endogenous entry and self selection in private value auctions an experimental study this paper presents the results of an experimental study of endogenous entry in first price independent private value auctions n potential bidders simultaneously decide whether to participate in an auction or receive a known outside option in the second stage entrants submit bids after learning their own private values and the number of entrants an equilibrium model of heterogeneous risk averse bidders implies a self selection effect where bidding in the auction is lower with endogenous entry because only less risk averse bidders enter this effect is confirmed by the experiment we also observe excessive entry relative to the theoretical model

optimal procurement mechanisms for an informed buyer this paper studies a buyer e g a government agency offering a procurement contract to a number of privately informed suppliers the buyer has private information about her demand for the product to be procured the optimal mechanisms for all types of the buyer are examined it is optimal for the buyer to reveal her demand information through the contract offer and use a first price sealed bid auction procedure to award the contract announcing her reserve price in advance any second price auction is shown to yield less expected surplus for the buyer than the optimal first price auction does when the buyer s marginal willingness to pay decreases with quantity

how to set minimum acceptable bids with an application to real estate auctions in a general auction model with affiliated signals common components to valuations and endogenous entry we compute the equilibrium bidding strategies and outcomes and derive a lower bound on the optimal reserve price this lower bound can be computed using data on past auctions combined with information about the subsequent sales prices of unsold goods we illustrate how to compute the lower bound using data from real estate auctions

the probability of sale and price premiums in withdrawn auctioned properties this paper examines the impact of the auction process of residential properties that whilst unsuccessful at auction sold subsequently the empirical analysis considers both the probability of sale and the premium of the subsequent sale price over the guide price reserve and opening bid the findings highlight that the final achieved sale price is influenced by key price variables revealed both prior to and during the auction itself factors such as auction participation the number of individual bidders and the number of bids are significant in a number of the alternative specifications

updating the reserve price in common value auctions we consider a common value auction model with bidder participation determined jointly by nature and by bidder optimization in this framework an increase in the reserve price as two effects it deters marginal bidders and it deters bidders from becoming informed we then derive a test statistic for establishing when it is optimal to raise the reserve price this statistic is independent of the distribution of valuations we then apply the analysis to u s offshore oil sales and find evidence that the reserve price is dramatically too low this abstract was borrowed from another version of this item

bidding behavior in a symmetric chinese auction abstract this paper purposes a symmetric all pay auction where the bidders compete neither for an object nor the object itself but for a lottery on receive that lottery is determined endogenously through the bids this auction is known as chance auction or more popularly as chinese auction the model considers the possibility that for some bidders the optimal strategy is to bid zero and to rely on luck it showed that bidders become less aggressive when the lottery satisfies a variational condition it was also shown that luck factor is decisive to determine if the expected payoff in chinese auction is bigger or smaller than expected payoff in standard all pay auction

a simple model of expert and non expert bidding in first price auctions abstract this paper studies the equilibrium bidding behavior in a first price sealed bid auction when the number of informed bidders is not common knowledge both the independent private values and the common value cases are analyzed under the assumption that a neutral signal exists in equilibrium experts and non experts draw their bids from distinct supports experts bid in the upper and lower tail of the bidding distribution and non experts randomize their bids in between for common values it is shown that the seller s expected revenue always decreases with the probability of a bidder being informed when this probability is small the opposite result is shown for the case of independent private values journal of economic literatureclassification numbers d44 d82

limit cycles under a negative effect of pollution on consumption demand the role of an environmental kuznets curve since heal explorations in natural resource economics the johns hopkins university press for resources for the future baltimore 1982 there is a theoretical consensus about the occurrence of limit cycles through a hopf bifurcation under a positive effect of pollution on consumption demand compensation effect and about the impossibility under a negative effect distaste effect however recent empirical evidence advocates for the relevance of distaste effects our paper challenges the conventional view on the theoretical ground and reconciles theory and evidence the environmental kuznets curve ekc pollution first increases in the capital level then decreases plays the main role indeed the standard case a la heal limit cycles only under a compensation effect only works along the upward sloping branch of the curve while the opposite limit cycles only under a distaste effect holds along the downward sloping branch welfare effects of taxation also change according to the slope of the ekc

revenue management with forward looking buyers a seller wishes to sell multiple goods by a deadline for example the end of a season potential buyers enter over time and can strategically time their purchases each period the profit maximizing mechanism awards units to the buyers with the highest valuations exceeding a sequence of cutoffs we show that these cutoffs are deterministic depending only on the inventory and time remaining in the continuous time limit the optimal mechanism can be implemented by posting anonymous prices when incoming demand decreases over time the optimal cutoffs satisfy a one period look ahead property and prices are defined by an intuitive differential equation

information effects in uniform price multi unit dutch auctions we design a multi unit descending price dutch auction mechanism that has applications for resource allocation and pricing problems we address specific auction design choices by theoretically and experimentally determining optimal information disclosure along two dimensions bidders are either informed of the number of bidders in the auction or know that it is one of two possible sizes they also either know the number of units remaining for sale or are unaware of how many units have been taken by other bidders we find that revealing group size decreases bids and therefore revenue if units remaining are not shown when group size is unknown the price also falls if the number of units remaining is revealed the most efficient and largest revenue outcome occurs when bidders are not provided information on either group size or units remaining these laboratory results conform to some directional predictions from our theory although overbidding is common

optimal health and environmental policies in a pollution growth nexus abstract this paper shows how policies aimed at insuring health risks and those intended to improve the environment are and should be deeply intertwined in the model economy inspired by recent chinese experience pollution raises the likelihood of future poor health prompting households to save more so as to self insure against anticipated medical expenses increased household saving generates more capital while capital use by firms generates more pollution along the transition such a pollution growth nexus may be attractive from a capital accumulation perspective however rising pollution via the health channel hurts welfare both insurance and environmental policies affect capital accumulation and can have additional dynamic benefits the availability of private health insurance to top up pay as you go coverage of medical bills along with a pigouvian tax on emissions and a profit tax can replicate the first best

fickle consumers durable goods and business cycles abstract this paper develops a three sector dynamic general equilibrium model with the specific aim of evaluating the role of consumer durables in the generation and propagation of business cycles the model displays indeterminacy at commonly considered realistic parameter restrictions and basically constant returns to scale if calibrated at modest increasing returns to scale the sunspots driven model version produces a close match to moments of aggregate u s data journal of economic literatureclassification numbers e00 e32

auctions with a stochastic number of bidders abstract auction theory is generalized by allowing the number of bidders to be stochastic in a first price sealed bid auction with bidders having constant absolute risk aversion the expected selling price is higher when the bidders do not know how many other bidders there are than when they do know this thus the seller should conceal the number of bidders if he can moreover a bidder s ex ante expected utility is the same whether or not there is a policy of concealing the number of bidders concealment therefore pareto dominates announcement with risk neutral bidders the optimal auction is the same whether or not the bidders know who their competitors are

the participant s curse and the perception of unequal treatment abstract if participation is subject to congestion externalities then conditional upon participation the returns to activities are less than suggested by an unconditional valuation of returns this phenomenon is investigated in general terms and with respect to markets and auctions

efficient competition through cheap talk the case of competing auctions we consider a large market where auctioneers with private reservation values compete for bidders by announcing cheap talk messages if auctioneers run efficient first price auctions then there always exists an equilibrium in which each auctioneer truthfully reveals her type the equilibrium is constrained efficient assigning more bidders to auctioneers with larger gains from trade the choice of the trading mechanism is crucial for the result most notably the use of second price auctions equivalently ex post bidding leads to the nonexistence of any informative equilibrium we examine the robustness of our finding in various dimensions including finite markets and equilibrium selection

uniqueness and indeterminacy on the dynamics of endogenous growth abstract in this paper we study the dynamics of endogenous growth both in the model of lucas and in a generalization that incorporates a labor leisure choice we characterize the regions of the parameter space that give rise to unique equilibria as well as the regions that yield a continuum of equilibria with positive growth rates we find that such multiple equilibria exist for empirically very plausible parameters in particular when the lucas model is modified to incorporate endogenous labor journal of economic literature numbers e00 e3 o40

indeterminacy and sunspots with constant returns recently there has been a renewed interest in the possibility of indeterminacy and sunspots or alternatively put in the existence of a continuum of equilibria that arises in dynamic economies with some market imperfections much of the research in this area has been concerned with the empirical plausibility of indeterminacy in markets with external effects or with monopolistic competition and which exhibit some degree of increasing returns while the early results on indeterminacy relied on relatively large increasing returns and high markups more recently benhabib and farmer 1996a showed that indeterminacy can also occur in two sector models with small sector specific external effects and very mild increasing returns

hedonic price indexes for residential housing a survey evaluation and taxonomy every house is different it is important that house price indexes take account of these quality differences hedonic methods which express house prices as a function of a vector of characteristics such as number of bedrooms and bathrooms land area and location are particularly useful for this purpose i consider here some developments in the hedonic methodology as it is applied in a housing context that have occurred in the last three decades a number of hedonic house price indexes are now available however it is often difficult to see how these indexes relate to each other for this reason i attempt to impose some structure on the literature by developing a taxonomy of hedonic indexes and then show how existing indexes fit into this taxonomy also discussed are some promising areas for future research in the hedonic field in particular greater use needs to be made of spatial econometric and nonparametric methods to exploit the increased availability of geospatial data the main criticisms of the hedonic approach are evaluated and compared with those of the repeat sales and stratified median methods the overall conclusion is that the advantages of the hedonic approach outweigh its disadvantages

auctions an introduction abstract this is a detailed introduction to auction theory it begins with a simple analysis of standard auctions and then uses a strikingly simple general solution of symmetric private values auctions to prove the payoff equivalence of many auction rules the basic framework is then modified to admit risk aversion multi unit and repeated auctions as well as collusion then follows an introduction to optimal auctions with and without stochastic entry and to common value auctions and the winner s curse problem the survey closes with a sample of applications from the regulation of natural monopolies to price competition in oligopoly and the government securities market

equilibrium bid functions for auctions with an uncertain number of bidders abstract the number of rivals may be unknown when a bidding strategy is formulated in an auction in a symmetric model with risk neutral bidders holding independent information we obtain explicit equilibrium bidding functions for first price and second price auctions with uncertainty about the number of rivals five auctions are revenue equivalent first price and second price auctions each with the number of bidders known or uncertain and english auctions

cellular telephone new products and the cpi since their introduction in 1983 cellular telephones adoption has grown at 25 35 per year at year end 1997 about 55 million cellular telephones were in use in the united states the bureau of labor statistics bls did not know that cellular telephones existed at least in terms of calculating the consumer price index cpi until 1998 when they were finally included in the cpi omitting cellular telephones from the cpi created a significant bias i estimate a bias in the bls estimate of the telecommunications services index of between 8 1 9 per year because of the omission of the cellular telephone rather than telecommunications service prices increasing at about 1 1 per year the correct calculation has them decreasing at about 8 per year omission of new goods from the cpi for significant periods of time leads to important bias in the calculation of the cpi

revenue ranking of discriminatory and uniform auctions with an unknown number of bidders an important managerial question is the choice of the pricing rule we study whether this choice depends on the uncertainty about the number of participating bidders by comparing expected revenues under discriminatory and uniform pricing within an auction model with affiliated values stochastic number of bidders and linear bidding strategies we show that if uncertainty about the number of bidders is substantial then the discriminatory pricing generates higher expected revenues than the uniform pricing in particular the first price auction might generate higher revenues than the second price auction therefore uncertainty about the number of bidders is an important factor to consider when choosing the pricing rule we also study whether eliminating this uncertainty i e revealing the number of bidders is in the seller s interests and discuss the existence of an increasing symmetric equilibrium

the environmental kuznets curve and equilibrium indeterminacy abstract we illustrate that the existence of the environmental kuznets curve ekc could be the result of indeterminacy of equilibria in a simple neoclassical growth model with a single environmental externality in households utility function and with public abatement we characterize the condition on the parameters in preferences and in the pollution technology leading to local indeterminacy of equilibrium estimates of the crucial parameters of the model using data from economies that display the ekc satisfy the theoretical indeterminacy condition we find that the presence of abatement activities is not a necessary condition for indeterminacy equilibria and hence an ekc to arise on the other hand non separability of consumption and pollution in the utility function is crucial

efficiency of large private value auctions we consider discriminatory and uniform price auctions for multiple identical units of a good players have private values possibly asymmetrically distributed and for multiple units our setting allows for aggregate uncertainty about demand and supply in this setting equlibria generally will be inefficient despite this we show that such auctions become arbitrarily close to efficient if they are large and use this to derive an asymptotic characterization of revenue and bidding behavior

disclosure policy in tullock contests with asymmetric stochastic entry we examine how disclosure policy can be optimally designed to incentivize contestants when their participation is exogenously stochastic in a generalized tullock contest setting with two players who are asymmetric in both their values and entry probabilities we fully characterize the necessary and sufficient conditions under which no disclosure dominates full disclosure we find that the comparison depends solely on a balance effect exercised by entry probabilities on the expected total effort the optimal disclosure policy must better balance the competition these conditions continue to hold when the precision r of tullock contests is endogenously chosen by the designer

k price auctions abstract in this paper we analyze the equilibria structure of k price auctions k 3 under the independent private value assumption we discuss agents with an arbitrary attitude toward risk that is agents may be risk averse or risk seeking or they may have an alternating attitude toward risk we provide a characterization of a continuous symmetric equilibrium prove that there exists at most one such equilibrium and show that every such equilibrium is differentiable and increasing we also show some additional general properties of the equilibrium strategies in these auctions journal of economic literature classification numbers c72 c73 d83

auctions with an inexpert bidder abstract we consider an auction in which the behavior of one potential bidder departs mildly from full rationality we show that the presence of such an inexpert bidder can be enough to discourage all of an infinitely large population of fully rational potential bidders from entering an auction furthermore this departure from full rationality does not reduce the inexpert bidder s payoff

capacity utilization under increasing returns to scale abstract this paper overcomes an important objection against the empirical relevance of the benhabib farmer model as a potential account of actual business cycle fluctuations this is attributable to an elasticity effect and a returns to scale effect of capacity utilization these effects are closely related to the empirical puzzles that capital appears to play an insignificant role in explaining cyclical movements in output and that the estimated labor elasticity appears to be larger than labor s share due to these effects multiple equilibria and persistent fluctuations can easily occur in a growth model for externalities mild enough so that the aggregate labor demand curve is downward sloping analyses show that the propagation mechanism generated by capacity utilization under mild increasing returns is capable of explaining the periodic patterns of u s business cycles documented by watson journal of economic literature classification numbers e32 e22 c52

sunspots and the business cycle in a finance constrained economy abstract this paper examines the cyclical properties of a finance constrained economy populated by two classes of households with heterogeneous preferences and featuring social increasing returns to scale the model exhibits indeterminacy for externalities mild enough so that the labor demand curve is downward sloping furthermore simulation results show that endogenous fluctuations driven by expectations are quantitatively relevant in opposition to standard real business cycles and sunspot models with single type of households our finance constrained economy reveals to be able to mimic both an acyclical pattern of the real wage and strong procyclical movements of aggregate consumption journal of economic literature classification numbers e2 e32

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

auctions with uncertain numbers of bidders abstract we investigate bidders and seller s responses to ambiguity about the number of bidders in the first price auction fpa and the second price auction spa with independent private valuations we model ambiguity aversion using the maxmin expected utility model we find that bidders prefer the number of bidders to be revealed in the fpa are indifferent between revealing and concealing in the spa and prefer the spa to the fpa if bidders are more pessimistic than the seller then the seller prefers to conceal the number of bidders in the fpa and prefers the fpa to the spa

information disclosure as a matching mechanism theory and evidence from a field experiment market outcomes depend on the quality of information available to its participants we measure the effect of information disclosure on market outcomes using a large scale field experiment that randomly discloses quality information in wholesale automobile auctions we argue that buyers in this market are horizontally differentiated across cars that are vertically ranked by quality this implies that information disclosure helps match heterogeneous buyers to cars of varying quality causing both good and bad news to increase competition and revenues the data confirm these hypotheses these findings have implications for the design of other markets including e commerce procurement auctions and labor markets jel c93 d44 d82 l15

disclosure policies in research contests with stochastic entry abstract this paper models research contests as an all pay auction with stochastic entry and analyzes the effect of disclosing the actual number of participants on the expected winning bid i find that the classic disclosure irrelevance principle on expected revenue does not extend to the ranking on expected winning bid the ranking on expected winning bid crucially depends on the number of potential bidders participation probabilities and the distribution of bidders valuations when there are more than two potential bidders fully concealing the actual number of participants elicits a higher expected winning bid if potential bidders have low participation probabilities whereas the rank reverses if bidders have high participation probabilities and high chances of being high types

information management in incentive problems we extend the standard procurement model to examine how an agent is optimally induced to acquire valuable planning information before he choose an unobservable level of cost reducing effort concer

durable goods inter sectoral linkages and monetary policy barsky house and kimball 2007 show that introducing durable goods into a sticky price model leads to negative sectoral comovement of production following a monetary policy shock and under certain conditions to aggregate neutrality these results appear to undermine sticky price models in this paper we show that these results are not robust to two prominent and realistic features of the data namely input output interactions and limited mobility of productive inputs when extended to allow for both features the sticky price model with durable goods delivers implications in line with var evidence on the effects of monetary policy shocks

hedging winner s curse with multiple bids evidence from the portuguese treasury bill auction auctions of government securities typically permit bidders to enter multiple price quantity bids despite the widespread adoption of this institutional feature and its use by bidders the motivations behind its use and its effects on auction outcomes are not well understood theoretically and have been little explored empirically this paper proposes that bidders use multiple bids to adjust for winner s curse by spreading her bids a bidder aligns her outcome more closely to the aggregate outcome of the auction this hypothesis is tested using bidding data from treasury bill auctions in portugal i find that ceteris paribus a bidder submits a greater number of bids and disperses prices on these bids more widely when there is a greater potential for winner s curse in particular both these measures of bid spreading increase with the volatility of market interest rates and the expected number of participating well informed bidders

government procurement and international trade abstract we model the bidding for a government contract in which there is imperfect competition each bidder is better informed about his own costs than either his rival bidders or the government and the distribution of the domestic firms costs differs from the distribution of foreign firms costs because of comparative advantage effects we find that the government minimizes its expected procurement cost by operating a price preference policy not necessarily purchasing from the lowest bidder

age time vintage and price indexes measuring the depreciation pattern of houses age time and vintage are key determinants of house prices yet they cannot be included together linearly or as dichotomous variables in hedonic regressions as construction time age of house sale time we introduce a method where the estimates of the age time and vintage effects on prices are obtained in a flexible manner without requiring us to specify a pre determined functional form for either of these variables applying our method to dutch data we find that the estimated depreciation pattern over the life of houses does not follow the functional forms typically specified for the age of houses in hedonic regressions

hedonic imputation and the price index problem an application to housing in this study we show how use of the hedonic imputation method complicates the price index problem in addition to the usual choice between formulas such as fisher and tornqvist the fact that index compilers have some discretion over which prices are imputed implies that it is necessary to choose as well between different varieties of each formula the functional form of the hedonic model must also be taken into account we illustrate the importance of these issues in a housing context using house price data for three regions in sydney over a 3 yr period jel c43 e31 o47 r31

dual mechanism for an online retailer abstract while posted price and auction have typically been seen as alternatives to each other we observe web stores selling a product at a posted price and simultaneously running auctions for the identical product a phenomenon that has not been studied fully in this article we study a dual mechanism where an online retailer combines the two conventional mechanisms posted price and auction for multiple units of a product we demonstrate that the dual mechanism can be used to achieve market segmentation when customers discount the expected utility of auctions we characterize the customer s decision rule and formulate a retailer s profit function under the dual mechanism finally we compare the performance of three selling mechanisms posted price auction and dual through computational experiments

modeling and analysis of an auction based logistics market we consider a logistics spot market where the transportation orders from a number of firms are matched with two types of carriers through a reverse auction in the spot market local carriers compete with in transit carriers that have lower costs in order to analyze the effects of implementing a logistics spot market on these three parties firms local carriers and in transit carriers and also the effects of various system parameters we develop a two stage stochastic model we first model the auction in a static setting and determine the expected auction price based on the number of carriers engaging in the auction and their cost distributions we then develop a continuous time markov chain model to evaluate the performance of the system in a dynamic setting with random arrivals and possible abandonment of orders and carriers by combining these two models we evaluate the performance measures such as the expected auction price price paid to the carriers distribution of orders between local and in transit carriers and expected number of carriers and orders waiting at the logistics center in the long run we present analytical and computational results related to the performance of the system and discuss operation of such a logistics spot market in turkey

economic models for the environmental kuznets curve a survey abstract the environmental kuznets curve ekc refers to an inverted u shaped relationship between some pollutant level and per capita income i e the environmental quality deteriorates at early stages of economic growth and subsequently improves at a later stage since the early 1990s a considerable number of empirical studies have been conducted on the ekc and although there is no conclusive proof it has been recognized that the ekc emerges as an empirical regularity however some recent studies cast doubt on the concept and methodology of empirical results and evidence of the existence of the ekc has been questioned in fact how economic growth affects the environmental quality i e the shape of the ekc is still controversial in order to identify the actual relationship between the environmental quality and economic growth it is essential to develop economic models from various points of view this paper overviews the current stage of theoretical models that explain such relationship

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

unraveling in first price auction abstract in a private values first price auction with random number of bidders the auctioneer has to decide whether to announce or not the actual number of bidders if the auctioneer cannot commit to any particular announcement policy then he would like to reveal when the number of bidders is high in order to increase bidding competition by the same logic the auctioneer should like to conceal if the number turns out to be small when bidders types are independent full revelation by the auctioneer is shown to be a unique equilibrium with skeptical belief as the unique equilibrium belief

a reconsideration of hedonic price indexes with an application to pc s this paper compares hedonic to matched model indexes matched model indexes are averages of the price changes of goods that remain on sampled stores shelves since goods that disappear tend to have falling market values matched model indexes select from the right tail of price changes the bls can construct hedonic indexes that correct for this selection and are justified by standard arguments in an empirical study of pc s hedonics produce sharp price declines while matched model indexes are near zero also though there are modifications to hedonics that seem desirable they are not those in current use

the price of residential land for counties zip codes and census tracts in the united states abstract data from millions of appraisals in 2012 2019 are used to estimate residential land prices the share of house value attributable to land and related statistics down to the census tract level for areas that include the vast majority of u s population and single family housing the results confirm predictions about land prices from canonical urban models over 2012 2019 we show that land prices rose faster than house prices in large metro areas boosting the land share of house value while the land share fell in smaller metros the data are available for download at https www fhfa gov papers wp1901 aspx

indeterminacy home production and the business cycle a calibrated analysis abstract in this paper i present a business cycle model with one market sector that produces a standard good and another that produces a non market or home good the model can have multiple equilibria and therefore cycles driven only by self fulfilling expectations with low externalities to market production in particular an upward sloping aggregate labor demand as e g in farmer and guo j economic theory 63 1994 42 72 is not required for indeterminacy the effect of technology shocks is also studied in all cases the time series that are generated have properties that are comparable to the real us postwar series

bid preference programs and participation in highway procurement auctions we use data from highway procurement auctions subject to california s small business preference program to study the effect of bid preferences on auction outcomes our analysis is based on an estimated model of firms bidding and participation decisions which allows us to evaluate the effects of current and alternative policy designs we show that incorporating participation responses significantly alters the assessment of preferential treatment policies

a simple model of price dispersion abstract this article considers a simple stock flow matching model with fully informed market participants unlike the standard matching literature prices are assumed to be set ex ante when sellers pre commit themselves to sell their products at an advertised price the unique equilibrium is characterized by price dispersion due to the idiosyncratic match payoffs in a marketplace with full information this provides new insights into the price dispersion literature which instead commonly assumes that buyers are not perfectly informed and engage in a costly search

auctions with limited commitment we study the role of limited commitment in a standard auction environment in each period the seller can commit to an auction with a reserve price but not to future reserve prices we characterize the set of equilibrium profits attainable for the seller as the period length vanishes an immediate sale by efficient auction is optimal when there are at least three buyers for many natural distributions two buyers is enough otherwise we give conditions under which the maximal profit is attained through continuously declining reserve prices

walras retrouve decentralized trading mechanisms and the competitive price we extend the standard analysis of decentralized markets to allow for the possibility that traders interact simultaneously with more than one trader on the opposite side of the market in contrast with the literature we reconcile the walrasian equilibrium with the outcome of decentralized strategic trade we show that there exist generic matching technologies that determine local market conditions such that as market frictions vanish the equilibrium price is the one that would result in the static walrasian market our analysis highlights the importance of local market conditions for the determination of equilibrium prices

competition among sellers who offer auctions instead of prices abstract in this paper we study a large market in which sellers compete by offering auctions to buyers instead of simple fixed price contracts two variants of the model are studied one extends a model first analyzed by wolinsky rev econ stud 55 1988 71 84 in which buyers learn their valuations only after meeting sellers the other variant extends the model of mcafee econometrica61 1993 1281 1312 in which buyers know their valuations before they choose among available auctions the equilibrium array of auctions is characterized for each case and the efficiency properties of the equilibria are analyzed journal of economic literatureclassification numbers d41 d44 d82

scanner data and the treatment of quality change in nonrevisable price indexes the recently developed rolling year geks procedure makes maximum use of all matches in the data to construct nonrevisable price indexes that are approximately free from chain drift a potential weakness is that unmatched items are ignored in this article we use imputation tornqvist price indexes as inputs into the rolling year geks procedure these indexes account for quality changes by imputing the missing prices associated with new and disappearing items three imputation methods are discussed the first method makes explicit imputations using a hedonic regression model which is estimated for each time period the other two methods make implicit imputations they are based on time dummy hedonic and time product dummy regression models and are estimated on bilateral pooled data we present empirical evidence for new zealand from scanner data on eight consumer electronics products and find that accounting for quality change can make a substantial difference

jump bidding strategies in internet auctions abidding strategy commonly observed in internet auctions is that of jump bidding or entering a bid larger than what is necessary to be a currently winning bidder in this paper we argue that the cost associated with entering online bids and the uncertainty about future entry both of which distinguish internet from live auctions can explain this behavior we present a simple theoretical model that includes the preceding characteristics and derive the conditions under which jump bidding arises in a format commonly used for online trading the ascending price auction we also present evidence recorded from hundreds of internet auctions that is consistent with some of the basic predictions from our model we find that jump bidding is more likely earlier in an auction when jumping has a larger strategic value and that the incentives to jump bid increase as competition increases our results also indicate that jump bidding is effective jump bidders place fewer bids overall and increased early jump bidding deters entry later in the auction we also discuss possible means of reducing bidding costs and evidence that internet auctioneers are pursuing this goal

entry coordination and auction design with private costs of information acquisition i introduction in most auction literature bidders are passively endowed with private information about their valuations the analysis then focuses on optimal elicitation of private information on many occasions bidders may instead have to incur costs to collect this information 1 auction design in these cases has to balance between information acquisition and information elicitation which are interdependent the performance of an auction depends not only on the bidding equilibrium but also crucially on the information acquisition equilibrium 2 as a salient feature auction design with information acquisition costs has been complicated by entry coordination among bidders due to multiple entry equilibria issue in a symmetric independent private value ipv setting of mcafee and mcmillan 1987 with fixed information acquisition cost levin and smith 1994 note that the ex ante efficient and revenue maximizing auction a second price auction with no entry fee and no reserve induces many asymmetric entry equilibria other than the targeted symmetric one the existence of asymmetric entry equilibria in this setup fundamentally lies in bidders constant marginal cost of entry 3 information acquisition costs could be private information of bidders just as with their private information about values for example in the cases of construction procurements or u s timber auctions many aspects of prebid information acquisition and analyzation are private knowledge of bidders 4 clearly when information acquisition costs are private information of bidders auction design has to additionally take into account information elicitation at the information acquisition stage this aspect of analysis has yet to be reflected in the literature while the case with fixed information acquisition costs has been thoroughly studied by milgrom 1981 mcafee and mcmillan 1987 engelbrecht wiggans 1987 1993 harstad 1990 levin and smith 1994 mcafee quan and vincent 2002 ye 2004 2007 and cremer spiegel and zheng 2009 among others a widely recognized insight of these studies is that ex ante efficiency can be achieved through a second price auction while setting the reserve at the seller s valuation if ex ante entry fees can be used to extract all the expected surplus of bidders then there is a congruence between the revenue and total surplus 5 this article advances this line of research by studying the implications of private acquisition costs on auction design with an emphasis on bidders coordination at the information acquisition stage specifically we consider the ipv setting of mcafee and mcmillan 1987 and levin and smith 1994 while allowing the information acquisition costs to be bidders private information which follow a continuous distribution in light of our previous discussion this article attempts to answer the following questions 1 how are ex ante efficient and revenue maximizing auctions affected by this additional dimension of private information in other words how does information rent extraction at the entry stage affect the auction designs 2 can this private information alleviate rather than aggravate the problem of entry coordination with the dispersion in private information acquisition costs the multiplicity of entry equilibria arising from the constant marginal cost in levin and smith 1994 might be avoidable the types with higher information acquisition costs must have less incentive to enter which could reduce the number of entry equilibria the questions are will sufficient dispersion coordinate bidders and induce a unique entry if yes how much dispersion is enough due to the potential multiplicity of entry equilibria for any given mechanism it is rather difficult to compare performances across varieties of mechanisms to overcome this difficulty we come up with an alternative approach our analysis begins with characterizing efficient and revenue maximizing auctions for any given feasible entry pattern which can be described through a vector of bidders entry thresholds of acquisition costs

risk aversion in first price auctions with common values abstract in a first price auction with private values bidders risk aversion increases the seller s revenue this is not generally true when there are common values because winning the auction entails receiving an object with uncertain value

not knowing the competition evidence and implications for auction design in a government auction program where first price auctions generate significantly higher revenue than english auctions i document evidence that bidders are uncertain about the number of auction entrants motivated by additional data evidence i estimate a structural model of auctions in which rivals participation is stochastic allowing for bidders risk aversion and asymmetry counterfactual simulations reveal that bidders uncertainty about the number of entrants combined with risk aversion substantially softens the revenue impact of low competition in first price auctions this explains the observed revenue patterns and uncovers an empirically important reason for sellers to favor first price auctions over english auctions

a dynamic model of bertrand competition with entry abstract this paper analyzes a simple repeated game of simultaneous entry and pricing we report a surprising property of the symmetric equilibrium solution if the number of potential competitors is increased above two the market breaks down with higher probability and the competitive outcome becomes less likely more potential competition lowers welfare another bertrand paradox the model can also be applied to auctions to explore whether a revenue maximizing auctioneer should restrict the number of bidders if bidder participation is costly

equilibrium transformations and the revenue equivalence theorem i develop a method that transforms an equilibrium strategy profile from one auction to another the method is constructive and does not require complicated computation this provides a new approach to revenue equivalence and extends the theorem to domains where it had not previously been known in particular to simultaneous multiple object auctions with complete information and to auction environments having correlated private values and common values

equilibrium labor turnover firm growth and unemployment this paper considers equilibrium quit turnover in a frictional labor market with costly hiring by firms where large firms employ many workers and face both aggregate and firm specific productivity shocks there is exogenous firm turnover as new small startups enter the market over time while some existing firms fail and exit individual firm growth rates are disperse and evolve stochastically the paper highlights how dynamic monopsony where firms trade off lower wages against higher endogenous employee quit rates yields excessive job to job quits such quits directly crowd out the reemployment prospects of the unemployed with finite firm productivity states stochastic equilibrium is fully tractable and can be computed using standard numerical techniques

impatience pollution and indeterminacy abstract this paper examines an equilibrium growth model in which production activities generate environmental pollution that has a negative welfare effect and in which individual households subjective discount rate is a function of individual consumption which is internal to each household and of total pollution which is an external factor to the individual agents it is shown that there may exist multiple steady states and that the dynamic equilibrium may display indeterminacy depending on the properties of the discount rate function the pollution capital relationship in production technology and the pollution consumption relationship in instantaneous utility the long run effects of tighter environmental policy are subsequently examined and the results are also found to be dependent on the above factors

resolving uncertainty about the number of bidders in independent private value auctions an experimental analysis results from first price sealed bid auctions in which there is uncertainty regarding the number of bidders are reported consistent with recent theoretical findings concealing information regarding the number of bidders raises more revenue for the seller than revealing information individual bids show that 1 narrowly interpreted the nash equilibrium bidding theory underlying these theoretical predictions is rejected as less than 50 of all bids satisfy the strict inequality requirements of the theory but 2 a majority of the deviations from these inequality requirements favor the revenue raising predictions of the nash model and in a large number of cases involve marginal violations of the theory

strategic information revelation in fundraising abstract we consider a model of voluntary contributions for a public project with random number of potential contributors the fundraiser who observes this number has to decide whether to reveal or suppress the information before contributions are given the fundraiser s objective is to collect maximal contributions we show that whether the public project is convex or non convex can be the key to the fundraiser s announcement decision in the convex case this number is always revealed in the non convex case the number may not be revealed at all or sometimes revealed only when it is in an intermediate range in the presence of multiple equilibria total contributions increase with the extent of concealment

divergence in economic performance transitional dynamics with multiple equilibria abstract special pairs of the utility functions and the production functions are used in this paper to uncover the transitional dynamics in a lucas model of growth the main findings are as follows a continuum of equilibria exists if the external effect of human capital in goods production is sufficiently large the process of lagging behind catching up with and overtaking that we often observe in the world economy can be explained finally some equilibrium paths are shown to have such complicated patterns that the dynamics conjectured by lucas are too simple to be correct journal of economic literature classification numbers o41 c61

can environmental taxation stimulate growth the role of indeterminacy in endogenous growth models with environmental externalities abstract this paper examines the effects of environmental taxation on long run growth in an infinitely lived representative agent model of endogenous growth with negative pollution externalities the novelty of this paper lies in its investigation of how the long run effects of environmental taxes are affected by the possible emergence of indeterminacy of equilibria in romer s 1986 increasing returns and long run growth journal of political economy 94 1002 1037 learning by doing model with endogenous labor supply the analysis shows that environmental taxation generally enhances harms long run growth when the balanced growth path is indeterminate determinate

a dynamic model of the environmental kuznets curve turning point and public policy we set up a simple dynamic macroeconomic model with i polluting consumption and a preference for a clean environment ii increasing returns in abatement giving rise to an ekc and iii sustained growth resulting from a linear final output technology there are two sorts of market failures caused by external effects associated with consumption and environmental effort the model is employed to investigate the determinants of the turning point and the cost effectiveness of different public policies aimed at a reduction of the environmental burden moreover the model offers a potential explanation of an n shaped pollution income relation it is shown that the model is compatible with most empirical regularities on economic growth and the environment

identification of standard auction models this paper presents new identification results for models of first price second price ascending english and descending dutch auctions we consider a general specification of the latent demand and information structure nesting both private values and common values models and allowing correlated types as well as ex ante asymmetry we address identification of a series of nested models and derive testable restrictions enabling discrimination between models on the basis of observed data the simplest model symmetric independent private values is nonparametrically identified even if only the transaction price from each auction is observed for richer models identification and testable restrictions may be obtained when additional information of one or more of the following types is available i the identity of the winning bidder or other bidders ii one or more bids in addition to the transaction price iii exogenous variation in the number of bidders iv bidder specific covariates while many private values pv models are nonparametrically identified and testable with commonly available data identification of common values cv models requires stringent assumptions nonetheless the pv model can be tested against the cv alternative even when neither model is identified

design of discrete dutch auctions with consideration of time abstract as a departure from much of the existing literature that aims at maximizing the expected revenue from a single auction this research work is concerned with the design of discrete dutch auctions to achieve the optimal balance between the selling price of the object and the auction duration so that the auctioneer s expected revenue per unit of time is as high as possible the new objective is especially important in trading perishable products or services when multiple auctions are to be conducted by the auctioneer for different sellers during a limited period of time our findings indicate that the proposed discrete dutch auction models generate higher average revenues per unit of time for the auctioneer than their counterparts without consideration of time this is achieved by reducing the duration of each auction in exchange for more auctions to be held within the given time frame so that the small decrease in the revenues from the longer auctions is more than compensated for by the large increase in the total revenues from the shorter auctions the numerical results show that the proposed discrete dutch auction design becomes extremely useful when the number of bidders becomes large it is also shown that complete knowledge about the number of bidders in the auction results in a higher auctioneer s expected revenue per unit of time

ekc type transitions and environmental policy under pollutant uncertainty and cost irreversibility abstract previous studies have suggested that some pollutant levels first increases due to the economic growth and then start decreasing the pattern being called the environmental kuznets curve ekc we examine ekc type transitions of pollutant levels not with respect to economic growth but more generally in time assuming that each policy maker optimally executes the two switching options of regulation and unregulation for pollution the switching dynamics of environmental policy can be described by an alternating renewal process it is shown that the double laplace transform of transition density of a pollutant level can be obtained by a novel application of renewal theory the expected level of overall pollutants is then calculated numerically and found to exhibit either a shaped or an n shaped pattern in time our results present a simple explanation for the ekc type transitions of pollutant levels within a real options framework

rfq auctions with supplier qualification screening we consider a manufacturer using a request for quotes rfq reverse auction in combination with supplier qualification screening to determine which qualified supplier will be awarded a contract supplier qualification screening is costly for the manufacturer for example involving reference checks financial audits and on site visits the manufacturer seeks to minimize its total procurement costs i e the contract payment plus qualification costs although suppliers can be qualified prior to the auction prequalification we allow the manufacturer to delay all or part of the qualification until after the auction postqualification using an optimal mechanism analysis we analytically explore the trade offs between varying levels of pre and postqualification although using postqualification causes the expected contract payment to increase bids from unqualified suppliers are discarded we find that standard industrial practices of prequalification can be improved upon by judicious use of postqualification particularly when supplier qualification screening is moderately expensive relative to the value of the contract to the manufacturer

real business cycles and the animal spirits hypothesis abstract we calibrate a quantitative equilibrium macroeconomic model with an aggregate technology that is subject to increasing returns and show that this model may display fluctuations at business cycle frequencies even when there are no shocks to the fundamentals of the economy these fluctuations are due to the self fulfilling beliefs of investors which we call animal spirits we compare the impulse response functions predicted by our model and by two other more standard models with a four variable vector autoregression on u s data our animal spirits economy is the most successful of the three at matching broad features of the dynamic responses in the data journal of economic literature classification numbers e00 e3 e32

economic growth and transitions between renewable and nonrenewable energy resources abstract we study transitions between nonrenewable and renewable energy forms at different development stages of an economy it is shown that in the historical context the emphasis on energy production may evolve from renewables to nonrenewables and back to renewables typically both energy forms are used simultaneously along the equilibrium path nonrenewable resource consumption may increase and their price decrease an inverted u relation between carbon emissions and income level may follow even without environmental policy