stationary equilibrium in a market for durable assets this paper presents a dynamic model of consumer trading on the primary secondary and scrap markets for a stochastically deteriorating durable good in a stationary economy with perfect information and no transaction costs we explicitly model the trading process by tracking each durable from its birth in the primary market through its sequence of owners in the secondary market until its death in the scrap market we prove that a stationary equilibrium exists characterize the distribution of consumer holdings of durables and show that equilibrium asset prices are shadow prices to a particular regenerative optimal stopping problem we show that each heterogeneous agent equilibrium is observationally equivalent to a homogeneous agent equilibrium we derive a differential equation for equilibrium rental rates and a functional equation which links rental rates to asset prices these equations show precisely how the structure of durable prices and rental rates embody the functional form and population distribution of preferences and the technological characteristics of durable goods this abstract was borrowed from another version of this item

durable goods theory for real world markets the early 1970s witnessed three major advances in durable goods theory swan 1970 1971 and sieper and swan 1973 on optimal durability coase 1972 on time inconsistency and akerlof 1970 on adverse selection this paper surveys durable goods theory starting with these three contributions where much of the focus is on recent literature and on models that explain real world phenomena in addition to the ideas found in the contributions of swan coase and akerlof topics covered include why producers sometimes practice planned obsolescence the role of adverse selection in new car leasing and reasons for aftermarket monopolization

non price strategic behavior the case of bank branches abstract we perform an empirical study of banks branching decisions as a strategic non price variable in an oligopolistic setting using panel data of banks from norway we find clear evidence that banks act strategically in their branching decisions taking into consideration the future response from rival banks the analysis is applied to a unique data set which covers the entire banking sector during both pre and post banking crisis periods where very different types of conduct are found in each of these periods both for banks and borrowers moreover we find that a bank specific branch network does not confer externality on other banks as a result branch network affects only market shares but not market size

price discrimination via second hand markets consumers have heterogeneous tastes for new and used goods and second hand markets involve transactions costs a monopoly seller may gain or lose from the existence of a second hand market locally it may prefer lower transactions costs but globally it may prefer high transactions costs so it can strangle the used market the monopolist uses the second hand market as an indirect device to achieve a form of second degree price discrimination if the monopolist can control the quality of its product when used it may wish to deteriorate this quality to worthless or else to have it as good as new

the effect of policy reforms on agricultural incentives in sub saharan africa in 1981 the world bank s report on subsaharan africa cited trade and exchange rate biases against exports poor macroeconomic and public sector management and a price bias against agriculture as contributing to the region s poor performance and slow growth world bank 1981 1986b since then average per capita income in the region has continued to fall overall agricultural production has grown more slowly than population declining food production per capita has led to rising food imports and for many of the primary agricultural exports africa s share of world trade has fallen steadily from 1970 to 1983 many african governments now agree on the central role of agriculture and the need to strengthen incentives in the sector united nations this paper assesses how reforms in macroeconomic and sector policies have affected agricultural incentives government policies can be broadly classified into three groups macroeconomic policies that affect incentives in all sectors generally agricultural sector policies that affect farm profitability directly by changing commodity and input prices and general and sector specific policies that may affect farm profitability indirectly by changing factor prices and influencing productivity e g public expenditures on research extension and infrastructure this paper analyzes the impact on agricultural incentives of the first two groups of policies the analysis of producer prices presented below is based on data for about twothirds of the countries in sub saharan africa which account for more than three fourths of agricultural gross domestic product gdp country coverage varies by indicator depending in part on whether comprehensive data are available simple averages are used to summarize policy performance across countries in contrast to weighted averages commonly used to assess aggregate economic effects the analysis of producer prices covers one to four principal export crops per country 2

lessons learned in structural adjustment lending in the developing world and implications for eastern europe discussion conditional program assistance which has come to be designated as structural adjustment sa was and still is the order of the day in many countries in africa and elsewhere tweeten mosley and toye also from both methodological and pragmatic viewpoints the experience of several countries which perhaps each in its own way found themselves in the obligation of improving their efficiency through the removal of disincentives and economic distor

dynamic oligopoly in the rice export market a linear quadratic dynamic oligopoly model is used to estimate the competitiveness of the rice export market the model nests various market structures using either open loop or feedback strategies the estimated feedback model implies a less competitive market structure than the estimated open loop model the rice export market is oligopolistic but it is closer to competitive than collusive copyright 1989 by mit press

durable goods oligopoly with secondary markets the case of automobiles we study the effects of durability and secondary markets on equilibrium firm behavior in the car market we construct a dynamic oligopoly model of a differentiated product market to incorporate the equilibrium production dynamics that arise from the durability of the goods and their active trade in secondary markets we derive an econometric model and estimate its parameters using data from the automobile industry over a 20 year period our estimates are used to provide a measure of the competitive importance of the secondary market

food poverty profile and decomposition applied to ghana abstract a new procedure for deriving a food poverty line and estimating a decomposable poverty measure is applied to the 1974 1975 ghana household budget survey a food poverty profile is constructed which estimates the relative contributions of regional and socioeconomic variables to overall food poverty the incidence of food poverty is found to be more prevalent in 1 rural areas and locations close to the sahel and 2 households with many members and illiterate female or self employed heads comparisons of least cost diets and observed diets incorporating tastes suggest that households exercise food preferences which have relatively high costs

used clothing donations and apparel production in africa this article examines the importance of one possible explanation for the failure of african countries to step onto the bottom rung of the manufacturing sophistication ladder that is to produce apparel used clothing donations to thrift shops and other organisations in industrialised countries typically end up being sold to consumers in africa since used clothing is initially provided as a donation it shares characteristics with food aid which always assists consumers but at times harms african food producers used clothing imports are found to have a negative impact on apparel production in africa explaining roughly 40 of the decline in production and 50 of the decline in employment over the period 1981 2000

conjectural variations as a reduced form abstract the conjectural variations solution is usually seen as the reduced form of the equilibrium of an unmodeled dynamic game we show that in linear oligopolies and for an open set of values of the discount factor this correspondence holds exactly for a quantity setting repeated game with minimax punishments during t periods

spatial competition in the banking system localization cross subsidies and the regulation of deposit rates abstract the paper analyses a spatial competition model of the banking sector banks offer two kind of services deposits and credit and can either borrow or lend on the money market we investigate the consequences of the regulation of rates paid on deposits the main conclusions are as follows regulation first increases network size beyond social optimum in the long run it results in lower equilibrium credit rates because of increased competition secondly regulation generates tied sales contracts by which banks propose bundles of credit and deposit services tied sales in turn motivate the introduction of cross subsidies between the two activities the rent levied upon regulated deposits financing lower rates in the credit market finally it is shown that in a regulated environment the effectiveness of monetary policy is reduced in the sense that fluctuations of money market rates are less than fully transmitted in credit rates

the political economy of used automobile protection in latin america i n the wake of the debt crises of the early 1980s latin america embarked upon a process of trade liberalisation the levels of both average tariffs and tariff dispersions fell throughout the region as did the coverage of non tariff barriers in the case of used automobiles however this liberalisation has not in general taken place many latin american countries retain significant restrictions on the imports of used automobiles even as liberalisation has occurred in the new automobile sector from a factor proportions standpoint these restrictions are difficult to justify for a number of reasons elucidated by sen 1962 used machinery should be imported relatively intensively into labourabundant countries such as those of latin america further this insight was specifically applied to the case of used automobiles by grubel 1980 the key factor identified by grubel is the lower repair costs of used automobiles in developing countries importantly grubel s analysis suggests that the bulk of the gains from trade in used automobiles would accrue to the developing countries explaining latin american protection against imports of used automobiles requires an exploration of the political economy of the protective measures in this paper we make a preliminary attempt at this exploration we begin in the following section by presenting the degree of used passenger automobile protection in 24 latin american and caribbean countries this is followed by a

turnover of used durables in a stationary equilibrium are older goods traded more this paper develops a dynamic model with transaction costs to determine the equilibrium resale pattern in a market for a durable good the key result is that the probability of resale is nonmonotonic in the age of the good trade volume is relatively low in the very beginning and in the middle of a good s life this result helps explain observed variations of resale rates across vintages for the u s market of used cars

trade in used equipment with heterogeneous firms this paper examines the pattern of trade in used asset markets where firms have differing factor prices and utilization rates of capital goods depreciation is modeled as an increase in down time as machines age and a measure of comparative advantage is derived that will explain the pattern of trade when there are two types of firms it is shown that with heterogeneous firms the price of used machines will reflect the characteristics of firms as well as the productivity of used machines and the implications of this result for the study of depreciation are discussed finally the relationship between firm characteristics and choice between purchasing new and used truck tractors is presented as an illustration of the predictions of the model

balladurette and juppette a discrete analysis of scrapping subsidies this paper studies the effects of subsidies on durable goods markets in particular we focus on a recent policy in france in which the governments of balladur and juppe subsidized the replacement of old cars with new ones to study this policy we construct a dynamic stochastic discrete choice model of car ownership at the household level the resulting decision rules and equilibrium conditions are used to estimate the underlying parameters of the model using aggregate data these policy functions are used to evaluate the short and long run effects of the french policies we find that these policies do stimulate the automobile sector in the short run but through the induced changes in the cross sectional distribution of car ages create the basis for subsequent low activity further while these policies increase government revenues in the short run revenues in the long run are lower relative to a baseline without intervention

gains from trade in used goods evidence from automobiles abstract i investigate the welfare effects of trade liberalization by exploiting a natural policy experiment in the economy of cyprus a 1993 law relaxed import restrictions on used vehicles and enabled the importation of second hand japanese automobiles into the country this led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market welfare gains computed from a structural demand system average 2000 per purchaser per year over a four year period after the policy change the findings are suggestive of the potential for substantial gains from liberalizing trade in used goods

adverse selection in durable goods markets we present a dynamic model of adverse selection to examine the interactions between new and used goods markets we find that the used market never shuts down the volume of trade can be large and distortions are lower than previously thought new cars prices can be higher under adverse selection than in its absence an extension to several brands that differ in reliability leads to testable predictions of the effects of adverse selection unreliable brands have steeper price declines and lower volumes of trade we contrast these predictions with those of a model where brands physically depreciate at different rates

cross border travellers and parallel trade implications for asian economies this paper explores the impact of parallel trade in an export market by cross border travellers on welfare of the home country in a model with heterogeneous consumers perceptions we show that such parallel trade when it is organised trading always hurts the home country welfare however when parallel trade is unorganised trading it might benefit the home country welfare provided that the size of the export market is relatively small along these lines we suggest optimal policy responses in the home country to parallel trade by cross border travellers the results of the paper yield insightful policy implications for asian economies

quality standards for used durables an indirect subsidy abstract we construct a theoretical framework to study the impact of quality standards for used durable goods on trade ows pro ts and consumer welfare we show that asymmetric quality standards generate trade in used goods from high to low standard countries while at the same time reducing trade in new goods producers in the exporting country bene t from this change while consumers lose in the importing country consumers are better off but domestic industry is hurt these ndings suggest that quality standards on used goods may be a powerful policy tool whose use should be monitored by the wto

economic reform programmes and agricultural development macro policy sequencing in ghana 1983 1988 abstract 1983 saw the institution of an economic reform programme as a policy response to economic decline in ghana results indicate achievement of some degree of stabilization and growth agricultural performance was mixed a result partly attributed to poor macro policy sequencing this article highlights the importance of orderly macro policy sequencing for the achievement of growth and development it suggests setting structural measures within demand management measures in a mutually enhancing package consideration of social dimensions of reform programmes and measures to ameliorate hardships among vulnerable groups in initial stages of programmes is emphasized as important for the sustainability of economic reforms