the cournot and bertrand outcomes as equilibria in a strategic metagame is fully variable in the short run so that if one firm is undercut by another the lower priced firm can expand output to serve all the demand it is this basic insight that we explore we present a general model in which the flexibility of production is endogenous and which embraces both the cournot and bertrand outcomes as possibilities this enables us to see which outcomes will emerge from firms strategic decisions rather than presupposing either in this paper the flexibility of production is determined by the factors of production that the firm precommits output is produced by two factors of production capital and labour there are two stages to the model in the first strategic stage the firm will precommit one both or neither of its factors of production in the second market stage a competitive equilibrium occurs the price clears the market given firms supply functions thus the firm s decision in the strategic stage determines the supply function that the firm has in the market stage there are three possible types of precommitment for the firm a total precommitment the firm precommits both inputs and hence capacity b strategic investment the firm precommits one factor of production capital leaving the other labour freely variable in the market stage c no precommitment the firm is free to vary the level of both factors of production in the market stage in the case of total precommitment the firm will have a

competition and unilateral dumping this paper presents an analysis of the effects of market structure on the propensity of firms to dump goods the analysis of brander and krugman is extended to show that in the presence of transportation costs bilateral intra industry trade is not possible without dumping contrary to the conventional wisdom this paper finds that firms in markets with a large number of domestic competitors are more prone to dump unilaterally than firms in less competitive markets this dumping is not predatory but may result in export prices being below average cost

the efficiency of indirect taxes under imperfect competition abstract this paper considers the relative efficiency of ad valorem and unit taxes in imperfectly competitive markets we provide a simple proof that ad valorem taxes are welfare superior to unit taxes in the short run when production costs are identical across firms the proof covers differentiated products and a wide range of market conduct cost asymmetries strengthen the case for ad valorem taxation under cournot competition but unit taxation may be welfare superior under bertrand competition with product differentiation ad valorem taxation is superior with free entry under cournot competition but not necessarily under price competition when consumers value variety

new measures of the output gap based on the forward looking new keynesian phillips curve abstract forward looking versions of the new keynesian phillips curve imply that the output gap the deviation of the actual output from its natural level due to nominal rigidities drives the dynamics of inflation relative to expected inflation we exploit this to set up a bivariate unobserved component model for extracting new estimates of the output gap in the us the gap estimates are large and persistent even after allowing for correlated trend and cycle shock we then augment our model to use the information in the unemployment rate the estimates confirm the presence of a large and persistent cyclical component

market structure and organizational form this paper studies the determinants of a firm s organizational form in the context of an imperfectly competitive industry there are two kinds of organizational forms the multi divisional form m form and the unitary form u form an m form firm suffers from ignorance of demand externalities among different products and double marginalization is eliminated in contrast in a u form firm demand externalities are taken into consideration and double marginalization exists a firm s optimal choice of organizational form depends on the market structure

return migration wage differentials and the optimal migration duration in simple static models migration increases with the wage differential between host and home country in a dynamic framework and if migrations are temporary the size of the migrant population in the host country depends also on the migration duration this paper analyses optimal migration durations in a model which rationalises the decision of the migrant to return to his home country despite persistently higher wages in the host country the analysis shows that if migrations are temporary the optimal migration duration may decrease if the wage differential grows larger using micro data for germany the second part of the paper provides empirical evidence which is compatible with this hypothesis

stackelberg versus cournot equilibrium we reconsider stackelberg s classical critique of the cournot duopoly in the framework of endogenous timing for two player games for quantity duopoly we provide different sets of minimal conditions directly on the demand and cost functions yielding respectively the simultaneous and the two sequential modes of play while our findings essentially confirm the predominance of the former they also indicate that the latter is natural under some robust but restrictive conditions no extraneous assumptions such as concavity existence or uniqueness of equilibria are needed and the analysis makes crucial use of the basic results from the theory of supermodular games classification numbers b21 c72 d43 l13 c 1999 academic press

housing sales in urban beijing in the housing market new properties sometimes experience delays before they are sold such delays reflect the preferences of buyers in respect of the homes characteristics therefore it is important for managerial purposes to identify the causes of housing sales delays after analysing the delays in sales of housing in beijing city china the principal finding of this study is that delays are largely explained by the dwellings characteristics and location policy implications of the research findings particularly those related to means of reducing the delays are discussed

harvest uncertainty and the tragedy of the commons abstract this paper demonstrates that a fixed number of risk averse firms faced with harvest uncertainty owing to resource stock uncertainty will typically reduce their exploitation of a commons in addition the total exploitation of the industry will decrease when entry is permitted and uncertainty is compared with certainty this result holds for perfectly competitive output markets and also characterizes imperfectly competitive output markets with linear market demand and risk neutral firms in the latter case the socially optimum number of firms is determined based upon the degree of uncertainty the price elasticity of market demand and the elasticity of input productivity

lechatelier samuelson principle in games and pass through of shocks abstract the lechatelier samuelson principle states that as a reaction to a shock an agent s short run adjustment of an affected action is smaller than its long run adjustment when the agent can also adjust other related actions we extend the principle to strategic environments where the long run adjustment also accounts for other players adjusting their strategies we show that the principle holds for supermodular games strategic complements satisfying monotone comparative statics and provide sufficient conditions for the principle to hold in games of strategic substitutes heterogeneity we discuss the principle s implications for cost pass through of multiproduct firms

mixed oligopoly with consistent conjectures abstract in this paper we consider a model of mixed oligopoly with conjectural variations equilibrium cve the agents conjectures concern the price variations depending upon their production output s increase or decrease we establish existence and uniqueness results for the conjectural variations equilibrium called an exterior equilibrium for any set of feasible conjectures to introduce the notion of an interior equilibrium we develop a consistency criterion for the conjectures referred to as influence coefficients and prove the existence theorem for the interior equilibrium understood as a cve with consistent conjectures to prepare the base for the extension of our results to the case of non differentiable demand functions we also investigate the behavior of the consistent conjectures in dependence upon a parameter representing the demand function s derivative with respect to the market price

endogenous fluctuations under evolutionary pressure in cournot competition abstract an evolutionary game theoretic model of cournot competition is investigated individuals choose from a finite set of different behavioral rules each rule specifies the quantity to be produced in the current period as a function of past quantities using more sophisticated rules may require extra information costs based upon realized payoffs the fractions of the population choosing a certain behavioral rule are updated according to the replicator equation with noise the long run behavior of the evolutionary system consisting of the population dynamics coupled with the quantity dynamics of the cournot game may be complicated and endogenous fluctuations may arise we consider a typical example where firms can choose between two rules the nash rule and the best reply rule we show that a homoclinic tangency between the stable and unstable manifold of the equilibrium occurs as evolutionary pressure increases implying bifurcation routes to complicated dynamics and strange attractors

the relationships between permanent and transitory movements in u s output and the unemployment rate this paper estimates the permanent and transitory movements in u s output and the unemployment rate and the relationships between them the results suggest that permanent movements in u s output and the unemployment rate are important for explaining overall fluctuations further the correlation between changes in these series arises in large part due to the relationship between their permanent components

entry deterrence and overexploitation of the fishery abstract two stackelberg game models open access and restricted entry of a poaching fishery situation are proposed only the long run noncooperative solution of managing resource stocks is assumed feasible the optimal stock under open access for poachers is shown to be lower than under restricted entry and the latter to be lower than under exclusive ownership deterrence is completely successful under open access but is partially successful only under restricted entry the game models considered are shown to be equivalent to a constrained ownership fishery control problem or its surrogate

the value of public information in a cournot duopoly we derive alternative sufficient conditions for the value of public information to be either positive or negative in a cournot duopoly where firms technology exhibits constant returns to scale

generalized quantity competition for multiple products and loss of efficiency we study a generalized model of quantity cournot oligopolistic competition the impact of competition on social surplus and firms profit is analyzed firms produce multiple differentiated products and face production constraints we compare the social surplus produced by competing firms and by colluding firms with the maximum achievable total surplus in the market similarly we quantify the loss of profit that firms incur by competing instead of colluding our goal is to understand how the presence of competition affects the firms and society as a whole but also to determine what are the key drivers of the inefficiencies that arise due to competition

insisting on a non negative price oligopoly uncertainty welfare and multiple equilibria i study cournot competition under incomplete but symmetric information about the intercept of the linear demand function while assuming that market price must be non negative for all demand realizations although the non negativity assumption is very natural it has only rarely been made in the earlier literature yet it has important economic consequences 1 expected demand effectively becomes convex which means that multiple symmetric pure strategy equilibria can exist and 2 expected total surplus can be larger when the firms do not know demand than when they do the arguments of the paper are relevant also for price competition and for uncertainty about e g cost or the number of firms and these issues are discussed

a continuous approach to oligopolistic market equilibrium we provide an algorithm for computing cournot nash equilibria in a market that involves finitely many producers the algorithm amounts to following a certain dynamical system all the way to its steady state which happens to be a noncooperative equilibrium the dynamics arise quite naturally as follows let each producer continuously adjust the planned production if desired as a response to the current aggregate supply in doing so the producer is completely guided by myopic profit considerations we show under broad hypothesis that this adjustment process is globally asymptotically convergent to a nash equilibrium

on the existence of a unique price equilibrium for models of product differentiation abstract we prove the existence of a unique price equilibrium for models of product differentiation these models are characterized by demand functions that depend on differences in prices and have log increasing differences in own price and other prices which implies that best response correspondences are increasing many discrete choice models satisfy these conditions including logit models and nested logit models and the existence theorem can be applied directly with the logarithmic transformation the existence theorem can be extended to models with homogeneous demand functions which characterizes representative consumer models

a general equilibrium model of guest worker migration the source country perspective abstract this paper examines the problem of guest worker migration from an economy populated by identical utility maximizing individuals with finite working lives the decision to migrate the rate of saving while abroad as well as the length of a migrant s stay in the foreign country are all viewed as part of a solution to an intertemporal optimization problem in addition to studying the microeconomic aspects of temporary migration the paper analyses the determinants of the equilibrium flow of migrants the corresponding domestic wage and the level of welfare enjoyed by a typical worker effects of an emigration tax are also investigated

cross licensing and competition we study bilateral cross licensing agreements between n 2 firms that engage in competition after the licensing phase it is shown that the most collusive cross licensing royalty i e the one that allows the industry to achieve the monopoly profit is sustainable as the outcome of bilaterally efficient agreements in a symmetric setting if the terms of the cross licensing agreements are not observable to third parties the monopoly royalty is the unique symmetric bilaterally efficient royalty however when the terms of the agreements are public the most competitive royalty i e zero can also be bilaterally efficient policy implications regarding the antitrust treatment of cross licensing agreements are derived from these results

job amenity and the incidence of double work abstract the hypothesis that workers in jobs associated with an amenity are more prone to moonlighting is derived and tested if earnings fall for such jobs it is rational to have two jobs while for jobs with no amenity a fall in earnings causes a rational worker to leave the sector altogether an amenity can be expected for instance for workers in primary sectors and evidence that farmers at an increasing rate have double occupations are provided the comparative statics on the models shows among other things that wage increases outside the amenity sector may have different effects than wage decreases inside the sector the models are tested on data on farmers and to some extent the regressions support the theoretical models

research joint ventures and the cost paradox abstract we consider the impact of the cost paradox on the likelihood of cooperative firms to use a cost reducing research joint venture rjv to increase research levels when spillovers are large the cost paradox cp occurs whenever industry wide cost reductions would lead to such intense competition that profits would fall we give a restriction on cost reducing research which guarantees that an rjv will prefer marginal reductions in research to the noncooperative levels whenever cp would arise and spillovers are less than perfect in such cases firms use an rjv to lessen competition rather than to lower costs

supermodularity and complementarity in economics an elementary survey the literature on supermodular optimization and games is surveyed from the perspective of potential users in economics this methodology provides a new approach for comparative statics based only on critical assumptions and allows a general analysis of games with strategic complementarities the results are presented in a simplified yet rigourous manner without reference to lattice theory for the special case of one dimensional parameter and actions sets with the emphasis being on wide accessibility detailed applications are presented for well known models of consumer behavior monopoly pass through bertrand and cournot competition strategic r d search and matching wherever appropriate useful tricks for applications and comparative comments are inserted

cournot and the oligopoly problem cournot s recherches sw les principes mathpmatiques de la thiorie des richesses 1838 contribution to economic theory ranges from the formulation of the concept of demand function to the analysis of price determination in different market structures from monopoly to perfect competition he is credited for being the pioneer in the use of mathematics in economic analysis nevertheless cournot is most known for his theory of oligopoly cournot claimed that prices would also be determined under oligopolistic rivalry he envisioned firms the celebrated mineral water producers competing independently deciding about their production levels and bringing to the market the output where a price emerges from the interaction of supply and demand an equilibrium is reached when the output of any firm is a best response to the other firms outputs that is when each firm chooses an output level that maximizes profits given the outputs chosen by the rivals the equilibrium involves a price above the marginal cost of production cournot thought furthermore that this equilibrium would be stable in the sense that a departure from it would be self correcting through a series of reactions of the firms the disequilibrium dynamics would be governed by the best response functions of the firms that is by the functions that give the optimal output of a firm in terms of the outputs of the rivals cournot also evoked the question of why is it that firms do not come to an understanding and agree on sharing the market at the monopoly price the answer is that from the point of view of a firm if the rivals follow the agreement it is in the interest of the firm to depart from it since this way it can increase its profits in other words there is an incentive to cheat cournot thought that monopoly or cartel type agreements could only be maintained by means of a formal engagement p 83 our author also considered competition of

an inflation predicting measure of the output gap in the euro area using a small bayesian dynamic factor model of the euro area we estimate the deviations of output from its trend that are consistent with the behavior of inflation we label these deviations the output gap in order to pin down the features of the model we evaluate the accuracy of real time inflation forecasts from different model specifications the version that forecasts inflation best implies that after the 2011 sovereign debt crisis the output gap in the euro area has been much larger than the official estimates versions featuring a secular stagnation like slowdown in trend growth and hence a small output gap after 2011 do not adequately capture the inflation developments

estimating the impact of immigrants on the host country social security system when return migration is an endogenous choice in this paper i examine the impact of immigrants on the social security system in germany when return migration is an endogenous choice for this purpose i develop a dynamic stochastic model of joint return migration and saving decisions that accounts for uncertainty in future employment and income and estimate this model using a longitudinal dataset on immigrants from five different source countries i find that immigrants make positive net contributions to both the pension and unemployment insurance systems in germany regardless of their country of origin and age at entry moreover the magnitudes of the net contributions are remarkable for certain groups return migration plays a critical role in generating these positive net contributions in a counterfactual i examine how much exogenous modeling of the return decision which has been the practice of the literature so far changes immigrants net contributions such a restriction causes a serious misestimation of net contributions i also examine the impact of a counterfactual policy experiment in which financial bonuses are provided conditional on return to certain unemployed immigrants such a policy turns out to be ineffective in a number of dimensions

migrants in a guest worker system a utility maximizing approach this paper examines the behavior of utility maximizing migrants in a system of guest worker migration their pattern of leisure and commodity consumption at home and abroad is analysed and related

monotone comparative statics in games with non monotonic best replies contests and cournot oligopoly abstract in this paper we employ lattice theoretic techniques to derive a number of comparative statics in a logit contest a class of games for which best replies are generically non monotonic using the same approach we obtain several comparative statics in a cournot oligopoly model without imposing the usual assumptions that ensure the game is one of strategic substitutes our analysis illustrates how lattice theoretic techniques can deliver powerful insights in games with non monotonic best replies

facilitating practices the effects of advance notice and best price policies even if firms in a market choose discount prices noncooperatively the use of most favored customer and meet or release contracts enables those firms to adopt quantity choice strategies consequently there can be a range of list prices that are impervious to unilateral nonselective discounts but this range does not include prices above the level determined in a cournot equilibrium the practice of advance public notification of list price increases can facilitate the establishment of such supracompetitive list prices as was argued in the recent ftc ethyl case the possibility of offering discounts selectively results in a much more competitive situation

the existence and capitalization of neighborhood externalities a reassessment an anomalous result in the empirical literature on residential property values has been the inability to measure the capitalization of negative neighborhood externalities using disaggregate data this result has persisted with few exceptions across data sets and across definitions of externality and neighborhood this paper argues that the literature may have misspecified the theoretical relationship between residential property values and neighborhood externalities and that this could explain the lack of observed capitalization a new specification is proposed and given a preliminary test the conventional literature on neighborhood externalities can be summarized by the hedonic price equation

measuring world business cycles using kalman filtering and dynamic factor analysis the authors decompose aggregate output consumption and investment for the g7 countries into factors that are 1 common across all countries and aggregates 2 common across aggregates within a country and 3 specific to each individual aggregate in quarterly data for the period 1970 through 1993 fluctuations in all aggregates contain world and country specific common components that are both statistically significant and quantitatively important the authors find that the world and country specific common components play different roles in different business cycle episodes for each of the seven countries and that either may be dominant during a particular episode copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

return migration and occupational choice evidence from albania this paper explores the impact of return migration on the albanian economy by analyzing the occupational choice of return migrants while explicitly differentiating between self employment as either own account work or entrepreneurship we find that the own account workers have characteristics closer to non participants in the labor market i e lower education levels while entrepreneurship is positively related to schooling foreign language proficiency and savings accumulated abroad furthermore compared to having not migrated return migrants are significantly more likely to be entrepreneurs showing the positive impact of migration on job creating activities in albania

strategic complements and substitutes and potential games abstract we show that games of strategic complements or substitutes with aggregation are pseudo potential games the upshot is that they possess nash equilibria in pure strategies ne even if the strategy sets are not convex and that various dynamic processes converge to ne in particular ne exist in cournot oligopoly with indivisibilities in production our notion of aggregation is quite general and enables us to take a unified view of several disparate models

welfare changes in the cournot setting with an empirical application to the telecommunications industry i characterize the efficiency of the cournot equilibrium and provide bounds for the loss in consumer surplus producer surplus and welfare when the number of firms in the market changes i only assume that demand is decreasing in price and costs increasing in the quantity produced as long as equilibrium exists i show how price demand and average cost before and after the number of firms in the market changes can be used to compute these bounds i apply these bounds to the portuguese wireline market and conclude that welfare increased significantly when the monopolist was split in 2007

core inflation and trend inflation abstract this paper examines empirically whether the measurement of trend inflation can be improved by using disaggregated data on sectoral inflation to construct indexes akin to core inflation but with a time varying distributed lags of weights where the sectoral weight depends on the timevarying volatility and persistence of the sectoral inflation series and on the comovement among sectors the modeling framework is a dynamic factor model with time varying coefficients and stochastic volatility as in del negro and otrok 2008 and is estimated using u s data on seventeen components of the personal consumption expenditure inflation index

a curvature condition ensuring uniqueness of cournot equilibrium with applications to comparative statics abstract we study a curvature condition on demands that with a cost assumption ensures the uniqueness of cournot equilibrium for two firms the condition is that industry marginal revenue rises no faster than price falls the condition is weaker with more firms and holds for any smooth demand curve provided there are enough firms

iterative computation of cournot equilibrium abstract in a homogeneous coumot model with quasi concave profit functions the problem of determining an equilibrium can be posed as one of solving an equation in one real variable total sales if the response functions are monotone or firms are identical then a certain iterative process based on averaging converges to an equilibrium such iterations have the interpretation that every firm responds to the average of sales by other firms in brevious periods

on the coalition proofness of the pareto frontier of the set of nash equilibria abstract this article shows that the pareto efficient frontier of the nash equilibrium set of games with strategic substitutes is coalition proof under the following conditions 1 the game has three players or alternatively a player s payoff depends on her own strategy and on the sum but not on the composition of other players strategies 2 an increase in a player s strategy either raises all other players payoffs monotonically or reduces them monotonically and 3 each player s payoff is strictly concave in her own strategy under these conditions the pareto dominance refinement is equivalent to the coalition proof nash equilibrium refinement journal of economic literature classification number c72

idiosyncratic shocks in an asymmetric cournot oligopoly abstract several authors have studied the impact of a marginal cost variation in the cournot model on consumers surplus firms profits and social welfare we unify and extend the results when all marginal costs change simultaneously hence we bring together two strands of literature respectively on mean preserving and subgroup common shocks the effect of any shock is decomposed into two parts an average impact ai and a heterogeneity effect he the former improves welfare if the inverse demand function is concave enough and the market is concentrated enough the latter when the diffusion of the shock is negatively correlated with the market share distribution finally we apply our decomposition to various special cases

landscape preferences and patterns of residential development abstract i analyze a model of residential location choice where people derive utility from their proximity to open space when people have such landscape preferences then 1 equilibrium residential development is mixed with undeveloped land 2 equilibrium land price gradients depend sensitively on how land markets are organized are not generally monotonic and may or may not reflect the value of open space and 3 dynamic equilibria generally have the property that more remote areas are developed before more central areas finally when compared to optimal development equilibrium development houses too many residents too close together and remote areas are developed too soon these results imply that equilibrium development may not be sprawling enough and that policies to encourage infill development are not welfare improving

price vs quantity in oligopoly games abstract price setting and quantity setting oligopoly games lead to extremely different outcomes in the market one natural way to address this problem is to formulate a model in which some firms use price while the remaining firms use quantity as their decision variable we introduce a mixed oligopoly game of this type and determine its equilibria in addition we consider an extension of this mixed oligopoly game through which the choice of the decision variables can be endogenized we prove the emergence of the cournot game

the economics of temporary migrations many migrations are temporary a fact that has often been ignored in the economic literature on migration such omission may be serious in that expected migration temporariness can impart a distinct dynamic element to immigrants economic behavior generating possible consequences for nonmigrants in both home and host countries in this paper we provide a thorough examination of the various aspects of temporary migrations that matter for the analysis of economic phenomena we demonstrate the extent of temporary migrations in population movements we show how temporariness can affect the various economic choices and how better data have improved both the measurement of nonpermanent migrations and the analyses of various aspects of migrant behavior we propose a general theoretical framework for modeling temporary migration decisions based on which we outline the various motives for temporariness while simultaneously reviewing related literature and available data sources we discuss the possible consequences of migration temporariness for nonmigrants in both home and host countries jel f22 f24 j11 j61 k37 o15

estimating the u s output gap with state level data this paper develops a method to estimate the u s output gap by exploiting the cross sectional variation of state level output and unemployment rate data the model assumes that there are common output and unemployment rate trend and cycle components and that each state s output and unemployment rate are subject to idiosyncratic trend and cycle perturbations i estimate the model with bayesian methods using quarterly data from 2005 q1 to 2018 q2 for the 50 states and the district of columbia results show that the u s output gap reached about negative 4 6 around the years of the great recession and was about 0 9 in 2018 q2

an output gap measure for the euro area exploiting country level and cross sectional data heterogeneity abstract this paper proposes a methodology to estimate the euro area output gap by taking advantage of two types of data heterogeneity on the one hand the method uses information on real gdp inflation and the unemployment rate for each member state on the other hand it jointly considers this information for all the euro area countries to extract an area wide output gap measure the setup is an unobserved components model that theorizes common output trend and cyclical components across euro area economies in addition to country specific counterparts i estimate the model with bayesian methods using data for the 19 countries of the euro area from 2000 q1 through 2018 q3 and perform model comparisons across different specifications of the output trend the estimation of the model preferred by the data indicates that because of negative shocks to trend output during the global financial crisis output was only slightly below potential in that period but an output gap of about negative 3 emerged during the european debt crisis at the end of the sample period output is estimated to be 3 5 above potential output which is growing at an average annual pace of only 0 5 in recent years

on the existence of pure and mixed strategy nash equilibria in discontinuous games a game is better reply secure if for every nonequilibrium strategy x and every payoff vector limit u resulting from strategies approaching x some player i has a strategy yielding a payoff strictly above u i even if the others deviate slightly from x if strategy spaces are compact and convex payoffs are quasiconcave in the owner s strategy and the game is better reply secure then a pure strategy nash equilibrium exists better reply security holds in many economic games it also permits new results on the existence of symmetric and mixed strategy nash equilibria

the great recession and the inflation puzzle notwithstanding high unemployment following the great recession inflation in the united states has been remarkably stable we find that a traditional phillips curve describes the behavior of inflation reasonably well since the 1960s using a non linear kalman filter that allows for time varying parameters we find that three factors have contributed to the observed stability of inflation inflation expectations have become better anchored and to a lower level the slope of the phillips curve has flattened and the importance of import price inflation has increased

return migration uncertainty and precautionary savings this paper presents a life cycle model where migrants determine re migration and consumption simultaneously in a stochastic environment whether precautionary savings of migrants are above or below those of natives is ambiguous in general the sign depends on the risk in host and home country labor markets and on the correlation of labor market shocks furthermore the effect of an uncertain environment on migration and re migration plans cannot be unambiguously signed for the general case it depends on the size of the wage differential as well as the relative risk the migrant exhibits in the two labor markets

quantity competition with access fees abstract we analyze an oligopoly model where firms choose both quantities and access fees per unit prices are determined endogenously to equate quantity demanded with quantity supplied at each firm in a nash equilibrium of the game played by firms the per unit prices equal marginal cost and access fees may or may not extract all consumer surplus as the number of firms increases access fees fall below net consumer surplus and toward zero existence is guaranteed if marshallian consumer surplus is not too concave with open entry quantity competition with access fees may be less efficient than without access fees

measuring business cycle comovements in europe evidence from a dynamic factor model with time varying parameters abstract estimation results from a dynamic factor model confirm an increase in output synchronization across european countries during the run up to the inception of emu but emu by itself has not continued to foster the emergence of a common business cycle

why has u s inflation become harder to forecast we examine whether the u s rate of price inflation has become harder to forecast and to the extent that it has what changes in the inflation process have made it so the main finding is that the univariate inflation process is well described by an unobserved component trend cycle model with stochastic volatility or equivalently an integrated moving average process with time varying parameters this model explains a variety of recent univariate inflation forecasting puzzles and begins to explain some multivariate inflation forecasting puzzles as well

efficiency and surplus bounds in cournot competition we derive bounds on the ratios of deadweight loss and consumer surplus to producer surplus under cournot competition to do so we introduce a parameterization of the degree of curvature of market demand using the parallel concepts of concavity and convexity the more concave is demand the larger the share of producer surplus in overall surplus the smaller is consumer surplus relative to producer surplus and the lower the ratio of deadweight loss to producer surplus deadweight loss over total potential surplus is at rst increasing with demand concavity then eventually

mixed oligopoly privatization subsidization and the order of firms moves several types of objectives abstract we show the robustness of results in earlier works for a subsidy in mixed oligopoly these results do not depend upon the fact that each private firm maximizes its own profits

immigrant decisions concerning duration of stay and migratory frequency abstract the temporary and repetitive character of contemporary labor migration is explained by assuming that immigrants have a preference for location a life cycle model of immigrant behavior is developed to determine net lifetime income total time allocated to home country and foreign country residence and the number of migratory trips because of income effects home wages and foreign wages are not symmetric in their effect on the location of work effort it is also shown that changes in travelling costs have predictable consequences for the number of border crossings but not for the total time spent in the foreign labor market

the worst case efficiency of cost sharing methods in resource allocation games resource allocation problems play a key role in many applications including traffic networks telecommunication networks and economics in most applications the allocation of resources is determined by a finite number of independent players each optimizing an individual objective function an important question in all these applications is the degree of suboptimality caused by selfish resource allocation we consider the worst case efficiency of cost sharing methods in resource allocation games in terms of the ratio of the minimum guaranteed surplus of a nash equilibrium and the maximal surplus our main technical result is an upper bound on the efficiency loss that depends on the class of allowable cost functions and the class of allowable cost sharing methods we demonstrate the power of this bound by evaluating the worst case efficiency loss for three well known cost sharing methods incremental cost sharing marginal cost pricing and average cost sharing

aggregate comparative statics abstract in aggregative games each player s payoff depends on her own actions and an aggregate of the actions of all the players many common games in industrial organization political economy public economics and macroeconomics can be cast as aggregative games this paper provides a general and tractable framework for comparative static results in aggregative games we focus on two classes of games 1 aggregative games with strategic substitutes and 2 nice aggregative games where payoff functions are continuous and concave in own strategies we provide simple sufficient conditions under which positive shocks to individual players increase their own actions and have monotone effects on the aggregate the results are illustrated with applications to public good provision contests cournot competition and technology choices in oligopoly

computing cournot nash equilibria this paper examines convergence criteria of an algorithm for the computation of cournot nash economic equilibria the method is based on formulating the equilibrium problem as that of finding a solution to a nonlinear complementarity problem solved by sequential linearization and lemke s algorithm conditions for local and global convergence are developed and the technique is applied to homogeneous segmented and differentiated product markets

a study of the impacts of zoning on housing values over time abstract using a virtually unique data base for vancouver canada this study examines the ways in which various zoning classifications and land uses affect the sale prices of single family residences over a 24 year period the overwhelming conclusion is that while there are impacts they are consistent in neither direction nor magnitude the results suggest that the negative externalities that are generally assumed to exist may in fact not exist as a result the use of zoning to control the effects of such presumed externalities may not be justified

international business cycles world region and country specific factors the paper investigates the common dynamic properties of business cycle fluctuations across countries regions and the world we employ a bayesian dynamic latent factor model to estimate common components in macroeconomic aggregates output consumption and investment in a 60 country sample covering seven regions of the world the results indicate that a common world factor is an important source of volatility for aggregates in most countries providing evidence for a world business cycle we find that region specific factors play only a minor role in explaining fluctuations in economic activity we also document similarities and differences across regions countries and aggregates jel f41 e32 c11 c32

overlapping neighborhoods and housing externalities abstract this paper explores the roles of distance and feedback in neighborhood effects conventional models employ positive feedback and feature neighborhoods that stand apart like islands when neighborhoods overlap a change in land use in one location can induce changes in land use across the city furthermore equilibrium land use is unlikely to be symmetric with negative feedback indirect neighborhood effects can lead to comparative static changes in density and price that cycle these cycles can reduce the ability of coarse zoning to achieve an optimum and can make measurement of neighborhood effects a difficult undertaking

perfectly competitive markets as the limits of cournot markets a perfectly competitive partial equilibrium market for a single homogeneous good with a bounded continuum of infinitesimal firms is considered cost functions are essentially unrestricted and are allowed to vary smoothly across firms a sequence net of cournot markets each with a finite number of firms which converge smoothly to the perfectly competitive limit in terms of both the inverse demand functions and the distributioon of firm technologies is introduced and it is shown that all markets sufficiently far along the sequence have a cournot equilibrium and all the cournot equilibria converge to the perfectly competitive equilibrium of the limit market

on noncooperative oligopoly equilibrium in the multiple leader follower game abstract in this paper we provide new proofs of existence and uniqueness of a stackelberg market equilibrium for a multiple leader follower noncooperative oligopoly model in which heterogeneous firms compete on quantities to this end we consider a two stage game of complete and perfect information in which many leaders interact strategically with many followers the stackelberg market equilibrium constitutes a pure strategy subgame perfect nash equilibrium of this game existence and uniqueness are more difficult to handle in this framework insofar as the presence of several leaders and followers displays a richer set of strategic interactions then to prove existence we notably provide a new procedure to determine the conditions under which the optimal behavior of the followers may be written as functions of the sole strategy profile of the leaders some examples outline our procedure and discuss our assumptions

why do migrants return to poor countries evidence from philippine migrants responses to exchange rate shocks abstract this paper distinguishes between target earnings and life cycle motivations for return migration by examining how philippine migrants return decisions respond to major unexpected exchange rate changes in their overseas locations due to the asian financial crisis overall the evidence favors the life cycle explanation more favorable exchange rate shocks lead to fewer migrant returns a10 improvement in the exchange rate reduces the 12 month return rate by 1 4 percentage points however some migrants appear motivated by target earnings considerations in households with intermediate foreign earnings favorable exchange rate shocks have the least effect on return migration but lead to increases in household investment

divisionalization franchising and divestiture incentives in oligopoly a two stage game is used to model firms strategic incentives to divide production among autonomous competing units through divisionalization franchising or divestiture firms simultaneously choose their number of competing units which then engage in cournot competition while it is costly to form autonomous units each firm does so in equilibrium thus reducing firm profits and increasing social welfare relative to the case where firms cannot form competing units with linear demand and costs duopolists choose the socially optimal number of competing units oligopolies with larger numbers of firms choose too many the case of nonlinear demand is also examined copyright 1996 by american economic association

demand side secular stagnation abstract the experience of first japan and now europe and the usa suggests that hansen s concept of secular stagnation is highly relevant recovery has been anemic and follows a generation of financially unsustainable and often lackluster growth investment demand has declined while the supply of saving has increased leaving the economy vulnerable to liquidity traps although some us indicators have improved forward real rates have declined sharply european prospects remain muddled and the zero bound will likely constrain again during the next recession infrastructure and private investment are the best ways to both minimize the risk of secular stagnation and raise demand

on the use of heuristics to approximate competitors private information abstract firms often lack knowledge of the nature of the uncertainty they or their opponents face and use heuristics or approximations to determine their strategy we define and analyze one type of heuristic strategy in which firms choose strategies based on the expectation of their opponents private information rather than the full information about the distribution of that private information we find that in equilibrium the degree to which the heuristic strategy differs from the bayesian strategy depends on 1 the convexity of a firm s marginal profits with respect to their opponents private information and 2 whether firm strategies are complementary or substitutable under certain conditions firms equilibrium profits are greater when all firms use heuristics than when all firms use the full information our results provide insight into incentives firms may have to either facilitate or impede access to industry information

welfare optimal patent royalties when imitation is costly we identify welfare optimal patent royalties in a model of costly imitation entry and imperfect competition when the social planner may impose a compulsory license optimal royalties either blockade imitation facilitating unregulated monopoly or yield an aggregate zero profit efficient duopoly when duopoly is optimal the optimal per unit royalty pins the equilibrium price at the aggregate average cost and the optimal fixed royalty shifts surplus so the patentee and imitator break even efficient duopoly yields higher welfare than monopoly for sufficiently low invention cost and may also yield higher welfare than a prize system interestingly royalty payments may be negative because of this efficient duopoly may not be feasible if the planner must instead direct the courts to use such royalties

interactive property valuations this paper estimates models of social interactions within residential neighborhoods using data on neighborhood clusters for standard metropolitan areas in the united states from the american housing survey for 1985 and 1989 it examines eects of social interactions in the form of reaction functions for homeowners valuation of their properties at the level of the immediate residential neighborhood with neighborhoods consisting of a randomly chosen dwelling unit and about ten nearest neighbors the paper identifies the eect of endogenous social interactions to be significant and large ranging from 0 587 to 0 770 and much more important then the dynamic autoregressive structure of the model when both variables are present and both are significant the interactive regressions that it reports improve upon commonly used hedonic regressions as well the paper provides empirical support for the notion common in the real estate world of the importance of neighboring properties in property valuations

investment opportunities in the source country and temporary migration this paper examines how attractive investment opportunities available to temporary migrants in their country of origin aect their saving behavior and the optimal duration of stay abroad the model predicts an inverse u shaped relationship between migration duration and the expected rate of return on repatriated savings a higher rate provides an incentive to go back earlier and consume less abroad while it can also trigger emigration aimed at generating the savings required for investment after return at a more general level the paper illustrates how the behavior of temporary migrants re ects the interaction between their preferences and the opportunities available in the labor and capital markets of both countries

fully aggregative games abstract a game is fully aggregative if payoffs and marginal payoffs depend only on a player s own strategy and a function of the strategy profile which is common to all players we characterize the form which this function must take in such a game and show that the game will be strategically equivalent to another game in which the function is the simple sum of strategies

endogenous timing in the presence of non monotonicities the aim of this paper is to generalize the endogenous timing game proposed by hamilton and slutsky games and economic behavior 1990 2 pp 29 46 by allowing the payoff or the marginal payoff of a player to become non monotonic with respect to the strategy of the opponent we propose a taxonomy of the subgame perfect nash equilibria based on the characteristics of the payoff functions proposed by eaton canadian journal of economics 2004 37 pp 805 29 we determine under which conditions of the initial payoff functions commitment has a social value and when the simultaneous move nash equilibrium is commitment robust and discuss its pareto efficiency

tax compliance and firms strategic interdependence we focus on a relatively neglected area of the tax compliance literature in economics the behaviour of firms we examine the impact of alternative audit rules on receipts from a tax on profits in the context of strategic interdependence of firms the enforcement policy can have an effect on firms behaviour in two dimensions their market decisions as well as their compliance behaviour an appropriate design of the enforcement policy can thus have a double dividend by manipulating firms in both dimensions

on the effects of entry in cournot markets in the framework of symmetric cournot oligopoly this paper provides two minimal sets of assumptions on the demand and cost functions that imply respectively that as the number of firms increases the minimal and maximal equilibria lead to i decreasing industry price and increasing or decreasing per firm output and ii increasing industry price and decreasing per firm output in both cases per firm profits are decreasing the analysis relies crucially on lattice theoretic methods and yields general unambiguous and easily interpretable conclusions of a global nature as a byproduct of independent interest new insight into existence of cournot equilibrium is developed

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

majoritarian preference utilitarian welfare and public information in cournot oligopoly abstract can individual preferences for public information among heterogeneous consumers be aggregated into a meaningful social preference that does not suffer from condorcet cycles in a cournot model where homogeneous producers observe a public signal about an uncertain cost of production prior to taking quantity decisions we show that the majoritarian preference of consumers for the precision of public information is fairly well behaved so that a condorcet winner always exists under a monotonicity condition on the demand function we characterize the condorcet winning precision in terms of the demand function and the number of firms under which the condorcet winning precision i hurts consumers surplus and profits or ii remains conflict free these results have interesting implications on collective bayesian persuasion by agencies representing consumers showing that when full transparency maximizes expected consumers surplus collective bayesian persuasion can lead to full opacity and vice versa

global talent local careers circular migration of top indian engineers and professionals despite heightened interests from policy makers in the notion of brain circulation the discussion around the issue has remained largely theoretical drawing upon unique data of the alumni of a leading indian university this study examines how migration dynamics unfold within a highly educated population whose emigration is considered as a classic example of brain drain we adopt an integrative framework bringing together macro level push and pull influences and individual level selectivity we find that disparity in economic development between countries drives migration flows in both directions while host country demand has a stronger impact on out migration than on return migration we also detect significant selection effects at the individual level top students are more likely to emigrate and less likely to return in out migration flowing out of the country appear to be the best and the brightest amongst the highly educated talent pool in return migration negative selection is manifested in multiple aspects including ability post migration human capital investment and income we also find that the influences of macro forces vary amongst individuals higher ability individuals appear to be less affected by demand changes the findings have important policy implications for both source countries and receiving countries

on the existence of cournot equilibrium this paper examines the existence of n firm cournot equilibrium in a market for a single homogeneous commodity it proves that if each firm s marginal revenue declines as the aggregate output of other firms increases which is implied by concave inverse demand then a cournot equilibrium exists without assuming that firms have nondecreasing marginal cost or identical technologies also if the marginal revenue condition fails at a potential optimal point there is a set of firms such that no cournot equilibrium exists the paper also contains an example of nonexistence with two nonidentical firms each with constant returns to scale production