do japanese auto manufacturers behave as short run profit maximizers in the us market does the pricing behaviour following a major vehicle restyling of japanese manufacturers in the us market differ from that of domestic manufacturers over the 1977 92 period while we found that domestic manufacturers increase price significantly on restyled models we were unable to conclude that japanese manufacturers did the same in light of the demand and cost conditions developed this pricing behaviour by japanese manufacturers is difficult to reconcile with short run profit maximization

putting free riding to work a partnership solution to the common property problem the common property problem results in excessive mining hunting and extraction of oil and water the same phenomenon is also responsible for excessive investment in r d and excessive outlays in rent seeking contests we propose a partnership solution to eliminate or at least mitigate these excesses each of n players joins a partnership in the first stage and chooses his effort in the second stage under the rules of a partnership each member must pay his own cost of effort but receives an equal share of the partnership s revenue the incentive to free ride created by such partnerships turns out to be beneficial since it naturally offsets the excessive effort inherent in such problems in our two stage game this institutional arrangement can under specified circumstances induce the social optimum in a subgame perfect equilibrium no one has a unilateral incentive 1 to switch to another partnership or create a new partnership in the first stage or 2 to deviate from socially optimal actions in the second stage the game may have other subgame perfect equilibria but the one associated with the partnership solution is strictly preferred by every player we also propose a modification of the first stage which generates a unique subgame perfect equilibrium antitrust authorities should recognize that partnerships can have a less benign use by organizing as competing partnerships an industry can reduce the excessive output of cournot oligopoly to the monopoly level since no partner has any incentive to overproduce in the current period there is no need to deter cheating with threats of future punishments

observable and unobservable determinants of replacement of home appliances despite the dominant role of replacement purchases in many consumer durable categories the research in this area has not been extensive only in the last few years has the economic theory made progress towards a more rigorous analysis of the dynamic nature involved in replacement decisions as a consequence of this applied researchers have switched from conventional discrete choice models to new econometric techniques e g duration analysis that allow for richer relationships between socioeconomic variables characteristics of the durable good and the likelihood of its replacement over time our study focuses on two home appliances taken from the residential energy consumption survey recs based on a duration model that allows for unobserved heterogeneity across households we conclude that household demographics and product features both observable and unobservable in general have statistical power to explain replacement decisions over time

labour s shares and profitability crisis in the u s recent experience and post war trends extends work on u s rate of profit by t e weisskopf 1979 firstly the author finds by extending weisskopf s data into the early 1980s that continued downward pressure on profitability i s explained by capacity utilization in contrast to weisskopf s explanation of rising labor share secondly it is found that ri sing labor share in the post war period is largely composed of r ising levels of supplemental fringe benefits and is in the earl y part of the period also explained by rising nonproduction lab or costs production worker wage share falls secularly and this may be explained particularly in the 1960s by rising price mar k ups on direct cost copyright 1987 by oxford university press

the impact of sunday shopping on employment and hours of work in the retail industry evidence from canada abstract between 1980 and 1998 every canadian province passed legislation that in some way relaxed restrictions on sunday shopping this study exploits the variation in deregulation dates between provinces to identify how retail employers adjust employment and hours of work when deciding to open on sundays a major complication of this analysis is to first determine for which provinces the deregulation dates are useful indicators of increases in sunday store openings this paper uses a unique trading day regression approach to identify these provinces and then uses aggregate data from the selected provinces to estimate a simple dynamic labour demand model that allows employment and hours to be imperfect substitutes in production the results suggest that retailers needs for sunday labour were disproportionately satisfied through increases in employment levels comparison of the estimates at three levels of the retail industry suggests that the employment and hours gains were larger among general merchandise stores than among more specialized retail establishments and relatively modest at the aggregate retail industry level in addition despite evidence of an immediate shortfall in the employment level below the long run optimal level the results suggest that firms were unable to compensate by temporarily increasing the hours of their existing employees

peer pressure and partnerships partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie but in organizations of any significant size the free rider effects would seem to choke off

the role of individual financial contributions in the formation of entrepreneurial teams abstract this paper studies how entrepreneurs limited in how much they are able to contribute to a joint business organize in partnerships and how this process is impacted by the frictions common for team production it demonstrates that moral hazard and reliance on simple equity sharing contracts create incentives for the entrepreneurs making large contributions to team up together even if the production technology exhibits decreasing returns to scale to total investment the paper formalizes this novel mechanism in a matching model and illustrates that the model s predictions regarding co owners financial contributions and ownership shares are consistent with the empirical evidence from the kauffman firm survey data

rates of time preference and consumer valuations of automobile safety and fuel efficiency this article estimates hedonic price models for automobiles using a data set on almost 3 000 households from the u s department of energy residential transportation energy consumption survey the standard hedonic models are generalized to recognize the role of discounting of fuel efficiency and safety yielding an estimated rate of time preference ranging from 11 to 17 percent this range includes the prevailing rate of interest for car loans in 1988 and is consequently consistent with market rates purchasers exhibit an implicit value of life ranging from 2 6 to 3 7 million which is within the range found in the labor market as well as other market contexts the model also estimates a significant price effect for auto injury risks and fuel efficiency

dynamic production teams with strategic behavior abstract we analyze if intergenerational teams reveal workers productivities some uncertainty on agents productivities persists when i each agent must work independently or ii technological shocks are agent specific in compulsory teams however when technological shocks are team specific in compulsory teams each worker s productivity is revealed when agents choose to work independently or in teams that problem falls in the class of dynamic games elective teams are preferred by high productivity young workers when the technological shocks are agent specific and maximize the expected utility of a young worker when shocks are team specific

the efficiency of used vehicle markets the case of technological obsolescence and differential repair records this paper examines the effect of technological oboslescence differential maintanance expenditures and differential fuel efficiencies on the depreciated value of automobiles our results support the widely held belief that used vehicle markets are efficient we show that the significant decline in the depreciated values of used automobiles is predominantly due to age we also conclude that technological obsolescence causes a once and for all decrease in the depreciated value of used automobiles that for imported vehicle lines differential maintanance expenditures affect depreciated value and that for domestic vehicle lines differential fuel efficiencies impact depreciated value

second best taxation as a game second best theory usually lies in the realm of normative analysis it focuses attention on the best solutions which still can be obtained in problems where constraints of various natures forbid the attainment of first best pareto optimal situations its central concern is the characterization of such second best solutions and a large part of the literature concentrates on the optimal design of taxes or of policies of public firms taking a second best problem we try in this paper to shift the emphasis from normative to positive considerations the solution we are interested in is not optimal with respect to some a priori given social welfare function embodying justice objectives but it is supposed to reflect the power of the different agents in a negotiation process clearly the conceptual tools required for such an analysis are to be found in game theory and it is actually a game theoretical approach that we follow here the model we are looking at is presented in section ii it formalizes one of the simplest second best problems that can be imagined we have a twogood economy with one private good and one public good agents have different wealth in private good and the public good is financed through a wealth tax this latter fiscal system is clearly not flexible enough to adjust contributions with marginal willingnesses to pay so that we actually face a second best situation there is one decision variable in the society the tax rate which determines the public good production about which the agents have conflicting desires to this problem we associate a game which provides a precise framework for the analysis of the power of the agents the positive outcomes of the negotiation process are supposed to belong to the core of this game sections iii and iv concentrate on the analysis of the core the results strongly contrast with those obtained in the classical studies of the core of 67 0022 053 l 81 040067 25 02 00 o

shopping hours and price levels in the retailing industry a theoretical and empirical analysis i introduction the debate surrounding shopping laws is very much the same regardless of the country in which it occurs the traditional objectives of regulating store opening hours can be divided into four categories i to guarantee access to essential goods and services ii to promote and protect a certain way of life iii to protect small businesses and iv to assure a day of rest for everyone despite these concerns the recent trend in canadian provinces is to extend store opening hours in the retailing industry for instance in july 1990 the quebec government allowed retail stores to stay open on wednesday nights and on sundays the recent deregulation was prompted by changes in lifestyles and increasing constraints on the time people can devote to shopping activities perhaps the most significant are that the number of one parent families is increasing as is the number of couples in which both spouses work there is evidence that changes in opening hours influence the structure of the retailing industry morrison and newman 1983 show that there is a redistribution of sales from small stores to large stores after deregulation an empirical study by moorehouse 1984 shows that in the united states those states that strictly regulate store opening hours do have a smaller proportion of large stores building on their work we examine the short term impact of extended shopping hours on prices at large stores to determine whether consumers have to pay higher prices for greater shopping flexibility to our knowledge this issue has not been addressed in the literature first we develop an extension of morrison and newman s 1983 theoretical model inspired by becker 1965 and location models pioneered by hotelling 1929 chamberlin 1951 1962 lancaster 1966 and salop 1977 we deem the price of a good to have two components the price itself and the time spent by the consumer to purchase the good thus opening hours and store location play a role in the determination of prices we explore the effect of increased opening hours on the demand faced by stores of different sizes and thus on their price levels among other things our model predicts that after deregulation price levels at large stores will increase because of a demand shift in favor of large stores at the expense of small stores we then test this prediction using pooled time series and cross section data prices of five products for thirty one weeks collected before and after the deregulation of store hours in quebec on july 8 1990 the data were collected at three major food stores in the montreal area we obtain estimates of price equations using the pooling method developed by kmenta 1986 the results support our view that prices have increased at large stores since the deregulation the rest of the paper is organized as follows in section ii we develop our analytical framework section iii presents the data and the estimation strategy since a price increase may signal an increase in costs rather than an increase in demand we deal explicitly with this issue in that section of the paper we discuss the empirical results in section iv and we conclude in section v ii the model the following analysis extends that of morrison and newman 1983 a brief initial overview of their work is needed to develop the necessary notation and to set up the problem in their model morrison and newman make two simplifying yet standard assumptions they assume a single perfectly divisible homogeneous commodity and only two types of stores large and small thus consumers choose to shop at small or large stores to minimize the total cost tc of purchasing the commodity on a given shopping trip the total cost includes the cost of the bundle of goods p sub j b where p sub j is the price per unit at store j and b is the bundle size a consumer intends to buy and his own valuation of the time needed to travel to the store a

has pricing behaviour in the us automobile industry become more competitive the literature in the us is divided over whether the character of the domestic automobile industry has changed recently becoming less oligopolistic this paper investigates whether domestic industry pricing policies have changed since the oil embargo the paper finds evidence that industry pricing policy has changed from that consistent with a target rate of return pricing to one more consistent with marginal cost pricing

efficient and nearly efficient partnerships this paper shows in two ways that the degree to which free riding diminishes the performance of deterministic partnerships may be less than has been generally thought first a necessary and sufficient condition is provided for a partnership to sustain full efficiency it implies that many non trivial partnerships sustain efficiency such as generic ones with finite action spaces and neoclassical ones with leontief technologies second approximate efficiency is shown to be achievable in a large class of partnerships including ones with smooth and monotonic production and disutility functions approximate efficiency is achieved by mixed strategy equilibria one partner takes with small probability an inefficient action the degree to which efficiency is approximated is restricted only by the amount of liability the partners can bear nonetheless their equilibrium payments are not arbitrarily large

causes of increased competition in the u s economy 1939 1980 examines the sources of increased competition in the united states u s between 1939 to 1980 in this paper authors consider the review of related literature trends and patterns of competitive structure in the u s economy influence of antirust actions on competition

the fourth commandment is it pareto efficient a bill to legalise sunday trading has recently been defeated in the british parliament an argument commonly advanced by traders opposing liberalisation starts by observing that if a few shops were to choose to open on sunday they would attract so much business from retailers trading only on weekdays that soon all shops would be forced to open on sunday some customers might find this convenient but to the extent they were merely induced to change their shopping day no new demand would be created without an increase in weekly turnover the additional costs of sunday opening would bankrupt some shops and the survivors would have to raise prices thus there is no guarantee that on balance consumers will gain a counter argument denies that all shops would be forced to open on sundays insofar as consumers really prefer lower prices to the convenience of sunday opening then a shop which closed on sunday and used a fraction of the cost saving to reduce prices for the rest of the week could maintain its sales and increase its profit giving retailers the option of sunday opening therefore enables them to respond more sensitively to consumers preferences as between the convenience of sunday shopping and lower prices this seems to be the position taken by tullock i975 pp 673 4 my guess is that most economists would feel sympathetic to this argument as i certainly am however matters are not entirely straightforward the retail trade can hardly be regarded as perfectly competitive and starting from a second best equilibrium there is no guarantee that permitting more competition in one dimension of the characteristic space yields a potential pareto gain these considerations suggest that the argument be pursued at a more formal level the following section examines sunday opening in the context of a standard model of imperfect competition the principal results are that the removal of the restrictions may result in a social loss with a loss being less likely the more competitive is the market an informal preview of the argument may be helpful given that travel costs must be incurred to make a purchase customers who live close to a shop cannot easily be enticed away by competitors the real fight is for buyers located approximately equi distant from two neighbouring stores ideally each shop would like to offer price cuts to these distant customers only but this is not feasible however for customers who go out to work the opportunity cost of shopping time may well be lowest on sunday so for at least some customers sunday opening results in a fall in transport costs thereby offering more to

bidding till bankrupt destructive competition in professional team sports if we don t sign hershiser we ll lose him at the end of the year to an owner who is told by his manager that the club is only one pitcher away from winning it all to win it all some owners will do anything god save us from those owners only one pitcher away los angeles dodger owner peter o malley durslag 1990 i introduction during the labor dispute that delayed the start of the 1990 baseball season team owners raised their usual complaint that free agency will eventually result in a two tier league of have and have not teams to the detriment of league revenues and fan interest but player representatives remained skeptical of the validity of this complaint donald fehr executive director of the major league baseball players association repeatedly pointed out that the owners have never demonstrated a need for radical change in the player compensation system arguing they don t have a basis for it we re looking for the rationale newhan 1990 10 this paper suggests such a rationale in the pursuit of a league championship the talent that turns an average team into a contender makes a disproportionately large contribution to the team s success owners therefore tend to earn most of their quasi rents on the last stars they sign and suffer net losses on much of their infra marginal talent teams with net losses on their overall stock of talent face a shutdown situation and will opt to abandon a competitive market for star athletes reducing the number of remaining participants 1 it is useful to think of athletic talent in the sports industry as a strategic input an input whose productivity for a given user depends on how much of the input is employed by the user s rivals the most well established point about inputs of this type is the tendency to overemploy them in the sports literature this was demonstrated by canes 1974 this paper extends the analysis of strategic inputs in the professional team sports industry to demonstrate how the objective of championship prospects confronts market participants with a persistent shutdown threat of particular concern from an economics perspective the shutdown scenario can result in a credible case of destructive competition in the sense of a competitive process that risks driving at least some participants out of a market even though it is inefficient for them to leave sections ii and iii provide the theoretical basis for the shutdown situation which can emerge in the competition for athletic talent in professional team sports evidence for major league baseball presented in section iv suggests that the theoretical analysis may be empirically relevant section v closes with some implications of the analysis and possible extensions to situations outside the professional sports industry the most important of the implications is the clear potential for welfare reducing effects associated with the shutdown scenario ii team performance criteria and the productivity of athletic talent economists have long recognized that the market for athletic talent is not trouble free researchers such as el hodiri and quirk 1971 demmert 1973 noll 1974 and daly and moore 1981 have discussed the inherent third party externalities of player transactions involving any pair of teams because of the league wide interdependence of relative team performance noll 1974 416 also noted that an unrestricted market for athletic talent can threaten the viability of marginal franchises who rely on rents derived from their players to cover some of their fixed costs and cassing and douglas 1980 modeled the winner s curse phenomenon in the context of an auction market for athletic talent but these analyses do not generate the bleak scenario described by team owners of a free agency environment in which league divisions split sharply into have and have not teams for example the third party externality problem is not specific to free agency it arises regardless of whether players or owners have the marketing rights to player contracts

hours layoffs and unemployment insurance funding theory and practice in an international perspective the strikingly different behaviour of important economic aggregates in the united states and other industrial countries has received surprisingly little attention from economists among recent exceptions however gordon i 982 has shown that wages and hours of work are much more flexible in the united kingdom and japan than in the united states such relative hours variability is confirmed in a macro analysis by capdevielle and alvarez i98i and at micro level by sengenberger and kohler i982 the latter authors are concerned with labour market adjustment within the u s and west german automobile industries between i 97 i and i 980 estimates of the german workeroutput elasticity are found to be less than half that of the united states while the german hours elasticity is twice the united states figure at the national aggregate level capdevielle and alvarez also reveal much greater employment variability in the united states than in most other oecd countries in the years following the i973 74 opec supply shock much in line with these employment hours observations moy and sorrentino i98i argue that after

transaction costs and partnerships the case of rock bands abstract this paper applies transaction cost economics to rock bands it develops the importance of asset specificity a number of phenomena in the field are shown to be explicable in terms of transactions costs

after work shopping employment effects of a deregulation of shop opening hours in the german retail sector abstract this study investigates the impact of a deregulation of shop opening laws on employment in the german retail sector exploiting the gradual change in the opening times of shops across states and using data from the german socio economic panel difference in differences estimates indicate an average increase in the employment probability driven by a rise in the likelihood of working marginal part time hours workers in small firms are likely to experience a reduction of their propensity to work for individuals facing high family related supply side constraints the change in shop opening hours has opposing effects on employment positive on lower and negative on upper parts of the hours distribution overall the deregulation is estimated to have raised the likelihood of working fewer hours than desired by the workers

market power and market change in the u s automobile industry two of their number the companies difficulties are generally attributed to oil price increases economic recessions increasing government regulation and changing cost conditions relative to foreign producers less often recognized however is the crucial underlying role of monopoly power in the industry and in particular the long standing dominance of general motors the concentration of the automobile market this paper will argue has led to distortions of decision making which rendered the companies vulnerable to outside forces and ultimately induced responses that proved damaging to the entire u s industry

strong tiebout equilibrium under restricted preferences domain abstract we investigate the existence and give a partial characterization of a strong tiebout equilibrium which consists of an endogenously formed partition of the individuals into disjoint jurisdictions with each jurisdiction producing and financing its own public goods and moreover there exists no group of individuals who can all benefit by establishing their own community in particular no single individual finds it desirable to migrate from his equilibrium jurisdiction the existence proof makes use of the notion of consecutive games which we introduce and show that for such games there always exists a partition with a nonempty core

on the economics of regulated early closing hours some evidence from canada in many countries such as australia canada and britain the hours of daily retail operation are controlled through the political process this paper tests one hypothesis for why regulation is adopted the hypothesis is that early closing hours are a low cost institutional response to net social costs that can arise when time is used competitively to redistribute customers spatially competition produces this result when stores s marginal customers value longer shopping hours more highly than the average customer evidence is presented on the characteristics of 45 ontario cities that had the choice of whether or not to adopt early closing hours and logit analysis is used to test the model s predictions the estimates of the probability of choosing early closing hours are then used to test the model s prediction on store density in general the evidence is consistent with the hypothesis that municipal control over shopping hours in ontario is appropriate

the economic efficiency of sunday trading restrictions restriction of shop opening hours is current but controversial pr actice in britain and much of europe the economic case presented for such restrictions is that given the constraint that individual shop s may not vary their price by time of day competitive pressures woul d induce excessive opening at times when high costs would be incurred such as on sundays the authors show that such inefficient equilib ria are a theoretical possibility empirical evidence on retail costs and demand in the united kingdom shows that this case does not arise in practice and that deregulation of opening hours would lead to low er costs and prices copyright 1987 by blackwell publishing ltd

efficiency in partnership structures abstract consider an economy where agents differ in production skills and abilities and are free to form production coalitions or partnerships with each other farrell and scotchmer 1988 showed that if partners are restricted to equal output sharing in equilibrium the partnerships are inefficiently small we elaborate on another possible source of inefficiency which is due to composition rather than size under the equal sharing constraint high ability agents form partnerships with agents of similar ability levels yet mixing of ability levels may be socially efficient we further investigate whether relaxing the equal sharing constraint corrects the inefficiency of equilibrium

before it gets better the short term employment costs of regulatory reforms the article exploits long time series of industry level data in a group of oecd countries to analyze the short term labor market effects of reforms that lower barriers to entry and dismissal costs estimates show that both policies induce non negligible transitory employment losses the strength of these effects varies depending on the underlying industry and labor market structure and on cyclical conditions the employment cost of deregulation is higher in economic downturns and negligible in good times these findings prove robust to a set of specification and sensitivity checks and are confirmed after standard reverse causality and falsification tests

hours of operation restrictions and competition aming retail firms this study examines the redistributive effects of government regulations concerning the hours in which retail stores may remain open for business throughout canada municipal by laws restrict nighttime shopping hours to a few specified days of the week in analyzing the outcome of these restrictions a model of consumer behaviour is used which emphasizes the consumers s decision concerning the allocation of purchases between small and large retail outlets the empirical results are consistant with the theoretical model indicating that such market intervention redistributes sales from large to small stores

the impact of repealing sunday closing laws on educational attainment adolescents face daily tradeoffs between human capital investment labor and leisure this paper exploits state variation in the repeal of sunday closing laws to examine the impact of a distinct and plausibly exogenous rise in the quantity of competing diversions available to youth on their educational attainment the results suggest that the repeals led to a significant decline in both years of education and the probability of high school completion i explore increased employment and risky behaviors as potential mechanisms further i find a corresponding decline of the repeals on adult wages

an example of a repeated partnership game with discounting and with uniformly inefficient equilibria in this note we present an example of a repeated partnership game with imperfect monitoring in which all supergame equilibria with positive discount rates are bounded away from full efficiency uniformly in the discount rate provided the latter is strictly positive on the other hand if the players do not discount the future then every efficient one period payoff vector that dominates the one period equilibrium payoff vector can be attained by an equilibrium of the repeated game thus the correspondence that maps the players discount rate into the corresponding set of repeated game equilibrium payoff vectors is discontinuous at the point at which the discount rate is zero

the employment effect of deregulating shopping hours evidence from german food retailing wir untersuchen den effekt der freigabe der ladenoffnungszeiten auf die beschaftigung im deutschen lebensmitteleinzelhandel mit der differenz von differenzen methode unter verwendung von daten uber alle deutschen einzelhandler finden wir dass die ausweitung der gesetzlich erlaubten ladenoffnungszeiten die beschaftigung um durchschnittlich 0 4 arbeitnehmer pro laden erhoht hat was einer zunahme der beschaftigung um 3 bis 4 prozent entspricht getrieben wird dieser effekt von einer zunahme der teilzeitbeschaftigung wohingegen die vollzeitbeschaftigung nicht betroffen war die statistische signifikanz der gefundenen effekte hangt von den annahmen an die stortermkorrelation ab und wir berichten daher ergebnisse bei clustering auf verschiedenen ebenen eine uberschlagsrechnung zeigt eine zunahme der beschaftigung um 0 1 arbeitnehmer pro erhohung der tatsachlichen wochentlichen offnungszeiten um eine stunde

non sequential consumer search and the consequences of a deregulation of trading hours abstract this paper analyzes the consequences of a liberalization of shopping hours in a market where consumers collect price information through non sequential search it is first shown that with as well as without restrictions on search time an equilibrium price distribution and possibly a single price equilibrium with the monopoly price exist then it is demonstrated that a liberalization is either ineffective or leads to price reductions increases in consumer welfare and larger market shares of more efficient firms

exploring the relationship between the markets for new and used durable goods the case of automobiles given that durable products are long lived there exists the possibility of secondary markets for used products as well as the potential for product obsolescence this is an important issue in markets where technology changes rapidly because the introduction of new versions of a product can make earlier versions obsolete more generally prices of older versions in the secondary market adjust in response to changes incorporated in new versions of the product thus another method of evaluating consumers response to a new product is by looking at the variation in market prices of the old product this paper develops a general model to explore the relationship between primary markets for new cars and secondary markets for used cars the results suggest that the depreciation of used cars is influenced strongly by the types of changes in new model cars

rationalizability learning and equilibrium in games with strategic complementarities we study a rich class of noncooperative games that includes models of oligopoly competition macroeconomic coordination failures arms races bank runs technology adoption and diffusion r d competition pretrial bargaining coordination in teams and many others for all these games the sets of pure strategy nash equilibria correlated equilibria and rationalizable strategies have identical bounds also for a class of models of dynamic adaptive choice behavior that encompasses both best response dynamics and bayesian learning the players choices lie eventually within the same bounds these bounds are shown to vary monotonically with certain exogenous parameters we study the class of noncooperative supermodular games introduced by topkis 1979 and further analyzed by vives 1985 1989 who also pointed out the importance of these games in industrial economics supermodular games are games in which each player s strategy set is partially ordered the marginal returns to increasing one s strategy rise with increases in the competitors strategies so that the game exhibits strategic complementarity 2 and if a player s strategies are multidimensional marginal returns to any one com ponent of the player s strategy rise with increases in the other components this class turns out to encompass many of the most important economic applications of noncooperative game theory in macroeconomics diamond s 1982 search model and bryant s 1983 1984 rational expectations models can be represented as supermodular games in each of these models more activity by some members of the economy raises the returns to increased levels of activity by others in oligopoly theory some models of bertrand oligopoly with differentiated products qualify as supermodu lar games in these games when a firm s competitors raise their prices the marginal profitability of the firm s own price increase rises a similar structure is present in games of new technology adoption such as those of dybvig and spatt 1983 farrell and saloner 1986 and katz and shapiro 1986 when more users hook into a communication system or more manufacturers adopt an interface standard the marginal return to others of doing the same often rises similarly in some specifications of the bank runs model introduced by diamond and dybvig 1983 when more depositors withdraw their funds from a bank it is more worthwhile for other depositors to do the same in the warrant exercise

the role of small firms in east germany this paper examines the role which small firms in east germany have played under the system of combines and the important contribution they can make in the current reform process the evolution of a striking trend towards the centralization of economic power in the gdr during the last three decades is documented not only has the share of economic activity accounted for by the combines greatly increased but the number of establishments and particularly small establishments has drastically decreased it is concluded that the establishment of a vital entrepreneurial sector is essential if east germany is to succeed in its process of economic reform and the transition to the market economy

rat race redux adverse selection in the determination of work hours in law firms this paper describes an organizational setting in which professional employees are required to work inefficiently long hours the focus of the authors investigation is large law firms the income sharing that characterizes legal partnerships creates incentives to promote associates who have a propensity to work very hard law firms use indicators of this propensity especially an associate s record of billable hours in promotion decisions reliance upon work hours as an indicator leads to a rat race equilibrium in which associates work too many hours the authors find evidence in support of this conclusion with data they collected from two large law firms copyright 1996 by american economic association