a theory of retail pricing until recently the retail enterprise the shop has been comparatively neglected by economic theorists partly because they assigned little role to retailing the growth of interest in the problem in recent years reflects the development of models of imperfect information and the revival of interest in location theory pricing theory for the retail enterprise however remains a neglected area after surveying existing models of retailing the paper concentrates on the idea that the shop saves its customers costs by assembling goods in one place this introduces an essential non convexity and importantly affects the conditions under which shops compete with each other and the constraints on their price setting under the admittedly unrealistic assumption of full buyer information a theory of retail pricing is developed retail prices are frequently regarded as exceptions both to the law of costs and generally to every rational process of price formation which is all the more remarkable since these prices are the only ones which are of direct interest to the consumer and which are directly influenced by consumption knut wickselt

new issues in corporate finance flow of funds data are used to compare methods of finance in 5 countries over the period 1970 to 1985 many of the problems associated with previous studies are avoided by estimating net instead of gross financing proportions the degree of consolidation of accounts reciprocal arrangements between borrowers and lenders and compensating deposit requirements on borrowers no longer distort financing patterns corrections for inflation are provided by employing flow rather than stock figures and using own aggregation procedures to derive stock measures significant variations in financing emerge these are not readily explained by traditional descriptions of corporate finance in particular taxation as an alternative the paper suggests that relationships between borrowers and lenders establish forms of commitment that are conducive to the provision of long term finance the separation between investment and finance which has been the starting point of corporate finance theory is untenable in a multiperiod context in which terms of finance define future allocation of control

urbanization mortality and fertility in malthusian england the modern world is the product of two momen tous changes the industrial revolution of 1800 which brought sustained efficiency advances in economies and the demographic transition of 1900 which channeled those efficiency advances mainly into increased income per capita instead of increases in population how these revolutions were connected has been a persistent unsolved puzzle in the history of growth the demographic transition was achieved without any improve ment in contraceptive technologies from those of 1800 and earlier it was a possibility for all preindustrial societies why did it occur only after the industrial revolution the key component of the malthusian econ

innis lecture environmental crises past present and future environmental crises are distinguished by rapid and largely unexpected changes in environmental quality that are difficult if not impossible to reverse examples would be major extinctions and significant degradations of an ecosystem i argue there are three preconditions for crisis failures in governance an ecological system exhibiting a tipping point and an economy environment interaction with positive feedbacks i develop a simple model to illustrate how a crisis may arise and draw on our knowledge of past and present crises to highlight the mechanisms involved i then speculate as to whether climate change is indeed a crisis in the making les crises environnementales sont caracterisees par des changements rapides et largement non anticipes dans la qualite de l environnement qui sont difficiles sinon impossibles a renverser des exemples pourraient etre des extinctions d especes et des degradations significatives d un ecosysteme l auteur suggere qu il faut trois conditions pour qu il y ait crise faillites de gouvernance un systeme ecologique au point de bascule et une interface environnement economie riche de retroactions positives l auteur developpe un modele simple pour illustrer comment une crise peut emerger et s appuie sur la connaissance des crises passees et presentes pour souligner les mecanismes en jeu on specule en fin de texte sur la question a savoir si le changement climatique est une crise en train de prendre

financial systems financing constraints and investment empirical analysis of oecd countries this paper investigates the influence of cash flow on corporate investment in 11 oecd countries we find that the sensitivity of investment levels to internally available funds differs significantly across countries and is lower in countries with predominantly close bank firm relationships than in countries with predominantly arm s length bank firm relationships at the same time we find no relationship of the levels of financial constraints to indicators of overall financial development our results are consistent with the view that information and incentive problems in the capital market have important effects on corporate investment and that close bank firm relationships can reduce these problems and thus improve the access of firms to external finance

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

unplanned purchases and retail competition i propose a framework in which consumers have biased beliefs about their future purchase probabilities leading them to make unplanned purchases us ing this framework i examine the phenomenon of below cost pricing and the welfare eects of banning it when the market is covered a ban on below cost pricing raises social surplus although consumers need not gain they are only guaranteed to ben et if the market is perfectly competitive when the market is not covered a ban always hurts at least some consumers also there is a pro competitive justica tion for the observation that larger rms sometimes charge below cost on the core product lines of smaller rms consumer bias is crucial for this justication multi product retailers sometimes sell certain products beneath cost with the hope of at tracting additional customers who will also buy other higher margin items this practice often referred to as loss leading is controversial with below cost pricing having been banned in a number of countries including belgium germany france and ireland and in approximately half of all us states 1 many us cities also have such prohibitions in this article i examine the welfare consequences of prohibitions on below cost pricing in a market where multi product retailers compete for boundedly rational consumers who practice one stop shopping that is visit at most one store when rivals are symmetric and the market is covered so that all consumers shop a ban on loss leading raises social surplus but when the market is not covered a ban presents a social welfare tradeo fewer consumers choose to shop although those who do generate higher levels of social surplus perhaps surprisingly for those consumers who shop both before and after a ban a ban is guaranteed to make them better o if the market is perfectly competitive but otherwise may harm them taken together these results indicate that it is simplistic to argue that by limiting the scope of competition below cost pricing bans must hurt consumers and society but i also assess below cost pricing laws in the presence of asymmetric competition as when a large rm with a full product line competes against a small rm with a limited product

towards de financialisation the role of the state understanding the nature of state financialisation is crucial to ensure de financialisation efforts are successful therefore this article provides a structured overview of the emerging literature on financialisation and the state we define financialisation of the state broadly as the changed relationship between the state understood as sovereign with duties and accountable towards its citizens and financial markets and practices in ways that can diminish those duties and reduce accountability we then argue that there are four ways in which financialisation works in and through public institutions and policies adoption of financial logics advancing financial innovation embracing financial accumulation strategies and directly financialising the lives of their citizens organising our review around the two main policy fields of fiscal and monetary policy four definitions of financialisation in the context of public policy and institutions emerge when dealing with public expenditure on social provisions financialisation most often refers to the transformation of public services into the basis for actively traded financial assets in the context of public revenue financialisation describes the process of creating and deepening secondary markets for public debt with the state turning into a financial market player finally in the realm of monetary policy financial deregulation is perceived to have paved the way for financialisation while inflation targeting and the encouragement or outright pursuit of market based short term liquidity management among financial institutions constitute financialised policies

collateral loan quality and bank risk abstract most commercial loans are made on a secured basis yet little is known about the relationship between collateral and credit risk several theoretical studies find that when borrowers have private information about risk the lowest risk borrowers tend to pledge collateral in contrast conventional wisdom holds that when risk is observable the highest risk borrowers tend to pledge collateral an additional issue is whether secured loans as opposed to secured borrowers tend to be safer or riskier than unsecured loans empirical evidence presented here strongly suggests that collateral is most often associated with riskier borrowers riskier loans and riskier banks

are german banks different in recent years there has been a vigorous revival of the long standing debate about the uniqueness of german banks to date little consensus has been reached while some see few differences between the role of banks in germany and in other countries others claim that universal banks equity shareholdings in and nomination of representatives to the boards of nonfinancial firms are the key institutional features driving the rest of the german model of long term investment in high quality internationally competitive manufacturing this article argues that the uniqueness of the german banking system lies 1 in its unusually high capacity to provide industrial finance in the form of long term debt capital and 2 in its avoidance of the speculative boom credit crunch cycle experienced by almost every other advanced industrialized country in the 1980s and early 1990s these two key characteristics are attributable to a regulatory framework which involves strict prudential regulation access to long term refinancing sources and a federalist form of corporatism furthermore the behavior of german banks must be analyzed within a broader institutional system of economic governance which includes corporatist labor market institutions and a relatively large and modern sme sector

global population growth technology and malthusian constraints a quantitative growth theoretic perspective we structurally estimate a two sector schumpeterian growth model with endogenous population and finite land reserves to study the long run evolution of global population technological progress and the demand for food the estimated model closely replicates trajectories for world population gdp sectoral productivity growth and crop land area from 1960 to 2010 projections from 2010 onwards show a slowdown of technological progress and because it is a key determinant of fertility costs significant population growth by 2100 global population reaches 12 4 billion and agricultural production doubles but the land constraint does not bind because of capital investment and technological progress

the effectiveness of bank governance reforms in the wake of the financial crisis a stakeholder approach this study examines the impact of bank corporate governance reforms in the wake of the financial crisis these reforms correspond to criticism of shareholder focused agency based corporate governance practices and a renewed focus on the stakeholder impact of corporate governance lapses in the financial sector this study differs from previous studies of corporate governance in the financial sector in using performance indicators that proxy the interests of customers and the community drawing on data from 134 countries over an eight year period from 2004 to 2011 we find that the post crisis corporate governance reforms in the banking sector appear to be effective in promoting greater bank attention to non shareholder stakeholders interests this study provides a means to conceptualize measures of bank performance from a stakeholder perspective in order to test emerging ideas about governance effectiveness in the financial sector

capital market information and industrial performance the role of west german banks in orthodox theory external capital markets play a dual role supplying various forms of investment finance and disciplining firms which are inefficient or fail to pursue profit goals an extensive literature speaks of the efficiency of external capital markets meaning that firms can make production investment decisions and investors can choose among the securities that represent ownership of firms activities under the assumption that security prices at any time fully reflect all available information fama i970 1 however this concept of efficiency is purely technical it depends critically on what information is available and we know there are problems of appropriability and failure in information markets deriving ultimately from certain peculiarities of information as a commodity arrow i962 thus another growing literature focusses on problems of achieving equilibrium in markets where agents are imperfectly or asymmetrically informed amongst other things this literature shows that informational failures of the kind in question can lead to capital rationing in loan and credit markets and the use of strict collateral requirements as screening devices jaffee and russell i976 stiglitz and weiss i98i cable and turner i983 these may then be expected to affect the efficiency of individual firms and the system as a whole capital shortage implies that some profitable investment opportunities are foregone and production choices may also be distorted by the need to satisfy additional financial constraints contrived to elicit signals of creditworthiness of the firms undertaking them similarly the disciplining role of external capital markets can be impaired by information impactedness williamson i975 and the costs of mobilising and giving effect to shareholders preferences thus in the principal agent framework developed by jensen and meckling i976 and fama i980 the degree of constraint on managerial pursuit of non profit goals as posited by managerial theorists depends on the transactions costs of stock owner intervention the result is an optimal degree of departure from cost minimising profit maximising behaviour determined by the level of transactions costs institutional factors which affect the way information is distributed amongst agents can therefore have an important bearing on allocative and technical efficiency and the west german system of industrial finance provides an in

a note on the effect of cost changes on prices in a recent article in this journal sumner 1981 took an ingenious approach to estimating the level of monopoly power in the cigarette industry he noted that differences in marginal costs exist in the industry due to varying levels of state taxes the sales prices established will satisfy the equation p i liq l mr mc where p price and q the elasticity of demand for the product in question if elasticity is a constant observing the change in marginal cost and the change in price enables one to infer the elasticity of demand perceived by the firm elasticity could then be used as a proxy for the firm s market power this technique turns out to be of very limited applicability however because it is extremely sensitive to the functional form assumed for the demand curve consider the general problem of a firm facing constant marginal costs of c in maximizing profits the firm solves

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

fixed versus variable rate loans this paper discusses the nature of fixed and variable loan contracts and derives the conditions which determine the optimal quantity of each the results indicate that the payoff functions are quite different and dependent upon the project financed the appropriate conditions for the allocation of loan terms to a set of borrowers are then developed finally the analysis derives the optimal portfolio frontier and risk return trade off for the banking firm here it is demonstrated that the solution is unlikely to be at a point of zero interest rate risk

from smith to schumpeter a theory of take off and convergence to sustained growth abstract this paper proposes a theory of the emergence of modern schumpeterian growth that focuses on the within industry forces that regulate the response of firms and entrepreneurs to smithian market expansion and thus identifies an amplification mechanism that the literature has neglected because it solves the model in closed form the paper provides analytical insight on the forces that drive the economy s phase transition and the associated qualitative transformation of industrial activity the resulting s shaped path of gdp per capita replicates the key feature of the data an accelerating phase followed by a deceleration with convergence to a stationary growth rate the model also yields predictions for grand ratios like consumption gdp profits gdp and the distribution of income across factors of production

the return of malthus resource constraints in an era of declining population growth abstract will natural resources comprise an important constraint on economic development in the 21st century we use a macroeconomic model mava to demonstrate the precise nature of this problem first we employ the model to demonstrate that resource constraints do not substantially limit future economic growth under parametric conditions prevailing in the period 1960 2010 second we examine the sorts of changed conditions that are unavoidable in the coming century and demonstrate that declining population growth and the increased dependency rates this implies is likely to result in increasingly important resource constraints ironically it is the decline in population growth rates and not the opposite that may occasion the return of malthusian constraints 1

capital markets and corporate control a study of france germany and the uk this paper examines the relation between capital markets and corporate control in france germany and the uk it compares levels of takeover activity in the three countries and describes the degree to which takeovers are associated with changes in corporate control the paper examines the influence of regulation on forms of corporate ownership and control it compares regulation pertaining to the rights of employees managers and shareholders in the three countries and finds that regulatory rules are related to patterns of ownership and control changes the paper suggests that a fundamental objective of control changes is to correct managerial failure and that takeovers are suited to the correction of particular classes of managerial failure that cannot be readily rectified by contracts thus markets with low levels of takeovers may suffer from a low level of correction of managerial failure however by changing ownership takeovers may give rise to an inability of owners to commit themselves to the long term interests of managers and employees as a consequence financial systems with active takeover markets may be associated with inadequate investment in firm specific assets and an unduly short term investment horizon there is therefore a tradeoff between alternative methods of correcting managerial failure this is particularly important for european countries facing an extension of uk takeover activity to the continent the process is being encouraged by the european commission which aims to harmonize regulation on a uk style takeover code harmonization of regulation may have far reaching consequences for the structure of different countries capital markets and in view of the tradeoff is of uncertain merit

banks and the false dichotomy in the comparative political economy of finance the wide ranging varieties of capitalism literature rests on a particular conception of banks and banking that the authors argue no longer reflects the reality of modern financial systems they take advantage of the greater information regarding bank activities revealed by the financial crisis to consider the reality across eight of the world s largest developed economies of the financial power of banks to act as bulwarks against market forces this article offers a marketbased banking framework that transcends the bank based capital market based dichotomy that dominates comparative political economy s consideration of financial systems and argues that future cpe research should focus on the activities of banks by demonstrating how market based banking increases market influences on the supply of credit the authors highlight an underappreciated source of financial market pressure on nonfinancial companies nfc s that can have a potential impact across the range of issues that the varieties of capitalism voc literature has seen as differentiating national systems this approach has implications in areas such as labor welfare innovation and flexibility

price competition in multimarket duopolies in this article we analyze the pricing strategies offirms that compete for the demand of an assortment of goods in a complete information static framework in particular we model the competition between two symmetric firms in a market that consists of two types of consumers each of which may buy one unit of both goods sold by the two firms we show that all nash equilibria are such that neither firm charges the same price for both goods interestingly under certain conditions thefirms jointly price discriminate between the two types of consumers and may even achieve the same level of profits as if they maximized joint profits for another set of conditions the unique equilibrium is such that the price for one of the goods and the price for the bundle are the same as the price of the good in a standard hotelling model with one good finally we show that if these equilibria exist both firms prefer to sell both goods rather than specialize in either one of them these results are a direct consequence of the interplay between the multimarket rivalry and the existence of more than one market segment as modelled in this article

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

blocks liquidity and corporate control the paper develops a simple model of corporate ownership structure in which costs and benefits of ownership concentration are analyzed the model cornpares the liquidity benefits obtained through dispersed corporate ownership with the benefits from efficient management control achieved by some degree of ownership concentration the paper reexamines the free rider problem in corporate control in the presence of liquidity trading derives predictions for the trade and pricing of blocks and provides criteria for the optimal choice of ownership structure the recent incomplete contracting approach in corporate finance has considerably improved our understanding of how small firms determine their capital structure the basic setting considered in this line of research is one where a founder manager seeks funding from one or several financiers the main premise is that the founder manager in her dealings with the financiers is primarily concerned with maintaining her private benefits of control for small firms these are often quite large relative to the financial returns thus for a small firm the problem of determining the financial structure often reduces to the problem of how to obtain fundingr while giving away as little control as possible to the financiers of course most financiers insist on some form of protection so that the final compromise reached in most financial contracts for small firms is one resembling a debt contract or a venture capital contract which protects the founder manager s control as long as the firm is performing adequately this perspective for small firms does not extend naturally to large firms because the private benefits of control of the managers for large firms are likely to be small relative to the firm s monetary returns so that protection of these benefits is not an overriding consideration moreover large firms

price discrimination in grocery trade evidence from italy this paper investigates the determinants of price dispersion between staple and non staple goods in grocery retailing as the result of pricing decisions by multiproduct firms theoretical predictions about the nature of supermarkets pricing behaviour are compared and tested empirically using disaggregated data from the italian grocery trade over the period 1990 1992 the empirical results provide evidence for the existence in all types of retail organization of the form of price discrimination suggested by bliss particularly for specialist shops the results are consistent with discrimination due to the exploitation of consumers switching costs

investment internal funds and public banking in germany abstract previous studies supposed that low investment cash flow sensitivities of german firms may be caused by a dominance of public banking the paper addresses this assumption and applies a unique accounting dataset of german firms results from a dynamic version of the sales accelerator model show that the dependence of investment spending on internal funds does not significantly differ among firms attached to savings banks cooperative banks or commercial banks thus the importance of the public banking sector in germany may not explain the rather low dependence of german firms on internal funds and public ownership of banks does not seem to be important for reducing financing constraints

fragmented duopoly a conceptual and empirical investigation where wireline distribution networks compete each network typically has some customers over which it competes and others for which it is the sole provider this paper conceptually and empirically assesses the effects of such competition on market prices demand and service quality for cable television service the results suggest that the effectiveness of competition in lowering prices is contingent on the degree of system overlap in particular in equilibrium an increase in overlap substantially reduces prices the conceptual model of fragmented duopoly developed in the paper may be useful in analyzing emerging competition in other network distribution industries

the determinants of subsistence income in a malthusian world abstract this study constructs a simple two sector malthusian model with agriculture and industry and uses it to identify the determinants of income in a malthusian equilibrium we make standard assumptions about preferences and technologies but in contrast to existing studies we assume that children and other consumption goods are gross substitutes consistent with the conventional malthusian model the present theory shows that productivity growth in agriculture has no effect on equilibrium income more importantly we also show that equilibrium income varies not just with the death rate as has recently been demonstrated in the literature but also with the level of productivity in the industrial sector an empirical analysis using data for pre industrial england lends support to both hypotheses

causes and effects of financing constraints at the firm level this paper focuses on the empirical assessment of determinants and effects of financing constraints at the firm level using a standard model of credit rationing based on asymmetric information firm age and size are found to be factors which should influence the probability of financing constraints improving business conditions strengthen the degree of informational asymmetry a unique panel of firm data for germany including direct information on financing constraints is used for the econometric analysis firms size and improving business conditions are found to have a significant effect furthermore a significant impact on investment and r d expenditures cannot be rejected

confronting the food energy environment trilemma global land use in the long run economic agronomic and biophysical drivers affect global land use so all three influences need to be considered in evaluating economically optimal allocations of the world s land resources a dynamic forward looking optimization framework applied over the course of the coming century shows that although some deforestation is optimal in the near term in the absence of climate change regulation the desirability of further deforestation is eliminated by mid century although adverse productivity shocks from climate change have a modest effect on global land use such shocks combined with rapid growth in energy prices lead to significant deforestation and higher greenhouse gas emissions than in the baseline imposition of a global greenhouse gas emissions constraint further heightens the competition for land as fertilizer use declines and land based mitigation strategies expand however anticipation of the constraint largely dilutes its environmental effectiveness as deforestation accelerates prior to imposition of the target

what makes german banks different the past few years have seen a revival in the academic debate over the economic functions of german banks this paper takes the position that large non financial firms have become highly autonomous of the banks and the corporate governance role of banks while still important is much less significant than widely presumed german banks however do fulfill certain economic functions to a greater degree and in a different manner than banks in other countries these bank functions of long term commercial financing comprehensive management consulting and supporting diversified quality production strategies are made possible by the institutional character of the banking system itself and the institutional context in which it operates a complex web of government laws regulations and government financial aid combine with bank group competition to create an extensive and successful financial support system for german smes this system faces various adjustment challenges from international financial market integration to eu regulatory harmonization but it has thus far managed to adapt while sustaining its core functions

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

institutional change in contemporary capitalism coordinated financial systems since 1990 what happens when the unstoppable force of liberalization collides with the immovable object of national financial institutions in the advanced industrial democracies to answer this question and evaluate alternative mechanisms to explain institutional change this article examines the cases of the three large european economies with concentrated share ownership france germany and italy in the formal legal mechanism interest coalitions adopt new laws leading actors to deviate from formerly stable patterns of behavior in shareholding in the joint belief shift mechanism collective actors use a triggering event to jointly reevaluate their views of how the world works and thus how their interests can best be pursued using the metric of patient capital this article shows that institutional change took place in france but not in germany or italy despite the fact that germany and italy experienced significant regulatory change in the area of corporate governance while france did not this evidence fits joint belief shift and is inconsistent with the formal legal mechanism it is likely that the importance of the two mechanisms of institutional change depends on the degree of strategic interdependence among institutional actors where it is high the joint belief shift mechanism is likely to precipitate change and where it is low the formal legal mechanism is likely to precipitate change

the simple analytics of competitive equilibrium with multiproduct firms the familiar model of free entry competitive equilibrium has long played a central role in applied analysis of product markets among its stylizations is the restriction that firms produce a single output for many situations however it is necessary to relax this assumption while models permitting multiproduct firms exist so far there is no framework that begins to rival the singleproduct analysis in terms of the ease with which it may be manipulated and extended to deal with specific applications this paper develops such a model specifically in section i a two good model is set out that parallels the classic singleproduct analysis very closely the sole difference is that alongside the single product specialized technologies which would usually be permitted a multiproduct diversified technology is available the model s competitive equilibrium is then characterized and it is shown that this equilibrium may take one of three forms obviously if diversification offers large cost advantages no specialized firms can operate in equilibrium and conversely if there are sizable disadvantages the only other possibility is that diversified firms and exactly one type of specialized firm operate contiguously section ii shows that the model is easy to manipulate extends straightforwardly and simple as it is offers some new propositions this demonstration involves examining the predictions the model offers in both its most general form and several extensions to illustrate basic features of equilibrium in the standard single product environment are that price is determined by the cost of production with all operating firms producing the same level of output also demand variation has no effect on either price or the actions of these firms in contrast in any equilibrium centre for decision sciences and econometrics social science centre university of western ontario london ontario n6a 5c2 comments from david donaldson ignatius horstmann boyan jovanovic peter lloyd michael parkin charles plott edward prescott sherwin rosen christopher robinson hugo sonnenschein and the referees are gratefully acknowledged research allowing multiproduct firms comes in a variety of forms early work by roy g d allen 1938 john hicks 1939 paul samuelson 1947 as well as more recent efforts by keith laitinen 1980 analyzed in detail the isolated behavior of firms having access to an m input n output production technology also the arrow debreu mckenzie general equilibrium model allows each producer a distinct production set so that firms might choose to produce many goods more recently the contestability literature surveyed by elizabeth bailey and ann friedlander 1982 analyzes a setting in which firms produce more than one good of all the contestability material the work of william baumol et al 1982 ch 9 is the most closely related to the present analysis therein firms are permitted to choose a set of goods to produce and a condition is provided that is necessary and sufficient for the otherwise exogenously imposed symmetric outcome to be supported in equilibrium that this condition is indeed a relevant restriction is shown by means of a two good numerical example in which the condition fails and the equilibrium is asymmetric finally there is what might be termed the where there is sawdust there may be pressed logs approach dating back at least to alfred marshall 1920 pp 321 22 in which joint products are the result of unstructured technological complementarities

a model of add on pricing this paper examines competitive price discrimination with horizontal and vertical taste differences consumers with higher valuations for quality are assumed to have stronger brand preferences two models are considered a standard competitive price discrimination model in which consumers observe all prices and an add on pricing game in which add on prices are naturally unobserved and firms may advertise a base good at a low price in hopes of selling add ons at high unadvertised prices in the standard game price discrimination is self reinforcing the model sometimes has both equilibria in which the firms practice price discrimination and equilibria in which they do not the analysis of the add on pricing game focuses on the chicago school argument that profits earned on add ons will be competed away via lower prices for advertised goods a conclusion is that add on practices can raise equilibrium profits by creating an adverse selection problem that makes price cutting unappealing although profitable when jointly adopted using add on pricing is not individually rational in a simple extension with endogenous advertising practices and costless advertising several models that could account for add on pricing are discussed

continuous cross subsidies and quantity restrictions this article provides a model of loss leader pricing and quantity restrictions for a competitive multiproduct industry when individual consumers have continuous and independent demands for the set of available goods utilizing a generalization of the model proposed by bliss 1988 we demonstrate the importance of consumer heterogeneity for the existence of cross subsidies when there is complete information and individual consumers have smooth downward sloping demands continuous cross subsidies arising from consumer heterogeneity are also shown to exist in hotelling models our use of continuous rather than unit demands allows us to analyze issues related to welfare which in turn exposes a strong incentive for the firm to place binding quantity restrictions on consumers we also show how the presence of quantity restrictions can be used to distinguish between continuous cross subsidies arising from heterogeneous consumers versus those arising from classic demand complementarity with homogeneous agents

population growth and natural resource scarcity long run development under seemingly unfavorable conditions in this paper i consider an economy that is constrained by the use of natural resources and driven by knowledge accumulation resources are essential inputs in all sectors i show that population growth and poor input substitution are not detrimental but on the contrary are even necessary to obtain a sustainable consumption level i find a general rule to define the conditions for a constant innovation rate the rule does not apply to capital but to labor growth which is the crucial input in research furthermore the rule relates to the sectoral structure of the economy and to demographic transition the results continue to hold with a backstop technology and are extended for the case of minimum resource constraints

supermarket competition the case of every day low pricing every day low pricing edlp strategy has proved to be a successful innovation resulting in higher profits to supermarkets adopting it in competition with promotional pricing promo conventional wisdom attributes this success either to lower costs or to edlp better serving time constrained consumers while discouraging cherry pickers who seek promotions however it is unclear that such cost savings are being fully realized since edlp stores also engage in price promotions also continued existence of promo stores means that costs are not the only factor and they compete effectively without relying just on the cherry pickers furthermore experimental evidence suggests that a supermarket cannot obtain higher profits by merely setting constant low prices leading to the question exactly what makes edlp successful this question is of particular relevance to both academics and practitioners who have been intrigued by the success of this retailing strategy more generally the retailing issues addressed in this paper the economic analysis of competition and the empirical findings should be of interest to the broader community of researchers and managers we investigate the factors contributing to edlp s success by analyzing the competition between supermarkets through a game theoretic analysis of a market consisting of both time constrained consumers and cherry pickers key features of our model are consumers shop and purchase a basket of goods based on price announcements by stores and rational expectations of unannounced prices stores carry more than one good and compete through prices service convenience and appropriate communication strategies and no exogenous cost asymmetries we derive the conditions under which retailers choosing different strategies edlp and promo is a perfect nash equilibrium our analysis shows that the edlp store s offering of constant every day low prices is an equilibrium outcome endogenously determined successful implementation of the edlp strategy involves communication of relative basket prices implying that merely setting constant low prices is not viable we further demonstrate that while time constrained consumers find every day low prices at edlp attractive and cherry pickers the promotions at promo clientele effects are in fact more complicated specifically in equilibrium the promo store offers a higher service level as desired by time constrained consumers and the edlp store a lower service level in keeping with the needs of cherry pickers this choice of service by the two stores results in a cleaner segmentation of the market the higher relative basket price and service at the promo store results in a larger base of time constrained consumers to shop at the promo store and a larger base of cherry pickers to shop at the edlp store even though some cherry pickers continue to visit the promo store to avail of the price specials in this way our results contradict the conventional wisdom on edlp strategy as being mainly geared towards time constrained consumers finally industry profits are higher in an edlp promo equilibrium than when stores adopt identical strategies our analysis and results also offer a more complete characterization of the edlp and promo strategies indeed we show that edlp and promo strategies are positioning strategies rather than merely pricing strategies with different elements price promotions service and communications while the edlp store uses basket prices to attract both segments the promo store uses service and price specials to compete in the time constrained and cherry picking segment respectively given these different approaches of the two stores the communication strategies of the edlp and the promo stores emphasize these differences as well in this way we show as suggested by corstjens and corstjens 1994 that positioning in a retail context involves developing multidimensional strategies appealing to all segments while each element of the strategy may focus on a different consumer segment this is in contrast to the traditional view of segmentation in which different products in a product line for example are designed to appeal to different segments we complete the analysis by examining the data from the trade press and a survey conducted in a major metropolitan area these data while limited in scope support our theoretical results

optimal departures from marginal cost pricing focuses on departures from marginal cost pricing optimal allocation or resources level of tax revenue that will be collected by the government theorems developed for resource allocation ebsco

agricultural research spending must increase in light of future uncertainties abstract agricultural productivity depends critically on investments in research and development r d but there is a long lag in this response failing to invest today in improvements of agricultural productivity cannot be simply corrected a few decades later if the world finds itself short of food at that point in time this fundamental irreversibility is particularly problematic in light of uncertain future population income and climate change as portrayed in the ipcc s shared socio economic pathways ssps this paper finds the optimal path of agricultural r d spending over the 21st century for each ssp along with valuation of those regrets associated with investment decisions later revealed to be in error the maximum regret is minimized to find a robust optimal r d pathway that factors in key uncertainties and the lag in productivity response to r d results indicate that the whole of uncertainty s impact on r d is greater than the sum of its individual parts uncertainty in future population has the dominant impact on the optimal r d expenditure path the robust solution suggests that the optimal r d spending strategy is very close to the one that will increase agricultural productivity fast enough to feed the world under the most populous scenario it also suggests that society should accelerate r d spending up to mid century thereafter moderating this growth rate

malthus to solow a unified growth theory is developed that accounts for the roughly constant living standards displayed by world economies prior to 1800 as well as the growing living standards exhibited by modern industrial economies our theory also explains the industrial revolution which is the transition from an era when per capita incomes are stagnant to one with sustained growth the authors use a standard growth model with several technologies the first denoted the malthus technology requires land labor and reproducible capital as inputs the second denoted the solow technology does not require land the authors show that in the early stages of development only the malthus technology is used and due to population growth living standards are stagnant despite technological progress eventually technological progress causes the solow technology to become profitable and both technologies are employed at this point living standards improve since population growth has less influence on per capita income growth in the limit the economy behaves like a standard solow growth model excerpt

a structural equations analysis of the impact of price promotions on store performance guided by past research conventional wisdom in the retailing area and microeconomic theory the authors develop a series of hypotheses about the effects of loss leaders in store price specials