debt futures and options optimal price linked financial contracts under moral hazard and limited liability this paper characterizes the optimal financial contract between a risk neutral entrepreneur and risk neutral lender investors when the entrepreneur has limited liability there is moral hazard and the investor payoff function can depend on both output and output price but is nondecreasing in output in this setting the optimal contract is a price contingent commodity bond that can be replicated by combining pure debt commodity futures and commodity call option contracts although a pure commodity bond contract is sometimes optimal a pure debt contract is almost never optimal various properties of the entrepreneur s optimal price contingent promised payment are described copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

stochastic equilibria existence spanning number and the no expected financial gain from trade hypothesis stochastic equilibria under uncertainty with continuous time security trading and consumption are demonstrated in a general setting a common question is whether the current price of a security is an unbiased predictor of the future price of the security plus intermediate dividends this is the hypothesis of no expected financial gains from trade the relevance of this hypothesis in multi good economies is called into question by the following demonstrated fact for each set of probability assessments there exists a corresponding equilibrium one with the original agents original equilibrium allocations and no expected financial gains from trade under the given probability assessments the spanning number of the economy is defined as the fewest number of security markets required to sustain a complete markets equilibrium in a dynamic sense made precise in the paper the spanning number is linked directly to agent primitives in particular the manner in which new information resolves uncertainty over time the spanning number is shown to be invariant under bounded changes in expectations several examples are given in which the spanning number is finite even though the number of potential states of the world is infinite

futures market equilibrium with heterogeneity and a spot market at harvest abstract this paper studies equilibrium in the futures market for a commodity in a single good economy which is populated by heterogeneous producers and speculators the commodity is traded only in the spot market at harvest whereas futures contracts written on the commodity are traded continuously the model illustrates the role of heterogeneity and non tradeness in a futures market equilibrium the results show that the futures price is driven by aggregate wealth rather than the spot price as in other models and that the futures price process is a simple one which depends on the relative risk process

the use of eminent domain in land assembly the case of the tennessee valley authority eminent domain gives public agencies the right to acquire property from private individuals in exchange for just compensation following kelo vs new london 2005 the powers of eminent domain were extended opening the door for potential abuses of power by government officials in this paper i empirically investigate the use of eminent domain using newly digitized records from the tennessee valley authority tva which extensively used eminent domain to construct dams in the 1930s using a sample of families living in one reservoir location i find empirical evidence that land tenure the number of property holdings and debt levels affected the holdout decision suggesting that holdouts are individuals with high subjective values i then develop a screening model with asymmetric information in seller valuations to predict when eminent domain will be used and what settlement values and court awards would be i test the model s and find that individuals who held out increased their property value by about 5 and incentives to holdout existed only for individuals who received initially low settlement proposals

information holdouts and land assembly abstract this paper solves for the equilibria of a land assembly game there are multiple perfect bayesian equilibria but only one involves no play of weakly dominated strategies the equilibrium has three important characteristics first the develop s bid is uninformative the counteroffers of the landowners depend therefore only on their priors second there is a holdout problem smaller landowners ask larger per acre prices for their land this means that when there are many landowners the price will be larger if there is an agreement and mutually beneficial agreements will more frequently be missed third when the asking prices of the landowners are strategic complements some landowners can be induced to accept a low bid because this leads other landowners to moderate their own asking prices

holdout existence information and contingent contracting abstractthe holdout problem permeates policy discussions of legal issues involving bargaining for land acquisition and more broadly impacts multilateral bargaining between agents laboratory experiments investigate the scope of the holdout problem the research strategy incorporates as treatment variables available information and the exposure problem arising from the unavailability of contingent contracts an examination reveals that holdout can reliably produce large inefficiencies and lost opportunities for mutually advantageous trade the introduction of contingent contracts facilitates successful bargaining however buyers are not made significantly better off by contingent contracts

strikes and holdouts in wage bargaining theory and data we develop a private information model of union contract negotiations in which disputes signal a firm s willingness to pay previous models have assumed that all labor disputes take the form of a strike yet a prominent feature of u s collective bargaining is the holdout negotiations often continue without a strike after the contract has expired production continues with workers paid according to the expired contract we analyze the union s decision to strike or hold out and highlight its importance to strike activity strikes are more likely to occur after a drop in the real wage or a decline in unemployment

land acquisition political intervention fragmentation and voice abstract this paper develops a simple dynamic framework of holdout in land acquisition both with and without political intervention where holdout arises because of the landowners inability to manage large sums of money and consequent lack of inter temporal consumption smoothing in case of sale formalized as landowners having sophisticated present biased preferences we then use this framework to analyze two issues of interest political intervention and fragmentation we find that politicization cannot improve efficiency if holdout is landowner induced and may even increase inefficiency if holdout is buyer induced further the extent of politicization depends on whether it involves voice for non members or not turning to the effects of fragmentation we find that while it increases holdout in the absence of politicization in the presence of politicization this effect may however be reversed

fairness and efficiency in a subjective claims problem abstract in a subjective claims problem agents have conflicting perceptions on what constitutes a fair division of a jointly produced cake in a large scale experimental study involving a three agent subjective claims problem we compare the performance of four mechanisms which use agents reports on fair shares as input and yield a division of the cake or less as output the mechanisms differ with respect to the desirable properties they possess and they are compared in terms of efficiency and perceived allocative and procedural fairness successful in terms of both fairness and efficiency are two mechanisms that explicitly ask for an assessment of the partners fair shares and that do not induce agents to exaggerate their assessment of the own fair share one of the two successful mechanisms does not ask for an assessment of the own fair share while the other punishes overly selfish own claims

price competition with integrated and decentralized supply chains we consider price competition with a linear demand function and compare two cases in the first case each distribution channel is vertically integrated while in the second decentralised case the manufacturers and retailers act independently we explore the effect of varying the level of price competition on the profits of the industry participants and demonstrate the important role played by the spread of underlying market shares the coefficient of variation of these market shares determines whether decentralised supply chains can outperform integrated supply chains with an appropriate level of competition

the time pattern of hedging and the volatility of futures prices the paper proposes a multi period model of hedging which allows for a futures position to be revised within the cash market holding period within this framework we assess the robustness of the two period theory of hedging when generalized to many periods we characterize the normal time path of a hedge and the way it is affected by the requirement that futures accounts mark to market daily finally we show how the resolution of production uncertainty over time affects hedging behavior and determines the volatility of futures prices in the large literature on hedging in futures markets the principal analytical accounts of hedging are framed in a two trade date setting an agent commits himself now to a future purchase or sale of a good whose cash price later is uncertain this risk is hedged by purchase or sale of an appropriate number of futures contracts and holding this futures position until the cash transaction is realized in the present paper we formulate a multi period model of hedging which allows for the futures position to be revised within the cash market holding period the resulting analysis captures an important institutional reality that is absent in a two trade date model namely the fact that the day to day fluctuations of the futures price will generate a series of random cash flows over the period during which a futures position is held this is due to the requirement that futures accounts mark to market daily within this framework we address a number of issues first we assess the robustness of the two period theory of hedging when generalized to many periods second we characterize the normal time path of a hedge and contrast futures and forward contracts from the perspective of an individual hedger finally we show how the resolution of production uncertainty over time affects hedging behaviour and determines the volatility of futures prices while the literature on asset demand in a multiperiod setting is large futures markets are specifically treated in a limited number of studies grauer and litzenberger 1976 are concerned principally with characterizing the relation of spot and futures prices in a market for a storable periodically produced commodity they offer a rationale for positive stock holding in markets where spot price exceeds the futures price richard and sundaresan 1980 are also concerned primarily with characterizing price behaviour since they posit identical consumers in equilibrium individual holdings of futures are zero there is no hedging activity in the sense that we understand it breeden 1980b analyzes the optimal futures position sizes in a multiperiod setting his framework is more general than ours in that his is a multi good multi asset model where preferences

optimal hedging and equilibrium in a dynamic futures market abstract this paper considers an agent maximizing the expected utility of the sum of the terminal value of a fixed portfolio of spot market assets and the terminal value of a margin account on a futures trading position closed form solutions for the optimal hedging strategy are provided in several special cases

is there a hold up problem most literature on the hold up problem starts from the assumption that ex post bargaining outcomes are insensitive to prior investment costs we argue that this approach is unsatisfactory if the bargaining procedure is relatively symmetric it typically admits multiple perfect equilibria some of which give the investor a high enough payofi to sustain e cient investment even if the bargaining procedure is asymmetric and rigged against the investor there may be investment if agents are driven by moral concerns or if communication creates commitment laboratory experiments indicate that communication is necessary and su cient for agents to coordinate on e cient outcomes when the bargaining game is symmetric when the bargaining game is rigged against the investor the hold up problem is mitigated but not eliminated by moral behavior communication is quite credible and we flnd that promises are more believable than threats

land aggregation using contingent and guaranteed payments this article explores the use of alternative payment mechanisms to overcome the holdout problem when multiple parcels of land must be acquired to complete a real estate development project purchase offers contingent upon successful land aggregation are compared to combination offers containing both guaranteed and contingent payments to determine which approach better mitigates holdout the distribution of gains between developers and landowners is also examined the results of a series of economic experiments suggest that contingent offers expedite land aggregation but developer payoffs are higher when combination offers are used the results offer insight to real estate developers participating in land aggregation and inform government entities considering the necessity of public sector intervention in real estate markets to encourage desired development projects

quantity premium in real property markets in this paper a theory of nonlinear pricing is tested using 1993 land market data in residential districts of the osaka metropolitan area it is shown that quantity premia prevail in real property markets i e larger lots are proportionately more expensive this is due to irreversibility in changing lot size and an oligopolistic market structure with nondecreasing marginal utility of lot size

the taking of land when should compensation be paid the analysis focuses on the question of whether the payment of compensation for land taken by eminent domain is efficient when the taking decision is independent of land use zero compensation is efficient but full compensation is not when the project decision is no longer independent of land use and can be affected by investor decisions neither compensation rule is generally efficient because of the moral hazard problem with risk averse consumers and risk neutral firms the previous conclusions remain essentially unchanged however when the project decision rule involves a budgetary fiscal illusion additional compensation may be necessary to correct the incentives facing the project decision maker

the taking of land market value compensation should be paid abstract in most jurisdictions in the world governments are allowed to expropriate private property but a government s expropriation decision may be personally motivated and not in society s best interest i propose a very simple tax and compensation scheme that implements the socially optimal allocation when the government behaves in such a manner an implication of my tax and compensation policy is that an individual who has his property expropriated will receive its full market value as compensation

strategic decentralization in channels the purpose of this paper is to understand the effect of strategic interaction on a manufacturer s channel structure decision in the model i analyze if there were no strategic interaction then the manufacturer would prefer vertical integration to decentralization with strategic interaction however decentralization can be a nash equilibrium strategy as mcguire and staein mcguire timothy richard staelin 1983a an industry equilibrium analysis of downstream vertical integration marketing sci 2spring 161 192 showed so the question arises what is it about strategic interaction that makes decentralization a nash equilibrium strategy the answer i give is that strategic interaction makes it possible for a manufacturer s retail demand curve to rise when he decentralizes i show that this raising of the demand curve on decentralization can happen only if one of the following mutually exclusive conditions is satisfied 1 the manufacturers products are demand substitutes at the retail level and strategic complements at the manufacturer or retailer levels 2 the manufacturer s products are demand complements at the retail level and strategic substitutes at the manufacturer or retailer levels strategic complementarity at the retailer manufacturer level means that if one retailer manufacturer raises his price then the other retailer manufacturer would raise his price as well strategic substitutability is just the opposite these results show that what is important for decentralization to occur is not how demand substitutable the two manufacturers products are as one might have thought from earlier works in the literature but rather the nature of coupling between demand dependence and strategic dependence

the determination of spot and futures prices with storable commodities this paper analyzes the effects of futures trading in a market for a storable commodity in which producers and speculators are assumed to be risk averse and specifications of the aggregate supply and inventory demand functions are derived from explicit optimization a critical aspect is how the parameters of these functions change with the introduction of the future market as it is through these induced parameter changes that the futures market exerts its influence on the spot price the effects of the futures market on both the long run average spot price and its variance are analyzed while we are unable to draw any definitive conclusions on this issue we find that in all cases considered the futures market stabilizes the spot price as well as lowering its long run mean for many years now the question of the effects of futures trading on the stability of spot prices has been extensively debated this topic has been discussed at various levels for example farmers and agricultural interest groups have claimed that futures trading destabilizes spot prices thereby imposing welfare losses on the economy in the united states congress has decided that futures trading can cause price destabilization and has subjected futures trading to the regulation of the commodity futures trading commission at a more analytical level economists have been investigating the issue both empirically and more recently theoretically as well

bargaining in competing supply chains with uncertainty abstract substantial literature has been devoted to supply chain coordination the majority of this literature ignores competition between supply chains moreover a significant part of this literature focuses on coordination that induce the supply chain members to follow strategies that produce the equilibria chosen by a vertically integrated supply chain this paper investigates the equilibrium behavior of two competing supply chains in the presence of demand uncertainty we consider joint pricing and quantity decisions and competition under three possible supply chain strategies vertical integration vi manufacturer s stackelberg ms and bargaining on the wholesale price bw is the bargaining parameter over a single or infinitely many periods we show that in contrast to earlier literature using vivi vi in both chains is the unique nash equilibrium over one period decision while using msms or bw bw may be nash equilibrium over infinitely many periods

sovereign debt restructuring the judge the vultures and creditor rights what role did the us courts play in the argentine debt swap of 2005 what implications does this have for the future of creditor rights in sovereign bond markets the judge in the argentine case has it appears deftly exploited creditor heterogeneity between holdouts seeking capital gains and institutional investors wanting a settlement to promote a swap with a supermajority of creditors our analysis of argentine debt litigation reveals a judge mediated sovereign debt restructuring which resolves key issues of transition and aggregation two of the tasks envisaged for the imf s stillborn sovereign debt restructuring mechanism for the future we discuss how judge mediated sovereign debt restructuring together with creditor committees could complement collective action clauses in sovereign bond contracts

breakdown in multilateral negotiations abstract we analyze a complete information multilateral bargaining model in which a buyer is to purchase two complementary goods from two sellers binding cash offer contracts are used to govern transactions in contrast to preexisting literature we do not normalize the parties reservation utilities to zero we show that this assumption holds critical importance by demonstrating that a complete breakdown of negotiations may occur as the unique equilibrium outcome even if only two sellers are present

a continuous time equilibrium model of forward prices and futures prices in a multigood economy abstract this paper is a theoretical investigation of equilibrium forward and futures prices we construct a rational expectations model in continuous time of a multigood identical consumer economy with constant stochastic returns to scale production using this model we find three main results first we find formulas for equilibrium forward futures discount bond commodity bond and commodity option prices second we show that a futures price is actually a forward price for the delivery of a random number of units of a good the random number is the return earned from continuous reinvestment in instantaneously riskless bonds until maturity of the futures contract third we find and interpret conditions under which normal backwardation or contango is found in forward or futures prices these conditions reflect the usefulness of forward and futures contracts as consumption hedges

a theory of holdouts in wage bargaining holdouts the continuation of negotiations beyond the contract expiry date are the most common form of disputes in labor contract negotiations the authors model holdouts as a delaying tactic employed by unions to obtain information about other bargaining outcomes in their industry novel implications of their model include a positive association between holdout duration and the number of bargaining pairs negotiating contracts simultaneously bunching of holdout durations within these negotiating groups and fewer strikes among holdouts which end later in groups using a large panel of contract negotiations in canadian manufacturing the authors find considerable support for these predictions copyright 1998 by american economic association

an experimental study of the holdout problem in a multilateral bargaining game abstract when an economic exchange requires agreement by multiple independent parties the potential exists for an individual to strategically delay agreement in an attempt to capture a greater share of the surplus created by the exchange this holdout problem is a common feature of the land assembly literature because development frequently requires the assembly of multiple parcels of land we use experimental methods to examine holdout behavior in a laboratory bargaining game that involves multi person groups complementary exchanges and holdout externalities the results of six treatments that vary the bargaining institution number of bargaining periods and the cost of delay demonstrate that holdout is common across institutions and is on average a payoff improving strategy for responders both proposers and responders take a more aggressive initial bargaining stance in multi period bargaining treatments relative to single period treatments but take a less aggressive bargaining stance when delay is costly nearly all exchanges eventually occur in our multi period treatments leading to higher overall efficiency relative to the single period treatments both with and without delay costs

futures markets and commodity options hedging and optimality in incomplete markets abstract this paper examines the allocational roles of futures markets and commodity options in multi good and multi period economies in a continuous time model with time additive utilities and homogeneous beliefs trading in unconditional futures contracts the market portfolio and a riskless asset gives any pareto optimal allocation individuals optimal holdings of futures contracts in the continuous time model are related to their consumption bundles and to their risk tolerances it is shown that both hedging and reverse hedging behavior are possible in the general model with discrete trading options on portfolios of commodity options are shown to permit any unconstrained pareto optimal allocation

how do landowners price their lands during land expropriation and the motives behind it an explanation from a wta wtp experiment in central beijing compensation paid to property owners for land expropriation is always a controversial topic partly due to the difficulty in revealing households true valuation of their housing this paper estimates and discusses the widely observed willingness to accept willingness to pay wta wtp gap for surveyed residents of their own houses during land expropriation by testing several hypotheses interpreting the wta wtp disparity from previous studies the paper tries to establish the incentive for households decision making the paper employs a contingent valuation method with data from 315 household interviews in central beijing china the paper reports an average wta wtp ratio of 3 74 and reaches the conclusion that in our case the high compensation required by property owners largely derives from opportunistic pricing behaviour rather than sentimental attachment to the dwellings that is unobservable in the market price and that the wta of the residents is intentionally overpriced

seasonal patterns of futures hedging and the resolution of output uncertainty abstract optimal futures hedging is examined in a two good model with stochastic output and sequential information arrival a producer s optimal hedge depends on demand elasticity sensitivity of his output to weather his correlation with aggregate output and how rapidly his output uncertainty is resolved relative to other producers during different seasonal periods because regional output uncertainties are resolved at different times the optimal futures position of a grower will commonly reverse in direction during the crop year a producer with non stochastic output who faces price risk arising from demand shocks may remain unhedged or even maintain a long position

on the land assembly problem abstract we consider a segment of the land market where the entire available land stock is needed for the realization of some indivisible development project the stock is shared by several landholders who either collude or negotiate independently with the developer over the prices of their lots investigating the price setting behavior of the landowners and the optimal strategy of the developer we show that landowners set more moderate prices under collusion than when acting independently in the latter case the individual asking price falls with the size of the land share and the total price increases with the number of landowners as regards the optimal strategy we find that the developer will in general not offer the lowest price he expects to be accepted by the landowners

supply chain optimization of petroleum organization under uncertainty in market demands and prices a multi period stochastic planning model has been developed and implemented for a supply chain network of a petroleum organization operating in an oil producing country under uncertain market conditions the proposed supply chain network consists of all activities related to crude oil production processing and distribution uncertainties were introduced in market demands and prices a deterministic optimization model was first developed and tested the impact of uncertainty on the supply chain was studied by performing a sensitivity analysis in which 20 deviations were introduced in market demands and prices of different commodities a stochastic formulation was then proposed which is based on the two stage problem with finite number of realizations the proposed stochastic programming approach proved to be quite effective in developing resilient production plans in light of high degree of uncertainty in market conditions the anticipated production plans have a considerably lower expected value of perfect information evpi the main conclusion of this study is that for an oil producing country with oil processing capabilities the impact of economic uncertainties may be tolerated by an appropriate balance between crude exports and processing capacities

optimal dynamic hedging decisions for grain producers the application of an optimal dynamic hedging model was explored for a county in north carolina corn yield harvest corn basis and december corn futures prices were forecast the forecasts were used to calculate optimal dynamic hedge positions when the hedge position was updated infrequently commissions were only slightly higher than commissions from a fixed hedge gains from updating the hedge position over the corn growing season were not substantial compared to a fixed hedge position

an industry equilibrium analysis of downstream vertical integration this paper investigates the effect of product substitutability on nash equilibrium distribution structures in a duopoly where each manufacturer distributes its goods through a single exclusive retailer which may be either a franchised outlet or a factory store static linear demand and cost functions are assumed and a number of rules about players expectations of competitors behavior are examined it is found that for most specifications product substitutability does influence the equilibrium distribution structure for low degrees of substitutability each manufacturer will distribute its product through a company store for more highly competitive goods manufacturers will be more likely to use a decentralized distribution system this article was originally published in marketing science volume 2 issue 2 pages 161 191 in 1983

the cyclical behavior of holdout durations abstract holdouts are the negotiation periods between the expiration of an old wage contract and the signing of a new one this paper presents an analysis of the hazard function for holdout durations using data on wage negotiations in the netherlands the unemployment rate is found to have a significant negative effect on the holdout hazard rate holdout duration is counter cyclical

hold up and the evolution of investment and bargaining norms abstract the purpose of this paper is to explore the evolution of bargaining norms in a simple production problem with two sided relationship specific investments and competition the puzzle we wish to address is why efficient bargaining norms do not evolve even though there exist efficient sequential equilibria conditions under which stochastically stable bargaining conventions exist are characterized and it is shown that there is a hierarchy of norms with a stochastically stable division rule that is independent of the long run investment strategy due to this independence efficient sequential equilibria are not in general stochastically stable this result may help us understand why institutions such as firms may be needed to ensure efficient relationship specific investments

chain to chain competition on product sustainability this paper studies the game model of two sustainable supply chains under competition in product sustainability derives the equilibrium structures of the two chain system and generates the managerial insights when the supplier and manufacturer within the reverse supply chain are competitive the sustainability degrees demands and profits under three structures of this two chain system are analyzed it is found that although vertical integration is always a nash equilibrium it is pareto optimal only when the competition degree is low on the other hand a more generalized case for the former model is investigated when the supplier and manufacturer are cooperative in bargaining the wholesale price and the effects of bargaining power to the sustainability degrees demands and chain member profits are studied it is further shown that the structure of vertical integration channels is not an equilibrium unless the two sustainable supply chains are independent

why do governments subsidize gasoline consumption an empirical analysis of global gasoline prices 2002 2009 abstract governments spend hundreds of billions of dollars annually to subsidize the consumption of fossil fuels without understanding the environmental and economic problems this practice creates to shed light on these problems we examine the case of gasoline subsidies using data on gasoline prices in 137 countries for the years 2002 2009 it is useful to study gasoline pricing because gasoline is the most important transportation fuel and there are data for many countries for the time period of investigation we find that major oil producers subsidize gasoline consumption by artificially reducing prices countries with weak institutional capacity also seem to subsidize gasoline but the effects are weaker these results suggest that policy interventions to improve institutional capacity could help developing countries in particular reduce their fossil fuel subsidies

environmentally responsible inventory models non classical models for a non classical era abstract mathematical models of inventory typically include the three inventory associated costs of surplus shortage and ordering these classic inventory models are then analysed so as to choose inventory parameters that usually minimise the total cost of operating the inventory system being investigated unfortunately classic inventory models do not provide a meaningful basis for analysing many real and increasingly important practical inventory problems and situations it is therefore not surprising that over recent years several authors have discussed these issues in broad terms and suggested that a new paradigm needs to be developed this paper develops some specific aspects of this discussion in particular the paper identifies a range of inventory problems that are not covered appropriately by traditional inventory analysis one of these is to design responsible inventory systems i e systems that reflect the needs of the environment the paper then examines the importance of inventory planning to the environment in greater detail for example packaging is important not only because of its costs and the protection that it provides to the inventory items but also because of its eventual effects on the environment in terms of the use of resources and potential landfill for similar reasons waste which can result from poor inventory management is highly important the location of stores is important because location affects transport costs thus the influence of the secondary aspects of most inventory models packaging waste and location are important but even more important are the inter relations with the total system in particular the location of the manufacturing plants and the effect that inventory planning has on the logistics chain potentially have considerable environmental implications inventory is part of a wider system however until the cost charged for an activity reflects the true environmental cost of that activity it is likely that decisions will be made on the basis of erroneous data in that situation we are faced with either determining the environmental cost of specific actions or to use environmental costs that are somewhat contrived in which case it may be more sensible to use very different performance measures and models the paper discusses these ideas and ways in which inventory policies may reassure us with our environmental concerns

the simultaneous determination of spot and futures prices in a simple model with production risk this paper deals with properties of a rational expectations equilibrium when there is futures trading a simple two good model is analyzed where one of the goods is produced subject to production risk although the futures market provides insurance against price risk to producers it is income risk that concerns them whether they hedge in equilibrium is shown to depend on the price and income elasticity of demand for their output as well as on the degree to which consumers the other party in the futures transaction are risk averse

competition and cooperation between supply chains in multi objective petroleum green supply chain a game theoretic approach petroleum supply chain is one of the most important and sophisticated managing missions in both developing and developed countries nowadays environmental pollution is another critical factor in designing the petroleum supply chain this importance encourages the governments to minimize the amount of environmental pollution and maximize their obtained profit simultaneously by enacting required legislations on the transportation modes and the refineries considering maximizing the job creation and each stakeholder s profit and minimizing the emission of co2 and other greenhouse gases at the same time is called sustainable petroleum supply chain which has been paid little attention despite its significance therefore the modelling of petroleum supply chain considering sustainability and pricing issues is investigated for the first time in this work and a sustainable competitive petroleum supply chain scpsc model is developed to minimize pollution while maximizing the profits and job creation this problem is a two level model the first level in scpsc is the competition between the supply chains of the government and the private sectors which is modelled by the game theory approach including nash and stackelberg equilibria the optimal price and demand for each supply chain determined in the first level are considered as the second level parameters in the second level the optimal values of the decisions in designing the petroleum supply chain will be obtained by solving mixed integer linear programming milp under the mentioned three objective functions finally the proposed model is applied to a real world case in the national iranian oil company nioc based on the results of the stackelberg equilibrium the government profits increase by 11 12 while that of the private sector decreases by 25 4 and 28 11 increasing in the government profit is due to increased demand provided by government the results show that the whole profit of the petroleum supply chain in nash equilibrium is 9 8 more than that in the stackelberg equilibrium

futures markets and production decisions this paper investigates the use of futures prices in making production decisions we derive a preference independent production rule for firms that face both demand and production uncertainty this rule is compared to a simple marginal cost equals future price rule which previously has been suggested for firms with deterministic output data for agricultural producers are used to examine the importance of output uncertainty in the determination of the proper production rule our analysis suggests that for many crops the simple rule is sufficiently accurate to be a useful guide to production

claimholder incentive conflicts in reorganization the role of bankruptcy law when a firm is financial distress in most cases a set of mutually advantageous reorganization plans exist this article shows that the bankruptcy code by providing rules governing the negotiation process yields a unique solution to the reorganization process in addition the structure imposed by the code mitigates the holdout problem created by the individual claimant s divergent incentives article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

transparency complementarity and holdout this paper characterizes the conditions under which holdout i e bargaining inefficiency may or may not be significant in a two sided one buyer many seller model with complementarity we address this problem in a very general setup with a bargaining protocol that is symmetric and allows for both publicly observable as well as secret offers and a technology that allows for variable degrees of complementarity the central insight is that the transparency of the bargaining protocol formalized by whether offers are publicly observable or secret as well as the extent of complementarity play a critical role in generating efficiency even with perfect complementarity holdout seems to be largely resolved whenever the bargaining protocol is public but not if it is secret further irrespective of the bargaining protocol holdout is resolved if the marginal contribution of the last seller is not too large

can buyer mobility reduce aggregation failures in land assembly abstract in this paper we examine whether site development competition can be used to facilitate land assembly in the absence of contingent contracts in particular we attempt to determine 1 whether competition can be induced among prospective sellers 2 whether or not competition increases aggregation rates and 3 what effects competition has on the distribution of surplus among the bargaining parties we also study the incidence with which a buyer endogenously chooses to deal with a single large parcel owner vs multiple small parcel owners to do so we make use of a laboratory experiment where all the relevant information about the project is common knowledge and landowner valuations are private information our results show that competition more than doubles aggregation rates with aggregation rates of approximately 40 in the baseline and at least 84 in the competitive treatments we also find that developers have a strong preference to make transactions with landowners who have consolidated land holdings doing so in 24 27 successful aggregations providing empirical evidence that there is a link between the transactions cost associated with land assembly and suburbanization as suggested by miceli and sirmans 2007

dynamic hedging with uncertain production this paper provides a closed form rule for dynamic hedging with production uncertainty the rule is obtained by considering a discret e time control problem in the limit as the interval between hedging opportunities goes to zero price may be expected to increase or decrease so that a speculative motive is present in the absence of this motive and of discounting the optimal hedge is myopic for a given expected rate of change in price the hedge may be expected to rise or fall depending on the degree of risk aversion copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

bargaining behavior and the tragedy of the anticommons abstract to date most experimental studies of the tragedy of the anticommons treat individuals preferences as common knowledge here we conduct experiments in which values are private information we vary the bargaining institution the buyer s signaled willingness to pay and the fraction of sellers whose inputs must be assembled in our experiments simultaneous bargaining gives the buyer a better tradeoff between the total price paid and the risk of failure than sequential bargaining when all sellers inputs are necessary when two thirds are necessary assembly failure virtually disappears but simultaneous bargaining still generates lower prices for the buyer

a determination of bid rents through bidding procedures abstract rent profiles in land markets with finitely many participants are derived under two bidding procedures free unit size bidding and single unit size bidding free unit size bidding is shown to be basically equivalent to an english auction whereas the rent determination problem under single unit size bidding reduces to a mathematical programming problem an application of the latter case is provided in which a density model of land use is shown to be a good approximation of appropriately chosen discrete models

symmetric tragedies commons and anticommons an anticommons problem arises when there exist multiple rights to exclude in a lengthy law review paper michael a heller has examined the tragedy of the anticommons especially in regard to disappointing experiences with efforts to shift from socialist to market institutions in russia in an early footnote heller suggests that a formal economic model of the anticommons has not been developed this paper responds to heller s challenge we analyze the anticommons problem in which resources are inefficiently underutilized rather than overutilized as in the familiar commons setting the two problems are shown to be symmetrical in several respects we present an algebraic and geometric illustration and extend the discussion to several applications of greater importance we suggest that the construction is helpful in understanding the sources of major value wastage in modern regulatory bureaucracy the navigation of the danube is of very little use to the different states of bavaria austria and hungary in comparison of what it would be if any of them possessed the whole of its course till it falls into the black sea adam smith the wealth of nations 1776 bk 1 ch 3

intertemporal commodity futures hedging and the production decision this paper deals with the producer s optimal use of commodity futures in hedging the framework for analysis is an intertemporal consumption and investment model the producer makes his production decisions at the beginning of the period and realizes his return at the end of the time interval during the period he faces both price and output uncertainties in applying stochastic dynamic programming methods this paper shows the effect of these risks on his consumption behavior further the paper investigates his optimal hedging positions in the futures market over time and his optimal production decisions finally implications of these results on the futures markets are discussed this paper studies a normative model of the farmer s optimal hedging strategy and consumption behavior in a continuous time framework recent papers for example berck 3 rolfo 18 stoll 21 have analyzed the farmer s hedging strategies in a one period context these papers have provided interesting insights into the farmer s production decisions and the optimal design of futures contracts and markets however in a one period model some rather restrictive conditions are imposed on the individual s behavior for example in these models an individual is assumed to ignore any information arrival process as a result the individual is assumed to adjust neither consumption behavior nor hedging positions to the changing state of the world during the production period these conditions can be relaxed in a continuous time framework in an intertemporal context the farmer s hedging problem may be viewed as follows since the farm income at harvest depends on both the spot price and the output in bushels the farmer is subject to both price and output uncertainties during the production period 1 when the farmer can hedge only in the commodity futures market he cannot eliminate both the price and output uncertainties by any hedging strategy 2 as the farm income represents a significant portion of his wealth he must necessarily hold an undiversified portfolio during the production period therefore in essence the farmer must solve for his investment consumption behavior and his hedging strategy facing the nonmarketable asset problem mayers 14 in a multiperiod framework in this context one can see intuitively the major difference between a one

addressing the collective action problem in multiple purchaser pes an experimental investigation of negotiated payment contributions this project was carried out as part of the defra payments for ecosystem services pes pilot research projects river fowey improvement scheme ne0131 it was also supported by a university of east anglia studentship funding support is gratefully acknowledged

holdups and holdouts what do they have in common abstract the holdup and holdout problems arise in different contexts but they share certain fundamental similarities that have not generally been recognized this paper characterizes the commonalties between the two problems and their remedies

holdouts backdating and wage negotiations the haller and holden jet 1990 wage bargaining model is extended to incorporate holdouts with and without work to rule inefficient holdouts and backdating of new contracts the union s most effective action inflicts the highest costs upon the firm among the credible actions necessary and sufficient conditions for equilibria with lengthy holdouts are derived backdating does not affect the bargaining positions of the parties the settlement wage negatively depends upon the length of the holdout and this dependence does not disappear as the time between bargaining rounds vanishes this result has implications for empirical work moreover this negative effect is small and confirms empirical evidence for the netherlands

production flexibility stochastic separation hedging and futures prices we study a dynamic model where uncertainty about interim output adjustments causes producers to face price cost and output uncertainty stochastically separable production decisions are independent of the producer s risk preferences and expectations and are based on the prevailing futures price as a certain output price conditions under which futures contracts achieve stochastic separation are established optimal hedging and maturity structure of futures contracts equilibrium futures prices and the effects of futures trading on output are studied the systematic risk premium depends on the product of the futures beta and the covariance of the market return with production revenues article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

financial risk management in the planning of refinery operations abstract most models for refinery planning are deterministic that is they use nominal parameter values without considering the uncertainty this paper addresses the issue of uncertainty and studies the financial risk aspects the problem addressed here is that of determining the crude to purchase and decide on the production level of different products given forecasts of demands the profit is maximized taking into account revenues crude oil costs inventory costs and cost of unsatisfied demand the model developed in this paper was tested using data from the refinery owned by the bangchak petroleum public company limited thailand the results show that the stochastic model can suggest a solution with higher expected profit and lower risk than the one suggested by the deterministic model

free riders holdouts and public use a tale of two externalities free riders and holdouts are distinct market failures that potentially impede the completion of otherwise beneficial transactions the key difference is that the free rider problem is a demand side externality that requires taxation to compel payment for a public good while the holdout problem is a supply side externality that requires eminent domain to force the sale of land for large scale projects this paper highlights the distinction between these two problems and uses the resulting insights to clarify the meaning of the public use requirement of the fifth amendment takings clause

the holdout problem and urban sprawl experimental evidence abstract conventional wisdom as well as economic theory suggests it is more costly to reassemble fragmented land due to transactions costs and strategic bargaining costs both costs are expected to increase with the number of sellers inefficient allocation of land resources may result including property entropy parisi 2002 urban sprawl miceli and sirmans 2007 and deteriorating inner cities given the difficulty of observing actual values attached by buyers and sellers to land little empirical evidence exists to support the conventional wisdom and theoretical work we use experimental methods to examine transactions costs and strategic bargaining costs in a land assembly market game with one buyer 1 4 sellers and complementary exchanges the buyer s final earnings vary inversely with the number of sellers ceteris paribus indicating an incentive to purchase consolidated land delay costs reduce holdout but result in lower payoffs for both buyers and sellers competition between sellers reduces holdout and the buyer s total purchase price