information and incentives in computing services supply the effect of limited system choices abstract every organization has only limited computing resources that need to be shared by members of the organization rationing mechanisms such as pricing usually are used to regulate the demands for such resources however to derive an effective mechanism for determining the usage or the scale of an organization s computing service is difficult since there are many informational and incentive problems that need to be overcome by incorporating these problems into a game theoretic model this study analyzes the effects of limited system choices on an organization s net value generated from computing service based on the mechanism design approach the optimal incentive compatible mechanism is derived and contrasted with the case where the is department is evaluated as a profit center the results show that limited system choices can have significant effects on the value generated by an organization s computing service also depending on whether the is department is governed by the optimal mechanism or is evaluated as a profit center the effects oflimited system choices can be different managerial implications derived from the study are provided

cost allocation revisited an optimality result the resource manager of a firm is faced with capacity and pricing decisions with regard to a congestion prone system such as computer communication facilities difficulties arise since the manager is uninformed of the system demand when the capacity decision is to be made a game theoretic model is developed to analyze the effects of different accounting rules on the elicitation of relevant information and ex post efficiency in acquisition and allocation decisions the key result is that the cost allocation method aided by an anonymous reporting scheme is indeed as asserted by zimmerman zimmerman j 1979 the costs and benefits of cost allocations accounting rev 54 july 504 521 a full information efficient rule achieving optimality both in acquisition and allocation decisions discussions of the main assumptions underlying this result are provided

price taking equilibrium in economies with multiple memberships in clubs and unbounded club sizes abstract we model an economy with clubs or jurisdictions where individuals may belong to multiple clubs and where clubs sizes are arbitrary clubs may be restricted to consist of only one or two persons or as large as the entire economy or anything in between notions of price taking equilibrium and the core both with communication costs are introduced these notions take into account that there is a small communication cost of deviating from a given outcome we demonstrate that given communication costs for all sufficiently large economies the core is nonempty and the set of price taking equilibrium outcomes is equivalent to the core

a reverse robin hood the distributional implications of non standard monetary policy for italian households abstract we study empirically the distributional implications of ecb non standard monetary policy by exploiting a rich micro dataset on italian households income and wealth and contemporaneously taking into account all relevant transmission channels our results do not support the claim that an unconventional monetary loosening acts as a reverse robin hood larger benefits accrue to households at the bottom of the income scale as the effects via the stimulus to economic activity and employment outweigh those via financial markets the response of net wealth is moderately u shaped less wealthy households take advantage of their leveraged positions wealthier households of their larger share of financial assets overall the effects on inequality are negligible the results also suggest that savers are not hurt as the decrease in the remuneration of assets is compensated by support to labour income and by capital gains

the distributional effects of conventional monetary policy and quantitative easing evidence from an estimated dsge model abstract this paper compares the distributional effects of conventional monetary policy and quantitative easing qe within an estimated open economy dsge model of the euro area the model includes two groups of households i wealthier households who own financial assets and are able to smooth consumption over time and ii poorer households who only receive labor and transfer income and live hand to mouth we use the model to compare the impact of policy shocks on constructed measures of income and wealth inequality net disposable income net asset position and relative per capita income except for the short term expansionary conventional policy and qe shocks tend to mitigate income and wealth inequality between the two population groups in light of the coarse dichotomy of households that abstracts from richer income and wealth dynamics at the individual level the analysis emphasizes the functional distribution of income

delay cost and incentive schemes for multiple users this paper examines the role of cost application in the presence of delay and agency costs two risk neutral division managers share a common production facility and decide on a the demand usage rates and b productive action each division manager causes costly delays at the common production facility for the other division manager the expected delay depends on the demand rates chosen by the division managers an m g 1 queuing framework is used to characterize delay costs the unobservability of demand rates leads to stochastic choice hazard and the unobservability of productive actions leads to moral hazard problems the headquarters designs incentive schemes such that the use of the common facility is optimal for the firm we show that a franchise contract is necessary to implement the first best solution similar to harris and raviv 1979 but is not sufficient specifically when the action aversion of one division manager is small the use of a franchise contract leads to greedy behaviour by the that division manager the cost application required is greater than the expected marginal cost of delay to preclude the greedy behavior and ensure a stable equilibrium

general equilibrium when economic growth exceeds discounting abstract after dropping the standard general equilibrium assumption that preference orders discount future consumption faster than the economy grows and dropping continuity and weakening utility representation we establish commodity prices and consumptions that approach approximate equilibrium to within any practical tolerance the weizacker overtaking criterion defines the best known non standard discounting orders we admit over discrete time deterministic consumption paths and over continuous time stochastic consumption processes we also perturb preferences to qualify all approximate equilibrium as full equilibrium thus showing some well known non existence examples are singular and so are inadequate defence of standard assumptions journal of economic literature classification numbers c60 c62

economies with many commodities we discuss the two fundamental theorems of welfare economics in the context of the arrow debreu mckenzie model with an infinite dimensional commodity space as an application we prove the existence of competitive equilibrium in the standard single agent growth model

aggregate implications of wealth redistribution the case of inflation this paper shows that a zero sum redistribution of wealth within a country can have persistent aggregate effects motivated by the case of an unanticipated inflation episode we consider redistribution shocks that shift resources from old to young households aggregate effects arise because there are asymmetries in the reaction of winners and losers to changes in wealth we focus on two sources of asymmetries differences in the average age of winners and losers and differences in their labor force status jel d31 d58 e31 e50

on equilibrium prices in continuous time abstract state prices are the fundamental building block for dynamic asset pricing models we provide here a general continuous time setup that allows to derive non trivial structural properties for state prices from economic fundamentals to this end we combine general equilibrium theory and theorie generale of stochastic processes to characterize state prices that lead to continuous price systems on the consumption set we also show that equilibria with such state prices exist

inflation nominal portfolios and wealth redistribution in canada les ameliorations dont pourraient beneficier les regimes de politique monetaire font actuellement l objet d un debat public dans les pays caracterises par un taux d inflation bas et stable comme les etats unis et le canada ainsi le regime canadien de cibles d inflation est soumis en ce moment a un examen en profondeur

linear and non linear price decentralization compendious and thorough solutions to the existence of a linear price equilibrium problem the second welfare theorem and the limit theorem on the core are provided for exchange economies whose consumption sets are the positive cone of arbitrary ordered frechet spaces dispensing entirely with the assumption that the vector ordering of the commodity space is a lattice the motivation comes from economic applications showing the need to bring within the scope of equilibrium theory vector orderings that are not lattices which arise in the typical model of portfolio trading with missing options the assumptions are on the primitives of the model they are bounds on the marginals of non linear prices and for proper economies they are both sufficient and necessary

the effects of monetary policy shocks on inequality abstract this paper provides new evidence of the effect of conventional monetary policy shocks on income inequality we construct a measure of unanticipated changes in policy rates changes in short term interest rates that are orthogonal to unexpected changes in growth and inflation news for a panel of 32 advanced and emerging market countries over the period 1990 2013 our main finding is that contractionary monetary policy shocks increase income inequality on average the effect is asymmetric tightening of policy raises inequality more than easing lowers it and depends on the state of the business cycle we find some evidence that the effect increases with the share of labor income and is mitigated by redistribution policies finally while an unexpected increase in policy rates increases inequality changes in policy rates driven by an increase in growth and inflation are associated with lower inequality

aggregate and welfare effects of redistribution of wealth under inflation and price level targeting abstract an unanticipated rise in the price level redistributes wealth from lenders to borrowers its size depends on the monetary policy regime as inflation targeting it and price level targeting pt have different implications for the price level path following price level movements the effects of an unexpected 1 price level increase are measured and assessed under both regimes overall the redistribution of wealth and the implied aggregate and welfare effects are larger under it than they are under pt the youngest the poorest and the government gain at the expense of the rest of the population and when the government gain is given to households as lump sum transfers the effects on gdp are negative and long lasting

on inflation as a regressive consumption tax abstract evidence on the portfolio holdings and transaction patterns of households suggests that the burden of inflation is not evenly distributed we build a monetary growth model consistent with key features of cross sectional household data and use this framework to study the distributional impact of inflation at the aggregate level our model economy behaves similar to standard monetary growth models within the representative agent abstraction inflation has however important distributional effects since it is effectively a regressive consumption tax thus neglecting the distributional consequences of inflation may prove misleading in assessing the effects of inflation in our economy

competitive equilibria in production economies with an infinite dimensional commodity space the existence of competitive equilibrium is established for economies with a produc tion sector and an infinite dimensional space of commodities the cru cial assumptions which are required beyond those required in the fin ite dimensional setting are bounds on marginal rates of substitution and marginal rates of transformation copyright 1987 by the econometric society

economies with public projects efficiency and decentralization the article deals with the two fundamental theorems of welfare economics for production economies with a finite set of agents infinitely many private goods and a set of public projects the problem of efficiency and decentralization is addressed under the following very general assumptions a the commodity price duality is endowed with a consistent locally convex topology b the set of public projects is without any mathematical structure moreover any agent is characterized by a nonordered preference relation depending on consumption goods and public projects approximate and exact welfare theorems are discussed throughout the article

core equivalence theorem with production abstract in production economies the extent to which non equilibria are blocked depends on the allocation of control rights among shareholders because a blocking coalition s resources are affected by the firms it jointly owns with outsiders we formulate a notion of blocking that takes such interdependency problem into account and we prove an analog of the debreu scarf theorem for replica production economies our theorem differs from theirs in using an additional assumption which we argue is indispensable and is driven by the interdependency problem

monetary policy and wealth inequality over the great recession in the uk an empirical analysis abstract we use detailed micro information at household level from the wealth and assets survey to construct measures of wealth inequality from 2006 to 2018 at the monthly frequency we investigate the dynamic relationship between monetary policy and the evolution of wealth inequality measures our findings suggest that expansionary monetary policy shocks lead to an increase in wealth inequality and contributed significantly to its fluctuations this effect is heterogenous across the wealth distribution with the monetary shock affecting the median household relative to the 10th and 20th percentile by a larger amount than the right tail our results suggest that the shock is transmitted through changes in net property and financial wealth

price level changes and the redistribution of nominal wealth across the euro area we document the presence of sizable distributional effects from unexpected price level movements in the euro area ea using sectoral accounts and newly available data from the household finance and consumption survey the ea as a whole is a net winner of unexpected price level increases with italy greece portugal and spain being the biggest beneficiaries and belgium and malta being the largest losers governments are net winners of inflation while the household hh sector is a net loser in the ea as a whole hhs in belgium ireland malta and germany incur the biggest per capita losses while hhs in finland and spain turn out to be net winners of inflation considerable heterogeneity exists also within the hh sector relatively young middle class hhs are net winners of inflation while older and richer hhs are losers as a result wealth inequality in the ea decreases with unexpected inflation although in some countries austria germany and malta inequality increases due to presence of relatively few young borrowing hhs we document that hhs inflation exposure varies systematically across countries with hhs in high inflation ea countries holding systematically lower nominal exposures

congestion and network externalities in the short run pricing of information system services transfer pricing provides management with an efficient tool for coordinating the use of information system services in practice these services if they are charged out to end users are priced via an allocation of historical costs based on individual usage or are assigned a price based on the fair market value of outside alternatives both approaches encourage suboptimal usage of information systems resources they ignore three constituents of optimal transfer prices 1 the reaction of other users to any change in a given user s consumption of service 2 the technical response to additional use of an information system service in the form of congestion and network externalities and 3 end user preferences for the information system service together these influences on demand contribute to an externality two types of externalities are significant in information systems congestion externalities decrease and network externalities increase the utility of services this research provides a complete model for computing optimal transfer price which corrects several existing problems in information system service valuation when full absorption cost allocations contain significant fixed precommitted or sunk cost components it is not possible to balance the budget direct costing improves on full absorption costing but misspecifies costs when demand is nonlinear to balance the budget with a minimum of disutility to end users management must resort to second best pricing inefficiency arises from two sources when externalities are ignored in transfer pricing end users cannot plan service usage and thus encounter unanticipated congestion which lowers morale and efficiency and increases costly expediting where congestion effects are highly nonlinear congestion may effectively shut down the system on the other hand incorrect transfer prices can motivate usage too low to take advantage of network benefits end users may confuse externality effects and intrinsic value of an information system service in these cases the price and performance of outside alternatives exert a complex and subtle influence on use and pricing of services where there exist identical outside and inside processing alternatives and transfer pricing does not reflect this there is a significant tendency to overprice and underutilize internal services in this case there may be a tendency to outsource when processing should be kept in house future markets for information systems will favor technologies which exhibit strong network externalities and pricing of these technologies will become increasingly complex because of the interrelationship of hardware software and data originated externalities the models provided in this research will allow management to take advantage of these opportunities

optimal internal pricing and capacity planning for service facility with finite buffer abstract an economic model is developed for exploring optimal internal pricing and capacity planning for service facility with finite buffer capacity because of the limited buffer capacity jobs finding the system full upon their arrival would be rejected such rejections create a gap between the value collectively perceived by users and the actual achievement of the organizational value this gap called a loss externality has never been studied before and plays an important role for designing optimal pricing scheme in general the underlying economic structure may involve multiple equilibria and it is unclear whether or not the system can be controlled through internal pricing in this regard a sufficient condition is given under which the system administrator can find two separate prices for accepted and rejected users at any demand level to be desired so that the desired demand level becomes the unique equilibrium of the system for a short run problem it is shown that the optimal pricing scheme can be expressed as the sum of the congestion and the loss externalities for a long run problem the optimal pricing scheme is expressed in a unified manner so that a structural relationship between the short run problem and the long run problem at optimality can be readily observed a necessary and sufficient condition is also given for the marginal capacity pricing to be optimal i e the optimal long run pricing consists of the marginal cost for processing capacity and the marginal cost for buffer capacity without involving any externality at all

the transmission of monetary policy through redistributions and durable purchases this paper studies a redistribution channel for the transmission of monetary policy using a tractable olg setting in which the government is a net debtor we show that standard open market operations omo conducted by central banks have signi cant revaluation eects that alter the level and distribution of wealth in the economy and the real interest rate expansionary omo generate a negative wealth eect the private sector as a whole is a net creditor to the government increasing households incen tives to save for retirement and pushing down the real interest rate this in turn leads to a substitution towards durables generating a temporary boom in the durable good sector with search and matching frictions a form of productive investment is added to the model and the fall in interest rates causes an increase in labour demand raising aggregate employment the mechanism can mimic the empirical responses of key macroeconomic variables to monetary policy interventions the model shows that dierent monetary interventions e g omo versus helicopter drops can have sharply dierent eects on activity

increasing returns in infinite horizon economies this paper shows that in a general equilibrium model with an infiniite holizonl in whichi productionl may exhibit increasing returns to scale or non conivexities marginal cost pricing equilibria exist anid are essential that is stable witlh respect to small perturbationis of the economily as in many important models of mairket imperfections marginal cost pricinig equilibria need not be pareto optimal in the presence of noni convexities so the systematic approaches to equilibrium analysis in infinite dimenisionial commodity spaces which rely crucially oln the first welfare theorem cainnot be used instead this paper introduces leray schauder degree theory the extension of degree theor y to banacih and locally convex spaces as the natural methodology for showinlg that equilibria exist and for anialyzing qualitative features of equilibria such as local uniqueness or essentiality

user delay costs and internal pricing for a service facility this paper studies optimal pricing and capacity decisions for a service facility in an environment where users delay cost is important the model assumes a general nonlinear delay cost structure and incorporates the tradeoff between the delay cost and capacity cost we find necessary and sufficient conditions for the optimality of a pricing rule that charges out service resources at their marginal capacity cost we examine the issue of budgetary balance and find that net value maximization entails a budget deficit for the service facility that is the service facility should be evaluated as a deficit center the results provide guidelines under which the optimal magnitude of the deficit can be determined

cost of congestion operational efficiency and management accounting abstract in this paper we examine the conflicts that arise when multiple users share a common facility the conflicts could arise at three levels a between the individual users and the division manager b among the divisions or different classes that use the facility and c between the divisions and the headquarters in the presence of private information we analyze these conflicts and outline the role of cost allocation mechanisms and thereby account for congestion in each of these situations the results of this paper demonstrate the usefulness of resolving these conflicts in an organization and hence has direct managerial accounting implications

central bank policies and income and wealth inequality a survey this paper reviews recent research on the relationship between central bank policies and inequality a new paradigm which integrates sticky prices incomplete markets and heterogeneity among households is emerging which allows for the joint study of how inequality shapes macroeconomic aggregates and how macroeconomic shocks and policies affect inequality the new paradigm features multiple distributional channels of monetary policy most empirical studies however analyze each potential channel of redistribution in isolation our review suggests that empirical research on the effects of conventional monetary policy on income and wealth inequality yields mixed findings although there seems to be a consensus that higher inflation at least above some threshold increases inequality in contrast to common wisdom conclusions concerning the impact of unconventional monetary policies on inequality are also not clear cut to better understand policy effects on inequality future research should focus on the estimation of general equilibrium models with heterogeneous agents

unconventional monetary policy and inequality is japan unique unconventional monetary policy ump influences inequality through two channels that work in opposite directions a labour market channel more employment higher wages and a financial market cha

cost allocation and opportunity costs one explanation for the widespread use of allocated fixed costs is that they can serve as a proxy for difficult to calculate opportunity costs this explanation is pursued by modeling a service department as an m m s s queueing system two main results are that the expected value of opportunity costs equals both the incremental productivity of capacity and the optimal transfer price when the cost of capacity is of the form cs as and is close to one we show that allocated fixed costs are a good proxy for average opportunity costs however if there are great economies of scale is close to zero then a method which charges users only for the variable costs of the service department is recommended finally the economic efficiency of transfer prices based on either variable cost or full cost is compared with optimal transfer pricing policies

allocating costs of a shared server with stochastic service parameters and job class priorities abstract this paper develops an approach to allocate common costs to two divisions that share a process where there is a trade off between the joint investment in the process and the delays that a division s jobs are expected to experience there we allow one division s jobs to have priority over the other division s jobs one purpose of allocation is to obtain accuracy in costing of products reflecting their consumption of resources the second purpose the incentive issue is to elicit truthful reports of private information possessed by each division on i delay cost parameters or ii expected usage this information being needed for the investment decision in case i we find that when a division s private information on its delay costs is poor or non existent it would prefer to invest at a weakly higher level than its accounting cost information justifies in other words a firm that allocates service center costs depending only on accounting measures of delay costs will under invest in a shared facility in case ii we find that to elicit truthful reporting by divisions requires a cost allocation rule that involves a complex monitoring of various physical parameters broadly related to the pattern of waiting times this complexity is driven by the fact that one division has priority however because actual usage provides an ex post estimate of expected usage up to some random error a penalty scheme based on directly monitoring actual usage can be used to enforce truth telling up to any desired approximation

edgeworth equilibria in production economies abstract an edgeworth equilibrium is an allocation that belongs to the core of every n fold replica of the economy in this work we study the properties of edgeworth equilibria for economies with production and infinite dimensional commodity spaces under some relatively mild conditions we establish among other things that 1 edgeworth equilibria exist 2 every edgeworth equilibrium is a quasi equilibrium and 3 an allocation is an edgeworth equilibrium if and only if it can be decentralized by a price system

optimal incentive contracts with multiple agents abstract a setting in which a single principal contracts with two agents who possess perfect private information about their own productivity is considered with correlated productivities each agent s private information also provides a signal about the other agent s productivity in contrast to the setting in which there is only one agent it is shown that such private information may be of no value to the agents it is only if the agents are risk averse that their private information may allow them to command rents moreover when the agents are constrained only to reveal their private information truthfully as a nash equilibrium the pareto optimal incentive scheme may induce the agents to adopt strategies other than truth telling this leads to the consideration of truth telling equilibria that are not pareto dominated in the subgame played by the agents among all such equilibria the one preferred by the principal restricts one agent to tell the truth as a dominant strategy and the other as a nash response to truth

profit maximizing cost allocation for firms using cost based pricing this work develops a profit maximizing cost allocation scheme for firms that allocate all costs to their various outputs and then use these costs to set prices a process known as fully distributed cost based pricing if the costs incurred by the firm are not easily traced to a particular output for example the electric bill for a shared manufacturing plant the costs must be allocated the demand for a given output is assumed to be a function of the price hence the cost allocation scheme that is selected will affect both the price and the demand for the output the allocation of common costs that maximizes the firm s overall profit under these conditions is identified frequently the profit maximizing allocation allocates none of the untraceable common costs to one or more of the outputs this allocation scheme stands in contrast to common practices of sharing costs equally or proportionally across outputs examples explore the implications of such a profit maximizing cost allocation on prices and demand in four scenarios i no constraints ii constraints on maximum allowable prices iii a change in market size and iv cost containment incentives

the existence of competitive equilibrium over an infinite horizon with production and general consumption sets although many theorems have been proved on the existence of competitive equilibrium in production economies with an infinite set of goods and a finite set of consumers nearly all suff er from a major defect the consumption possibility sets are required t o equal the positive orthant this rules out trade in personal service s and it does not allow for substitutions between goods on the subsistence boundary using methods similar to b peleg and m e yaari 1970 the authors show both equilibrium existence and core equivalence for economies with production and general consumption sets copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

distributional consequences of asset price inflation in the euro area we study the distributional consequences of housing price bond price and equity price increases for euro area households using data from the household finance and consumption survey hfcs the capital gains from bond price and equity price increases turn out to be concentrated among relatively few households while the median household strongly benefits from housing price increases the capital gains from bond price increases relative to household net wealth do not correlate with household net wealth or income bond price increases thus leave net wealth inequality largely unchanged in contrast equity price increases largely benefit the top end of the net wealth and income distribution thus amplify net wealth inequality housing price increases display a hump shaped pattern over the net wealth distribution with the poorest and richest households benefitting least with regard to the latter finding there exists considerable heterogeneity across euro area countries

a theory of value with non linear prices equilibrium analysis beyond vector lattices this paper presents a new theory of value with a personalized pricing system that naturally induces a family of non linear prices this affords a coordinate free theory of value in which the analysis is without any lattice theoretic considerations when commodity bundles are perfectly decomposable the generalized prices become linear and the analysis specializes to the walrasian model this happens for instance whenever the commodity space is a vector lattice and consumption sets coincide with the positive cone our approach affords theorems on the existence of equilibrium and provides a value based characterization of pareto optimality and edgeworth equilibrium where the walrasian linear price based characterization fails the analysis has applications in the finite as well as the infinite dimensional setting journal of economic literature classification numbers c62 c71 d46 d51 d61

an overlapping generations model core equivalence theorem we show that in the overlapping generations model an allocation is a walrasian equilibrium if and only if the allocation belongs to the short term core of every replication of the olg economy and hence we establish a core equivalence theorem for the overlapping generations model

the recursive core core allocations may be defined for infinite horizon capital accumulation models if agents cannot trust each other in the sense of gale then agents may renege on their commitments their decisions appear time inconsistent a core allocation is a recursive core allocation provided no coalition can improve upon its consumption stream at any time given its accumulation of assets up to that period we show for every allocation of consumption in the initial core one can find a distribution of capital stocks among the agents where no coalition of agents will break the initial core contract at any date it follows that if the proper distribution of the streams of capital is achieved then the allocation in the core is also in the recursive core the latter therefore forges a link between the distribution of wealth capital the problem of trust and time consistent intertemporal contracts

ambiguous policy announcements we study the effects of an announcement of a future shift in monetary policy when agents face knightian uncertainty about the commitment capacity of the monetary authority households are ambiguity averse and are differentially exposed to inflation due to differences in wealth in response to the announcement of a future loosening in monetary policy only wealthy households creditors will act as if the announcement will be fully implemented due to the potential loss of wealth from the prospective policy easing and when creditors believe the announcement more than debtors their expected wealth losses are larger than the wealth gains that debtors expect hence the economy responds as if aggregate net wealth falls which attenuates the effects of the announcement we study the quantitative properties of the model in a liquidity trap after allowing for a realistic characterization of households wealth portfolio