general equilibrium modelling of the direct and indirect economic impacts of water quality improvements in the netherlands at national and river basin scale abstract the main objective of the study presented in this paper is to estimate the direct and indirect economic impacts of water quality policy scenarios in the netherlands focusing on the reduction of emission levels of nutrients and a number of eco toxicological substances for this purpose an applied general equilibrium age model consisting of 27 production sectors is extended to water through the inclusion of substitution elasticities between labour capital and emissions to water in the sectors production functions the macro economic costs of a 10 20 and 50 reduction of the emission levels in the year 2000 of ten priority substances in the eu water framework directive vary between 0 2 and 9 4 of net national income nni a large share of the total economic costs are borne by important sources of pollution like commercial shipping the chemical and metal industry however important spin off effects due to adaptation take place in the tertiary service sector besides the estimation of the economy wide impacts of water quality improvements the novelty of the study presented here is found in the downscaling of national and sector results to river basin level and the estimation of shadow prices for water polluting substances through the introduction of an emission permits market

name your own price at priceline com strategic bidding and lockout periods a buyer suggests prices to n sellers in a time period and buys from the seller who accepts the bid first the number of bidding rounds is determined by how frequently the buyer can make an offer we show that with no limit on the frequency and without discounting the price path is either kept flat initially with large jumps at the end or increasing steadily over time which class of path occurs in equilibrium depends on the buyer s trade off between committing to a price ceiling versus finely screening the sellers costs with discounting limiting the number of rounds mitigates the delay caused by the reluctance to raise bids in the first class of equilibrium and therefore can benefit the buyer this result suggests why in reality bargaining parties often take measures to make their offers rigid and consequently force themselves to make fewer offers copyright oxford university press

time is money time pressure incentives and the quality of decision making many decisions in economics and finance have to be made under severe time pressure furthermore payoffs frequently depend on the speed of decision making as for instance when buying and selling stocks in this paper we examine the influence of time pressure and time dependent incentive schemes on the quality of decision making in an experimental beauty contest game we find that convergence to equilibrium is faster and payoffs are higher under low time pressure than under high time pressure interestingly time dependent payoffs under high time pressure lead to significantly quicker decision making without reducing the quality of decisions

economies of traffic density in the deregulated airline industry this article estimates a structural model of competition among hub and spoke airlines in order to measure the strength of economies of traffic density on individual route segments we find that economies of density were strong during the sample period fourth quarter 1985 stronger than previous estimates by douglas caves laurits christensen and michael tretheway derived from traditional cost function methods we also find that the airlines competitive behavior was far from collusive in the markets under study markets requiring a connection at a hub airport our structural model also provides plausible estimates of demand elasticities we use our estimates to provide a cost based rationale for the major changes in the structure of the industry following deregulation for example the increase in airport and industry wide concentration and the increase in competition at the city pair market level and to simulate the effects of a merger of airlines that share a hub

delay and settlement in litigation delay in litigation is a policy concern in many jurisdictions little evidence is available on the causes of such delay however we present a version of spier s 1992 bargaining model of litigation and derive directly a functional form for the conditional probability of case settlement we then estimate this and test predictions about the effects of legal costs and uncertainty over damages and liability on the conditional probability of settlement using data from negligence claims against several nhs trusts our results provide a direct test of the model and shed light on the causes of settlement delay in england

strikes and holdouts in wage bargaining theory and data we develop a private information model of union contract negotiations in which disputes signal a firm s willingness to pay previous models have assumed that all labor disputes take the form of a strike yet a prominent feature of u s collective bargaining is the holdout negotiations often continue without a strike after the contract has expired production continues with workers paid according to the expired contract we analyze the union s decision to strike or hold out and highlight its importance to strike activity strikes are more likely to occur after a drop in the real wage or a decline in unemployment

bargaining games with a random sequence of who makes the offers abstract this note relaxes the rigid assumption in recent bargaining theory of a strictly alternating sequence of offers and instead considers the opposite extreme at each bargaining round a random event determines who gets to make an offer irrespective of who made the previous offer the equilibrium of this game is practically identical to the equilibrium of the alternating offers game if the horizon is infinite with a finite horizon the properties of the equilibrium are more satisfying than the properties of the equilibrium of the alternating offers game

price discovery and learning during the preopening period in the paris bourse before the opening of the paris bourse traders place orders and indicative prices are set this offers a laboratory to study empirically the t tonnement process through which markets discover equilibrium prices since preopening orders can be revised or canceled before the opening indicative prices could be noise we test this against the hypothesis that preopening prices reflect learning early in the preopening the noise hypothesis is not rejected as the opening gets closer the informational content and efficiency of prices increase and the learning hypothesis is not rejected we also propose a gmm based estimate of the speed of learning

unions and strikes with asymmetric information strikes seem to be a pareto inefficient outcome of bargaining between a union and a firm however this paper shows that strikes can be the outcome of rational behavior by both agents if the firm has more information than the union concerning the state of nature the union can use strikes as a way of gaining information the paper uses an asymmetric information model where the firm has information about the state i e profitability that the union does not know the schedule of wage offers by the union then depends on the probability that a given state will occur

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

bargaining over reform abstract this paper models the delay in a macroeconomic stabilization as the outcome of a bargaining game between two parties who must reach an agreement over how the stabilization cost is to be shared the paper modifies alesina and drazen s 1991 american economic review 81 1170 1189 war of attrition model by endogenizing the distribution of the stabilization costs through a bargaining game using this bargaining framework the paper analyzes the role of crises and foreign assistance in bringing about a settlement to the distributional conflict in the bargaining game a crisis that increases the welfare loss from not stabilizing the economy will lower the probability of delay in contrast foreign aid that is used to reduce the stabilization costs will further increase the delay in reaching an agreement between the two parties

tribunal specialization and institutional targeting in patent enforcement recent scholarship on nonmarket strategies has sought to understand organizational decisions to target specific institutional venues for nonmarket actions we contribute to this emerging literature by studying institutional targeting between specialized and general purpose tribunals which are available to resolve disputes in a number of settings whereas prior work on institutional targeting has primarily focused on the differences in the policy preferences of public actors and the susceptibility of policy positions to influence activities we focus on the differences in expertise and procedural flexibility that typically accompany tribunal specialization we develop a theory about targeting decisions forum shopping in such contexts which suggests two main drivers of tribunal targeting expected settlement and expected returns drawing on these mechanisms we formulate hypotheses linking tribunal targeting decisions to firm level attributes such as market strategic stakes institutional distance from competitors and tribunal specific capabilities our hypotheses are tested using a novel data set of patent enforcement against u s imports which also sheds light on nonmarket strategies in patents

bargaining and strikes strikes are generally regarded as an important economic phenomenon and yet good theoretical explanations of them are hard to come by the difficulty is to understand why rational parties should resort to a wasteful mechanism as a way of distributing the gains from trade why could not both parties be made better off by moving to the final distribution of surplus immediately or if it is uncertain to its certainty equivalent and sharing the benefits from increased production

gains of integrating sector wise pollution regulation the case of nitrogen in danish crop production and aquaculture abstract this paper extends the orani g computable general equilibrium model with an externality market the externality market is modelled with a limited number of pollution permits that are traded between representative firms in different sectors the model is applied to identify the gains of a common nitrogen regulation system for danish agriculture crop and aquaculture production common regulation across the two sectors is found to increase gdp by euro 32 million corresponding to 2 2 of their initial gdp contribution the direct effect in the two sectors is euro 39 million where the spill over effect is 7 million full use of recirculation technology in aquaculture entails a further increase in gdp to 106 million the introduction of a common regulatory system and recirculation technology simultaneous with a reduction of the common nitrogen cap of 17 6 corresponding to the current policy objectives is found to increase gdp by 52 million 4 1 of their initial contribution hence introducing a common regulatory system and taking advantage of the new technology more than counterbalances the negative socio economic effect of a cap reduction the analysis points to the importance of introducing more coherent regulatory frameworks that include all polluters under the same regulatory system

is strike behavior cyclical we examine cyclicality of strike frequency and incidence using canadian data on strikes and contracts total strike frequency exhibits significant procyclicality to which within contract strikes contribute appreciably evidence is weaker for procyclical behavior of contract expiry strikes both in total and disaggregated by issue strike incidence is also procyclical particularly in manufacturing though the procyclicality here is confined to strikes over nonwage issues these results mirror those obtained by analyzing the frequency of strikes in the contract data industry specific cyclical variables positively affect strike incidence in manufacturing but region specific variables have no effect

wage bargaining with time varying threats we study wage bargaining in which the union is uncertain about the firm s willingness to pay and threat payoffs vary over time strike payoffs change as replacement workers are hired as strikers find temporary jobs and as inventories or strike funds run out we find that bargaining outcomes are substantially altered if threat payoffs vary if dispute costs increase in the long run then dispute durations are longer settlement rates are lower and wages decline more slowly during the short run and may even increase the settlement wage is largely determined from the long run threat rather than the short run threat

misrepresentation of utilities in bargaining pure exchange and public good economies in order to analyze bargaining in pure exchange and public good economics when the agents are not informed about their opponents payoffs we embed each bargaining problem into a noncooperative game of misrepresentation in pure exchange public good economies with an arbitrary number of agents whose true utilities satisfy a mild assumption the set of allocations obtained at the linear strategies nash equilibria of this game is equal to the set of constrained walrasian lindahl allocations with respect to the agents true utilities without this assumption the result holds for two agent pure exchange economies and under alternative assumptions for public good economies c 2002 elsevier science usa

the economics of hubs the case of monopoly in this paper we study the optimization problem of an unregulated air carrier which is given the exclusive right to satisfy demand for air travel between any pair of cities it chooses a network of connections and a set of prices to maximize profits thus both network design and prices are endogenous we characterize the solution to this optimization problem when demands and costs are symmetric our main result is that if there are economies of density in the number of individuals travelling between two directly connected cities the optimal network is either a hub of size n 1 or one in which every pair of cities is connected directly

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

union contracts and money wage changes in u s manufacturing industries this paper analyzes the relationship between wage changes negotiated in selected large collective bargaining agreements and industry wide changes in average hourly earnings multiple regressions are used to examine the relationship in two digit manufacturing industries for the period 1958ii to 1978il negotiated wage changes are found to have a major impact on overall movements in hourly earnings the estimated equations have potential applications for short run wage forecasting and for policy analyses

uniqueness of equilibrium payoffs in the stochastic model of bargaining abstract i provide a sufficient condition for the uniqueness of equilibrium payoffs in a model of stochastic bargaining with unanimity rule and risk averse players my condition s implies condition c of merlo and wilson 1995 and is easy to verify in applications

bargaining with deadlines and imperfect player control anecdotal and experimental evidence suggests that bargaining sessions subject to deadlines often begin with cheap talk and rejected proposals agreements if they are reached at all tend to be concluded near the deadline we attempt to capture and explain these phenomena in a strategic bargaining model that incorporates a bargaining deadline the possibility of strategic delay and a lack of perfect player control over the timing of offers imperfect player control is generated by an exogenous uniformly distributed random delay in offer transmission our model has a symmetric markov perfect equilibrium unique at almost all nodes in which players adopt strategic delay early in the game make and reject offers later on and reach agreements late in the game if at all in equilibrium players miss the deadline with positive probability the expected division of the surplus is unique and close to an even split

the timing of multilateral lending bargaining over the terms of multilateral lending can be a prolonged process we model failure to come to quick agreement as a screening device policy makers who find conditionality especially costly delay to signal their type we show that increased costs to not reaching agreement whether borne by borrowers or lenders can increase the chances of delay the imf s high profile involvement in recent crises in asia and russia illustrates the way international lenders and borrower governments delay to extract concessions loans from the fund and other international lenders such as the world bank and the united states treasury are accompanied by detailed requirements for policy changes borrower countries bargain hard on the package of reform measures they are obliged to adopt and standoffs in negotiations are common an example is the negotiations between the fund and the indonesian government beginning in autumn 1997 the fund was critical of the indonesian authorities failure to carry out a series of detailed structural reforms and hostile to the suharto government s expressed intention to introduce a currency board as a banker commented the more you talk about a currency board the more you delay the debt restructuring agreement it was not until april 1998 that an agreement was reached indonesia gave up on the currency board and the imf conceded that the government could continue subsidising food and energy a problem with the use of strategic delay to extract concessions is that the backdrop to such negotiations is often a worsening economic situation postponing agreement can severely exacerbate the costs to both borrowers and lenders if it leads to high inflation a loss of confidence in the banking system political backlashes or contagion the recent confrontation between indonesia and the fund raised the prospect of a break off of negotiations the indonesian rupiah fell by 25 the jakarta stock market declined by 20 prices skyrocketed and civil unrest worsened in this paper we use bargaining theory to analyse the timing of loan agreements between international lenders and governments in times of possible crises and rising costs of postponement our model works as follows a country approaches international lenders for a loan the lenders want as much reform as possible they propose a programme yielding economic benefits to the country that requires some amount of reform as a condition the country may accept the programme in which case we suppose reform occurs or it may reject the package in which case the lenders may revise their proposal

breakdown in multilateral negotiations abstract we analyze a complete information multilateral bargaining model in which a buyer is to purchase two complementary goods from two sellers binding cash offer contracts are used to govern transactions in contrast to preexisting literature we do not normalize the parties reservation utilities to zero we show that this assumption holds critical importance by demonstrating that a complete breakdown of negotiations may occur as the unique equilibrium outcome even if only two sellers are present

bio economic modeling of water quality improvements using a dynamic applied general equilibrium approach an integrated bio economic model is developed to assess the impacts of pollution reduction policies on water quality and the economy emission levels of economic activities to water are determined based on existing environmental accounts these emission levels are built into a dynamic economic model for the dutch economy and subsequently coupled to a national water quality model the modular approach has the advantage that the impacts on the economy and water quality are evaluated simultaneously but each within their own domain based on the appropriate scale and level of detail the dynamic nature of the economic model allows us to also evaluate a derogated water policy as foreseen in the european water framework directive the indirect costs of different water quality improvement policy scenarios are at least as high as the direct costs related to investments in pollution abatement technology the stricter the policy scenario the more important the role of economic adjustment and restructuring mechanisms at the macro economic level significant water quality improvements can be achieved through stringent domestic emission reductions however reaching water quality standards is highly dependent on water quality improvement policy in surrounding river basin countries and climate change

compatibility and competition in airlines demand side network effects abstract network effects arising in air transport markets are usually viewed as resulting from the implications of joint production on the cost side in this paper we focus on network effects originating on the demand side we consider a network that links three cities involving two direct and one indirect connection two carriers with asymmetric traffic rights on this network compete sequentially at the first stage they choose their departure times at the second they set prices we show that in order to compensate its network disadvantage the weak carrier chooses its departure time as close as possible to its competitor s this is in contrast to the usual maximum differentiation principle the network effect intensifies price competition depending on the size of the market and on consumers valuation of waiting time various subgame perfect equilibrium configurations are exhibited

dynamic bargaining with transaction costs a buyer and seller alternate making offers until an offer is accepted or someone terminates negotiations the seller s valuation is common knowledge but the buyer s valuation is known only by the buyer impatience to reach an agreement comes from two sources the traders discount future payoffs and there are transaction costs of bargaining equilibrium behavior involves either immediate trade delayed trade or immediate termination depending on the size of the gains from trade and the relative bargaining costs this contrasts with the pure discounting model where termination never occurs and the pure transaction cost model where delayed trade never occurs

bargaining with endogenous deadlines we develop a two person negotiation model with complete information that makes endogenous both the deadline and the level of surplus destruction after the deadline we show that the undominated nash equilibrium outcome is always unique but might be inefficient moreover as the bargaining period becomes short or as the players become very patient the unique undominated nash equilibrium outcome is always inefficient

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

tough negotiations bilateral bargaining with durable commitments abstract we offer a tractable model of tough negotiations and delayed agreement the setting is an infinite horizon bilateral bargaining game in which negotiators can make strategic commitments to durable offers commitments decay stochastically but uncommitted negotiators can make new commitments the game s unique markov perfect equilibrium outcome takes the form of a war of attrition negotiators initially commit to incompatible offers but agreement occurs once a negotiator s commitment decays if commitments decay more quickly the terms of the agreement become more equal in expectation more patient committed and less risk averse negotiators obtain a larger fraction of the surplus

a non cooperative bargaining game with risk averse players and an uncertain finite horizon abstract for an alternating offer bargaining game with an uncertain horizon the equilibrium payoff to a player is greater the less risk averse is he relative to his opponent as the horizon becomes infinite in length the equilibrium partition converges to the nash bargaining solution

the macroeconomic cost of catastrophic pollinator declines we develop a computable general equilibrium cge approach to assess the macroeconomic impacts of productivity shocks due to catastrophic losses of pollination ecosystem services at global and regional scales in most regions producers of pollinator dependent crops end up benefiting because direct output losses are outweighed by increased prices while non agricultural sectors experience large adverse indirect impacts resulting in overall losses whose magnitudes vary substantially by comparison partial equilibrium analyses tend to overstate the costs to agricultural producers understate aggregate economy wide losses and overstate the impacts on consumers welfare our results suggest an upper bound on global willingness to pay for agricultural pollination services of 127 152 billion

selective acceptance and inefficiency in a two issue complete information bargaining game abstract this paper explores the effects of a selective acceptance rule on the outcome of two issue negotiations the alternating offer game introduced here allows for the possibility that settlement may be reached on one issue while negotiation continues about the other this model captures features of laws that are generally believed to increase efficiency the analysis shows that if one issue is indivisible there are inefficient subgame perfect equilibria with no pareto improving alternative equilibria with opposing valuations rapid communication guarantees inefficiency these are unique examples of this strong form of inefficiency in an alternating offer bargaining game with complete and perfect information journal of economic literature classification numbers c72 j30

a measure of sustainable national income for the netherlands abstract we present calculations on the sustainable national income sni indicator first proposed by hueting which corrects net national income nni for the costs to bring back environmental resource use to a sustainable level using an applied general equilibrium age model specifying 27 production sectors we calculate different variants of sni for the netherlands in 1990 given a set of pre determined sustainability standards the age model is extended with emissions and abatement cost curves based on large data sets for nine environmental themes the model combines the advantages of a top down approach the age model with the information of a bottom up approach the environmental data and data on emissions reductions costs the presented numerical results show that in 1990 dutch sni is about 50 below nni though many uncertainties are still present in the data and the model the enhanced greenhouse effect is the most expensive environmental theme

dynamic bargaining with action dependent valuations abstract an infinite horizon dynamic bargaining model is presented in which actions affect the expected future value of the buyer seller match because actions directly affect the future surplus to be bargained over the model is unlike other models that tie the dynamic process to nature alone focusing on a subset of weak markov equilibria several results come about that are not found in static bargaining models using similar bargaining protocols in particular optimal price demands can be lower higher than the buyer s lowest highest possible valuation and several empirical features concerning wage settlements and strike incidence from labor union contract negotiations can be explained

repeated bargaining with persistent private information the paper analyses repeated contract negotiations involving the same buyer and seller where the contracts are linked because the buyer has persistent but not fully permanent private information the size of the surplus being divided is specified as a two state markov chain with transitions that are synchronized with contract negotiation dates equilibrium involves information cycles triggered by the success or failure of aggressive demands made by the seller because there is persistence in the markov chain generating the surplus a successful demand induces the seller to make another aggressive demand in the next negotiation since the buyer s acceptance reveals that the current surplus is large rejection of an aggressive demand on the other hand leads the seller to be pessimistic about the size of the surplus in the next contract so the seller makes a soft offer that is sure to be accepted then after several such offers have been accepted the seller is optimistic enough to again make an aggressive demand creating an information cycle an interesting feature of this cycle is that the soft price is not constant but declines as the cycle continues so as to offset the buyer s option value of re starting the cycle when the current state is bad an explicit mapping is given for the relationship between the basic parameters and the equilibrium prices and quantities in particular there is a closed form solution for the threshold belief that makes the seller indifferent between hard and soft offers

a note on pricing of hub and spoke networks abstract the difference between competitive and monopolistic pricing of airlines hub and spoke networks is examined it is found that under reasonable cost conditions pass through passengers pay lower prices per mile than those originating or ending at the hub thus higher per mile prices in large hubs do not necessarily signal market power

bargaining structure and strike activity in this paper the authors examine the nature of the relationship between bargaining structure and strike activity in particular they focus on the implications of the fact that the amount of information revealed by a union s actions depends on the bargaining environment in which it operates the authors demonstrate that a union representing workers of more than one firm will face a greater incentive to reject offers than an independent union this implies that a merger of two unions or the formation of bargaining coalitions will lead to a greater level of strike activity

bilateral trading in networks in many markets goods flow from initial producers to final customers travelling through many layers of intermediaries and information is asymmetric we study a dynamic model of bargaining in networks that captures these features we show that the equilibrium price demanded over time is non monotonic but the sequence of transaction prices declines over time with the possible exception of the last period the price dynamic is therefore reminiscent of fire sales and hot potato trading traders who intermediate the object arise endogenously and make a positive profit the profit earning intermediaries are not necessarily traders with many connections for the case of multilayer networks they belong to the path that reaches the maximum number of potential buyers using the minimal number of intermediaries this is not necessarily the path of the network that maximizes the probability of consumption by traders who value the most the object i e welfare

multilateral bargaining with concession costs this paper presents a new non cooperative approach to multilateral bargaining we consider a demand game with the following additional ingredients i there is an exogenous deadline by which bargaining has to end ii prior to the deadline players may sequentially change their demands as often as they like iii changing one s demand is costly and this cost increases as the deadline gets closer the game has a unique subgame perfect equilibrium prediction in which agreement is reached immediately and switching costs are avoided moreover this equilibrium is invariant to the particular order and timing in which players make demands this is important as multilateral bargaining models are sometimes too sensitive to these particular details in our context players with higher concession costs obtain higher shares of the pie their increased bargaining power stems from their ability to credibly commit to a demand earlier we discuss how the setup and assumptions are a reasonable description for certain real bargaining situations

inventories and public information in private negotiation a laboratory market study using laboratory markets this research investigates the impacts of reporting different kinds of aggregated trade information to buyers and sellers who conduct transactions through bilateral private negotiation there are a limited number of bargaining rounds or matches between buyer and seller pairs sellers hold a perishable inventory before negotiations begin we find that knowledge of trades along with price improves the coordination and bargaining position of buyers trade prices are lower and buyer earnings are higher relative to the no information treatment or when just past quantities or just past prices are reported market efficiency declines as public information is reported copyright 2007 oxford university press

inventory accumulation wages and employment this paper analyzes the effect of inventory accumulation on the outcome of wage and employment agreements between a union and a firm a two period model is set up with bargaining in each period and the paper analyzes under what circumstances inventories will be held even if demand and production conditions are constant it is found that inventories have an important strategic role they bring forward employment and strengthen the bargaining position of the firm in the later period however the firm s strategic use of inventories will generally be to the detriment of both parties copyright 1991 by royal economic society

automatic responses of crop stocks and policies buffer climate change effects on crop markets and price volatility abstract climate change has the potential to affect crop prices and price volatility however the economic models used in prior assessments largely do not include known automatic stabilizing factors crop storage can stabilize prices and u s crop policy tends to provide support that moves opposite prices we quantify effects of circa 2050 climate forcing on the inter annual variability of u s corn belt corn and soybean yields using statistical crop models and climate scenarios from regional and global climate models climate change generally reduces mean yields and increases the inter annual variability of yields in the midwestern u s using these yield impacts and an economic model with automatic market stabilizers we find only modest increases in price volatility although individual producers and states are negatively affected by the yield reductions the aggregate effect for all corn and soybean producer returns can be positive because of price increases moreover agricultural policies based on price levels or revenue variation offset some of the impacts of market variation on farm income our results differ from other recent results and temper concerns that increasing climate instability necessarily translates to greater uncertainty about agricultural commodity uses including as food and biofuels in the near future

water competition through the water energy nexus assessing the economic impacts of climate change in a mediterranean context abstract the impacts of climate change on water resources availability are expected to be adverse especially in drier climate regions such as the mediterranean increased water scarcity will exacerbate competition for water resources not only between sectors but also between countries sharing transboundary river basins due to the mutual dependence of the energy sector on water resources and of the water services provision sector on energy inputs the water energy nexus is acknowledged as a major challenge for the near future with hydropower representing one of the most direct links in this nexus the aim of this paper is to assess the economy wide impacts of the concurrent effects of climate change driven impacts on water availability and the sectoral and regional competition for scarcer water resources in order to accomplish that goal an integrated modelling approach is developed where a computable general equilibrium model including raw water as a production factor is linked to times pt a bottom up model of the energy sector a case study is provided for the mediterranean country of portugal results for 2050 show that macroeconomic impacts are significant and encompass important inter sectoral differences that in turn depend on the degree of competition between sectors impacts are stronger when water consumption by spanish sectors is considered as this intensifies water scarcity in portugal thus the paper allows to gain insight in the broader water energy economy nexus and the additional costs that the dependence on water resources availability in transboundary river basins represents to an economy both aspects being of utmost importance for climate adaptation and energy policy making

an empirical test of an asymmetric information model of strikes recent developments in the theory of strategic bargaining demonstrate how informational asymmetries can lead to prolonged and costly bargaining these models can be applied to contract negotiations yielding an economic theory of strikes to date however few empirical tests of these models have been carried out in this paper a set of predictions concerning the incidence and unconditional duration of strikes is derived from a simple bargaining model in which the union is uncertain about the firm s future profitability these predictions are then tested on a micro data set of major u s contract negotiations that took place from 1973 to 1977

dynamic contractual enforcement a model of strikes this paper provides a theory of strikes as part of a constrained efficient enforcement mechanism for an implicit contractual agreement a firm possessing contemporaneously private information about demand engages in an enduring relationship with its workforce if the information becomes perfectly observable subsequently then modulo discounting the first best is implementable but strikes are always off the equilibrium path if the observations of the workforce are imperfect strikes occur in equilibrium the dynamic contracting problem is modeled as a repeated game with imperfect monitoring the equilibrium exhibits production inefficiency and incomplete insurance to mitigate the inefficiencies caused by strikes

quantity quality and the welfare effects of us airline deregulation in this paper we employ a method for estimationg quality adjusted demand to calculate measures of the change in consumer suruplus due to us airline deregulation the quality adjusted estimates of the price elasticity of demand indicate that consumers are from 25 to 50 more sensitive to changes in air fares than unadjusted estimates would suggest changes in unadjusted consumer surplus overstate the net welfare gains from deregulation by roughly a factor of two strongly suggesting that adjustments for quallity of service are essential to welfare analysis of regulatory changes in this industry

inventories and strikes this paper analyses a dynamic model of bargaining and strikes in which the reservation wage of union members in each period is private information the model endogenizes the firm s decision to accumulate inventories of finished goods in order to enhance its bargaining position with higher inventories the firm makes a lower wage offer thereby accepting an increased probability of a strike the model can help explain empirical results that have found a positive correlation between wages and inventory accumulation it also shows that unless inventories are controlled for strike incidence will exhibit a spurious negative state dependence

negative externalities may cause delay in negotiation we study the strategic equilibria of a negotiation game where potential buyers are affected by identity dependent negative externalities the unique equilibrium of long finitely repeated generic games can either display delay where a transaction can take place only in several stages before the deadline or in spite of the random element in the game a well defined buyer exists that obtains the object with probability close to one

efficiency and disagreement in repeated infinite horizon bargaining games m satterthwaite and s williams 1987 characterize regular equilibria of the sealed bid k double auction that in some cases are efficient the sealed bid k double auction specifies one period of simultaneous offers and requires agents to sometimes disagree at the end of the first period when gains from continued bargaining exist this paper constructs a theory of disagreement based on reputation in repeated bargaining games agents make the offers of a satterthwaite williams regular equilibrium in the first round of a negotiation then if no trade results the agents terminate the negotiation in spite of possible gains from the option of continued bargaining copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

collusion among asymmetric firms the case of different discount factors abstract this study investigates collusive behavior among asymmetric firms for this purpose we develop a selection criterion for deriving a unique collusive outcome and apply it to the case when firms have different discount factors our analysis reveals that for collusion to be self enforcing it is unnecessary that all firms have sufficiently high discount factors but rather only that firms on average have a sufficiently long run view the optimal collusive outcome entails a strict ordering of output quotas in which firms with relatively low discount factors receive a disproportionate share of market demand as found in the case of a common discount factor a fall in a firm s discount factor reduces the likelihood of successful collusion this effect reduces firm profits on the other hand in the event that firms can collude a lowering of a firm s discount factor increases its output quota so that its profits rise

resistance redistribution and investor friendliness abstract poor communities sometimes resist private investment and destroy economic surplus even if the government has the willingness and ability to redistribute we interpret such acts of resistance as demands for redistribution destruction contains credible information about how the affected group values surplus and such information is used by the government in implementing the optimal redistribution policy the extent of destruction is increasing in the extent of political marginalization of the affected group resistance not only destroys economic surplus it also mutes the investor s incentives to create surplus the government uses a tax subsidy on the investor to maximize weighted social surplus and we show that the possibility of destruction may force the government to be too soft in its negotiations with the investor we discuss several policy instruments that have the potential to improve welfare these include compensation floor for the affected group legal or financial protection for the investor and licensing fees for the investor

durable goods monopoly with entry of new consumers this paper analyzes a model of a dynamic monopolist who produces at constant unit cost each period a new cohort of consumers enters the market each entering cohort is identical consumers within a cohort have different tastes for the good my main results are if players are sufficiently patient any positive average profit less than the maximum feasible level can be attained in a subgame perfect equilibrium in the subset of subgame perfect equilibria in which players use stationary strategies the seller cannot make sales at prices significantly greater than the lowest willingness to pay when period length goes to zero and the seller attains the maximum profit when commitment is feasible by charging the same static monopoly price in every period this paper analyzes a model of a dynamic monopolist who operates in a market in which there is a regular flow of new consumers the seller produces a durable good at constant unit cost each period a new cohort of consumers enters the market consumers wish to buy exactly one unit of the item but are willing to wait resales are not allowed each entering cohort is identical

bargaining with history dependent preferences abstract two impatient players bargain over a pie of size one according to the infinite alternating offers procedure players payoffs depend not only on the outcome but also on the process of the bargaining specifically they prefer impasse to any agreement that gives them lower discounted utility than would have been derived from accepting earlier offers we characterize the essentially unique subgame perfect equilibrium path which consists of gradual concessions the more patient players are the longer it takes them to reach an agreement when players become infinitely patient the efficiency loss is substantial yet the equilibrium division converges to the nash solution

imperfect durability and the coase conjecture this article considers a market served by a monopolist who sells a durable good that depreciates stochastically over time we show that there exist three types of stationary equilibria a coase conjecture equilibrium a monopoly equilibrium and a reputational equilibrium when the depreciation rate is low the coase conjecture equilibrium is the unique equilibrium for intermediate values of the depreciation rate all three equilibrium types coexist when the depreciation rate is high the monopoly equilibrium is the unique equilibrium consequently when selling a good of sufficiently low durability the monopolist does not lose any of her monopoly power furthermore the steady state output in the reputational equilibrium falls below the monopoly quantity hence in durable goods markets welfare losses due to monopoly power may be larger than in markets for perishables

sequential bargaining with incomplete information this paper describes a simple two person two period bargaining game and solves it using the concept of perfect bayesian equilibrium in which the actions of each player convey information which is used by his opponent the paper examines the effects of changes in bargaining costs the size of the contract zone and the length of the bargaining process on such aspects of the solution as the probability of impasse and the likelihood of concessions the combination of information transfer and the lack of pre commitment embodied in perfectness yields many surprising results common perceptions about the effects of parameter changes on bargaining processes are suspect and should be checked in the particular game being discussed

a multistage model of bargaining this paper presents a simple multistage model of bargaining wherein a seller makes an offer that can be either accepted or refused if rejected the process continues how the seller s ability to make commitments affects bargaining outcomes is analysed by comparing the commitment equilibria to those arising when commitment is impossible the effects of increasing uncertainty about preferences and varying the length of the bargaining horizon are analysed the ways in which the bargaining environment can be changed to improve outcomes are discussed

the advantageous nature of risk aversion in a three player bargaining game where acceptance of a proposal requires a simple majority abstract in a three player bargaining game in which acceptance of a proposed allocation requires only the approval of a simple majority it is shown that the most least risk averse player receives the highest lowest expected share when the preferences of the players are not too diverse

on delay in bargaining with one sided uncertainty recently attention has been given to a model of two person bargaining in which the parties alternate making offers and there is uncertainty about the valuation of one party the purpose of the analysis has been to identify delay to agreement with a screening process where agents with relatively lower valuations distinguish themselves by waiting longer to settle we point out a fundamental difficulty with this program by demonstrating that the assumptions used in the literature allow for delay only in so far as the time between offers is significant

durable goods coasian dynamics and uncertainty theory and experiments this paper presents a model in which a durable goods monopolist sells a product to two buyers each buyer is privately informed about his own valuation thus all players are imperfectly informed about market demand we study the monopolist s pricing behavior as players uncertainty regarding demand vanishes in the limit in the limit players are perfectly informed about the downward sloping demand we show that in all games belonging to a fixed and open neighborhood of the limit game there exists a generically unique equilibrium outcome that exhibits coasian dynamics and in which play lasts for at most two periods a laboratory experiment shows that consistent with our theory outcomes in the certain and uncertain demand treatments are the same median opening prices in both treatments are roughly at the level predicted and considerably below the monopoly price consistent with coasian dynamics these prices are lower for higher discount factors demand withholding however leads to more trading period

reputational bargaining and deadlines i highlight how reputational concerns provide a natural explanation for deadline effects the high frequency of deals prior to a deadline in bargaining rational agents imitate the demands of obstinate behavioral types and engage in brinkmanship in the face of uncertainty about the deadline s arrival i also identify how surplus is divided when the prior probability of behavioral types is vanishingly small if behavioral types are committed to fixed demands outcomes converge to the nash bargaining solution regardless of agents respective impatience if behavioral types can adopt more complex demand strategies outcomes converge to the solution of an alternating offers game without behavioral types for the deadline environment

damaged durable goods i analyze a durable goods monopolist s incentives to introduce a damaged good a stripped down version of the original good in an infinite horizon framework the damaged good helps the monopolist to mitigate the coasian time inconsistency problem however it may lead to a welfare reduction low valuation buyers are induced to purchase the low quality damaged good early rather than buy the high quality original good later and when the players are patient the surplus loss from quality reduction outweighs the gain from earlier consumptions this welfare result contrasts with the previous literature based on a static framework

strategic delay in bargaining this paper analyses a bargaining model with incomplete information in which the time between offers is an endogenous strategic variable we find equilibria involving a delay to agreement that is due to the use of strategic time delay by bargainers to signal their relative strength under some specifications of the parameters delay is present in the unique sequential equilibrium whose beliefs satisfy one intuitive restriction this delay does not vanish as the minimal time between offers becomes small