transfers to sustain dynamic core theoretic cooperation in international stock pollutant control international environmental agreements aiming at correcting negative externalities generated by transboundary pollution are difficult to achieve for many reasons important obstacles arise from asymmetry in costs and benefits and instability may occur due to the fact that coalitions of countries may attempt to do better for themselves outside of any proposed agreement in a static context it has already been shown that it is possible to achieve stability in the sense of the core of a co operative game by means of appropriately defined transfers between the countries involved however the transboundary pollution problems that are most important are caused by accumulated pollutants so that a dynamic analysis is required this paper provides a transfer scheme that yields a core property in a dynamic context the possibility of computing such transfers numerically is discussed

insiders versus outsiders in monetary policymaking this paper looks at the voting patterns of internal and external members of the mpc to investigate how far there are differences between insiders and outsiders we make three contributions first we assess the extent to which the bank of england internally generated forecasts explain the mpc members voting decisions this is important as generating forecasts on a quarterly basis is a key part of the process used by the bank of england the forecast for inflation is made public in the inflation report while the output gap forecast is not second we use a random coefficient method of estimation in which the parameters of the interest rate rule are allowed but not required to be different across members third we find evidence of some heterogeneity in the intercept a measure of experience on the mpc and the interest rate smoothing parameter but no significant differences in the members reaction to the forecasts of inflation and the output gap this abstract was borrowed from another version of this item

price setting supergames with capacity constraints this paper examines the role of industry capacity in enforcing collusion in the context of repeated games for a fixed capacity per firm it is shown that changes in the number of firms have a non monotone effect on the best enforceable cartel price this is due to the fact that while an additional firm lowers the share that each of the other firms enjoys at the collusive price it also increases the losses to each firm should the cartel fail

market structure of multi product firms under free entry abstract three sources of advantages to multi product firm are considered economies of scope risk reduction and demand complementarity each source if of sufficient magnitude leads to a market equilibrium dominated by multi product firms as the market becomes sufficiently large the multi product cournot nash model is shown to converge to an efficient outcome

north american tomato market a spatial equilibrium perspective this paper studies the north american tomato market in a world market perspective for this purpose a spatial equilibrium model with endogenous prices is constructed and solved by quadratic mathematical programming method six scenarios involving the impacts from transportation costs tariffs and north american free trade agreement nafta were modelled the solutions illustrate their impacts on production consumption trade flows prices and net social welfare due to nafta mexico became the main tomato exporter to the usa

empirical studies of gasoline retailing a guide to the literature abstract this paper surveys the empirical literature on gasoline retailing which has been growing rapidly over the last three decades possibly in response to antitrust and regulatory concerns and increased availability of pricing data studies of both pricing and non price decision variables are considered in general it is found that crude oil prices are the primary driver of national price movements over time however market structure has been identified as playing a role in price dynamics equilibrium selection and price differentials across markets and stations the economic literature emphasizes the importance of heterogeneity across stations and coordination problems faced by retailers several directions for future work are suggested including the development of theory and demand estimation using high frequency station level data

the dissent voting behaviour of central bankers what do we really know we examine the determinants of the dissent in central bank boards voting records about monetary policy rates in the czech republic hungary sweden the uk and the us in contrast to previous studies we consider 25 different macroeconomic financial institutional psychological or preference related factors jointly and use bayesian model averaging bma to formally assess the attendant model uncertainty we find that the rate of dissent is between 5 and 20 for the examined central banks our results suggest that most of the examined regressors including factors that capture the effects of inflation and output are not robust determinants of voting dissent this result suggests that unobserved characteristics of central bankers and different communication strategies drive the dissent rather than the level of macroeconomic uncertainty

dynamic legislative policy making abstract we prove existence of stationary markov perfect equilibria in an infinite horizon model of legislative policy making in which the policy outcome in one period determines the status quo for the next we allow for a multidimensional policy space and arbitrary smooth stage utilities and we assume preferences and the status quo are subject to arbitrarily small shocks we prove that equilibrium continuation values are differentiable and that proposal strategies are continuous almost everywhere we establish upper hemicontinuity of the equilibrium correspondence and we provide weak conditions under which each equilibrium of our model determines an aperiodic transition probability over policies we establish a convergence theorem giving conditions under which the invariant distributions generated by stationary equilibria must be close to the core in a canonical spatial model finally we extend the analysis to sequential move stochastic games and to a version of the model in which the proposer and voting rule are determined by play of a finite perfect information game

long run price competition we generalize the standard repeated games model of dynamic oligopolistic competition to allow for consumers who are long lived and forward looking each period leaves some residual demand to future periods and pricing in one period affects consumers expectations about future prices we analyze this setting for an indivisible durable good with price setting firms and overlapping cohorts of consumers the model nests the repeated game model and the coasian durable goods model as its two extreme cases the analysis is mostly focused on constant price collusion but conditions for collusive recurrent sales are also identified

publicity of debate and the incentive to dissent evidence from the us federal reserve transparency in committee decision making may have clear benefits by making members more accountable to outside observers we consider one potential cost the possibility that publishing records of deliberations will make members more reluctant to offer dissenting opinions we construct a model that compares incentives for members with career concerns to voice dissent when deliberations occur in public or in private we test the model using an original dataset based on deliberations of the federal reserve s federal open market committee asking whether the fomc s 1993 decision to begin releasing transcripts of its meetings has altered incentives for dissent we find evidence that this is indeed the case there has been much recent discussion of the advantages of transparency in agency relationships both in and outside of government while research has attempted to model this issue theoretically there has been less progress with empirical tests a problem due no doubt in large part to the fact that it is difficult to make before and after comparisons of a shift in transparency often no data are available on an agent s actions prior to the establishment of transparency in this article we focus on one specific type of transparency publishing verbatim transcripts of committee meetings and one specific reason why this type of transparency might not be desirable the possibility that the quality of deliberation on a committee will suffer if the deliberations take place in public we develop a theoretical model that helps to identify the potential costs of this type of transparency and we then test the model empirically using an original dataset on deliberations of the federal reserve s federal open market committee fomc our dataset is unique in that it records views expressed by policymakers at fomc meetings and not just their official votes our empirical tests focus in particular on the observed effect of the institutional change that occurred in 1993 when the fomc decided to begin releasing transcripts of its meetings after a delay of five years transparency is a particularly relevant issue in monetary policy because it is commonly argued that when central banks take actions such as publishing macroeconomic forecasts revealing individual votes on monetary policy committees or releasing minutes of meetings this will lead to improved economic outcomes while simultaneously facilitating democratic accountability 1

a long history of fomc voting behavior we devise and apply a method for estimating monetary policy reaction functions for individual members of the federal open market committee fomc of the federal reserve our method uses members votes on the monetary policy directive in fomc meetings as the key source of data on individual preferences the analysis provides a ranking by preference for ease for 84 fomc members who served during the 1966 1996 period

a dynamic oligopoly structural model for the prescription drug market after patent expiration this article incorporates consumer learning and heterogeneity into a dynamic oligopoly model for the prescription drug market in the model both firms and patients need to learn the generic qualities via patients experiences generic firms entry decisions are endogenous but their entry timings depend on a random approval process i apply the model to examine the impact of shortening the expected generic approval time although this policy experiment brings generics to the market sooner it increases a potential entrant s likelihood of entering a crowded market and hence could reduce the total number of generic entrants and consumer welfare

dynamic complexity in duopoly games abstract we discuss the occurrence of periodic and chaotic phenomena in infinite horizon duopoly games where firms maximize their discounted sum of profits and use markov perfect equilibrium strategies in the alternating case their corresponding actions are then constrained orbits of a map similar to a cournot t tonnement we show that any behavior is possible for small discount factors and that one obtains the cournot t tonnement as the discount factor goes to zero in the simultaneous case we show by mean of an example that many cournot t tonnements can be viewed as markov perfect equilibria of an infinite horizon game and that one obtains the nash equilibrium of the static game as the discount parameter goes to zero we are thus led to study in detail the dynamical properties of a cournot t tonnement

the policy choices and reaction functions of bank of england mpc members the results of an econometric exercise are presented showing that monetary policy committee mpc members appointed from outside the ranks of bank of england staff outsiders react differently to forecasts of inflation and output than those appointed from within the bank insiders all results are reinforced by the well established findings that compared with outsiders insiders choose higher interest rates are more likely to vote as a bloc and feature on the winning side of policy decisions more frequently on the basis of these results it is argued that the current mpc framework is biased toward the policy choices of insiders

a decade of dissent explaining the dissent voting behavior of bank of england mpc members we examine the dissent voting record of the bank of england monetary policy committee contrary to findings in the fomc literature for example havrilesky and schweitzer in the political economy of american monetary policy pp 197 210 1990 chappell et al in q j econ 108 1 185 218 1993 the effects of members career backgrounds and the political channel of appointment on voting behavior are negligible reflecting the distinct institutional constraints and incentives associated with uk monetary policy our findings also suggest that literature which characterizes voting behavior as being predominantly determined by members internal or external status is overly simplistic this view is supported by econometric results appertaining to the introduction of member specific fixed effects which account for possible unobserved heterogeneity

retail price cycles and response asymmetry weekly retail gasoline prices in windsor ontario from 1989 to 1994 appear to respond faster to wholesale price increases than to decreases but exhibit a cyclic pattern inconsistent with a common explanation of response asymmetry i reconcile these observations through a model of price cycles prices on the downward portion of the cycle appear insensitive to costs compared with price increases supporting the theory that price decreases result from battles over market share this pattern resembles a faster response to cost increases than to decreases and the conclusion that asymmetry indicates a role for competition policy may be inappropriate jel classification l13 l71 cycles des prix de detail et reponse asymetrique les prix de detail hebdomadaires de la gazoline a windsor ont entre 1989 et 1994 semblent reagir plus vite aux accroissements qu aux chutes des prix de gros mais suivent un pattern cyclique qui ne semble pas consistant avec l explication traditionnelle en termes de reponse asymetrique l auteur reconcilie ces observations a l aide d un modele de cycle de prix les prix dans la portion descendante du cycle semblent insensibles aux variations de couts par comparaison avec les accroissements de prix ce qui supporte la theorie que les chutes de prix resultent de luttes pour les parts de marche le pattern ressemble a celui declenche par une reponse plus rapide aux augmentations qu aux chutes de couts et la conclusion qui voudrait qu on puisse attribuer le tout a l asymetrie des reponses et que donc une intervention de la politique de la concurrence s impose peut etre inappropriee

coordination need not be a problem abstract in a game of common interest there is one action vector that all players prefer to every other yet there may be multiple pareto ranked nash equilibria in the game and the coordination problem refers to the fact that rational equilibrium play cannot rule out pareto dominated equilibria in this paper i prove that two elements asynchronicity and a finite horizon are sufficient to uniquely select the pareto dominant action vector in subgame perfect equilibrium play asynchronicity may be exogenously specified by the rules of the game alternatively in a game where players choose when to move asynchronicity may emerge as an equilibrium move outcome

endogeneity and simultaneity in competitive pricing and advertising a logit demand analysis in this article we use four data sets to provide a benchmark study of the effects of accounting for endogeneity and simultaneity in estimating marketing mix effects in a logit demand framework we compare the results obtained from accounting for endogeneity only to those from accounting for both endogeneity and simultaneity and in the latter case we allow for more general models of firm behavior to examine the consequences of imposing assumptions about the behavior of firms we find that accounting for both endogeneity and simultaneity not only affects the parameter estimates but also results in efficiency gains that affect the statistical significance of the estimates

strategic investment and conjectural variations abstract this paper analyzes investment decisions under the alternative assumptions of competitive collusive open loop non cooperative and feedback non cooperative behavior steady state capital stocks prices and outputs are obtained and compared the paper shows that one of the linear feedback equilibrium decision rule coefficients is a dynamic version of a contemporaneous conjectural variation the same decision rule coefficients are shown to imply a particular value for the contemporaneous conjecture the implied conjecture embodies subgame perfection and approaches the competitive value as the number of firms in the industry increases

computable markov perfect industry dynamics we provide a general model of dynamic competition in an oligopolistic industry with investment entry andexit toensurethatthereexistsacomputationallytractablemarkov perfectequilibrium we introduce firm heterogeneity in the form of randomly drawn privately known scrap values and setup costs into the model our game of incomplete information always has an equilibrium in cutoff entry exit strategies in contrast the existence of an equilibrium in the ericson and pakes model of industry dynamics requires admissibility of mixed entry exit strategies contrary to the assertion in their article that existing algorithms cannot cope with in addition we provide a condition on the model s primitives that ensures that the equilibrium is in pure investment strategies building on this basic existence result we first show that a symmetric equilibrium exists under appropriate assumptions on the model s primitives second we show that as the distribution of the random scrap values setup costs becomes degenerate equilibria in cutoff entry exit strategies converge to equilibria in mixed entry exit strategies of the game of complete information

dynamic auction environment with subcontracting this article provides evidence on the role of subcontracting in the auction based procurement setting with private cost variability and capacity constraints we demonstrate that subcontracting allows bidders to modify their costs realizations in a given auction as well as to control their future costs by reducing backlog accumulation restricting access to subcontracting raises procurement costs for an individual project by 12 and reduces the number of projects completed in equilibrium by 20 the article explains methodological and market design implications of subcontracting availability

effects of spatial density on veterinarian income where are all of the veterinarians with increased numbers of veterinarians in the market it is critical to understand how this increased competition affects income potential at multiple levels this study presents an empirical appr

a foundation for markov equilibria in sequential games with finite social memory we study stochastic games with an infinite horizon and sequential moves played by an arbitrary number of players we assume that social memory is finite every player except possibly one is finitely lived and cannot observe events that are sufficiently far back in the past this class of games includes games between a long run player and a sequence of short run players and games with overlapping generations of players an equilibrium is purifiable if some close by behaviour is consistent with equilibrium when agents payoffs in each period are perturbed additively and independently we show that only markov equilibria are purifiable when social memory is finite thus if a game has at most one long run player all purifiable equilibria are markov

career experience political effects and voting behavior in the riksbank s monetary policy committee abstract we find that career experience shapes the voting behavior of the riksbank s monetary policy committee mpc members members with a career in the riksbank and the government prefer higher rates during a legislation with a center right center left party administration mpc members with a career background in the government favor higher lower interest rates

optimal policies in a dynamic oligopoly model of international trade abstract the paper generalises the static cournot oligopoly model of international trade to a dynamic context and derives optimal trade policies it is found that an export subsidy is the optimal instrument for intervention by the domestic country when the domestic and foreign firms compete only in a third market when domestic consumption is allowed for the optimal policy is a production subsidy it is found that unlike the static cournot case in the dynamic version the reaction curves of both firms shift when a tax subsidy is imposed

a theory of dynamic oligopoly iii cournot competition abstract we study the markov perfect equilibrium mpe of an alternating move infinite horizon duopoly model where the strategic variable is quantity we exhibit a pair of difference differential equations that when they exist differentiable mpe strategies satisfy for quadratic payoff functions we solve these equations in closed form and demonstrate that the mpe corresponding to the solution is the limit of the finite horizon equilibrium as the horizon tends to infinity we conclude with a discussion of adjustment costs and endogenization of the timing

a theory of dynamic oligopoly ii price competition kinked demand curves and edgeworth cycles we provide game theoretic foundations for the classic kinked demand curve equilibrium and edgeworth cycle we analyze a model in which firms take turns choosing prices the model is intended to capture the idea of reactions based on short run commitment in a markov perfect equilibrium mpe a firm s move in any period depends only on the other firm s current price there are multiple mpe s consisting of both kinked demand curve equilibria and edgeworth cycles in any mpe profit is bounded away from the bertrand equilibrium level we show that a kinked demand curve at the monopoly price is the unique symmetric renegotiation proof equilibrium when there is little discounting we then endogenize the timing by allowing firms to move at any time subject to short run commitments we find that firms end up alternating thus vindicating the ad hoc timing assumption of our simpler model we also discuss how the model can be enriched to provide explanations for excess capacity and market sharing keiiwords tacit collusion markov perfect equilibrium kinked demand curve edgeworth cycle excess capacity market sharing endogenous timing

intertemporal price competition with exogenous demand shocks in this paper we show that in a differentiated product market the presence of exogenous demand shocks leads to countercyclical price behavior when firms are committed to prices in the short run

is the mpc s voting record informative about future uk monetary policy it is shown that the voting record of the monetary policy committee of the bank of england helps predict future policy rate changes this result is robust to the inclusion of market participants expectations as measured by the slope of the term structure of money market rates and interest rate futures moreover expectations seem to adjust to the information contained in the voting record which suggests that publishing the minutes of mpc meetings increases the transparency of monetary policy

ad valorem tariff and spatial equilibrium models the objectives of this article are to illustrate theoretically and empirically how to incorporate an ad valorem tariff in spatial equilibrium models and show the equivalence of three approaches primal dual and mcp of spatial equilibrium trade modelling the article lays out in detail the theory empirical applications and the results for all three approaches so that trade modellers can easily follow and apply them in their work the primal approach is commonly used by spatial equilibrium modellers though the dual approach corresponds to the textbook depiction of consumer surplus producer surplus and gains from trade the mixed complementarity problem mcp is not commonly used by spatial equilibrium modellers though it is relatively simpler if the modeller knows the equilibrium conditions this article also presents advantages and disadvantages of each approach

guns butter and anarchy a state in the international system implicit in realism must allocate its limited resources between satisfying its intrinsically valued ends and the means of military power i formalize this guns versus butter problem in a simple infinite horizon model in which two states must continually decide how to allocate their resources and whether to attack the other state the analysis establishes sufficient conditions to ensure the existence of an equilibrium in which neither state attacks shows that there is a strictly pareto dominant pair of peaceful equilibrium payoffs characterizes the unique peaceful markov perfect equilibrium that yields them and describes the comparative statics of the equilibrium allocations more broadly the analysis also suggests that the notion of anarchy has little if any substantive significance distinctively related to international politics and that the problem of absolute and relative gains is superfluous

persistency in sticky price models abstract nominal rigidities imply that nominal shocks have an impact effect which may be propagated by standard mechanisms however the nominal adjustment process may in itself be a propagation mechanism causing persistent effects of nominal shocks this may be caused by inertia in nominal wage and price adjustment arising due to input output networks or multiperiod nominal contracting as captured in models with staggered price wage decisions it has recently been contested whether staggering can account for persistency of any quantitative importance this paper reviews the theory and empirical evidence on this issue and it is concluded that staggering may be a quantitative important propagation mechanism

are two heads better than one monetary policy by committee two experiments were conducted to test the common hypothesis that groups make decisions more slowly than individuals one of these experiments imitates real life monetary policy decisions in both cases the hypothesis is found wanting groups are not slower than individuals in both experiments we also find that group decisions are on average better than individual decisions this holds regardless of whether the groups make decisions by unanimity or majority rule simple mechanical theories of group decisionmaking that the group follows its average player median player or best player do not explain the results group interactions seem to matter

effects of trade diversion and trade creation of mercosur on us and world apple markets apples are the third most valuable fruit in the united states and account for 18 of us fruit exports chile is a major competitor to the united states in the mercosur market since it is one of the leading apple producing countries and enjoys the tariff reductions as a member of mercosur consequently chilean exports displace us exports in mercosur in addition other mercosur members import more from lower cost chile leading to a reduction in production and an increase in consumption in these countries this study develops a theoretical and an empirical model of world apple market to quantify the trade diversion and trade creation effects of the mercosur free trade agreement and to estimate the welfare impacts

strategic incentives in dynamic duopoly abstract we compare steady states of open loop and locally stable markov perfect equilibria mpe in a general symmetric differential game duopoly model with costs of adjustment strategic incentives at the mpe depend on whether an increase in the state variable of a firm hurts or helps the rival and on whether at the mpe there is intertemporal strategic substitutability or complementarity a full characterization is provided in the linear quadratic case then with price competition and costly production adjustment static strategic complementarity turns into intertemporal strategic substitutability and the mpe steady state outcome is more competitive than static bertrand competition

regional influences on fomc voting patterns this paper looks at the monetary policy decisions of the u s federal reserve and asks whether observed voting patterns have been driven entirely by national concerns or whether regional factors have also played a role we find that fed policymakers take into account developments in regional unemployment when casting votes on monetary policy these results are robust to different specifications of the voting equation this research is relevant for the fed and it may also be relevant for europe s fledgling central bank in frankfurt in light of regional differences within the euro area

a spatial equilibrium analysis of trade policy reforms on the world wheat market since a few countries produce most of the world s wheat and consumption is widespread across the world wheat is one of the most commonly traded agricultural commodities in recent years the wheat market has been going through difficult phases as wheat prices are depressed the fall in wheat prices is attributed to a supply glut and restrictive trade barriers this study develops a large scale spatial equilibrium trade model for wheat to analyse the effects of removing trade barriers tariffs and subsidies on each country s region s price supply demand trade welfare and bilateral trade flows the results show that trade liberalization leads to an increase decrease in prices in the exporting importing countries production and exports increase in the exporting country and consumption and imports increase in the importing country consequently the volume of trade also increases the welfare of most countries rises and thus world welfare also rises

an alternating move price setting duopoly model with stochastic costs abstract this paper examines an alternating move price setting duopoly model in which marginal costs are stochastic without persistence it is shown that provided marginal costs do not fluctuate excessively equilibria in which firms match the current monopoly price do not exist by contrast equilibria in which firms always match their rival along the equilibrium path do exist in these equilibria deviations off of the equilibrium path result in extended price wars in which firms repeatedly undercut each other finally examples in which such price wars are observed in equilibrium are constructed

the former soviet union and the world wheat economy the impacts of the former soviet union leaving the world wheat market as a consistent net importer are investigated using a modified spatial trade equilibrium model the simulation results suggest that the former soviet union following bigman s stochastic trade hypothesis can have a stabilizing role in the future world wheat economy

aggregate pattern of time dependent adjustment rules i a game theoretic analysis of staggered versus synchronised wage setting this paper studies the benefits of staggered wage setting in reducing strategic conflicts it is shown that when wage setters interact strategically and dynamically they prefer moving alternatingly because by doing so they are able to commit temporarily not to offset the effects of each other s action it is also shown that synchronization represents a better arrangement when agents are able to coordinate these results are consistent with the presence of nonsynchronous and decentralized wage decisions in the united states and the united kingdom and the presence of synchronous bargaining in shunto and coordination in wage determination in japan copyright 1996 by royal economic society

subsidized buyer credits atypical results in strategic trade theory using subsidized buyer credit as a policy tool it is shown that the general result of strategic trade policy namely that by committing itself to an export subsidy any government can favorably change the outcome of the cournot oligopoly does not necessarily hold

aggregate pattern of time dependent adjustment rules ii strategic complementarity and endogenous nonsynchronization abstract this paper provides an explanation for an important institutional feature of staggered time dependent adjustment rules assumed in a number of macroeconomic models it identifies strategic complementarity as the crucial factor leading to nonsynchronized decisions in a game theoretic framework the paper first shows that nonsynchronization is the equilibrium outcome in an infinite horizon game in which strategic complementarity is present whether the players choose predetermined or fixed actions by pursuing the interpretation of a nonsynchronized move dynamic game as a series of games with symmetric stackelberg leadership it is further suggested that the relationship between strategic complementarity and the benefit to the stackelberg follower provides the insight to the game theoretic explanation of nonsynchronization the results of this paper reveal a link between strategic complementarity and nonsynchronization two important macroeconomic features journal of economic literature classification numbers e30 l16

monetary policy preferences of individual fomc members a content analysis of the memoranda of discussion the memoranda of discussion provide detailed records of federal open market committee fomc meeting deliberations procedures are developed for coding the textual data in the memoranda and assessing the reliability of those codings the codings are then used in the estimation of parameters of individual fomc members reaction functions data from the 1970 to 1976 period are employed in the estimation in the future similar methods could be used to analyze newly released transcripts of fomc meetings held after 1976

staggered vs synchronised wage setting in oligopoly abstract this paper analyses the dynamic equilibrium which emerges when wages are bargained upon at different times in the various firms operating in an oligopolistic industry unions set wages the management of the firms the output level and the outcome of this interaction is captured by the game theoretic concept of markov perfect equilibrium the steady state equilibrium is compared with that which would emerge if all wage negotiations occurred simultaneously it is shown that staggered wage setting leads to higher steady state levels of wage and unemployment than synchronised wage setting it is also shown that a longer duration for wage contracts leads other things equal to lower wages and higher employment the final part of the paper shows that allowing for nash bargaining between union and management and for risk averse unions does not alter the conclusions of the paper

mixed strategy in oligopoly pricing evidence from gasoline price cycles before and under a timing regulation this paper studies oligopoly firms dynamic pricing strategies in a gasoline market before and after the introduction of a unique law that constrains firms to set price simultaneously and only once per day the observed gasoline pricing behavior both before and under the law is well captured by the edgeworth price cycle equilibrium in the maskin and tirole dynamic oligopoly model my results highlight the importance of price commitment in tacit collusion i also find evidence that the price leadership outcome under the law is better predicted by mixed strategies play than by alternative hypotheses

time to build and fluctuations in bulk shipping abstract this paper explores the nature of fluctuations in world bulk shipping by quantifying the impact of time to build and demand uncertainty on investment and prices we examine the impact of both construction lags and their lengthening in periods of high investment activity by constructing a dynamic model of ship entry and exit a rich dataset of secondhand ship sales allows for a new estimation strategy resale prices provide direct information on value functions and allow their nonparametric estimation we find that moving from time varying to constant to no time to build reduces prices while significantly increasing both the level and volatility of investment jel g31 l11 l62 l92

the effect of fomc votes on financial markets this paper shows that since votes of members of the federal open market committee have been included in press statements stock prices increase after the announcement when votes are unanimous but f

asynchronized multiperiod commitments and cycles abstract we consider a game where agents can synchronize or stagger their decisions we compare the outcomes of both timing patterns and show that spillovers and strategic interactions are crucial for such a comparison a typology used in industrial organization distinguishing four cases fat cat top dog lean and hungry puppy dog allows us to compare the actions taken in the staggered variant and in the synchronized one the staggered variant exhibits cycles and players are both better off when there are strategic complementarities between them a timing game is then set up so as to endogenize the choice between the two variants we study two examples are developed i bertrand competition and ii a wage setting game when there are two monopoly unions in two interrelated firms we show that the staggering of price decisions generates counter cyclical mark ups in the first example and the staggering of wage decisions generates cycling output in the industry in the second example

convergence to symmetry in dynamic strategic models of r d the undiscounted case abstract will r d increase or decrease the asymmetry between firms over time we examine this issue in the context of a dynamic alternate move duopoly model of non cooperative r d the asymmetry we consider is with respect to the initial stocks of technological knowledge which provides one firm a greater potential for current and future profits in the product market utilizing a value loss process constructed from the optimality equation of dynamic programming we show that for the undiscounted case the asymmetry between the firms disappears over time we obtain this convergence to symmetry result by imparting a temporal character to r d through the notion that r d investment cannot be changed instantaneously by allowing research externalities complementarity or substitutability between own and appropriated r d and either increasing decreasing or constant returns to scale in the production of technical knowledge from own and rival r d

the evolution of consistent conjectures in this paper we model the evolution of conjectures in an economy consisting of a large number of firms which meet in duopolies the duopoly game is modelled by the conjectural variation cv model an evolutionary process leads to more profitable conjectures becoming more common payoff monotonic dynamics under this class of selection dynamics convergence occurs to a small set of serially undominated strategies containing the consistent conjecture this set can be made arbitrarily small by appropriate choice of the strategy set if the game is dominance solvable then the dynamics converge globally to the unique attractor

effects of global trade liberalization on softwood lumber markets this study develops a world spatial equilibrium softwood lumber model comprised of the major importing and exporting countries regions to analyse the impacts of global trade reform on the world softwood lumber market the results show that free trade leads to an increase in lumber trade and canadian producers and us consumers are the biggest beneficiaries trade liberalization improves the overall world welfare as world producer and consumer surpluses increase the result highlights the importance of moving towards free trade in the global softwood lumber market

uk bank services for small business how competitive is the market abstract this study is the first to employ an econometric model to examine the pricing behaviour of british financial institutions with respect to key bank products services offered to small and medium sized enterprises smes including current accounts investment accounts business loans and mortgages a mean group approach is used on a panel of monthly data to gauge individual banks reactions to identify factors influencing the setting of deposit and loan rates and to assess the competitive structure that best describes the uks sme banking market though the results should be interpreted with caution the empirical evidence is suggestive of a complex oligopoly policies directed at improving information and making it easier for small businesses to change banks accounts would reduce inertia and improve competition among financial institutions

export liberalization and household welfare the case of rice in vietnam vietnam has rapidly become one of the three largest rice exporters in the world in spite of a binding export quota this article uses a multimarket spatial equilibrium model to examine the effect of further liberalization on regional rice prices household data are then used to calculate the welfare impact of these price changes on different household groups the results suggest that although rice export liberalization would raise food prices and exacerbate regional inequality it would also increase average real income and reduce slightly the incidence and severity of poverty we explore several explanations of these apparently paradoxical results

asynchronous choice and markov equilibria we provide a theoretical foundation for the use of markov strategies in repeated games with asynchronous moves if admissible strategies must display finite arbitrarily long memory and each player incurs a complexity cost which depends on the memory length required by her strategy then every nash equilibrium must be in markovian strategies if in addition admissible strategies have uniformly bounded memory every rationalizable strategy must be markovian these results are robust to considerations of perfection and also yield interesting implications for equilibrium selection in simple contexts

us brazil cotton dispute and the world cotton market us policies for its cotton producers depress world cotton prices adversely affecting exporters such as brazil which filed a complaint to the wto despite wto rulings in brazil s favour meting out the right to enact retaliatory countermeasures the united states continues to subsidise its cotton farmers after prolonged negotiations brazil and the united states reached an agreement which allowed the united states to pay brazil to refrain from enforcing the countermeasures to capture the adverse effects of us policies theoretical analyses are conducted the theoretical model is extended by constructing an empirical model of the world cotton market the adverse effects of us policies on brazil are estimated and compared to the compensation the united states pays brazil

the dynamics of price dispersion or edgeworth variations abstract hypotheses on the dynamics of dispersed prices are extracted from computer simulations and theory and are tested using laboratory data as predicted in some variations of the edgeworth hypothesis the data exhibit a significant cycle relative to the unique stationary distribution the empirical distribution of posted prices has excess mass in an interval that declines until it approaches the lower boundary of the stationary distribution then jumps upward and the downward cycle resumes the amplitude of the cycle seems fairly constant over the longer experimental sessions a hybrid of gradient dynamics and logit dynamics seems to best reproduce the observed dynamics

alternative time patterns of decisions and dynamic strategic interactions this paper offers a simple approach to study steady state markov perfect equilibria arising in dynamic games when players are obliged to commit their actions for several periods it highlights the importance of spillovers and dynamic strategic interactions when assessing the various time patterns conceivable in such games the obtained results are then applied to various either micro or macroeconomic issues where time patterns of decisions matter

market structure and endogenous productivity growth how do r d subsidies affect market structure abstract conclusions about optimal rd 2 distribution of firm sizes and 3 more complex market structures that vary across industries and over time this paper presents the partial equilibrium for a single industry demonstrating how growth promoting r d subsidies alter the endogenously determined market structure subsidies to r d stretch the distribution of market shares with an increased number of firms in the market but a higher variance in the market shares across firms

majority rule consensus building and the power of the chairman arthur burns and the fomc this paper investigates decision making within the federal open market committee of the federal reserve focusing on the competing pressures of majority rule consensus building and the power of the chairman to undertake this analysis we have constructed an original data set recording desired federal funds rates for each member of the committee over the 1970 78 period our results confirm a disproportionate influence of the chairman in the policy process they also confirm that other voting members of the committee have an impact on policy choices estimates indicate that the chairman exercises 40 to 50 of the voting weight in committee decisions

dynamic oligopoly with capacity adjustment costs abstract the literature on strategic investment emphasized the case of completely irreversible investment this paper considers an oligopoly model in which investment is reversible and capacity is subject to adjustment costs an n player linear quadratic differential game is analyzed existence and characterization results for perfect equilibrium feedback strategies are provided feedback strategies provide incentives for each player to invest strategically so as to preempt subsequent expansion by rivals a larger set of perfect equilibria is constructed by using memory dependent trigger strategies equilibria of this type are shown to support joint value maximization for some initial states and asymmetric steady states

negotiations in multi issue committees abstract we propose a non cooperative bargaining approach to the problem of collective decision making in committees by modelling this process as a sequential bargaining game the main objective of the paper is to discuss the formation of the agenda in multi issue committees and its relation to the importance of the issues we start by asserting that in the case of a single issue the set of all equilibrium outcomes of our game coincides with the set of coalitional stable outcomes we then consider multi issue committees to discuss the problem of forming agendas we argue that from the point of view of efficiency and stability the most important issues should be put first on the agenda we conclude with a sufficient condition on players preferences which guarantees the efficiency and stability of the bargaining outcomes for every possible agenda

export subsidies under dynamic duopoly abstract in this paper i analyze an export subsidy game under a dynamic cournot duopoly using a discrete time markov equilibrium model of dynamic cournot duoply according to maskin and tirole 1987 assuming a linear demand function i will show that under a dynamic duopoly 1 firms are more sensitive to changes in export subsidies 2 the equilibrium export subsidy in an export subsidy game is smaller 3 the output at the subsidy equilibrium is larger than a static duopoly with lower subsidy and higher output the welfare in countries under a dynamic duopoly is higher than a static duopoly

markov perfect equilibrium in multi period games between sponsor and bureau we formulate a simple model of the interaction between a sponsor and a bureau the sponsor sets the bureau s budget while the bureau decides on how much to spend on slack we compute numerically markov perfect equilibria of multi period games where the agents move alternately and apply markov strategies both agents are worse off compared to the one period game with simultaneous moves as the discount factors increase the equilibrium outcome becomes less cooperative in nature

a dynamic model of entry and exit in a growing industry the potential demand in a new industry evolves over time demand is initially low but advertising by the industry s early entrants can speed up demand growth however there is intrinsic uncertainty of the demand level in each period and uncertainty of the demand evolution path which can be affected by the underlying economic environment we construct a dynamic model that features the stochastically and endogenously expanding demand of a new industry and we investigate the optimal entry and exit behavior of firms as the industry evolves we find that firms incentive to enter early depends critically on the cost that early entrants have to pay in developing the market when the cost is high and the benefit spills over to potential entrants firms have an incentive to wait and the probability of entry can increase with the number of incumbents under certain circumstances firms entry strategy is also influenced by the transition of economic states firms are more likely to enter under a state that shows the prospect of demand taking off soon we also find that in the early stage of an industry higher demand uncertainty can induce faster entry

sequential moves and tacit collusion reaction function cycles in a finite pricing duopoly abstract this paper analyzes a finite horizon sequential move pricing duopoly restricting attention to markov strategies the solution yields stationary patterns independent of initial conditions where the reaction functions follow cycles of three periods the market price never settles down and is at all times strictly above marginal cost long run average industry profits are approximately 5 6 of the monopoly level these results demonstrate that neither a long horizon nor non markovian strategies are required for persistent profits in dynamic price competition games journal of economic literature classification numbers c73 d43 l13

empirical analysis of closed loop duopoly advertising strategies closed loop perfect equilibria in a lanchester duopoly differential game of advertising competition are used as the basis for empirical investigation two systems of simultaneous nonlinear equations are formed one from a general lanchester model and one from a constrained model two empirical applications are conducted in one involving coca cola and pepsi cola a formal statistical testing procedure is used to detect whether closed loop equilibrium advertising strategies are used by the competitors rather than open loop strategies in the second application involving anheuser busch and miller the general model is estimated results indicate that closed loop equilibria better explain dynamic advertising competition than do open loop equilibria also closed loop equilibrium advertising strategies implied by model estimates show that competitive advertising levels may or may not be monotonic in market share

oligopoly exploitation of a private property productive asset abstract in this paper we build a closed loop nash equilibrium of a private property productive asset oligopoly we compare and contrast private with common property in terms of exploitation rates and social welfare and provide a comparative dynamic analysis with respect to the number of firms in the industry contrary to previous studies on oligopolistic exploitation of productive assets before exploitation begins the resource is parcelled out each firm privately owns and manages the assigned parcel over the entire planning horizon compared with the common property regime we find a new set of results both in the short and in the long run as for social welfare we provide conditions on the implicit growth rate and the initial asset stock under which the socially optimal allocation of the resource implies a natural monopoly

on endogenously staggered prices taylor s model of staggered contracts is an influential explanation for nominal inertia and the persistent real effects of nominal shocks however in standard imperfect competition models if agents are allowed to choose the timing of pricing decisions they will typically choose to synchronize this paper provides a simple model of imperfect competition which produces stable staggering our argument relies on strategic interaction at two levels between firms within an industries and across industries and produces a continuum of staggered price equilibria these equilibria are strict and hence stable under a simple adaptive learning process an enduring problem for business cycle theory is an explanation for the persistent effects of nominal shocks explaining persistence is particularly problematic for theories based on nominal shocks as opposed to real shocks this is because rational expectations implies that nominal shocks themselves cannot be serially correlated since nominal shocks are the deviation of realized nominal magnitudes from expected values in two important papers taylor 1979 1980 provided an argument as to why a nominal shock can have persistent effects taylor s argument required two important assumptions first he assumed that firms could adjust prices only in alternate periods an assumption which may be justified by menu or information costs taylor s second assumption was that price setting was staggered half the firms were constrained to adjust prices in odd periods while the other half were allowed to adjust prices in even periods these two assumptions combined to provide dramatic results on nominal inertia the adjustment of prices to a nominal shock is slow and hence output effects are long lasting taylor s results on persistence arise due to strategic complementarity between price setting decisions this implies that each firm s optimal price is an increasing function of the aggregate price level if a shock arrives in an even period firms in the even cohort will not adjust fully to the nominal shock since firms in the odd cohort have fixed prices in the current period furthermore with rational expectations the even cohort also takes into account the fact that its own failure to adjust fully will also make for partial adjustment in future periods this elegant story has made taylor s model possibly the most influential of new keynesian models by providing a dynamic setting within which small nominal rigidities may result in persistent nominal inertia