money and capital abstract the effects of money anticipated inflation on capital formation is a classic issue in macroeconomics previous papers adopt reduced form approaches putting money in the utility function or imposing cash in advance but using otherwise frictionless models we follow instead a literature that tries to be explicit about the frictions making money essential this introduces new elements including a two sector structure with centralized and decentralized markets stochastic trading opportunities and bargaining these elements matter quantitatively and numerical results differ from findings in the reduced form literature the analysis also reduces a gap between microfounded monetary economics and mainstream macro

can falling supply explain the rising return to college for younger men a cohort based analysis although the college high school wage gap for younger u s men has doubled over the past 30 years the gap for older men has remained nearly constant in the united kingdom and canada the college high school wage gap also increased for younger relative to older men using a model with imperfect substitution between similarly educated workers in different age groups we argue that these shifts reflect changes in the relative supply of highly educated workers across age groups the driving force behind these changes is the slowdown in the rate of growth of educational attainment that began with cohorts born in the early 1950s in all three countries

premuneration values and investments in matching markets we analyze a model in which agents make investments and then match into pairs to create a surplus the agents can make transfers to reallocate their pretransfer ownership claims on the surplus mailath postlewaite and samuelson 2013 showed that when investments are unobservable equilibrium investments are generally inecient in this paper we work with a more structured model that is suciently tractable to analyze the nature of the investment ineciencies we provide conditions under which investment is ineciently high or low and conditions under which changes in the pretransfer ownership claims on the surplus will be pareto improving as well as examine how the degree of heterogeneity on either side of the market aects investment eciency

efficient non contractible investments in large economies abstract do investors making complementary investments face the correct incentives especially when they cannot contract with each other prior to their decisions we present a two sided matching model in which buyers and sellers make investments prior to matching once matched buyer and seller bargain over the price taking into account outside options efficient decisions can always be sustained in equilibrium we characterize the inefficiencies that can arise in equilibrium and show that equilibria will be constrained efficient we also show that the degree of diversity in a large market has implications for the extent of any inefficiency journal of economic literature classification numbers c78 d41 d51

should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

choosy search and the mismatch of talents this article proposes a multi sector matching model where workers have symmetric sector specific skills and the search market is segmented by sector workers choose the range of markets they are willing to participate in i identify a composition externality workers do not take into account the impact of their choice on sector specific mean productivity among the pools of job seekers consequently workers prospect too many market segments and there is room for public policy even when the so called hosios condition holds

equilibrium price dispersion with sequential search abstract the paper studies equilibrium pricing in a product market for an indivisible good where buyers search for sellers buyers search sequentially for sellers but do not meet every seller with the same probability specifically a fraction of the buyers meetings lead to one particular large seller while the remaining meetings lead to one of a continuum of small sellers in this environment the small sellers would like to set a price that makes the buyers indifferent between purchasing the good and searching for another seller the large seller would like to price the small sellers out of the market by posting a price that is low enough to induce buyers not to purchase from the small sellers these incentives give rise to a game of cat and mouse whose only equilibrium involves mixed strategies for both the large and the small sellers the fact that the small sellers play mixed strategies implies that there is price dispersion the fact that the large seller plays mixed strategies implies that prices and allocations vary over time we show that the fraction of the gains from trade accruing to the buyers is positive and nonmonotonic in the degree of market power of the large seller as long as the large seller has some positive but incomplete market power the fraction of the gains from trade accruing to the buyers depends in a natural way on the extent of search frictions

efficient co2 emissions control with emissions taxes and international emissions trading abstract we consider a stylized model of the hybrid co 2 emissions control in the eu a group of countries operates a joint emissions trading system ets covering only part of each country s economy the countries levy an emissions tax in the rest of their economy and possibly an additional tax in their ets sectors welfare maximizing governments are shown to lack incentives for group efficient policies preexisting taxes overlapping with the ets lead policy makers to allocate more permits to their ets sectors than cost effectiveness would suggest the cases of small and large countries exhibit significantly different efficiency implications

job search with bidder memories this paper revisits the no recall assumption in job search models with take it or leave it offers workers who can recall previously encountered potential employers in order to engage them in bertrand bidding have a distinct advantage over workers without such attachments firms account for this difference when hiring a worker when a worker first meets a firm the firm offers the worker a sufficient share of the match rents to avoid a bidding war in the future the pair share the gains to trade in this case the diamond paradox no longer holds

competitive search equilibrium in this paper i construct an equilibrium for markets with frictions which is competitive in the sense that all agents are price takers and maximize utility subject to a set of market parameters i show that the equilibrium allocation is socially optimal i also show how the competitive search equilibrium can be achieved if employers with vacancies can advertise publicly the wages they pay

life cycle equilibrium unemployment this paper extends the job creation job destruction approach to the labor market to take into account a deterministic finite horizon as hirings and separations depend on the time over which investment costs can be recouped the life cycle setting implies age differentiated labor market flows while search by the unemployed falls with age the separation rate is rather u shaped over the life cycle worker heterogeneity in the context of undirected search implies an intergenerational externality which is not eliminated by the hosios condition we show that age specific policies are required to attain the first best allocation

the impact of cap reform on farmers plans for the future some evidence from south west england this paper considers farmer intentions following the implementation of the 2003 cap reforms identifies the extent to which these plans have been influenced by the introduction of the single payment scheme sps in 2005 and considers the implications in terms of likely structural change i e changes in the deployment of land labour and capital the analysis uses data from a large sample survey of farmers in south west england and the results indicate that cap reform is not stimulating rapid agricultural restructuring rather it appears to be reinforcing many existing trends towards diversification and an increasing polarisation between the largest and smallest farms cap reform is impacting unevenly on the farm community and different farming situations are associated with different types of reaction market signals may become a more powerful driver of farmer behaviour in which case the 2003 reforms will have proved successful in providing farmers the freedom to farm without coupled subsidies on the basis of the results presented in this paper though only a minority of farmers seem both well placed and well disposed to exploit such opportunities

competing for order flow in otc markets we develop a model of a two sided asset market in which trades are intermediated by dealers and are bilateral dealers compete to attract order flow by posting the terms at which they execute trades which can include prices quantities and execution times and investors direct their orders toward dealers that offer the most attractive terms of trade equilibrium outcomes have the following properties first investors face a trade off between trading costs and speeds of execution second the asset market is endogenously segmented in the sense that investors with different asset valuations and different asset holdings will trade at different speeds and different costs for example under a leontief technology to match investors and dealers per unit trading costs decrease with the size of the trade in accordance with the evidence from the market for corporate bonds third dealers implicit bargaining powers are endogenous and typically vary across sub markets finally we obtain a rich set of comparative statics both analytically by studying a limiting economy where trading frictions are small and numerically for instance we find that the relationship between trading costs and dealers bargaining power can be hump shaped

competitive equilibrium and the core in club economies with anonymous crowding in club economies with anonymous crowding competitive equilibrium states of the economy are efficient and coincide with the core when there is only one private good anonymous admission prices permit consumers with different tastes to share facilities consumers might do so when their demands for facility size and crowding coincide in which case sharing is efficient thus similarity of demands is the relevant consideration for efficiently grouping consumers with different tastes

the effect of decoupling on the decision to produce an irish case study abstract this paper assesses the impact of decoupling on farming in ireland the decision to engage in production post decoupling is simulated using profit maximising multi period linear programming models the number of farmers that would financially benefit from disengaging from production is projected the results of the economic models suggest that significant restructuring is likely to occur at the farm level as a result of decoupling projections of farmers production decisions post decoupling are compared and contrasted to the results of a survey of farmers production intentions the comparison shows that despite the significant changes in profitability that decoupling could engender the majority of farmers intend to continue as before and are unlikely to change their production patterns the survey of farmers intentions indicates that a large number of farmers still seem to consider the decoupled payment linked to production the implications of these results for land use agricultural production and farm numbers are discussed

dynamics of asymmetric conflict the case of the german milk conflict the german milk conflict developed when an emerging farmer association challenged the large incumbent in the wake of an insufficiently communicated policy change abolition of the milk quota the organizations represent opposing sides of a common policy debate market liberalization versus regulation the study analyzed the patterns between the two organizations and proposed a grounded theory of asymmetric conflict due to the elevated level of emotions during the conflict the study used a qualitative research approach based on 34 in depth interviews the analysis uncovered the interlocking patterns of simplification and emotionalization by the smaller association and rationalizing by the larger association results indicate how an active opponent can use policy changes to its advantage and how to prevent such a development recommendations based on the grounded theory developed such as implementing suitable communication strategies are transferable to a variety of changes and conflict situations in complex environments such as the food and agricultural sector

carbon trading in the policy mix the kyoto protocol is stimulating the development of emissions trading schemes at the national and international levels these are being introduced alongside existing policy instruments such as carbon taxes and negotiated agreements leading to complex problems of policy interaction but the topic of policy interaction remains under researched this paper aims to improve understanding of such interactions by examining the conditions under which a cap and trade scheme for carbon dioxide emissions may usefully coexist with carbon energy taxes support mechanisms for renewable electricity and policies to promote energy efficiency the paper argues that each of these instrument combinations may be acceptable provided they contribute to either improving the static or dynamic efficiency of the trading scheme or delivering other valued policy objectives but since the coexisting instruments may raise overall abatement costs while contributing nothing further to emission reductions the objectives and trade offs within the policy mix must be explicit

the climate policy hold up green technologies intellectual property rights and the abatement incentives of international agreements the success of global climate policies over the coming decades depends on the diffusion of green technologies this requires that international environmental agreements ieas and trade related intellectual property rights trips interact productively using a simple and tractable model we highlight the strategic reduction in abatement commitments on account of a hold up effect in anticipation of rent extraction by the innovator signatories might abate less than non signatories turning the iea brown self enforcing ieas have fewer signatories and diffusion can reduce global abatement under trips countries hosting patent holders extract rents from trips but may be better off without them

eu type carbon regulation and the waterbed effect of green energy promotion abstract this paper studies waterbed effects in a stylized model of carbon regulation in which all countries participate in an emissions trading scheme ets implement national emissions caps on non ets emissions and support green electricity since a change in some country s ets emissions is exactly offset by opposite changes in the other countries ets emissions waterbed effect allocative disturbances in one country affect all other ets countries we analyze the allocative displacement effects on inputs outputs prices and trade that a country say country a triggers at home and in the other ets countries when it unilaterally increases its support of green electricity via raising its feed in tariff ets emissions turn out to decline in country a and to rise in the other countries another remarkable waterbed effect is that country a suffers a welfare loss whereas the other countries are better off country a s welfare loss is larger than it would be if there would be national etss instead of the joint ets if green electricity support takes the form of subsidies on the electricity price instead of feed in tariffs we get another waterbed effect green electricity production increases in country a but declines in the other countries various decarbonization indicators improve in country a but tend to point into the opposite direction in the other countries

holdups and overinvestment in capital markets abstract this paper considers a decentralized capital market characterized by trading frictions in which firms and suppliers need to make investment decisions before meeting with each other and bargaining over the price of capital the resulting holdup problem provides firms with a strategic incentive to overaccumulate capital so as to reduce their marginal productivity and thus the bargained price in equilibrium this strategic incentive can outweigh the usual distortionary effects of holdup problems that on their own would lead to underinvestment thus resulting in the economy to overinvest in a setting with both capital and labor the holdup problem in capital markets interacts with holdup problems in labor markets this presents firms with a trade off that has non trivial equilibrium effects and that depending on the substitutability of capital and labor and the firm s bargaining power in each market can mitigate or exacerbate the overinvestment result

extending the sectoral coverage of an international emission trading scheme in a model inspired by the eu emissions trading scheme non cooperative countries allocate their emissions to internationally trading and non trading sectors each country is better off with trading than without and aggregate welfare is maximized with all sectors in the trading scheme we analyze the effects of extending the sectoral coverage of the trading scheme in a two country model with quadratic abatement costs if only the original trading sector is asymmetric between countries the welfare change is always positive and the same in both countries if the original and additional trading sectors are asymmetric one country might lose but there is an aggregate welfare gain if the original trading sector and the non trading sector are asymmetric both countries always gain

equilibrium wage dispersion and interindustry wage differentials this paper develops a search theoretic explanation of interindustry wage differentials given coordination problems in the labor market the probability of filling a vacancy is an increasing function of the wage offered in equilibrium firms that find vacancies more costly will offer higher wages the model thus explains the persistence of interindustry wage differentials and their correlation with industry average capital labor ratio and profitability additionally the model predicts that high wage firms will receive more applications per job opening and that wages in the labor market will behave as strategic complements

a spillover based theory of credentialism i propose a model in which credentials such as diplomas are instrumentally valuable to workers the model avoids an important criticism of standard job market signalling models by tying a worker s wage to their output a worker s productivity is influenced by the skills of their co workers where such skills arise from an ability augmenting investment that is made prior to matching with co workers credentials allow workers to demonstrate their investment to the labour market thereby allowing them to match with high skill co workers in equilibrium despite the positive externality associated with a worker s investment i show how overinvestment is pervasive in equilibrium

a search model of rental markets who should pay the commission abstract we develop a dynamic search equilibrium model of rental markets with brokerage fees an endogenous mass of landlords and tenants is active in the search market while the mass of entering tenants is exogenous the mass of entering landlords is endogenously determined by the rate at which apartments become vacant brokerage fees paid by tenants are used as a device to screen short term and long term tenants we analyze a policy that requires fees to be paid by landlords such a policy decreases efficiency by preventing efficient screening but also increases turnover and hence efficiency in the search market we further provide empirically testable implications of our theory

markov equilibria in dynamic matching and bargaining games abstract rubinstein and wolinsky rev econ stud 57 1990 63 show that a simple homogeneous market with exogenous matching has a continuum of non competitive perfect equilibria however the unique markov perfect equilibrium of this model is competitive by contrast in the more general case of heterogeneous markets even the markov property is not enough to guarantee the perfectly competitive outcome we define a market game that allows for heterogeneous values on both sides of the market and exhibit a number of examples of non competitive markov perfect equilibria with and without discounting unlike the homogeneous case these equilibria allow for inefficient trades and for trade at non uniform prices the non competitive equilibrium may be unique

efficient investments in the implementation problem abstract this paper identifies a condition for an efficient social choice rule to be fully implementable when we take into account investment efficiency to do so we extend the standard implementation problem to include endogenous ex ante and ex post investments in our problem the social planner aims to achieve efficiency in every equilibrium of a dynamic game in which agents strategically make investments before and after playing the mechanism our main theorem shows that a novel condition commitment proofness is sufficient and necessary for an efficient social choice rule to be implementable in subgame perfect equilibria the availability of ex post investments is crucial in our model there is no social choice rule that is efficient and implementable in subgame perfect equilibria without ex post investments we also show that our positive result continues to hold in the incomplete information setting

income schooling and ability evidence from a new sample of identical twins we develop a model of optimal schooling investments and estimate it using new data on approximately 700 identical twins we estimate an average return to schooling of 9 percent for identical twins but estimated returns appear to be slightly higher for less able individuals simple cross section estimates are marginally upward biased these empirical results imply that abler individuals attain more schooling because they face lower marginal costs of schooling not because of higher marginal benefits

competition human capital and income inequality with limited commitment we develop a dynamic general equilibrium model with two sided limited commitment to study how barriers to competition such as re strictions to business start up aect the incentive to accumulate hu man capital we show that a lack of contract enforceability ampli es the eect of barriers to competition on human capital accumulation high barriers reduce the incentive to accumulate human capital by lowering the outside value of skilled workers while low barriers can result in over accumulation of human capital this over accumulation can be socially optimal if there are positive knowledge spillovers a calibration exercise shows that this mechanism can account for signif icant cross country income inequality

sorting versus screening search frictions and competing mechanisms in a market where sellers compete by posting trading mechanisms we allow for a general search technology and show that its features crucially affect the equilibrium mechanism price posting prevails when meetings are rival i e when a meeting by one buyer reduces another buyer s meeting probability under price posting buyers reveal their type by sorting ex ante only if the meeting technology is sufficiently non rival price posting is not an equilibrium multiple buyer types then visit the same sellers who screen ex post through auctions

optimal unemployment insurance in search equilibrium should unemployment benefits be paid indefinitely at a fixed rate or should the rate decline or increase over a worker s unemployment spell we examine these issues using an equilibrium model of search unemployment the model features worker firm bargaining over wages free entry of new jobs and endogenous search effort among the unemployed the main result is that an optimal insurance program implies a declining benefit sequence over the spell of unemployment numerical calibrations of the model suggest that there may be nontrivial welfare gains associated with switching from an optimal uniform benefit structure to an optimally differentiated system

transplants and implants the economics of self improvement this article examines equilibrium self improvement and marriage proposal strategies in a two sided search model with nontransferable utility singles are vertically differentiated some make better marriage partners than others a complete characterization of equilibrium is provided it is shown there are two externalities to self improvement decisions further these externalities may support multiple pareto rankable equilibria by encouraging everybody to self improve society can create a situation where everybody is forced to improve to remain acceptable but a preferred equilibrium may exist where there is less costly self improvement

demand shocks and open economy puzzles abstract we pose good markets frictions on top of an otherwise standard two country international real business cycle irbc model shopping for goods takes effort which prevents perfect matching between customers and producers an increase in search effort implies increased measured productivity demand shocks increase expenditures and search effort simultaneously increasing output consumption productivity and the trade deficit and appreciating the real exchange rate thus we solve the backus smith puzzle and we show that the cross country correlation of consumption is higher than that of output standard irbc models cannot account for these puzzles along with movements in tfp

efficiency of investment in human and physical capital in a model of bilateral search and bargaining a matching model is used to analyze the effect of search frictions on incentives to invest in human and physical capital equilibrium involves inefficient low levels of investment the source of the inefficiency cannot be attributed solely to either search or bargaining schemes that assist matching are pareto improving while the ratio of workers to firms remains fixed intermediaries that pay owners according to the amount of capital carried into the market are able to generate efficient outcomes such intervention may not eliminate inefficiencies when the ratio is endogenized policy implications include encouragement of investment even while abstracting from growth this paper examines investment in human and physical capital in an environment with explicit frictions in particular i analyze a random matching model where workers must search for employers and vice versa but one that is generalized beyond the previous literature to include ex ante investments on both sides of the market 2 the model generates equilibria with inefficiently low levels of investment to identify the source of the inefficiency its robustness to variations in the environment is considered i also analyze a generalized version of the model in which individuals can choose whether to invest in physical or human capital i e whether to become employers or workers the model predicts that the

taxation and redistribution of residual income inequality this paper studies the optimal redistribution of income inequality caused by the presence of search and matching frictions in the labor market we study this problem in the context of a directed search model of the labor market populated by homogeneous workers and heterogeneous firms the optimal redistribution can be attained using a positive unemployment benefit and an increasing and regressive labor income tax the positive unemployment benefit serves the purpose of lowering the search risk faced by workers the increasing and regressive labor tax serves the purpose of aligning the cost to the firm of attracting an additional applicant with the value of an application to society

investments and bargaining in a model with positive consumption externalities abstract this paper analyzes the investment decisions of the members of a committee when a subsequent bargaining process determines the distribution of a divisible good among them the shares allocated to investing agents generate positive consumption externalities we show that agents investments improve their bargaining position this induces rent seeking behavior that generates a negative external effect on other investing agents in this setting the effects of rent seeking counterbalance the effects of positive consumption externalities so that equilibria may be efficient or display either over or under investment

unemployment and hours of work the north atlantic divide revisited i examine the dynamic evolutions of unemployment hours of work and the service share since the war in the united states and europe the theoretical model brings together all three and emphasizes technological growth computations show that the very low unemployment in europe in the 1960s was due to the high productivity growth associated with technological catch up productivity also played a role in the dynamics of hours but a full explanation for the fast rise of service employment and the big fall in aggregate hours needs further research taxation has played a role but results are mixed

holdups and efficiency with search frictions a natural holdup problem arises in a market with search frictions firms have to make a range of investments before finding their employees and larger investments translate into higher wages in particular when wages are determined by ex post bargaining the equilibrium is always inefficient recognizing that capital intensive production relations have to pay higher wages firms reduce their investments this can only be prevented by removing all the bargaining power from the workers but this in turn depresses wages below their social product and creates excessive entry of firms in contrast to this benchmark we show that efficiency is achieved when firms post wages and workers can direct their search toward more attractive offers this efficiency result generalizes to an environment with imperfect information where workers only observe a few of the equilibrium wage offers we show that the underlying reason for efficiency is not wage posting per se but the ability of workers to direct their search toward more capital intensive jobs

too much investment a problem of endogenous outside options this paper shows that when agents on both sides of the market are heterogeneous varying in their costs of investment ex ante investments by firms and workers or buyers and sellers more generally may be too high when followed by stochastic matching and bargaining over quasi rents the overinvestment is caused by the fact that low cost agents by investing more can increase the value of their outside option and thus shift rent away from high cost investors numerical simulations show that overinvestment can occur given parameter values calibrated to oecd labour markets

investment and competitive matching we study markets in which agents first make investments and are then matched into potentially productive partnerships equilibrium investments and the equilibrium matching will be efficient if agents can simultaneously negotiate investments and matches but we focus on markets in which agents must first sink their investments before matching additional equilibria may arise in this sunk investment setting even though our matching market is competitive these equilibria exhibit inefficiencies that we can interpret as coordination failures all allocations satisfying a constrained efficiency property are equilibria and the converse holds if preferences satisfy a separability condition we identify sufficient conditions most notably quasiconcave utilities for the investments of matched agents to satisfy an exchange efficiency property as well as sufficient conditions most notably a single crossing property for agents to be matched positive assortatively with these conditions then forming the core of sufficient conditions for the efficiency of equilibrium allocations

informative price advertising in a sequential search model the purpose of this paper is to study the role and implications of price advertising when shopping trips are costly to consumers to do so we introduce advertising into an optimal sequential search model information about prices is both gathered by consumers and disseminated by firms consumers search sequentially and stores advertise with various intensity when it is in their interest to do so our model has a unique equilibrium exhibiting priee dispersion the model generates predictions about the shape of the price distribution and firms advertising behavior we explore the effects of entry and find that when initial advertising costs at zero level of effort are precisely zero entry drives the equilibrium to the perfectly competitive outcome however when initial marginal advertising costs are positive entry drives prices higher and while the informed consumers almost surely locate competitive prices welfare does not necessarily increase finally we compare the effectiveness of the two informational channels when advertising costs shrink prices become competitive however when search costs shrink prices remain bounded above marginal production costs

ex ante price offers in matching games non steady states a matching problem is considered in which sellers can publicly commit to a trading price that differs from the price at which buyers expect to trade elsewhere in the market when demand and supply are nearly equal the equilibrium ex ante price offer lies below the price associated with the nash bargaining split this relationship reverses when the level of excess demand is large sellers always have an incentive to make ex ante offers when prices elsewhere are determined by nash bargaining this can be interpreted to mean that nash bargaining is an unstable pricing institution copyright 1991 by the econometric society

overeducation in the labor market this article examines the reasons for the observed discrepancy between workers actual and required levels of schooling and the resulting differences in returns to schooling overeducated workers are found to be younger and to have lower amounts of on the job training than workers with the required level of schooling they also have higher rates of firm and occupational mobility characterized by movement of higher level occupations the findings suggest that overeducation can be explained by the trade off between schooling and other components of human capital and by the mobility patterns of overeducated workers

explaining the economic irrationality of farmers land use behaviour the role of productivist attitudes and non pecuniary benefits abstract although the physical conditions of a farm and farming system will to some extent predispose a farmer towards converting land to alternative agricultural uses such as forestry results presented in this paper suggest that differences in underlying farming motivations can also play an important role in explaining farmers decision making our findings suggest that even in the face of higher economic returns some farmers may be reluctant to convert land to forestry as to do so would not be in keeping with their productivist attitudes other farmers may fear losing the non pecuniary benefits derived from working the land we conclude that economic incentives alone are unlikely to encourage certain cohorts of farmers to consider alternative land uses such as farm forestry and that policy ought to be guided by a better understanding of the differing farming motivations of farm operators

wage differentials discrimination and efficiency abstract i analyze a large labor market where homogeneous firms post wages to direct the search of workers who differ in productivity i show that the model has a unique equilibrium the wage differential depends positively on the workers productivity differential only when the latter is large when the productivity differential is small high productivity workers get a lower wage than low productivity workers this reverse wage differential remains even when the productivity differential shrinks to zero however the equilibrium is socially efficient high productivity workers always get the employment priority and higher expected wages than low productivity workers although discrimination in terms of expected wages does not exist conventional measures are likely to incorrectly find discrimination in the model

implications for food production land use and rural development of the european union s single farm payment indications from a survey of farmers intentions in germany portugal and the uk abstract the 2003 reform of the european union s eu common agricultural policy introduced a decoupled income support for farmers called the single farm payment sfp concerns were raised about possible future land use and production changes and their impact on rural communities here such concerns are considered against the workings of the sfp in three eu member states various quantitative studies that have determined the likely impact of the sfp within the eu and the study countries are reviewed we present the results of a farm survey conducted in the study countries in which farmers responses to a decoupling scenario similar to the sfp were sought we found that little short term change was proposed in the three rather different study countries with only 30 of the farmers stating that they would alter their mix of farm activities furthermore less than 30 of all respondents in each country would idle any land under decoupling of those who would adopt a new activity the most popular choices were forestry woodland and non food crops

a walrasian theory of markets with adverse selection the paper describes a walrasian theory of markets with adverse selection and shows how refinements of equilibrium can be used to characterize uniquely the equilibrium outcome equilibrium exists under standard conditions it is shown that under certain conditions a stable set exists and is contained in a connected set of equilibria for generic models there exists a stable outcome that is all the equilibria in the stable set have the same outcome these ideas are applied to markets with one sided and two sided uncertainty under standard monotonicity conditions it is shown that the stable outcome is separating and implies a particular pattern of matches of buyers and sellers

pareto inefficiency of market economies search and efficiency wage models this paper shows that market economies with search and in which wages are affected by efficiency wage considerations are not constrained pareto efficient wages are not set at pareto efficient levels nor is the level of employment unemployment pareto efficient we identify the nature of the biases and the welfare improving government interventions this abstract was borrowed from another version of this item

strategic bargaining and competitive bidding in a dynamic market equilibrium this paper extends the bargaining and matching literature such as rubinstein 1985 and gale 1986 and 1987 by considering a new matching process we assume that a central information agency exists such as job centres and newspapers in the labour market or real estate agents in the housing market which puts potential traders into direct contact with each other with agent heterogeneity equilibrium trade is characterized by existing traders on the other side since existing traders have already sampled and rejected each other two procedures of trade coexist namely strategic bilateral bargaining and a competitive bidding process depending on the number of potential matches a new trader obtains we characterize the unique symmetric markov perfect equilibrium to this stochastic trading game

taxing international emissions trading we investigate the efficiency and effectiveness consequences of emissions trading taxation a theoretical partial equilibrium model is developed showing that permits taxation distorts the equilibrium price and abatement efforts potentially counterintuitive conclusions concerning the tax revenue are also derived a cge model complements theoretical results suggesting that the change in the equilibrium permits price brought about by taxation can be significant finally we conclude that policy design based on cost effectiveness might lead to wrong conclusions the socially desirable design of emissions trading taxation requires homogenous tax rates applied to net sellers and no rebate rates allowed for net buyers

absolute abundance and relative scarcity environmental policy with implementation lags we study the effectiveness of environmental policy in a model with nonrenewable resources and an unavoidable implementation lag we find that a time lag between the announcement and the implementation of an emissions quota induces an increase in emissions in the period between the policy s announcement and implementation since a binding constraint on emissions restricts energy use during the implementation phase more of the resources must be extracted outside of it we call this the abundance effect in the case of multiple resources that differ in their pollution intensity a second channel emerges since cleaner sources are relatively more valuable when the policy is implemented it is optimal to conserve them before the cap is enforced this ordering effect tends to induce a switch to dirtier resources before the policy is implemented compounding the increase in emissions via the abundance channel using the announcement lag in title iv of the 1990 caaa as a case study we are able to empirically show that the abundance effect and ordering effect are both statistically and economically significant we discuss a number of alternative policy options to deal with these undesirable side effects of policy announcements