a theory of retail pricing until recently the retail enterprise the shop has been comparatively neglected by economic theorists partly because they assigned little role to retailing the growth of interest in the problem in recent years reflects the development of models of imperfect information and the revival of interest in location theory pricing theory for the retail enterprise however remains a neglected area after surveying existing models of retailing the paper concentrates on the idea that the shop saves its customers costs by assembling goods in one place this introduces an essential non convexity and importantly affects the conditions under which shops compete with each other and the constraints on their price setting under the admittedly unrealistic assumption of full buyer information a theory of retail pricing is developed retail prices are frequently regarded as exceptions both to the law of costs and generally to every rational process of price formation which is all the more remarkable since these prices are the only ones which are of direct interest to the consumer and which are directly influenced by consumption knut wickselt

expanding demand through price advertisement abstract retail stores frequently advertise prices when consumer search is costly advertising low prices expands the number of consumers who visit and buy we show that this demand enhancement may offset a retailer s loss in margins from the low price making advertisement desirable we further show that a multi product monopolist may choose to advertise low prices only for select products even when advertised and non advertised products are substitutes for duopolist retailers at a common location an equilibrium exists in which for some range of advertising costs one store advertises and the other free rides on its competitor

on multiplicity of consistent conjectures in free entry oligopoly abstract if we allow free entry into oligopoly we should take into account the fact that the number of firms is variable therefore we should include it in the arguments of the conjectural variation functions and consider a conjectural variation for the change in the number of firms we will show that for such conjectural variation functions there exist multiple consistent conjectures equilibria in free entry oligopoly

coalition building in a spatial economy abstract we analyze the possibility and consequences of coalition formation among suppliers of retail services we first provide a framework in which producers of substitutes have an incentive to cluster in marketplaces to attract consumers dispersed in space owing to spatial externalities the resulting spatial equilibrium can be welfare suboptimal we characterize regimes in which we find too little and those in which there is too much agglomeration of firms we analyze the role of coalitions of firms e g initiated by a land developer in this framework and show that such coalitions can overcome the suboptimality of the decentralized spatial allocation

price search and spatial competition abstract in this paper we study a model where two spatially scattered sellers face a population of consumers dispersed over a given geographical area they have to incur a transaction cost to place their purchase order moreover these consumers have imperfect knowledge of prices but obtain full information about prices at the first shop they solicit we study price competition between these firms the main outcomes of our analysis are as follows first we show that whenever a price equilibrium exists for given locations of firms it will necessarily display price dispersion second we study location configurations which ensure the existence of a price equilibrium furthermore we show that when it exists a price equilibrium is unique finally we analyze firms revenues when merchants anticipate the consequences of their locational choice on subsequent price competition then we find that there is an incentive for a firm to get as close as possible to its competitor

spatial competition among multi store firms abstract the paper analyzes spatial cournot competition among multi store firms it demonstrates that the complex problem of determining equilibrium store locations for competing multi store firms can be approximated by a simple one in which each firm behaves as a multi store monopolist in choosing its store locations a firm s equilibrium store locations often coincide with its monopoly locations and in general converge to its monopoly locations as the demand grows larger when the firms have an equal number of stores the stores belonging to competing firms agglomerate at discrete points that coincide with each firm s monopoly store locations

challenges of existing in a market as a small low quality producer this paper explores the strategy of a small firm entering a monopolist s market thereby creating a duopoly market the small firm avoids competing with the larger incumbent firm by producing a lower quality product at a lower price the model here establishes an equilibrium under a specific set of assumptions and examines how exogenous factors affect prices qualities and profits although the strategy might allow the firm to enter and earn a profit the market conditions may make this position much less desirable to that of the large firm for several reasons in the case explored here where tastes for the product are uniformly distributed the small firm s profit is about six percent of that of the larger firm the smaller firm is more severely threatened by the entrance of a third firm furthermore even if the smaller firm can cut costs its position is not well suited for exploiting such increases in efficiencies

do consumers search for the highest price oligopoly equilibrium and monopoly optimum in differentiated products markets we develop a model of search among substitutes for the best combination of commodity variant and price in which the structure of search costs is manipulable by the suppliers of these variants e g by joining an existing market or opening a new one we analyze the subgame perfect equilibria arising in a multistage game involving specialized firms choice of entry variant and price and we compare them to a multiproduct monopolist s optimal choice we show that equilibrium prices increase in the number of substitutes sold in one market and that in the situation considered here monopoly increases welfare

market transparency and product differentiation abstract in a hotelling market with endogenous choice of product characteristics increasing market transparency on the consumer side leads to less product differentiation and lower prices and profits this is welfare improving for all consumers and total surplus increases

creative destruction barriers to urban growth and the great boston fire of 1872 urban growth requires the replacement of outdated buildings yet growth may be restricted when landowners do not internalize positive spillover effects from their own reconstruction the boston fire of 1872 created an opportunity for widespread simultaneous reconstruction initiating a virtuous circle in which building upgrades encouraged further upgrades of nearby buildings land values increased substantially among burned plots and nearby unburned plots capitalizing economic gains comparable to the prior value of burned buildings boston had grown rapidly prior to the fire but negative spillovers from outdated durable buildings had substantially constrained its growth by dampening reconstruction incentives

moral duty warm glow or self interest a choice experiment study on motivations for domestic garbage sorting in italy abstract behavioural and mainstream environmental economics have proposed alternative explanations for individual motivations behind environmentally relevant activities leading to different recommendations for policymakers separate collection of different types of municipal waste represents a popular field of application in this paper we exploit the results of a choice experiment study conducted on a representative sample of 1010 italian households aimed at understanding the relative weights of economic and non economic motivations the results show that the mean willingness to pay for separate waste collection is 77 year per family which is an adequate empirical estimate of the warm glow effect of recycling however the four identified latent classes reveal individuals with fairly opposite motivations this finding can be interpreted as the fact that the two types of motivations economic and non economic do not add up but tend to cancel each other the concept of latent classes applied to environmental economics is novel and suggests distinct typologies of individuals more importantly these groups of individuals are likely to react differently to alternative policy instruments therefore instead of designing waste management policies based on the assumption that behavioural responses are stereotyped policymakers should adopt a more complex set of policy instruments that target different groups of individuals with appropriately chosen incentive schemes

estimating consumer willingness to supply and willingness to pay for curbside recycling we estimate the willingness to pay for curbside recycling based on a contingent valuation survey of 600 residents of a large southeastern united states city the best estimate of willingness to pay for curbside recycling is 2 29 month after adjustment for hypothetical bias we also report the results of a field experiment designed to test the effectiveness of explicit monetary incentives and communication appeals to influence the decision to recycle and the quantity of materials to recycle while households respond to the monetary cost of recycling the effects of the token ex ante incentives and appeals appear to be small jel d61 q21

inflation forecast targeting implementing and monitoring inflation targets abstract inflation targeting is shown to imply inflation forecast targeting the central bank s inflation forecast becomes an explicit intermediate target inflation forecast targeting simplifies both implementation and monitoring of monetary policy the weight on output stabilization determines how quickly the inflation forecast is adjusted towards the inflation target money growth or exchange rate targeting is generally inferior than inflation targeting and leads to higher inflation variability commitment to target rules may be better than commitment to instrument rules

exchange rate regime durability and performance in developing versus advanced economies abstract drawing on new data and advances in exchange rate regimes classification we find that countries appear to benefit by having increasingly flexible exchange rate systems as they become richer and more financially developed for developing countries with little exposure to international capital markets pegs are notable for their durability and relatively low inflation in contrast for advanced economies floats are distinctly more durable and also appear to be associated with higher growth for emerging markets our results parallel the baxter and stockman classic exchange regime neutrality result though pegs are the least durable and expose countries to higher risk of crisis

price reactions to rivals local channel exits in this paper we study the effect of a firm s local channel exits on prices charged by incumbents remaining in the marketplace exits could result in higher prices due to tempered competition or lower prices due to reduced colocation or agglomeration benefits the net effect of these two countervailing forces remains unknown in addition little is known about how this effect could change depending on incumbents geographic locations we address this research gap by examining new car price reactions by incumbent multiproduct automobile dealerships who experience the exit of a chrysler dealership in their local markets we find evidence that the competition effect exceeds the colocation effect prices increase by about 1 318 following an exit relative to the price change in the absence of an exit more important we find that the price increase is lower at dealerships more proximate to the exiting dealership than dealerships farther away for the same set of cars available across these locations this

effects of norms and opportunity cost of time on household recycling social and moral norms and the opportunity cost of time will affect household recycling efforts a model is developed to describe how norms affect the recycling decision through feelings of self respect guilty conscience and warm glow as well as respect in and sanctions from the community we find that the opportunity cost of time has a significant negative effect on household recycling all indicators of warm glow social and moral norms increase household recycling efforts we find no evidence of crowding out neither when recycling is perceived as mandatory nor when economic incentives are introduced in the form of a differentiated garbage fee

evaluation of swedish youth labor market programs this paper evaluates two swedish active labour market programmes for youth namely youth practice and labour market training a non parametric matching approach is applied to estimate the average p

the determinants of household recycling social influence public policies and environmental preferences abstractour article aims at understanding the determinants of households selective waste sorting behaviours based on data from an original survey of 694 individuals in the french provence alpes cote d azur region the applied literature focuses mainly on countries with high recycling rates we focus on a region with the lowest recycling rate in france a country that recycles less than the european country average we first apply polychoric principal components analysis to reduce the number of explanatory variables to a set of six factors in a second step we use a probit model to estimate the probability of waste sorting as a function of these factors this model tests several hypotheses emerging from the recent literature on behavioural economics applied to households selective sorting this literature pays particular attention to the social influence on recycling behaviour which has been studied mostly by sociologists and psychologists the results of our empirical analysis confirm some of the fin

does the exchange rate regime make a difference in inflation performance in developing and emerging countries the role of inflation targeting abstract we apply propensity score matching estimators with multiple outcomes to evaluate the impacts of exchange rate regimes fixed intermediate and flexible without inflation targeting and inflation targeting on inflation rates in emerging and developing countries an inflation targeting regime does better than or at least as good work as a fixed regime in lowering inflation rates when compared with intermediate or flexible regimes we do not observe a clear difference in inflation rates between fixed and inflation targeting regimes in recent years 2000 2007 intermediate and flexible regimes provide higher inflation than fixed or inflation targeting regimes in most cases

a microeconometric evaluation of rehabilitation of long term sickness in sweden in this study the effects of various types of rehabilitation programmes on labour market out comes are estimated a main feature of this study is that it jointly evaluates multiple treat ments by nonparametric matching estimators the study is based on a large sample of per sons in western sweden who are long term sick and could participate in rehabilitation pro grammes our results suggest that work place training is superior to the other rehabilitation programmes with respect to labour market outcomes but compared to non participation no positive effects are found doi 10 1002 jae 757 download appendix pdf 147 kb

one without the other behavioural and incentive policies for household waste management this paper provides a review of economic studies that analyses the use of multiple policies to cope with waste management problems we discuss the factors that influence selective sorting behaviour and the most appropriate policies for their promotion based on the works analysed our survey shows the original features of waste as an environmental problem requiring regulation the traditional approach in which decisions respond to rational behaviour particularly cost savings has some limits although not all public policies seem justified we argue that there might be a need for specific policies to promote recycling preferably based on the provision of information to consumers or on behavioural instruments indeed personal factors specific to each individual such as emotions and the influence of social interaction should be taken into account in the development of public policies we review the literature related to different rationales and identify some avenues for future research

the economics of product variety a survey demand for variety may arise from a taste for diversity in individual consumption and or from diversity in tastes even when each consumer chooses a single variant the full degree of variety potentially demanded will not in general be supplied because scale economies even to a small degree mean that the potential welfare or revenue gain from greater variety must be balanced against the lower unit production costs with fewer variants the economics of product variety consists essentially in analysing the effect of this balance in different situations and comparing the degree of product variety for different market structures with each other and with the optimum the survey commences with the work on market structures with single product firms generalized monopolistic competition tracing modern developments in both the chamberlinian and hotelling traditions the latter has been particularly fruitful due to the expansion of the original locational ideas into virtual spaces in product characteristics the emphasis in recent work on product variety has been on multiproduct firms in both monopolistic and oligopolistic structures including strategic market preemption although most work has been in a full information context there have been advances in product variety under imperfect information either by consumers to properties of the firms products or firms as to consumers demands

inflation targeting genuine effects or publication selection bias abstract this paper uses a meta regression analysis mra to evaluate the impact of publication selection bias as for the macroeconomic effects of inflation targeting it a popular approach to implementing monetary policy documented in the existing literature using 8 059 point estimates from 113 studies we show that a significant part of the documented positive effects of it on inflation and to some extent output growth volatility is in fact due to publication selection bias in particular results pointing to lower inflation volatility and higher real gdp growth tend to be favored by researchers as well as those pointing to statistically significant macroeconomic effects however even after controlling for these two types of biases we find it to be correlated with lower inflation and higher real gdp growth differently the evidence on the it inflation volatility relationship is found to be less clear

promoting recycling private values social norms and economic incentives individual behaviors that benefit the environment are potentially influenced by personal values of environmental quality social norms that encourage proenvironmental actions and economic incentives economic incentives often loom particularly large including those that result from environmental policies less well understood are the respective roles of private values and social norms do people undertake proenvironmental actions more out of their per sonal valuations of the environment that might be characterized as warm glow effects or from the social norms that reinforce proenvironmental behaviors the least explored component of these deter minants of proenvironmental behavior is that of social norms we characterize social norms in terms of what is normatively appropriate rather than what is the conventional mode of behavior there is a burgeoning economics literature modeling social norms but not a commensurate empirical investigation of their practical impor tance if norms do matter what is the respective role of personal norms that a person imposes on others compared with the external norms that people perceive are imposed on them by others to what extent are these social norms the result of legal regimes and regulatory policies that establish standards for behavior our empirical analysis estimates the role of these influences the empirical case study for this article is based on an analysis of recycling of plastic water bottles recycling policies are becoming

international experiences with different monetary policy regimes any views expressed in this paper are those of the author only and not those of columbia university or the national bureau of economic research abstract this paper examines the international experiences with four basic types of monetary policy regimes 1 exchange rate targeting 2 monetary targeting 3 inflation targeting and 4 monetary policy with an implicit but not an explicit nominal anchor the basic theme that emerges from this analysis is that transparency and accountability are crucial to constraining discretionary monetary policy so that it produces desirable long run outcomes because the devil is in the details in achieving transparency and accountability what strategy will work best in a country depends on its political cultural and economic institutions as well as on its past history

is inflation targeting a good remedy to control inflation abstract since the 1990s inflation targeting it has been adopted by several central banks as a strategy for monetary policy it is expected that the adoption of this monetary regime can reduce inflation and inflation volatility this article is concerned with these issues and makes use of the propensity score matching methodology on a sample of 180 countries for the period from 1990 to 2007 for analysis the sample is split into two sets of countries advanced and developing the findings suggest that the adoption of it is an ideal monetary regime for developing economies and in addition to reducing inflation volatility can drive inflation down to internationally acceptable levels regarding advanced economies the adoption of it does not appear to represent an advantageous strategy in brief the empirical results indicate that the adoption of it is useful for countries that must enhance their credibility for the management of monetary policy

subjective price search and price competition abstract in this paper we study price rivalry between two firms facing a population of imperfectly informed buyers the two sellers are geographically dispersed and consumers search for the lowest price the competitive process either suffers from cyclical instability or stabilises at that price at which no buyer searches

does inflation targeting make a difference in developing countries we evaluate the treatment effect of inflation targeting in thirteen developing countries that have adopted this policy by the end of 2004 using a variety of propensity score matching methods we show that on average inflation targeting has large and significant effects on lowering both inflation and inflation variability in these thirteen countries however the effectiveness of inflation targeting on lowering inflation is found to be quite heterogeneous the performance of a given inflation targeting regime can be affected by country characteristics such as government s fiscal position central bank s desire to limit the movements of exchange rate its willingness to meet the preconditions of policy adoption and the time length since the policy adoption

a stable international monetary system emerges inflation targeting is bretton woods reversed a stable international monetary system has emerged since the early 1990s a large number of industrial and a growing number of developing countries now have domestic inflation targets administered by independent and transparent central banks these countries place few restrictions on capital mobility and allow their exchange rates to float the domestic focus of monetary policy in these countries does not have any obvious international cost inflation targeters have lower exchange rate volatility and less frequent sudden stops of capital flows than similar countries that do not target inflation inflation targeting countries also do not have current accounts or international reserves that look different from other countries this system was not planned and does not rely on international coordination there is no role for a center country the imf or gold it is durable in contrast to other monetary regimes no country has been forced to abandon an inflation targeting regime succinctly it is the diametric opposite of the post war system bretton woods reversed

currency unions and trade how large is the treatment effect currency unions and trade what can the data say the impact of a common currency on trade can be grossly mismeasured if countries that belong to currency unions are systematically different from those that do not and if the relationship between trade and its observable determinants is complex i argue that such complications are plausible and likely to distort the empirical results of a recent economic policy paper by andrew rose issue 30 2000 pp 7 45 using techniques designed to be robust in this situation i find that the effects of common currency on international trade are considerably less dramatic and much less precisely estimated torsten persson i have always maintained that the measured effect of a single currency on trade appears implausibly large but i am not convinced by torsten persson s diagnosis and proposed solution i apply a variety of estimation techniques to a new larger data set where many more instances of currency union creation and abandonment make it possible to rely on time series as well as cross sectional evidence the results are similar to my earlier ones the effect of a single currency on trade is large andrew rose

product differentiation and price collusion the paper analyzes the implications of price collusion with or without monetary transfers on the degree of horizontal product differentiation we find that the principle of minimum differentiation holds i e firms sell the same product when there is no possibility of monetary transfers on the contrary we find that the presence of monetary transfers may induce some product differentiation the reason is that when monetary transfers are possible it is not essential per se to be well located in terms of relative market shares the outcome is then shown to be driven by only two forces 1 choosing a product closer to the competitor s improves the bargaining power 2 choosing a product closer to the one maximizing the joint profit improves the global firm efficiency

currency boards more than a quick fix currency boards more than a quick fix once a popular colonial monetary arrangement currency boards fell into disuse as countries gained political independence but recently currency boards have made a remarkable come back this essay takes a critical look at their performance are currency boards really a panacea for achieving low inflation and high growth or do they merely provide a quick fix allowing authorities to neglect fundamental reforms and thus fail to yield lasting benefits we have three major findings first the historical track record of currency boards is sterling with few instances of speculative attacks and virtually no involuntary exits countries that did exit from currency boards did so mainly for political rather than economic reasons and such exits were usually uneventful second modern currency boards have often been instituted to gain credibility following a period of high or hyperinflation and in this regard have been remarkably successful countries with currency boards experienced lower inflation and higher if more volatile gdp growth compared to both floating regimes and simple pegs the inflation difference reflects both a lower growth rate of money supply a discipline effect and a faster growth of money demand a credibility effect the gdp growth effect is significant but may simply reflect a rebound from depressed levels third case studies reveal the successful introduction of a currency board to be far from trivial requiring lengthy legal and institutional changes as well as a broad economic and social consensus for the implied commitment moreover there are thorny issues as yet untested regarding possible exits from a currency board thus currency boards do not provide easy solutions but if introduced in the right circumstances with some built in flexibility they can be an important tool for gaining credibility and achieving macroeconomic stabilization atish r ghosh anne marie and holger c wolf

does cournot competition yield spatial agglomeration abstract locations and quantities are chosen sequentially in spatial markets strikingly different location patterns emerge depending on the shape of the market in a circular city firms locate equidistant from each other in a linear city firms agglomerate at the center

heterogeneous preferences for community recycling programs this paper examines household preferences for community recycling programs which have both public and private good dimensions the data come from a survey conducted in seattle wa which elicited stated preference contingent ratings for different recycling programs relative to status quo with experimental variation in the overall community recycling rate achieved and expected household cost the recycling rate is interpreted as capturing the public benefits of recycling programs and constitutes the most common measure used by policy agencies for setting waste management objectives and evaluating policy initiatives the analysis begins with fixed parameter models that explore different ways of handling rating data and mixed logit estimations that capture household preference heterogeneity both within and across different recycling programs this analysis yields unique estimates of willingness to pay for an increase in the community recycling rate predicted individual specific utility parameters are then regressed on household background information to explicitly examine the nature of preference heterogeneity overall this paper generates interpretable policy relevant insights into the public and private good dimensions of community recycling programs

tourism agglomeration and its impact on social welfare an empirical approach to the spanish case abstract this paper measures two descriptors of tourism namely its scale and agglomeration level and subsequently evaluates both descriptors according to their direct and joint impacts on the host communities quality of life the key constructs for this research are the following 1 a tourism evaluation function that incorporates the scale and agglomeration of tourism which is constructed for each one of the 50 spanish provinces and 2 a measure of the host communities quality of life that comprises 12 objective partial indicators and an overall indicator that integrates them all results show the existence of carrying capacity frontiers or maximum thresholds that tourist destinations can sustain without damaging the economic socio cultural or environmental systems of the communities they belong

transitions to inflation targeting panel evidence from panel estimates of an extended version of the taylor rule reaction function that adds lagged inflation output gaps and exchange rates we confirm that inflation is more central to the setting

the modern history of exchange rate arrangements a reinterpretation we develop a novel system of reclassifying historical exchange rate regimes one key difference between our study and previous classifications is that we employ monthly data on market determined parallel exchange rates going back to 1946 for 153 countries our approach differs from the imf official classification which we show to be only a little better than random it also differs radically from all previous attempts at historical reclassification our classification points to a rethinking of economic performance under alternative exchange rate regimes indeed the breakup of bretton woods had less impact on exchange rate regimes than is popularly believed