a note on foreigners trading and price effects across firms abstract we study the investment behavior of foreign investors in association with an equity market liberalization and find a strong link between foreigners trading and local market returns in the period following the liberalization net purchases by foreign investors induced a permanent increase in stock prices suggesting that local firms reduced their cost of equity capital we also find a strong link between a firm s fraction of foreign ownership and the magnitude of the cost reduction foreign investors seem to prefer large and well known firms and these firms realize the largest reduction in capital cost furthermore our analysis suggests that foreigners increase their net holding in firms that have recently performed well analyzing foreigners performance we find very little evidence of informed trading suggesting that risk sharing is the most plausible explanation for the reduction of the cost of equity capital

a model of advertising with application to the german automobile industry this paper develops a dynamic duopolistic model of advertising and price competition advertising accumulates a stock of goodwill which enters directly into the demand functions and both the cooperative and predatory effects of advertising are considered it is shown that firms invest more in advertising the higher the degree of cooperativeness of advertising and some comparative static results are provided in the second empirical part of the article estimations of the demand equations are presented using data from the german automobile industry the main conclusion drawn is that advertising plays an important role in this market and has a predatory nature

consumer response to commodity specific and broad based promotion programs for fruits and vegetables generic promotion activities have traditionally been used for individual agricultural commodities yet there is renewed interest in implementing a mandatory broad based promotion program for all fruits and vegetables here we use data from an experiment that introduce subjects to various promotional efforts for fruits and vegetables to estimate the shift and rotational effects of advertising econometric results indicate that commodity specific promotional efforts may not be effective at increasing demand for fruits and vegetables after controlling for various demographic differences among treatments our results show that consumers valuation of fruits and vegetables was highest among subjects exposed to broad based advertisements copyright 2011 oxford university press

factor demand models with nonlinear short run fluctuations abstract this paper considers asymmetric costs of adjustment that propagate nonlinear shortrun fluctuations in stochastic factor demand systems the model endogenously generates asymmetric cyclical demand for capital and labour between peaks and troughs of the business cycle the empirical analysis of the model is based on quarterly time series data of the dutch manufacturing sector for the period 1971 i 1984 iv and annual time series data of the u k manufacturing sector for the period 1955 1986 i find important differences of adjustment speed of capital and labour inputs between expansionary and contractionary phases of the business cycle

can nontradables generate substantial home bias the past decade has witnessed an increase in the fraction of equity portfolios invested abroad as barriers to international asset trade have significantly declined what are the long run implications of this process in this paper we investigate to what extent nontradables consumption and leisure can affect the portfolio allocation decision in otherwise integrated capital markets we find that hedging against nontradables shocks can account for only a small portfolio bias toward domestic assets these results suggest that in the near future we can expect to observe sizable additional international diversification

closed loop advertising strategies in a duopoly using the lanchester model to describe the dynamics of the market where two firms compete for customers by advertising we solve the problem of determining an optimal advertising strategy for maximum discounted profits we develop both open and closed loop strategies and explain the relationship between them using a new mathematical approach we prove that our closed loop solution is a global nash equilibrium the closed loop strategy is time variant and depends linearly on the actual market share the time variant coefficient incorporates the discount factor its computation requires the solution of a backward differential equation and a set of two nonlinear differential equations for an initial value problem the closed loop advertising expenditures are proportional to the open loop advertising expenditures and to the square of the competitor s actual market share this provides a very practical adaptive control rule that allows the manager to adjust the actual advertising expenditure and to deviate f

investment allocation decisions home bias and the mandatory ifrs adoption abstract we examine the familiarity hypothesis of home bias by studying how foreign ownership of swedish firms is affected by the mandatory adoption of ifrs we decompose foreign investors into institutional and non institutional investors foreign investors are further decomposed into eu ifrs adopting countries and non eu residents non ifrs adopting countries we analyse the equity investments of these foreign investor groups in sweden during the period of 2001 2007 we find that after the mandatory adoption of ifrs foreign ownership owners from countries that adopted ifrs and particularly those from the eu increased these effects are particularly strong in small firms foreign institutional investors increased their ownership stake after the mandatory ifrs adoption whereas foreign non institutional investments were not affected significantly by the ifrs adoption in contrast to ownership from non adopting countries ownership from the eu increased in firms with both more and less tangible assets similarly foreign ownership from the eu increased in firms with both concentrated ownership and dispersed ownership after the adoption because sweden has already had strict legal enforcement and a low level of earnings management prior to the adoption our results suggest that increased foreign ownership is due to better abilities to compare firms rather than an improved quality

dynamic advertising and pricing in an oligopology a nash equilibrium approach a general dynamic oligopolistic price advertising model is formulated and open loop nash solutions are derived as a main result a generalisation of the well known dorfman steiner theorem to heterogenous oligopoly markets is presented furthermore a detailed discussion of long run equilibrium solutions is given for an important special case of the general model formulation it is shown that the optimal advertising policies are constant over time and constitute degenerated feedback solutions

dynamic promotional budgeting and media allocation this paper address the managerial problem of promotional budgeting and media allocation in a dynamic competitive framework we develop an extended lanchester model that is able to analyze multi instrument promotion in an oligopoly the competitors each with a different initial position as well as economic value of the market share and communication effectiveness adopt the strategy of maximizing their net present value of discounted profits taking the other players actions into account the resulting differential game is solved using a novel method providing both the open loop strategy and the closed loop strategy for each firm we prove that our solution is a global nash equilibrium we develop a simple formula that when applied to an open loop strategy readily generates a feedback strategy we also show that for both open and closed loop strategies the proportion of the budget allocated to each instrument is invariant with time and depends only on instrument effectiveness we illustrate the results and provide several managerial rules and discuss their application in practice finally we show that our model favorably compares with other model in the literature in explaining actual data

home sweet home home bias and international diversification among individual investors abstract a striking feature of international portfolio investment is the extent to which equity portfolios are concentrated in the domestic market of the investor we investigate differences in home bias on an individual level by studying portfolios formed as a part of the new defined contribution pension plan in sweden we estimate the likelihood of home bias and use individuals demographic and socioeconomic features as explanatory variables our findings indicate that the likelihood of home bias is caused by both rational and irrational factors moreover we relate home bias to investors desire to hedge against inflation sophistication and overconfidence

units of measurement and the stone index in demand system estimation the stone index typically used in estimating linear almost ideal demand systems is not invariant to changes in units of measurement which may seriously affect the approximation properties of the model a modification to the stone index or use of a regular price index instead are both desirable practices in estimating linear ai models

home bias in equity portfolios inflation hedging and international capital market equilibrium we test whether the home bias in equity portfolios is caused by investors trying to hedge inflation risk the empirical evidence is consistent with this motive only if investors have very high levels of risk tolerance and equity returns are negatively correlated with domestic inflation we then develop a model of international portfolio choice and equity market equilibrium that integrates inflation risk and deadweight costs using this model we estimate the levels of costs required to generate the observed home bias in portfolios consistent with different levels of risk aversion for a level of risk aversion consistent with standard estimates of the domestic equity market risk premium these costs are about a few percent per annum greater than observable costs such as withholding taxes thus the home bias cannot be explained by either inflation hedging or direct observable costs of international investment unless investors have very low levels of risk aversion article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

a differential game model of a market of substitutable products abstract modern industrial organization often classifies groups of differentiated products that are fairly good substitutes to belong to the same market this paper develops a differential game model of a market of substitutable products to avoid the problem of time inconsistency we solve a feedback nash equilibrium solution for the game a set of state dependent equilibrium strategies is derived extensions of the model to a stochastic formulation and to an infinite time horizon specification are also provided

generic fluid milk advertising demand expansion and supply response the case of new york city a transfer function was used to estimate the fluid milk demand equation of new york city the consumption effect of a generic fluid milk advertising program in the city was found to be positive and statistically significant the resulting higher blend price of milk was found to have a negligible effect on the subsequent supply of milk though being successful in generating positive returns on advertising it was found that a 35 reduction in the advertising expenditures would have been optimal in the marginal sense

investigating the sensitivity of equilibrium profits to advertising dynamics and competitive effects the author investigates the validity of the flat maximum principle the insensitivity of a firm s profits to changes in its optimal advertising level in a duopolistic market in which advertising by the two firms has carryover effects two alternative competitive scenarios are examined i in which total industry sales are allowed to vary over time and ii where firms are engaged in market share rivalry for i the open loop nash equilibrium advertising strategies for the firms are derived assuming a specific sales response function and an infinite time horizon a numerical analysis of the sensitivity of firms profit functions to advertising expenditures is performed at different levels of the a discount rate b advertising elasticity and c advertising decay rate an empirical illustration from the pharmaceutical industry is provided special cases of the model formulation are examined analytically in order to highlight the intuition behind the flatness of the maximum and to study the sensitivity of results obtained to choice of equilibrium strategy closed loop vs open loop for the market share game closed loop policies are considered and the flat maximum principle is illustrated in the context of coke pepsi rivalry in the soft drinks market

externalities in urban sustainability environmental versus localization type agglomeration externalities in a general spatial equilibrium model of a single sector monocentric industrial city abstract this paper studies urban sustainability from the perspective of externalities we develop a general spatial equilibrium model of a monocentric city in which two types of externalities occur on the one hand pollution in the industrial center leads to a spatially differentiated deterioration of the environmental quality in the residential area on the other hand the existence of the city is explained by agglomeration economies represented as simple marshallian external benefits in production we investigate free market versus first best and second best optimal spatial equilibria and conclude that the pursuit of environmental goals may sometimes come at the expense of reduced agglomeration economies but may actually sometimes also stimulate these economies

differential game models in management science abstract this paper reviews a number of differential games applications to management science and operations research problems published with a few exceptions during the last decade the purpose of the article is to provide the reader with an up to date account of the state of the art within this field after having stated in an introduction the general differential games framework as well as some conceptual problems we proceed to review the models which have been divided into the following functional areas investment consumption and employment production inventories and maintenance marketing advertising pricing and rd bargaining natural resources and pollution the survey concludes with some remarks on applicability solvability and directions for future research

advertising information and product quality the case of butter this study examines the roles of cholesterol information and advertising in explaining consumption trends for fats and oils focusing on butter results suggest increased consumer awareness of the health effects of blood cholesterol has contributed to the secular decline in butter consumption in canada although consumers responses to negative information appear to outweigh their responses to positive information the industry advertising campaign launched in 1978 by the dairy bureau of canada has had a positive effect on butter demand

coexistence and segregation of two groups in a metropolitan area through externalities abstract this paper proposes to regard the population distributions of two groups in a metropolitan area as equilibrium solutions of systems of ordinary differential equations this approach an extension of the miyao s single subarea model to a many subarea case allows us to incorporate the effect of fiscal pecuniary neighborhood externalities into the classic alonso mills muth model this paper investigates its three typical cases and obtains one coexistent and two segregated solutions consideration on these cases leads to the conclusion that substantial neighborhood externalities other than simple tax redistribution exist between the groups in the united states as by products of this analysis it is also shown that positive bid gradients and discontinuities of bid prices are realized under suitable conditions

optimal pricing and advertising in a durable good duopoly abstract this paper analyzes dynamic advertising and pricing policies in a durable good duopoly the proposed infinite horizon model while general enough to capture dynamic price and advertising interactions in a competitive setting also permits closed form solutions we use differential game theory to analyze two different demand specifications linear demand and isoelastic demand for symmetric and asymmetric competitors we find that the optimal price is constant and does not vary with cumulative sales while the optimal advertising is decreasing with cumulative sales comparative statics for the results are presented

quasi fixed inputs in u s and japanese manufacturing a generalized leontief restricted cost function approach in this paper a generalized leontief variable cost function is develope d which permits analytical derivation of steady state levels of quasi fixed inputs and capacity output and does not require specification of a numeraire input this framework is then used to evaluate the fa ctor demand patterns of japanese and u s manufacturing based on bot h one quasi fixed capital input and two quasi fixed capital and la bor input specifications and both static and dynamic optimization t he findings provide evidence of considerable flexibility of demand re sponses in japan which may have contributed to japan s relatively st rong economic performance in the volatile 1970s copyright 1988 by mit press

productivity growth in u s agriculture under dynamic adjustment a dynamic measure of productivity growth adjusted for deviations from the long run equilibrium is established within an adjustment cost framework an empirical application to u s agriculture is presented which permits identifying the dynamic linkages between technical change and productivity growth in u s agriculture total factor productivity as dynamically measured grew at 1 50 per annum the combined effect of scale quality adjusted input growth and long run disequilibrium input use contributes only 3 44 of the growth while technical change dominates the growth of total factor productivity

a duopolistic model of dynamic competitive advertising abstract this paper proposes a differential game model of competitive advertising decisions for non durable products by extending the lanchester model and the deal model of competitive advertising in the literature the proposed model is compared empirically with the lanchester model for model fitting and forecast accuracy it is shown that the model is suitable for an actual market and out performs the lanchester model in forecast accuracy the model provides a sensible modeling alternative to the lanchester model for the study of dynamic competitive advertising decisions necessary and sufficient conditions for open loop and closed loop nash equilibrium solutions to the model are discussed a numerical algorithm for open loop and closed loop nash strategies to the model is developed

advertising competition in a dynamic oligopoly with multiple brands a model is developed that allows the derivation of feedback nash equilibrium advertising strategies for oligopolistic competitors the model is an extension of a modified vidale wolfe model that incorporates multiple brands per competitor the resulting expressions of feedback advertising strategies are combined with those for sales dynamics in an empirical model that is applied to the carbonated soft drink market which involves three primary competitors and five primary brands the research provides the following contributions a modification of the vidale wolfe model is extended to allow dynamic analysis of an oligopoly in which the competitors each offer multiple brands the model extension permits the derivation of a feedback nash equilibrium the determination of a feedback nash equilibrium enhances empirical analysis by allowing an expanded empirical model that includes the explicit modeling of endogenous advertising along with demand relationships

the intertemporal dimension of neoclassical production theory abstract the aim of this survey paper is to provide a guide to the literature on optimal dynamic factor demands to the non specialist reader interested in applied work we start with the distinction between variable and quasi fixed factors of production and use these to characterize the firm s temporary equilibrium we then review the optimal intertemporal behaviour of the firm using the notion of adjustment costs as a means to solve the firm s optimization problem this process gives rise to a system of interrelated dynamic factor demands in a flexible accelerator format theoretical difficulties and empirical limitations of this model are discussed this fact leads us to review the theory of intertemporal duality we next analyze the issue of expectations in this class of dynamic models a section reviewing the empirical work on dynamic factor demands follows after which we offer some concluding remarks

dynamic model of fresh fruit promotion a household production approach many studies consider the dynamic effects of commodity promotion on demand but few derive the theoretical basis for these effects in a model of optimal consumer behavior this study develops a dynamic household production model of u s fresh fruit consumption which it uses to evaluate the effectiveness of advertising and promotion expenditures by the washington apple commission estimates from a dynamic dual generalized leontief system show direct advertising to be marginally more effective than retail promotion in increasing apple sales but advertising has positive spillover effects to sales of other fruits whereas promotion reduces sales of competing products

dynamic measures of scope and scale economies an application to german agriculture static concepts of multiproduct economies of scale and scope are extended into a dynamic setting within the cost of adjustment framework important properties of the dynamic measures are developed and the foundations of a dynamic theory of the firm generalizing static neoclassical theory are presented dynamic measures of scope and scale as well as shadow costs are estimated empirically for multiple output multiple input german dairy farms operating under a production quota causes of scope economies are explored and a conceptual model to predict the evolution of the production structure of german farms is formulated

the possibility of positive rent gradients reconsidered abstract despite empirical evidence to the contrary most residential location models are consistent only with a negative rent gradient richardson has suggested including average neighborhood plot size as an argument of the utility function a positive rent gradient is not then a priori inconsistent with equilibrium however richardson does not define the concept of equilibrium and the purpose of this paper is to suggest a reasonable definition and to show that the rent gradient is negative if the utility function is strictly quasi concave and if individual and average neighborhood plot size are substitutes

dynamic and static behaviour with respect to energy use and investment of dutch greenhouse firms dutch greenhouse horticulture firms are energy intensive and major emitters of greenhouse gases this paper develops a theoretically consistent model that is able to describe the greenhouse firms behaviour regarding energy use and investments in energy technology the behaviour of the firm is modelled using a combination of a dynamic cost function and a static profit function framework the optimal quantity of energy is derived from the link between these two functions the model is applied to a panel of 97 dutch greenhouse firms over the period 2001 2008 the results show that most dutch greenhouse firms shift from being net electricity users to net electricity producers in the long term investing in energy capital contributes to reducing net energy use however it increases the quantity of carbon dioxide emissions due to an increase in electricity production a 1 increase of the price of gas reduces carbon dioxide emissions by 1 6

competitive advertising strategies and market size dynamics a research note on theory and evidence this paper analyzes competing firms advertising strategies in markets characterized by dynamic market sizes for new product innovations a large literature has been developed on the basis of the celebrated bass diffusion process which captures what we call market size dynamics however in spite of the significant literature incorporating competitiveness into the bass model few if any analytical results have been obtained especially those with normative implications on the other hand important theoretical and empirical insights have recently been obtained using the famous lanchester warfare model of competition in which market share dynamics are governed by advertising activities for mature products whose market sizes are typically fixed or stable our paper seeks to address the issue of optimal advertising strategies incorporating both market share dynamics and market size dynamics in doing so we seek to take advantage of the theoretical and normative insights currently available in the lanchester formulation for mature products to obtain normative analytical results on competitive advertising strategies for new product innovations whose markets evolve around the bass process we first obtain analytical solutions to the problem at hand and offer theoretical implications for competitive advertising on the bass diffusion model the models parameters are then estimated using a set of data on sales and advertising expenditures of polaroid corp and eastman kodak co in instant photography during the 19761985 period optimal trajectories for the firms advertising spending are then calculated and other marketing and managerial implications of optimal advertising strategies are explored

primal and dual dynamic luenberger productivity indicators abstract this paper develops primal and dual versions of the dynamic luenberger productivity growth measures that are based on the dynamic directional distance function and intertemporal cost minimization respectively the empirical application focuses on panel data of dutch dairy farms over the period 1995 2005 primal dynamic luenberger productivity growth averages 1 5 percent annually in the period under investigation with technical change being the main driver of annual change dual dynamic luenberger productivity growth is 0 1 percent in the same period improvements in technical inefficiency and technical change are partly counteracted by deteriorations of allocative inefficiency with large dairy farms presenting a slightly higher productivity growth than small dairy farms

equity home bias a review essay this paper reviews the relatively more recent literature on equity home bias the empirical finding that people overinvest in domestic stocks relative to the optimal investment portfolio implied by the modern portfolio theory it reviews six broad classes of explanation of this puzzling phenomenon 1 hedging home risks 2 barriers to foreign investments 3 information asymmetries and 4 behavioral factors the consensus is that none of the explanations can account for the full extent of the bias by itself thus the home bias should be explained by a combination of rational and behavioral factors

home bias risk differential and cultural spatial spillover effects abstract this paper aims to uncover the role of heterogeneity and spillover effects of return and risk on home bias associated with common background characteristics of trading countries we adopt a spatial panel model to utilize uniquely created weight matrices and capture the spatial spillover effects of the common background characteristics a modified definition of home bias is used to explore the role of market risks associated with the common characteristics of cross border portfolio flows in an international portfolio balance model using annual panel data of 17 countries spread over three different regions i e asia europe and others for the 2002 2012 period evidence strongly supports our hypothesis that the effects of the return and risk differentials of trading countries on home bias depend on the correlation of each of the common characteristics with return and risk

equity home bias and corporate disclosure abstract i show that more comprehensive corporate disclosure reduces investors uncertainty about domestic companies payoffs at no cost thereby decreasing investors equity home bias toward a country since investors should base their investment decisions on valid and easily interpretable company information only more comprehensive disclosure will reduce the home bias only if domestic securities law is sufficiently stratified and domestic companies use international accounting standards using panel data for 38 countries from 2003 to 2008 i find that more comprehensive disclosure reduces investors home bias though significantly only for countries that sufficiently enforce their securities law and implement international accounting standards

dynamic adjustment in the u s dairy industry a dual model is used to examine the dynamic structure of the u s dairy industry properties implied by the theory of the competitive firm and independent adjustment of two quasi fixed inputs labor and herd size are tested and not rejected instantaneous adjustment however is soundly rejected for each quasi fixed input input adjustment to optimal levels is estimated to take about two years for labor and ten for cows quality adjustments of the labor and cow series do not fully embody the technological change that has occurred in this industry over the study period

interrelated factor demands for manufacturing a dynamic translog cost function approach abstract in this paper we report the results of estimating a joint model for labour capital and energy using the transcendental logarithmic cost function of christensen jorgenson and lau 1973 this allows us to determine both the own price and cross elasticities of substitution between labour capital and energy we combine a model of factor shares with a dynamic adjustment process for each factor we also impose on the cross equation restrictions necessary to provide additivity homogeneity and symmetry since the covariance matrix in systems of share relationships is singular we follow the suggestions of anderson and blundell 1982 and employ a mullivariate error corrrection model the results suggest that additivity symmetry and homogeneity restrictions do hold and that there are short run increasing returns to scale

a dynamic adjustment model for u s agriculture 1948 79 abstract a multioutput model is developed within the adjustment cost framework to analyze the structure of dynamic adjustments in u s agriculture during the post war period an important feature of this model is that the econometric model is consistent with dynamic economic theory fluctuations in capital stocks variable inputs and outputs are explained by changing opportunity costs empirical results indicated that durable equipment farm produced durables and family labor exhibited significant rigidity in adjustment as a response to exogenous shocks surprisingly the hypothesis that real estate was a variable input could not be rejected the univariate flexible accelerator hypothesis which is widely maintained in most agricultural adjustment studies is inconsistent with the data

advertising strategies in a dynamic oligopoly the author uses a dynamic model of oligopolistic advertising competition in which competitors are assumed to make a series of single period advertising decisions with salvage values attached to achieved sales in each period as the foundation for empirical analysis of the competitive situation involving the three largest ready to eat cereal manufacturers kellogg general mills and the post division of philip morris general foods the primary insight of the author s empirical analysis is that general mills places a higher future value on achieved sales than do the other competitors in the market

home bias foreign mutual fund holdings and the voluntary adoption of international accounting standards we test the assertion that a consequence of voluntarily adopting international accounting standards ias is the enhanced ability to attract foreign capital using a unique database that reports firm level holdings of over 25 000 mutual funds from around the world our multivariate tests find that average foreign mutual fund ownership is significantly higher among ias adopters we also find that ias adopters in poorer information environments and with lower visibility have higher levels of foreign investment consistent with firms using ias adoption to provide more information and or information in a more familiar form to foreign investors taken together our findings are consistent with voluntary las adoption reducing home bias among foreign investors and thereby improving capital allocation efficiency

costs of adjustment the aggregation problem and investment this paper looks at the empirical consequences of inappropriately using a representative firm to mimic the aggregate investment decisions of a group of heterogeneous firms faced with costs of adjusting capital inputs improper aggregation generates a bias with two important consequences 1 an apparent insensitivity of the aggregate capital stock to the user cost of capital and 2 predicted responses of the capital stock to shocks that are considerably slower than observed both of these consequences are features of available investment equations copyright 1992 by mit press

the multivariate flexible accelerator model its empirical restrictions and an application to u s manufacturing this paper derives an exhaustive set of restrictions implied by the multistock flexible accelerator specification of the adjustment cost model for the firm the flexible accelerator specification of the demand for capital and labor is estimated using u s manufacturing annual data for the 1947 1976 period the consistency of the data with the model is examined by testing the validity of the derived restrictions finally the conditions which permit aggregation over firms are determined and tested empirically the flexible accelerator specification has been popular in the empirical literature on interrelated investment and employment decisions see nadiri and rosen 38 coen and hickman 10 and schramm 40 more recent examples include sargent 39 berndt fuss and wavermann 4 berndt and morrison 6 and meese 34 under suitable assumptions the specification may be rationalized by the adjustment cost model of the firm eisner and strotz 13 lucas 30 mortensen 35 extends the work of lucas and derives some empirically testable restrictions of the accelerator specification that are implied by the adjustment cost framework the broad objective of this paper is to provide a more rigorous and comprehensive test of the adjustment cost model than is presently found in the literature this objective is achieved in three stages first we offer an alternative derivation of the mortensen restrictions and more importantly we prove theorem 1 that his restrictions are exhaustive i e we establish an integrability result for the flexible accelerator adjustment cost model second the flexible accelerator specification of the demand for capital and labor is estimated using total u s manufacturing annual data for the 1947 76 period it is assumed that firms minimize expected production costs subject to a technology which implies that capital and labor stocks are costly to adjust while a third factor materials is freely adjustable the consistency of the data with the adjustmentcost framework is examined by testing for the validity of the derived restrictions further we test the validity of some separability restrictions on the adjustmentcost technology that to varying degrees are imposed a priori in all of the cited empirical studies finally we provide a complete characterization of the individual firm technologies which justify the common assumption of the existence of a representative firm this problem of aggregation over firms which has been

wholesale and farm level impacts of generic advertising the case of catfish a four equation econometric model of the us catfish industry is estimated to determine the impacts of industry funded advertising on the wholesale and farm levels of the market results suggest that despite the market power held by middlemen the compaign has increased quasi rents to producers the relatively large benefit cost ratios about 13 1 however are attributed primarily to the price effects of the campaign this highlights the importance of supply response in evaluating the economic effects of industry generic advertising programmes elasticity estimates based on 1980 89 monthly data are farm level supply 0 15 wholesale level demand 1 01 farm wholsale price transmission 0 68 and advertising 0 0075

output response to prices and public investment in agriculture indonesian food crops abstract this paper analyzes dynamic food crop supply response in indonesia the effects of technology prices and investments on output growth for rice corn soybean and cassava are examined the analysis generates crop wise area yield and input demand parameters suitable for the evaluation of price and investment policies and shows the large impact of public investment in agricultural research extension and irrigation on long run output growth in indonesia elimination of the fertilizer subsidy and reinvestment of the resulting fiscal savings in research extension and irrigation would produce large benefits

differential game models of advertising competition abstract differential game methodology combines two attractive features that are critical to the study of advertising competition dynamics and multi competitor decision making a focused review of two decades of differential game modeling of advertising competition indicates that insights gained to date while valuable are of a limited nature and research in the area needs to extend beyond present limits four recent studies are offered as examples of possible directions to follow in continued research

recent developments in dynamic advertising research a variety of continuous time differential functions have been developed to investigate dynamic advertising problems in business and economics fields since major dynamic models appearing before 1995 have been reviewed by a few survey papers we provide a comprehensive review of the dynamic advertising models published after 1995 which are classified into six categories i nerlove arrow model and its extensions ii vidale wolfe model and its extensions iii lanchester model and its extensions iv the diffusion models v dynamic advertising competition models with other attributes and vi empirical studies for dynamic advertising problems for each category we first briefly summarize major relevant before 1995 models and then discuss major after 1995 models in details we find that the dynamic models reviewed in this paper have been extensively used to analyze various advertising problems in the monopoly duopoly oligopoly and supply chain systems our review reveals that the diffusion models have not been used to analyze advertising problems in supply chain operations which may be a research direction in the future moreover we learn from our review that very few publications regarding dynamic advertising problems have considered the supply chain competition we also find that very few researchers have used the diffusion model to investigate the dynamic advertising problems with product quality as a decision variable and the pricing decision has not been incorporated into any extant lanchester model the paper ends with a summary of our review and suggestions on possible research directions in the future

does manufacturer advertising crowd in or crowd out retailer advertising an application of an endogenous prize contest with asymmetric players when a manufacturer advertises what is the impact on retailer advertising i analyze a contest model of advertising where total advertising by the manufacturer and by retailers determines market size and the relative level of advertising by each retailer determines market share if retailers are symmetric i show that there is a crowding in effect so increased manufacturer advertising increases retail advertising but if one retailer is stronger then marginal increases in manufacturer advertising have a crowding out effect on retailer advertising while sufficiently large increases have a crowding in effect by jump starting competition between retailers for the larger market furthermore asymmetric abilities in such contests can lead the weaker player to effectively drop out of the contest thereby undermining the ability of increased prizes to increase effort by intensifying competition

a note on feedback sequential equilibria in a lanchester model with empirical application we study in this paper dynamic equilibrium advertising strategies in a duopoly with asymmetric information structure and sequential play the advertising model of lanchester is used in a game where the relevant solution concept is feedback stackelberg equilibrium which is subgame perfect an algorithm is devised for the computation of this equilibrium and numerical results are reported and discussed using a data set from the cola market we obtain the resulting advertising strategies and provide a comparison with closed loop and open loop nash equilibria

the effect of supply management on herd size in alberta dairy a supply management program limits the aggregate supply of a commodity often through the use of marketable quota licenses the static aggregate welfare effects of supply controls are well known but the farm level dynamic effects on dairy investment are not a theoretical cost of adjustment model is used to show that supply management reduces the rate of quasi fixed input adjustment at the farm level in fact when a quasi fixed input is complementary to quota licenses investment or disinvestment can be impaired to such an extent that the input moves away from the long run equilibrium as a result overinvestment in this input can significantly reduce productivity growth

asymmetric adjustment of dynamic factors at the firm level presents a study which addressed the deficiencies of previous studies the specification and estimation in the modeling of asymmetry and zero gross investment in the agricultural industry reference to previous studies on asymmetry information on the standard dual model results of the study

differences in dynamic brand competition across markets an empirical analysis we investigate differences in the dynamics of marketing decisions across geographic markets empirically we begin with a linear quadratic game involving forward looking firms competing on prices and advertising based on the corresponding markov perfect equilibrium we propose estimable econometric equations for demand and marketing policy our model allows us to measure empirically the strategic response of competitors along with economic measures such as firm profitability we use a rich dataset that combines sales marketing mix factor cost and advertising cost data for eighteen geographic markets in the frozen entree category we find that larger markets tend to be less price sensitive and more profitable than smaller markets we also find evidence of positive carryover of own advertising on own demand in terms of consumer substitution patterns we find that the role of advertising in our data seems to be more category building complementary than share stealing competitive the complementary role is stronger in larger markets on the supply side we find that firms make smaller adjustments to own advertising as goodwill goes up consistent with cross advertising effects on demand firms make smaller larger adjustments to advertising in response to competitive goodwill in the less competitive larger in the more competitive smaller markets finally we find that consumer welfare decreases increases in larger smaller markets when firms move to a zero advertising regime

dynamic factor demands and market structure under rational expectations some estimates for the italian manufacturing system this paper deals with a dynamic model of the behaviour of firms under rational expectations the adjustment cost framework is followed to describe production technologies the objective of firms is to maximize the stream of future profits under rational expectation first order conditions for the optimum are derived with respect to input demands and one output supply the output market structure is modelled in order to test price taking behaviour the adjustment costs of quasi fixed inputs are internal and interrelated the model is estimated for the italian manufacturing system with encouraging results

the structure of urban land prices abstract recognition of the existence of nonlinear land prices has an impact on the measurement of the rate at which land price declines with distance from the urban center it is hypothesized that concave parcel prices have given rise to overly large estimates of the rate of price decline with distance because parcel sizes increase with distance and increased parcel sizes would be associated with lower unit prices as a result of the concavity of the land price function this hypothesis is empirically tested using vacant residential commercial and industrial land sales from within cook county illinois an important finding is that allowing for concavity greatly reduces although it does not eliminate measured rates of price decline with distance

an oligopoly model of dynamic advertising competition abstract an oligopoly model is presented that allows the determination of feedback nash equilibrium advertising strategies for an oligopoly analyses of symmetric and asymmetric oligopolies with the model show that unit contribution and advertising effectiveness have positive effects on a competitor s own advertising and steady state sales while discount rate and decay rate have negative effects an asymmetric analysis further shows that unit contribution and advertising effectiveness affect positively and discount rate and decay rate negatively a competitor s rivals advertising but have effects in opposite directions regarding rivals steady state sales the symmetric and asymmetric analyses also show that steady state sales per competitor decline with the number of competitors in the oligopoly while total oligopoly steady state sales increase the model is applied empirically to the triopolistic competition involving anheuser busch sabmiller and molson coors in the beer industry

dynamic factor demands under rational expectations we model the industrial demands for structures equipment and blue and white collar labor in a manner consistent with rational expectations and stochastic dynamic optimization in the presence of adjustment costs but allowing generality of functional form we represent the technology by a translog input requirement function that specifies the amount of blue collar labor needed to produce an output level given quantities of three quasi fixed factors nonproduction workers equipment and structures a complete description of the production structure is obtained by simultaneously estimating the input requirement function and three stochastic euler equations we find adjustment costs are small in total but large on the margin and differ considerably across factors

an empirical investigation of advertising strategies in a dynamic duopoly the equilibrium profit maximizing advertising policies of firms operating in a dynamic duopoly are derived by linking in a single framework the econometric estimation of the market response function and the technique of differential games that characterizes dynamic competitive behavior we use the lanchester model of combat to represent the system dynamics that capture the competitive shifts due to investments in advertising by the two market rivals we determine the equilibrium advertising levels using both closed and open loop policies we also compare these equilibrium advertising policies for each firm to those obtained using an optimal control theory formulation wherein the advertising spending levels of the rival are assumed to be known the empirical results obtained by analyzing the advertising rivalry between coke and pepsi for the period 1968 1981 under the above three alternative spending policies provide some interesting insights into the nature of competition between these two market rivals a significant contribution of this paper is to extend the existing literature on advertising competition by integrating theoretical and empirical analyses

risk sensitive dynamic market share attraction games we present partial results showing that risk sensitive oligopolists would spend less on advertising than would their risk neutral counterparts the model is an infinite horizon stochastic game in which each firm s goodwill is a random function of both its own and its competitors current and past advertising expenditures single period firm profits have a market share attraction form each firm seeks to maximize its expected exponential utility of the sum of discounted profits we analyze the impact that risk sensitivity and other parameters have on equilibrium advertising strategies by exploiting the special structure of the stochastic game model journal of economic literatureclassification number c73

a symmetric normalized quadratic gnp function and the u s demand for imports and supply of exports this paper reports estimates of a gnp function for the united states using data covering most of the postwar period and it introduces a new functional form the symmetric normalized quadratic variable profit function which is a natural extension of recent work by diewert and wales this functional form allows convexity in prices and concavity in fixed inputs to be imposed globally empirical results indicate that the demand for imports is less price elastic than the supply exports that an increase in labor endowment favors trade and that a deterioration of the terms of trade mostly hurts labor

competitive dynamic advertising a modification of the case game abstract in this paper we consider a modified version of the advertising differential game of case 1979 we derive non cooperative nash equilibria for open loop controls as well as for feedback strategies we consider finite and infinite planning horizons the feedback equilibrium is shown to be robust against stochastic disturbances of the state equation

adjustment cost and supply response in a fishery a dynamic revenue function in industries where firms can adjust product mix in response to price changes the process can be delayed by adjustment costs an example is fishermen who change fishing grounds to target different species if adjustment costs are sufficiently large this may hamper the fishermen s response so that regulatory tools that are not efficient in the long run are useful in the short run moreover adjustment costs can influence the choice of species targeted in this paper dynamic supply equations are specified using a revenue function approach different hypotheses about the dynamics of the supply equations are tested for norwegian trawlers

an empirical study on the lanchester model of combat for competitive advertising decisions this paper presents an empirical study on the lanchester model of combat for competitive advertising decisions three issues are evaluated i the specification of the market share response model ii the effect of inflation on the estimation of the response model and iii the performance of competitive strategies it is shown that a the square root function that is used in previous studies is often inappropriate to characterize the market share response model b market share variations are more responsive to current advertising expenditures c closed loop nash equilibrium strategies are better competitive advertising strategies for firms to maximize profits than open loop nash equilibrium strategies and d finally general perfect equilibria nash equilibrium strategies developed by case are usually not good competitive advertising strategies for firms to maximize profits

hedging familiarity and portfolio choice we exploit the restrictions of intertemporal portfolio choice in the presence of non nancial income risk to design and implement tests of hedging that use the information contained in the actual portfolio of the investor we use a unique dataset of swedish investors with information broken down at the investor level and into various components of wealth investor income tax positions and investor demographic characteristics portfolio holdings are identi ed at the stock level we show that investors do not engage in hedging but invest in stocks closely related to their non nancial income we explain this with familiarity that is the tendency to concentrate holdings in stocks with which the investor is familiar in terms of geographical or professional proximity or that he has held for a long period we show that familiarity is not a behavioral bias but is information driven familiarity based investment allows investors to earn higher returns than they would have otherwise earned if they had hedged

intertemporal price indices for the firm abstract a notion of intertemporal price aggregation is analysed within the adjustment cost model of the firm and is shown to be feasible precisely for those technologies which imply an accelerator adjustment rule a unique feature of the common quadratic production function specification is established the analysis is shown to be relevant to the possibility of decentralization within the firm to functional form specification for dynamic demand functions and to comparative dynamics analysis

on the generalizability of advertising pulsation monopoly results to an oligopoly this paper introduces for the first time an analytical framework for modeling and analyzing sales response to advertising pulsation for competitive markets of mature products in continuous time for discrete piecewise policies that allow unequal cycle lengths employing a nash equilibrium solution concept this study supported with numerical analysis demonstrates that there is an oligopolistic as opposed to a monopolistic justification for advertising at a constant rate in the presence of concave response functions or advertising according to a pulsing policy in the presence of s shaped response functions the article employs a modeling framework whereby each of a set of competitors responses to advertising spending is governed mainly by lanchester type response is used to analyze the game resulting from cyclical advertising policies that are strictly adhered to by all players a non discounted averaged performance is used to assess the purported optimality of different variants of piecewise constant policies

investment in u s agriculture resource adjustment problems in u s agriculture are motivated against the background of the farm problem the adjustment cost hypothesis is invoked to specify and estimate consistently a system of dynamic investment demand and output supply equations by utilizing recent advances in dynamic duality theory the investment demand equations assume the form of a multivariate flexible accelerator results indicate that labor capital services and land exhibited quasi fixity while intermediate materials were a variable factor this can be construed as a form of asset fixity within aggregate u s agriculture the univariate flexible accelerator hypothesis is rejected

empirical analysis of closed loop duopoly advertising strategies closed loop perfect equilibria in a lanchester duopoly differential game of advertising competition are used as the basis for empirical investigation two systems of simultaneous nonlinear equations are formed one from a general lanchester model and one from a constrained model two empirical applications are conducted in one involving coca cola and pepsi cola a formal statistical testing procedure is used to detect whether closed loop equilibrium advertising strategies are used by the competitors rather than open loop strategies in the second application involving anheuser busch and miller the general model is estimated results indicate that closed loop equilibria better explain dynamic advertising competition than do open loop equilibria also closed loop equilibrium advertising strategies implied by model estimates show that competitive advertising levels may or may not be monotonic in market share

adjustment costs and factor demands in canadian manufacturing industries the question of whether regional disparities in canada could arise as a result of nonconstant returns to scale and non identical production functions is examined this is accomplished by estimating and comparing the decision rules for factor demands across canadian regions the decision rules are based on a flexible and dynamic production technology which allows for the presence of internal adjustment costs do not impose constant returns to scale or require hours and workers to have the same output elasticities the model is estimated for four separate canadian regions ontario quebec the western and eastern provinces on annual data ranging from 1965 to 1985