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

animal breeding and productivity growth of dairy farms we introduce genetic based technical change into a malmquist productivity index and measure the growth in productivity caused by bovine breeding because breeding is likely to affect milk quality we adjust milk quantities for quality differences we use panel data on icelandic dairy farms from 1997 to 2006 to estimate an input distance function the malmquist productivity index shows that the average productivity growth rate is 1 6 scale effects are the most important source of this growth but 19 of the productivity growth rate is due to breeding if quality differences are ignored the average productivity growth rate is reduced by 83

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

back to fundamentals equilibrium in abstract economies we propose a new abstract definition of equilibrium in the spirit of competitive equilibrium a profile of alternatives and a public ordering expressing prestige price or a social norm such that each agent prefers his assigned alternative to all lower ranked ones the equilibrium operates in an abstract setting built upon a concept of convexity borrowed from convex geometry we apply the concept to a variety of convex economies and relate it to pareto optimality the magic of linear equilibrium prices is put into perspective by establishing an analogy between linear functions in the standard convexity and primitive orderings in the abstract convexity jel c90 d11 in this paper we return to the fundamental concept of competitive equilibrium and extend the notion to a more abstract setting the extension is based on the idea that competitive equilibrium is a method of creating harmony in an interactive situation with a feasibility restriction and self interested agents it is built around a public ordering of the alternatives which either limits the choices available to the agents or systematically influences their preferences in the standard economic setting this ordering is given by prices that apply equally to all agents these prices determine consumers choice sets and producers preferences we propose an analogous solution concept adjusted to fit more abstract situations in which valuation using prices is replaced by valuation according to a public ordering the road to the construction of the equilibrium concept starts with a discussion of the notion of convexity in the euclidean setting the algebraic notion of convexity is central to the standard analysis of competitive equilibrium since we primarily consider settings that lack an algebraic structure we employ a more abstract form of convexity definitions of convexity involve the primitive phrase b is between the elements a 1 a l in an euclidean space this means that b is an algebraic con vex combination of a 1 a l however the phrase also has a common use in daily conversation for example one can say that game theory is between mathematics and economics and that canada is culturally between the united states the united kingdom and france to accommodate this the first step will be to borrow a formal

competition in taxes and performance requirements for foreign direct investment abstract tax incentives offered to attract firms engaged in foreign direct investment are often tied to performance requirements such as domestic content restrictions or adherence to environmental standards the tax competition literature has repeatedly shown that competition between municipalities for mobile firms tends to drive taxes to low levels one would expect a comparable result for burdensome performance requirements despite this the evidence suggests that while taxes have indeed been driven down performance requirements are as popular as ever we explain this seeming conundrum by showing that in the presence of spillovers binding performance requirements can act as a coordination device for firms in equilibrium municipalities choose performance requirements which maximize joint surplus from investment competition between municipalities then transfers this surplus to firms via tax subsidies

long run welfare effect of energy conservation regulation we investigate the long run effect of energy conservation regulation which forces firms to raise energy saving investment above the cost minimizing level if pigovian tax is imposed additional regulation always harms social welfare under perfect competition while it can improve welfare under imperfect competition our result under imperfect competition holds regardless of whether strategies are strategic substitutes or complements in contrast to direct entry regulation

returns to scale in a highly regulated economy evidence from indian firms abstract this paper examines returns to scale for a panel of indian manufacturing firms from 1976 1985 a period in which government regulations restricted firms expansion observers have argued that these regulations led to unexploited scale economies in indian firms and our estimates lend limited support to this view although a large number of firms produce below the minimum efficient scale average returns to scale for the various industries are not significantly different from one our estimates suggest that recent deregulation will not generate significant gains in scale efficiency unless expansion is heavily biased towards growth in the smaller firms

examining the cost efficiency of chinese hydroelectric companies using a finite mixture model this paper evaluates the operational activities of chinese hydroelectric power companies over the period 2000 2010 using a finite mixture model that controls for unobserved heterogeneity in so doing a stochastic frontier latent class model which allows for the existence of different technologies is adopted to estimate cost frontiers this procedure not only enables us to identify different groups among the hydro power companies analysed but also permits the analysis of their cost efficiency the main result is that three groups are identified in the sample each equipped with different technologies suggesting that distinct business strategies need to be adapted to the characteristics of china s hydro power companies some managerial implications are developed

two stage residual inclusion estimation addressing endogeneity in health econometric modeling the paper focuses on two estimation methods that have been widely used to address endogeneity in empirical research in health economics and health services research two stage predictor substitution 2sps and two stage residual inclusion 2sri 2sps is the rote extension to nonlinear models of the popular linear two stage least squares estimator the 2sri estimator is similar except that in the second stage regression the endogenous variables are not replaced by first stage predictors instead first stage residuals are included as additional regressors in a generic parametric framework we show that 2sri is consistent and 2sps is not results from a simulation study and an illustrative example also recommend against 2sps and favor 2sri our findings are important given that there are many prominent examples of the application of inconsistent 2sps in the recent literature this study can be used as a guide by future researchers in health economics who are confronted with endogeneity in their empirical work

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

cost structure and productivity growth in european railway systems the purpose of this paper is threefold first to empirically investigate the coststructure of the railway systems in ten european countries belgium denmark france germany greece italy luxembourg the netherlands portugal and the united kingdom of the european union second to provide measures of economies diseconomies of scale and fully investigate the manner by which economies of scale have affected the cost structure of the system and have been affected by the growth in input prices and technology and third to measure economic efficiency and identify its sources in achieving this purpose the translog technology has been used and the translog model was estimated using time series data covering the period 1969 1993 zellner s iterative method was used in estimating the translog model

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

an examination of the equilibrium specification and structure of production for canadian telecommunications multiple output models of canadian telecommunications production are estimated under different production equilibria a specification test is conducted between the short and long run equilibrium models and the long run equilibrium is rejected in order to capture the nature of the disequilibrium a dynamic cost of adjustment model is estimated for bell canada there are significant adjustment costs and it is estimated that for 1 00 of marginal capital costs the carrier must incur an additional cost of 0 30 to install the new capital into the production process

economies of scale in the korean district heating system a variable cost function approach this paper aims to investigate the cost efficiency of south korea s district heating dh system by using a variable cost function and cost share equation we employ a seemingly unrelated regression model with quarterly time series data from the korea district heating corporation kdhc a public utility that covers about 59 of the dh system market in south korea over the 1987 2011 period the explanatory variables are price of labor price of material capital cost and production level the results indicate that economies of scale are present and statistically significant thus expansion of its dh business would allow kdhc to obtain substantial economies of scale according to our forecasts vis a vis scale economies the kdhc will enjoy cost efficiency for some time yet to ensure a socially efficient supply of dh it is recommended that the kdhc expand its business proactively with regard to informing policy or regulations our empirical results could play a significant role in decision making processes

foreign direct investment local content requirement and profit taxation we develop a partial equilibrium model of foreign direct investment fdi in which identical foreign firms locate themselves in a host country to compete in an oligopolistic market for a non tradeable commodity the host country assumed to be small in the market for fdi makes use of two instruments viz a profit tax and a local content requirement to compete for fdi in the international market we assume the existence of unemployment in the host country the structure of optimal instruments and their relationship to the number and the relative efficiency levels of the domestic firms are established

on the measurement of capacity utilization capacity utilization is usually defined as the ratio of actual output to the output corresponding to 1 the minimum point on the short run average total cost curve and 2 the point of tangency between the long run average total cost and short run average total cost curves in practice however capacity utilization is often measured as the ratio of actual to the maximum potential output consistent with a given capital stock this paper demonstrates how to estimate the theoretical measures of capacity utilization and examines the correlation between three measures of capacity utilization and the mcgraw hill estimates of capacity utilization using data from a sample of u s privately owned electric utilities for 1961 83 copyright 1989 by blackwell publishing ltd

valuing varieties with imperfect output quality measurement markets for agricultural products may be inefficient when signals do not adequately reflect product characteristics important to market participants preferences can be explicitly reflected in price premiums for measurable characteristics using hedonic methods however when product quality information is costly to obtain the problem is compounded bundling of quality traits by variety can serve to signal product quality a procedure is developed to derive the value of different varieties in meeting buyer demands an application to the hard red spring market wheat illustrates the use of a procedure to distinguish among varieties and provides empirical support for the existence of akerlof s lemon market in the release of wheat varieties

hyperbolic efficiency and return to the dollar abstract this paper after establishing the relations between hyperbolic graph measure of technical efficiency and the radial measures of technical efficiency shows that the dual cost and revenue interpretation of the hyperbolic efficiency measure is related to georgescu roegen s notion of return to the dollar n georgescu roegen in koopmans t ed activity analysis of production and allocation wiley new york 1951 pp 98 115 once this relation is established it leads to a derivation of an allocative efficiency index which measures the price distortions using data on observed costs and revenues without requiring information on prices

a parametric estimation of total factor productivity and its components in u s agriculture the present study aims at improving our understanding of the individual contribution of the components of total factor productivity tfp change to u s agricultural productivity a novel sequential primal dual estimation routine to calculate tfp change is proposed using a multi output input distance function in the first stage followed by a cost minimization routine in the second stage tfp change is estimated as the direct sum of the estimates of technical change technical efficiency change allocative efficiency change input price effects changes in output markup and changes in returns to scale in each state the validity of the proposed methodology is supported by the remarkable overlap and high correlation of our annual estimates of tfp change with the usda s measures of change in tfp by state although technical change tends to be the largest contributor to productivity change it bears a low and statistically insignificant correlation with tfp change on an annual basis whereas annual changes in the markup effect and returns to scale are highly and significantly correlated with tfp changes this is the first study to find a slowdown of technical progress in the u s farm sector in the 1990s and 2000s and technical regress during the farm crisis of the 1980s while technical efficiency shows a positive overall trend allocative efficiency shows a negative overall trend and their combined effect i e the overall cost efficiency slows down tfp growth the policy recommendations from previous studies on the drivers of tfp should be revised in light of these findings

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

estimating input mix efficiency in a parametric framework application to state level agricultural data for the united states this paper contributes to the productivity literature by demonstrating novel econometric methods to estimate input mix efficiency ime in a parametric framework input mix efficiency is defined as

productivity and efficiency dynamics in indian banking an input distance function approach incorporating quality of inputs and outputs summary banking technology is typically characterized by multiple inputs and multiple outputs that are associated with various attributes such as different types of deposits loans number of accounts classes of employees and location of branches these quality differentials in inputs and outputs are mostly ignored in empirical studies these omissions make the practical value of productivity studies in organizations like banks questionable because quality is a key component of performance this paper proposes using hedonic aggregator functions as a tool of aggregating inputs and outputs with quality attributes within an input distance function framework and analyzes the impact of banking deregulation on efficiency and total factor productivity tfp change in the indian banking industry using panel data for the period 1996 2005 empirical results indicate that banks have improved their efficiency from 61 in 1996 to 72 in 2005 during the post deregulation period and the gain in efficiency of state owned banks has surpassed that of private banks improvement in capital base as indicated by increased capital adequacy ratio played an important role in ushering efficiency gain the return to scale estimate suggests that state owned banks are operating far above their efficient scale and cost savings can be obtained by reducing their size of operations overall tfp growth was above 3 5 annually both technical progress and technical efficiency change consistently played an important role in shaping tfp growth copyright 2010 john wiley sons ltd

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

productivity change technical progress and relative efficiency change in the public accounting industry we present evidence on components of productivity change in the public accounting industry toward the end of the 20th century using revenue and human resource data from 64 of the 100 largest public accounting firms in the united states for the 1995 1999 period we analyze productivity change technical progress and relative efficiency change over time the average public accounting firm experienced a productivity growth of 9 5 between 1995 and 1999 we find support for the hypothesis that technical progress rather than an improvement in relative efficiency was the reason for this productivity growth firms that were early movers into management advisory services mas and those that emphasized growth in mas over growth in the traditional audit and tax services enjoyed significantly higher productivity growth than their peers these firms also contributed significantly more to the industry s technical progress

estimation of input distance functions a system approach this article offers a methodology to address the endogeneity of inputs in the input distance function idf formulation of the production processes we propose to tackle endogenous input ratios appearing in the normalized idf by considering a flexible simultaneous system of the idf and the first order conditions from the firm s cost minimization problem our model can accommodate both technical and input allocative inefficiencies amongst firms we also present the algorithm for quantifying the cost of allocative inefficiency we showcase our cost system based model by applying it to study the production of norwegian dairy farms during the 1991 2008 period among other things we find both an economically and statistically significant improvement in the levels of technical efficiency among dairy farms associated with the 1997 quota scheme change which a more conventional single equation stochastic frontier model appears to be unable to detect

scale economies and inefficiency of u s dairy farms this study employs data drawn from the 2000 agricultural resource management survey a u s department of agriculture sponsored farmers survey the article estimates returns to scale relationships across dairy farms of different sizes and across different regions incorporating variables hypothesized to influence farm performance results point to significant scale economies in u s dairy farms and underscore the importance of taking account of inefficiency when estimating scale economies contrary to previous research the preferred cost function specification does not show a region of decreasing returns to scale this finding helps explain why the average size of dairy farms has been increasing

input substitution economies of scale and productivity growth in the us upholstered furniture industry cost factor demand and productivity growth are considered in the upholstered furniture industry over 1958 87 factors are divided into labour capital and materials it is found that all inputs are substitutes in production although substitution elasticities are small factor demand is price inelastic for all inputs the industry operates around minimum average cost productivity growth is small but significant the results indicate that labour will continue to be important in the industry however regional comparative advantage is not related to labour alone the results suggest that policies to attract or retain the industry must consider the low degree of factor substitution

profit taxation and the mode of foreign market entry abstract this paper studies the role of profit taxation for an international firm s decision upon how to penetrate a foreign market through exports or through foreign direct investment fdi and local supply we show that with harmonized taxes the international firm may choose fdi even though this has welfare costs from a global point of view with tax competition the host country can enforce exporting instead of fdi this leads to a nash equilibrium associated with higher world welfare than harmonized taxes thus because of the effect on entry mode tax competition provides heretofore unexplored benefits as compared to tax harmonization

contracts versus salaries in matching workers and firms may bargain over general multidimensional contracts they may negotiate over health benefits housing retirement plans etc substitutes on the other hand is the assumption commonly placed on firms preferences to guarantee the existence of stable matchings of workers and firms in this paper i show that when firms regard contracts as substitutes bargaining over contracts can be embedded into a model of bargaining over wages the economics of the embedding is straightforward except for a small twist when a firm and a worker negotiate over a contract they may bargain over many dimensions however the pareto frontier of contracts is in a sense one dimensional what is better for the worker is worse for the firm so pareto optimal contracts may be viewed as salaries with the better contracts for the firm meaning lower salaries and the better contracts for the worker meaning higher salaries the twist is that a firm s ranking over contracts might be affected by the firm s other hires for example health plan a may be better than b for a firm if it has many employees but b beats a if it has few when contracts are substitutes it turns out that the ranking is not affected in this way hatfield and milgrom 2005 present a model of two sided worker firm matching with contracts a firm will hire a collection of workers and will negotiate a contract with each one of them the model is a generalization of kelso and crawford 1982 where each firm and each worker negotiate a wage 1 kelso and crawford show that when firms demands satisfy gross substitutes the core of the matching market is nonempty hatfield and milgrom show that when the firms preferences over contracts satisfy their notion of substitutes the core of the market is nonempty i show that hatfield and milgrom s model can be embedded into the model of kelso and crawford hatfield and milgrom s assumption of substitutability enables an embedding where firms demands for workers satisfy kelso and crawford s notion of gross substitutes as a result the nonemptiness of the core follows from the argument in kelso and crawford and their salary adjustment algorithm finds a stable matching of workers to firms and a vector of supporting salaries hatfield and milgrom s paper is an elegant analysis of two sided matching it simplifies matching models and makes their relationship to auction models more transpar ent their paper contributes much more than showing the nonemptiness of the core when firms and workers can sign general contracts and my result does not diminish

decent rural employment and farm production efficiency empirical evidence from tanzania and ethiopia promoting decent rural employment by creating new jobs in rural areas and upgrading the existing ones could be one of the most efficient pathways to reduce rural poverty this article systematically investigates the impact of decent rural employment on agricultural production efficiency in ethiopia and tanzania the analysis applies an output oriented distance function approach with an estimation procedure that accounts for different technological demographic socioeconomic institutional and decent rural employment indicators data of the 2011 round of living standards measurement study integrated surveys on agriculture for the two countries are used and a set of indicators is derived to proxy core dimensions of decent rural employment the findings of our analysis show that decent rural employment contributes to agricultural production efficiency

measuring and decomposing productivity change measuring productivity change with malmquist indices has become common practice because they are easily computed using nonparametric programming techniques and can be readily decomposed into technical and efficiency change however this approach is nonstochastic and requires a constant returns to scale assumption to construct the reference technology we propose estimating productivity change using a stochastic input distance frontier imposing no restrictions on returns to scale we derive the analogous decomposition of productivity change and develop a generalized method of moments strategy in which outputs or inputs may be endogenous we compare two methods in an application to electric utilities

strong tiebout equilibrium under restricted preferences domain abstract we investigate the existence and give a partial characterization of a strong tiebout equilibrium which consists of an endogenously formed partition of the individuals into disjoint jurisdictions with each jurisdiction producing and financing its own public goods and moreover there exists no group of individuals who can all benefit by establishing their own community in particular no single individual finds it desirable to migrate from his equilibrium jurisdiction the existence proof makes use of the notion of consecutive games which we introduce and show that for such games there always exists a partition with a nonempty core

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

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

a control function approach to endogeneity in consumer choice models abstract endogeneity arises for numerous reasons in models of consumer choice it leads to inconsistency with standard estimation methods that maintain independence between the model s error and the included variables the authors describe a control function approach for handling endogeneity in choice models observed variables and economic theory are used to derive controls for the dependence between the endogenous variable and the demand error the theory points to the relationships that contain information on the unobserved demand factor such as the pricing equation and the advertising equation the authors approach is an alternative to berry levinsohn and pakes s 1995 product market controls for unobserved quality the authors apply both methods to examine households choices among television options including basic and premium cable packages in which unobserved attributes such as quality of programming are expected to be correlated with price without correcting for endogeneity aggregate d

parametric decomposition of output growth using a stochastic input distance function midmore peter karagiannis g tzouvelekas v parametric decomposition of output growth using a stochastic input distance function american journal of agricultural economics 2004 86 4 pp 1044 1057

a general index of technical change this paper outlines a procedure for estimating a general index of technical change within the context of a quite general production technology specifically when panel data are available for firms in an industry time specific dummies can be combined in a nonlinear estimation procedure to yield a general index of technical change that may be both nonneutral and scale augmenting this approach offers numerous advantages over the traditional time trend representation of technical change for example the general index can serve as the basis for analysis of the determinants of technical change results for a sample of 30 electric utilities over the period 1951 78 show that the productivity decline of the 1970s can be attributed primarily to sulphur oxide restrictions and secularly declining capacity utilization due to rapidly increasing peak load demands

a goal programming constrained regression review of the bell system breakup the recently implemented court decision to break up bell american telephone telegraph co to accord with u s anti trust laws represents a highly significant policy decision which is proving to be influential in other countries as well as the u s the telecommunication industry is of such size and importance that even relatively small economies that might be lost with bell s breakup as a natural monopoly could involve substantial welfare losses to consumers and producers studies commissioned by the u s justice department that approached this topic by econometric methods reported that the evidence failed to support the contention that bell was a natural monopoly here a goal programming constrained regression as developed in the management science literature uses the same functional form and the same data but nevertheless reverses the main findings of the econometric studies in every one of the 20 years covered this kind of difference in results obtained by two different methods of analysis poi

price cost margins exports and productivity growth with an application to canadian industries a model is estimated for oligopolistic industries producing multiple outputs in short run equilibrium outputs are sold domestically and exported while capital is treated as a quasi fixed factor the model is applied to the canadian non electrical machinery electrical products and chemical products industries the results show that there is significant oligopoly power in each of the industries and that the degree of this power differs between the domestic and export markets total factor productivity is decomposed price cost margins exert little influence but the rate of technological change returns to scale and the rate of capital adjustment determine productivity growth

cost structure and capacity in the norwegian pelagic fisheries the parameters of the short run cost function are estimated for three vessel types taking part in the norwegian pelagic fisheries purse seine vessels trawlers and coastal vessels the generalized translog functional form is used estimates of returns to scale are calculated and the results indicate that there are substantial economies of scale in all vessel classes it is further investigated whether excess capacity varies with vessel size and age the analysis suggests increased quotas per vessel to avoid rent dissipation with the total allowable catch given the number of participating vessels must be reduced

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

substitution possibilities for unpriced natural resources restricted cost functions for the canadian metal mining industry a bstract the effects of resource depletion on economic growth depend critically on the elasticities of substitution between non renewable natural resources and reproducible inputs estimation of the elasticities of substitution for natural resources has been hindered by the absence of data on their prices which results from the prevalence of vertical integration in natural resource industries in this paper we use the theory of restricted cost functions to develop a general procedure for estimating substitution possibilities for unpriced inputs estimation of the model with data for the canadian metal mining industry indicates that the elasticities of substitution for the natural resource metallic ore are equal to unity

partial agglomeration or dispersion in spatial cournot competition 1 introductionsince the seminal work of hotelling 1929 a rich and diverse literature on spatial competition has emerged location models can be classified into two types one type is shipping or spatial price discrimination model where sellers bear transport costs the other is shopping or mill pricing model where buyers pay for transport for each type one can have either bertrand type price setting or cournot type quantity setting 1most studies on location theory use shopping mill pricing models with bertrand competition although cournot and bertrand types of non spatial models are equally popular the body of literature on spatial competition that uses cournot type models is relatively small economists have recently considered shipping models with cournot competition hamilton thisse and weskamp 1989 and anderson and neven 1991 carry out pioneering works on location models 2 they use linear city models and show that all firms agglomerate at the central point pal 1998 shows that their result is crucially dependent on the assumption of a linear city he investigates a circular city duopoly model3 and finds that an equidistant location pattern appears in equilibrium that is locational dispersion appears 4 matsushima 2001a extends pal s model to an n firm oligopoly and shows another equilibrium where half of the firms locate at one point and the other half locate at the opposite point partial agglomeration these results indicate the multiplicity of equilibria in spatial cournot models with a circular city the multiplicity of equilibria restricts the applicability of the model because the model does not give us a distinct prediction in this article we take a close look at pal 1998 and matsushima 2001a we try to solve this problem by extending their linear transport cost model to one with nonlinear transport cost 5 we consider a simplified model the numbers of firms and markets and so possible locations are four four firms choose location a b c or d see if each of the four firms chooses a different location we call this outcome pal type if two firms locate at a and the other two locate at c we call this outcome matsushima type we find that the pal type equilibrium is much more robust because i pal type equilibrium always exists as long as transport cost is increasing in distance while matsushima type equilibrium fails to exist when the transport cost function is significantly convex or concave proposition 1 ii if firms choose their locations sequentially the unique equilibrium outcome is pal type under nonlinear transport cost functions proposition 2 and iii the profit of each firm in pal type is never smaller than that in matsushima type and the former is strictly larger if the transport cost function is nonlinear proposition 3 we also compare the welfare implications of pal type and matsushima type models if the transport cost function is linear the two outcomes yield exactly the same profits consumer surplus and total social surplus however this equivalence does not hold if the transport cost function is nonlinear either convex or concave in this case pal type yields greater total social surplus and profit of each firm while matsushima type yields greater consumer surplus these results indicate that the welfare implications are sensitive to whether or not the transport cost function is linear anderson and neven 1991 show that in the linear city model a strong concavity in transport cost changes the equilibrium outcome this result is related to our results but we emphasize that our results are different from theirs first we show that both concavity and convexity of the transport cost function affect the results while in anderson and neven 1991 only strong convexity changes the result second in our propositions 2 and 3 even a slight nonlinearity changes the results

how many firms should be leaders beneficial concentration revisited we investigate how the number of stackelberg leaders and followers aects economic welfare first we discuss the model with m leaders and n m followers compete in a homogeneous good market daughety 1990 nds that under constant marginal costs the stackelberg model m2 0 n yield a higher welfare than the cournot model m 0 or

productivity growth and incentive regulation in austria s gas distribution abstract the projected rate of productivity growth is the critical determinant of the price cap in incentive regulation however the regulatory authorities generally lack sophisticated industry tfp studies to set an optimal cap we thus estimate productivity growth in the austrian gas distribution sector in a translog cost function framework a key feature is our unique panel database on costs and outputs of regulated utilities for the period 2002 2013 covering six years prior and during incentive regulation as introduced in 2008 we find a modest tfp growth rate in the early sample years followed by a decline to zero or even slightly negative rates in recent years we also find a significant potential for returns to scale which is left unexploited indicating that utilities could significantly save on costs by merging as essential investments have already been undertaken in the past opportunities for technological progress seem to be limited in recent years

estimating and decomposing the rate of technical change in the swedish pulp and paper industry a general index approach abstract the purpose of this paper is to analyse the rate and the impacts of technical change in the swedish pulp and paper industry in contrast to earlier research on this industry we replace the standard time trend with time specific dummy variables enabling the estimation and decomposing of a general index of technical change the analysis is made within a translog cost function model which is estimated using a panel data set with observations across individual paper and board mills over the time period 1974 1994 our results indicate that the highest rates of technical change have generally occurred during the latter part of this period pure technical change is the primary component that has directed technical change over the entire time period we also find evidence of non neutral technical change energy use has been stimulated by technical improvements while labour use has been discouraged also technical change has had wastepaper and woodpulp using impacts however the magnitudes of these latter impacts are relatively small implying that the increase in wastepaper use during the last decades has mainly been stimulated by relative price changes

measuring embodied technical change in the us local telephone industry this study attempts to measure the rate of embodied technical change by using a short run variable cost function that contains arguments for labour and capital quality in this short run variable cost model the expansion of the amount of physical capital increases variable costs due to more maintenance outlays and then it leads to improvements in capital quality when a measure of competition is included as a proxy for organizational efficiency improvements in labour and capital quality explain more than two thirds of productivity growth the degree of returns to scale and the shadow cost of capital input in the embodiment cost model are presented as well the study is based on pooled time series and cross section data of eight us local exchange carriers

productivity scale economies and technical change reconsidered recently several writers have presented theoretical arguments and empirical evidence that suggests that an electric utility s long run productivity growth rate can be decomposed into a variety of factors for example gollop and roberts 12 decompose a utility s total factor productivity growth rate into three distinct components 1 technical change 2 a scale effect and 3 an environmental regulatory factor results for the 1970s indicate that declining rates of technical change and output growth coupled with increased regulatory intensity lead to a noticeable decline in the firm s long run productivity growth rate similarly nelson and wohar 15 examine the impact of technical change scale economies and rate of return regulation on an electric utility s longrun productivity growth rate evidence suggests that the technical change and scale components behaved in a manner similar to the gollop and roberts 12 findings the evidence concerning the impact of the regulatory factor was less convincing due to the difficulty in obtaining reliable estimates of the regulatory constraint parameter a common characteristic of this literature is that the firms under investigation are assumed to employ all inputs at their long run cost minimizing levels as such the productivity decomposition model is primarily concerned with distinguishing between shifts in the production function versus movements along the production structure according to caves christensen and swanson 5 a violation of the long run equilibrium assumption adds an equally important factor to the decomposition of productivity growth specifically the movement toward or away from longrun equilibrium as a consequence researchers must further distinguish between long run and short run productivity growth estimates 2 in a recent article 9 daly and rao illustrate theoretically and empirically using a long run cost function and data pertaining to ontario hydro that a firm s long run productivity growth rate can be decomposed into 1 technical change 2 non constant returns to scale and 3 a capacity

the impact of environmental regulations on industry productivity direct and indirect effects abstract the paper develops an approach to measuring the impact of environmental regulations on total factor productivity growth which is less restrictive than a simple growth accounting approach environmental regulations have a direct impact on productivity growth due to the diversion of resources toward required abatement capital there can be a further indirect effect however as conventional inputs and production processes are changed in response to requirements to purchase abatement capital we estimate this indirect effect using a flexible functional form cost function total factor productivity and the direct and indirect productivity effects of environmental regulations are presented for five polluting industries we find that the indirect effect can be either positive or negative and in all industries is energy using the net impact of environmental regulations on total factor productivity growth is fairly small given that these are the most polluting industries they account for about 10 30 of the productivity decline of the 1970s in these industries

capacity utilization and its determinants for a container shipping line theory and evidence under utilization of fleet capacity appears to be a long lasting issue in the container shipping industry also there are some difficulties unsolved while measuring the ratio of capacity utilization cu of a container shipping line from the perspective of an engineering approach the slots capacity installed is the most popular way to represent the capacity output since the slots capacity installed lacks theoretical support this study adopts an economics model to find the capacity output of a shipping line further the derived cu ratio identifies the realized utilization of fleet capacity for a shipping line focused on the three largest container shipping lines in taiwan this article shows that their fleet capacity are totally under utilized and the movement patterns of cu ratios are approximately identical in addition the variations of cu ratios also suggest that the enactment of ocean shipping reform act has contributed a positive effect on the capacity utilization of a container shipping line