the effect of financial repression and enforcement on entrepreneurship and economic development abstract a general equilibrium model with heterogeneous agents with respect to wealth and ability shows that differences across countries in intermediation costs and enforcement generate differences in occupational choice firm size credit output and income inequality counterfactual experiments are performed for latin american european transition and high growth asian countries with empirical estimates of each country s financial frictions and united states values for all other parameters the results isolate the quantitative effect of these financial frictions in explaining the performance gap between each country and the united states and depend critically on whether a general equilibrium factor price effect is operative

the international competitiveness of ceec agriculture the paper surveys the price competitiveness of agricultural production in central and east european countries ceecs it draws together empirical work conducted by the authors and other studies that have estimated domestic resource cost drc ratios for agriculture in various ceecs the paper identifies that in general ceec crop production is more internationally competitive than livestock farming during the mid1990s wheat production in bulgaria the czech republic hungary romania and slovakia was internationally competitive in contrast during the same period milk production was not internationally competitive however there is also a considerable degree of variation from country to country very little of slovenia s agricultural production is internationally competitive in the livestock sector the greatest problems lie where large herds have been broken up resulting in fragmented production this has particularly affected beef and milk production considering variations in drcs by farm type larger private farms in hungary and the czech republic are more internationally competitive than smaller private farms in crop production if ceec producers faced average eu prices for their traded inputs and output most could be price competitive however the conclusions should be treated with caution due to sensitivity of drc ratios to changes in international prices and the choice of the shadow prices for non tradable inputs

comparative statics in a simple class of strategic market games this paper investigates the effects of entry in two sided markets where buyers and sellers act strategically applying new tools from supermodular optimization games sufficient conditions for different comparative statics results are obtained while normality of one good is sufficient for the equilibrium price to be increasing in the number of buyers normality of both goods is required for equilibrium bids and sellers equilibrium utilities to be increasing in the number of buyers when the economy is replicated normality of both goods and gross substitutes guarantee that the equilibrium of the strategic market game converges monotonically in quantities to the competitive equilibrium simple counter examples are provided to settle other potential conjectures of interest c 2007 elsevier inc all rights reserved

on the generic inefficiency of differentiable market games it is shown that a differentiable market game remains generically inefficient when its strategic outcome function is perturbed smoothly the proof is based on thom s transversality theorem and removes any restriction regarding the dimension of the strategy spaces a converse result is that almost all efficient market games that are competitive are characterized by bertrand like non differentiabilities finally a synthesis between the cournot and bertrand type approaches to walrasian equilibrium as recently developed in the literature is suggested

trade fragmentation and coordination in strategic market games abstract this paper analyzes the incentives to trade and the validity of the law of one price in three strategic market games with multiple trading posts in bilateral oligopolies where traders have corner endowments in one commodity all agents participate in all the markets the law of one price holds in bilateral oligopolies and in the buy or sell market game where equilibrium strategies are locally unique when traders can simultaneously buy and sell on every market the law of one price fails and the set of equilibrium prices generically has the same dimension as the number of active markets journal of economic literature classification numbers d43 d51

a new bankruptcy procedure that uses multiple auctions abstract we propose a new bankruptcy procedure that makes use of multiple auctions the procedure is designed to work even when capital markets do not function well for example in developing economies or in economies in transition although it can be used in all economies

the efficiency cost of protective measures in climate policy despite recent achievements towards a global climate agreement climate action to reduce greenhouse gas emissions remains quite heterogeneous across countries energy intensive and trade exposed eite industries in industrialized countries are concerned on stringent domestic emission pricing that puts them at a competitive disadvantage against producers of similar goods in other countries with more lenient emission regulation this paper focuses on climate policy design in the united states of america us and compares the economic implications of four alternative protective measures for us eite industries i output based rebates ii exemptions from emission pricing iii energy intensity standards and iv carbon intensity standards using a large scale computable general equilibrium model we quantify how these protective measures affect competitiveness of us eite industries we find that protective measures can improve common trade related competitiveness indicators such as revealed comparative advantage or relative world trade shares but at the same time may lead to a decline in the output value for eite industries because of negative income effects the economy wide cost of emission abatement under protective measures increase as compared to uniform emission pricing stand alone such that the gains of protective measures for eite exports may be more than compensated through losses in domestic eite demand

competitive behavior in market games evidence and theory we explore whether competitive outcomes arise in an experimental implementation of a market game introduced by shubik 1972 market games obtain pareto inferior strict nash equilibria in which some markets are closed we find that subjects do not coordinate on autarkic nash equilibria but favor more efficient nash equilibria in which all markets are open as the number of subjects participating in the market game increases the nash equilibrium they achieve approximates the associated walrasian equilibrium of the underlying economy motivated by these findings we investigate theoretically whether evolutionary forces lead to walrasian outcomes in market games we introduce a strong version of evolutionary stable strategies sess f orfinite populations our concept requires stability against deviations by coalitions of agents a small coalition of trading agents is sufficient for pareto improving trade to be generated in addition provided that agents lack market power nash equilibria corresponding to approximate competitive outcomes constitute the only approximate sess

does eu enlargement increase agro food export duration this paper examines the impact of eu enlargement on agro food export performance across 12 new eu member states and five newly independent states in the eu markets covering the period 1999 to 2007 the performance is examined by duration of export and hazard model we find larger duration for the agro food exports from the new eu member states the results confirm gains from the eastward eu enlargement and governance on export increases and longer duration for exporting higher value added specialized consumer ready food and more competitive niche agro food products

an empirical investigation of u s firms in reorganization the purpose of this paper is to understand the institutional features of chapter 11 from an empirical examination of thirty firms that have emerged from reorganization we find the recontracting framework of chapter 11 to be complex lengthy and costly violations of absolute priority in favor of stockholders are frequently encountered these deviations may result from the bargaining process of chapter 11 or from a recontracting process between creditors and stockholders which recognizes the ability of stockholder oriented management to preserve firm value an example of such recontracting addresses myers underinvestment problem an investigation of the effects of chapter 11 on the pricing of risky debt is also provided the purpose of this paper is to understand the institutional features of chapter

complementarities of trade advantage and trade competitiveness measures the complementarities of trade advantage and trade competitiveness measures for agro food trade of five central european ce 5 countries with the european union are analysed the stability and duration of the trade measures over time is investigated by the survival analysis using the nonparametric kaplan meier product limit estimator and the consistency test between the trade measures is conducted by the stratified cox proportional hazard model the ce 5 countries experienced a greater number of products with relative trade disadvantages and greater significance of one way imports unlike the czech republic poland slovakia and slovenia hungary experienced relative trade advantages rtas for bulk raw commodities processed intermediates and horticulture with the greatest significance of successful quality competition and one way exports and the lowest significance of unsuccessful price and unsuccessful quality competition the duration of rtas is longer than the duration for the successful trade co

unilateral climate policy and competitiveness economic implications of differential emission pricing unilateral emission reduction commitments raise concerns on international competitiveness and emission leakage that result in preferential regulatory treatment of domestic energy intensive and trade exposed industries our analysis illustrates the potential pitfalls of climate policy design which narrowly focuses on competitiveness concerns about energy intensive and trade exposed eite branches the sector specific gains of preferential regulation in favour of these branches must be traded off against the additional burden imposed on other industries beyond burden shifting between industries differential emission pricing bears the risk for substantial excess cost in emission reduction as policy concedes too low carbon prices to eite industries and thereby foregoes relatively cheap abatement options in these sectors from the perspective of global cost effectiveness we find that differential emission pricing of eite industries hardly reduces emission leakage since the latter is driven through robust international energy market responses to emission constraints as a consequence the scope for efficiency compared to uniform pricing is very limited only towards stringent emission reduction targets will a moderate price differentiation achieve sufficient gains from leakage reduction to offset the losses of diverging marginal abatement cost

large market games with demand uncertainty abstract we consider a market game with a continuum of consumers where the measure of each type is stochastic nature selects the set of active consumers who make bids and offers on l 1 spot market trading posts existence of type symmetric nash equilibrium is proven when facing price uncertainty best responses are unique and a nash equilibrium to the sell all game is typically not a nash equilibrium to the original game under plausible circumstances consumers strictly prefer to be on one side of the market

market uncertainty correlated and sunspot equilibria in imperfectly competitive economies first version received june 1988 final version accepted november 1990 eds an imperfectly competitive economy is very prone to market uncertainty including uncertainty about the liquidity or thickness of markets we show in particular that there exist stochastic equilibrium outcomes in nonstochastic market games if and only if the endowments are not pareto optimal we also provide a link between extrinsic uncertainty arising in games e g correlated equilibria and extrinsic uncertainty in market economies e g sunspot equilibria a correlated equilibria to the market game is either a sunspot equilibrium or a non sunspot equilibrium to the related securities games but the converse is not true in general

the politics of legal reform as a result of the emerging market crises of the last decade and a large body of academic research on the influence of investor protection in the development of capital markets and economic growth there is a growing consensus that reforming the legal infrastructure supporting business should be an important component of reforms in many developing countries but the consensus is unwieldy as there are still many forces against reform and little agreement about what constitutes feasible legal reforms this paper has two parts in the first we identify the forces for and against legal reform and review the role these forces play in episodes of reform in the second we seek to further our understanding of what constitutes good laws and regulatory mechanisms and more importantly how to make them enforceable in different countries if legal reform is to succeed the commonly advocated principles of corporate governance in the international community must be brought down to the local political and judicial realities translating international corporate governance initiatives into clear and enforceable rights for creditors and shareholders that incorporate these constraints will be difficult but necessary bankruptcy law and corporate law reform need to be politically feasible and enforceable legal reforms should be complemented with carefully drafted judicial reforms as well as market based mechanisms that foster a culture of corporate governance

empirical relevance of the hillman condition for revealed comparative advantage 10 stylized facts the theoretically necessary and sufficient condition for the correspondence between revealed comparative advantage and pre trade relative prices derived by hillman 1980 is analysed empirically for virtually all countries of the world over an extended period of time this yields 10 stylized facts including that i violations of the hillman condition are small as a share of the number of observations but substantial as a share of the value of world exports ii violations occur relatively frequently in the period 1970 1984 and more rarely in the period 1985 1997 and iii violations occur foremost in primary product and natural resource intensive sectors and for countries in africa the middle east latin america and central and eastern europe an additional bonus of verifying the hillman condition in empirical research is its ability to identify erroneously classified trade flows

strategic market games with exchange rates abstract strategic market games describe mechanisms of formation of prices and of redistribution of goods we introduce here a model without commodity money but where the use of fiat money does not imply the possibility of debt hence the necessity for penalty this is done through a collection of exchange rates that allows for a coherent price system and a redistribution that clears the market for any initial bids of the agents journal of economic literature classification numbers c72 d51 e31

optimal bankruptcy law and firm specific investments in this paper we characterize an optimal bankruptcy law that takes into consideration the incentives of managers to invest in firm specific human capital we show that the optimal bankruptcy law is biased towards the management team and may be implemented by the use of a restricted auction mechanism in which creditors have the right to refuse bankruptcy but are not allowed to bid for the firm the bankruptcy law is needed as a commitment device to implement the optimal outcome

financial development growth and the distribution of income a paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined financial intermediation promotes growth because it allows a higher rate of return to be earned on capital and growth in turn provides the means to implement costly financial structures thus financial intermediation and economic growth are inextricably linked in accord with the goldsmith mckinnon shaw view on economic development the model also generates a development cycle reminiscent of the kuznet hypothesis in particular in the transition from a primitive slow growing economy to a developed fast growing one a nation passes through a stage in which the distribution of wealth across the rich and poor widens

trade liberalisation the effects of free trade agreements on the competitiveness of the dairy sector in recent years preferential trade agreements ptas free trade agreements ftas in particular have proliferated while wto negotiations have stagnated this paper contributes to the literature on trade liberalisation and the agricultural sector by analysing the effects of ftas on the competitiveness of the dairy sector across 76 countries and over a 20 year period from 1990 to 2009 with a longitudinal econometric model the results demonstrate that when a country has a revealed comparative advantage in the dairy sector ftas positively influence several indicators of competitiveness in the dairy sector such as production market share and trade balance the results also indicate that multilateral ftas are more beneficial than bilateral ftas there is strong empirical evidence that ftas are more beneficial to developed countries than to developing countries there is no statistical evidence to support the hypothesis about a relationship between ftas and farm gate price

self confirming equilibrium rium path of play thus if a self confirming equilibrium occurs repeatedly no player ever observes play that contradicts his beliefs even though beliefs about play at off path information sets need not be correct we characterize the ways in which self confirming equilibria and nash equilibria can differ and provide conditions under which self con firming equilibria correspond to standard solution concepts nash equilibrium and its refinements describe a situation in which i each player s strategy is a best response to his beliefs about the play of his opponents and ii each player s beliefs about the opponents play are exactly correct we propose a new equilibrium concept self confirming equilibrium that weakens condition ii by requiring only that players beliefs are correct along the equilibrium path of play thus each player may have incorrect beliefs about how his opponents would play in contingencies that do not arise when play follows the equilibrium and moreover the beliefs of different players may be wrong in different ways the concept of self confirming equilibrium is motivated by the idea that noncooperative equilibria should be interpreted as the outcome of a learning process in which players revise their beliefs using their observations of previous play suppose that each time the game is played the players observe the actions chosen by their opponents but that players do not observe the actions their opponents would have played at the information sets that were not reached along the path of play then if a self confirming equilibrium occurs repeatedly no player ever observes play that contradicts his beliefs so the equilibrium is self confirming in the weak sense of not being inconsistent with the evidence by analogy with the literature on the bandit problem e g rothschild 1974 one might expect that a non nash self confirming equilibrium can be the outcome of plausible learning processes this point was made by fudenberg and

revealed comparative advantage and competitiveness in hungarian agri food sectors we examine the competitiveness of hungarian agriculture and food processing in relation to that of the eu based on four indices of revealed comparative advantage using highly disaggregate data for the period 1992 to 1998 consistency tests suggest that the indices are less satisfactory as cardinal measures but are useful in identifying the demarcation between comparative advantage and comparative disadvantage hungary is shown to have a comparative advantage in a range of agri food products including animals and meat this complements the findings of those studies that have used price and cost based approaches in identifying competitiveness in cereals and crops results indicate that the rca indices when interpreted as a binary measure have remained surprisingly stable during the period of transition although there is evidence of a weakening in the level of comparative advantage as revealed in the balassa index

consistency tests of alternative measures of comparative advantage the commodity pattern of comparative advantage across countries is a central concept in international trade theory since the concept is based upon autarkic prices which are not observable in post trade equilibria its use in empirical research is most difficult the literature reports numerous alternative indices that purport to measure comparative advantage this paper examines the extent to which various measures are consistent using a large sample of trade flows the results have important implication for judging empirical studies based upon particular choices of a measure for comparative advantage

security pricing and deviations from the absolute priority rule in bankruptcy proceedings claims ultimately awarded to shareholders of firms in reorganization were examined for a sample of 30 filings under the 1978 bankruptcy reform act we measured the amount paid to shareholders in excess of that which they would have received under the absolute priority rule and found that this amount represents on average 7 6 of the total awarded to all claimants evidence is also reported that common share values reflect a significant proportion of value ultimately received in violation of absolute priority suggesting that deviations from the rule were expected by the equity markets the absolute priority rule hereafter apr states that a bankrupt firm s value is to be distributed to suppliers of capital such that senior creditors are fully satisfied before any distributions are made to junior creditors and junior creditors are paid in full before common shareholders bankruptcy reorganization proceedings however are leaving shareholders and junior creditors with valuable assets even when senior claimants receive only partial settlements as barrett and sullivan 1988 noted traditionally shareholders have been last in line their claims on a troubled company s assets have had the lowest priority and their impact on the course of bankruptcy code proceedings generally has been next to nil but lately the balance of power has been shifting warner 1977 provided one of the early discussions of the implications of deviations from the apr baldwin and mason 1983 pp 510 511 examined the resolution of claims in the massey ferguson reorganization and provided no support for the hypothesis that the market believes absolute priority rules will be enforced if the firm defaults on its financial obligations franks and torous 1989 analyzed a sample of bankruptcies that occurred during the period 1970 through 1984 and found that 21 of 27 sample cases exhibited departures from the apr more recently weiss 1990 examined 37 firms that filed for bankruptcy between 1980 and 1986 and reported that 27 of the cases involved apr violations

relative export competitiveness of agricultural commodities and its determinants some evidence from india abstract in this paper we derive time varying relative export competitiveness rec of india s top agricultural exports rice wheat cotton and sugar against india s share of world agricultural exports rec wa and world exports rec we from 1961 to 2012 we reveal that india s exports of all four commodities became relatively competitive over time but these were not as competitive as the top or selected emerging exporters of the four commodities we also examine the determinants of rec in these four commodities focusing on factors including crop specific and aggregate factor endowments domestic price export prices and gdp per capital preferential trade agreements export restrictions and bans and india s green revolution the regression analysis was mainly confined to the 1981 2012 due to data constraints we find that the time series regression results are similar in sign and significance for rec we and rec wa our key findings suggest the rec in wheat rice and cotton deteriorated as a result of export restrictions capital had negative effects on cotton rec labor and farm size did not influence the rec in the commodities the green revolution improved the rec in rice and cotton in phase 3 the wto had a positive effect on the rec in rice the south asian free trade area safta agreement adversely affected the rec in wheat and rice but strengthened the rec in cotton and sugar higher domestic price reduced the rec in cotton higher per capita income strengthens the rec in wheat with a lag we explain these results and suggest policy implications

determinants of the export structure of countries in central and eastern europe the growth in exports from central and eastern europe to western markets suggests that entrepreneurs have responded to changed incentives by restructuring their production to capture new markets the absence of change in the structure of exports however suggests that these restructuring efforts have not been significant this article analyzes the magnitude of the change in export structure across the central and eastern european countries in 1990 95 focusing in particular on trade with the european union it finds that imports of intermediate inputs and machinery are an important determinant of the changes in export structure sourcing of inputs from abroad is a major factor underlying the expansion of exports to the european union outward processing subcontracting arrangements and foreign direct investment have a smaller impact except for poland inflows of foreign direct investment are statistically insignificant or negatively associated with measures of revealed comparative advantage this suggests that foreign investors have chosen sectors in which the central and eastern european countries were not relatively specialized under central planning

a battle of informed traders and the market game foundations for rational expectations equilibrium abstract potential manipulation of prices and convergence to rational expectations equilibrium is studied in a game without noise traders informed players with initially long and short positions bulls and bears seek to manipulate consumer expectations in opposite directions in equilibrium period 1 prices reveal the state so manipulation is unsuccessful bears and uninformed consumers sell up to their short sale limits in period 1 bulls buy in period 1 but receive arbitrage losses when the number of bulls and bears approaches infinity the equilibrium converges to the ree without short sale constraints there is a non revealing equilibrium but no revealing equilibrium

bankruptcy law in latin america past and future this paper studies bankruptcy law in latin america focusing on the brazilian reform we start with a review of the international literature on this subject next we examine the economic incentives associated with several aspects of bankruptcy laws and insolvency procedures in general as well as the trade offs involved we follow this theoretical discussion with an empirical evaluation of the quality of current insolvency procedures in latin america we find that the region is governed by a set of laws that is inefficient even when compared with regions of lower per capita income this inefficiency has severe consequences for credit markets and the cost of capital next we focus on the recent brazilian bankruptcy reform analyzing its main components and possible effects the appendix describes difficulties of the reform process in brazil and lessons other latin american countries can learn from it

on integrating theories of international economics in the strategic planning of global supply chains and facility location abstract this paper relates three theories of international economics comparative advantage competitive advantage and competitiveness and formulates the thesis that incorporating them in the form of readily available individual competitiveness indicators in or ms models offers promise to enhance decision support for the strategic planning of global supply chains in general and for locating facilities in particular the purpose of this paper is to relate these theories from the field of international economics to give a roadmap of related measures that are provided by annual competitiveness reports and to pose several research questions as challenges to the or ms community as it seeks to improve models to support the strategic planning process accordingly specific objectives of this paper are to relate each of these theories and to describe their interrelationships to describe measures provided by two well known annual competitiveness reports and to illustrate application of the theories as a means of supporting the thesis of the paper and justifying the research questions we pose for future research while this paper discusses topics relative to the broader background of global supply chain design it illustrates applications associated with facility location a component of the global supply chain design since it has a rich history within the or ms community and since it is central to strategic planning in the global economy

the costs of bankruptcy chapter 7 liquidation versus chapter 11 reorganization our paper explores a comprehensive sample of small and large corporate bankruptcies in arizona and new york from 1995 to 2001 bankruptcy costs are very heterogeneous and sensitive to the measurement method used we find that chapter 7 liquidations appear to be no faster or cheaper in terms of direct expense than chapter 11 reorganizations however chapter 11 seems to preserve assets better thereby allowing creditors to recover relatively more our paper also provides a large number of further empirical regularities our paper analyzes the largest sample of corporate bankruptcies to date we research approximately 300 cases from the arizona and new york federal bankruptcy courts from 1995 to 2001 these cases consist of 1 both publicly traded and privately held corporations and 2 both chapter 7 liquidations and chapter 11 reorganizations this sample is practically the entire population of unique corporate bankruptcies in these courts our paper s primary objective is to measure how the two available bankruptcy procedures differ especially but not only in terms of cost we explore four variables namely the change in the estate s value during bankruptcy a measure of indirect costs the time spent in bankruptcy another and more common measure of indirect costs the expenses submitted to and approved by the bankruptcy court a measure of direct costs and the recovery rates for creditors and apr violations our most important findings are that chapter 7 liquidations are not cheaper than chapter 11 reorganizations particularly after we control for endogenous self selection of firms into bankruptcy procedure bankruptcy professionals attorneys accountants trustees regularly end up with most of the post bankruptcy firm s value in chapter 7 arturo bris is at imd yale school of management and ecgi ivo welch is at brown uni

liquid markets and competition abstract a market is liquid if no individual s actions have a big effect on the prices of goods traded in that market perfectly competitive markets are therefore perfectly liquid it is well known that market liquidity can be achieved by increasing the number of traders so that individual trades are small compared to total trades we show that even when there are only few traders market liquidity can be achieved through large short sales in which net trades are small relative to gross trades in particular for a natural variant of the market game which permits unlimited short sales we show that there is always a nash equilibrium allocation arbitrarily close to a competitive equilibrium allocation of course not all ne are near competitive only the large short sales ne are nearly liquid and hence close to ce