common trends and common cycles in regional crime this paper uses the vahid and engle journal of applied econometrics 8 341 360 1993 common trend common cycle approach to model the dynamics of regional crime rates in england over the period

substitute goods auctions and equilibrium this paper identifies two notions of substitutes for auction and equilibrium analysis weak substitutes the usual price theory notion guarantees monotonicity of t tonnement processes and convergence of clock auctions to a pseudo equilibrium but only strong substitutes which treats each unit traded as a distinct good with its own price guarantees that every pseudo equilibrium is a walrasian equilibrium that the vickrey outcome is in the core and that the law of aggregate demand is satisfied when goods are divisible weak substitutes along with concavity guarantees all of the above properties except for the law of aggregate demand

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

r d policies trade and process innovation we set up a simple trade model with two countries hosting one firm each the firms invest in cost reducing r d and each government may grant r d subsidies to the domestic firm we show that it is optimal for a government to provide higher r d subsidies the lower the level of trade costs even if the firms are independent monopolies if firms produce imperfect substitutes policy competition may become so fierce that only one of the firms survives international policy harmonization eliminates policy competition and ensures a symmetric outcome however it is shown that harmonization is not necessarily welfare maximizing the optimal coordinated policies may imply an asymmetric outcome with r d subsidies to only one of the firms

the marginal welfare cost of public funds theory and estimates abstract we derive a general analytic formula for the marginal welfare cost mwc of public funds without imposing restrictive assumptions on preferences or technologies the framework encompasses the various special cases previously considered and reconciles the disparities among the reported estimates of mwc unresolved differences in existing estimates are fully explained by appropriate interpretations of intended thought experiments and alternative assumptions about the elasticity of labor supply with respect to public spending further progress in measuring mwc requires empirical estimation of labor supply functions that include government spending as an explanatory variable

common trends and common cycles the existence of a serial correlation common feature among the first differences of a set of i 1 variables implies the existence of a common cycle in the beveridge nelson stock watson decomposition of those variables a test for the existence of common cycles among cointegrated variables is developed the test is used to examine the validity of the common trend common cycle structure implied by flavin s excess sensitivity hypothesis and campbell and mankiw s mixture of rational expectations and rule of thumb hypothesis for consumption and income linear independence between the cointegration and the cofeature vectors is exploited to decompose consumption and income into their trend and cycle components copyright 1993 by john wiley sons ltd

simultaneous auctions without complements are almost efficient abstract a simultaneous item auction is a simple procedure for allocating multiple indivisible goods to a set of bidders in a simultaneous auction every bidder submits bids on all items simultaneously the allocation and prices are then resolved for each item separately based solely on the bids submitted on that item such procedures are similar to auctions used in practice e g ebay but are not incentive compatible we study the efficiency of bayesian nash equilibrium bne outcomes of simultaneous first and second price auctions when bidders have complement free a k a subadditive valuations we show that the expected social welfare of any bne is at least 1 2 of the optimal social welfare in the case of first price auctions and at least 1 4 in the case of second price auctions

competitive equilibrium with indivisibilities abstract this paper studies an exchange economy with a finite number of agents in which each agents is initially endowed with a finite number of personalized indivisible commodities we observe that the equivalence theorem of the core and the competitive equilibrium may not hold for this economy when the coalitional form game is generated in the standard manner we provide an alternative definition of the coalitional form game to resolve this problem so that the balancedness of the new defined game provides a useful necessary and sufficient condition for the existence of competitive equilibrium for the original economy journal of economic literature classification numbers c71 d41 d51

the politician and his banker should the european union grant state aid through an institution like the european investment bank this paper evaluates the efficiency of different measures for granting state aid we use a theoretical model with firms that differ in their creditworthiness and compare different types of subsidies with indirect subsidization through public banks we find that in a large parameter range the politician prefers public banks to direct subsidies because they avoid windfall gains to entrepreneurs and they economize on screening costs for similar reasons they may increase social welfare relative to subsidies one important prerequisite for this result is that public banks must not be allowed to fully compete with private banks however from a welfare perspective a politician uses public banks inefficiently often

the average shadow price for milps with integral resource availability and its relationship to the marginal unit shadow price abstract the economic significance of the average shadow price for integer and mixed integer linear programming milp problems has been established by researchers kim and cho eur j operat res 37 1988 328 crema eur j operat res 85 1995 625 in this paper we introduce a valid shadow price aspira for integer programs where the right hand side resource availability can only be varied in discrete steps we also introduce the concept of marginal unit shadow price musp we show that for integer programs a sufficient condition for the marginal unit shadow price to equal the average shadow price is that the law of diminishing returns should hold the polyhedral structures that will guarantee this equivalence have been explored identification of the problem classes for which the equivalence holds complements the existing procedure for determining shadow price for such integer programs the concepts of aspira and musp introduced in this paper can play a vital role in resource acquisition plans and in defining efficient market clearing prices in the presence of indivisibilities

an efficient dynamic auction for heterogeneous commodities this paper proposes a new dynamic design for auctioning multiple heterogeneous commodities generalizing earlier work that treated identical objects an auctioneer wishes to allocate one or more units of each of k heterogeneous commodities to n bidders the auctioneer announces a vector of current prices bidders report back quantities demanded at these prices and the auctioneer adjusts the prices units are credited to bidders at the current prices as their opponents demands decline and the process continues until every commodity market clears bidders rather than being required to behave as price takers are permitted to strategically exercise their market power nevertheless with pure private values the proposed auction yields walrasian equilibrium prices an efficient outcome results as from a vickrey clarke groves mechanism but bidders are only required to evaluate their demands along a one dimensional path of prices rather than reporting their utilities over the entire k dimensional consumption set the auction is also more transparent and potentially simpler for bidders to understand and has the advantage of assuring the privacy of the upper portions of bidders demands theoretically the new auction provides a new foundation for convergence to walrasian equilibrium in an exchange economy practically it provides an efficient method for simultaneously auctioning two or more related types of securities for example three month and six month treasury bills it is also potentially useful for auctioning multiple types of communications spectrum for example licenses for paired and unpaired spectrum

on the marginal welfare cost of taxation this paper develops a rigorous partial equilibrium analysis of the determinants of margin al welfare cost mwc of taxes on labor earnings it shows that four key parameters interact to determine the magnitude of mwc using aggregate data and plausible ranges of values for the parameters mwc can vary from under 10 percent to more than 300 percent of marginal tax revenue intermediate parameter values sugge st mwc is in the 25 50 percent range however the more extreme estimates cannot be ruled out on the basis of available evidence suggesting that mwc cannot yet be copyright 1987 by american economic association

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

the package assignment model we study assignment problems where individuals trade packages consisting of several rather than single objects although buyers reservations values are non additive efficient assignments can be formulated as a linear programming problem in which the pricing functions expressing duality may be non linear in the objects constituting the packages the interconnections among the linear programming formulation walrasian equilibrium and the core are established in the single seller auction version a necessary and sufficient condition is given for the vickrey payoff point to be implementable by a pricing equilibrium journal of economic literature classification numbers c62 d44 d51

determinants of state aid to firms the case of the european automotive industry using an original database for the 1992 2008 period we investigate the determinants of state aid to the automotive industry in the european union eu we find evidence that eu policies have been effective in reducing state aid and re orienting it toward horizontal objectives however national politics still have considerable relevance during election years governments are more generous and this is particularly true in eu countries with proportional representation finally a strategic game between countries seems to take place whereby a country s decision to grant aid seems to be responsive to aid previously granted by other member states

auction protocols for decentralized scheduling decentralized scheduling is the problem of allocating resources to alternative possible uses over time where competing uses are represented by autonomous agents market mechanisms use prices derived through distributing bidding protocols to determine schedules we investigate the existence of equilibrium prices for some general classes of scheduling problems the quality of equilibrium solutions and the behavior of an ascending auction mechanism and bidding protocol to remedy the potential nonexistence of price equilibria due to complementarities in preference we introduce additional markets in combinations of basic goods finally we consider direct revelation mechanisms and compare to the market based approach journal of economic literature classification numbers c62 c70 d44

an efficient ascending bid auction for multiple objects when bidders exhibit multi unit demands standard auction methods generally yield inefficient outcomes this article proposes a new ascending bid auction for homogeneous goods such as treasury bills or telecommunications spectrum the auctioneer announces a price and bidders respond with quantities items are awarded at the current price whenever they are clinched and the price is incremented until the market clears with private values this dynamic auction yields the same outcome as the sealed bid vickrey auction but has advantages of simplicity and privacy preservation with interdependent values this auction may retain efficiency whereas the vickrey auction suffers from a generalized winner s curse

impulse response analysis of cointegrated systems abstract impulse response or dynamic multiplier analysis of vector autoregressive systems with cointegrated variables is considered the asymptotic distribution of the responses estimated with johansen s 1988 maximum likelihood procedure is derived the results are illustrated with an analysis of a west german money demand system the investigation shows that a direct interpretation of the cointegration relations may be difficult or misleading thereby the virtue of impulse response analysis for applied work is illustrated

job matching and coalition formation with utility or disutility of co workers abstract this paper studies the job matching market in kelso and crawford 1982 econometrica50 1483 1504 with one exception that co workers may generate utility or disutility in the workplace we provide a simple idea to show how a great number of sufficient conditions for a nonempty core in the literature can be extended to this labor market a generalized competitive equilibrium with a tax subsidy system is also discussed journal of economic literature classification number d71

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

the existence and computation of competitive equilibria in markets with an indivisible commodity abstract this paper considers an exchange economy called a generalized assignment market in which sellers and buyers trade one indivisible commodity possibly with product differentiation for a perfectly divisible commodity the existence of a competitive equilibrium in this economy is proved using kakutani s fixed point theorem this existence theorem is applied to a production economy in which sellers are formulated as producers with convex cost functions two examples of housing markets are provided and their competitive equilibria are numerically calculated

existence and welfare properties of equilibrium in an exchange economy with multiple divisible indivisible commodities and linear production technologies abstract in this paper we consider a class of economies with a finite number of divisible commodities linear production technologies and indivisible goods and a finite number of agents this class contains several well known economies with indivisible goods and money as special cases it is shown that if the utility functions are continuous on the divisible commodities and are weakly monotonic both on one of the divisible commodities and on all the indivisible commodities if each agent initially owns a sufficient amount of one of the divisible commodities and if a no production without input like assumption on the production sector holds then there exists a competitive equilibrium for any economy in this class the usual convexity assumption is not needed here furthermore by imposing strong monotonicity on one of the divisible commodities we show that any competitive equilibrium is in the core of the economy and therefore the first theorem of welfare also holds we further obtain a second welfare theorem stating that under some conditions a pareto efficient allocation can be sustained by a competitive equilibrium allocation for some well chosen redistribution of the total initial endowments journal of economic literature classification numbers d4 d46 d5 d51 d6 d61

the communication requirements of social choice rules and supporting budget sets the paper examines the communication requirements of social choice rules when the sincere agents privately know their preferences it shows that for a large class of choice rules any minimally informative way to verify that a given alternative is in the choice rule is by verifying a budget equilibrium i e that the alternative is optimal to each agent within a budget set given to him therefore any communication mechanism realizing the choice rule must find a supporting budget equilibrium we characterize the class of choice rules that have this property furthermore for any rule from the class we characterize the minimally informative messages budget equilibria verifying it this characterization is used to identify the amount of communication needed to realize a choice rule measured with the number of transmitted bits or real variables applications include efficiency in convex economies exact or approximate surplus maximization in combinatorial auctions the core in indivisible good economies and stable many to one matchings

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

iterative auction design for tree valuations we study a special class of multi item valuations tree valuations that exhibit both value complementarity and substitutability we provide a linear programming formulation of the efficient allocation problem that is of polynomial size in the number of agents and items this reveals a new class of valuations for which a walrasian equilibrium exists in the presence of value complementarities an iterative algorithm for this linear program in conjunction with an appropriate payment rule yields an iterative auction that implements the efficient outcome at an ex post perfect equilibrium this auction relies on a simple pricing rule compact demand reports and uses a novel interleaved price update structure to assign final payments to bidders that guarantee truthful bidding

the politician and his banker how to efficiently grant state aid abstract politicians should spend money as efficiently as possible but what is the best method of granting state aid to firms we use a theoretical model with firms that differ in their success probabilities and compare different types of direct subsidies with indirect subsidies through bank loans we find that for a large range of parameters subsidies through banks entail higher social welfare than direct subsidies avoiding windfall gains to entrepreneurs and economizing on screening costs for selfish politicians subsidizing a bank has the additional advantage that part of the screening costs are born by private banks consequently from a welfare perspective politicians use subsidized banks inefficiently often

powering up developing countries through integration power market integration is analyzed in a two country model with nationally regulated firms and costly public funds if the generation costs between the two countries are too similar negative business stealing outweighs efficiency gains so that the subsequent integration welfare decreases in both regions integration is welfare enhancing when the cost difference between two regions is large enough the benefits from export profits increase the total welfare in the exporting country whereas the importing country benefits from lower prices in this case market integration also improves incentives to invest compared to autarky the investment levels remain inefficient however especially for transportation facilities free riding reduces incentives to invest in these public good components of the network whereas business stealing tends to decrease the capacity to finance new investment

multi item auctions a collection of items is to be distributed among several bidders and each bidder is to receive at most one item assuming that the bidders place some monetary value on each of the items it has been shown that there is a unique vector of equilibrium prices that is optimal in a suitable sense for the bidders in this paper we describe two dynamic auction mechanisms one achieves this equilibrium and the other approximates it to any desired degree of accuracy

an alternative proof of an equilibrium existence theorem in exchange economies with indivisibilities abstract bikhchandani and mamer 1997 j econom theory 74 385 413 studied an exchange economy with multiple indivisible objects and established a necessary and sufficient condition for the existence of competitive equilibrium by a linear programming approach this paper provides an alternative proof of their theorem by the core of a coalitional form game journal of economic literature classification number c71

bundling decisions by a multiproduct monopolist with incomplete information this paper analyzes bundling decisions of a rnultiproduct monopolist facing uncertain demand the monopolist sells his products using an auction mechanism and the market is analyzed as a game with incomplete information in which the buyers as well as the seller are strategic agents with a small number of buyers a profit maximizing seller will bundle all his output this makes buyers uniformly worse off compared to the case where the same monopolist does not bundle in the sense that any buyer is worse off regardless of his demand for the monopolist s outputs with a larger number of buyers the seller will have a tendency to unbundle his output and high demand buyers are worse off than they would be if the monopolist bundled his output low demand buyers on the other hand are always better off when the monopolist unbundles his output regardless of the number of competing buyers despite the fact that high demand buyers are the typical purchasers of the monopolist s output the net effect of increasing the number of buyers is greater market efficiency since bundling creates market inefficiencies both ex post and ex ante

pricing and allocation for quality differentiated online services we explore the problem of pricing and allocation of unique one time digital products in the form of data streams we look at the short term problem where the firm has a capacitated shared resource and multiple products or service levels we formulate the allocatively efficient generalized vickrey auction gva for our setting and point out the computational challenges in determining the individual discriminatory transfer payments we propose an alternative uniform price computationally efficient revenue maximizing knapsack formulation called the multiple vickrey auction mva while not incentive compatible the mva mechanism achieves bounded posterior regret and can be solved in real time it has the added benefit of realizing imputed commodity prices for the various services a feature lacking in the discriminatory gva approach for service providers that are concerned about the incentive compatibility but want imputed service prices we suggest a maximal mva mmva uniform pricing scheme that trades off revenue maximization for allocative efficiency for sake of completeness we discuss the properties of a first price pay your bid scheme while np hard and not incentive compatible this formulation has the perceived benefit of cognitive simplicity on the parts of sellers and bidders

package auctions and exchanges we report recent advances concerning the package allocation problem in which traders seek to buy or sell combinations of goods the problems are most difficult when some goods are not substitutes in that case competitive equilibrium typically fail to exist but the core is non empty and comprises the competitive solutions also in that case the vickrey auction fails to select core allocations and yield revenues that are less than competitive the ausubel milgrom auction generally selects core allocations and when goods are substitutes prescribes the vickrey allocation we also evaluate the problems and promise of mechanisms for the package exchange problem

marginal welfare cost calculations differential analysis vs balanced budget analysis abstract in a differential analysis tax revenue collections are held constant in a balanced budget analysis the spending level is changed and the level of distortionary taxation is changed correspondingly here income effects are important and efficiency calculations depend chiefly on uncompensated elasticities unless government exhaustive expenditure is assumed to substitute closely for cash a small scale computational general equilibrium model is constructed and differential and balanced budget experiments are performed results show that marginal welfare costs calculated from balanced budget experiments can be negative when labor supply functions are backward bending interactions among parameter values and efficiency costs are explored

on auction protocols for decentralized scheduling abstract this note shows that for the combinatorial market goods defined by wellman et al 2001 there may not exist an optimal allocation that is in equilibrium moreover this result holds even if the value of each processed job is independent of its completion time the proposed algorithm for finding an equilibrium allocation using an assignment model fails due to complementarity even for instances that admit an optimal allocation which is in equilibrium

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

informational limitations of ascending combinatorial auctions abstract we study the inherent limitations of natural widely used classes of ascending combinatorial auctions specifically we show that ascending combinatorial auctions that do not use both non linear prices and personalized prices cannot achieve social efficiency with general bidder valuations we also show that the loss of efficiency can be severe and that only a diminishing fraction of the social welfare may be captured this justifies the added complexity in the auctions suggested by e g parkes and ungar 2000 29 and ausubel and milgrom 2002 2

state aid in the european union the prohibition of subsidies in an integrated market the effect of prohibiting state aid in an integrated market is analysed in a symmetric cournot oligopoly model where one firm is located in each member state subsidies are financed by distortionary taxation so there is a trade off between the deadweight loss from the oligopolistic distortion and that from distortionary taxation it is shown that there exists a range of values for the opportunity cost of government revenue where member states want to give subsidies and where the multilateral prohibition of subsidies would increase aggregate welfare furthermore this range of values is shown to include plausible estimates of opportunity cost

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