strategic segmentation of a market abstract when competing firms target information towards specific consumers through direct marketing activities complete segmentation of markets can result we analyze a two stage duopoly where prior to price competition each firm targets information to specific consumers and only consumers informed by a firm can buy from it this has the effect of endogenously determining market segments in a model of sales in equilibrium pure local monopoly emerges firms target and sell to mutually exclusive market segments when the cost of marketing approaches zero market shares reflect relative production efficiency equal shares when firms are symmetric this may not be the case when marketing cost is high

competitive coupon targeting with the advent of panel data on household purchase behavior and the development of statistical procedures to utilize this data firms can now target coupons to selected households with considerable accuracy and cost effectiveness in this article we develop an analytical framework to examine the effect of such targeting on firm profits prices and coupon face values we also derive comparative statics on firms optimal mix of offensive and defensive couponing the number of coupons distributed redemption rates face values and incremental sales per redemption among our findings when rival firms can target their coupon promotions at brand switchers the outcome will be a prisoner s dilemma in which the net effect of targeting is simply the cost of distribution plus the discount given to redeemers

expanding demand through price advertisement abstract retail stores frequently advertise prices when consumer search is costly advertising low prices expands the number of consumers who visit and buy we show that this demand enhancement may offset a retailer s loss in margins from the low price making advertisement desirable we further show that a multi product monopolist may choose to advertise low prices only for select products even when advertised and non advertised products are substitutes for duopolist retailers at a common location an equilibrium exists in which for some range of advertising costs one store advertises and the other free rides on its competitor

information provision in a vertically differentiated competitive marketplace this paper examines the interaction of information provision product quality and pricing decisions by competitive firms to explore the following question in a competitive market where consumers face uncertainty about product quality and or their preference for quality which firms those that sell higher or lower quality products have the higher incentive to provide what type of information we find that while the higher quality firm should always provide information resolving consumer uncertainty on product quality the lower quality firm under certain conditions will have the higher incentive to and will be the one to provide information resolving consumer uncertainty about their quality preferences in the analysis we trace the latter result to competition and to free riding on the information provision specifically in a monopoly market or when consumer free riding is restricted by the costliness of store visits the lower quality firm would have a lower incentive to provide information resolving consumer preference uncertainty than otherwise the model is also adapted to examine product returns as a possible strategy of information provision

competitive targeted advertising with price discrimination this paper investigates the eects of price discrimination by means of targeted advertis ing in a duopolistic market where the distribution of consumers preferences is discrete and where advertising plays two major roles it is used by rms as a way to transmit relevant information to otherwise uninformed consumers and it is used as a price discrimination device we compare the rms optimal marketing mix advertising and pricing when they adopt mass advertising non discrimination strategies and targeted advertising price discrim ination strategies if rms are able to adopt targeted advertising strategies we nd that the symmetric price equilibrium is in mixed strategies while the advertising is chosen deter ministically our results also unveil that as long as we allow for imperfect substitutability between the goods rms do not necessarily target more ads to their own market in par ticular rms optimal marketing mix leads to higher advertising reach in the rival s market than in the rms own market provided that advertising costs are su ciently low in relation to the consumer s reservation value the comparison of the optimal marketing mix under mass advertising strategies and targeted advertising strategies reveals that targeted adver tising might constitute a tool to dampen price competition in particular if advertising costs are su ciently low in relation to the value of the goods we obtain that average prices with non discrimination mass advertising are below those with price discrimination and targeted advertising regardless of the market segment accordingly when i goods are imperfect substitutes ii advertising is not too expensive and iii targeted advertising constitutes an eective price discrimination tool price discrimination through targeted advertising may be detrimental to social welfare since it boosts industry pro ts at the expense of consumer surplus

wage and technology dispersion this paper explains why firms with identical opportunities may use different technologies and offer different wages our key assumption is that workers must engage in costly search in order to gather information about jobs stigler 1961 in equilibrium some firms adopt high fixed cost high productivity technologies offer high wages and fill job openings quickly other firms adopt less capital intensive technologies and offer low wages hiring mostly uninformed workers in equilibrium the amount of wage dispersion leaves workers indifferent about whether to gather information and the fraction of informed workers leaves firms indifferent about their wage and technology choice we show that worker search which would appear to be a rent seeking activity in partial equilibrium may be efficiency enhancing in general equilibrium

should we be worried about the green paradox announcement effects of the acid rain program this paper presents the first empirical test of the green paradox hypothesis according to which well intended but imperfectly implemented environmental policies may lead to detrimental outcomes due to supply side responses we use the introduction of the acid rain program in the u s as a case study the theory predicts that owners of coal deposits expecting future sales to decline would supply more of their resource between the announcement of the acid rain program and its implementation moreover the incentive to increase supply would be stronger for owners of high sulfur coal this would all else equal induce an increase in sulfur dioxide emissions using data on prices heat input and sulfur content of coal delivered to u s power plants we find strong evidence of a price decrease and of an increase in the sulfur premium some indication that the amount of coal used might have increased and no evidence of fuel switching towards higher sulfur coal overall our evidence suggests that while the mechanism indicated by the theory might be at work market conditions and concurrent regulation largely prevented a green paradox from arising these results have implications for the design of climate policies

theory and evidence on pricing by asymmetric oligopolies we present an analysis of markets with many asymmetrically positioned retailers that compete for the business of both informed and uninformed customers for a homogenous good such as software music book or a brand name appliance we show that two forms of asymmetry one related to loyal segment sizes of retailers and one related to the positioning of firms completely explain the observed price dispersion in such markets and the multitude of asymmetrical strategies adopted by retailers the stochastic dominance of empirical mixed strategy measures is used to test the theory with data on 968 books from 10 online retailers

the green paradox and budgetary institutions abstract we examine oil production strategies in response to the rise of alternative energy in context of saudi arabia and the united states in a unified simultaneous equation model sem over the period 1976 2015 we investigate the extent to which budget balance behaviour explains the nature of oil production strategies we find that green regulations have a positive impact on u s oil production while an inverse relationship holds for saudi arabia we argue that the nature of budgetary institutions prevents saudi arabia from following a profit maximising behaviour saudi arabia is incentivised to ensure political cohesion through adopting a procyclical fiscal policy rather regulators seem incentivised to channel surplus towards individuals to gain popularity in the united states a thriving shale oil industry is a plausible rationale for u s production strategies also known as a weak green paradox this is problematic for climate change initiatives to reduce global emissions climate experts may wish to pay more attention to the supply side of oil markets when designing decarbonisation plans the results challenge conventional wisdom of the green paradox neglecting the role of incentive structure between different types of oil producers

household energy consumption versus income and relative standard of living a panel approach our fundamental premise is that energy consumption at the household level is a key indicator of standard of living we employ state of the art panel cointegration techniques to evaluate the nature of the relationship between income measures and energy consumption measures for seven east indian ocean countries the general finding is that income and household electricity consumption are not cointegrated given this finding we conclude that standard of living measures that rely on income measures and do not include household level energy consumption information will necessarily miss important indications of both levels and changes of standard of living

product diversity in asymmetric oligopoly is the quality of consumer goods too low we analyse an oligopoly model incorporating horizontal differentiation and quality differences high quality goods are overpriced and underproduced when the market is fairly well covered low quality products may be profitable when their net social contribution is negative implying excessive entry in a relatively uncovered market even low quality goods are underproduced and there may be underentry when fixed costs are independent of quality the market tends to select the right firms otherwise the market may produce low quality products when it should produce high quality ones the model is calibrated using market data for yoghurt

announcing climate policy can a green paradox arise without scarcity unintended consequences of a pre announced climate policy are studied within a framework that allows for competition between polluting and clean energy sources we show that early announcement of a carbon tax gives rise to a green paradox in that it increases emissions in the interim period between announcement and actual implementation irrespective of the scarcity of fossil fuels the paradoxical outcome is driven by consumption saving tradeoffs facing households who seek to smooth consumption over time and holds both when the announced implementation date is taken as a credible threat and when households are skeptical about the political will or capability of the government to implement the policy as announced

advertising for attention in a consumer search model we model the idea that when consumers search for products they first visit the firm whose advertising is most salient the gains a firm derives from being visited early increase in search costs so equilibrium advertising increases as search costs rise as a result higher search costs may decrease both consumer welfare and firm profits we extend the basic model by allowing for firm heterogeneity in advertising costs firms that raise attention more easily advertise more but also charge lower prices and obtain higher profits as advertising cost asymmetries increase consumer surplus falls and aggregate profits rise

informative advertising with differentiated products in this paper we study the role of promotional expenditures by sellers in a model of product differentiation advertising conveys full and accurate information about the characteristics of products heterogeneous consumers who have no source of information other than advertisements seek to purchase the products that best fit their needs despite the roles played by advertising in improving the matching of products and consumers and in increasing the elasticity of demand faced by each firm we find that the market determined levels of advertising are excessive given the extent of diversity in the market we derive a promotional equilibrium based on a specific information transmission technology paying explicit attention to the structure of consumer information and its impact on firms demand curves this allows us to study the effects of changes in the advertising technology including an increased ability to target messages to specific groups of consumers on the equilibrium in the product market we find that decreased advertising costs may reduce profits by increasing the severity of price competition

advertising and consumer search in a duopoly model we consider a duopoly in a homogenous goods market where part of the consumers are ex ante uninformed about prices information can come through two different channels advertising and sequential consumer search we arrive at the following results first there is no monotone relationship between prices and the degree of advertising second advertising and search are substitutes for a large range of parameters third when the cost of either search or advertising vanishes the competitive outcome arises finally both expected advertised and non advertised prices are non monotonic in search cost one of the implications is that firms actually may benefit from consumers having low rather than high search costs

is there really a green paradox abstract in the absence of a co2 tax the anticipation of a cheaper renewable backstop increases current emissions of co2 since the date at which renewables are phased in is brought forward and more generally future emissions of co2 will decrease the effect on global warming is unclear green welfare falls if the backstop is relatively expensive and full exhaustion of fossil fuels is optimal but may increase if the backstop is sufficiently cheap relative to the cost of extracting the last drop of fossil fuels plus marginal global warming damages as then it is attractive to leave more fossil fuels unexploited and thus limit co2 emissions we establish these results by analyzing depletion of non renewable fossil fuels followed by a switch to a clean renewable backstop paying attention to timing of the switch and the amount of fossil fuels remaining unexploited we also discuss the potential for limit pricing when the non renewable resource is owned by a monopolist finally we show that if backstops are already used and more backstops become economically viable as the price of fossil fuels rises a lower cost of the backstop will either postpone fossil fuel exhaustion or leave more fossil fuel in situ thus boosting green welfare however if a market economy does not internalize global warming externalities and renewables have not kicked in yet full exhaustion of fossil fuel will occur in finite time and a backstop subsidy always curbs green welfare

negotiations and exclusivity contracts for advertising exclusive advertising on a given media outlet is usually profitable for an advertiser because consumers are less aware of competing products however for such arrangements to exist media must benefit as well we examine conditions under which such exclusive advertising contracts benefit both advertisers and media outlets referred to as stations by illustrating that exclusive equilibria arise in a theoretical model of the media advertisers and consumers who participate in both the product and media markets in the model stations sell advertising space to advertisers and broadcast advertising messages to consumers conditions leading to higher equilibrium levels of advertising can be unprofitable for advertisers because high levels of advertising make consumers better informed and thus lead to fiercer product price competition as a result media stations may be less profitable as well because their payoff is determined as a fraction of the advertiser surplus generated in the product market stations mitigate this effect by offering advertisers exclusive advertising contracts with such contracts consumers are less informed about competing products yielding higher producer surplus it is profitable for stations to offer exclusivity when commercial advertising is an important means for advertisers to inform consumers about their products

a bertrand model of pricing and entry abstract we analyze an oligopolistic pricing and entry model in which there is a sunk cost of entry and in which firms outputs are homogeneous firms pure strategies consist of a binary entry decision and conditional on entry a uniform or non linear price schedule there does not exist a pure strategy nash equilibrium in this model so we analyze the symmetric mixed strategy equilibrium the main result is that if there exists a positive sunk cost of entry then an increase in the number of potential competitors puts more probability weight on higher prices this result is counter to the usual intuition that underlies current antitrust policy

the existence of equilibrium in discontinuous economic games ii applications in part i of this study we established two existence theorems for mixed strategy equilibrium in games with discontinuous payoff functions see theorems 4 4 and 5 5 in dasgupta and maskin 1986 hereafter d m 1986 in this second part we use the second of these two theorems to prove the existence of mixed strategy equilibrium in some wellknown discontinuous economic games that fail to have pure strategy equilibria the models we analyse are the bertrand edgeworth example of price setting duopolists with capacity constraints see section 2 2 price competition among firms producing differentiated products hotelling 1929 and d aspremont gabszewicz and thisse 1979 see section 2 3 spatial competition eaton and lipsey 1975 and shaked 1975 see section 3 and models of market dependent information rothschild and stiglitz 1976 and wilson 1977 section 4 the paper concludes section 5 with a classification of these models

green expectations current effects of anticipated carbon pricing i report evidence that an anticipated strengthening of environmental policy increased emissions i find that the breakdown of the u s senate s 2010 climate effort generated positive excess returns

did credit rating agencies make unbiased assumptions on cdos article appears in papers and proceedings of the 123rd annual meeting of the amerian economic association denver co usa 6 9 january 2011

it takes two to tango equilibria in a model of sales we show that the varian model of sales with more than two firms has two types of equilibria a unique symmetric equilibrium and a continuum of asymmetric equilibria in contrast the 2 firm game has a unique equilibrium that is symmetric for the n firm case the asymmetric equilibria imply mixed strategies that can be ranked by first order stochastic dominance this enables one to rule out asymmetric equilibria on economic grounds by constructing a metagame in which both firms and consumers are players the unique subgame perfect equilibrium of this metagame is symmetric

advertising for consideration abstract we analyze markets where firms competing on price advertise to increase the probability of entering consumers consideration sets we find that moderately costly advertising allows firms to raise prices and possibly profits by reducing the fraction of price conscious consumers and by segmenting the market according to whether or not consumers consider the lower priced firm however when the cost of advertising is sufficiently low advertising leads to a prisoners dilemma that adversely impacts profits without affecting expected prices

advertising expenditure and consumer prices this paper studies the effect of a change in the marginal costs of advertising on advertising expenditures of firms and on consumer prices i make use of a policy change in austria that involved an increase of the taxation of advertising in parts of the country and a simultaneous decrease in other parts i show that advertising expenditures of firms move quickly in the opposite direction of the marginal costs of advertising consumer prices increase with advertising in some industries and decrease in others this effect correlates with informational differences in advertisements across industries

oligopolistic pricing with sequential consumer search n identical stores compete by choosing prices for a homogeneous good with constant marginal costs consumers search sequentially with perfect recall for the lowest price one class of consumers called shoppers have zero search costs while all other consumers have a positive search cost c there is a unique symmetric nash equilibrium price distribution with the property that it changes smoothly from marginal cost pricing when all consumers are shoppers and or c 0 and monopoly pricing when no consumers are shoppers remarkably as the number of stores increases the nash equilibrium becomes more monopolistic copyright 1989 by american economic association

informative advertising in differentiated oligopoly markets abstract this paper examines the welfare implications of informative advertising in differentiated product oligopoly markets the analysis reconciles the conflicting results in previous studies that find advertising to be undersupplied in homogeneous product markets but oversupplied in differentiated product markets when the degree of differentiation is small in equilibrium purely informative advertising is undersupplied when brands are sufficiently close substitutes and oversupplied when brands are more differentiated product differentiation also has welfare implications for the effect of technological change in the advertising sector in response to an advertising cost innovation equilibrium prices fall and the market converges to the socially optimal resource allocation for brands that are sufficiently close substitutes whereas equilibrium prices rise and divergence occurs when brands are more differentiated

aid policies and growth the authors of this paper use a new database on foreign aid to examine the relationships among foreign aid economic policies and growth of per capita gdp in panel growth regressions for 56 developing countries and 6 four year periods 1970 93 they find that the policies that have a great effect on growth are those related to fiscal surplus inflation and trade openness they construct an index for those three policies and have that index interact with foreign aid they have instruments for both aid and aid interacting with policies they find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies in the presence of poor policies aid has no positive effect on growth this result is robust in a variety of specifications which include or exclude middle income countries include or exclude outliers and treat policies as exogenous or endogenous they examine the determinants of policy and find no evidence that aid has systematically affected policies either for good or for ill they estimate an aid allocation equation and show that any tendency for aid to reward good policies has been overwhelmed by donors pursuit of their own strategic interests in a counterfactual they reallocate aid reduce the role of donor interests and increasing the importance of policy such a reallocation would have a large positive effect on developing countries growth rates

price competition and endogenous valuation in search advertising abstract this article studies how to endogenously assess the value of a superior advertising position in the price competition and examines the resulting location competition outcomes and price dispersion patterns the authors consider a game theoretic model in which firms compete for advertising positions and then compete in price for customers in a product market firms differ in their competence and positions are differentiated in their prominence which reflects consumers online search behavior they find that when endogenously evaluated within the product market competition a prominent advertising position might not always be desirable for a firm with competitive advantage even if it is cost free the profitability of a prominent advertising position depends on the trade off between the extra demand from winning the position and the higher equilibrium prices when the weaker competitor wins it furthermore the authors show that the bidding outcome might not align with the relative competitive s

savings growth and the resource curse hypothesis an important connection between recent attempts to understand the determinants of economic growth and the measurement of sustainability is the finding of a negative and significant relationship between natural resource abundance and economic growth this is the so called resource curse hypothesis using cross country regressions we offer evidence that the curse may itself be a manifestation of the inability of governments to manage large resource revenues sustainably in particular these results offer another perspective on the resource curse hypothesis the countries where growth has lagged are those where the combination of natural resource macroeconomic and public expenditure policies have led to a low rate of genuine saving net saving adjusted for resource depletion

personalized pricing and advertising an asymmetric equilibrium analysis we study personalized price competition with costly advertising among n quality cost differentiated firms strategies involve mixing over both prices and whether to advertise in equilibrium only the top two firms advertise earning bertrand like profits welfare losses initially rise then fall with the ad cost with losses due to excessive advertising and sales by the wrong firm when firms are symmetric the symmetric equilibrium yields perverse comparative statics and is unstable our key results apply when demand is elastic when ad costs are heterogeneous and with noise in consumer tastes

eight questions about corruption this paper will discuss eight frequently asked questions about public corruption 1 what is corruption 2 which countries are the most corrupt 3 what are the common characteristics of countries with high corruption 4 what is the magnitude of corruption 5 do higher wages for bureaucrats reduce corruption 6 can competition reduce corruption 7 why have there been so few recent successful attempts to fight corruption 8 does corruption adversely affect growth

natural resources education and economic development economic growth since 1965 has varied inversely with the share of natural capital in national wealth across countries four main channels of transmission from abundant natural resources to stunted economic development are discussed a the dutch disease b rent seeking c overconfidence and d neglect of education public expenditure on education relative to national income expected years of schooling for girls and gross secondary school enrolment are all shown to be inversely related to the share of natural capital in national wealth across countries natural capital appears to crowd out human capital thereby slowing down the pace of economic development

corruption and reduced oil production an additional resource curse factor prominent contributions to the resource curse literature suggest weak governance and corruption are important factors behind the wide welfare variations observed among oil producing countries how weak governance and corruption influence revenue management and expenditure decisions as well as the possible welfare benefits derived from oil are broadly discussed how they impact upon volumes of oil produced has however attracted little attention this paper combines a review of the resource curse and oil production literatures with findings from qualitative interviews with oil sector experts to appreciate the feasibility of connections between corruption and oil production below its potential we make particular reference to environments where regulatory institutions or political accountability are weak and focus primarily on producer government and oil firm relations drawing on insights from geology political science and economics we suggest suboptimal production solutions can impact volumes of oil actually produced and create constraints on long term revenues for oil producing countries we argue greater disclosure of information on oil production efficiency on a field by field and country by country basis will assist further investigation of the relationships between corruption and volumes of oil produced

customer poaching and advertising this paper is a first look at the dynamic effects of customer poaching in homogeneous product markets where firms need to invest in advertising to generate awareness when a firm is able to recognize customers with different purchasing histories it may send them targeted advertisements with different prices it is shown that only the firm which advertises the highest price in the first period will engage in price discrimination a practice that clearly benefits the discriminating firm this poaching gives rise to the race for discrimination effect through which price discrimination may act actually to soften price competition rather than intensify it as a result all firms may become better off even when only one of them can engage in price discrimination this paper offers a first attempt to evaluate the effects of price discrimination on the efficiency properties of advertising in markets with low or no advertising costs allowing firms to price discriminate leads them to provide too little advertising which is not good for consumers and overall welfare only in markets with high advertising costs might firms overadvertise regarding the welfare effects price discrimination is generally bad for welfare and consumer surplus though good for firms

appraisal smoothing and price discovery in real estate markets this paper reviews the literature on price determination in the private and public real estate markets in particular it discusses the processes of appraisal smoothing in the private market and of price discovery between the public and the private markets in real estate markets the absence of good quality information on price whether because of lack of trades or confidentiality has led to the widespread use of appraisals for market tracking and as the basis for performance measurement appraisers have to make an optimum assessment of value based on fundamental variables and market information including transactions and a market wide appraisal index however transaction prices are a noisy signal and it is the appraiser s role to extract the signal from the noise in an efficient manner this involves a process of optimal combination of past and current information and leads to appraisal smoothing price discovery is the process by which the opinions of market participants about the value of an asset

competitive promotional strategies this article analyzes the equilibrium pricing strategies of brands engaged in a pricing game each brand has a monopoly market loyal consumers and competes with others in a common market called brand switchers in the case of a duopoly it is shown that the behavior of the brand switchers characterizes the equilibrium behavior of the duopolists this article focuses on two key comparative statics namely the depth of discounts away from a regular high price and the probability of giving a deal or the frequency of deals how these properties vary with the size of the loyal markets and the behavior of the brand switching population is discussed copyright 1988 by the university of chicago

us biofuels subsidies and co2 emissions an empirical test for a weak and a strong green paradox abstract using energy data over the period 1981 2011 we find that us biofuels subsidies and production have provided a perverse incentive for us fossil fuel producers to increase their rate of extraction that has generated a weak green paradox further in the short run if the reduction in the co 2 emissions from a one to one substitution between biofuels and fossil fuels is less than 26 percent or less than 57 percent if long run effect is taken into account then us biofuels production is likely to have resulted in a strong green paradox these results indicate that subsidies for first generation biofuels which yield a low level of per unit co 2 emission reduction compared to fossil fuels might have contributed to additional net co 2 emissions over the study period

institutional causes macroeconomic symptoms volatility crises and growth countries that have pursued distortionary macroeconomic policies including high inflation large budget deficits and misaligned exchange rates appear to have suffered more macroeconomic volatility and also grown more slowly during the postwar period does this reflect the causal effect of these macroeconomic policies on economic outcomes one reason to suspect that the answer may be no is that countries pursuing poor macroeconomic policies also have weak institutions including political institutions that do not constrain politicians and political elites ineffective enforcement of property rights for investors widespread corruption and a high degree of political instability this paper documents that countries that inherited more extractive institutions from their colonial past were more likely to experience high volatility and economic crises during the postwar period more specifically societies where european colonists faced high mortality rates more than 100 years ago are much more volatile and prone to crises based on our previous work we interpret this relationship as due to the causal effect of institutions on economic outcomes europeans did not settle and were more likely to set up extractive institutions in areas where they faced high mortality once we control for the effect of institutions macroeconomic policies appear to have only a minor impact on volatility and crises this suggests that distortionary macroeconomic policies are more likely to be symptoms of underlying institutional problems rather than the main causes of economic

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

ownership risk investment and the use of natural resources the effect of insecure ownership on ordinary investment and natural resource use is examined insecure ownership is postulated to depend on the type of government regime in power and the prevalence of political violence or instability the political determinants of economy wide investment are estimated from cross country data and the results are used to form an index of ownership security when introduced into empirical models of natural resource use this index has a significant and quantitatively important effect on the use of forests and petroleum contrary to conventional wisdom ownership risk slows resource use in some circumstances

informative price advertising in a sequential search model the purpose of this paper is to study the role and implications of price advertising when shopping trips are costly to consumers to do so we introduce advertising into an optimal sequential search model information about prices is both gathered by consumers and disseminated by firms consumers search sequentially and stores advertise with various intensity when it is in their interest to do so our model has a unique equilibrium exhibiting priee dispersion the model generates predictions about the shape of the price distribution and firms advertising behavior we explore the effects of entry and find that when initial advertising costs at zero level of effort are precisely zero entry drives the equilibrium to the perfectly competitive outcome however when initial marginal advertising costs are positive entry drives prices higher and while the informed consumers almost surely locate competitive prices welfare does not necessarily increase finally we compare the effectiveness of the two informational channels when advertising costs shrink prices become competitive however when search costs shrink prices remain bounded above marginal production costs

can institutional investors bias real estate portfolio appraisals evidence from the market downturn this paper investigates the extent to which institutional investors may have influenced independent real estate appraisals during the financial crisis a conceptual model of the determinants of client influence on real estate appraisals is proposed it is suggested that the extent of clients ability and willingness to bias appraisal outputs is contingent upon market and regulatory environments ethical norms and legal and institutional frameworks the salience of the appraisal s to the client financial incentives for the appraiser to respond to client pressure organisational culture the level of moral reasoning of both individual clients and appraisers client knowledge and the degree of appraisal uncertainty the potential of client influence to bias ostensibly independent real estate appraisals is examined using the opportunity afforded by the market downturn commencing in 2007 in the uk during the market turbulence at the end of 2007 the motivations of different types of owners to bias appraisals diverged clearly and temporarily provided a unique opportunity to assess potential appraisal bias we use appraisal based performance data for individual real estate assets to test whether there were significant ownership effects on performance during this period the results support the hypothesis that real estate appraisals in this period reflected the differing needs of clients

spatial price discrimination with heterogeneous products product heterogeneity is introduced into the context of spatial price discrimination many of the strong properties of the standard homogeneous goods case which are attained as a limit case here are shown to be no longer valid in particular the social optimum is no longer sustainable as a market equilibrium unless products are either identical or else very different

truly costly sequential search and oligopolistic pricing we modify the paper of stahl 1989 stahl d o 1989 oligopolistic pricing with sequential consumer search american economic review 79 700 12 by relaxing the assumption that consumers obtain the first price quotation for free when all price quotations are costly to obtain the unique symmetric equilibrium need not involve full consumer participation the region of parameters for which non shoppers do not fully participate in the market becomes larger as the number of shoppers decreases and or the number of firms increases the comparative statics properties of this new type of equilibrium are interesting in particular expected price increases as search cost decreases and is constant in the number of shoppers and in the number of firms welfare falls as firms enter the market we show that monopoly pricing never obtains with truly costly search d 2005 elsevier b v all rights reserved

conflict of interest and the credibility of underwriter analyst recommendations brokerage analysts frequently comment on and sometimes recommend companies that their firms have recently taken public we show that stocks that underwriter analysts recommend perform more poorly than buy recommendations by unaffiliated brokers prior to at the time of and subsequent to the recommendation date we conclude that the recommendations by underwriter analysts show significant evidence of bias we show also that the market does not recognize the full extent of this bias the results suggest a potential conflict of interest inherent in the different functions that investment bankers perform

price competition and advertising in oligopoly abstract this paper studies price advertising in an oligopoly market where consumers have only local price information sellers may attract consumers from other locations by advertising their price with positive probability they advertise a low price to attract customers from distant locations with the remaining probability they post a high price and serve only local customers the random advertising equilibrium approaches the equilibrium under perfect price information when the cost of advertising becomes small

minerals institutions openness and growth an empirical analysis competing explanations of the resource curse are tested using panel data the data support the existence of a mineral resource curse for developing countries with weak institutions consistent with the hypothesis that owners of mineral resources use weak institutions and openness to trade to stifle the development of human capital to the detriment of growth in other sectors of the economy manufacturing imports substitute for the development of domestic production so openness to trade correlates with lower growth in mineral dependent economies the dutch disease and debt overhang explanations of the resource curse are not supported

how large are global fossil fuel subsidies summary this paper estimates fossil fuel subsidies and the economic and environmental benefits from reforming them focusing mostly on a broad notion of subsidies arising when consumer prices are below supply costs plus environmental costs and general consumption taxes estimated subsidies are 4 9 trillion worldwide in 2013 and 5 3 trillion in 2015 6 5 of global gdp in both years undercharging for global warming accounts for 22 of the subsidy in 2013 air pollution 46 broader vehicle externalities 13 supply costs 11 and general consumer taxes 8 china was the biggest subsidizer in 2013 1 8 trillion followed by the united states 0 6 trillion and russia the european union and india each with about 0 3 trillion eliminating subsidies would have reduced global carbon emissions in 2013 by 21 and fossil fuel air pollution deaths 55 while raising revenue of 4 and social welfare by 2 2 of global gdp

on informative advertising and product differentiation abstract we study informative advertising within a random utility non localized competition model of product differentiation quasi concavity of profits may fail as each firm may prefer to deviate to a high price targeting consumers who only become informed about its own product when a symmetric equilibrium exists it is unique increasing the number of firms may increase or decrease the equilibrium price advertising tends to be suboptimal when product differentiation is low and excessive otherwise we also revisit grossman and shapiro grossman g shapiro s 1984 informative advertising with differentiated products review of economic studies 51 63 81 focusing on similarities in constructing a symmetric equilibrium in the two models but also illustrating differences in their welfare properties

democratization or repression abstract regimes controlled by a rich elite often collapse and make way for democracy amidst widespread social unrest such regime changes are often followed by redistribution to the poor at the expense of the former elite we argue that the reason why the elite may have to resort to full scale democratization despite its apparent costs to themselves may be that lesser concessions would be viewed as a sign a weakness and spur further unrest and more radical demands the elite may therefore be forced to choose between repression and the most generous concession a transition to full democracy

oligopolistic pricing and advertising abstract n sellers advertise a homogeneous good to m buyers whose only source of information is this advertising there is a unique nash equilibrium ne in which sellers choose a common advertising level and mix over prices this ne approaches marginal cost pricing as advertising costs decrease and approaches monopoly pricing as advertising costs increase more sellers induce lower prices and less advertising per seller however the social welfare effect can be negative for some advertising technologies the ne advertising level is generically less than socially optimal journal of economic literature classification numbers d00 d4 d43 d8 d83 i00 i1 i13 m37

hotelling under pressure we show that oil production from existing wells in texas does not respond to oil prices while drilling activity and costs respond strongly to explain these facts we reformulate hotelling s class

going where the ad leads you on high advertised prices and searching where to buy an important role of informative advertising is to inform consumers of the simple fact that the shop that advertises sells a particular product this information may help consumers to save on their search activities instead of wandering around a consumer can simply visit the shop that has advertised knowing that there he can find the commodity he is looking for the implications of this simple fact have not been studied before using game theoretic reasoning in a model that combines consumer search and firms advertising we show that firms may find it optimal to advertise prices that are higher than nonadvertised prices the important mechanism underlying this result is that advertising lowers the expected search cost for consumers through this analysis we provide a new insight into the role of informative advertising

segmentation advertising and prices this paper explores the implications of market segmentation on firm competitiveness in contrast to earlier work here market segmentation is minimal in the sense that it is based on consumer attributes that are completely unrelated to tastes we show that when the market is comprised by two consumer segments and when there is sufficient variation in the per consumer costs firms need to incur to access the different consumer populations then firms obtain positive profits in symmetric equilibrium otherwise the equilibrium is characterized by zero profits as a result a minimal form of market segmentation combined with advertising cost asymmetries across consumer segments give firms an opportunity to generate positive rents in an otherwise bertrand like environment

aggregation and imperfect competition on the existence of equilibrium we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result provides general conditions under which there exists a pure strategy price equilibrium for any number of firms producing any set of products this includes products with multi dimen sional attributes in addition to the proof of existence we provide conditions for uniqueness our analysis covers location models the characteristics approach and probabilistic choice together in a unified framework to prove existence we employ aggregation theorems due to prekopa 1971 and borell 1975 our companion paper caplin and nalebuff 1991 introduces these theorems and develops the application to super majority voting rules we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result is that there exists a pure strategy price equilibrium for any number of firms producing any set of products in addition to the proof of existence we provide conditions for uniqueness our model both unites diverse strands of the earlier literature and opens up uncharted areas for future analysis in particular we expand the traditional one dimensional framework to allow for multi dimen sional product differentiation our approach involves twin restrictions on consumer preferences one on individuals preferences the other on the distribution of preferences across society these are generalizations of the restrictions supporting 64 majority rule presented in caplin and nalebuff 1988 to prove existence we apply a new technique of aggregation this technique is valuable in a variety of other problems in the companion paper we use the aggregation result to generalize our earlier work on 64 majority rule and to characterize the relationship between the distribution of human capital and the distribution of income caplin and nalebuff 1991 there are additional applications in statistics and in search theory we begin with a brief review of the early literature on imperfect competition describing in more detail the existence problem and previous solutions section 3 presents our twin assumptions and shows that they cover many standard cases in section 4 we introduce the aggregation theorem and use it in the analysis of demand functions the proof of existence of equilibrium is in section

information gatekeepers on the internet and the competitiveness of homogeneous product markets we examine the equilibrium interaction between a market for price information controlled by a gatekeeper and the homogenous product market it serves the gatekeeper charges fees to firms that advertise prices on its internet site and to consumers who access the list of advertised prices gatekeeper profits are maximized in an equilibrium where a the product market exhibits price dispersion b access fees are sufficiently low that all consumers subscribe c advertising fees exceed socially optimal levels thus inducing partial firm participation and d advertised prices are below unadvertised prices introducing the market for information has ambiguous social welfare effects

the effects of direct to consumer advertising of pharmaceuticals on adherence we evaluate the effect of direct to consumer dtc advertising on adherence to the standard drug regimen for treating high cholesterol statins we use a rich panel data set from an insurance firm that includes all prescription drug purchases and insurance claims from 1997 to 2002 the data include the relevant demographic variables including income we match this data with unique data from nielsen monitor plus on monthly dtc advertising expenditures by therapeutic category for all media types the research strategy identifies individuals who have been diagnosed with specific chronic conditions and tracks whether adherence as measured by purchases of specific prescription drugs within designated therapeutic classes can be explained in part by the level and type of dtc advertising to which the individual was potentially exposed income has a positive effect on adherence we find that advertising has a small negative effect on the average level of adherence we find some suggestive evidence that this is b

competition of firms discriminatory pricing and location1 two costlessly mobile firms are to be located in a market region a subset of the plane the firms compete by setting locations and delivered price schedules to study this competitive stiuation an appropriate extensive form game is defined along with an appropri ate noncooperative solution concept existence and general properties of the equilibrium are demonstrated among the results are each firm increases its profit by locating so as to decrease total cost to both firms of serving the market firms will never locate coinciden tally if they have identical production costs and transport cost rates or if these are different and the firms are located in a circular market region having a uniform demand distribution this paper studies competition between two profit maximizing firms in space who are costlessly mobile and may discriminate in price we will allow the firms to set locations and delivered price schedules and we will be concerned with the existence and properties of equilibria in location and price starting with hotelling 9 the spatial competition literature has focused on location on bounded linear markets by two or more firms hotelling assumed identical firms that produced a single good with constant cost of production and considered consumers to be uniformly distributed and to have inelastic demand he also assumed that the consumers pay transport cost and purchase the good from the cheapest source hotelling claimed that a nash equilibrium in locations for the two firm market existed and yielded back to back locations at the center of the market many authors most recently d aspremont gabszewicz and thisse 2 have noted that an equilbrium in prices and location does not exist for hotelling s model however if the firms employ identical exogeneously specified prices hotelling s conclusions hold subsequent work by smithies 14 hartwick and hartwick 7 and eaton 3 claimed to show that a nash equi librium in f o b prices and locations can exist in markets with a uniform distribu tion of consumers each of whom have identical elastic demand functions for the two and three firm problems the work of d aspremont et al casts doubt on these conclusions without the adoption of restrictive conditions our work contrasts with these works and related research which has dealt with linear markets with uniform distributions of customers and with identical firms our work will involve markets that are subsets of the plane having nonuniform distributions of customers our firms will be allowed to be different that is have differences in production and transport costs however the fundamental difference in our approach is that our firms will set discriminatory prices and not price f o b in many ways our work will represent the discriminatory pricing

threshold effects in the u s budget deficit i introduction there has been an ongoing debate on whether the u s fiscal policy is sustainable in the long run in addressing this issue a number of studies have examined whether the u s public finances are compatible with the government s intertemporal solvency constraint hamilton and flavin 1986 trehan and walsh 1988 hakkio and rush 1991 among others the requirement of budget processes to be sustainable implies effectively that ponzi games are ruled out as a viable option of government finance in other words further new borrowing cannot be used indefinitely as a method of financing interest payments on existing debt therefore the solvency constraint requires that any changes in taxes and government spending are followed by adjustment in future taxation and or spending that equals to the original change in present value this solvency constraint imposes testable restrictions on the time series properties of key fiscal aggregates in this article we present new evidence on this ongoing solvency debate utilizing an empirical framework that allows us to test whether there have been threshold effects in the u s deficit unlike existing empirical studies that focus only on the identification of regime shifts in u s fiscal policy we also offer an explanation and provide evidence as to why these regime shifts might occur specifically we argue that for fiscal authorities to be able to meet the solvency constraint they would intervene through deficit cuts only when the government budget deficit becomes very large therefore we expect a mean reverting dynamic behavior for deficits only when they are above some threshold value we test for this hypothesis using the threshold unit root empirical methodology recently developed by caner and hansen 2001 the article is organized as follows section ii reviews the empirical evidence section iii describes the empirical methodology and section iv presents the empirical results which are analyzed and interpreted section v summarizes and concludes ii intertemporal solvency condition empirical underpinnings one strand of the empirical literature focuses on the stationarity of the stock of public debt uctum and wickens 1997 deal with stochastic interest rates and primary surpluses that are allowed to be either exogenous or endogenous to the stock of public debt they show that a necessary and sufficient condition for the intertemporal solvency condition to hold is a stationary discounted stock of public debt another strand of the empirical literature has concentrated on the dynamics of the undiscounted inclusive of interest deficit or alternatively on the long run relationship between government spending and tax revenues trehan and walsh 1988 show that government spending inclusive of interest payments and government revenues should be cointegrated with a cointegrating vector equal to 1 1 they present evidence that supports this restriction hakkio and rush 1991 point out that a necessary condition for intertemporal solvency is the existence of cointegration between government expenditure inclusive of interest payments and government revenues with a cointegrating vector equal to 1 beta and 0 quintos 1995 expands on hakkio and rush 1991 and shows that cointegration is not necessary for the intertemporal balance condition to hold specifically she distinguishes between a weak and a strong sustainability condition the former implies that the government solvency holds but the undiscounted debt process is exploding at a rate that is less than the growth rate of the economy although this case is consistent with deficit sustainability it is inconsistent with the ability of the government to market its debt in the long run especially if the focus is on the debt to gross national product gnp or on the debt per capita see also hakkio and rush 1991 in contrast strong sustainability implies that the undiscounted public debt is finite in the long run