an alternative approach to market structure and the markup ratio hall s studies of market power emphasize that the markup ratio of price over marginal cost is an important indicator for assessing the role of market structure in resource allocation without using concentration ratios and is also a good measure of allocative efficiency the basic idea was that price is equal to marginal cost if there is perfect competition and constant markup ratio a statistrical model was developed to estimate the markup ratio if the markup ratio estimated for an industry is unitary then the null hypothesis of competition is not rejected if however it is greater than one the alternative hypothesis of non competition is not rejected the theory mandates that monopoly power is dynamically constant despite a nonconstant productivity residual hall assumes in etimation that technical progress or solow residual has a randomness this assumption implies that the procyclicity of technical progress is not a true phenomenon the spurious procyclicity is revealed in the estimated mark

trends in market power and productivity growth rates in us and japanese manufacturing abstract trends were estimated for market power measured by the price marginal cost ratio and the total factor productivity growth rate for us and japanese manufacturing both trends are negative in both countries but japan s are significant and much steeper

the intertemporal stability of the concentration margins relationship using a longitudinal data base we find that there has been a substantial narrowing of the spread between the price cost margins of concentrated and unconcentrated industries including measures of macroeconomic fluctuations into standard price cost margin regressions we find significant differences in cyclical behavior across market structure we also explore a possible explanation unionization for differences in cyclical behavior finally we investigate the degree to which our results are affected by the potential simultaneity of concentration advertising and the price cost margin

incorporating fuel constraints and electricity spot prices into the stochastic unit commitment problem the electric power industry is going through deregulation as a result the load on the generating units of a utility is becoming increasingly unpredictable furthermore electric utilities may need to buy power or sell their production to a power pool that serves as a spot market for electricity these trading activities expose utilities to volatile electricity prices in this paper we present a stochastic model for the unit commitment that incorporates power trading into the picture our model also accounts for fuel constraints and prices that may vary with electricity prices and demand the resulting model is a mixed integer program that is solved using lagrangian relaxation and bender s decomposition using this solution approach we solve problems with 729 demand scenarios on a single processor to within 0 1 of the optimal solution in less than 10 minutes our numerical results indicate that significant savings can be achieved when the spot market is entered into the problem and when stochastic policy is adopted instead of a deterministic one

characteristics of discrete housing market model equilibria abstract a discrete microeconomic model of a market for heterogeneous housing units is presented it is proven that whenever bid rents are lower semicontinuous monotone decreasing functions of utility and asked rents are continuous monotone increasing functions of profits an equilibrium solution exists whose graph corresponds to a bipartite tree this graphical representation of the solutions provides a mechanism for analyzing important theoretical issues using graph theoretic techniques it is demonstrated that bargaining power assumptions are sufficient to ensure unique equilibrium price and utility levels alternatively ruling out the possibility of isolated submarkets guarantees unique market clearing prices unique equilibrium prices imply almost unique location decisions one may still be able to reassign households among housing units for which they are indifferent the model reconciles the dichotomy between open and closed market models by providing a robust mechanism for characterizing conditions when agents leave the market the reconciliation underscores the necessity for carefully choosing bargaining power market exit reservation rent and reservation utility assumptions in closed as well as open models without at least implicitly making assumptions of these sorts neither closed nor open models can determine anything more than relative prices the model generalizes versions of the urban institute housing market model and the market clearing section of the national bureau of economic research urban simulation model it presents an algorithm for computing equilibria and describes an application of this algorithm to the urban institute housing market model the algorithm computes equilibrium solutions at one sixth of the cost of using the original u i model algorithm

the convergence of profits in the long run inter firm and inter industry comparisons this paper considers the extent to which the short run dynamic behavior and long run equilibrium levels of profitability differ among firms within the same industry movements in profits are modeled in terms of firm specific deviations from average industry profits and industry specific deviations from economy wide average returns applied to a sample of 217 large u k firms 1951 77 the results suggest that considerable heterogeneities exist within most industries that is most firms profitability experience differs considerably from those of their closest rivals copyright 1987 by blackwell publishing ltd

causes of increased competition in the u s economy 1939 1980 examines the sources of increased competition in the united states u s between 1939 to 1980 in this paper authors consider the review of related literature trends and patterns of competitive structure in the u s economy influence of antirust actions on competition

market structure and cyclical fluctuations in u s manufacturing the relevance of imperfect competition for models of economic fluctuations has received increased attention from researchers in both macroeconomics and industrial organization the authors outline a new methodology for estimating industry markups of price over marginal cost and the influence of market structure on cyclical movements in total factor productivity measures of industry concentration import competition and unionization are important for explaining markups in some industry groups much of the estimated markup of price over marginal cost is accounted for by noncapital fixed costs finally the authors show that their estimated margins fluctuate substantially over the cycle in particular markups are countercyclical especially in concentrated durable goods industries copyright 1988 by mit press

a security constrained bid clearing system for the new zealand wholesale electricity market this paper reports upon the mathematical models and implementation of the scheduling pricing and dispatch spd application for the new zealand electricity market nzem spd analyzes bids for energy offers reserve offers and energy demands and recognizes explicitly the effects on bid clearing due to transmission congestion network losses reserve requirements and ramp rate limits advanced lp solution methods are utilized to solve the large scale constrained optimization problem results on a 67 bus test system and the nzem are included

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

the relative rigidity of monopoly pricing this paper seeks to explain why monopolies keep their nominal prices constant for longer periods than do tight oligopolies the authors show that cost changes create a larger incentive for duopolists to change their prices while demand changes tend to have a greater effect on a monopolist when both costs and demand are affected by small changes in the overall price level the cost effect dominates in the presence of a small fixed cost of changing prices therefore duopolists change their prices in response to smaller perturbations in underlying conditions copyright 1987 by american economic association

urban housing with discrete structures abstract competitive equilibrium in an urban housing model with structures that cannot be readily aggregated or subdivided is analyzed in this paper the price and quantity of services forthcoming from each dwelling occupied by a household is determined by the equality of competitive supply and demand a stack algorithm is then developed to ensure households are assigned to dwellings so that they would not prefer to live in any other dwelling with an equilibrium price less than the one they would pay if they lived there using the urban institute housing model as an example the results of this algorithm are compared with those of the algorithm developed by de leeuw and struyk d s the stack algorithm yields greater price discounting of existing dwellings below the price of a new dwelling than does the d s algorithm and thus a greater potential for housing prices to be increased by a demand subsidy such as a housing allowance

bidding in sequential electricity markets the nordic case abstract for electricity market participants trading in sequential markets with differences in price levels and risk exposure it is relevant to analyze the potential of coordinated bidding we consider a nordic power producer who engages in the day ahead spot market and the hour ahead balancing market in both markets clearing prices and dispatched volumes are unknown at the time of bidding however in the balancing market the market participant faces an additional risk of not being dispatched taking into account the sequential clearing of these markets and the gradual realization of market prices we formulate the bidding problem as a multi stage stochastic program we investigate whether higher risk exposure may cause hesitation to bid into the balancing market furthermore we quantify the gain from coordinated bidding and by deriving bounds on this gain assess the performance of alternative bidding strategies used in practice

empirical evidence on a special interest group perspective to antitrust while the antitrust laws claim to serve the public interest they are as susceptible to the influence of special interest groups as are any public policies this paper extends the empirical literature regarding the special interest theory of antitrust our additional empirical evidence addresses some of the shortcomings in previous approaches in particular we conduct a more rigorous statistical examination this paper separates two crucial issues first what happened to prices and output from 1880 to 1900 prior to and following passage of the sherman act in 1890 second what do these empirical results mean for the origin history and development of antitrust

the relation between price and marginal cost in u s industry an examination of data on output and labor input reveals that some u s industries have marginal cost well below price the conclusion rests on the finding that cyclical variations in labor input are small compared with variations in output in booms firms produce substantially more output and sell it for a price that exceeds the costs of the added inputs the paper documents the disparity between price and marginal cost where marginal cost is estimated from annual variations in cost it considers a variety of explanations of the findings that are consistent with competition but none is found to be completely plausible

offer stack optimization in electricity pool markets we consider a generator making offers of energy into an electricity pool market for a given time period it must submit an offer stack consisting of a fixed number of quantities of energy and prices at which it wants these quantities dispatched we assume that the generator cannot offer enough power to substantially affect the market price so the optimal response would be to offer energy at marginal cost however the market rules do not permit an arbitrary function so the problem is to find an offer stack approximating marginal cost in a way that maximizes its profit we give optimality conditions for this problem and derive an optimization procedure based on dynamic programming this procedure is illustrated by applying it to several examples with different costs of production

market offering strategies for hydroelectric generators this paper considers the problem of offering electricity produced by a series of hydroelectric reservoirs to a pool type central market the market model is a simplified version of the new zealand wholesale electricity market with prices modelled by a first order markov process the demand for electricity is not explicitly modelled the hydroelectric generator is assumed to be unable to influence market prices i e to be a price taker we discuss the resulting stochastic dynamic program methods for its solution and the explicit optimal offer curves that it produces it is shown that the utility function is monotone increasing with respect to both reservoir level and current price however the optimal offer curves need not be monotone this is shown by example numerical results are provided

market structure and cyclical fluctuations in u s manufacturing comment r ian domowitz glenn hubbard and bruce c peterson 1988 estimate industry markups of price over marginal cost and show the influence of market structure on cyclical movements in total factor productivity using a disaggregate panel data set of 284 four digit standard industrial classification industries in this comment the authors examine whether domowitz hubbard and peterson really estimate what they intend to estimate domowitz hubbard and peterson also claim their estimates are not as large as those of hall if it is not clear what they estimate the comparison is of limited usefulness nevertheless the domowitz hubbard and peterson study deserves consideration and contemplation by anyone interested in industrial economics copyright 1993 by mit press

a linear programming model of housing market equilibrium abstract this paper reviews wheaton s assertion that the herbert stevens linear programming model produces solutions which do not meet alonso s criteria for market equilibrium it demonstrates that although wheaton s criticism is valid in general under certain conditions an alternative specification of the objective function coefficients and the dual variables in the linear program produces a model whose solutions satisfy alonso s criteria finally this paper shows that the nber model is an application in which a linear programming problem computes market equilibria

strategic bidding for price taker hydroelectricity producers this paper introduces a stochastic programming model that integrates strategic bids or offers for electricity in quantities and prices in a deregulated electricity market the model is designed to maximize the profits of a producer of electricity who manages a series of power plants along a river the model is compared with a previously reported stochastic model where the bidding process is disregarded the superiority of the new model is empirically demonstrated on historical data

unraveling the productivity growth slowdown in the u s canada and japan the effects of subequilibrium scale economies and markup measures of productivity growth typically include in the productivity residual the impacts of fixity of factors subequilibrium costs of adjustment returns to scale and markups this paper proposes a general framework for adjusting the residual to accommodate these impacts by first correcting and then decomposing traditional measures use of the framework is illustrated empirically for the united states japanese and canadian manufacturing sectors using an econometric model that allows explicit incorporation and measurement of these factors the adjusted measures show that a significant amount of cyclical and secular change in measured productivity growth can be attributed to production characteristics other than technical change particularly scale effects copyright 1992 by mit press