trade and protection in vertically related markets abstract we consider home country tariff and subsidy policies in a setting where a home firm is partially dependent on a foreign vertically integrated firm for supplies of a key input the firms are cournot competitors in the home market for the final product we show that a tariff on final product imports may cause the foreign vertically integrated firm to reduce the price charged for the input under circumstances where a simple monopoly supplier of the input would increase its price supply conditions for the input significantly affect whether imports of the input should be taxed or subsidized

international evidence on the demand for money one of the current questions in the literature on the demand for money is whethe r the adjustment of actual to desired money holdings is in nominal or real terms this paper describes a simple procedure that can be used to test the nominal against the real hypothesis the test is carried out for twenty seven countries the paper also tests the structural stability of the demand for money equations and the correctness of th e dynamic specification the results are strongly in favor of the nom inal adjustment hypothesis there is however some evidence of moder ate structural instability before and after 1973 the instability doe s not affect the conclusion that the nominal adjustment hypothesis do minates the real adjustment hypothesis copyright 1987 by mit press

the growth performance of agriculture in subsaharan africa the historical view of overall global economic growth provided by maddison presents striking evidence of africa s poor performance maddison s cross regional study suggests that african real gdp grew at 0 6 per annum between 1820 and 1992 which was half the rate of world growth since much of gross domestic product gdp is still in agriculture the sector has done poorly african agriculture lags other regions both in production and in productivity for the two decades prior to 1990 agricultural production per capita declined significantly cereal yields on average are less than half those in other developing regions even for tubers and plantain for which african agroecological conditions are suitable average yields are lower than in asia and latin america the sector is also severely undercapitalized leading to low agricultural labor productivity historically the marginal product of agricultural labor in africa is about the same as the average product whereas in asia and latin america the average product of labor is much greater than the marginal product delgado and ranade total factor productivity growth also was slow block thirtle hadley and townsend lusigi and thirtle there are of course large variations within and among african countries with some countries achieving yields input use and technology adoption at levels similar to other developing regions however the bottom line is clear over the past century african agriculture has not accumulated capital and has not grown fast enough to realize its potential as an important engine of economic growth and poverty reduction this paper explores the relative roles played by agricultural endowments low population density remoteness and adverse policies in explaining the undercapitalization and the poor growth of african agriculture over the last century we attribute the adverse performance largely to poor policies and to institutional failures which plagued the continent for several centuries however we also explain how the adverse endowments could have contributed to the locking in of poor policies and to the difficulties of breaking out of the adverse policy trap the paper then describes the acceleration of agricultural growth during the 1990s and explores the policy institutional and public investment agenda for the future

market power in emission permit markets theory and evidence from the eu ets a well known result about market power in emission permit markets is that efficiency can be achieved by full free allocation to the dominant firm i show that this result breaks down when taking the interaction between input and output markets into account even if the dominant firm perceives market power in the permit market alone i then examine the empirical evidence for price manipulation by the ten largest electricity firms during phase i of the eu ets i find that some firms excess allowance holdings are consistent with strategic price manipulation and that they cannot be explained by price speculation or by precautionary purchases to insure against uncertain future emissions my results suggest that market power is likely to be an empirically relevant concern during the early years of emission permit markets

unionisation structures and innovation incentives this paper examines how dierent unionisation structures aect rms innovation incen tives and industry employment we distinguish three modes of unionisation with increasing degree of centralisation 1 decentralisation where wages are determined independently at the rm level 2 coordination where one industry union sets individual wages for all rms and 3 centralisation where an industry union sets a uniform wage rate for all rms while rms investment incentives are largest under centralisation investment in centives are non monotone in the degree of centralisation decentralisation carries higher investment incentives than coordination labour market policy can spur innovation by decentralising unionisation structures or through non discrimination rules

estimating money demand functions the question of which functional forms of money demand regression equations are useful for empirical work is addressed here specifically it is argued that a functional form that focuses attention on the ability of the growth rate of nominal money to predict the inflation rate is a useful way of summarizing empirical evidence on the existence of a stable money demand function the results of estimating and simulating this functional form as well as standard functional forms are presented in the final part of this paper a typical equation expressing the public s demand for real money balances m is as follows

estimating the demand for a new technology bt cotton and insecticide policies this article examines the potential demand for bt cotton in the southeast from information gathered in the first year of commercialization we combine revealed preference rp data on adoption of bt cotton varieties with stated preference sp data on willingness to adopt to estimate demand using a double bounded maximum likelihood procedure using estimated demand equations we simulate the costs of reducing conventional insecticide applications through subsidization of bt cotton results indicate that reducing cotton insecticide applications by 40 in the southeast would require a 21 acre subsidy with total annual program costs between 53 million and 60 million

understanding the process of agricultural technology adoption mineral fertilizer in eastern dr congo summary we analyze the adoption of mineral fertilizer in south kivu we model technology adoption as a three step process including awareness tryout and adoption and empirically analyze these steps using cross sectional farm household data and bivariate and heckman selection probit models we find that awareness about fertilizer is high 57 and mainly determined by education and social capital tryout is low 13 of aware farmers but positively influenced by extension interventions continued adoption is high 70 of tryout farmers but capital constraints are important and not all extension interventions are effective for continued adoption our results entail implications for extension policies in poor areas

unionised labour market and strategic production decision of a multinational i show that a foreign firm may sell the same product through both foreign direct investment fdi and export and this decision depends on the size of the product market it happens irrespective of whether the labour market in the domestic country or in the foreign country is unionised unlike the existing works focusing on risk diversification in presence of demand or cost uncertainty i explain the co existence of fdi and export in a world with certainty the endogenous determination of the wage rate plays an important role for my results my analysis shows the effects of the fixed cost of fdi and competition in the product market on the production strategy of the foreign firm

stochastic programming for decentralized newsvendor with transshipment abstract this paper discusses a family of two stage decentralized inventory problems using a unifying framework taxonomy depicted as a multilevel graph this framework allows us to model and link different problems of competing retailers who independently procure inventory in response to uncertain demand and anticipated inventory decisions of other retailers in this family of problems in the ex post stage the retailers exercise recourse actions in response to the realized demand and competitors chosen procurement levels for example retailers could coordinate inventory transshipment to satisfy shortage with overage based on profit sharing agreements our framework provides a unifying parsimonious view using a single methodological prism for a variety of problems equally importantly as recourse options are laid out our framework clarifies and contributes a modeling connection between problems in a clear taxonomy of models this unifying perspective explicitly links work that appeared in isolation and offers future research directions

vertical foreclosure with the choice of input specifications we develop an equilibrium model of vertical foreclosure with the choice of input specifications vertical foreclosure occurs as the upstream division of the integrated firm makes a specialized input for its sister downstream division while it would as an independent firm provide a generalized input the changes in incentives with vertical integration can be explained by the externalities the choice of a specialized input entails vertical integration allows the upstream firm to internalize the benefit of raising the rival firm s costs at the downstream level we derive conditions for equilibrium vertical foreclosure to occur and discuss its welfare consequences

labour union entry and consumer welfare abstract it is usually believed that the presence of a labour union makes firms as well as consumers worse off by increasing wages compared to the situation with no labour union we show that the presence of a labour union may increase the incentive for entry and may also make consumers better off compared to the situation with no labour union if the labour productivity of the entrant is sufficiently higher to that of the incumbent

an alternative monetary policy target for most of the period since the mid 1970s the federal reserve has expressed its monetary policy intentions by announcing the target growth rates of three principal monetary aggregates the simple sum m1 m2 and m3 however the sweeping changes and the deregulation in the financial industry have greatly affected the relevance of these traditional monetary aggregates the unusual behaviour of the simple sum monetary aggregates has forced the federal reserve to stop setting target range for m1 the measuring of monetary aggregates has become a controversial question this paper constructs the new benchmark divisia monetary indexes which reflect moneyness more accurately than the old divisia indexes i demonstrate that the historical trends of the divisia monetary indexes are sensitive to the brenchmark rates chosen in constructing these indexes in addition i compare the forecasting performance of the new benchmark divisia monetary indexes with the simple sum and the old divisia monetary indexes in the

trips trade and technology transfer a north south model of unintentional technology transfer is developed where the stringency of southern patent protection provides the institutional backdrop for a strategic game in a high tech goods market the appropriability regime is set endogenously and combines elements of imperfect southern patent protection with the protection afforded by market made northern technology masking less stringent protection of northern intellectual property can work much like other strategic trade policies therefore developed countries appear to be right in demanding discussion of intellectual property rights in gatt

firm survival and industry evolution in vertically related populations this paper examines how the density and governance of vertically related populations affect the life chances of organizations we integrate the literatures on organizational ecology and vertical integration to develop a theory of how 1 specialized upstream industries affect downstream survival rates 2 the prevalence of different governance forms among upstream and downstream organizations moderates this relationship and 3 different forms of governance exert differential competitive pressures on focal organizations we find evidence supporting our hypotheses in an empirical examination of the downstream laser printer industry and upstream laser engine industry this paper was accepted by jesper sorensen organizations

industry profits and competition under bilateral oligopoly abstract we show that contrary to the key result of the standard cournot nash oligopoly model industry profits can increase with the number of firms if input prices are not exogenous but are determined by bargaining in bilateral oligopoly

presidential address antitrust restrictions on single firm strategies this article offers an overview of selected developments in the law and economics of antitrust regulation of single firm strategies the strategy generating the most cases historically is resale price maintenance here the law has moved sharply in both canada and the u s towards more solid economic foundations yet a gap between the law and economics remains the economics of resale price maintenance is reviewed within a framework that is much simpler and more general than the existing literature the law on a second strategy predatory pricing represents in my view a success story for the influence of economic theory in spite of the absence of a single accepted theory of predatory pricing the remaining single firm strategies are concerned largely with the exclusion by a dominant firm of rivals from a market i review with application to cases the two most basic questions concerning exclusionary strategies are exclusionary anticompetitive contracts ever entered into voluntarily by market participants on the other hand is complete or substantial foreclosure of a market through exclusionary strategies necessarily anticompetitive cette allocution presidentielle a l association canadienne d economique presente une vue d ensemble des developpements dans le droit et l economie de la reglementation antitrust sur les strategies d une firme unique la loi sur la strategie qui genere historiquement le plus de cas le maintien du prix de revente a change dramatiquement au canada et aux etats unis et derive vers une politique qui a des assises economiques solides mais il reste un ecart entre le droit et l economie on reexamine l economie du maintien du prix de revente a l aide d un cadre d analyse qui est a la fois plus simple et plus general que ce qui existe dans la litterature specialisee la loi pour ce qui est d une seconde strategie prix d eviction est a mon avis une grande reussite pour la science economique malgre l absence d une seule theorie du prix d eviction generalement acceptee un troisieme ensemble de strategies concerne l exclusion de ses rivaux d un marche par la firme dominante l auteur reexamine avec un recours extensif aux cas les deux questions de base pour ce qui est des strategies d exclusion est ce que les participants sur un marche entrent jamais volontairement dans un arrangement contractuel qui exclut et est anticoncurrentiel d autre part est ce que la saisie complete ou substantielle d un marche par des man uvres d exclusion est necessairement anticoncurrentielle

quantitative goals for monetary policy a quantile regression approach a recent paper by fatas et al 2006 indicates that formal monetary policy targets exchange rate money supply or inflation targets palpably decrease inflation in a sample of 40 countries the authors employ various least squares estimations which pick up the conditional average effect however there is wide inflation variability in the authors sample thus formal targets could have very different effects in high and low inflation countries accordingly we utilize the technique of quantile regression a method frequently used in labour economics we find in a sample of low and moderate inflation countries that formal targets exert no significant impact on low inflation nations this result is important for debates over formal targets such as whether the united states should adopt an inflation target there are costs and benefits in having formal targets and finding that targets do not decrease inflation when it is already moderate is an important piece of information to consider

new concepts of aggregated money the federal reserve board s recent redefinition of its monetary aggregates followed three years of intensive board staff research on monetary aggregation while the new aggregates ultimately were selected along conventional lines some of the staff s research was oriented towards more fundamental changes in monetary aggregation methods this paper reviews such proposals which are based upon the rigorous application of index number and aggregation theory and of principal components analysis in the construction of economic monetary aggregates the usefulness of aggregation and index number theory in acquiring price indices is widely known the theory of the true cost of living index is an application of aggregation theory examples of applied index number theory include the commerce department s implicit price deflator which is a paasche index and the labor department s consumer price index which is a laspeyres index somewhat less well known is the fact that dual to the theory of economic price aggregates and indices is a theory of economic quantity aggregates and indices an example of a highly reputable quantity index is the divisia quantity index the monetary aggregates traditionally are thought to measure the supplied quantity of an economic good called money whenever monetary aggregates are used in the context of economic theory rather than as simple accounting identities the theory of economic quantity aggregation is specifically applicable however published monetary aggregates in all countries have always been computed as simple sums but as fisher 1922 p 29 observed in the conclusion to his classic treatise on index number theory the simple arithmetic average produces one of the very worst of index numbers and if this book has no other effect than to lead to the total abandonment of the simple arithmetic type of index number it will have served a useful purpose with an example of the simple sum index fisher 1922 p 363 found that the bias alone reaches 36 percent although index number theory has not yet found its way into the monetary theory literature all of the literature on index number theory and aggregation theory for the past half century supports the result long ago deduced by fisher 1922 p 361 that the simple arithmetic index should not be used the views expressed herein are solely those of the authors and do not necessarily represent the views of the board of governors of the federal reserve system this research was partially supported by national science foundation grant soc 76 84459 we are deeply indebted to the conference session s discussant of this paper w erwin diewert for volunteering to cede his allocated journal space to us so that the paper could take its current extended form federal reserve board washington d c

the search for a stable money demand function a survey of the post 1973 literature phe question of whether the demnand function for money is stable is one of the most important recurring issues in the theory and application of macroeconomic policy what is being sought in a stable demand function is a set of necessary conditions for money to exert a predictable influence on the economy so that the central bank s control of the money supply can be a useful instrument of economic policy as such the notion of a stable demand function appears to involve three key elements e g john t boorman 1976 p 317 and david e w laidler 1977 pp 34 35 first the demand for money relation should be highly predictable in a statistical sense as measured by the usual goodness of fit statistics precision of estimated coefficients and presumably its ability to forecast accurately out of sample second a stable demand function for money has relatively few arguments a relationship that requires knowledge about a large number of variables in order to pin it down is in effect not predictable finally the variables that appear as arguments in the function should represent significant links to spending and economic activity in the real sector in sum a stable demand function for money means that the quantity of money is predictably related to a small set of key variables linking money to the real sector of the economy the importance of a stable money demand function for monetary policy can be illustrated with the standard is lm model in which interest rates and gnp are the endogenous variables in this context a stable demand function for money translates into a well defined relationship between money interest rates and gnp

strategic outsourcing revisited this paper analyzes a sequential game where firms decide about outsourcing the production of a non specific input good to an imperfectly competitive input market we apply the taxonomy of business strategies introduced by fudenberg and tirole 1984 to characterize the different equilibria and find that outsourcing generally softens competition in the final product market if firms anticipate the impact of their outsourcing decisions on input prices there may be equilibria where firms outsource so as to collude or to raise rivals costs we illustrate our analysis using a linear cournot model

the effects of a content requirement on a foreign duopsonist abstract this paper considers the operation of a local content requirement in a duopsony between domestic and foreign firms and demonstrates its consequences for the domestic producer of a final good it is shown that content protection may have perverse effects on a foreign firm s profits and may be welfare improving overall shifting profits from the domestic firm to both the foreign firm and domestic input producers

the grouping of stars an application to professional sports abstract this paper uses a two period model to analyze competition for high quality labor in a professional sports market leagues vertically differentiate their products by competing for the services of a small number of stars thereby endogenizing the cost of product quality if utility is linear or convex in the number of stars one league successfully employs all of them this grouping of stars results in an equilibrium market structure of either a monopoly or a duopoly depending on the opportunity costs of players and the number of consumers market efficiency of the resulting equilibrium is then discussed

an empirical analysis of fertilizer use in pakistan one of the stylized facts in developing countries is the wide variation in agricultural per acre input and output levels across farm households here we focus on the variation in the level of chemical fertilizer applied in particular to high yielding wheat the model used to explain the variation in fertilizer input across farms incorporates the process by which zeros are generated in particular differentiating between households who do not apply because of lack of access and those who do not apply out of choice we find that access is positively correlated with farm size but that among users per acre fertilizer levels decrease with farm size we interpret the latter by appealing to input choice under uncertainty with this interpretation our results suggest that although larger farms have a higher level of non stochastic wealth which in the presence of decreasing absolute risk aversion has the effect of increasing fertilizer intensity with farm size the presence of increasing relative risk aversion means that the net relationship between farm size and fertilizer intensity is negative this latter affect appears to dominate any tendancy for higher fertilizer intensity on larger farms arising from better knowledge or irrigation facilities

inflation output and money this paper uses money demand theory and a rational expectations version of the quantity theory of money to study inflation in the united states during the post korean war period the major results are as follows 1 the theory and tests explain the phenomenon of stagflation that is the negative relation between inflation and real activity observed during the post 1953 period the analysis calls into question the many variants of the phillips curve which presume that inflation real activity relations are positive 2 consistent with the models of patinkin 1961 and fama 1980 monthly quarterly and annual data indicate that the base currency plus reserves held against deposits is the relevant monetary variable in the inflation process and that demand deposits are irrelevant the direct policy implication is that the base is the key monetary variable in the control of inflation 3 the most convincing evidence for the simple quantity theory view of inflation proposed here comes from the comparison of the conditional exmoney demand theory and the quantity theory of money are used to study the inflation process as predicted by the model monthly quarterly and annual data indicate that inflation is positively related to money growth rates and negatively related to growth rates of real activity the theoretical and empirical origins of stagflation are explained and changes in monetary arrangements to simplify the control of inflation are prescribed

political consumerism and public policy good complements against market failures political consumerism has become over the past years an ever growing phenomenon by which citizens express through their consumption their political environmental and ethical opinions this paper discusses political consumerism from an economic science perspective focusing on the link between political consumerism and public policies it wonders to what extent political consumerism may represent an effective and fair instrument against market failures overall it seems that it would be better to consider it as a complement to conventional public policies

good times bad times and vertical upstream integration abstract we consider a set of downstream firms each of which has a stochastic requirement for a particular input downstream firms can produce the input themselves yet do not trade it upstream firms produce the input to sell it through a walrasian market to downstream firms efficient pooling of capacities requires the input to be produced by upstream firms and traded in the market yet downstream firms will always vertically integrate by producing some of its own input needs a downstream firm cuts down on aggregate input demand thus depressing prices in the market

the failing firm defense this paper evaluates the welfare consequences of the failing firm defense ffd in the eu and u s merger laws to this end i combine an oligopoly model with an endogenous valuations auction model the ffd is shown to work reasonably well for consumers unless small firms are too small the ffd may however lead to total surplus losses due to a least danger to competition ldc condition which favors small and thus possibly inefficient firms it is also shown that in a multi firm setting the ffd increases the incentive for predation only when the assets are industry specific

optimal cross licensing arrangements collusion versus entry deterrence this paper analyzes optimal cross licensing arrangements between incumbent firms in the presence of potential entrants the optimal cross licensing royalty rate trades off incentives to sustain a collusive outcome vis a vis incentives to deter entry with the threat of patent litigation we show that a positive cross licensing royalty rate which would otherwise relax competition and sustain a collusive outcome dulls incentives to litigate against entrants our analysis can shed light on the puzzling practice of royalty free cross licensing arrangements between competing firms in the same industry as such arrangements enhance incentives to litigate against any potential entrants and can be used as entry deterrence mechanism

exclusionary manipulation of markets for pollution rights abstract strategic price manipulation can affect the distribution of transferable pollution rights across polluters and the efficiency of pollution control efforts prior research has concentrated on market manipulation by firms seeking only to minimize the sum of pollution rights costs and pollution abatement costs in this paper we explore the potential for the exclusionary manipulation of pollution permit markets intended to drive up the costs of one s rivals and we distinguish between the resource allocation effects of exclusionary manipulation and cost minimizing manipulation we find that exclusionary manipulation can sometimes worsen and sometimes ameliorate the abatement inefficiency which occurs under cost minimizing manipulation and that an overbuying rule can obviate or at least limit damages from this form of strategic behavior

frontrunners and laggards the strategy of environmental regulation under uncertainty the extant literature on the political economy of environmental regulation does not provide a unified theoretical explanation for three salient stylized facts first companies voluntarily invest to reduce the environmental burden that they cause under threat of regulation second ex ante estimates of the compliance cost tend to be systematically higher than ex post estimates finally regulators use limited information provided by the industry i construct a game theoretic model of environmental regulation under uncertainty with a benevolent regulator in equilibrium companies undertake voluntary action to induce regulation that raises barriers to entry this profit driven behavior is not always socially detrimental however as the regulator obtains a credible commitment to production and a more accurate estimate of the compliance cost additionally the results provide a selection explanation for the mismatch between ex ante and ex post cost estimates if companies condition compliance on the installation cost only low cost companies install in equilibrium the analysis combines regulatory capture with social welfare maximization to explain the curious combination of voluntary action and low ex post compliance cost without serious information collection by the regulator

multi sector model of tradable emission permits this paper presents a multi sector model of tradable emission permits which includes oligopolistic and perfectly competitive industries the firms in oligopolistic industries are assumed to exercise market power in the tradable permit market as well as in the product market specifically we examine the effects of the initial permit allocation on the equilibrium outcomes focusing on the interaction among these product and permit markets it is shown that raising the number of initial permits allocated to one firm in an oligopolistic industry increases the output produced by that firm under certain conditions raising a clean less polluting firm s share of the initial permits can lead to reductions in both the product and permit prices we discuss criteria for the socially optimal allocation of initial permits considering the trade off between production inefficiency and consumer benefit

a characterization for the negative welfare effects of cost reduction in cournot oligopoly abstract this paper characterizes the welfare effects of cost reductions in a cournot model with linear costs under linear demand a small reduction in a firm s marginal cost reduces welfare if and only if its market share is less than 1 2n 2 or equivalently its marginal cost exceeds a critical level determined by the market a large cost reduction by the firm increases welfare if and only if its magnitude is at least twice the difference between the current marginal cost and its critical value the paper also extends the results to non linear demand but the characterizations become less tractable

endogenous protection foreign direct investment and protection building trade abstract we introduce the possibility of foreign direct investment fdi in a strategic oligopolistic setting with endogenous protection and find that a number of unique subgame perfect equilibria may arise including a new result we call protection building trade this phenomenon occurs in our model when foreign firms locating production in the home country try to increase protectionist pressures in the home country through increased exports to provide larger barriers against other foreign competitors in future periods we discuss how the foreign firm behavior surrounding significant u s protectionist actions including the vers on japanese automobiles may be consistent with protection building trade behavior

national treatment and the optimal regulation of environmental externalities we analyze the role of national treatment in the regulation of environmental product standards for an open economy a social planner uses product standards to control emissions from the consumption of a traded good we show that whether national treatment of standards interferes with welfare maximizing policy depends on the instruments available to the policy maker consumption or emissions tax and differences in the cost of complying with the standard we also highlight the asymmetric incidence of the domestic and import product standard when taxes are suboptimal this asymmetric incidence can also cause welfare maximizing policy to violate national treatment on analyse le role du principe de traitement identique des entites domestiques ou importees dans la reglementation des normes environnementales dans une economie ouverte un gouvernement utilise des normes pour controler les emissions decoulant de la consommation d un produit transige internationalement on montre que le fait que le traitement identique des normes va ou non interferer avec l objectif poursuivi qui est de maximiser le niveau de bien etre va dependre de l ensemble des instruments disponibles pour l architecte des politiques une taxe sur la consommation ou sur les emissions et des differences dans les couts a encourir pour se conformer aux normes on souligne aussi l incidence asymetrique des normes sur les produits domestiques et importes quand les taxes sont sous optimales cette incidence asymetrique peut faire que la politique qui vise la maximisation du bien etre soit en violation du principe de traitement identique

selective contracts foreclosure and the chicago school view abstract i examine a mechanism by which exclusive supply contracts may inefficiently deter entry into the market in the model the incumbent supplier selectively offers contracts only to some buyers and convinces them to consent by guaranteeing them low prices the contracts strengthen the monopoly position of the incumbent supplier and allow it to extract rents from the remaining buyers that were not offered contracts aside from the favorable contract terms buyers have another reason to consent to the exclusivity scheme the latter raises the input costs of rival buyers that were not offered contracts the model has potential applications to the recent microsoft antitrust case 1994 i define exclusive supply contract as an agreement under which an upstream firm becomes the exclusive supplier of a downstream firm the downstream firm is prohibited from buying from other suppliers

an experimental evaluation of strategic preemption abstract this paper reports the results of a series of two stage two person noncooperative games where one player can strategically preempt the other in one of our designs the subgame perfect equilibrium entails complete preemption in the other it entails partial preemption the data show that players tend to completely preempt when it is privately optimal however when partial preemption is privately optimal a non trivial fraction of players persist in choosing the non preemptive structure this may result because of occasional irrational behavior following preemptive play which induces some dominant agents to play less aggressively

competition policy in the united states an overview this paper provides a summary of the basic policies in the united states that affect the state of competition in u s markets much of the paper focuses on antitrust policy but a substantial fraction of the paper is devoted to regulatory policies for both types of policies the paper explains the basic structures of the policies and also provides discussions of recent developments copyright 1993 by oxford university press

factors influencing adoption of land enhancing technology in the sahel lessons from a case study in niger abstract technical change through the introduction of land enhancing conservation technologies is essential to economic growth in the sahel tobit analysis was used to identify factors that motivate level and intensity of adoption of specific soil and water management technologies the results show that higher percentage of degraded farmland extension education lower risk aversion and the availability of short term profits are important for increasing the adoption and intensity of use of improved tassa and half crescent shaped earthen mounds age and attitudes to differential gains between farm and non farm income showed no influence on adoption three main policy implications emerge from these findings first technologies should be targeted to locations that have large percentages of degraded farmlands the probability of adoption and intensity of use are likely to be high at such locations second there is the need to provide extension education that demonstrates risk reduction capacities of conservation techniques this will make available information capable of stimulating adoption of land enhancing technologies finally policy makers should not seek to target innovations to younger farmers because age has no relationship to adoption of the improved tassa and half crescent shaped earthen mounds lessons from the case study have broad relevance to cropped areas in the sahel

an empirical test of the resource based theory strategic regulation in the dutch audit industry the resource based view of the firm is a recent strategic management theory that seeks to identify the resources that may provide firms with a sustainable competitive advantage this paper has two purposes first the paper relates strategic management arguments to parallel lines of reasoning in industrial organization theory and argues that strategic regulation is a major source of sustainable competitive advantage the second purpose of the paper is to report the results of an empirical test of the resource based theory on the basis of a longitudinal data set on the postwar history of the dutch audit industry a key determinant of this history proves to be strategic regulation which stimulates demand for audit services and protects rent producing resources

exclusive dealing before bork and beyond abstractantitrust scholars have come to accept the basic ideas about exclusive dealing that bork articulated in the antitrust paradox indeed they have even extended his list of reasons why exclusive dealing can promote economic efficiency yet they have also taken up his challenge to explain when exclusive dealing might possibly cause harm and have modeled a variety of special cases where it does some albeit not all of these are sufficiently plausible to be useful to prosecutors and judges

urban bias in price risk the geography of food price distributions in low income economies the geography of agricultural marketing has important implications for the stochastic distribution of agricultural commodity prices this article proposes that objective food price risk differs between rural and urban areas of infrastructure poor economies characterised by spatially concentrated patterns of foodgrains storage this difference implies an urban bias having adverse welfare effects for peasants who seasonally switch between net food seller and net food buyer positions empirical analysis of rice price data from madagascar suggests that price variability and skewness indeed differ between rural and urban areas in ways that adversely influence the relative welfare of rural peasants

do input subsidy programs crowd in or crowd out commercial market development modeling fertilizer demand in a two channel marketing system many governments in developing countries distribute fertilizer at subsidized prices in an effort to stimulate small farmers agricultural productivity and food security prior fertilizer demand studies have largely failed to account for the effects of government programs on farmers commercial purchases using a double hurdle model and nationally representative rural household panel data in zambia we distinguish between these sources and measure the contemporaneous crowding in and crowding out effects of government input programs on commercial fertilizer sales where the private sector is relatively active and average wealth is higher areas seemingly more likely to be targeted by government programs results indicate that subsidies have substantially crowded out the private sector in some cases to the point that such programs could actually lower overall fertilizer use on the other hand in poorer areas where the private sector is relatively inactive subsidies help to generate demand and crowd in private sector retailers empirical studies explicitly modeling farmers fertilizer purchase behavior within a dual marketing framework can provide important insights for agricultural policy discussions in developing countries

upgrades switching costs and the leverage theory of tying this article investigates the role of product upgrades and consumer switching costs in the tying of complementary products previous analyses have found that a monopolist of one product will not increase its profits and reduce social welfare by tying and leveraging its monopoly position into a complementary market if the initial monopolised product is essential where essential means that all uses of the complementary good require the initial monopolised product we show that this is not true in settings characterised by product upgrades and consumer switching costs we also discuss various extensions including the role of the reversibility of tying

caveat innovator strategic and structural characteristics of new product introductions abstract the assumptions underlying models of strategic behavior by incumbents are evaluated using a case study of a ground coffee product introduction the assumption underlying earlier strategic models that the entrant does not know the incumbent s payoffs after strategic have been tested does not appear to apply instead strategic behavior is observed to hinge on ex ante uncertainty about the structure of the payoff matrix and the incremental decision making which this uncertainty spawns in this environment strategies which create noise can slow learning and delay entry

regional free trade and social integration this paper analyzes recent free trade arrangements from a positive political economy perspective in contrast to most other literature which fails to take into account geographical factors it is argued here that proximity and transportation costs play an important role in trade arrangements another important also largely neglected factor is the degree of social cohesion in terms of labor standards among potential trading partners a political support maximizing government will consider these factors when balancing political support from free traders and protectionists

government manipulation of constitutional level transaction costs a general theory of transaction cost augmentation and the growth of government transaction costs are pivotal to the ongoing political choice of where to draw the line between the private sector and the public sector contrary to the dominant paradigm politically important transaction costs are actively manipulated in the public sector by those who perceive potential personal gain from such action over time transaction cost changes so created by government decision makers may fundamentally redefine the role and scope of government to analyze the role of transaction costs in the growth or decline of government it is essential to distinguish transaction costs that are unavoidable realworld constraints from those that are contrived in the sense that they are created by government officials use or extension of their existing authority once discretionary power is vested in the government its officials have both the capacity and the incentive to restructure the transaction costs constraining the revision ofgovernrnental authority this restructuring of transaction costs may take two forms 1 altering people s perceptions of the costs and benefits of governmental authority in a given sphere an information cost problem 1 2 altering the cost of acting upon one s perceptions of the costs and benefits of collectivization in order to procure revision of the scope of governmental authority 2

access to natural gas storage facilities strategic and regulation issues abstract in this paper we analyze the strategic function of gas storage focusing on how gas storage decisions impact competition between gas companies on both spot and downstream markets using a two tier oligopolistic structure we first show that gas storage is actually used strategically even in a symmetric oligopolistic setting along the gas value chain storage is then a way to intensify competition on the spot market second we analyze the setting where a company has favored access to storage for example due to a historical monopolistic position and we analyze this as a leadership situation in the context of tpa regulation we then show that this setting compels the leader to adopt a strategic storage decision this strategy consists of levels of gas stored being greater than supplies available in the downstream market such a leader decision is part of a strategy to raise a rival s costs furthermore one can think that optimal regulation of the access to storage facilities would prevent such a behavior however especially when storage is not too costly we show that preventing a storage strategy for the leader is not optimal since the strategy helps to reduce the spot market price

stages and determinants of fertilizer use in semiarid african agriculture the niger experience fertilization is a stepwise decision in niger survey data from a representative sample of 100 households were utilized with individual and joint estimation to evaluate the determinants of fertilizer use at its three different stages manure alone and two different types of inorganic fertilizer application the fertilizer price relative to the millet price was always a highly significant determinant of fertilizer adoption farmers experience in seeing the results of fertilization in the field was a principal factor influencing the use of manure and of the micro fertilization other studies in semiarid regions have emphasized risk liquidity or fertilizer responsiveness under harsh conditions but the shift to the micro doses of inorganic fertilizer was statistically associated here with the demonstration trials and the price ratios fertilizer millet a variable reflecting the millet price recovery approximately 6 months after harvest was the most important factor in the decision to raise further inorganic fertilizer use with side dressing policy implications were focused on the importance of demonstration trials and improvements in the economic conditions millet fertilizer price ratios

a signaling model of environmental overcompliance abstract we present a theory of unilateral regulatory overcompliance as a signaling device firms that have a competitive advantage in the use of a cleaner but more costly technology overcomply in order to signal to an imperfectly informed benevolent government that compliance costs are low thereby triggering tougher regulation we identify the conditions under which such an overcompliance signaling equilibrium arises showing that there may be over overcompliance in that firms may overcomply even when tougher regulation is not socially desirable we also discuss the differential implications of the signaling theory as compared to other theories of unilateral regulatory overcompliance

the elementary economics of social dilemmas a social dilemma is in essence a prisoners dilemma in a continuous strategy space i discuss a number of social dilemmas that have caught my attention offer an elementary diagrammatic synthesis of them and discuss some of the economic insights that the diagrams capture including incentives for pre commitment finally i model pre commitment via delegation and link results to the literature on the evolution of preferences l economie elementaire des dilemmes sociaux un dilemme social est essentiellement un dilemme du prisonnier dans un espace continu de strategie l auteur discute d un certain nombre de dilemmes sociaux qui ont retenu son attention il en propose une synthese graphique elementaire et discute certaines des suggestions economiques qui decoulent de ces diagrammes comme par exemple les incitations a se pre engager finalement l auteur construit un modele de pre engagement par delegation et relie ses resultats a la litterature sur l evolution des references

nominal vs real adjustment in demand for money functions recently fair 1987 has addressd an interesting question in the areas of demand for money namely whether the adjustment of actual to desired demand for money is in nominal or real terms his conclusion based on time seies analysis for twenty seven countries including a few developing countries was that the evidence was overwhelmingly in favour of the nominal hypothesis the aim of this paper is to address the same issue for eleven asian countries in the process a reformulation of the test procedure used by fair is suggested in addition the question is also examined within the framework of the error correction model the models are also tested for structural stability the scheme of the paper is as follows the models and the tests are specified in section i the data and the estimation issues are dealt with in section ii section iii presents the results the paper is concluded with a brief summary of the major findings