supply chain competition with multiple manufacturers and retailers we study competition in a supply chain where multiple manufacturers compete in quantities to supply a set of products to multiple risk averse retailers who compete in quantities to satisfy the uncertain consumer demand for the symmetric supply chain we give closed form expressions for the unique equilibrium we find that provided there is a sufficiently large number of manufacturers and retailers the supply chain efficiency the ratio of the aggregate utility in the decentralized and centralized chains can be raised to 1 by inducing the right degree of retailer differentiation also risk aversion results in triple marginalization retailers require a strictly positive margin to distribute even when they are perfectly competitive because otherwise they are unwilling to undertake the risk associated with the uncertainty in demand for the asymmetric supply chain we show how numerical optimization can be used to compute the equilibria and we find that the supply chain efficiency may drop sharply with the asymmetry of either manufacturers or retailers we also find that the introduction of asymmetric product assortment reduces the degree of competition among retailers and thus has an effect similar to that of reducing the number of retailers we show that unlike in the symmetric chain the asymmetric chain efficiency depends on product differentiation and risk aversion because of the interaction between these features and the asymmetry of manufacturers and retailers

large deviations theorems for optimal investment problems with large portfolios the thrust of this paper is to develop a new theoretical framework based on large deviations theory for the problem of optimal asset allocation in large portfolios this problem is apart from being theoretically interesting also of practical relevance examples include inter alia hedge funds where optimal strategies involve a large number of assets in particular we also prove the upper bound of the shortfall probability or the risk bound for the case where there is a finite number of assets in the two assets scenario the effects of two types of asymmetries i e asymmetry in the portfolio return distribution and asymmetric dependence among assets on optimal portfolios and risk bounds are investigated we calibrate our method with international equity data in sum both a theoretical analysis of the method and an empirical application indicate the feasibility and the significance of our approach

cost heterogeneity industry concentration and strategic trade policies abstract we show that if domestic firms do not have identical unit costs then the interplay between the herfindahl index of concentration and the elasticity of the slope of the demand curve is of major importance in the determination of optimal trade policies in some cases the direction of optimal policy is reversed

exports inflation and growth abstract this article seeks to identify some of the main determinants of exports and economic growth in cross sectional data from the world bank covering 160 countries for 1985 94 first the linkages between the propensity to export and population per capita income agriculture primary exports and inflation are studied by statistical methods then the relationship between economic growth and some of the above mentioned determinants of exports as well as investment are scrutinized the same way the main conclusion is that in the period under review high inflation and an abundance of natural resources tended to be associated with low exports and slow growth

inflation growth and external debt a view of the landscape this paper reconsiders the relationship between inflation economic growth and external debt and discusses various channels through which a increased inflation tends to reduce growth and raise foreign indebtedness over time and b declining growth tends to amplify both inflation and debt based on a simple model of the simultaneous determination of inflation and growth a non parametric statistical comparison of the growth record and external indebtedness of high and low inflation economies reveals significantly slower growth and greater debts in the high inflation economies since 1973 the observed growth differential indicates that the real costs of inflation over time may be high for individual countries as well as for the world economy as a whole this abstract was borrowed from another version of this item

the paradox of plenty a meta analysis since sachs and warner s seminal article in 1995 numerous studies have addressed the link between natural resources and economic growth although the resource curse effect was commonly accepted at first many articles have challenged its existence and the results found in the literature are ambiguous in this paper we aim to quantitatively review this literature in order to i identify the sources of heterogeneity and ii assess the impact of natural resources on economic growth a meta analysis is performed on 69 empirical studies on the resource curse totaling 1 419 estimates our findings show that i only developing countries suffer from the resource curse although it is soft ii the way natural resources are taken into account is crucial to understand the heterogeneity found in the literature iii the negative impact of the volatility of the terms of trade on growth should be qualified an additional mra performed on indirect effects size also indicate that when institutions are at their best level the resource curse disappears and may be turned into a blessing

a portfolio performance index fund managers may sensibly be averse to earning a time averaged portfolio return that is less than the average return of some designated benchmark when a portfolio is expected to earn a higher average return than the benchmark return the probability that it will not approaches zero asymptotically at a computable exponential decay rate the probability decay rate is thus proposed here as a new portfolio performance index in the widely analyzed special case in which returns are normally distributed the new performance index maximizing portfolio is the same as the popular sharpe ratio maximizing portfolio the results of the two approaches generally differ however because of nonnormal levels of skewness and or kurtosis in the portfolio attributable to large asymmetrical economic shocks or investments in options and other derivative securities an illustrative example will show that the new index is easy to implement and consistent with empirical evidence on portfolio choice favors investments with

stabilization and growth in transition economies the early experience this paper analyzes the growth and stabilization experience in 26 transition economies in eastern europe the former soviet union and mongolia for the period 1989 1994 inflation rates have declined significantly in most countries following an inflation stabilization program growth resumes after stabilization occurs typically with a lag of about two years reducing inflation thus appears to be a precondition for growth an econometric analysis of the short run determinants of inflation and growth illustrates the key roles of fixed exchange rates improved fiscal balances and structural reforms in spurring growth and lowering inflation and confirms that inflation stabilization programs have been beneficial for growth even after controlling for structural reforms

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

a stochastic multiple leader stackelberg model analysis computation and application we study an oligopoly consisting of m leaders and n followers that supply a homogeneous product or service noncooperatively leaders choose their supply levels first knowing the demand function only in distribution followers make their decisions after observing the leader supply levels and the realized demand function we term the resulting equilibrium a stochastic multiple leader stackelberg nash cournot sms equilibrium we show the existence and uniqueness of sms equilibrium under mild assumptions we also propose a computational approach to find the equilibrium based on the sample average approximation method and analyze its rate of convergence finally we apply this framework to model competition in the telecommunication industry

output gains from economic stabilization by driving a wedge between the marginal returns to real and financial capital inflation distorts production the elimination of this distortion increases both the level and rate of growth of output first increased price stability improves the utilization of capital and this increases the full employment level of output in the long run even though output decreases initially second the static output gain from stabilization is captured in a simple formula in which the gain is approximately proportional to the square of the original inflation distortion third successful stabilization increases the rate of growth of output per head and not only its level in the presence of constant returns to capital in a broad sense fourth substitution of plausible parameter estimates into the simple formulae reflecting the gains from stabilization indicate that the static and dynamic output gains can be substantial

consumption externality and yield uncertainty in the influenza vaccine supply chain interventions in demand and supply sides we study the impact of yield uncertainty supply side and self interested consumers demand side on the inefficiency in the influenza vaccine supply chain previous economic studies focusing on demand side find that the equilibrium demand is always less than the socially optimal demand because self interested individuals do not internalize the social benefit of protecting others via reduced infectiousness positive externality in contrast we show that the equilibrium demand can be greater than the socially optimal demand after accounting for the limited supply due to yield uncertainty and manufacturer s incentives the main driver for this result is a second negative externality self interested individuals ignore that vaccinating people with high infection costs is more beneficial for the society when supply is limited we show that the extent of the negative externality can be reduced through more efficient and less uncertain allocation mechanisms to investigate the relative effectiveness of government interventions on supply and demand sides under various demand and supply characteristics we construct two partially centralized scenarios where the social planner i e government intervenes either on the demand side or the supply side but not both we conduct an extensive numerical analysis this paper was accepted by yossi aviv operations management

natural resources and economic growth a meta analysis summary an important question in development studies is how natural resources richness affects long term economic growth no consensus answer however has yet emerged with approximately 40 of empirical papers finding a negative effect 40 finding no effect and 20 finding a positive effect does the literature taken together imply the existence of the so called natural resource curse in a quantitative survey of 605 estimates reported in 43 studies we find that overall support for the resource curse hypothesis is weak when potential publication bias and method heterogeneity are taken into account our results also suggest that four aspects of study design are especially effective in explaining the differences in results across studies 1 controlling for institutional quality 2 controlling for the level of investment activity 3 distinguishing between different types of natural resources and 4 differentiating between resource dependence and abundance

the impact of demand uncertainty on consumer subsidies for green technology adoption this paper studies government subsidies for green technology adoption while considering the manufacturing industry s response government subsidies offered directly to consumers impact the supplier s production and pricing decisions our analysis expands the current understanding of the price setting newsvendor model incorporating the external influence from the government who is now an additional player in the system we quantify how demand uncertainty impacts the various players government industry and consumers when designing policies we further show that for convex demand functions an increase in demand uncertainty leads to higher production quantities and lower prices resulting in lower profits for the supplier with this in mind one could expect consumer surplus to increase with uncertainty in fact we show that this is not always the case and that the uncertainty impact on consumer surplus depends on the trade off between lower prices and the possibility of underserving customers with h

potential performance and tests of portfolio efficiency abstract the potential performance of an asset set may be obtained by choosing the portfolio proportions to maximize the sharpe 1966 performance measure if a portfolio has a sharpe measure equivalent to the potential performance of the underlying set of assets then it is efficient multivariate statistical procedures for comparing potential performance and testing portfolio efficiency are developed and then evaluated using simulations two likelihood ratio statistics are then used to compare stock and bond indices against sets of 20 and 40 portfolios the procedures are also compared to the gibbons 1982 methodology for testing financial models

on equilibrium asset price processes in this article we derive necessary and sufficient conditions that must be satisfied by equilibrium asset price processes in apure exchange economy we examine a world in which asset prices follow a diffusion process asset markets are dynamically complete all investors maximize their state independent expected utility of consumption at some future date and investors have nonrandom exogenous income we show that it is necessary and suffcient that the coefficients of an equilibrium diffusion price process satisfy a partial differential equation and a boundary condition we also examine how the dynamics of asset prices are related to the shape of the representative investor s utility function through the boundary condition for example in a constant volatility economy the expected instantaneous return of the market portfolio is mean reverting if and only if the relative risk aversion of the representative investor is decreasing in terminal wealth

asset allocation without unobservable parameters some asset allocation advice for long term investors is based on maximization of expected utility most commonly used investor utilities require measurement of a risk aversion parameter appropriate to the particular investor but accurate assessment of this parameter is problematic at best maximization of expected utility is thus not only conceptually difficult for clients to understand but also difficult to implement other asset allocation advice is based on minimizing the probability of falling short of a particular investor s long term return target or of an investable benchmark this approach is easier to explain and implement but it has been criticized by advocates of expected utility these seemingly disparate criteria can be reconciled by measuring portfolio returns relative to the target or benchmark and then eliminating the usual assumption that the utility s risk aversion parameter is not also determined by maximization of expected utility financial advisors should not be persuaded by advo

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

ownership and growth this article suggests how state enterprises can be incorporated into the theoretical and empirical growth literature specifically it shows that if state enterprises are less efficient than private firms invest less employ less skilled labor and are less eager to adopt new technology then a large state enterprise sector tends to be associated with slow economic growth all else remaining the same the empirical evidence for 1978 92 indicates that through a mixture of these channels an increase in the share of state enterprises in employment by one standard deviation could reduce per capita growth by one to two percentage points a year from one country to another

exports from a remote developed region analysed by an inverse hyperbolic sine transformation of the gravity model picture a small open economy alone in the middle of the atlantic ocean and highly dependent on trade with nafta and the eu how important are these trading blocs to the country s exports how significant is the country s isolation and small size and how do these affect the export sectors typically the export volume is significantly impacted by the economic size of the exporting country but in this case it is not this suggests that the exports from small remote economies are driven by different factors than exports from large economies the data are analysed using a unique transformation of the gravity model by an inverse hyperbolic sine function allowing for accountancy of scattered exports

how much do distortions affect growth abstract this paper presents a simple endogenous growth model with two types of capital which can display sizeable long run growth effects of distortionary policies the model applies to many different types of distortions of relative prices common in developing countries such as differential taxes and tariffs black market exchange rates and price controls the model shows that a subsidy to one type of capital financed by a tax on another capital good lowers growth a measure of the variance of relative prices of investment goods across sectors has a negative and statistically significant effect on growth

short run subsidies and long run adoption of new health products evidence from a field experiment short run subsidies for health products are common in poor countries how do they affect long run adoption a common fear among development practitioners is that one off subsidies may negatively affect long run adoption through reference dependence people might anchor around the subsidized price and be unwilling to pay more for the product later but for experience goods one off subsidies could also boost long run adoption through learning this paper uses data from a two stage randomized pricing experiment in kenya to estimate the relative importance of these effects for a new improved antimalarial bed net reduced form estimates show that a one time subsidy has a positive impact on willingness to pay a year later inherit to separately identify the learning and anchoring effects we estimate a parsimonious experience good model estimation results show a large positive learning effect but no anchoring we black then discuss the types of products and the contexts inherit for which these results may apply

choice under uncertainty problems solved and unsolved ffifteen years ago the theory of choice under uncertainty could be considered one of the success stories of economic analysis it rested on solid axiomatic foundations it had seen important breakthroughs in the analytics of risk risk aversion and their applications to economic issues and it stood ready to provide the theoretical underpinnings for the newly emerging information revolution in economics 1 today choice under uncertainty is a field in flux the standard theory is being challenged on several grounds from both within and outside economics the nature of these challenges and of our profession s responses to them is the topic of this paper

wealth natural capital and sustainable development contrasting examples from botswana and namibia theoretical work has demonstrated that sustainable development requires non declining per capita wealth where wealth is defined to include produced natural human and social capital several studies have attempted to measure total national wealth or changes in wealth but have been seriously hampered by a lack of data especially for natural and human capital to address this problem the un and other international statistical agencies developed a standardized framework for environmental accounts the system of integrated environmental and economic accounts seea using the newly available asset accounts for natural capital national wealth accounts are constructed and used to assess the contrasting development paths of botswana and namibia botswana with an explicit policy of reinvestment of resource rents has roughly tripled per capita wealth and national income over the past two decades namibia with no explicit policy to use natural capita to build wealth has seen per capita wealth and income decline

on the effectiveness of uniform subsidies in increasing market consumption we study the problem faced by a central planner trying to increase the consumption of a good such as new malaria drugs in africa the central planner allocates subsidies to its producers subject to a budget constraint and endogenous market response the policy most commonly implemented in practical applications of this problem is uniform in the sense that it allocates the same per unit subsidy to every firm primarily because of its simplicity and perceived fairness surprisingly we identify sufficient conditions of the firms marginal costs such that uniform subsidies are optimal even if the firms efficiency levels are arbitrarily different moreover this insight is usually preserved even if the central planner is uncertain about the specific market conditions further in many cases uniform subsidies simultaneously attain the best social welfare solution additionally simulation results in relevant settings where uniform subsidies are not optimal suggest that they induce a nearly optimal market

subsidizing the distribution channel donor funding to improve the availability of malaria drugs in countries that bear the heaviest burden of malaria most patients seek medicine for the disease in the private sector because the availability and affordability of recommended malaria drugs provided by the private sector distribution channel is poor donors e g the global fund are devoting substantial resources to fund subsidies that encourage the channel to improve access to these drugs a key question for a donor is whether it should subsidize the purchases and or the sales of the private sector distribution channel we show that the donor should only subsidize purchases and should not subsidize sales we characterize the robustness of this result to four key assumptions the product s shelf life is long the retailer has flexibility in setting the price the retailer is the only level in the distribution channel and retailers are homogeneous this paper was accepted by martin lariviere operations management

natural resources and economic growth the role of investment is it possible that excessive reliance on natural resources affects saving and investment in a way that retards economic growth and thus in the long run the level of output per capita this paper reviews the literature explores the data and compares and contrasts the explanatory power and interplay of natural resources and civil liberties our proxy for institutional variables currently under scrutiny in the literature we propose that natural resource dependence may be viewed as an exogenous factor that impedes economic growth and investment as well as institutions even if we stress that natural resource abundance may be good for growth

the safety first expected utility model experimental evidence and economic implications abstract roy s roy a 1952 safety first and the holding of assets econometrica 20 3 431 449 safety first criterion advocates the minimization of the probability of outcomes below a certain disaster level this paper examines safety first theoretically and experimentally we find that safety first plays a crucial role in decision making inducing choices that cannot be explained by and even contradict risk aversion prospect theory and loss aversion in general yet safety first alone cannot explain individual choice therefore we propose an expected utility safety first eu sf model where decisions are made based on a weighted average of the safety first criterion and standard expected utility maximization we experimentally estimate these relative weights and discuss their economic implications