public offers in the market for lemons with large discounting i show that bargaining impasse in horner and vieille 2009 can be interpreted as the limit of bargaining delay the maximal duration of the game increases unboundedly as the seller s discount factor approaches the threshold level above which bargaining impasse occurs

the effects of unions on investment and innovation evidence from wirs the above is representative of much popular discussion of the effects of unions on investment and innovation in the professional literature the view that unions deter investment by expropriating quasi rents is also commonplace see e g simons i944 baldwin i983 grout i984 in addition it is argued that union foisted restrictive work practices might make investment a more costly process see e g denny and nickell i989 in recent years the above theoretical notions have appeared to receive some empirical support in that in the united states the level of the investment capital ratio does appear to be lower in union firms see hirsch i988 and references therein in this paper we use information contained in the i 984 workplace industrial relations survey in order to investigate the actual impact of unions on investment the rest of the paper is organised as follows in section i i we informally review the alternative channels through which unions might affect investment section i 2 contains a simple theoretical model of investment which embodies all the alternative channels our results are to be found in section ii and finally some conclusions are contained in section iii

make and buy balancing bargaining power abstract we analyze the optimal procurement of labor which can be supplied either internally based on wage negotiations or acquired at terms negotiated with an external subcontractor the novel feature of our model is that the subcontractor s bargaining power is a function of the proportion of output outsourced we demonstrate analytically how multiple sourcing emerges as an organizational mechanism to balance cost advantages associated with outsourcing against a subcontractor s increased bargaining power we find that the optimal proportion of outsourcing is lower with sequential negotiations than with simultaneous negotiations if the supplier to first negotiate can foreclose subsequent negotiations

technological progress downsizing and unemployment this paper presents a model where the form of innovations is endogenous it is shown that with labour market imperfections which raise the wage above the shadow price of labour firms over invest in innovations cutting labour costs and under invest in increasing quality as a result the market outcome features lower long run growth higher unemployment and lower welfare than the social optimum it is further shown that a firm s incentives to cut labour costs are increased as wages rise and as the firm declines finally a rise in competition increases incentives to downsize for firms with below average quality performance

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

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

the redistributive impact of the general old age pensions act on lifetime income in the netherlands by means of a simple simulation model we will look at the effect of the general old age pensions act on the distribution of lifetime income in the netherlands in spite of the fact that premiums are proportional to income whereas benefits are only dependent on marital status married or unmarried 1 the redistribution of income is rather limited this is especially true for the vertical income redistribution within a generation this is caused by differences in mortality rates and differences in the duration of working life between income groups

the size distribution of innovating firms in the uk 1945 1983 a survey of 4 378 significant innovations shows that firms with fewer than 1 000 employees commercialized a much larger share than is indicated by their share of r and d expenditures innovations per employee have been consistently above average in firms with more than 10 000 employees and have become so in firms with fewer than 1 000 intersectoral variation in the size distribution of innovating firms can be explained as a function of r and d based technological opportunities and of technological ease of entry by user firms with principal activities outside the sector copyright 1987 by blackwell publishing ltd

multidivisional firms internal competition and the merger paradox traditional modelling of mergers has the merged firms insiders cooperate and maximize joint profits this approach has several unappealing results in quantity setting games for example mergers typically are not profitable for insiders but are profitable for non merging firms outsiders we take a different approach and allow for a parent company that can play each insider off one another in quantity setting games with our approach mergers are profitable for insiders unprofitable for outsiders socially beneficial and involve in a non monopolizing merger a small number of firms finally we find that the optimal strategy depends on whether firms compete in quantity or prices jel classification l000 entreprises multi divisionnelles concurrence interne et le paradoxe des fusions les modelisations conventionnelles des fusions suggerent que les entreprises fusionnees parties prenantes cooperent et maximisent leurs profits conjoints cette approche engendre plusieurs resultats contre intuitifs dans des jeux de concurrence par les quantites i e les fusions en general ne sont pas profitables pour les parties prenantes mais sont profitables pour des entreprises qui ne sont pas fusionnees les autres les auteurs adoptent une approche differente qui permet a l entreprise mere de jouer les parties prenantes l une contre l autre dans ce genre de jeu avec l approche adoptee les fusions sont profitables pour les parties prenantes non profitables pour les autres socialement benefiques et impliquent un petit nombre d entreprises dans une fusion qui ne cree pas un monopole finalement on trouve que la strategie optimale depend fondamentalement du fait que les entreprises se concurrencent par les prix ou par les quantites

public vs private offers in the market for lemons we study the role of observability in bargaining with correlated values short run buyers sequentially submit offers to one seller when previous offers are observable bargaining is likely to end up in an impasse in contrast when offers are hidden agreement is always reached although with delay

taxation pension and saving in a small open economy an overlapping generations model of a small open economy is used to explore several policy options aimed at reducing the burden of income taxes and pay as you go payg contributions on labor income so as to improve the incentives to supply labor including the return of funded collective fc pension plans in the tax base turns out to be counterproductive cutting payg benefits in contrast succeeds in improving efficiency in general and labor market incentives in particular under specific variants of the fc plan reducing payg benefits even proves to be pareto welfare improving

economic consequences of an aging population pip europe and japan are experiencing the aging of their populations aging implies a restructuring of the economy political issues which arise in an aging society include 1 a voting majority for the interests of the elderly 2 a voting majority of females 3 the domination of the decision power in corporate and similar ruling bodies and 4 unemployment or a long wait for promotion for younger people economic issues of an aging society include 1 population aging often occurs under reduced rates of growth of per capita national income 2 the relative economic status of the elderly very much depends on the currently existing tax transfer systems and 3 the income of families whose head is over age 65 has generally been more unequally distributed than the income for younger families issues concerning the labor supply of the elderly include 1 the availability of pension income and health limitations strongly influence decisions to retire and 2 older workers become disheartened and choose early retirement when facing bad reemployment prospects in general population aging is likely to have its most substantive effect on the overall level of productivity in an economy where technical knowledge is changing rapidly and strong competition necessitates a high degree of adaptability of the labor force

public pensions choices for the future abstract the purpose of this paper is to analyze to what extent pay as you go government mandated pensions can provide adequate retirement income to future generations this question is particularly relevant at times when the financial viability of public pensions is threatened by demographic aging and possibly declining productivity and when more importantly there is little consensus as to why those programs exist as they are that is mandatory public and unfunded the gist of our argument is that an aging population particularly if combined with declining productivity would jeopardize the financial and political viability of public pensions if individuals behavior doesn t adjust to this new reality and public authorities don t adopt the appropriate reforms as to mandatory retirement age payroll taxes and benefits structure among key individual decisions we focus on saving labor participation retirement education migration and fertility we consider how sensitive each of these is to changes in the environment and to changes in policy parameters then we turn to a number of issues unsolved either because of analytical complexity or because they arise from new realities

welfare effects of unfunded pension systems when labor supply is endogenous abstract a mandatory unfunded pension system can lead to welfare losses if the contributions are levied in such a way that the labor supply decision of the individuals is distorted this is shown in an overlapping generations model for a closed economy furthermore it is shown that under certain conditions a gradual abolition of unfuded pensions using lump sum contributions in the transition phase can lead to an intergenerational pareto improvement thus the paper extends a result recently derived by homburg for a small open economy to the closed economy case

policy reforms and growth in computable olg economies we build a computable general equilibrium model with overlapping generations of agents and an endogenous growth specification a la lucas two main issues are addressed i to what extent does endogenous growth play a significant role in the face of policy reforms and ii are the simulation results robust to various calibrations of the production function of human capital in this purpose we simulate four large policy changes and compare the predictions with endogenous growth under various parameter sets to those with exogenous growth if endogenous growth is important when examining the effects of education reform it does not really matter with pension reforms and plays a minor role in the debt repayment scenario these results are very robust to calibration

the second dividend and the demographic structure the demographic structure of a country influences economic activity the second dividend modifies growth accordingly in general equilibrium the second dividend and the demographic structure are interrelated this paper aims at assessing empirically the second dividend in a dynamic empirical and intertemporal setting that allows for measuring its impact on growth its intergenerational redistributive effects and its interaction with the demographic structure the paper uses a general equilibrium model with overlapping generations an energy module and a public finance module that distinguishes between non ageing related public spending and a pension regime policy scenarios compare the consequences of different scenarios of recycling a carbon tax through lower proportional income taxes rather than higher public lump sum expenditures they are computed for two countries with different demographics france and germany results suggest that the magnitude of the second dividend is significantly related with the demographic structure the more concentrated the demographic structure on cohorts with higher income and saving rate the stronger the effect on capital supply of the second dividend the second dividend weighs on the welfare of relatively aged working cohorts it fosters the wellbeing of young working cohorts and of future generations the more concentrated the demographic structure on aged working cohorts the higher the intergenerational redistributive effects of the second dividend

shadow economies size causes and consequences using various methods the size of the shadow economy in 76 developing transition and oecd countries is estimated average size varies from 12 percent of gdp for oecd countries to 23 percent for transition countries and 39 percent for developing countries increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy especially in oecd countries according to some findings corruption has a positive impact on the size of the shadow economy and a growing shadow economy has a negative effect on official gdp growth

union bargaining power subcontracting and innovation we show that if a firm can subcontract production to an informal sector an increase in union power may either increase or decrease innovation an increase in union power makes the firm worse off irrespective of its effect on innovation however in contrast to the usual belief an increase in union power may increase consumer surplus and decrease union utility by affecting innovation thus suggesting that a union may not want to be too powerful an increase in union power may create an ambiguous effect on social welfare our analysis provides new insights to the relation between union power and innovation

union rent seeking intangible capital and market value of the firm abstract this study considers the effect of unions on intangi ble capital investment and profitability within the context of a market value rather than a more traditional accounting based approach theory is provided suggesting unions are able to affect profitability by sharing in the economic returns to firm specific intangible capital in support of this hypothesis we find unionization reduces the returns to r d and produces a corresponding limiting influence on r d investment at the firm level i introduction a n extensive literature in economics has ex amined the determinants of profitability with much of the focus centering on the role of market structure only recently however have the effects of labor unions on profitability been analyzed ths is surprising since labor economists long have emphasized union influences on wages and productivity that in turn may affect profitabil ity in recent studies freeman 1983 and karier 1985 report a significant limiting influence of unions on price cost margins in high concentra tion manufacturing industries using firm level data and the market based tobin s

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

sequential bargaining with correlated values the paper analyzes an infinite horizon sequential bargaining game with one sided offers between a buyer and a seller when the buyer s valuation depends on the seller s the seller knows the value of the object and the buyer does not the influence of relative discount factors on the solution is studied it is shown for example that an impasse may result if the buyer offeror is too impatient relative to the seller the buyer makes a single take it or leave it offer

a theory of bargaining deadlock abstract i study a dynamic one sided offer bargaining model between a seller and a buyer under incomplete information the seller knows the quality of his product while the buyer does not during bargaining the seller may receive an outside option the value of which depends on the quality of the product if the outside option is sufficiently important there is an equilibrium in which the buyer s belief about the product s quality stays constant and she continues to make the same randomized offer throughout the bargaining process as a result the equilibrium behavior produces an outcome path that resembles a bargaining deadlock and its resolution the equilibrium outcome exhibits bargaining delay that does not vanish even with frequent offers and the limiting delay may exist even without a static adverse selection problem under stronger parametric assumptions the equilibrium with deadlock is the only one in which behavior is monotonic in the buyer s belief

economic liberalization and indian economic growth what s the evidence india s growth and poverty performance over the last three decades has been a subject of great curiosity unlike the east asian countries india s growth spurt is not associated with exceptionally high domestic savings or foreign capital inflows or manufacturing exports so what triggered the change in the growth trajectory did the market liberalization policies of the 1990s help how have the initial conditions shaped the process and how has the indian model impinged on india s central problem of mass poverty this paper surveys the literature and offers its own assessment of the drivers of change jel i32 o13 o14 o15 o21 o47

the determination of r d empirical evidence on the role of unions abstract this paper examines the empirical evidence of the role of union bargaining on innovation we review the existing empirical evidence and emphasis some of the problems with the theoretical assumptions we outline a simple model of strategic rd b the union bargains only over wages

labour markets and innovation ex post bargaining abstract there is considerable interest in how labour market conditions affect innovation lying behind much of the existing work on this question is a simple model of a single union bargaining with a single firm in which in the absence of binding contracts the union reduces the returns to innovation without bearing any of the costs this misses an important feature of some rd with efficient contracts there are cases where being faced with a stronger union will help a firm to win a patent race it would otherwise have lost

economic reform and informal wage a general equilibrium analysis abstract we attempt to trace the consequences of liberal economic policies on informal wage in a general equilibrium model with formal informal labor markets wage differential vertical linkage and restricted capital movement in particular we show that the informal wage representing income for a vast segment of unskilled labor may actually increase even if more people are employed in the informal segment this also confirms that a contraction in the formal sector employment and the consequent expansion in the informal segment do not necessarily imply impoverishment of the existing set of informal workers

partial outsourcing monitoring cost and market structure we investigate firms outsourcing decisions when production requires a large number of inputs the novelty of our approach is that it provides a testable framework to characterize the equilibrium fraction of outsourced inputs we demonstrate that intensified competition in a cournot market for the final good typically enlarges the set of outsourced components relative to those produced in house the proportions of outsourced inputs are found to be strategic substitutes independently of whether firms compete with respect to quantities or prices in the market for the final good jel classification d20 l22 sous traitance partielle cout de monitarisation et structure de marche l auteur examine les decisions de sous traitance des entreprises quand la production reclame un grand nombre d intrants la nouveaute de l approche proposee est qu elle fournit un cadre conceptuel testable pour definir en equilibre la fraction des intrants obtenue en sous traitance on montre qu une concurrence plus intense pour le produit final dans un marchea la cournot accroit l ensemble des intrants obtenus en sous traitance par rapport a l ensemble de ceux qui sont produit a l interne il s avere que les proportions des divers intrants obtenus en sous traitance sont des substituts que les firmes se concurrencent par les prix ou les quantites dans le marche du produit final

regulation of entry labor market institutions and the informal sector abstract this paper develops a two sector matching model that incorporates the main features of latin american labor markets it has an innovation in its matching structure that makes it more consistent with some key stylized facts of the informal sector in these countries the model is numerically solved using brazilian data and several policy simulations are performed reducing formal sector s entry cost significantly reduces the size of the informal sector and improves overall labor market performance increasing enforcement significantly reduces informality but has strong adverse effects on unemployment and welfare thus the results indicate that the tradeoff between lower informal employment and higher unemployment rates is not present when one looks at policies that aim at reducing the costs of being formal as opposed to policies that simply increase the costs of being informal

unionization incomplete contracting and capital investment this article examines empirically the hypothesis that incomplete contracts and resulting opportunistic behavior over the return to sunk assets reduces investment union firm contracts are incomplete because they 1 do not prevent all actions aimed at changing the existing contract 2 cover a relatively short time period and 3 do not extend to union members yet to be hired the primary response of firms is to reduce investment in specific durable assets and also to reduce employment growth and increase debt the authors find fairly strong evidence of these effects in a sample of large publicly traded firms using firm specific measures of unionization copyright 1993 by university of chicago press

the gains from pension reform we classify social security pension systems in three dimensions actuarial versus non actuarial funded versus unfunded and defined benefit versus defined contribution systems recent pension reforms are discussed in terms of these dimensions shifting to a more actuarial system reduces labor market distortions although limiting the scope for redistribution shifting to a funded system may increase saving redistribute income to future generations and distort contermporary labor supply a partial shift to a funded system helps individuals diversify their pension assets a shift from a defined benefit to a defined contribution system means that income risk will be shifted from workers to pensioners

sequential bargaining with incomplete information this paper describes a simple two person two period bargaining game and solves it using the concept of perfect bayesian equilibrium in which the actions of each player convey information which is used by his opponent the paper examines the effects of changes in bargaining costs the size of the contract zone and the length of the bargaining process on such aspects of the solution as the probability of impasse and the likelihood of concessions the combination of information transfer and the lack of pre commitment embodied in perfectness yields many surprising results common perceptions about the effects of parameter changes on bargaining processes are suspect and should be checked in the particular game being discussed

labour markets bargaining and innovation much of the recent empirical work on the impact of unions on rd ii under some circumstances an increase in union strength can make both firms and unions worse off we survey a more recent theoretical literature which takes account of the fact that r d is often undertaken for strategic reasons by firms that are in competition with one another we show that in this framework the prevailing theoretical paradigm may be overturned thus when firms and unions can enter into long term bargains then an increase in union strength will increase decrease r d spending if successful innovation causes employment to rise respectively fall however when r d falls then this increase in union strength can cause both firms and unions to be better off when firms and unions engage in short term bargaining then an increase in union bargaining strength will cause r d to fall when bargaining is over wages alone however when bargaining takes place over wages and employment then if unions care a lot about employment the relationship between union strength and r d is inverse u shaped

capital market effects of the ageing population abstract the present article aims at showing the influences of the ageing of the population on the capital market supply of the pension funds in the long run the analysis covers the period 1990 2025 and makes use of an extended version of an economic and demographic computational model published in huijser and van loo 1986 the calculated scenarios show the relation between a number of assumptions about economic variables and the future development of the pension funds operations

modeling overlapping generations in a complementarity format abstract this paper provides an introduction to numerical simulation of overlapping generations models with perfect foresight and finite lifetimes the exposition presents the fundamental characteristics of this class of problems and gams programs illustrate how models can be formulated in applied research using the complementarity framework issues addressed in the paper include how to calibrate to baseyear data and how to represent international trade bequests government tax and expenditure policies and a labor leisure choice with endogenous retirement