globalization migration and development the role of mexican migrant remittances in this paper we present evidence suggesting that international migrant remittances generally lead to improved developmental outcomes using a cross section of mexican municipalities in the year 2000 we show that increases in the fraction of households receiving international remittances are generally correlated with better schooling and health outcomes and with reductions in some dimensions of poverty our results take into account the likely endogeneity between migration remittances and developmental outcome variables and they suggest that measures to facilitate remittance flows are desirable

remittances and the informal economy abstract many developing countries are characterized by a large informal sector and are also often heavily dependent on remittance inflows from abroad we develop a general equilibrium framework to understand better the dynamic absorption of remittances in a two sector small open economy by incorporating many of the stylized features of the informal sector calibrating the model to yield a long run equilibrium consistent with sample averages for 56 developing countries for the period 1990 2014 we show that the effect of remittances depends critically on how they impinge on the recipient economy i e whether these inflows are i permanent or temporary ii associated with a collateral effect to securitize borrowing and iii exogenous or countercyclical we also identify the conditions under which remittances are associated with an expansion of the informal sector as well as the dutch disease effect

remittance effects on child labour evidence from burkina faso abstractthis article explores the effects of remittance receipt on child labour in an african context we focus on burkina faso a country with a high prevalence of child labour and a high rate of migration given the complex relationship between remittance receipt and household time allocation decisions we instrument remittances using economic conditions in remittance sending countries and explore heterogeneous effects across different types of potential remitters while remittances have no significant effect on child labour on average transfers reduce child labour in long term migrant households for whom the disruptive effect of migration is no longer felt we find no gender difference but remittances seem to affect mainly the labour market participation of younger children

remittances schooling and child labor in mexico abstract this paper studies the effects of remittances from the u s on child labor and school attendance in recipient mexican households we identify these effects using the impact of the 2008 2009 u s recession on remittance receipts the methodology employed is a differences in differences strategy that compares households that were remittance recipients before the crisis with never recipient households to avoid possible selection problems we instrument for membership in the remittance recipient group we find that the negative shock on remittance receipts caused a significant increase in child labor and a significant reduction of school attendance

optimum discriminatory tariffs under oligopolistic competition this paper attempts to present a simple cournot model to determine the optimal discriminatory tariff rates when the international market is a homogeneous heterogeneous product market in the model there are two foreign firms located in two different countries competing for sales in a local market when the firms sell a homogeneous product and the home country can impose differential tariffs on imports from different countries then the tariff on the low cost producer should be hgher in particular with constant marginal costs the tariff difference should equal half the cost difference on the other hand if the firms sell differentiated products with symmetric linear demands and technologies then the weaker the degree of product differentiation the greater is the tariff difference compared with the cost difference

storable good monopoly the role of commitment we study dynamic monopoly pricing of storable goods in an environment where demand changes over time the literature on durables has focused on incentives to delay purchases our analysis focuses on a different intertemporal demand incentive for consumers the key force on the consumer side is advance purchases or stockpiling this stockpiling motive can be present in the case of standard durables as well in environments unmodeled in the prior literature we show that if the monopolist cannot commit then prices are higher in all periods and social welfare is lower than in the case in which the monopolist can commit this is in contrast with the durable goods analysis in the literature on the coase conjecture

retail pricing and clearance sales sellers of new products are faced with having to guess demand conditions to set price appropriately but sellers are able to adjustprice over time and to learn from past mistakes additionally it is not necessary that all goods be sold with certainty it is sometimes better to set a high price and to risk no sale this process is modeledto explain retail pricing behavior and the time distribution of transactions prices start high and fall as a function of time on theshelf the initial price and rate of decline can be predicted and depends on thinness of the market the proportion of customers who are window shoppers and other observable characteristics copyright 1986 by american economic association

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

migration remittances and poverty in ecuador abstractwe analyse the influence of the recent wave of migration on the incidence of poverty among stayers in ecuador we draw our data from a survey that provides detailed information on migrants the analysis reveals a significant negative effect of migration on poverty among migrant households this effect is substantially smaller than the one that we find focusing on recipient households we explore the factors that account for this divergence our analysis entails that the existing empirical evidence on the relationship between remittances and poverty does not need to be informative about the size of the direct poverty reduction potential of migration

long run competition in capacity short run competition in price and the cournot model in this article we investigate the nature of equilibrium in markets in which firms choose the scale of operation before they make pricing decisions we analyze a duopoly model in which firms choose their capacities before engaging in bertrand like price competition we demonstrate that the cournot outcome is unlikely to emerge in such markets and that the equilibrium tends to be more competitive than the cournot model would predict in addition our results indicate a tendency toward asymmetric firm sizes and price dispersion that results from the mixed strategies firms use in equilibrium

on the optimal pricing policy of a monopolist the paper presents a simple explanation of price dispersion by a monopolist assuming only that consumers arrive in a random order and are served on a first come first served basis a firm can sometimes increase its profits by charging two different prices for the same good and rationing sales at the lower price however it is never necessary to charge more than two prices and a single price is sufficient as long as either the marginal revenue curve is everywhere downward sloping or the marginal cost of production is constant

imperfect price discrimination and welfare we develop a model in which a monopolist uses differences across consumers in their valuation of time to imperfectly price discriminate though it is customary to analyse price discrimination problems by the calculus of variations after postulating a continuum of types we assume a finite number of types and exploit the geometry and duality of the contract set and the structure of the programming specification we analyse in detail the qualitative properties of the model s solution and show by construction that our results exhaust the implications of the model for equilibrium contract pairs we show that imperfect discrimination is not bounded in welfare terms between perfect discrimination and single price monopoly and that the deadweight loss consumer surplus and output comparisons between single price monopoly and imperfect discrimination are ambiguous

inter temporal price discrimination and satiety driven repeat purchases abstract we discuss customers inter temporal repeat purchasing behavior when their valuations for a product are subject to transitory satiety the satiety can be increased by purchases and gradually decays in between repeat purchasing customers optimize their inter temporal purchasing schedules including the purchasing time and the purchasing quantity to maximize their time average payoffs and the monopoly seller chooses the optimal cyclic pricing policy to maximize its time average profit we derive the conditions under which firms earn the same profit under the cyclic pricing policy as under the fixed price pricing policy when the inter temporal price discrimination is more profitable we show that the optimal pricing policy depends on the relation between customer valuation and customer satiety our results imply that overlooking the effect of transitory satiety tends to cause firms to underprice we also consider extensions in which there exists a fixed purchasing cost or in which purchasing and consumption decisions are separate

remittances financial development and growth abstract despite the increasing importance of remittances in total international capital flows the relationship between remittances and growth has not been adequately studied this paper studies one of the links between remittances and growth in particular how local financial sector development influences a country s capacity to take advantage of remittances using a newly constructed dataset for remittances covering about 100 developing countries we find that remittances boost growth in countries with less developed financial systems by providing an alternative way to finance investment and helping overcome liquidity constraints this finding controls for the endogeneity of remittances and financial development does not depend on the particular measure of financial sector development used and is robust to a number of robustness tests including threshold estimation we also provide evidence that there could be an investment channel trough which remittances can promote growth especially when the financial sector does not meet the credit needs of the population

strategic trade and industrial policy towards dynamic oligopolies we characterise optimal trade and industrial policy in dynamic oligopolistic markets if governments can commit to future policies optimal first period intervention should diverge from the profit shifting benchmark to an extent which exactly offsets the strategic behaviour implied by fudenberg and tirole s animal spirits taxonomy of business strategies without government commitment there is an additional basis for intervention whose sign depends on the strategic substitutability between future policy and current actions we consider a variety of applications to rd spillovers consumer switching costs etc and also extensions to constrained second best policies

cyclic pricing by a durable goods monopolist in the model of this paper a monopoly seller of a durable good holds periodic sales as a means of price discrimination a new cohort of consumers enters the market in each period interested in purchasing the good either immediately or after a delay within each cohort consumers vary in their tastes for the good under broad conditions the seller will vary the price over time in most periods he will charge a price just low enough to sell immediately to consumers with a high willingness to pay periodically however he will drop the price far enough to sell to an accumulated group of consumers with a low willingness to pay

using yield management to shift demand when the peak time is unknown traditional peak load and stochastic peak load models assume firms have prior information about when peak demand occurs however price dispersion such as is typically used by firms practicing yield management can achieve some of the same efficient demand shifting even when the peak time is unknown equilibrium price dispersion arises because of stochastic demand and price rigidities but a previously unexplored benefit of price dispersion is its ability to reduce equilibrium capacity costs through demand shifting the model also suggests how yield management now more commonly called revenue management might actually benefit business travellers contrary to the popular prejudice

search unemployment in an overlapping generations setting this paper constructs an overlapping generations model in which the steady state equilibrium is characterized by the existence of search unemployment this dynamic general equilibrium model captures the possible existence of search unemployment in the long run despite the absence of exogenous shocks furthermore it allows for the wage offers distribution to be determined endogenously the effect of partial revelation of information on the existence of search unemployment in the long run is examined it is shown that search unemployment may be eliminated in the long run despite the persistence of the state of imperfect information this paper develops an overlapping generations model in which the steady state equilibrium is characterized by search unemployment 2 unemployment is created via a rational rejection of available wage offers in favor of further search for potentially more attractive offers the proposed dynamic general equilibrium model allows for the existence of long run search unemployment despite the absence of exogenous shocks and permits the presence of an endogenously determined nondegenerate wage offer distribution 3 the paper analyzes the trade off between revelation of information and the level of search unemployment in the long run in the absence of external disturbances the level of search unemployment would be expected to decrease as information becomes available in particular if information is fully revealed search unemployment is naturally eliminated exploring the likelihood of the existence of long run search unemployment in a deterministic world this study provides an example of partial revelation of information which eliminates search unemployment in the long run despite the persistence of the state of imperfect information 4 the proposed model presents a discrete infinite time horizon world where economic activity is conducted under imperfect information in every period a single homogeneous good is produced using two factors capital and labor in the production process the aggregate endowment of labor is exogenously given in

demand uncertainty and sales a study of fashion and markdown pricing the theory of clearance sales is expanded and applied to explain why markups markdowns and the frequency of sales of merchandise sold by department stores have increased dramatically in recent years and why they differ across merchandise groups tha major theme of the paper is that the growing role of fashion and product variety is an important reason for these increases and for the differences between merchandise groups the growing importance of fashion is illustrated by documenting the declining use of whites and the increasing use of colors and prints estimates of the effects of imports and technological and demographic changes on markups and markdowns are presented copyright 1988 by american economic association

assessing the direct and spillover effects of shocks to refugee remittances abstract we examine the impact of exogenously shutting down remittances to kakuma refugee camp in northern kenya during 2015 we find that the remittance shutdown did not reduce refugee consumption on average however it did decrease consumption of households that previously received remittances through the networks that were closed while simultaneously increasing consumption for those who continued to receive remittances through other mechanisms the shutdown also resulted in decreases in the probability of consuming a variety of goods by the host population particularly those with livelihoods linked to the refugee camp these findings underscore the tight links between refugee camps and surrounding communities and are a testament to the multiplier effects of remittances

export subsidies and high productivity cause or effect according to the emerging strategic theory of trade policy countries selling in imperfectly competitive world markets may benefit from export subsidies this paper demonstrates that the theory predicts that it is the countries with the lowest production costs that offer the highest subsidies it is argued that this result diminishes the attraction of the theory as a positive explanation of trade policy

optimal selling strategies when to haggle when to hold firm a seller encountering risk neutral buyers one at a time should if commitments are feasible quote a single take it or leave it price to each this strategy is superior to any other for finite or infinite buyer populations whether there is learning or the distribution of buyer prices is known at the outset with one object for sale or many although haggling may offer advantages in terms of price discrimination these gains are more than offset by the losses it generates by encouraging buyers to refuse purchases at high prices

measuring the effects of search costs on equilibrium prices and profits abstract this paper assesses the effects of search costs on equilibrium prices and profits using an estimated model of demand and costs in a laundry detergent market i find that some firms profits initially rise and then fall with search costs overall the magnitude and direction of the search costs effects on prices and profits are heterogeneous this is because search costs create conflicting incentives for a firm to reduce prices to attract the attention of searching consumers yet also raise prices to harvest profit from consumers who are unaware of competing products these effects can vary with the relationship between the firms actual prices and the consumers pre search beliefs about prices

dynamic competition with random demand and costless search a theory of price posting this paper studies a dynamic model of perfectly competitive price posting under demand uncertainty firms must produce output in advance after observing aggregate sales in prior periods firms post prices for their unsold output in each period the demand of a new batch of consumers is randomly activated existing customers who have not yet bought and then new customers arrive at the market in random order observe the posted prices and either purchase at the lowest available price or delay their purchase decision we construct a sequential equilibrium in which the output produced and its allocation across consumers is efficient thus consumers endogenously sort themselves efficiently with the highest valuations purchasing first transaction prices in each period rise continuously as firms become more optimistic about demand followed by a market correction by the last period prices are market clearing

intertemporal pricing and consumer stockpiling we study a dynamic pricing problem for a class of products with stable consumption patterns e g household items staple foods consumers may stock up the product at current prices for future consumption but they incur inventory holding costs we model this situation as a dynamic game over an infinite time horizon in each period the seller sets a price and each consumer chooses how many units to buy we develop a solution methodology based on rational expectations by endowing each player with beliefs we decouple the dynamic game into individual dynamic programs for each player we solve for the rational expectations equilibrium where all players make optimal dynamic decisions given correct beliefs about others behavior in equilibrium the seller may either charge a constant fixed price or offer periodic price promotions at predictable time intervals we show that promotions are useful when frequent shoppers are willing to pay more for the product than are occasional shoppers we also develop several model extensions to study the impact of consumer stockpiling on the seller s inventory production and rationing strategies

the shadow value of migrant remittances income and inequality in a household farm economy this article offers econometric evidence that income remittances sent home by family migrants stimulate household farm incomes indirectly by relieving credit and risk constraints on household farm production a high but unequally distributed shadow value of migrant remittances appears to reinforce an equalising direct effect of remittances on the income distribution across a sample of household farms in rural mexico

price dispersion in an automobile insurance market from automobile insurance data for alberta over the period 1974 81 we find thatpremiums are highly correlated across driver classes in a given year but that premiums for a given driver class are not correlated over a period of more than 5 years firms relative market shares among drivers over age 25 and married males under 25 are inversely related to their deviations from the mean premiums in these driver classes the variance of real premiums decreases with the numberof firms in the market and increases with the real loss cost per car insured and the number of cars insured from these results we conclude that the price dispersion in automobile insurance in alberta is based on costly consumer search

a theory of clearance sales clearance sales are widely used by firms as an intertemporal selling policy in particular in markets where firms face demand uncertainty and need to choose capacity in advance clearance sales consist in charging a high price initially but then lowering the price in the sales period high valuation consumers purchase the good at the high initial price so as to avoid rationing at the low price while low valuation consumers wait for the price to drop we develop a simple model of intertemporal monopoly pricing under demand uncertainty and show that clearance sales may be the optimal intertemporal selling policy

strategic trade policy with endogenous choice of quality and asymmetric costs abstract this paper examines strategic trade and joint welfare maximizing incentives towards investment in the quality of exports by an ldc and a developed country firms first compete in qualities and then export to an imperfectly competitive third country market under bertrand competition unilateral policy involves an investment subsidy by the low quality ldc and an investment tax by the developed country whereas jointly optimal policy calls for the reverse so as to reduce price competition by increasing product differentiation under cournot competition unilateral policy is also reversed from the bertrand outcome but jointly optimal policy involves a tax in both countries

upstream market power and wasteful retailers we provide a novel explanation for the wasteful product disposal by retailers in our model after purchasing a quantity of a product from the manufacturer the retailer exerts a costly effort to sell the product to the final users the manufacturer s production cost and the outside opportunity associated with it is private information we show that when the manufacturer has the upstream market power the retailer sells all units purchased from the manufacturer however when the retailer has the market power it might deliberately purchase more than it sells to the final users thus wasting the unsold amount

network effects and the dynamics of migration and inequality theory and evidence from mexico international migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate which can increase inequality in the sending community however the migration networks formed lower the costs for future migrants which can in turn lower inequality this paper shows both theoretically and empirically that wealth has a nonlinear effect on migration and then examines the empirical evidence for an inverse u shaped relationship between emigration and inequality in rural sending communities in mexico after instrumenting we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration we also find some suggestive evidence for an inverse u shaped relationship among communities with a wider range of migration experiences

export subsidies as signals of competitiveness in a cournot duopoly model of international competition between a domestic and foreign firm it is shown that when the foreign firm has incomplete information about the marginal cost of the domestic firm then the domestic government can use an export subsidy to signal the competitiveness of its firm this signalling effect strengthens the usual profit shifting argument for an export subsidy the optimal export subsidy in the signalling equilibrium may be twice as large as the optimal profit shifting export subsidy under complete information

migration networks and microenterprises in mexico are migration networks associated with lower capital costs or the alleviation of capital constraints we examine these questions with data measuring access to remittance flows among small scale entrepreneurs in mexico using a survey of more than 6000 self employed workers and small firm owners located in 44 urban areas of mexico we estimate the impact of attachment to migration networks on the level of capital investment the capital output ratio sales and profits of microenterprises the impact is identified from the geographic pattern of migration from mexico driven by the completion of rail lines in the early 1900s for the full sample of firms we find that migration is associated with higher investment levels and higher profits but not higher sales the strongest effects on investment are in the categories of automobiles tools and inventories when the sample is limited to firms in high capital sectors investment sales and profits all increase with attachment to the migration networks suggesting that attachment to the migration network alleviates capital constraints in those sectors

the macroeconomic consequences of remittances abstract this paper analyzes the dynamic absorption of remittances at the macroeconomic level contrasting two possible effects on economic activity depending on whether these accrue to hand to mouth wage earners or credit constrained entrepreneurs using an open economy dsge model with heterogeneous households we show that the effects of remittances are inherently contractionary if they accrue to the first group and expansionary when they accrue to the second group calibrating the model to the philippines using both aggregate data as well as micro evidence from the family income and expenditure survey fies we show that accounting for both binding credit constraints and the internal distribution of remittances improves the model s fit to the data welfare gains result when the distribution of remittances is skewed towards entrepreneurs

international migration remittances and household investment evidence from philippine migrants exchange rate shocks how do households respond to overseas members economic shocks overseas filipinos in dozens of countries experienced sudden heterogeneous changes in exchange rates during the 1997 asian financial crisis appreciation of a migrant s currency against the philippine peso leads to increases in household remittances from overseas the estimated elasticity of philippine peso remittances with respect to the exchange rate is 0 60 positive migrant shocks lead to enhanced human capital accumulation and entrepreneurship in origin households child schooling and educational expenditure rise while child labour falls households also work more hours in self employment and become more likely to start relatively capital intensive household enterprises

buy it now or take a chance price discrimination through randomized auctions increasingly detailed consumer information makes sophisticated price discrimination possible at fine levels of aggregation demand may not obey standard regularity conditions we propose a new randomized sales mechanism for such environments bidders can buy it now at a posted price or take a chance in an auction where the top d 1 bidders are equally likely to win the randomized allocation incentivizes high valuation bidders to buy it now we analyze equilibrium behavior and apply our analysis to advertiser bidding data from microsoft advertising exchange in counterfactual simulations our mechanism increases revenue by 4 4 and consumer surplus by 14 5 compared to an optimal second price auction this paper was accepted by assaf zeevi stochastic models and simulation

wealth inequality educational environment and school enrolment evidence from mexico using data from the extended section of the 2010 mexican census 2 9 million households we study how school enrolment is associated with wealth inequality and with the educational environment the child is exposed to at the household and municipal levels we provide robust evidence of wealth inequality as a negative predictor of school enrolment for children in primary secondary and high school age ranges while a positive role is played by the educational environment through the introduction of interaction terms we account for how economic and educational variables are intertwined at both the household and the municipal level and we are able to illustrate the considerable heterogeneity in the role of adult education for households at different standards of living

the efficiency of advance purchase discounts in the presence of aggregate demand uncertainty abstract the pricing behavior of two airlines is examined one is operated by a welfare maximizing social planner the other by an unregulated monopolist total capacity is fixed and aggregate demand is uncertain it is shown that advance purchase discounts can assist in attaining an efficient allocation of capacity when it is not feasible to operate a spot market on the day of the flight it is further shown that the planner may offer larger or smaller discounts than the monopolist

remittances and public finances evidence from oil price shocks we study the effect of inflowing remittances a major source of capital for many countries on tax revenues and tax policy instrumenting remittances with changes in the oil price interacted with a country s distance to oil producing countries we find that remittances have a large positive effect on vat revenues but no effect on income tax revenues this suggests that remittances often escape the income tax but can be taxed via consumption we further show that tax policy is responsive to shocks in incoming remittances remittances make the adoption of vat systems more likely and they lead to lower vat rates and higher income tax rates

a simple model of price dispersion abstract this article considers a simple stock flow matching model with fully informed market participants unlike the standard matching literature prices are assumed to be set ex ante when sellers pre commit themselves to sell their products at an advertised price the unique equilibrium is characterized by price dispersion due to the idiosyncratic match payoffs in a marketplace with full information this provides new insights into the price dispersion literature which instead commonly assumes that buyers are not perfectly informed and engage in a costly search

comparative advantage and the pursuit of strategic trade policy in the brander and spencer model j int econ 18 1985 83 100 it is shown that the absolute value of the export subsidy tax given by the country with low cost firm is larger than that given by the country with the high cost firm

competitive dynamic pricing with alternating offers theory and experiment abstract we propose an equilibrium model of duopolistic dynamic pricing in which a buyer alternates between two sellers for price offers over a finite time horizon the game ends when the buyer accepts a price offer or the selling season is over whichever comes first previous research granot et al 2007 shows that there are successive markdowns in equilibrium when the buyer is commonly known to be myopic our analysis suggests that when she is known to be strategic price offers over the entire selling season are constant moreover lengthening the season increases generally decreases both sellers profits when the buyer is myopic strategic an experimental study largely supports the equilibrium predictions when the buyer is myopic but not when she is strategic in the latter case early in the season sellers overprice the good arguably in an attempt to effectively shorten the season and thereby increase their profits

equilibrium price dispersion in retail markets for prescription drugs this study seeks to establish the empirical importance of price dispersion due to costly consumer search by examining retail prices for prescription drugs posted prices in two geographically distinct markets are shown to vary considerably across pharmacies within the same market even after one controls for variation due to pharmacy differences pharmacy heterogeneity accounts for at most one third of the observed price dispersion the empirical analysis hinges on the observation that consumers incentives to price shop depend on characteristics of the drug therapy cross sectional patterns in price distributions across drugs are consistent with the predictions of a search model prices for repeatedly purchased prescriptions for which the expected benefits of search are highest exhibit significant reductions in both dispersion and price cost margins

demand elasticities asymmetry and strategic trade policy abstract this paper shows that demand elasticities and cost asymmetry are important determinants of strategic trade policy in the symmetric case the direction of intervention is critically dependent upon the elasticity of demand under unit elastic demand free trade is optimal under symmetry and a subsidy tax is optimal if the exporting firm has lower higher marginal cost than its competitor if both the exporting governments intervene then the conventional result that the lower cost firm gets the higher subsidy is reversed for inelastic demand however such an equilibrium is unstable in policy space

international migration remittances and schooling evidence from el salvador abstract we examine the effect of remittances from abroad on households schooling decisions using data for el salvador following the massive war related emigration of the 1980s remittances became a significant source of household income throughout the 1990s we use the cox proportional hazard model to examine the determinants of school attendance measuring income from a source that is uncorrelated with parental schooling remittances we find that remittances have a large significant effect on school retention we estimate that while household income net of remittances has a small though significant impact on the hazard of leaving school in rural and urban areas remittances have a much larger impact on the hazard of leaving school in urban areas the effect of remittances is at its smallest 10 times the size of the effect of other income in rural areas the effect of remittances is about 2 6 times that of other income our finding is of interest in that it suggests that subsidizing school attendance particularly in poor areas may have a large impact on school attendance and retention even if parents have low levels of schooling

optimal export subsidies and marginal cost differentials abstract this paper examines the relationship between the difference in optimal subsidies and that in marginal costs for different exporting countries it shows that this relationship crucially depends upon the concavity of the market demand curve this result provides policy makers with useful information when implementing trade policies

strategic pricing consumer search and the number of firms discover prices there are three distinct price dispersed equilibria characterized by low moderate and high search intensity the effects of an increase in the number of firms on search behaviour expected prices price dispersion and welfare are sensitive i to the equilibrium consumers search intensity and ii to the status quo number of firms for instance when consumers search with low intensity an increase in the number of firms reduces search does not affect expected price leads to greater price dispersion and reduces welfare in contrast when consumers search with high intensity increased competition results in more search and lower prices when the number of competitors in the market is low to begin with but in less search and higher prices when the number of competitors is large duopoly yields identical expected price and price dispersion but higher welfare than an infinite number of firms a question that has received much attention in economic theory is how the number of competitors and market outcomes are related despite the existence of work showing the contrary see e g satterthwaite 1979 rosenthal 1980 the prediction that emerges from a market where firms interact in a cournot fashion has come to dominate economic thought namely that an increase in the number of competitors leads to larger aggregate production lower market price and improved market performance measured in terms of some social welfare criterion ruffin 1971 this paper challenges the generality of this belief by presenting an oligopoly model with consumer search where the equilibrium expected price may be constant increasing or nonmonotonic in the number of firms we present an economy with two types of consumers consumers who search for prices at no cost fully informed and consumers who must pay a fixed search cost for each price quotation they observe less informed 1 all buyers have the same willingness to pay for the good and buy either a single unit or nothing at all on the supply side of the market there are n firms producing a homogeneous good at constant marginal cost we analyse a one shot simultaneous move game firms set prices and consumers decide how many prices to search for at the same moment in time our model is essentially an oligopolistic version of burdett and judd 1983 where some consumers search costlessly in this model consumers search using a fixed sample size search strategy i e they choose the number of prices to observe before receiving any offer nonsequential search is appealing when consumers find it more advantageous to gather price information quickly morgan and manning 1985 this occurs when the search outcome is observed with delay and delay is costly for instance an mba graduate looking for a job 1 the presence in the model of consumers who search costlessly captures the fact that some people have a

optimal export subsidy when demand is uncertain abstract a standard result in export subsidy tax game models is that if governments can credibly precommit themselves to a particular trade policy an export subsidy tax is optimal when firms engage in quantity price respectively competition brander and spencer 1985 eaton and grossman 1986 in this paper we consider a model of dynamic duopoly when demand in the importing country is uncertain we show that in a symmetric equilibrium a subsidy is generally optimal for price competition

collusion with intertemporal price dispersion we develop a theory of optimal collusive intertemporal price dispersion dispersion clouds consumer price awareness encouraging firms to coordinate on dispersed prices our theory generates a collusive rationale for price cycles and sales patient firms can support optimal collusion at the monopoly price for less patient firms monopoly prices must be punctuated with fleeting sales the most robust structure involves price cycles that resemble edgeworth cycles low consumer attentiveness enhances the effectiveness of price dispersion by reducing the payoff to deviations involving price reductions however for sufficiently low attentiveness price rises are also a concern

the impact of collusion on price behavior empirical results from two recent cases abstract we use extended arch and garch models to examine the differences in the behavior of the first two moments of the price distribution during collusive and competitive phases of two recently discovered conspiracies citric acid and lysine according to our results the conspirators managed to raise prices by 9 and 25 cents per pound in the short run relative to non collusive periods also the variance of prices during the lysine conspiracy was lower and the variance of prices during the citric acid conspiracy was higher than during more competitive periods the proposed methodology may be used for antitrust screening and prosecution purposes

the timing of sales this paper presents a model of intertemporal price discrimination a fixed number of sellers produce a homogeneous good consumers with different preferences enter the market in each period and leave when they make a purchase the sellers typically vary their prices over time charging a high price in most periods but occasionally cutting the price to sell to a large group of customers with a low reservation price in some equilibria all stores lower their price at the same time and to the same level

advance purchase discounts and monopoly allocation of capacity optimal pricing by a monopoly airline that faces capacity constraints during the peak demand period is studied the existence of capacity constraints means that in order to expand output the airline must divert demand from the peak period to the off peak period a particular advance purchase discount policy is shown to be the profit maximizing method of selling tickets if the advance purchase requirement were infeasible output and total surplus would both be lower jel l12 substantial discounts for air travel are generally available to travelers who are willing to purchase tickets a week or more in advance of the departure date this paper demonstrates why the imposition of an advance purchase requirement may be a profit maximizing strategy for a monopoly airline facing capacity constraints during times of peak demand 1 the practice of imposing an advance purchase requirement on discount tickets is also placed in a favorable light in terms of its impact on social

profit sharing and welfare in an export subsidy game abstract this paper studies an export subsidy game in a duopoly in which one firm engages in sharing profits with its union in a non cooperative equilibrium of an export subsidy game without any cost advantage of firms the export subsidy to the profit sharing firm is smaller than the export subsidy to the non sharing firm and the output of the profit sharing firm is smaller than the output of the non sharing firm thus in an export subsidy game a profit sharing contract reduces the welfare in the country

shortages segmentation and self selection this paper considers the rationality and implications of using shortages as a self selection device shortages lead to uncertain access and enable sellers to offer ensured access either to the good or to a preferred variety of the good at a higher price or as part of a bundle it is shown that such activities allow firms to span nonconcavities in their revenue function firms respond to changes in demand and costs through changes in quantity and or the premium for ensured access but not through changes in the base price

marginal cost pricing when spot markets are complete the standard formulation of a spot market subject to uncertain excess demand uses a tatonnement process that restricts trade until the market clearing price is found here i present a model in which there is no restriction on trade during the process of the resolution of uncertainty about aggregate excess demand the idea is to enlarge the commodity space and define goods by the probability that they will sell in addition to other characteristics the probability of sale characteristic is the spot market analogue of the contingencies under which delivery will take place in the arrow debreu model a failure to distinguish goods by the probability of sale characteristic can lead to the rejection of the competitive paradigm even when everyone is a price taker and the allocation is efficient

equilibrium price dispersion under demand uncertainty the roles of costly capacity and market structure when capacity is costly and prices are set in advance firms facing uncertain demand will sell output at multiple prices and limit the quantity available at each price i show that the optimal price strategy of a monopolist and the unique pure strategy nash equilibria of oligopolists both exhibit intrafirm price dispersion moreover as the market becomes more competitive prices become more dispersed a pattern documented in the airline industry while generating similar predictions the model differs from the revenue management literature because it disregards market segmentation and fare restrictions that screen customers

monopoly price dispersion under demand uncertainty when a monopolist sets its price before its demand is known then it may set more than one price and limit the availability of its output at lower prices this article adds demand uncertainty and price rigidities to the standard model of monopoly pricing when there are two states of demand and the ex post monopoly price is greater when demand is high then the monopolist s optimal ex ante pricing strategy is to set two prices and limit purchases at the lower price

remittance inflows and financial development evidence from the top recipient countries in sub saharan africa this paper utilizes a panel cointegration approach to investigate the relationship between remittances and financial development in the top remittance recipient countries in sub saharan africa our

durable goods monopoly with entry of new consumers this paper analyzes a model of a dynamic monopolist who produces at constant unit cost each period a new cohort of consumers enters the market each entering cohort is identical consumers within a cohort have different tastes for the good my main results are if players are sufficiently patient any positive average profit less than the maximum feasible level can be attained in a subgame perfect equilibrium in the subset of subgame perfect equilibria in which players use stationary strategies the seller cannot make sales at prices significantly greater than the lowest willingness to pay when period length goes to zero and the seller attains the maximum profit when commitment is feasible by charging the same static monopoly price in every period this paper analyzes a model of a dynamic monopolist who operates in a market in which there is a regular flow of new consumers the seller produces a durable good at constant unit cost each period a new cohort of consumers enters the market consumers wish to buy exactly one unit of the item but are willing to wait resales are not allowed each entering cohort is identical

consumer stockpiling and competitive promotional strategies an examination of brand prices in several categories reveals that the distribution of prices is multimodal with firms offering shallow and deep discounts another interesting feature of these distributions is that they may have holes in the interior of the support these pricing distributions do not occur in extant theoretical models of price promotions we develop a dynamic model of competition in which some price sensitive consumers stockpile during periods of deep discounts a game theoretic analysis of our model generates a multimodal pricing distribution with a hole in the interior of the support consumer stockpiling in our model also gives rise to negative serial correlation in prices this is consistent with our empirical observation of the pricing distribution of several brands across multiple categories in the iri marketing data set we generate several interesting insights into firms optimal promotional strategies and their interplay with the clientele mix market structure and other market factors we find that in equilibrium stockpiling by price sensitive consumers neither harms nor benefits firms when they adopt equilibrium strategies interestingly when price sensitive consumers stockpile even increased consumption as a result of stockpiling does not lead to higher profits for firms

revenue management without commitment dynamic pricing and periodic flash sales a seller has a fixed number of goods to sell by a deadline at each time he posts a regular price and decides whether to hold a flash sale over time buyers privately enter the market and strategically time their purchases if a buyer does not purchase when she arrives she can pay an attention cost to recheck the regular price afterwards or she can wait for future flash sales where she may obtain a good at a discounted price in the unique markov perfect equilibrium the seller sporadically holds flash sales to lower the stock of goods a flash sale increases the willingness to pay of future buyers but decreases the willingness to pay of buyers who arrive early in the game when it is very likely that a buyer will obtain a good in a flash sale the seller holds a big initial flash sale for all but one unit of the good

export subsidies under dynamic duopoly abstract in this paper i analyze an export subsidy game under a dynamic cournot duopoly using a discrete time markov equilibrium model of dynamic cournot duoply according to maskin and tirole 1987 assuming a linear demand function i will show that under a dynamic duopoly 1 firms are more sensitive to changes in export subsidies 2 the equilibrium export subsidy in an export subsidy game is smaller 3 the output at the subsidy equilibrium is larger than a static duopoly with lower subsidy and higher output the welfare in countries under a dynamic duopoly is higher than a static duopoly

advance selling when consumers regret we characterize the effect of anticipated regret on consumer decisions and on firm profits and policies in an advance selling context where buyers have uncertain valuations advance purchases trigger action regret if valuations turn out to be lower than the price paid whereas delaying purchase may cause inaction regret from missing a discount or facing a stockout consumers whom we describe as emotionally rational act strategically in response to the firm s policies and in anticipation of regret in this context regret explains two types of behavioral patterns inertia delayed purchase and frenzies buying early at negative surplus we show how firms should optimally respond to consumer regret and also characterize a normative regret threshold above which they should not advance sell action regret reduces profits as well as the value of advance selling and booking limit policies for price setting firms inaction regret has the opposite effects these effects are diminished by capacity constraints and are reversed for firms facing price pressure in the advance period owing e g to competition or market heterogeneity regret heterogeneity explains premium advance selling for the capacity constrained firm which may benefit from larger shares of regretful buyers finally we show how the negative effects of regret on profits can be mitigated by regret priming marketing campaigns and by offering refunds or options or allowing resales our results highlight the importance of assessing the relative strength of regret within and across market segments and of accounting for these factors in pricing and marketing policies this paper was accepted by christian terwiesch operations management

the effects of external migration on enrolments accumulated schooling and dropouts in punjab external migration in developing countries can relax household income constraints because of external remittances this paper looks at whether the external migration of individuals in a household has a positive effect on schooling outcomes of children as measured by school enrolments accumulated level of schooling number of days spent in school and dropouts in punjab historic migration rates were used to instrument for migration in an analysis of school outcomes for children of different ages to see which group has been most affected by external migration the results show a significantly positive impact of external migration on the enrolments of younger children whereas the accumulated level of schooling for older children increases significantly if there is an external migrant in the household

networks in the modern economy mexican migrants in the u s labor market this paper attempts to identify job networks among mexican migrants in the u s labor market the empirical analysis uses data on migration patterns and labor market outcomes based on a sample of individuals belonging to multiple origin communities in mexico over a long period of time each community s network is measured by the proportion of the sampled individuals who are located at the destination the united states in any year we verify that the same individual is more likely to be employed and to hold a higher paying nonagricultural job when his network is exogenously larger by including individual fixed effects in the employment and occupation regressions and by using rainfall in the origin community as an instrument for the size of the network at the destination

optimal dynamic mechanism design with deadlines a seller maximizes revenue from selling an object in a dynamic environment with buyers that differ in their patience each buyer has a privately known deadline for buying and a privately known valuation first we derive the optimal mechanism neglecting the incentive constraint for the deadline the deadline of the winner determines the time of the allocation and therefore also the amount of information available to the seller when he decides whether to allocate to a buyer depending on the shape of the markup that the seller uses this can lead to a violation of the neglected incentive constraint we give sufficient conditions on the type distribution under which the neglected constraint is fulfilled or violated second for the case that the constraint cannot be neglected we consider a model with two periods and two buyers here the optimal mechanism is implemented by a fixed price in period one and an asymmetric auction in period two the asymmetry which is introduced to prevent the patient type of the first buyer from buying in period one leads to pooling of deadlines at the top of the type space

international r d rivalry and industrial strategy this paper presents a theory of government intervention which provides an explanation for industrial strategy policies such as r d or export subsidies in imperfectly competitive international markets domestic net welfare is improved by the capture of a greater share of the output of rent earning industries although the subsidy ridden noncooperative international equilibrium is jointly suboptimal behaviour of governments and firms is modelled as a three stage subgame perfect nash equilibrium the assumption that the government is the first player in this game allows it to influence equilibrium outcomes by altering the set of credible actions open to firms

how do migration and remittances affect human capital investment the effects of relaxing information and liquidity constraints abstractthis article explores the heterogeneous effects of the migration remittance process on the educational attainment of nepalese children the results suggest that when controlling for remittances the children of more educated or informed parents suffer from parental absence while the children of less informed parents gain from migration implying that the migration experience helps less educated parents estimate the value of and returns to education more precisely the results also suggest that remittances help severely credit constrained households enrol their children in school and prevent dropouts these remittances help households that face less severe liquidity constraints increase their investment in quality education