exploration and extraction in a duopoly exhaustible resource market exploration for an exhaustible natural resource is valuable because it produces information about the resource stock i model a duopoly exhaustible resource industry with imperfect information about stock size as a two period game where each period is made up of an exploration stage and an extraction stage i derive the value of gaining information about stock size prior to committing to an extraction plan both for the exploring firm and for the rival i show that an exploring firm would prefer on average to keep exploration information private but that industry profit is higher when information is made public le processus d e xploration et d extraction dans un marche de ressource naturelle non renouvelable oui il y a un duopole le processus d exploration est utile parce qu il permet de produire des renseignements quant a la taille du stock d une ressource naturelle non renouvelable l auteur examine un modele de duopole dans un jeu a deux p6riodes pour une industrie de ressource naturelle non renouvelable l information est imparfaite quant a la taille du stock de resource et chacune des deux p6riodes a un stage d exploration et un stage d extraction l auteur d6rive la valeur de l information additionnelle qujant a la taille du stock de ressource avant de s etngager dans un plan d extraction a la fois pour l entreprise exploratrice et pour l entreprise rivale on montre que l enterprise exploratrice va pr6f6rer en moyenne garder l information priv6e mais que les profits dans l industrie sont plus 6lev6s quand l information est rendue publique

monopolistic competition endogenous markups and growth markup variations brought about by changing demand conditions can have a significant impact on the growth dynamics of imperfectly competitive economies they can generate multiple steady states as well as multiple equilibrium paths for given initial conditions we illustrate that result in the context of two alternative models in the first model equilibrium markups depend on the aggregate savings rate in the second model the markup level varies with the range of intermediate goods available we discuss some of the empirical implications of the class of models introduced in the paper

money new keynesian macroeconomics and the business cycle abstract we show in this paper that the typical modern business cycle cannot be reduced to the real business cycles archetype a monopolistic competition model with price adjustment costs affected by technological and monetary shocks better mimics the economic fluctuations in two countries with very different cyclical properties namely france and the united states in our model monetary shocks are necessary to reproduce the standard deviation of output the money output correlation the labour productivity worked hours relative standard deviation the labour productivity worked hours correlation and the mark up output correlation with two independent shocks one real more specifically defined than the solow residual and one nominal the model gives an answer to some empirical puzzles which were left unexplained by traditional rbc models

the economics of international codesharing an analysis of airline alliances abstract international airline alliances allow airlines to coordinate their operations in providing international service this paper analyzes the effect of such alliances on traffic levels fares and welfare in the model the benefits of alliances arise because cooperative pricing of trips by the partners puts downward pressure on fares in the interline city pair markets these are markets where travel on both carriers is necessary the loss of competition in the interhub market which connects the hub cites of the partners generates a countervailing effect tending to raise the fare in that market while the presence of economies of traffic density complicates these impacts by generating cost links across markets simulation analysis shows that the above tendencies typically prevail welfare analysis shows that both consumer and total surplus typically rise following formation of an alliance despite the harm to interhub passengers suggesting that the positive effects of alliances may outweigh any negative impacts

information acquisition in global games of regime change abstract we study costly information acquisition in global games of regime change that is coordination games where payoffs are discontinuous in the unobserved state and in the agents average action we show that only symmetric equilibria exist and provide sufficient conditions for uniqueness we then characterize the value of information in these games and link it to the underlying parameters of the model we investigate equilibrium efficiency complementarities in information choices and the trade offs between public and private information we show that information acquisition can be inefficient and that strategic complementarities in actions do not always translate into strategic complementarities in information acquisition finally we find that public and private information can be complements these results contrast findings in linear quadratic models where payoffs depend continuously on both the unobserved state and the agents average action

information use and acquisition in price setting oligopolies asymmetric price setting multi product suppliers have access to multiple sources of information about demand conditions where the publicity of each source corresponds to the cross industry correlation of signals received from it a signal s influence on suppliers prices is increasing in its publicity as well as in its precision the emphasis on relatively public information is stronger for smaller suppliers who control narrower product portfolios when information is endogenously acquired suppliers listen to only a subset of information sources this subset is smaller when products are less differentiated and when the industry is less concentrated smaller suppliers focus attention on fewer information sources the inefficiencies arising from information acquisition and use are identified the associated externalities depend upon the extent of product differentiation the concentration of the industry and the degree of decreasing returns to scale

the contribution of western fast food to fast growing body mass in china abstractthe westernization of asian countries has led to the rapid expansion of western style fast food restaurants which are believed to be fueling an unprecedented rise in body mass in these countries this study tests this belief using longitudinal data from china exploiting the opening of a western style fast food restaurant in a particular community we conduct a transition analysis to make a more convincing causal interpretation than the standard cross sectional or fixed effects approach considering several measures of fatness we find no robust evidence of western fast food having a substantial effect overall but there is some indication of effect heterogeneity

communication in cournot oligopoly abstract this paper studies communication in a static cournot duopoly model under the assumption that the firms have unverifiable private information about their costs we investigate the conditions under which the firms cannot transmit any information through cheap talk and show that when these conditions are violated it may be possible to construct informative cheap talk equilibria if the firms can communicate through a third party communication can be informative even when informative cheap talk is impossible we exhibit a simple mediated mechanism that ensures informative communication and interim pareto dominates the uninformative equilibrium for the firms

mcdonald s and kfc in china competitors or companions in this paper we study the entry and expansion decisions of mcdonald s and kfc in china using an originally assembled data set on the two chains expansion in the china market from their initial entry up to year 2007 we analyze how the presence of a rival affects each firm s strategies the results indicate that a rival s presence has a net positive effect on a chain s expansion decision we focus on testing two possible explanations for a positive rival impact market learning and demand expansion first we derive a set of theoretical predictions on how a chain s optimal expansion decision would react to its rival s expansion patterns when market learning versus demand expansion is the driving force of the rival s positive influence the empirical analysis based on these predictions consistently suggests that market learning is more likely to explain the positive effect of kfc on mcdonald s and that demand expansion is more plausible with mcdonald s positive spillover on kfc in other words the results are consistent with the presence of kfc signaling market demand potential and growth to mcdonald s and the presence of mcdonald s helping to cultivate consumer taste and generate demand for western fast food which benefits kfc

the ignorant monopolist optimal learning with endogenous information economics lacks a good theory of the pricing and output decisions of a monopolist which does not know its demand we inevitably assume that the monopolist knows much more about demand conditions than is reasonable i present a model in which demand information is generated endogenously when information is endogenous the monopolist has an incentive to experiment with price and quantity i derive the direction of experimentation characterize an important value function arising from dynamic programming problems with learning and relate the results to blackwell s comparison of experiments copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

another look at the radner stiglitz nonconcavity in the value of information abstract this paper revisits the well known result of r radner and j stiglitz 1984 in bayesian models of economic theory elsevier amsterdam which shows that under certain conditions the value of information exhibits increasing marginal returns over some range their result assumes that both the number of states and the number of signal realizations are finite assumptions which preclude most analyses of optimal information acquisition we provide sufficient conditions that yield this nonconcavity in the value of information in a general framework the role that these conditions play is clarified and illustrated with several examples we also discuss the robustness of the nonconcavity result and the difficulties involved in getting the value of information to be globally concave journal of economic literature classification number d83

exchange of cost information in oligopoly when do oligopolists gain by sharing their private information about their costs with one another what are the social welfare effects of such information exchange i study these questions by comparing the oligopolists expected profits under a cost sharing agreement with their expected profits in the bayesian equilibrium that would arise without cost sharing i also analyse the firms decisions to form a trade association to share their cost data under conditions of linear demand and cournot behaviour industrywide information exchange is the unique point in the core of the trade association membership game the exchange of cost data increases expected profits and welfare but reduces expected consumer surplus cost sharing increases efficiency by raising the market shares of lower cost firms and reducing the variability of aggregate output consumer surplus is diminished however because the variance of output is reduced and consumer surplus is a convex function of output

trade association disclosure rules incentives to share information and welfare in this article i propose a monopolistic competition framework to analyze the effects of different disclosure rules used by trade associations on the incentives to share information and on the welfare of consumers firms and society this framework is appropriate whenever a single firm cannot influence aggregate market magnitudes and serves as a benchmark for the analysis of information pooling agreements abstracting from strategic considerations i report two main results first a policy of nonexclusionary disclosure destroys the incentives to share information while exclusionary disclosure preserves them second information sharing increases expected total surplus with cournot competition but decreases it with bertrand competition in the context of a quadratic normal model with demand uncertainty

strategic information manipulation in duopolies abstract this paper studies a duopoly market in which firms can draw inferences concerning uncertain market demand from observations of their outputs and market price firms may adjust their outputs away from myopically optimal levels to affect the informativeness of the market price because firms quantities are observed firms can manipulate the extent to which belief revision occurs rather than the direction in which beliefs are revised as in signal jamming models we develop conditions and present examples under which the value of information is positive and negative and under which firms will increase or decrease quantity to manipulate information journal of economic literature classification numbers d80 l13

temporal aggregation and svar identification with an application to fiscal policy abstract we show how to assess identifying assumptions for a low frequency svar using estimates from a higher frequency model in our application quarterly data support identified annual svars in government spending and output by assuming zero within year impact of output on spending

research note cost uncertainty is bliss the effect of competition on the acquisition of cost information for pricing new products we examine the optimal acquisition of information about a common uncertain cost factor by two competing firms seeking to price a new product we show that existing findings regarding the acquisition of demand information or the acquisition of either cost or demand information related to quantity decisions do not extend to this case for cost information with price competition the information acquisition strategies are strategic substitutes even though the price decisions that are based on the information are strategic complements competition decreases the expected value of cost information moreover when competition is intense and the cost of information low identical firms do not acquire the same amount of cost information even when information is free cost uncertainty acts like a fog that lessens the destructive effect of price competition when products are close substitutes and thus increases expected profits buyers on the other hand are better off when competing firms are informed about cost even though the expected value of cost information strictly decreases with competition the optimal price for industry specific cost information set by an information vendor increases with competition when the firms products are sufficiently substitutable

can imperfect competition explain the difference between primal and dual productivity measures estimates for u s manufacturing it is well known that under the assumptions of constant returns to scale perfect competition and the absence of factor hoarding primal and dual productivity measures should be highly correlated the apparent lack of correlation is usually attributed to fixed factors of production in this paper i propose an alternative explanation by relaxing the assumption of perfect competition by controlling for the presence of a markup component i demonstrate that both productivity measures are in fact highly correlated for u s manufacturing the analysis also provides an alternative method of estimating a markup of prices over marginal cost that avoids certain difficulties inherent in some existing methods of estimation

monopolistic competition business cycles and the composition of aggregate demand abstract we develop a dynamic general equilibrium model with monopolistically competitive firms and endogenous markups and show the possibility of equilibria with persistent fluctuations driven by self fulfilling revisions of expectations for some parameter values such fluctuations are characterized by time series properties similar to those observed in u s postwar business cycles in contrast with the existing literature our results do not rely on the presence of increasing returns or nominal rigidities a key ingredient of the model is the link between markups and the composition of aggregate demand some econometric evidence on the latter is also reported journal of economic literature classification number d43 d58 e32

information sharing between vertical hierarchies abstract when do principals independently choose to share the information obtained from their privately informed agents information sharing affects contracting within competing organizations and induces agents strategies to be correlated through the distortions imposed by principals to obtain information we show that the incentives to share information depend on the nature of upstream externalities between principals and the correlation of agents information with small externalities principals share information when externalities and correlation have opposite signs and do not share information when externalities and correlation have the same sign in this second case principals face a prisoners dilemma since they obtain higher profits by sharing information

price and quantity experimentation a synthesis this paper compares experimentation about product differentiation in a linear setting under four market structures quantity setting and price setting monopoly cournot and bertrand duopoly quantity setting firms always experiment by raising their quantities and the monopolist experiments relatively more than the duopolists a price setting monopolist does not experiment the value of information to bertrand duopolists may be positive or negative depending on the degree of product differentiation when information is valuable price setting duopolists experiment by lowering prices a numerical example indicates that the intensity of experimentation is higher in a cournot duopoly than in a bertrand duopoly c 2001 elsevier science by all rights reserved

experimentation and learning in a differentiated products duopoly abstract this paper explores price setting behavior in the context of a duopoly in which firms are uncertain about the degree of product differentiation firms learn from the difference in their realized demands in light of the price differential the informativeness of this market experiment is shown to be increasing in size of the price differential in markets with highly substitutable products price dispersion is enhanced as firms adjust their prices so as to generate more information in markets with highly differentiated products firms compress their prices as they prefer to reveal less about the extent of product differentiation journal of economic literature classification numbers d43 d83 l13

macroeconomic effects of fiscal policy in pakistan a disaggregate analysis abstractthis study analyzes the macroeconomic effects of fiscal policy on macroeconomic variables in pakistan the study utilizes var framework and uses quarterly data of pakistan from 1976q1 to 20

the effects of public spending shocks on trade balances and budget deficits in the european union we investigate the consequences of an increase in public spending for trade balances and budget deficits in the european union using a panel var approach whereas the literature tends to treat the trade balance gdp ratio as a single variable we include exports and imports as separate variables this allows us to track in more detail the sources of trade balance movements further we use annual rather than quarterly data this facilitates the interpretation of the shocks and reduces potential anticipation effects of fiscal policy changes however the identification assumptions become stronger and we extensively check their validity according to our baseline estimate a 1 gdp increase in public spending produces a 1 2 on impact with a 1 6 peak rise in gdp rising imports and falling exports are responsible for a fall of the trade balance by 0 5 of gdp on impact and a peak fall of 0 8 in addition the spending increase produces a 0 7 impact and peak budget deficit thereby pointing to the potential relevance of the twin deficits hypothesis for the european union jel e62 h60

endogenous private information structures we formally incorporate the option to gather information into a game and thus endogenize the information structure we ask whether models with exogenous information structures are robust with respect to this endogenization any nash equilibrium of the game with information acquisition induces a nash equilibrium in the corresponding game with an exogenous structure we provide sufficient conditions on the structure of the game for which this remains true when nash is replaced by sequential we characterize the sequential nash equilibria of games with exogenous information structures that can arise as a sequential nash equilibrium of games with endogenous information acquisition

information value under demand uncertainty and endogenous market leadership in an oligopoly model with firms choosing to produce in one of two periods we identify the circumstance under which a firm s having early information regarding stochastic demand results in market leadership high demand volatility leads to stackelberg competition with the information advantaged firm leading in the n firm case an equilibrium with multiple leaders and multiple followers emerges endogenously in a duopoly information acquisition game we identify conditions that determine whether neither one or both firms will pay to acquire early information and note that one firm s obtaining early information may generate a positive externality benefitting its competitor both symmetric and asymmetric outcomes are possible and stackelberg market leadership may occur in equilibrium but only when firms have different costs of information our finding that an information advantage may convey leadership which then affects the value of information to the players applies to other settings exhibiting first mover advantage such as certain public good provision games jel c72 d82 l13

duopoly information exchange the case of unknown slope abstract we model information exchange between duopolists facing a common random demand the slope of the common demand curve facing the firms is assumed unknown and firms observe private signals about this slope we show that for sufficiently large variation in the demand slope firms earn strictly higher profit when they share their information rather than keeping it private even with constant marginal costs and homogeneous goods in this case it is a nash equilibrium for the duopolists to share their information in a quid pro quo information exchange consistent with earlier models information exchange raises welfare

technology transport globalization and the nutrition transition food policy abstract diet and activity have been affected by the rapid worldwide shifts in technological innovations reducing energy expenditures during leisure transportation and work globalized modern food processing marketing and distribution techniques global mass media the increases occur increasingly in rural areas on all continents the resultant global increase in obesity increasingly is shifting the burden of obesity to the poor while few direct linkages between globalization of trade in goods services and technology can be directly linked to diet and activity a strong case exists for globalization s role as a key underlying force behind this stage of the nutrition transition

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

incentives for information production and disclosure in a duopolistic environment this paper examines the nature of the equilibrium solution to the duopoly problem under various incomplete information structures and the incentives to produce and disclose information attention is focused on the duopolists cost functions the results indicate that disclosure of such information is generally beneficial to the duopolists

an analysis of the implications of uncertainty and agency problems on the wealth effects to acquirers of private firms abstract extensive empirical work shows that bidders do not gain from the acquisition of publicly traded targets but experience positive excess returns in the acquisition of privately held firms this study investigates how two important differences between private and public firms namely informational uncertainty and ownership characteristics impact the returns to acquirers a sample of targets that were acquired shortly after filing for an ipo was collected to circumvent the lack of information on private firms in spite of the special characteristics of these targets the listing effect is still prevalent in this sample the results of the analysis are consistent with the hypothesis that acquirers gain in the acquisition of private firms because these targets have a relatively weaker bargaining position due to informational and agency problems and costly access to external capital markets to finance growth opportunities

non linear endogenous fluctuations with free entry and variable markups abstract the paper explores the effects of markup variability associated with free entry of cournotian firms on the occurrence of local indeterminacy local hopf bifurcations and multiplicity of steady states it uses an overlapping generations model with capital in which differentiated intermediate goods are produced with constant marginal cost plus a positive fixed cost if the markup factor were constant the case of no free entry or the case of zero fixed costs leading to the perfectly competitive outcome no local endogenous fluctuations or multiplicity of steady states can emerge unless factors of production are complementary on the contrary with any positive variable market power indeterminacy and multiplicity of steady states is possible for any value of the elasticity of technological substitution and local hopf bifurcations may also emerge provided variable market power is high enough

fiscal policy multipliers the role of monopolistic competition scale economies and intertemporal substitution in labour supply a dynamic macroeconomic model of monopolistic competition is developed for the closed economy forward looking consumers demand differentiated goods supply labour and save part of their income in the form of shares producers manufacture the differentiated goods by using labour and capital we study the short run transition and long run effects of fiscal policy comparisons with the new classical case of perfect competition are made simple expressions far multipliers are derived the sensitivity of the multipliers for diversity preference and ethier productivity effects intratemporal and intertemporal substitution effects and markup effects under free and restricted entry are also studied

westernization of asian diets and the transformation of food systems implications for research and policy abstract rapid economic and income growth urbanization and globalization are leading to a dramatic shift of asian diets away from staples and increasingly towards livestock and dairy products vegetables and fruit and fats and oils while the diversification of diets away from the traditional dominance of rice with rising incomes is expected and observed current food consumption patterns are showing signs of convergence towards a western diet the diet transition is characterized by increased consumption of wheat temperate fruit and vegetables and high protein and energy dense food globalization and the consequent global interconnectedness of the urban middle class is the driving force behind the convergence of diets the rapid spread of global supermarket chains and fast food restaurants is reinforcing the above trends the growing demand for diet diversity cannot be met solely by the traditional food supply chain it requires the modernisation of the food retail sector and the vertical integration of the food supply chain in effect linking the consumers plate to the farmers plow as a consequence asian agriculture is on an irreversible path leading away from its traditional pre occupation with cereal crop production especially rice towards a production system that is becoming increasingly commercialized and diversified this paper describes the determinants and trends in the diversification and westernization of asian diets implications of the evolving demand trends for food supply and retail systems are presented the paper discusses the prospects for small farmer participation in the emerging food supply system with a particular emphasis on asian rice production systems finally the paper considers emerging challenges for food policy small holder welfare and agricultural research and development priorities

entry deterrence and experimentation under demand uncertainty abstract we examine the effect of a threat of entry on experimentation about demand by an incumbent monopolist when there is a fixed cost of entry we show that experimentation may itself be used as a tool for entry deterrence and derive conditions under which experimentation reduces the probability of entry these conditions depend on the entry rule which in turn depends on entry costs we show that if experimentation does not deter entry the monopolist incumbent experiments less we also characterize experimentation and entry in the linear uniform example and show that cost of entry and experimentation do not have a monotonic relationship

cournot competition and the social value of information in a differentiated product cournot model each supplier receives informative signals about demand the cross industry correlations of the signals differ more public signals have higher correlation coefficients in equilibrium information is used inefficiently from the industry s perspective information is over used and too much emphasis is placed on relatively public signals from the consumer s perspective information is under used and too much emphasis is placed on relatively private signals welfare is enhanced by increasing the use of information as desired by consumers but re balancing that use away from public signals as desired by the industry if information is costly and endogenously acquired then suppliers acquire too much new information but they use it too little

endogenous information acquisition in bayesian games with strategic complementarities abstract this paper studies covert or hidden information acquisition in common value bayesian games of strategic complementarities using the supermodular stochastic order to arrange the structures of information increasingly in terms of preferences we provide novel easily interpretable and verifiable though restrictive conditions under which the value of information is increasing and convex and study the implications in terms of the equilibrium configuration increasing marginal returns to information leads to extreme behavior in that agents opt either for the highest or the lowest quality signal so that the final analysis of this complex game simplifies greatly into that of a two action game this result can rationalize the complete information game as an endogenous outcome finally we also establish that higher quality information leads players to select more dispersed actions in the bayesian game

information acquisition and relative efficiency of competitive oligopoly and monopoly markets this paper analyzes the relative efficiency of a competitive equilibrium against cournot oligopoly and monopoly equilibria when firms have diverse private information about the stochastic market demand when firms have information of the same precision the competitive equilibrium yields a larger expected welfare however when information is costly cournot oligopoly and monopoly firms acquire more information and hence may yield a larger expected welfare than the competitive firms under certain conditions the author also finds that competitive firms acquire less than the efficient level of information while cournot oligopoly and monopoly firms may acquire more than the efficient level copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

fiscal policy in the new neoclassical synthesis we analytically derive the cyclical effects of fiscal policy shocks in a new neoclassical synthesis model price stickiness has the consequence that a rise in government demand affects labor demand while at the same time the usual wealth effect boosts labor supply the strength of the demand effect depends on the response of the real interest rate governed by the monetary policy regime when the central bank controls money growth fiscal expansions are deflationary and might even be contractionary whereas output wages and inflation can increase when the rise in the real interest rate is dampened by an interest rate rule however price stickiness alone is not sufficient to explain a rise in consumption as predicted by keynesian theory

monopoly competition and information acquisition abstract an incumbent monopolist is uncertain about its linear demand but can acquire public information at a cost we determine how an entry threat affects the firm s information acquisition if returns to scale are constant and the state contingent demands become more dispersed as output increases then entry reduces information acquisition if however either the incumbent or entrant has increasing returns or if the state contingent demands are nonlinear or fail increasing dispersion then entry can increase information finally entry can hurt consumers although entry always increases output it can decrease information consumers sometimes prefer a better informed monopoly to a duopoly

market power and fiscal policy in oecd countries we compute average markups as a measure of market power throughout time and study their interaction with fiscal policy and macroeconomic variables in a var framework from impulse response functions the results with annual data for a set of 14 oecd countries show that the markup i depicts a pro cyclical behaviour with productivity shocks and ii a counter cyclical behaviour with fiscal spending shocks we also use a pvar increasing the efficiency in the estimations which confirms the country specific results

investment efficiency and product market competition does more competition lead to more information production and greater investment efficiency this question is largely unexplored in the finance literature this article provides both a model and a series of extensive empirical tests the model features a 2 stage bayesian game in differentiated products market competition we find that competition causes firms to acquire less information and investments to become more inefficient relative to a first best case with the same market structure empirically the panel regression analysis provides strong support for the theory and shows that investment is more efficient in concentrated industries

optimal information acquisition for heterogenous duopoly firms abstract this paper analyzes a stochastic duopoly market in which heterogenous firms acquire costly information about the stochastic market demand prior to their production decisions the equilibrium amounts of information acquired by each firm are compared the comparative statics analyses show the differential effects of a change in information cost the degree of uncertainty in the market demand and the demand and cost function parameters journal of economic literature classification numbers d82 l13 l15

strategic factor market intelligence an application of information economics to strategy formulation and competitor intelligence this paper develops a model of information acquisition decisions by firms that are competing in a strategic factor market barney 1986 to purchase a scarce resource whose value is unknown and differs across firms the model builds on the argument that more accurate expectations about the firm specific value of resources is other than luck the only way for firms to obtain the specific resources required for competitive advantage we address the more specific question of what types of information firms should gather to accomplish this goal the model generates a series of testable hypotheses about how a firm s optimal mix of different types of information is affected by a number of factors including the level of uncertainty about the value of the resource being acquired the rarity imitability and nonsubstitutability of that resource the level of inscrutability of firms pre existing stocks of resources and firms information gathering and information processing capacities

firm dynamics and markup variations implications for sunspot equilibria and endogenous economic fluctuations this paper analyzes how the interaction between firms entry and exit decisions and variations in competition gives rise to self fulfilling expectation driven fluctuations in aggregate economic activity and in measured total factor productivity tfp the analysis is based on a dynamic general equilibrium model in which net business formation is endogenously procyclical and leads to endogenous countercyclical variations in markups this interaction leads to indeterminacy in which economic fluctuations occur as a result of self fulfilling shifts in the beliefs of rational forward looking agents when calibrated with empirically plausible parameter values and driven solely by self fulfilling shocks to expectations the model can quantitatively account for the main empirical regularities characterizing postwar u s business cycles and for 65 of the fluctuations in measured tfp

information sharing and tax competition among governments abstract the residence based principle has been proposed as a second best measure to the full international coordination of capital tax policies this system requires that tax authorities have full information about the foreign investments of their residents however the degree of information transmission among governments can be considered as a strategic variable we show that under some features of the tax system there will not be any information sharing while there are institutional arrangements under which governments may transmit partial information for strategic purposes we also show that full information sharing is not necessarily a pareto optimum

voluntary disclosure and investment in environmental technology abstract i examine the role of voluntary disclosure programs in creating market incentives for competing firms to invest in environmentally cleaner technology in an industry subject to environmental regulation such as emission taxes such programs may allow firms to credibly disclose their progress in achieving compliance cost reduction through investments in internal rd the outcome of the investment is private information i show that the ex ante incentive to invest is always higher in the presence of the voluntary disclosure program than without it in particular the opportunity to credibly disclose progress in cost reduction allows a successful firm to convey its true position of competitive advantage to the rival firm and realize higher market share and profit thus voluntary disclosure programs increase the efficacy of traditional forms of environmental regulation in creating incentives for green technological change even when buyers have no preference for greener technology i show that such programs generally increase social welfare

optimal market intelligence strategy when management attention is scarce this paper extends the theoretical literature on firms optimal information strategies to the situation when a firm s management attention capacity to process available data is scarce in this case a firm s optimal market intelligence strategy must trade off learning a little about a broad range of markets a broad strategy with gaining a very deep understanding of one or a few markets a focused strategy this trade off is not present when data are scarce an assumption made in most of the existing literature on optimal information search strategies however in data rich environments which are of increasing relevance given technology changes we show a focused market intelligence strategy is always best when managers need to process a substantial amount of data before beginning to gain insights i e there are increasing returns to attention interestingly this focused strategy can also be best with decreasing returns to attention when a managers are sufficiently efficient in processing the available data and b managers have sufficiently strong initial priors on the unknown market parameters we show a broad market intelligence strategy is only optimal when new data points are sufficiently redundant i e when the learning rate is sufficiently decreasing with the allocation of more attention our results also indicate that advances in information technology can account for the pressure on firms to become more focused and that competition increases the likelihood of a focused strategy competition can lead to asymmetric outcomes where firms focus on different markets finally we note that a focused market intelligence strategy and thus an asymmetric allocation of attention does not require a priori differences between firms markets or market specific core capabilities consequently a focused market intelligence strategy can result in market specific core competencies and produce firm differences from equivalent starting conditions