competitive equilibria and the core of overlapping generations economies this paper analyzes whether the well known result that for arrow debreu economies all competitive equilibria belong to the core holds true in overlapping generations economies in these economies competitive equilibria are not a subset of the core we define the classical set as the set of all those competitive allocations which cannot be affected by a monetary tax transfer policy then we demonstrate that every competitive equilibrium in the classical set belongs to the core of the economy further we show that for large economies no monetary equilibrium belongs to the core journal of economic liferature classification numbers 021

the effects of entry regulation on oligopolistic interaction the uruguayan banking sector this article develops a methodology to test alternative oligopoly models and to analyze the effects of entry restrictions on conduct this methodology is applied to the uruguayan banking sector whose legal entry barriers were significantly relaxed during the late 1970s the results are consistent with a von stackelberg type of industry where the degree of oligopolistic interaction among the leading firms is reduced as a consequence of the relaxation of the legal entry barriers

interbank networks in prewar japan structure and implications forthcoming as interbank networks in prewar japan structure and implications with michiru sawada industrial and corporate change 2011

identifying the warm glow effect in contingent valuation abstract this paper reports the results from a contingent valuation study designed to investigate the influence of warm glow in willingness to pay wtp responses interindividual differences in warm glow motivation are measured through a factor analysis performed on a list of attitudinal items the reported wtp measures fail to pass the scope test both socioeconomic variables and motivational factor scores are significant in the explanation of the individual wtp measures we compute cold wtp measures by taking out the effect of the warm glow motivation these cold measures satisfy both the scope test and hausman s adding up property

a note on the core of a monetary economy this note shows that there are monetary equilibria in the model of overlapping generations that are in the core some equilibria have positive stocks of outside money in every generation these equilibria are thus self enforcing and introducing money into an economy need not be tantamount to contriving a new social institution designed to enforce sequential contracts journal of economic literatureclassification numbers e40 e60 c71

the joint production of confidence endogenous regulation and nineteenth century commercial bank clearinghouses during the nineteenth century deposits increased relative to bank notes c ausing increased information asymmetry problems in banking this pape r describes how bank clearinghouses lowered these costs by monitoring bank activities and establishing mechanisms of managerial control i n effect regulating bank behavior such actions enforced the loca l one to one exchange rate between deposits and specie clearinghouse s increased regulation during financial panics creating and enforcin g a risk sharing device loan certificates for addressing panic rela ted information problems this paper concludes that the market s capacity to control bank managers depends on the banking product mix and more generally on information costs copyright 1987 by ohio state university press

implications of basing health care resource allocations on cost utility analysis in the presence of externalities abstract cost utility analysis is increasingly being advocated as a tool for helping to establish funding priorities among programs and services in the health care sector as currently conducted however cost utility analysis is problematic as a basis for achieving allocative efficiency because it excludes externalities the exclusion of externalities may bias program ranking in unpredictable ways leading to a non optimal allocation of resources consideration of externalities also raises a number of distributional issues for the evaluation of health services and highlights the importance of developing economic evaluation methods that are consistent with the conceptual basis for allocating resources

illinois free banking experience recent studies by a j rolnick and w e weber 1983 1984 suggest that the conventional view of wildcat banking during the free banking era misrepresents the actual experience and that the problems of th e period were linked to a restriction imposed on the free bank rather than the lack of regulation illinois free banking experience is re examined to see if the traditional account of wildcat banking accurat ely portrays the actual experience and to test the validity of the ro lnick and weber assertions the illinois evidence shows that the trad itional accounts of wildcat banking were exaggerated and that the rol nick and weber assertions are substantiated copyright 1988 by ohio state university press

the rosse panzar statistic and the lerner index in the short run abstract the lerner index or price cost margin is derived in terms of the rosse panzar statistic thereby broadening our understanding of the latter and affording a way of empirically estimating the former

domestic and international determinants of bank profits foreign banks in australia abstract this paper develops and tests a model that integrates the existing multinational bank literature with the domestic bank profits literature using data for australia this paper demonstrates that an integrated model results in a small increase in explanatory power when compared to models drawn solely from the multinational banking literature the paper finds that profits are a negative function of competitor market share and bank licence status and a positive function of australian size and home gdp growth it is argued that there is incomplete integration between the market segments of domestic and multinational banks due to the first mover advantages of incumbent banks

the decision to establish a foreign bank branch or subsidiary an application of binary classification procedures this paper has two purposes first we model a key decision for inter national banks using data on the foreign direct investment fdi behavior of foreign banks in japan and california second we examine the utility of linear discriminant analysis and maximum likelihood logit analysis as statistical techniques for relating a qualitative dependent variable to a vector of inde pendent variables we apply these techniques to the decision by parent banks as to whether or not to have a subsidiary branch in california japan we treat the deci sion as a binary choice based on a consideration of various relevant factors the population for each of the countries consists of those foreign to the host country banks that already have a presence in the country the research ques tion then becomes given that a foreign bank is in the country does the extent of the parent bank s experience internationally and in the host country affect the probability that it will deepen its presence the choice of statis tical tools by which to examine this question gives rise to our methodological concerns

health related externalities evidence from a choice experiment health related external benefits are of potentially large importance for public policy this paper investigates health related external benefits using a stated preference discrete choice experiment framed in a health care context and including choice scenarios defined by six attributes related to a recipient and the recipient s condition communicability severity medical necessity relationship to respondent location and amount of contribution requested subjects also completed a set of own treatment scenarios and a values orientation instrument we find evidence of substantial health related external benefits that vary as expected with the scenario attributes and subjects value orientations the results are consistent with a number of hypotheses offered by the general theoretical analysis of health related externalities and the analysis of externalities specific to health care

on the performance of differently regulated financial institutions some empirical evidence abstract the paper raises two questions about the industrial economics of banking first why are financial market configurations so different across nations we discuss the theoretical arguments by following the sequence regulation structure performance section 2 second do the differences in regulation and structure matter section 3 provides empirical evidence pertaining to that question throughout the paper we refer to two polar cases of financial systems market m and bank b based systems as for banks we distinguish between specialised and universal banks universal banking is a particular institutional representation of b systems a first empirical test relating macroeconomic growth to financial variables suggests that these variables matter we then test with a set of 88 banks the effects of regulatory and structural variables on the level and variability of bank performance we conclude that universal banks achieve a better risk return trade off due to superior monitoring and information collection capacity

breaking the bank a probabilistic assessment of euro area bank profitability this paper explores the determinants of profitability across large euro area banks using an approach based on conditional profitability distributions the most reliable determinants of bank profitability are real gdp growth and the nonperforming loan npl ratio the estimated conditional distributions reveal that while higher growth would raise profits on average a large swath of banks would most likely continue to struggle even amid a strong economic recovery therefore for some banks a determined reduction in npls combined with cost efficiency improvements and customized changes to their business models appears to be the most promising strategy for durably raising profitability

short run core equivalence in an overlapping generations model abstract this essay establishes the equality between the set of competitive equilibrium allocations and the set of allocations which belong to the cores of a sequence of short run economies for an overlapping generations model a short run economy is a finite period economy obtained by truncating the original economy so that the truncated economy is irreducible

a second note on the core of the overlapping generations model abstract this note provides an example of an overlapping generations economy with a pareto optimal walrasian equilibrium and an empty core then in the context of the economy examined by balasko and shell 1980 a sufficient condition is provided for a pareto optimal walrasian equilibrium to be contained in the core

are choice experiments incentive compatible a test with quality differentiated beef steaks this study compares hypothetical and nonhypothetical responses to choice experiment questions we test for hypothetical bias in a choice experiment involving beef ribeye steaks with differing quality attributes in general hypothetical responses predicted higher probabilities of purchasing beef steaks than nonhypothetical responses thus hypothetical choices overestimate total willingness to pay for beef steaks however marginal willingness to pay for a change in steak quality is in general not statistically different across hypothetical and actual payment settings

fiat exchange in finite economies the state of the art of rendering fiat money valuable is either to impose a boundary condition or to make the boundary condition unimportant through an infinite sequence of markets so as to circumvent backward induction we show fiat exchange may nevertheless arise in finite economies if agents have incomplete information about their relative position in the trade cycle or when the barter and autarky equilibria of the one shot trading round support a monetary equilibrium with repeated trades

hidden effects of bank recapitalizations abstract given the importance of capital regulation in the banking industry how and why a bank s behavior reacts to a recapitalization has profound consequences to this end we investigate the effects of 306 seasoned equity offerings seos conducted by listed european banks between 2002 and 2014 we use propensity score matching and find that seos lead to asset expansion as opposed to any deleveraging further we find a decrease in lending in the short term followed by a subsequent increase a reduction in profitability and an increase in systemic risk regulators might not have fully considered this last negative externality when they imposed the tougher basel iii capital requirements the effects of seos strongly depend on the reasons behind the recapitalizations

a finite horizon monetary economy abstract conventional wisdom says that there is no demand for money in an economy of finite duration in this article we show that this is not necessarily the case we use a random matching model in which the function of money is to mediate exchange by alleviating the double coincidence of wants problem towards the end economic activity decreases but this does not affect the ability of money to speed up trade

implications of spillover effects within the family for medical cost effectiveness analysis medical cost effectiveness analyses traditionally treat patients as isolated individuals and neglect the effects of improvement in patients health on the welfare of their family members we use a model based on a family utility function with altruistic linkages to show that there can be direct and indirect effects on the welfare of all family members we focus specially on a model of how the spillover effects to the spouse in a two person family might affect choice of treatments for prostate cancer we then test the predictions of this model by analyzing treatment choices of prostate cancer patients using the linked seer medicare database we find that our results are consistent with the model s predictions we conclude that cost effectiveness analyses may better reflect the full costs and benefits of medical interventions if they incorporate these family effects however concerns about equity present a dilemma for the practice of cea from the societal perspective

international banking a survey two distinct sets of issues are involved in the analysis of international banking one set the industrial organization issues centers on the patterns of expansion of foreign branches and subsidiaries of banks headquartered in the united states great britain japan and a few other industrial countries and on the nature of the advantage that these branches and subsidiaries have in relation to their host country competitors the second set the international finance issues involves the role of banks in cross border and cross currency financial flows both from their head offices and from their foreign branches and subsidiaries despite the attention to international banking there are few uniquely international institutions rather international banks are a subset of domestic banks with significant numbers of foreign branches and subsidiaries moreover there are few uniquely international banking activities although foreign exchange trading may seem to be one in many countries most or all foreign exchange trading involves domestic banks with few if any foreign branches the growth of foreign branches and subsidiaries of major banks occurred in two waves the first occurred in the decades before world war i when the war started

pricing operating efficiency and profitability among large commercial banks abstract this study uses statistical cost accounting techniques to examine the relationship between bank profitability and two dimensions of operating performance pricing and operating efficiency the traditional statistical cost accounting model which relates a firm s income to its asset and liability mix is expanded to account for differences in market structure regional demand and supply conditions and macroeconomics factors the study focuses on large above 500 million in domestic deposits banks comparing a sample of relatively profitable banks against a matched group of much less profitable banks over the period 1970 1977 after allowing for regional supply and demand factors the high and low profit banks are estimated to earn equal market rates of return on individual assets and liabilities there is virtually no evidence that differential prices are an important discriminator between the two bank groups some evidence is found that the high earnings banks experience lower operating costs on some liabilities but the opposite is true with respect to selected asset items after taxes are taken into account however any such cost differentials virtually disappear overall there is no compelling evidence that high profit banks are characterized by greater operating efficiency than their low earnings counterparts this finding is consistent with the view that over time and especially among relatively large banks information flows and competitive pressures act to reduce operating efficiency differences that may appear in the short run

the role of location related factors in u s banking involvement abroad an empirical examination this study examines the role of major location specific advantages in the international branch banking involvement of u s banks using pooled time series 1976 82 cross sectional thirty countries regression analysis this study finds that the u s business presence in foreign country has a strong positive effect on u s branch banking activity in that country in contrast the local market opportunity appears to have no significant effect these results hold for the entire set of countries as well as each of five subsets developed less developed european latin american and asian countries the openness of the host country to the establishment of new foreign bank branches does affect u s branch banking involvement this effect is most pronounced in the less developed countries particularly those in asia

costly transfer institutions and the core in an overlapping generations model we examine an overlapping generations economy with no pre existing intergenerational transfers and study the set of transfer institutions in the core of the economy that is institutions that would be admissible for the first generation to create and would not be rejected by any future generation institution building is assumed to be costly we allow the cost of creating a new institution to vary with the size of the transfer it institutes and show that all institutions in the core must cost as much to build as they transfer in fact the core set is nonempty if and only if the institution that supports the golden rule transfer costs as much to create as it transfers the core set is characterized for various cost functions we conclude that costs associated with the creation of transfer institutions are essential to make intergenerational transfers socially viable but they may induce the choice of institutions making suboptimal transfers

competition conduct and demand elasticity abstract this paper demonstrates the relationship between the rosse panzar test for competitive conduct and the firm s elasticity of demand and develops a method of increasing the test s discriminating power

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

the challenge of monetary theory departing from custom i want to address a problem that needs to be solved rather than one that has been solved i do not have much to contribute to its solution but i believe that the problem is important and want to focus attention on it in general terms the problem is to find appropriate conceptual foundations for monetary economics i believe that we do not as yet have a suitable theoretical framework for studying the functioning of a monetary system the main obstacle to the development of such a framework is our habit of thinking in terms of frictionless organized i e walrasian markets the problem is partly a problem of language the central concepts of economics demand supply and price are concepts that presuppose a system of centralized walrasian markets we are used to thinking in terms of these concepts and we tend to apply them rather automatically to the market for money frequently without realizing that the market for money must be a rather non walrasian market if indeed it can be called a market at all more or less all the models of monetary economics that are being used in practice proceed in this way using artifical adaptations of the walrasian centralized markets model to accommodate money without actually giving an account of what the role of money in the economy is the problem is one of pure economic theory however it bears on many important questions of applied economics and economic policy to study the relation between money income and prices we need a framework which gives a satisfactory account of the relation between the monetary system and the price mechanism to study the effects of central bank open market

size growth and transnationality among the world s largest banks this essay investigates the relationship between size and growth rate of large international banks and then relates these to the banks degree of transnationality we test two sets of three propositions each the first three propositions are pi that the growth rate of each bank over some period is independent of its size p2 that the variability of growth rates is independent of the banks size and p3 that the banks growth rates in two consecutive periods are independent of each other the second three propositions are p4 that there is no association between size and transnationality p5 that transnationality and growth are independent and p6 that there is no relationship between transnationality and the variability of growth rates the growth referred to is primarily that of assets as a measure of size for the two propositions concerning the variability of growth rates we supplement this measure with one of the market value of the banks equity the results have implications for concentration in internathis paper investigates six propositions relating to gibrat s law of proportionate growth the growth referred to is that of book assets and total market value the results have implications for concentration in international banking and for depositor safety and the social cost of insuring it and provide evidence on economies of scale and on the transnational spread of the industry

parental altruism and the value of avoiding acute illness are kids worth more than parents abstract a model describing parents preferences to relieve their own and their children s acute illnesses is estimated using stated preference data estimated marginal rates of substitution mrs between child and parent illness are about two indicating that parents value children s illness attributes twice as highly as their own the mrs is larger for younger children falls toward unity as the child approaches adulthood and appears to reflect parental altruism rather than parent child differences in initial health or illness costs intra family allocations may compensate for chronic health impairments parents willingness to pay to avoid own or child illness increases with income declines with fertility increases at a decreasing rate with duration and number of symptoms and depends on perceived discomfort and activity restrictions current methods of assessing morbidity benefits of environmental regulations may understate substantially the value of children s health particularly in african american families

how do respondents process stated choice experiments attribute consideration under varying information load the popularity of stated choice sc experiments has produced many design strategies in which researchers use increasingly more complex choice settings to study choice behaviour when the amount of information to assess increases we wonder how an individual handles such information in making a choice defining the amount of information as the number of attributes associated with each choice set we investigate how this information is processed as we vary its complexity four ordered heterogeneous logit models are developed each for an sc design based on a fixed number of attributes in which the dependent variable defines the number of attributes that are ignored we find that the degree to which individuals ignore attributes is influenced by the dimensionality of the sc experiment the deviation of attribute levels from an experienced reference alternative the use of adding up attributes where feasible the number of choice sets evaluated and the personal income of the respondent the empirical evidence supports the view that individuals appear to adopt a range of coping strategies that are consistent with how they process information in real markets and that aligning choice complexity with the amount of information to process is potentially misleading relevancy is what matters copyright 2006 john wiley sons ltd

contestable markets an uprising in the theory of industry structure presents a transcript of the presidential address delivered at the 94th meeting of the american economic association on december 29 1981 discussion of developments in the theory of industry structure welfare attributes of contestable markets behavior characteristics of oligopoly equilibrium intertemporal vulnerability to inefficient entry ebsco

on dynamics and the core of og models stationary overlapping generations models can exhibit fluctuations however the fluctuations which have been studied by benhabib and day journal of economic dynamics and control 1982 4 37 55 gale journal of economic theory 1973 6 12 36 grandmont econometrica 1985 53 995 1046 and others are not in the core even though they are pareto optimal in the present paper it is shown that general stationary overlapping generation economies can have periodic equilibria in the core

the law of proportionate effect and oecd bank sectors the paper investigates the growth dynamics of the bank sectors in the oecd area over the period 1985 1994 and examines whether the structural financial reforms of the late 1980s have affected their growth path based on a test of gibrat s law of proportionate effect it is found that the 1985 89 period was characterized by size convergence implying that smaller bank sectors were expanding more rapidly however in the 1990 1994 period the pattern reversed to proportionate growth the analysis of the determinants of bank market growth reveals that macroeconomic growth operational bank efficiency credit quality and capitalization are the main drivers of bank industry growth

monetary policy and bank profitability in a low interest rate environment we analyse the impact of standard and non standard monetary policy on bank profitability we use both proprietary and commercial data on individual euro area bank balance sheets and market prices our results show that a monetary policy easing a decrease in short term interest rates and or a flattening of the yield curve is not associated with lower bank profits once we control for the endogeneity of the policy measures to expected macroeconomic and financial conditions accommodative monetary conditions asymmetrically affect the main components of bank profitability with a positive impact on loan loss provisions and non interest income offsetting the negative one on net interest income a protracted period of low monetary rates has a negative effect on profits that however only materializes after a long time period and is counterbalanced by improved macroeconomic conditions monetary policy easing surprises during the low interest rate period improve bank stock prices and cds

a characterization of the core in overlapping generations economies abstract in this paper we characterize the set of consumption allocations that belong to the core and show that for the case of one agent per generation and one good no monetary equilibrium is in the core for economies with many goods we give bounds on the value of money transactions for competitive equilibria to belong to the core

simple banking profitability and the yield curve how does bank profitability vary with interest rates we present a model of a monopolistically competitive bank subject to repricing frictions and test the model s predictions using a unique panel data set on uk banks we find evidence that large banks retain a residual exposure to interest rates even after accounting for hedging activity operating through the trading book in the long run both level and slope of the yield curve contribute positively to profitability in the short run however increases in market rates compress interest margins consistent with the presence of nonnegligible loan pricing frictions

bank entry during the antebellum period a recent study by kenneth ng 1988 challenges the view the free banking laws lowered barriers to entry the authors study examines bank entry and capital formation in free and nonfree banking states during the free banking period a competitive model is developed and used to test if barriers were lowered in free banking states the evidence indicates that entry significantly increased after the enactment of the free banking laws and that entry policy in nonfree banking states appeared to have been liberalized when the free banking laws were enacted in other states copyright 1995 by ohio state university press

competing at home to win abroad evidence from japanese industry the study explores the influence of domestic competition on international trade performance using data from a broad sample of japanese industries domestic rivalry is measured directly using market share instability rather than employing structural variables such as seller concentration we find robust evidence that domestic rivalry has a positive and significant relationship with trade performance measured by world export share particularly when r d intensity reveals opportunities for dynamic improvement and innovation conversely trade protection reduces export performance these findings support the view that local competition not monopoly collusion or a sheltered home market pressures dynamic improvement that leads to international competitiveness

on the profitability of commercial banks the sri lankan case abstractthis study determines the factors affecting the profitability of licensed commercial banks lcbs in sri lanka including the effect of the prolonged conflict which ended in 2009 using an error correction model together with data for the period 2006 2014 of 10 major lcbs the results reveal that in the short run capital and liquidity have a positive effect on bank profitability and default loans interest margin im operating cost and interest rates irs have a negative effect in the long run bank profitability is significantly impacted by default loans im real gdp inflation irs capital operating cost and conflict the ending of the prolonged conflict has significantly contributed to improved bank performance

international retail banking as a strategy an assessment we assess the viability of a bank s strategy of entering into retail banking worldwide wherever regulations permit via a review of literature and evidence on foreign direct investment in banking issues we discuss include the roles of regulation the costs of operating at a distance and in an unfamiliar environment and the advantages or offsetting factors which foreign banks may possess relative to their local competitors the factors the paper examines are uncompetitive host markets product differentiation economies of scale management and technology cost of capital government support and vertical integration

the bounded core of an overlapping generations economy the bounded core is the set of allocations which are not improved upon by any bounded set of agents we submit that the bounded core does not serve as a criterion for the efficiency of allocations in an overlapping generations economy for it may include allocations which are not even short run pareto optimal we also submit that the bounded core is a weak criterion for the robustness of allocations in an overlapping generations economy for it may not shrink to the set of competitive equilibrium allocations as the individual agents become negligible

commercial bank ownership and performance in china this study examines the determinants of bank performance based on proxy variables that assess the quality of assets profitability liquidity and overall performance using a sample of 111 chinese commercial banks over the period of 2000 2012 we find that foreign banks appear to have better asset quality and overall performance although lower profitability compared to domestic banks in contrast the state owned banks tend to be more profitable and have better liquidity position compared with other domestic banks and foreign banks at bank level equity liability ratio exerts significant influence on overall bank performance while at the macroeconomic level per capital gdp gdp growth inflation and unemployment rates appear to have a bearing on bank performance

does market structure matter on banks profitability and stability emerging vs advanced economies abstract we empirically investigate the effects of market structure on profitability and stability for 1929 banks in 40 emerging and advanced economies over 1999 2008 by incorporating the traditional structure conduct performance scp and relative market power rmp hypotheses we observe that a greater market share leads to higher bank profitability being biased toward the rmp hypothesis in advanced economies yet neither of the hypotheses is supported for profitability in emerging economies the scp appears to exert a destabilising effect on advanced banks suggesting that a more concentrated banking system may be vulnerable to financial instability however the rmp seems to perform a stabilising effect in both economies evidence also highlights that profitability and stability increase with an increased interest margin revenues in a less competitive environment for emerging markets overall these results suggest that although policy measures to promote competition may dampen economic rent excessive implementation may have an undesired destabilising impact on banks

emergence of money as a medium of exchange an experimental study findings are reported from an experiment that implements a search theoretic model of money as a medium of exchange the question is whether subjects learn to adopt the same commodities as media of exchange that the model predicts will be used in equilibrium it is reported that subjects have a strong tendency to play fundamental rather than speculative strategies even in environments where speculative strategies yield higher payoffs some possible motivations for subjects behavior are examined and it is concluded that subjects are mainly motivated by past payoff experience as opposed to the marketability considerations that the theory emphasizes

indeterminacy of equilibria in a hyperinflationary world experimental evidence the authors design and study an olg experimental economy where the government finances a fixed real deficit through seigniorage the economy has continua of nonstationary rational expectations equilibria and two stationary rational expectations equilibria the authors do not observe nonstationary rational expectations paths observed paths tend to converge close to or somewhat below the low inflation stationary state the adaptive learning hypothesis is consistent with the data in selecting the low inflation stationary state rational expectations equilibrium as a long run stationary equilibrium nevertheless simple adaptive learning models do not capture the market uncertainty or the biases observed in the data copyright 1993 by the econometric society

the measurement of individual utility and social welfare it has been suggested by a number of economists that decisions about how to allocate scarce health care resources should be informed by the cost per quality adjusted life years qalys of the different alternatives one of the criticisms of the qaly approach is that it is based on the measurement of individual utility yet the values elicited are used to inform social choice in this respect it is argued that the qaly approach fails to take account of distributional issues that are known to be important in the context of health care this paper addresses this issue and presents an approach grounded in microeconomic theory that is flexible enough to deal with a wide range of efficiency equity trade offs while making the nature of the trade off transparent in addition it is an approach that is relatively simple to investigate empirically and the results of a preliminary study are presented as illustration of this

altruism and environmental risks to health of parents and their children abstract this paper tests an equilibrium condition from a model that incorporates 1 altruism of parents toward their young children and 2 household production of latent health risks the model demonstrates that an altruistic parent s marginal rate of substitution between an environmental health risk to herself and to her child is equal to the ratio of marginal risk reduction costs econometric estimates support this prediction based on data from a stated preference survey involving 488 parents of children aged 3 12 years this outcome implies that parents reallocate family resources to at least partly offset the effectiveness of public programs that aim to reduce their children s environmental risks

market concentration and the likelihood of financial crises abstract according to theory market concentration affects the likelihood of a financial crisis in different ways the concentration stability and the concentration fragility hypotheses suggest opposing effects operating through specific channels using data of 160 countries for the period 1970 2009 this paper empirically tests these indirect effects of financial market structure we set up a simultaneous system in order to jointly estimate financial stability and the relevant channel variables as endogenous variables our findings provide support for the assumption of channel effects in general and both the concentration stability and the concentration fragility hypothesis in particular the effects are found to vary between high and low income countries

margins concentration unions and the business cycle theory and evidence for britain abstract a number of recent studies have examined the cyclical relationship between price cost margins concentration and unions u s data has concluded that unions reduce margins margins vary over the cycle and concentration unionisation and the cycle interact in their effect on margins however there is almost no theory to account for these results we propose a simple theory that assumes only that there is overhead labour present at the firm this produces theoretical predictions that can explain these results and discriminate between existing theories we present results of our own using u k panel data and show similar findings to the u s

the structure performance relationship for european banking abstract the relationship between market structure and performance has been studied extensively for american banking in contrast little work has been done to investigate this relationship for european banking two explanations of a positive correlation between profitability and concentration have been advanced the traditional structure performance hypothesis scp and the efficient structure hypothesis previous empirical tests of the alternative hypotheses have yielded mixed results but the tests were not robust because they did not incorporate measures of efficiency directly in the model this study applies a stochastic cost frontier as proposed by aigner et al 1977 to derive measures of x inefficiency and scale inefficiency under the assumption that the errors are distributed half normal we incorporate these measures of inefficiencies directly into the tests as proposed by berger and hannan 1993 we do not find a positive and significant relationship between concentration and profitability for a sample of banks across 11 european countries over a four year period 1988 1991 however we do find evidence to support one of the two versions of the efficient structure hypothesis for banks located in countries with low concentration of banks since little support is found for either of the scp hypotheses a simple policy of strict limitations on cross border acquisitions and growth is not warranted

sources of concentration related profits the relationship between industry structure and market performance plays a central role in the development and implementation of antitrust laws the overwhelming majority of economic studies reveal a positive though generally weak correlation between concentration a structure index and profitability a performance index however two radically different interpretations as to the causality of this relationship have resulted in diametrically opposite recommendations for antitrust policy the structural view asserts that the positive concentration profits correlation is evidence of collusive behavior by firms in oligopolistic industries it also maintains that larger firms do not have a substantial efficiency advantage over their smaller rivals for example in an exhaustive but limited sample study f m scherer et al 7 found that concentration across industries is considerably greater than required by scale economies 2 such findings have led structuralists to suggest that an antitrust policy which deconcentrates industries will not create a serious loss of productive efficiency the structural view is challenged by a group of economists led by harold demsetz who are skeptical that monopoly power can be sustained without government sanctions demsetz 3 argues that the positive relationship between industry concentration and profitability reflects the superior performance in a welfare sense of large firms a firm captures a large market share and earns above average profits by establishing a cost advantage over its rivals the cost advantage can be due to scale economies and or a downward shift of a positively sloped marginal cost curve consequently economists agreeing with demsetz believe a deconcentration policy will produce more inefficiency than it eliminates resulting in a net welfare loss to society there have been two basic methodologies employed to test the efficiency based explanations of the profits concentration relationship peltzman 4 has found a negative significant correlation between changes in concentration and unit cost changes for 165

concentration and other determinants of bank profitability in europe north america and australia abstract this study reviews the performance of banks in twelve countries or territories in europe north america and australia and examines the internal and external determination of profitability to circumvent some of the difficulties in making comparisons between banks in different countries the concept of value added is introduced results parallel those in domestic u s studies and provide some support for the edwards heggestad mingo hypothesis of risk avoidance by banks with a high degree of market power

bank panics government guarantees and the long run size of the financial sector evidence from free banking america governments attempt to increase the confidence of financial market participants by making implicit or explicit guarantees of uncertain credibility confidence in these guarantees presumably alters the size of the financial sector but observing the long run consequences of failed guarantees is difficult we look to america s free banking era and compare the consequences of a broken guarantee during the indiana centered panic of 1854 to the panic of 1857 in which guarantees were honored our estimates of a model of endogenous market structure indicate substantial negative long run consequences to financial depth when panics cast doubt upon a government s ability to honor its guarantees

society land love or money a strategic model of how to glue the generations together abstract the purpose of this paper is to show that if reasonable care is taken in well defining the types of games of strategy which arise naturally from considerations of the multigenerational aspects of any society then many different plausible explanations of intergenerational links will all be consistent with an ongoing economy with intergenerational transfers of wealth given that the problem is stated and deemed to be important what can we do about it in this paper we proceed by developing in highly simplified form the apparatus needed to consider a multistage variable person game of strategy this is applied to several relatively simple examples involving conscious altruism coded or instinctive behavior the threat of social custom and the role of ownership in conclusion it is argued that although the examples analyzed are simple they are examples of general phenomena the level of mathematical analysis itself is kept as a minimum further development calls for a considerable enlargement of notation and further discussion of items such as information games with infinite horizons and the many problems associable with the development of adequate solution theories for games played in extensive form as the stress is upon the modeling problems of glueing the generations together the game theory is presented only as a useful method for furthering this purpose because it stresses the general concepts of strategic analysis it is our belief that it is particularly suited to the analysis of situations in which economic social political and other decisions and motivations must be considered together

the price concentration relationship in banking the commonly observed positive correlation between market concentration and profitability may be explained by noncompetitive pricing behavior as argued by the structure performance hypothesis or by the greater efficiency of firms with dominant market shares as argued by the efficient structure hypothesis by examining the price concentration relationship instead of the profit concentration relationship this paper tests the structure performance hypothesis in a manner that excludes the efficient structure hypothesis as an alternative explanation of the results the results strongly support the structure performance hypothesis and are robust with respect to model specification measurement of concentration and econometric technique copyright 1989 by mit press