts this correlation is more important in concentrated industries we also provide several examples where inventories have been a factor in cartel behavior

english as a lingua franca facts benefits and costs how much further can we expect the spread of english to go what are the gains what are the costs the paper first tries to identify the areas of life where english already serves as a lingua franca in the world and those where the language faces sharp competition the discussion goes on to show that the future advance of english will depend heavily on the motives to learn the other major languages in the world as well the cultural market is the single one where the extraordinary progress of english threatens to go too far

monopoly behaviour with speculative storage abstract we analyze the effects of competitive storage when the production of the good is controlled by a monopolist the existence of competitive storers serves to reduce the monopolist s effective demand when speculators are selling and to increase it when they are buying this results in the monopolist manipulating the frequency of stockouts and hence the price smoothing effects of competitive storage we find that competitive storage affects both the level and the volatility of price under monopoly the average price level is higher with storage due to the monopolist s desire to induce stockouts by occasionally keeping the price just at the level that induces a stockout although storage does reduce the volatility of prices under monopoly production prices are more volatile than they would be under perfectly competitive production even though stockouts occur less frequently under monopoly these results are demonstrated through closed form solutions of the two period version of the model and computational solutions to the infinite horizon version of the model

noisy directional learning and the logit equilibrium we specify a dynamic model in which agents adjust their decisions toward higher payoffs subject to normal error this process generates a probability distribution of players decisions that evolves over time according to the fokker planck equation the dynamic process is stable for all potential games a class of payoff structures that includes several widely studied games in equilibrium the distributions that determine expected payoffs correspond to the distributions that arise from the logit function applied to those expected payoffs this logit equilibrium forms a stochastic generalization of the nash equilibrium and provides a possible explanation of anomalous laboratory data

the relative rigidity of monopoly pricing this paper seeks to explain why monopolies keep their nominal prices constant for longer periods than do tight oligopolies the authors show that cost changes create a larger incentive for duopolists to change their prices while demand changes tend to have a greater effect on a monopolist when both costs and demand are affected by small changes in the overall price level the cost effect dominates in the presence of a small fixed cost of changing prices therefore duopolists change their prices in response to smaller perturbations in underlying conditions copyright 1987 by american economic association

the role of obsolescence and inventory costs in providing commitment this paper modifies the cournot and stackelberg models to allow the firms to sell less than they have produced and to store the unsold portion of their output as inventory even if one of the firms can choose its output before the other if it is costless to carry unsold goods forward then the cournot outcome emerges we show however that costs of carrying the inventory forward endow the firms with a limited degree of commitment to sell what they have produced this partially restores the first mover advantage if the firms choose their outputs simultaneously the cournot outcome emerges and has locally consistent conjectures

markov puppy dogs and related animals abstract it is shown that steady state markov perfect equilibria of discrete time infinite horizon quadratic adjustment cost games differ from equilibria of their infinitely repeated counterpart games with zero adjustment costs even though no adjustment costs are paid in the steady state in contrast to continuous time games the limit of these equilibria as adjustment costs approach zero is the same as the equilibria of their static counterpart games a classification scheme is presented and it is shown that the taxonomy is identical to that of analogous two stage games such as those analyzed by fudenberg and tirole american economic review papers and proceedings 1984 74 361 366 this classification is useful in that it implies that steady state equilibria need not be explicitly calculated to analyze qualitatively the effects of adjustment costs in strategic environments it is also argued that estimated conjectural variations parameters may capture a well defined property of strategic interaction in a dynamic game

going multinational under exchange rate uncertainty abstract we analyze a model where an exporting firm competes a la cournot in a foreign market the firm faces exchange rate uncertainty and has the option to invest abroad the paper contributes four results first real option pricing techniques are used to derive the optimal timing rule of the investment and the price of the firm and foreign competitors second the sunk cost of entry into the foreign market introduces hysteresis in direct investment flows we find that the degree of hysteresis grows with the number of firms in the industry third we determine the conditions under which dumping may appear and the role of fdi in precluding this type of dumping fourth tariffs have the well known fdi inducing effect more so in less competitive markets and are more effective at deterring delocation furthermore a tariff might have the effect of triggering dumping

forward trading and storage in a cournot duopoly a dynamic game is presented that models the effects of forward trading and storage in an imperfectly competitive market it is shown that the pro competitive effects of forward trading found in previous work are weakened by the addition of storage but not eliminated the price level lies between that of a cournot game and that of a game with forward trading but without storage

on the dynamic stability of a price dispersion model using gradient dynamics abstract this paper studies the evolutionary stability of a unique nash equilibrium in a price dispersion model burdett and judd 1983 using gradient dynamics the numerical solution to the partial differential equation that governs the evolution of prices shows that the stationary equilibrium is not a nash equilibrium and that it differs from the cyclical behavior predicted by another family of dynamics such as replicator and logit in a continuous action space

are you too young for the nobel prize abstract although age is not supposed to be a criterion for the award of the nobel prize it is commonly believed that it does play a role indeed econometric evidence in this paper also suggests such a role however the paper finds that if there is a preference for older nobel candidates this is introduced during the nomination process the paper actually finds that the nobel committee does not favor older nominees and that if anything it seems to partially offset the age premium introduced by the nominators

the impact of english dominance on literature and welfare abstract market forces privilege the translation of english fiction and poetry into other languages and thus pose a danger for the accumulation of capital in the form of literature a variety of source languages in translations makes literary capital more valuable as such further the importance of writing in english in order to reach a world audience lowers the pool of talent capable of contributing to literature the paper starts with a model of the world publishing market that explains why the dominant language acquires a disproportionate share of translations then the reasoning proceeds from theory to the empirical evidence

markets and linguistic diversity abstract producers of cultural goods and media products can make their specific contents available to their audiences and readerships only through a particular language the choice of language is a non trivial decision in markets with bilingual or multilingual consumers in this paper i argue that the very existence of bilingual consumers may seriously bias market outcomes against minority languages in particular i show that the level of linguistic diversity determined by profit maximizing firms tends to be inefficiently low except when and where the cost of producing a second linguistic version becomes sufficiently low thus the model provides an efficiency argument supporting policies that protect the presence of minority languages in these markets

the rigidity of prices this paper uses evidence on individual transaction prices to analyze price behavior the evidence shows that for many transactions pricesremain rigid for periods exceeding one year the rigidity of price ispositively correlated with industry concentration for several productsthe correlation of price changes across buyers is low the paper alsoinvestigates the relationship between price rigidity price change andthe length of time a buyer and seller have been doing business together the author interprets the evidence as emphasizing the importance of nonprice rationing and the inadequacy of models in whichprice movements alone clear markets copyright 1986 by american economic association

the dynamics of price dispersion or edgeworth variations abstract hypotheses on the dynamics of dispersed prices are extracted from computer simulations and theory and are tested using laboratory data as predicted in some variations of the edgeworth hypothesis the data exhibit a significant cycle relative to the unique stationary distribution the empirical distribution of posted prices has excess mass in an interval that declines until it approaches the lower boundary of the stationary distribution then jumps upward and the downward cycle resumes the amplitude of the cycle seems fairly constant over the longer experimental sessions a hybrid of gradient dynamics and logit dynamics seems to best reproduce the observed dynamics

market structure and the stability and volatility of electricity prices by using a novel approach in this paper 2 analysis we have found that electricity prices most of the time have increased in stability and decreased in volatility when the nordic power market has expanded and the degree of competition has increased that electricity prices at nord pool have been generated by a stochastic dynamic system that most often has become more stable during the step wise integration of the nordic power market means that this market is less sensitive to shocks after the

the dynamic instability of dispersed price equilibria abstract we adopt an evolutionary framework to explain price dispersion as a time varying phenomenon by developing a finite strategy analogue of the burdett and judd 1983 price dispersion model we show that all dispersed price equilibria are unstable under the class of perturbed best response dynamics instead numerical simulations using the logit dynamic show that price dispersion manifests itself as a limit cycle we verify that limit cycles persist even when the finite strategy model approaches the original continuous strategy model for a particularly simple case of the model we prove the existence of a limit cycle

the language effect in international trade a meta analysis abstract gravity models of international trade have been frequently applied to estimate the impact of common official or spoken language on bilateral trade this study provides a meta analysis based on 701 language effects collected from 81 academic articles on average a common official or spoken language increases trade flows directly by 44

inventory holding as a strategic weapon to deter entry recent papers by dixit 1980 and eaton and lipsey 1981 have explored the strategic use of committed product specific capital by an incumbent firm in order to influence a post entry equilibrium and in some cases make entry unattractive by committing or sinking part of the production costs prior to entry the incumbent creates a credible shift in its own reaction function if entry should occur in this way the payoffs in the post entry equilibrium can be influenced to the incumbent s advantage the entry game thus consists of two stages the first in which the incumbent is able to strategically commit itself prior to entry and the second or post entry period in which a duopoly equilibrium is realized the more costs that are put up front by the incumbent the greater is the post entry output it will wish to sell for a given output of the entrant and the lower will be the resulting equilibrium price if the set up or fixed costs of entry are sufficiently high entry may be rendered unprofitable this paper extends the idea in a natural way all the production costs of a quantity of output can be sunk or committed by stockpiling inventory of the product the stock of inventory held by the incumbent firm represents a credible shift in its reaction function in response to entry in the following way the inventory is a stock that can be sold off over time in a way consistent with intertemporal profit maximization constrained by the presence of the entrant moreover the threat to sell off the inventory in response to entry is credible since given that entry has occurred the opportunity cost of the inventory is zero it seems reasonable to require that any strategic asymmetry between incumbent and entrant should be restricted to commitments made by the former prior to entry conditional on such commitments the post entry game should give neither firm a strategic advantage this requirement is the same as the game theoretic concept of perfectness 1 entry can be credibly deterred because the entrant knows that were entry to take place it would be in the incumbent s own interest to follow the anticipated sales programme of inventory in order to demonstrate that entry may be deterred by holding a stock of inventory that is sufficiently large that deterrence can be made the perfect equilibrium of the complete entry game the properties of the equilibrium with entry must be derived the post entry equilibrium is modelled here as a pair of nash strategies in sales programmes if the sales programme anticipated by the entrant in the post entry equilibrium implies a negative present value entry will be deterred thus successful entry deterrence implies that the equilibrium with entry is never realized the incumbent can then continue to receive monopoly profits less the holding cost of the inventory which serves as a credible deterrent to entry but is never sold