matching with waiting times the german entry level labor market for lawyers abstract we study the allocation of german lawyers to regional courts for legal trainee ships because of excess demand in some regions lawyers often have to wait before being allocated the currently used berlin mechanism is not weakly pareto efficient does not eliminate justified envy and does not respect improvements we introduce a mechanism based on the matching with contracts literature using waiting time as the contractual term the resulting mechanism is strategy proof weakly pareto efficient eliminates justified envy and respects improvements we extend our proposed mechanism to allow for a more flexible allocation of positions over time

taxation in matching markets what is the impact of taxation in matching markets in matching markets because agents have heterogeneous preferences over potential partners welfare depends on which agents are matched to each other in equilibrium taxes in matching markets can generate inefficiency by changing who is matched to whom even if the number of workers at each firm is unaffected for markets in which workers refuse to match without a positive wage higher taxes decrease match efficiency however in more balanced matching markets where transfers may flow in either direction such as the student college market lowering taxes may decrease match efficiency because an agent can transfer enough to buy an inefficient partner only to be bought back when taxes are lowered further simulations show that in matching markets traditional deadweight loss estimates based on the change in taxable income can be substantially biased in either direction jel classification h20 j24 c78 d13

walrasian equilibrium with gross substitutes in this paper we study the problem of efficient production and allocation of indivisible objects among a set of consumers we assume that the agents preferences depend on the bundle of objects and the quantity of money they consume furthermore we assume that preferences are quasilinear in money and that agents have a large endowment of money with indivisibilities it is well known that many familiar properties of the utility functions fail to ensure existence in their striking analysis of the matching problem kelso and crawford 5 introduce the gross substitutes gs condition which ensures the non emptiness of the core we propose two new conditions and show that with quasilinearity they are equivalent article id jeth 1999 2531 available online at http www idealibrary com on

theory of the firm and structure of residual rights abstract this paper develops a general equilibrium model with consumer producers economies of specialization and transaction costs to investigate the emergence of firms from the division of labor and the function of a structure of residual rights it is shown that the institution of the firm can be used to get intangible intellectual property involved in the division of labor while avoiding its direct pricing and marketing so that the division of labor can be promoted by saving on transaction costs

intermediation and resale in networks i study intermediation via sequential bilateral bargaining in markets with a network structure a partition of the network into layers captures intermediation power competition governs trade withi

a note on the local expectations hypothesis a discrete time exposition cox ingersoll and ross 1 distinguished various forms of the expectations hypothesis of the term structure of interest rates they proved that with one exception these are consistent with general equilibrium only in the trivial case in which interest rates are nonrandom the exception is the local expectations hypothesis because of this nonexistence result those who regard the expectations hypothesis as a natural starting point in investigating the term structure of interest rates are motivated to understand under what restrictions the local expectations hypothesis is valid in our experience many readers of cox ingersoll and ross s paper particularly those not conversant with stochastic calculus have difficulty following the discussion such readers may find it easier to work through an analysis of the local expectations hypothesis in a more familiar discrete time framework this paper provides such an exposition in continuous time the local expectations hypothesis states that the conditional expected rates of return on bonds of all maturities over the next instant are equal to each other and to the instantaneous spot interest rate cox ingersoll and ross proved p 783 ff that the local expectations hypothesis is valid in an exchange economy if the dynamics of consumption are locally certain in a stochastic constant returns to scale production economy they showed that the local expectations hypothesis will be valid under locally certain production dynamics if in addition agents have logarithmic utility the analogous definition of the local expectations hypothesis in discrete time is that the conditionally expected one period rates of return on bonds of all maturities are equal to each other and to the one period interest rate two examples below illustrate that the local expectations hypothesis is valid in discrete time economies under the same conditions as in continuous time economies these examples work because a sufficient condition for the validity of the local expectations hypothesis is that the marginal utility of consumption be locally certain this might happen either because consumption itself is locally certain as in both of the above mentioned examples or because the utility function exhibits risk neutrality and there is strictly positive consumption in every period a third example shows that risk neutrality alone does not imply the local expectations hypothesis if zero consumption can occur the reason is that the implication of risk neutrality that rates of interest are nonrandom requires the exclusion of corner solutions a restriction which is violated if zero consumption can occur

substitutes and stability for matching with contracts we consider the matching problem with contracts of hatfield and milgrom 2005 and we introduce new concepts of bilateral and unilateral substitutes we show that bilateral substitutes is a sucient condition for the existence of a stable allocation in this framework however the set of stable allocations does not form a lattice under this condition and there does not necessarily exist a doctor optimal stable allocation under a slightly stronger condition unilateral substitutes the set of stable allocations still does not necessarily form a lattice with respect to doctors preferences but there does exist a doctor optimal stable allocation and other key results such as incentive compatibility and the rural hospitals theorem are recovered

testing the scale effect predicted by the fujita krugman urbanization model abstract this paper tests the scale effect predicted by the fujita krugman fujita m krugman p 1995 when is the economy monocentric von th nen and chamberlin unified regional science urban economics 25 505 528 urbanization model which implies a monotonically positive relationship between the average firm size and the degree of urbanization given that population and fixed cost do not decrease empirical data from seven oecd countries are examined and the fujita krugman model is tested the results suggest that the prediction in the fujita krugman model is incompatible with empirical observation the evidence in the paper seems to support the alternative classical urbanization theory proposed by xenophon gordon b 1975 economic analysis before adam smith macmillan london and william petty petty w 1683 another essay on political arithmetics in hull c h ed economic writings of sir william petty augustus m kelly new york p 947 reissued in 1963 and formalized by yang yang x 1991 development structure change and urbanization journal of development economics 34 199 222 yang and rice yang x rice r 1994 an equilibrium model endogenizing the emergence of a dual structure between the urban and rural sectors journal of urban economics 25 346 368 and sun and yang sun g yang x 2002 agglomeration economies division of labor and the urban land rent escalation a general equilibrium analysis of urbanization australian economic papers 41 164 183

on the correspondence of contracts to salaries in many to many matching abstract in this note i extend the work of echenique 2012 to show that a model of many to many matching with contracts may be embedded into a model of many to many matching with wage bargaining whenever 1 all agents preferences are substitutable and 2 the matching with contracts model is unitary in the sense that every contractual relationship between a given firm worker pair is specified in a single contract conversely i show that unitarity is essentially necessary for the embedding result

the role of networks in antitrust investigations antitrust investigations typically focus on the competitive pressures coming from within the defined markets of interest however competitive pressures can also come from other markets even when individually these markets place only weak constraints on one another collectively they may matter a networks approach to modelling competition permits a systemic view of competition that can sometimes paint a more accurate picture we demonstrate this through some simple examples and show more generally how tools from the networks literature can be applied to capture competition across a system of interrelated markets as a leading example we consider antitrust investigations into supermarkets where local geographic markets have been used as the basis of investigation

a micro macroeconomic analysis based on a representative firm in this paper i develop a method of analysis incorporating elements of micro and macroeconomics as well as general equilibrium in order to examine the effects of economy wide changes in demand costs expectations etc it focuses on the microeconomics of a representative firm1 but takes account of the effects of macroeconomic variables aggregate demand aggregate output and the price level on the demand and cost functions of the firm it thus goes beyond a partial microeconomic analysis but stops short of a fully general equilibrium analysis of the arrow debreu type it deals with aggregates and averages but with the microeconomic foundation built into the analysis our method is based on a number of simplifications some essential some purely for simplicity outlined below if we view the method as using the response of the representative firm to approximate the response of the whole economy the simplifications involved seem reasonable in the spirit of positive economics whether the approximation is acceptable can be settled only by empirical testing of the conclusions of the theory by way of conclusions our method not only provides strong qualitative results but in some cases also quantitative results summarized into the four propositions below since our method can be used either for the whole economy or for an industry on which see ng 1981a it has significance for both macro and microeconomic problems

general equilibria in large economies with endogenous structure of division of labor abstract we study a general equilibrium model with specialization and division of labor the market coordinates all individuals decisions in choosing their patterns of specialization in order to utilize positive network effects of division of labor net of transaction costs we establish the equilibrium existence theorem the first and second welfare theorems and the core equivalence for a family of general equilibrium models with both possible increasing returns and transaction costs using an analytical framework with consumer producers economies of specialization and transaction costs we resurrect the spirit of the classical economics of the division of labor in a modern body of mathematical formalism

a double track adjustment process for discrete markets with substitutes and complements we propose a new walrasian tatonnement process called a double track procedure for efficiently allocating multiple heterogeneous indivisible items in two distinct sets to many buyers who view items in the same set as substitutes but items across the two sets as complements in each round of the process a walrasian auctioneer first announces the current prices for all items buyers respond by reporting their demands at these prices and then the auctioneer adjusts simultaneously the prices of items in one set upward but those of items in the other set downward it is shown that this procedure converges globally to a walrasian equilibrium in finitely many rounds

matching with contracts comment the theory of two sided matching markets has interested researchers for its theoretical appeal and its relevance to the design of real world institutions the medical residency matching mecha nism in the united states the national resident matching program nrmp and student assign ment systems in new york city and boston are important mechanisms designed by economists using the theory 1 hatfield and paul r milgrom 2005 present a unified framework of matching with contracts which includes the two sided matching and package auction models as well as a simplified version of a labor market model of alexander kelso and vincent p crawford 1982 as special cases they introduce the substitutes condition of contracts which is an adaptation of the substitutability condition in the matching literature roth and marilda a oliveira sotomayor 1990 to matching with contracts they show that there exists a stable allocation if contracts are substitutes for hospitals and that a number of other results in matching generalize to problems with contracts they further claim that the substitutes condition on individual hospitals prefer ences is necessary to guarantee the existence of a stable allocation for all possible singleton preferences of others that is if contracts are not substitutes for a hospital then there exists a preference profile of other hospitals with single job openings and doctors such that there exists no stable allocation we show that this last claim of hatfield and milgrom 2005 does not hold in general the counterexample we present involves a hospital which has two different kinds of positions and the preferences of the hospital are a combination of preferences of these two positions while the substitutes condition does not hold for that hospital we adopt a technique developed by bettina klaus and flip klijn 2005 and show that there exists a stable allocation we then present the weak substitutes condition which we show is necessary to guarantee existence of stable allocations the modified result we present as well as the original contribu tion of hatfield and milgrom 2005 suggest a connection between the substitutes condition and stability 2

a theory of buyer seller networks this paper introduces a new model of exchange networks rather than markets of buyers and sellers it begins with the empirically motivated premise that a buyer and seller must have a relationship a link to exchange goods networks buyers sellers and the pattern of links connecting them are common exchange environments this paper develops a methodology to study network structures and explains why agents may form networks in a model that captures characteristics of a variety of industries the paper shows that buyers and sellers acting strategically in their own self interests can form the network structures that maximize overall welfare

bertrand competition with subcontracting we investigate how the possibility of subsequently subcontracting production to each other influences rivals initial competition for a contract or a market as a two stage game in its first stage the two firms engage in price competition to supply a contract or a market in the second stage the firms may subcontract production to each other it is supposed that the firms produce the identical product with the same strictly convex cost function the incentive for subcontracting comesfrom the strictly convex production costs a firm is obliged to supply the entire quantity demanded at its quoted price our analysis discloses that if the winner of the game s first stage determines the terms of the subcontract in its second stage there exists a unique subgame perfect nash equilibrium spne in pure strategies in which the firms bid the same price in the first stage and both receive zero profits on the other hand if the loser of the game s first stage sets the terms of the subcontract in the second stage there exists a unique spne in pure strategies in which the firms bid the same price in the first stage and both receive positive profits the presence of the possibility of subcontracting supports a unique spne in pure strategies even though no actual subcontracting may occur the spne price is below the socially optimal price in the first case and is above it in the second case we also consider other modes of sharing the gains from subcontracting between the two firms such as the nash bargaining solution

information disclosure as a matching mechanism theory and evidence from a field experiment market outcomes depend on the quality of information available to its participants we measure the effect of information disclosure on market outcomes using a large scale field experiment that randomly discloses quality information in wholesale automobile auctions we argue that buyers in this market are horizontally differentiated across cars that are vertically ranked by quality this implies that information disclosure helps match heterogeneous buyers to cars of varying quality causing both good and bad news to increase competition and revenues the data confirm these hypotheses these findings have implications for the design of other markets including e commerce procurement auctions and labor markets jel c93 d44 d82 l15

stability and competitive equilibrium in trading networks we introduce a model in which agents in a network can trade via bilateral contracts we find that when continuous transfers are allowed and utilities are quasi linear the full substitutability of preferences is sufficient to guarantee the existence of stable outcomes for any underlying network structure furthermore the set of stable outcomes is essentially equivalent to the set of competitive equilibria and all stable outcomes are in the core and are efficient by contrast for any domain of preferences strictly larger than that of full substitutability the existence of stable outcomes and competitive equilibria cannot be guaranteed

sequential procurement with subcontracting two symmetric sellers are approached sequentially by fragmented buyers each buyer conducts a second price auction and purchases from the seller who offers the lower price winning an auction affects bidding for future contracts because the sellers have nonconstant marginal costs we assume that the sellers are completely informed and we study the unique equilibrium that survives iterated elimination of weakly dominated strategies if subcontracting between the sellers is impossible the final allocation of contracts is generally inefficient if postauction subcontracting is possible the sellers can be worse off ex ante than when subcontracting is impossible

immiserizing growth in a closed economy we develop a model with three key features a factor market distortion monopoly power in the product market and indivisibilities in consumption in this setting multiple equilibria arise one with high and the other with low equilibrium wages incomes and output it is also shown that even in a closed economy growth may be immiserizing and finally that redistribution could be a rich man s game

the new keynesian economics preface 1 from keynesian to new keynesian economics 2 keynesian microfoundations in historical perspectives part i real rigidities 3 the labour market and real wage rigiditry 4 credit rationing and imperfect capital markets 5 real rigidities in the goods market part ii nominal rigidities introduction 6 rational models of irrational behaviour 7 price setting with adjustment cost 8 real and nominal price rigidity further issues part iii coordination failures and hysteresis 9 coordination failures 10 hysteresis conclusions

cost pass through and inverse demand curvature in vertical relationships with upstream and downstream competition this paper provides two characterizations of the retailer s markup relative to the manufacturer s markup in vertical relationships with homogeneous manufacturers and homogeneous retailers we first show that retailer s relative markup is equal to the ratio of the retail pass through to the wholesale pass through multiplied by the number of manufacturers relative to the number of retailers we then provide its expression in terms of the inverse demand curvature

declining discount rates and the fisher effect inflated past discounted future uncertain and persistent real interest rates underpin one argument for using a declining term structure of social discount rates in the expected net present value enpv framework despite being controversial this approach has influenced both the inter agency working group on cost benefit analysis and the uk government s guidelines on discounting we first clarify the theoretical basis of the enpv approach then rather than following previous work which used a single series of u s treasury bond returns we treat nominal interest rates and inflation as co integrated series and estimate the empirical term structure of discount rates via the fisher effect this nests previous empirical models and is more flexible it also addresses an irregularity in previous work which used data on nominal interest rates until 1950 and real interest rates thereafter as we show the real and nominal data have very different time series properties this paper therefore provides a robustness check on previous discounting advice and updated methodological guidance at a time when governments around the world are reviewing their guidelines on social discounting the policy implications are discussed in the context of the social cost of carbon nuclear decommissioning and public health

the english auction with differentiated commodities abstract we study economies with indivisibilities that satisfy the gross substitutes gs condition we define an excess demand set with the property that increasing the prices of all goods in excess demand eventually leads to the smallest walrasian prices this procedure is a generalization of the auction studied by g demange d gale and m j sotomayor polit econ 94 1986 863 872 in our auction truthful revelation of demand is a perfect bayesian equilibrium if the smallest walrasian prices correspond to the vickrey clarke groves payments however no dynamic auction can reveal sufficient information to implement the vickrey mechanism if all gs preferences are allowed journal of economic literature classification numbers d4 d44 d5 d51

monopolistic competition and the effects of aggregate demand how important is monopolistic competition to an understanding of the effects of aggregate demand on output we ask the question at three levels can monopolistic competition by itself explain why aggregate demand movements affect output can it together with other imperfections generate effects of aggregate demand in a way that perfect competition cannot if so can it give an accurate account of the response of the economy to aggregate demand movements the answers are no yes and yes

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

competitive equilibria in two sided matching markets with general utility functions we present an exact characterization of utilities in competitive equilibria of two sided matching markets in which the utility of each agent depends on the choice of partner and the terms of the partnership potentially including monetary transfer examples of such markets include sellers and buyers or jobs and workers demange and gale showed that the set of competitive equilibria in this type of market forms a complete lattice with each extreme point of the lattice representing an equilibrium with the highest utilities for the agents on one side and the lowest utilities for the agents on the opposite side our characterization is based on establishing a connection between the competitive equilibria of a market and the competitive equilibria of certain strict subsets of that market each obtained by removing exactly one agent this characterization captures the effect of competition when agents are added to the market or removed from the market it gives a precise procedure for constructing competitive eq

development structural changes and urbanization abstract this paper constructs an equilibrium model by formalizing a trade off between the gains from trade based on increasing returns to specialization and transaction costs the relationship between development structural changes and urbanization is investigated in addition the function of a free market in searching for the efficient market structure is explored

tick size price grids and market performance stable matches as a model of market dynamics and equilibrium abstract the tick size in a financial market is the minimum allowable difference between ask and bid prices by the rules of each exchange no transactions can occur within the tick interval the impact of tick size is an ongoing controversy which we study by experimental methods whose simplicity helps distinguish among competing models of complex real world securities markets we observe patterns predicted by a matching cooperative game model because a price grid interferes with a competitive equilibrium and restrictions on order flow interfere with information aggregation the matching model provides predictions when the competitive model cannot although their predictions are the same when a competitive equilibrium does exist our experiments examine stable allocations average prices timing of order flow information flow and price dynamics larger tick size invites more speculation which in turn increases liquidity however increased speculation leads to inefficient trades that otherwise would not have occurred

benchmarking the expectations hypothesis of the interest rate term structure an analysis of cointegration vectors i test cointegration restrictions that are consistent with the expectations hypothesis of the term structure by employing the full information maximum likelihood methods developed by johansen yield curves appear to be the result of cointegration among interest rates the cointegration vectors that best describe the long term impact of interest rate levels on interest rate changes can often be written as linear combinations of interest rate spreads there is however difficulty in keeping short term yields in such a restricted cointegrated system with other interest rates short term speculative returns from long term bonds do not conform to the expectations hypothesis

specifying a structural matching game of trading networks with transferable utility structural estimation of matching games with transferable utility including matching games of trading networks and many to many matching is increasingly popular in empirical work i explore several modeling decisions that need to be made when specifying a structural model for a matching game one decision is the choice of a game theoretic solution concept to impose in the structural model i discuss pairwise stability competitive equilibrium and noncooperative games such as auctions another decision is whether to work with a continuum of agents or a finite number of agents i explore other issues as well

matching with contracts we develop a model of matching with contracts which incorporates as special cases the college admissions problem the kelso crawford labor market matching model and ascending package auctions we introduce a new law of aggregate demand for the case of discrete heterogeneous workers and show that when workers are substitutes this law is satisfied by profit maximizing firms when workers are substitutes and the law is satisfied truthful reporting is a dominant strategy for workers in a worker offering auction matching algorithm we also parameterize a large class of preferences satisfying the two conditions

technological change and the boundaries of the firm the authors examine a firm s decision either to produce an essential input itself or to hire a subcontractor to produce the input the authors focus on how this decision is affected by technological change in the industry in general cost reducing technological change leads the firm to produce the input itself more often the firm s calculus is shown to depend on whether the subcontractor s skills are idiosyncratic or transferable in the latter case technological progress can even be detrimental to the firm and to society as a whole copyright 1991 by american economic association

competitive equilibrium in an exchange economy with indivisibilities abstract we analyze an exchange economy in which i all commodities except money are indivisible ii agents preferences can be described by a reservation value for each bundle of indivisible objects and iii all agents are price takers we obtain a necessary and sufficient condition under which market clearing prices exist implications for market mechanisms are discussed journal of economic literatureclassification numbers d51 c78

understanding preferences demand types and the existence of equilibrium with indivisibilities we propose new techniques for understanding agents valuations our classification into demand types incorporates existing definitions substitutes complements strong substitutes etc and permits new ones our unimodularity theorem generalises previous results about when competitive equilibrium exists for any set of agents whose valuations are all of a demand type for indivisible goods contrary to popular belief equilibrium is guaranteed for more classes of purely complements than of purely substitutes preferences our intersection count theorem checks equilibrium existence for combinations of agents with specific valuations by counting the intersection points of geometric objects applications include matching and coalition formation and the product mix auction introduced by the bank of england in response to the financial crisis

optimal assignment of principalship in teams abstract this paper investigates the optimal assignment of principalship in teams we formalize a theory of the firm pioneered by alchian and demsetz am econ rev 62 1972 777 using an approach in the spirit of grossman and hart j pol econ 94 1986 691 our theory makes a distinction between production effort and monitoring effort when it is costly to sign contracts on efforts it may be optimal to let one party purchase the rights to monitor and to direct and claim full residual principalship is the purchase of these rights these rights are limited residual rights of control over actions we have confirmed alchian and demsetz s celeberated conjecture that residual claims should match residual control we have also explored how the optimal assignment of principalship and partnership depends on the interaction between each member s importance in production the effectiveness of monitoring and the degree of teamwork

a microeconomic mechanism for economic growth this paper constructs a dynamic general equilibrium model in which economic growth is explained by the evolution of the division of labor the relationships among the accumulation of human capital the evolution of the division of labor endogenous comparative advantage trade dependence the market structure and economic growth are investigated

formalizing internationalization in the eclectic paradigm the paper presents a simple general equilibrium model that formalizes internationalization in the eclectic paradigm based on a reconfiguration of concepts taken from the new classical economics literature the model enables us to address simultaneously the role of ownership location and internalization advantages and their interaction in the emergence of the multinational enterprise mne through a set of mathematical inequalities our model offers a bridge between the detached perceptions of the mne often held by international trade economists and international business scholars and makes specific aspects of the eclectic paradigm empirically testable

gamma discounters are short termist weitzman 1998 2001 proposed a simple gamma discounting method to characterize the term structure of discount rates today from the sole distribution of future spot interest rates this rule which justifies using a smaller discount rate for longer maturities is now used for long term policy evaluations in the uk france norway and potentially in the us but we show that there is no social preference within the discounted expected utility framework that generically supports this pricing model and its underlying criterion the expected net present value rule considering a standard lucas tree economy we characterize the term structure from a coherent joint distribution of future spot interest rates and future consumption levels when future growth rates are positively serially correlated efficient discount rates today are decreasing with maturity and the gamma discounting rule yields discount rates that are larger than the efficient ones

credible group stability in many to many matching problems abstract it is known that in two sided many to many matching problems pairwise stable matchings may not be immune to group deviations unlike in many to one matching problems blair 1988 in this paper we show that pairwise stability is equivalent to credible group stability when one side has responsive preferences and the other side has categorywise responsive preferences a credibly group stable matching is immune to any executable group deviations with an appropriate definition of executability under the same preference restriction we also show the equivalence between the set of pairwise stable matchings and the set of matchings generated by coalition proof nash equilibria of an appropriately defined strategic form game

the contractual nature of the firm for their helpful comments i am grateful to armen a alchian yoram barzel keith leffler john s mcgee and dean worcester 1 ronald h coase the nature of the firm 4 economica 386 1937 the paper however was written several years earlier see note 3 infra 2 the social sciences citation index provides the following information breaking down the period of 1966 80 into three five year periods the total citations of coase s firm paper for each subperiod are 1966 70 17 citations 1971 75 47 citations and 1976 80 105 citations

incentivizing resilience in financial networks when banks extend loans to each other they generate a negative externality in the form of systemic risk they create a network of interbank exposures by which they expose other banks to potential insolvency cascades in this paper we show how a regulator can use information about the financial network to devise a transaction specific tax based on a network centrality measure that captures systemic importance since different transactions have different impact on creating systemic risk they are taxed differently we call this tax a systemic risk tax srt we use an equilibrium concept inspired by the matching markets literature to show analytically that this srt induces a unique equilibrium matching of lenders and borrowers that is systemic risk efficient i e it minimizes systemic risk given a certain transaction volume on the other hand we show that without this srt multiple equilibrium matchings exist which are generally inefficient this allows the regulator to effectively stimulate a rewiring of the equilibrium interbank network so as to make it more resilient to insolvency cascades without sacrificing transaction volume moreover we show that a standard financial transaction tax e g a tobin like tax has no impact on reshaping the equilibrium financial network because it taxes all transactions indiscriminately a tobin like tax is indeed shown to have a limited effect on reducing systemic risk while it decreases transaction volume

understanding price controls and nonprice competition with matching theory we develop a quality competition model to understand how price controls affect market outcomes in buyer seller markets with discrete goods of varying quality while competitive equilibria do not necessarily exist in such markets when price controls are imposed we show that stable outcomes do exist and characterize the set of stable outcomes in the presence of price restrictions in particular we show that price controls induce non price competition price floors induce the trade of inefficiently high quality goods while price ceilings induce the trade of inefficiently low quality goods

price controls non price quality competition and the nonexistence of competitive equilibrium we investigate how price ceilings and floors affect outcomes in continuous time double auction markets with discrete goods and multiple qualities when price controls exist the existence of competitive equilibria is no longer guaranteed hence we investigate the nature of non price competition and how markets might evolve in its presence we develop a quality competition model based on matching theory equilibria of the quality competition model always exist in such price constrained markets moreover they naturally correspond to competitive equilibria when competitive equilibria exist additionally we characterize the set of equilibria of the quality competition model in the presence of price restrictions in a series of experiments we find that market outcomes closely conform to the predictions of the model in particular price controls induce non price competition between agents both in theory and in the experimental environment market behaviors result in allocations close to the predictions of the model

equilibria and indivisibilities gross substitutes and complements this paper examines an exchange economy with heterogeneous indivisible objects that can be substitutable or complementary we show that a competitive equilibrium exists in such economies provided that all the objects can be partitioned into two groups and from the viewpoint of each agent objects in the same group are substitutes and objects across the two groups are complements this condition generalizes the well known kelso crawford gross substitutes condition and is called gross substitutes and complements we also provide practical and typical examples from which substitutes and complements are both jointly observed

the efficiency wage hypothesis a mesoeconomic analysis abstract in this paper we apply the mesoeconomic approach to examine the efficiency wage hypothesis with the traditional formulation of the efficiency wage hypothesis we show that under certain conditions the economy has a continuum of equilibria and that nominal shocks can have real effects depending on the firms expectations with a modified formulation of the efficiency wage hypothesis and increasing return to scale we capture the weak positive correlation between real wage and employment and show that nominal shocks may have real effects in an economy without a continuum of equilibria

connecting the cooperative and competitive structures of the multiple partners assignment game multiple partners assignment game is the name used by sotomayor the multiple partners game in m majumdar ed equilibrium and dynamics essays in honor of david gale the macmillan press ltd new york 1992 the lattice structure of the set of stable outcomes of the multiple partners assignment game int j game theory 28 1999 567 583 to describe the cooperative structure of the many to many matching market with additively separable utilities stability concept is proved to be different from the core concept an economic structure is proposed where the concept of competitive equilibrium payoff is introduced in connection to the equilibrium concept from standard microeconomic theory the paper examines how this equilibrium concept compares with the cooperative equilibrium concept properties of interest to the cooperative and competitive markets are derived

real and nominal interest rates a discrete time model and its continuous time limit i provide a general equilibrium theory of the term structure of real interest rates in a discrete time economy i derive the prices for one period and two period real bonds and a simple recursive formula for general k period bonds and prove that the price formula with appropriately specified parameters converges to that of the cox ingersoll and ross model 1985 in addition i consider the behavior of nominal bond prices in a partial equilibrium setting in which an exogenous price level process is correlated with the real economy finally i provide an illustrative empirical investigation of the model the results indicate a significant correlation between the price level and the growth rate of consumption which does not support the money nuetrality assumption underlying cox ingersoll and ross s nominal bond prices and related empirical studies such as gibbons and ramaswamyu 1992 heston 1991 and pearson and sun 1991 article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies