does peer monitoring influence choices between cash and food findings from a field experiment to explore whether choices for transfers are influenced by peer monitoring we examine private versus public choices among monetarily equivalent values of cash and food in northern kenya many northern kenyan communities face high levels of chronic food insecurity and are tightly knit often sharing food aid transfers yet humanitarian cash transfers are relatively new to the area whether cash will be subject to the same sharing norms is not well understood utilizing a randomized block experiment we find that assigning a respondent to choose in front of peers decreases the likelihood of choosing a cash transfer relative to at least some food we argue that peer monitoring decreases the value of cash relative to food in two inter related ways choosing food in public first provides an opportunity for respondents to publicly demonstrate a commitment to local food aid sharing norms second choosing cash in public may be riskier since cash does not yet have established sharing norms a critical implication is that transfer choices and retargeting of resources within the community can be influenced by use of public or private discussions when eliciting community views especially in communities where sharing is a salient social norm

bundling of substitutes or complements abstract the adams yellen two good bundling framework is generalized to allow the goods to be substitutes or complements general theorems on price change effects are given a monopolist may find it most profitable to offer the goods only as a bundle even if they are imperfect substitutes or to not bundle the goods even if they are complements if one good is competitively sold a monopoly producer of the other good can never increase profits by offering his good only as part of a bundle however such a monopolist might profitably offer his good in both bundled and unbundled form to price discriminate even if the two goods are substitutes

timing of effort and reward three sided moral hazard in a continuous time model this paper studies a three sided moral hazard problem with one agent exerting up front effort and two agents exerting ongoing effort in a continuous time model the agents efforts jointly affect the probability of survival and thus the expected cash flow of the project in the optimal contract the timing of payments reflects the timing of effort payments for up front effort precede payments for ongoing effort several patterns are possible for the cash allocation between the two agents with ongoing effort in one case where the two agents face equally severe moral hazard they share the cash flow equally at each point of time in another case where the two agents have different severities of moral hazard their payments are sequential in a more general case the two agents with ongoing effort first receive the cash flow alternately with an increasing frequency of switches and then divide the cash flow at each point of time this study provides a framework for understanding a broad set of business contracting issues the characteristics suggested in the optimal contract help us analyze the causes of business failure such as the recent debacle of mortgage backed securities

optimal bundling and pricing under a monopoly contrasting complements and substitutes from independently valued products we develop an analytical model of contingent valuations and address two questions of import to a monopolist i should a given pair of complements or substitutes be sold separately pure components together pure bundling or both mixed bundling and at what prices ii how do optimal bundling and pricing strategies for complements and substitutes differ from those for independently valued products we find that the combination of marginal cost levels and the degree of complementarity or substitutability determines which of the three bundling strategies is optimal complements and substitutes should typically be priced higher than independently valued products

escaping poverty and becoming poor who gains who loses and why abstract different households have followed very different economic trajectories this study of 35 north indian villages shows members of 11 1 of 6 376 households in these villages have overcome poverty in the last 25 years while members of another 7 9 have fallen into poverty households escape from poverty is assisted by one set of factors but an entirely different set of factors is associated with households decline two distinct sets of policies are required thus one set to promote escape from poverty and another set to arrest decline into poverty poverty has some distinctly local antecedents a methodology for tracking changes in poverty at the local level is developed that community groups and others can use to assess change and examine causes

growth inequality and poverty looking beyond averages the evidence is compelling that the poor in developing countries do typically share in the gains from rising aggregate affluence and in the losses from aggregate contraction but how much do poor people share in growth do they gain more in some settings than others do some gain while others lose does pro poor growth mean more or less aggregate growth recent theories and evidence suggest some answers but deeper microeconomic empirical work is needed on growth and distributed change only then will we have a firm basis for identifying the specific policies and programs needed to complement and possibly modify growth oriented policies

recipients satisfaction with locally procured food aid rations comparative evidence from a three country matched survey summary using survey data from natural experiments in three countries that simultaneously received food aid sourced locally and from the united states we test the hypothesis that locally sourced commodities are more culturally appropriate and thus preferred over traditional food aid commodities sourced from the donor country we use a semi nonparametric regression method to estimate recipients satisfaction with these commodities across a range of criteria we establish that recipients of locally procured rations are generally more satisfied with the commodities they receive than are recipients of us sourced foods this pattern is especially pronounced among less well off recipients

demand estimation and merger simulations for drugs logits v aids abstract we use adhd drugs sales data from 2000 2003 and compare estimates of elasticities and merger simulations from three different demand models models include logit random coefficients logit and conditional aids demand model with multistage budgeting the magnitude of cross price elasticities is larger in the third model in comparison to the first two and some of the cross price elasticities are estimated to be negative hypothetical merger simulations show larger price effects for the multistage aids model in comparison to the discrete choice models

warranties as signals under consumer moral hazard this article examines the use of prices and warranties as signals of product quality to consumers who choose how to maintain their purchases the seller s incentives are strongly affected by the interaction of quality and maintenance in determining product reliability two different assumptions about this interaction are made a separating equilibrium in which high quality is signalled with a low warranty and low price is shown to be possible in both cases

are the poor less well insured evidence on vulnerability to income risk in rural china the authors test how well consumption is insured against income risk in a panel of sampled households in rural china they estimate the risk insurance models by generalized method of moments treating income and household size as endogenous insurance exists for all wealth groups although the hypothesis of perfect insurance is universally rejected those in the poorest wealth decile are the least well insured with 40 percent of an income shock being passed on to current consumption by contrast consumption by the richest third of households is protected from almost 90 percent of an income shock the extent of insurance in a given wealth stratum varies little between poor and nonpoor areas

can we trust shoestring evaluations many more impact evaluations could be done and at lower unit cost if evaluators could avoid the need for baseline data using objective socio economic surveys and rely instead on retrospective subjective questions on how outcomes have changed asked post intervention but would the results be reliable this paper tests a rapid appraisal shoestring method using subjective recall for welfare changes the recall data were collected at the end of a full scale evaluation of a large world bank supported poor area development program in china qualitative recalls on how living standards have changed are found to provide only weak and biased signals of the changes in consumption as measured from contemporaneous surveys importantly the shoestring method was unable to correct for the selective placement of the program favoring poor villages the results of this case study are not encouraging for future applications of the shoestring method although similar tests are needed in other settings

household strategies and rural livelihood diversification this article reviews the recent literature on diversification as a livelihood strategy of rural households in developing countries with particular reference to sub saharan africa livelihood diversification is defined as the process by which rural families construct a diverse portfolio of activities and social support capabilities in order to survive and to improve their standards of living the determinants and effects of diversification in the areas of poverty income distribution farm output and gender are examined some policy inferences are summarised the conclusion is reached that removal of constraints to and expansion of opportunities for diversification are desirable policy objectives because they give individuals and households more capabilities to improve livelihood security and to raise living standards

coping and resilience during the food fuel and financial crises how and how well have people with low incomes been coping with global economic volatility since 2008 this question is addressed through a synthesis of qualitative research in 17 countries on how selected groups of people coped with the local effects of the global food fuel and financial crises from 2008 2011 the data are a uniquely large body of qualitative evidence that afford insights into how people affected by a common global economic shock coped as it transmitted to their diverse social and economic contexts the paper describes and categorizes the impacts of coping responses used analyzing the distribution of the costs of coping the effects on social and gender relations and the sources of support including public policy non state support and informal social support the paper is organized as follows section one gives introduction section two sets out conceptual approaches to analyzing crisis coping section three describes the approach setting out the methodological advantages and limitations section four describes and categorizes the impacts and coping responses section five analyzes sources and types of support identified by the research section six draws concludes

platform pricing in mixed two sided markets when a consumer can appear on both sides of a two sided market such as a user who both buys and sells on ebay the platform may want to bundle the services it provides to two sides i develop a general model for such mixed two sided markets and show that a monopolist platform s incentive to bundle and its optimal pricing strategy are determined by simple formulas using familiar price elasticities of demand which embody the bundling effect and price cost margins adjusted for network externalities which incorporate two sidedness the optimal pricing rule in such markets generalizes the familiar lerner formula

signaling quality with a money back guarantee the role of transaction costs direct marketing is witnessing explosive growth as consumers increasingly purchase products from their homes their ability to judge the quality of products they buy is significantly reduced in this paper we study how money back guarantees can signal product quality in such environments we interpret product quality broadly to mean both the level of attributes promised as well as the firm s consistency in delivering on those promises key aspects of our formulation are the explicit consideration of transaction costs and alternative signals of product quality transaction costs are the costs the seller or buyer faces when redeeming a money back guarantee we show that money back guarantees signal quality by exploiting the higher probability of returns for a lower quality product and the attendant higher transaction costs however if the seller s transaction costs are very large then there are less costly ways to signal namely charging a high price we compare the signaling performance of 1 price 2 price with uninformative advertising and 3 price with a money back guarantee whereas uninformative advertising does not work at all in our model under certain conditions a money back guarantee is necessary to signal and under other conditions a money back guarantee is a useful supplement to price

effect of distance of transportation on willingness to pay for food abstract consumers interest in locally produced foods is increasing hence there is a need to decipher and quantify consumers desire for local foods and understand the underlying causes of this demand more specifically we examine in this paper the issue of distance of transportation and its impact on consumer preferences we investigate how consumers willingness to pay wtp for food varies with the distance the food traveled results from non hypothetical second price auctions indicate that average wtp is falling in distance traveled indicating a preference for local production results also indicate that the marginal value of a mile traveled depends on the type of food studied apples vs wine socio demographic characteristics perceptions of freshness taste and food safety as well as support of local economy impact wtp for local foods

escaping poverty and becoming poor in 36 villages of central and western uganda abstract twenty four per cent of households in 36 village communities of central and western uganda have escaped from poverty over the past 25 years but another 15 per cent have simultaneously fallen into poverty a roughly equal number of households escaped from poverty in the first period ten to 25 years ago as in the second period the last ten years examined here however almost twice as many households fell into poverty during the second period as in the first period progress in poverty reduction has slowed down as a result multiple causes are associated with descent into poverty and these causes vary significantly between villages in the two different regions for nearly two thirds of all households in both regions however ill health and health related costs were a principal reason for descent into poverty escaping poverty is also associated with diverse causes which vary across the two regions compared to increases in urban employment however land related reasons have been more import

slipping into and out of poverty the dynamics of spells this paper examines the dynamics of poverty previous analyses have examined either fluctuations in the male heads earnings or the frequency of poverty periods over a fixed time frame our approach depends on a definition of spells of poverty using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty the methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads earnings while 60 percent of the spells end when the heads earnings increase thus researchers must focus on household formation decisions and on the behavior of secondary family members there has been a dramatic resurgence recently of discussion of the underclass the discussion is reminiscent of debates about poverty during the 1960s when the notions of a culture of poverty particularly as popularized by michael harrington s other america 1962 dominated both intellectual and policy thinking the idea of an underclass seems inconsistent however with much of the research on the dynamics of poverty during the 1970s that research using new longitudinal data seemed to show that the bulk of the poor were poor for only a few years the research also showed that the poor were a very heterogeneous group including a small minority of persistently poor the persistence of poverty is of interest both for understanding the phenomenon and for developing policy claims about dependency and separate life styles among the poor rest on assumptions about the long term nature of poverty questions

an intertemporal model of warranties using a simple two period model this paper attempts to explain certaini interesting intertemporal properties of product warranties specifically why does coverage generally fall over time and why is the typical warranty s life so much shorter than the expected life of the product it covers we view warranties as a partial solution to the double moral hazard problem that arises when buyers cannot readily observe the quality built into a product and sellers cannot observe the care with which buyers use it the optimal warranty strikes the right balance between providing incentives for seller quality and for buyer care under certain conditions a two period warranty will render even the first best i e full information solution achievable un modlde intertemporel dce garanties ce memoire tente d expliquer certaines proprietes intertemporelles interessantes des garanties sur les produits a l aide d un modele simple sur deux periodes specifiquement on se pose les questions suivantes pourquoi est ce que generalement la couverture diminue avec le passage du temps et pourquoi la vie de la garantie est elle tellement plus courte que celle du produit auquel elle est attachee les garanties sont perques comme une solution partielle a un double probleme de risque

comments on gaussian demand and commodity bundling different commodities are often sold together as a bundle e g complete dinners in a restaurant stereo systems in mixed bundling strategies the individual components of the bundle are also offered for sale separately in block booking or pure bundling strategies they are not via simple hypothetical examples of two product firms stigler 1963 and adams and yellen 1976 have demonstrated that these selling practices can increase profit even if there is no cost advantage to bundling and the component products are independent in demand it is obvious from these examples that heterogeneity in consumer tastes especially in relative valuations of the firm s two products is a necessary condition for profitable bundling unfortunately more specific principles to describe concisely the necessary and or sufficient conditions for profitable bundling are not so obvious since consumer demand in the examples is represented by a complete enumeration of consumer reservation prices optimal prices and pricing strategies must be determined by trial and error marginal analysis is inappropriate or uninformative more important these numerical examples do not yield characterizations of profit for each strategy as functions of a small number of parameters that summarize the relevant features of the distribution of reservation prices in the consumer population by assuming that reservation prices for the firm s two products are distributed in the consumer population according to the bivariate normal probability law schmalensee in this issue has constructed a class of examples within which the profitability of bundling can be analyzed as a function of production costs the mean and variance of the reservation price for each commodity and the correlation between the two commodities reservation prices although this analysis is sometimes mathematically complex schmalensee is quite thorough subject to the normality assumption many of the questions suggested by the

the irrelevance of national strategies rural poverty dynamics in states and regions of india 1993 2005 summary examining panel data for more than 13 000 rural indian households over the 12 year period 1993 94 to 2004 05 shows that two parallel and opposite flows regularly reconfigure the national stock of poverty some formerly poor people have escaped poverty concurrently some formerly non poor people have fallen into poverty these simultaneous inward and outward flows are asymmetric in terms of reasons one set of reasons is associated with the flow into poverty but a different set of reasons is associated with the flow out of poverty both sets of reasons vary considerably across and within states no factor matters consistently across all states of india standardized national policies do not represent the best use of available resources diverse threats and different opportunities must be identified and tackled at the sub national level

the economics of breakdowns checkups and cures a market in which the owner of a durable good x contracts with an expert for diagnostic and treatment services is studied good x may be in one of three states health disease or failure only experts can determine whether x is healthy or diseased and perform treatment the owner cannot tell whether recommended treatment is really needed this creates an information based demand for health insurance by risk neutral consumers imperfections in the market for spot insurance may give rise to free diagnostic checks strategic procrastination and long term health maintenance agreements

a more general theory of commodity bundling this paper extends the standard model of bundling as a price discrimination device to allow products to be substitutes and for products to be supplied by separate sellers whether integrated or separate firms have an incentive to introduce a bundling discount when demand for the bundle is elastic relative to demand for stand alone products product substitutability typically gives an integrated firm a greater incentive to offer a bundle discount relative to the model with additive preferences while substitutability is often the sole reason why separate sellers wish to offer inter firm discounts when separate sellers coordinate on an inter firm discount they can use the discount to overturn product substitutability and relax competition

which demand systems can be generated by discrete choice we provide a simple necessary and sufficient condition for when a multiproduct demand system can be generated from a discrete choice model with unit demands

valuing new goods in a model with complementarity online newspapers many important economic questions hinge on the extent to which new goods either crowd out or complement consumption of existing products recent methods for studying new goods rule out complementarity by assumption so their applicability to these questions has been limited i develop a new model that relaxes this restriction and use it to study competition between print and online newspapers using new micro data from washington dc i estimate the relationship between the print and online papers in demand the welfare impact of the online paper s introduction and the expected impact of charging positive online prices

risk preferences and demand drivers of extended warranties we disentangle and study the relative importance of different risk preferences in explaining extended warranty purchases and the high premia paid for them empirical and behavioral research on insurance is at odds with whether diminishing returns curvature of the utility function or loss aversion and nonlinear probability weighting lead to observed consumer behavior this lack of consensus is primarily due to the inability of standard choice data to separate different risk preferences and the consequent need to rely on strong parametric assumptions we design two conjoint studies consistent with simultaneous and sequential decision making with choices about washing machines and extended warranties where subjects are given failure probabilities and repair costs using stated choice data from the surveys we can nonparametrically identify product and risk preferences we find that loss aversion is significantly more important than curvature and probability weights in explaining extended warranty choices importantly failure to decompose risk averse behavior into that arising from curvature loss aversion and probability weighting leads to lower washer prices and profits these findings are robust to alternate reference point assumptions we rationalize the premia paid for warranties by exploring retailer incentives to price discriminate and test the theory on complementary goods pricing finally based on counterfactual analysis forcing separate retailers to sell washers and extended warranties is not necessarily welfare enhancing as cited in the media and previous literature

enhancing nutrition a new tool for ex ante comparison of commodity based vouchers and food transfers summary this article presents a new analytical tool for ex ante comparison of the cost effectiveness of two transfer modalities in pursuing specific nutritional objectives it does so by introducing a metric to score the nutrient value of a food basket the nutrient value score nvs and explains how this metric can be combined with full supply chain analysis and costing to generate a new tool the omega value the use of the omega value allows policy makers who design a program with nutrition objectives to compare direct food transfers and commodity based food vouchers in terms of both cost efficiency and cost effectiveness 2013 elsevier ltd all rights reserved

relief programs when it may be better to give food instead of cash abstract a standard way to give relief to the needy is to organize employment or public works programs it is often argued that in many situations paying workers in cash instead of food may be the superior option the aim of this paper is to caution that some plausible spillover effects may weaken this argument observe that paying wages in food and in cash can have differential effects on prices a cash for work program would typically enhance the demand for food cause food prices to rise and result in more food in the hands of those who have received the wages this will mean that those who are left out of the program for example the old and the infirm could be worse off

modelling trends in food market integration method and an application to tanzanian maize markets abstract pushed by increasing availability of price data and extensive market liberalisation efforts in many developing countries research on food market integration has evolved rapidly over the last two decades empirical methods to measure market integration diverged in two directions on the one hand there is the parity bounds model pbm using a switching regressions technique while on the other hand the use of threshold autoregressive tar models has been proposed this article provides a discussion on the two methods and argues that tar models are better able to capture the dynamics of the arbitrage process underlying interconnected markets furthermore we extend the standard tar model to include a time trend in both the threshold and the adjustment parameter using weekly maize price data on seven selected markets in tanzania we illustrate how both transaction cost and the speed of adjustment have changed during the nineties

warranties durability and maintenance two sided moral hazard in a continuous time model double moral hazard in continuous time generates the familiar warranty pattern with full coverage for an initial block of time the more complete the warranty the better the producer s durability incentives and the worse the consumer s maintenance incentives using continuous time highlights the need for some warranty bound to avoid reaching the first best as an unreasonable limit early in the paper an exogenous bound is used while later the bound arises endogenously from the possibility of abuse and repair a quadratic example shows that the warranty s duration depends on the relative severity of the two moral hazard problems

the economics and nutritional impacts of food assistance policies and programs recent evidence on malnutrition and poverty raise important questions on the role of food assistance policies and programs in this review article we examine evidence on the economic and nutritional impacts of international food assistance programs faps and policies the returns on investments in faps are on average high but depend considerably on the targeting and cost structures as well as on food quality and role of complementary activities we disaggregate findings into four classes of recipients returns to faps are highest for children under two but faps oriented towards early childhood interventions are less well funded than are interventions aimed at school age children or at the broader largely adult population even though available evidence indicates that these latter classes of interventions offer considerably lower average returns in economic health and nutrition terms nonetheless fap effectiveness in achieving any of several objectives varies with a range of key factors including targeting additionality seasonality timeliness incentive effects social acceptability and political economy considerations

competition with exclusive contracts and market share discounts we analyze firms that compete by means of exclusive contracts and market share discounts conditional on the seller s share of customers total purchases with incomplete information about demand firms have a unilateral incentive to use these contractual arrangements to better extract buyers informational rents however exclusive contracts intensify competition thus reducing prices and profits and in all pareto undominated equilibria increasing welfare market share discounts by contrast produce a double marginalization effect that leads to higher prices and harms buyers we discuss the implications of these results for competition policy jel d43 d83 d86 k21 l14 l42 in this paper we study firms that compete by means of exclusive contracts or mar ket share discounts i e discounts that depend on the seller s share of a customer s total purchases these are common yet seldom studied forms of competition the literature has mainly focused on incumbents use of exclusive contracts or marketshare discounts to deter new entrants whilst paying less attention to competitors deploying similar pricing strategies we show that exclusive contracts intensify competition reducing equilibrium prices whereas market share discounts have a double marginalization effect and hence result in higher prices these findings have a bearing on the current lively policy debate 1 fueled by the fact that antitrust authorities view competition by means of exclusive contracts or marketshare discounts with some suspicion to say the least the authorities main concern appears to be that a dominant firm can use exclusivity or market share discounts to eliminate not only potential competitors but also existing ones a prime instance of this is the case of intel intel whose main competitor amd has been operating for years in the microchip sector offered electronics manufacturers discounts that depended on their buying a minimum share of their total purchases of microchips from intel some customers to qualify for the discount had to opt for an exclusive supply contract that

poverty transition and persistence in ethiopia 1994 2004 summary this study analyzes the persistence of poverty in both rural and urban areas in ethiopia during 1994 2004 the key finding is that households move frequently in and out of poverty but the difficulty of exiting from poverty like the chance of avoiding slipping back increases with the time spent in that state and varies considerably between male and female headed households our results imply that it is important to design anti poverty policies both to hinder households from slipping into extreme poverty and to minimize the length of the poverty spell for households once they have fallen into it

parallel realities exploring poverty dynamics using mixed methods in rural bangladesh this paper explores the implications of using two methodological approaches to study poverty dynamics in rural bangladesh using data from a unique longitudinal study we show how different methods lead to very different assessments of socio economic mobility we suggest five ways of reconciling these differences considering assets in addition to expenditures proximity to the poverty line other aspects of well being household division and qualitative recall errors considering assets and proximity to the poverty line along with expenditures resolves three fifths of the qualitative and quantitative differences use of such integrated mixed methods can therefore improve the reliability of poverty dynamics research

multiproduct monopoly commodity bundling and correlation of values through what selling strategy can a multiproduct monopolist maximize his profits when his knowledge about individual consumers preferences is limited one possibility extensively studied in the context of a single good monopoly is to use quantity dependent pricing as a means of discriminating among customers with differing tastes see for example oi 1971 and maskin and riley 1984 an alternative technique for price discrimination first suggested by stigler 1968 and analyzed further by adams and yellen 1976 is for the monopolist to package two or more products in bundles rather than selling them separately through a series of examples adams and yellen illustrate that bundling can serve as a useful price discrimination device even when all consumers willingnesses to pay for each of the goods individually are unaffected by whether they are also consuming the other product a typical example is illustrated in figure i adapted from figure iv in adams and yellen where there are two goods three consumers ab c who consume at most one unit of each good with reservation values for each good that are independent of whether the other good is consumed and zero costs of production there a bundle offered at a price of 100 fully extracts all potential surplus which would be impossible pricing the goods independently unfortunately though these authors do not provide any general characterization of the circumstances in which bundling is actually a multiproduct monopolist s optimal strategy their examples however such as figure i create the impression that the profitable use of bundling

the inheritance of inequality how level is the intergenerational playing field what are the causal mechanisms that underlie the intergenerational transmission of economic status are these mechanisms amenable to public policies in a way that would make the attainment of economic success more fair these are the questions we will try to answer

estimating stated preferences with rated pair data environmental health and employment effects of energy programs abstract respondents stated preferences for attributes related to various electricity generation scenarios are analyzed using a series of pairwise ratings multiple observations for each respondent facilitate estimating individual scale parameters scale estimates can identify uninformative rating patterns and make it possible to delete such observations or adjust wtp calculations cross section time series analysis of the data indicates that nonprice attributes increase in salience during the course of the experiment thus later responses may be better indicators of preferences than earlier responses comparisons of polychotomous with dichotomous models indicate that most respondents relative preference ratings are not simply dichotomous but discriminate systematically along the rating scale

are household production decisions cooperative evidence on pastoral migration and milk sales from northern kenya market based development efforts frequently create opportunities to generate income from goods previously produced and consumed within the household production within the household is often characterized by a gender and age division of labor market development efforts to improve wellbeing may lead to unanticipated outcomes if household production decisions are noncooperative we develop and test models of household decision making to investigate intrahousehold decision making in a nomadic pastoral setting from kenya our results suggest that household decisions are contested with husbands using migration decisions to resist wives ability to market milk

return policies market outcomes and consumer welfare the effect of return policies on market outcomes is studied in a model where consumers differ in their valuations of time product reliability is identified with defect rates producers first choose reliability levels and then compete in prices for given defect rates allowing returns makes products closer substitutes enhancing competition and reducing prices being closer substitutes makes higher reliability less worthwhile which reduces reliability while the decrease in reliability reduces consumer welfare the decrease in prices raises it the latter dominates so that aggregate consumer welfare increases with return policy l effet des politiques de remboursement sur les resultats du marche est examine dans le cadre d un modele ou les consommateurs ont des evaluations differentes de la valeur de leur temps la fiabilite des produits est mesuree par leur taux de defectuosite les producteurs choisissent d abord des niveaux de fiabilite et ensuite se concurrencent par les prix pour des niveaux de defectuosite donnes permettre de retourner le produit rend les produits davantage des substituts accroit la concurrence et reduit les prix une plus grande substituabilite rend la fiabilite moins importante et donc reduit la fiabilite alors que la chute de la fiabilite reduit le bien etre du consommateur la chute des prix l accroit ce second effet domine ce qui fait que le bien etre agrege du consommateur s accroit quand il y a politique de remboursement

economic mobility and poverty dynamics in developing countries this study provides an introduction to this special issue of the journal of development studies on economic mobility and poverty dynamics in developing countries in addition to providing a conceptual framework it outlines how the contributions fit into the extant literature a series of regularities emerge across these studies the poor consist of those who are always poor poor at all dates and those who move in and out of poverty with the latter group tending to be strikingly large such movements in and out of poverty are apparent when looking at poverty in either absolute or relative terms changes in returns to endowments can be a potent source of increased incomes finally seemingly transitory shocks can have long term consequences the study concludes by drawing out the policy implications of these regularities

does size matter reassessing the relationship between aquaculture and poverty in bangladesh abstract aquaculture has long been promoted by development institutions in bangladesh on the understanding that it can alleviate poverty most of this attention has focused on forms of the activity commonly referred to as small scale this article draws on concepts from the literature on agricultural growth and elaborates a typology of aquaculture based on relations of production which suggests that in bangladesh quasi capitalist forms of aquaculture may possess greater potential to reduce poverty and enhance food security than the quasi peasant modes of production generally assumed to do so the implications of this conclusion are explored

product line design we characterize the product line choice and pricing of a monopolist from the upper envelope of net marginal revenue curves to the individual product demand functions the equilibrium product line constitutes those varieties yielding the highest upper envelope in a generalized vertical differentiation framework the equilibrium line is exactly the same as the first best socially optimal line these upper envelope and first best optimal line findings extend to symmetric cournot oligopoly

welfare dynamics in rural kenya and madagascar this paper presents comparative qualitative and quantitative evidence from rural kenya and madagascar in an attempt to untangle the causality behind persistent poverty we find striking differences in welfare dynamics depending on whether one uses total income including stochastic terms and inevitable measurement error or the predictable structural component of income based on a household s asset holdings our results suggest the existence of multiple dynamic asset and structural income equilibria consistent with the poverty traps hypothesis furthermore we find supporting evidence of locally increasing returns to assets and of risk management behaviour consistent with poor households defence of a critical asset threshold through asset smoothing

intertemporal price discrimination with two products we study the two product monopoly profit maximization problem for a seller who can commit to a dynamic pricing strategy we show that if consumers valuations are not strongly ordered then optimality for the seller can require intertemporal price discrimination the seller offers a choice between supplying a complete bundle now or delaying the supply of a component of that bundle until a later date for general valuations we establish a sufficient condition for such dynamic pricing to be more profitable than mixed bundling so we show that the established no discrimination across time result does not extend to two product sellers under standard taste distributions

a general equilibrium theory of contracts in community supported agriculture community supported agriculture csa contracts allow consumers to buy claims on a farm s future production in turn the consumer provides working capital to the farm during the growing season csa contracts also provide risk management for farmers with limited access to federal crop insurance by transferring part of the farm s risk to the consumer we derive a theory of csa contract pricing for the two most prevalent types of csa contracts yield contracts in which consumers receive a percentage of the farm s production and weight contracts in which consumers receive fixed quantities we develop a two period model in which expected utility maximizing producers and consumers engage in csa contracting in the first period based on anticipation of yields and spot prices in the second period using the model we generate several testable hypotheses to be explored in future research additionally we present an overview of the data necessary to test the propositions and potential challenges that might arise in related empirical work

on the choice and impacts of innovative international food assistance instruments summary the rise of new food assistance instruments including local and regional procurement cash and vouchers has surpassed increase in understanding of the tradeoffs among and impacts of these options relative to traditional food aid response choices rarely appear to result from systematic response analyses further impacts along multiple dimensions timeliness cost effectiveness local market effects recipient satisfaction food quality impact on smallholder suppliers etc may be competing or synergistic no single food assistance tool is always and everywhere preferable a growing body of evidence including the papers in this special section nonetheless demonstrates the clear value added of new food assistance instruments

chronic and transitory poverty evidence from egypt 1997 99 abstract this paper uses a panel data of 347 households in egypt to measure changes in household consumption during 1997 99 and to identify causes behind the changes per capita consumption has decreased for the households during this time the decrease has not been dramatic but it has occurred at all points along the distribution over the two year period the number of households who have fallen into poverty is over twice as large as the number of households who have climbed out of poverty about two thirds of overall poverty is chronic average consumption over time is below the poverty line and almost half of all poor are always poor we use quantile regression methods to identify the factors that explain total chronic and transitory poverty while our analysis is able to document the extent of transitory poverty it performs relatively poorly in explaining the determinants of this type of poverty the predominantly chronic nature of poverty in our sample and our ability to identify associated characteristics strengthens the case for targeting antipoverty interventions such as food subsidies

promotions and product pricing parsimony versus veblenesque demand the veracity of the parsimonious law of demand has long been challenged by analyses of the veblen effect and prestige pricing backward bending demand curves often attend discussions of conspicuous consumption probing the sociological and psychological intricacies of potential consumer interdependencies scholars in economics and marketing have overlooked mundane product promotions for a monopolistic firm we formalize the relationship between the optimal price quantity combination and the thoroughness of product promotions iterating toward the profit maximizing thoroughness of product promotion gives rise to a backward bending price quantity locus challenges to the law of demand that ignore product promotions are thereby undercut

third degree price discrimination in oligopoly all out competition and strategic commitment price discrimination by imperfectly competitive firms may intensify competition leading to lower prices for all consumers the tradeoff of consumer groups welfare that is characteristic of monopolistic discrimination need not arise this escalation of competition may make firms worse off and as a result firms may wish to avoid the discriminatory outcome under conditions similar to those in which unambiguous price and welfare effects may arise unilateral commitments not to price discriminate including the adoption of everyday low pricing or no haggle policies may raise firm profits by softening price competition

country of origin labeling for complex supply chains the case for labeling the location of different supply chain links we investigate the value of a country of origin label cool that separately identifies the geographic location of different stages in a food product s supply chain we estimate the willingness to pay wtp of u s consumers for a packaged cereal product where the key grain ingredient may be grown in one country and processed in a second country multicountry supply chain and compare it to equivalent products that have both stages located in a single country we find consumer wtp for products with single country and multicountry supply chains are statistically different meaning that simplifying a multicountry label by listing only the country where the ingredients are grown or only the country where the ingredients are processed can result in different consumer values we also find that for countries with a poor quality reputation consumers respond more negatively when that country has the last touch than when that country s involvement is limited to upstream supply chain links

product risk sharing by warranties in a monopoly market with risk averse consumers abstract this paper analyzes the implications of three different warranty rules in a monopoly setting with risk averse consumers the necessary condition for the existence of the market is independent of the risk sharing arrangement although the quantity consumed is the highest if the consumer receives no warranty even if the monopolist is constrained to marginal cost pricing the replacement warranty is most efficient from a risk allocation point of view however the situation with no warranty is pareto superior to a money back warranty additionally the producer and the consumers agree on the ranking of the warranty rules

multiproduct nonlinear pricing typically work on mechanism design has assumed that all private information can be captured in a single scalar variable this paper explores one way in which this assumption can be relaxed in the context of the multiproduct nonlinear pricing problem it is shown that the firm will choose to exclude some low value consumers from all markets a class of cases that allow explicit solution is derived by making use of a multivariate form of integration by parts in such cases the optimal tariff is cost based

fit for purpose rethinking food security responses in protracted humanitarian crises the recent rise in the price of food worldwide defied easy categorization however the impact of the price hikes on developing country consumption served to refocus attention on food security much attention was paid to short term buffering of nutrition in tandem with new investments in agriculture a dual approach that served to reinforce a longstanding bifurcation in analysis and programming between emergency and development categories suggesting that emergency responses deal with immediate needs while development means addressing underlying causes with a longer term lens the notion of the relief to development continuum has long been dismissed as conceptual framework but has never really been replaced as a programmatic framework this paper suggests a multi dimensional way of conceiving of these categories and a more systematic way of thinking about response ethiopia is noted as an example where elements of this new approach are taking shape but even ethiopia has not adopted all of these components in an integrated way and the programming there has not been comprehensively evaluated

brand extension as informational leverage the marketing literature refers to the concept of brand capital and provides empirical evidence that firms with a large stock of well established brands have an advantage in introducing new products this paper develops a theory of brand extension as a mechanism for informational leverage in which a firm leverages off a good s reputation in one market to alleviate the problem of informational asymmetry encountered in other markets it is shown that brand extension helps a multi product monopolist introduce a new experience good with less price distortion thus the paper provides a theoretical foundation for the concept of brand capital

product warranties and double moral hazard this article explores a model of warranties in which moral hazard problems play a key role the goal is to understand the important characteristics of warranties including their provision of incomplete insurance and the relationship between product quality and coverage we analyze a model in which buyers and sellers take actions that affect a product s performance since these actions are not cooperatively determined an incentives problem arises we characterize the optimal warranty contract and undertake comparative statics to determine the predicted correlation of warranty coverage and product quality

decomposing local a conjoint analysis of locally produced foods increasingly foods are marketed as locally grown we use stated preference data from a choice based conjoint instrument to address two issues surrounding consumer demand for locally produced goods 1 what is the geographical extent of local and 2 is the value consumers place on local production distinct from other factors that are often confounded with locally produced foods such as farm size and product freshness we find our subjects place similar value on products produced in state and nearby and that consumers willingness to pay for local production is independent from values associated with product freshness and farm size copyright 2008 oxford university press

commodity bundling by single product monopolies consider two products that have independent demands in the sense that all individual buyers consider them neither substitutes nor complements then if the two products are priced separately the demand for either is independent of the price of the other in his classic analysis of block booking of feature films george stigler shows that it may be profitable for a monopoly seller of two such products to bundle them by requiring a buyer to take both in order to get either his work provides a rationale for tying arrangements that does not depend on technological or other dependencies among the products involved 2 adams and yellen extend the analysis of multiproduct monopoly with independent demands 3 they discuss two different bundling strategies pure bundling in which the seller only offers the products in fixed proportions and mixed bundling in which buyers may either buy the products separately or purchase a bundle with fixed proportions of each in this note i consider a single product monopoly and investigate the profit and welfare implications of bundling its product for some other

tradeoffs or synergies assessing local and regional food aid procurement through case studies in burkina faso and guatemala we compare the impacts across a range of criteria of local and regional procurement lrp relative to transoceanic shipment of food aid in burkina faso and guatemala we find that neither instrument dominates the other across all criteria in either country although lrp commonly performs at least as well as transoceanic shipment with respect to timeliness cost market price impacts satisfying recipients preferences food quality and safety and in benefiting smallholder suppliers lrp is plainly a valuable food assistance tool but its advantages and disadvantages must be carefully weighed compared and prioritized depending on the context and program objectives

optimal pricing and composition of multiple bundles a two step approach abstract this paper analyzes the problem facing a firm that must determine the optimal composition and pricing of multiple bundles it supplies to a single market segment it is assumed the firm s competitors does not react in the short run to its decisions and that their bundles prices and characteristics are known it is further assumed that potential consumers of bundles are rational and maximize a random utility function the problem is modeled as a mixed integer non linear program though such programs are normally hard to solve using traditional methods the difficulties are circumvented here by taking advantage of the problem s mathematical structure to develop a novel two phase solution approach two aspects of the solution are particularly worthy of note 1 we demonstrate that the optimal price of a bundle marketed by a firm depends on the composition of all the firm s bundles and not on their prices and on the composition and price of all the competitors bundles in the market and 2 that if the consumer choice behavior is described by a logit model then the firm s bundles should be very similar to each other

responding to food insecurity employing the market information and food insecurity response analysis framework in rural northern kenya abstract aid agencies are increasingly advocating for cash transfers as a substitute or complement to food transfers when responding to both emergency and chronic food insecurity yet cash is not always optimal in this article we demonstrate how a newly developed response analysis tool the marketing information and food insecurity response analysis mifira framework can guide evidence based identification of appropriate transfers we present findings from a mifira analysis in marsabit a remote and generally food insecure district of northern kenya as a demonstration of the analytical versatility of mifira we utilise a variety of data ranging from rigorously collected household data to market surveys and rapid assessments in focus groups as a proof of concept this article shows how mifira can be effectively deployed in other regions facing chronic or emergency food insecurity to help response agencies make systematic decisions on a solid evidence base

delegation and incentives this article analyzes the relation between authority and incentives it extends the standard principal agent model by a project selection stage in which the principal can either delegate the choice of project to the agent or keep the authority the agent s subsequent choice of effort depends both on monetary incentives and the selected project we find that the consideration of effort incentives makes the principal less likely to delegate the authority over projects to the agent in fact if the agent is protected by limited liability delegation is never optimal

enabling the original intent catalysts for social entrepreneurship as capitalist economies have shifted their primary focus from providing goods and services for all to concentrating wealth at the top echelons of societies social entrepreneurs have been one source of re capturing the original intent of capitalism social entrepreneurs have combined the efficiency and effectiveness of business organizations with the social concerns of many non profit and governmental agencies as a result social entrepreneurship is viewed as having significant potential for alleviating many of the social ills we now face to accomplish this mission however will require expansion of social enterprises beyond their current footprints we explore alternate methods of expansion scaling and replication and then examine potential catalysts which can enable social entrepreneurs to attain their goals of social improvement the catalysts we identify are effectual logic enhanced legitimacy through appropriate reporting metrics and information technology we conclude with two brief case studies that exemplify how these catalysts are currently working to enhance the effectiveness of social start ups

the economics of poverty traps and persistent poverty an asset based approach abstract longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty while a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty this paper develops an asset based approach to poverty analysis that makes it possible to distinguish deep rooted persistent structural poverty from poverty that passes naturally with time due to systemic growth processes drawing on the economic theory of poverty traps and bifurcated accumulation strategies this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long term persistent structural poverty as well as relevant extensions of the popular foster greer thorbecke class of poverty measures the paper closes with reflections on how asset based poverty can be used to underwrite the design of persistent poverty reduction strategies

the price effects of cash versus in kind transfers this article examines the effect of cash versus in kind transfers on local prices both types of transfers increase the demand for normal goods in kind transfers also increase supply in recipient communities which could lead to lower prices than under cash transfers we test and confirm this prediction using a programme in mexico that randomly assigned villages to receive boxes of food trucked into the village equivalently valued cash transfers or no transfers we find that prices are significantly lower under in kind transfers compared to cash transfers relative to the control group in kind transfers cause a 4 fall in prices while cash transfers cause a positive but negligible increase in prices in the more economically developed villages in the sample households purchasing power is only modestly affected by these price effects in the less developed villages the price effects are much larger in magnitude which we show is due to these villages being less tied to the outside economy and having less competition among local suppliers

interfirm bundling and vertical product differentiation in this paper we study the competitive effects of bundled discounts offered by pairs of independent firms in a setting with vertically differentiated goods where firms decide whether to participate in a discounting scheme before prices are set it is shown that in equilibrium all pairs of firms producing goods of the same quality level offer bundled discounts relative to the no bundling benchmark we find that i all headline prices rise ii all bundle prices net of the respective discount decrease and iii only high quality sellers will obtain higher profits furthermore this equilibrium corresponds to the worst scenario in terms of consumer welfare and it and decreases social welfare

moving from the stock of social capital to the flow of benefits the role of agency abstract comparing results for 60 villages in rajasthan india it is seen that having a high level of social capital does not always help to achieve high development performance stocks of social capital need to be drawn upon actively and capable agency is necessary in addition to high social capital locally relevant scales of development performance and social capital are devised for making this comparison variables corresponding to other bodies of explanation including extent of commercialization relative stratification and relative need are also examined but a combination of high social capital and capable agency is found to be associated most closely with high development performance

confronting the risk of asset loss what role do livestock transfers in northern kenya play abstract in many low income high risk environments households participate in informal risk sharing institutions involving inter household transfers this study focuses on asset transfers and asset risk the influence of past behavior on access to transfers and wealth differentiated transfer behavior panel data on livestock transfers in northern kenya are analyzed three explanations of livestock transfers are investigated ex post insurance ex ante precautionary savings and redistribution findings indicate that livestock transfers are of limited effectiveness in addressing asset risk and avoiding poverty the findings have implications for both research on risk sharing institutions and for the design of development policies in pastoral areas

cash transfers and high food prices explaining outcomes on ethiopia s productive safety net programme an ongoing and highly politicised debate concerns the relative efficacy of cash transfers versus food aid this paper aims to shed light on this debate drawing on new empirical evidence from ethiopia s productive safety net programme psnp our data derive from a two wave panel survey conducted in 2006 and 2008 ethiopia has experienced unprecedented rates of inflation since 2007 which have reduced the real purchasing power of psnp cash payments our regression findings confirm that food transfers or cash plus food packages are superior to cash transfers alone they enable higher levels of income growth livestock accumulation and self reported food security these results raise questions of fundamental importance to global humanitarian response and social protection policy we draw out some implications for the design of social transfer programmes and describe some steps that could be taken to enable predictable transfers to meet predictable needs

does food aid disrupt local food market evidence from rural ethiopia the paper examines the impact of food aid on households marketing behavior based on a panel of households followed during 1994 2009 in 15 villages of ethiopia the impact of aid is examined at the intensive margin on quantities produced sold or bought by the households and at the extensive margin on the number of producers sellers and buyers food aid reduces the probability of being a producer it also increases the probability of being a seller after a reform of aid policy in 2004 from repeated emergency distributions toward a multi year program aiming at agricultural development

interfirm bundled discounts as a collusive device this paper investigates whether and how firms competing in price with homogeneous goods i e bertrand competitors can achieve supernormal profits using interfirm bundled discounts by committing to offering price discounts conditional on the purchase of a specific brand of other differentiated good the homogeneous good suppliers can separate consumers into distinct groups such brand specific discounts help the firms relax competition and attain a collusive outcome consumers become worse o due to higher effective prices our result shows that in oligopolies it is feasible to leverage other s market power without excluding rivals

do tournaments solve the two sided moral hazard problem abstract the paper analyzes the optimality of relative performance evaluation via two part piece rate tournaments in incentive contracting with multiple agents and two sided moral hazard if the agents are risk averse it is shown that a tournament is optimal only when the following conditions hold i there is common uncertainty inflicted on the activities of the agents that is not contingent on their actions but can be contingent on the principal s action ii the principal sufficiently saves in transaction costs by employing a tournament iii the number of agents is sufficiently large then the feedback effect of using a tournament to monitor the agents is that the principal s moral hazard problem is relaxed when the principal takes a single action it can also be relaxed when the principal can vary her actions with the agents but there are economies of scale in her activity absent common uncertainty the optimum scheme is shown to be a fixed performance standard rather than a tournament but if the agents are risk neutral a tournament can still be optimal provided that ii and iii hold

optimal product bundling with dependent valuations the price of independence abstract in this paper we investigate the tactical problem of pricing a bundle of products when the underlying valuations of the bundle components are dependent we use copula theory to model the joint density of reservation prices and provide analytical derivations for the prices under different bundling strategies and sharp bounds for the profit function we discover that when only the bundle is offered and the marginal costs are relatively small the seller is better off by bundling products that have a negative association between their valuations while the converse is true when the marginal costs are relatively high we also show that the net benefit of offering a full product line containing both the bundle and the components decreases for mild to strong associations between the component valuations compared to offering just the bundle finally we analyze how the typical literature assumption of independence of reservation prices impacts the seller s profitability when in fact the valuations are dependent and find that this gap in profitability which we call the price of independence can be arbitrarily large

health nutrition and economic development the relationship between health and economic development is explored focusing on nutrition based health indicators the spotlight is placed on the inter related feedbacks between the influence of health on productivity on one hand and the influence of income on health status on the other disentangling causality in these relationships has preoccupied much of the literature we evaluate different empirical strategies that have been adopted and assess the results there is now a body of evidence based on careful empirical studies that demonstrates a causal relationship between health and labor productivity there is also evidence that at least among the very poor additional income is spent on improved nutrition there are two issues that have received little attention although we argue they are likely to be very important first measurement of health is discussed in detail evidence is presented on how taking into account differences in the extent of measurement error is critical for interpreting the impact of health on wages the same theme emerges in studies of the effect of income on health specifically calorie intake the key role of non linearities in these relationships is highlighted and we demonstrate that a good deal of the variation in estimates of income elasticities of demand for calories can be ascribed to the role of measurement and functional form authors

on the limitation of warranty duration this paper analyzes the frequently observed phenomenon that firms offer product warranties that are of much shorter duration than the life expectancy of these products it is shown that competitive equilibria may entail limitation of warranty duration if firms face adverse selection problems with respect to different consumers copyright 1989 by blackwell publishing ltd

why growth is not enough household poverty dynamics in northeast gujarat india despite high growth rates in gujarat exceeding 9 per cent per year over the decade of the 1990s poverty in 36 villages located in the northeastern part of this state has changed hardly at all in these villages 9 5 per cent of households escaped from poverty over the past 25 years but 6 3 per cent of households became poor at the same time escape and descent are not symmetric different reasons account for escaping poverty than those for declining into poverty growth alone is hardly sufficient to achieve poverty reduction on any significant scale public policies will be needed to address directly the separate causes for descent into poverty

to certify or not to certify separating the organic production and certification decisions this article separates the decision to be certified organic into the decision to use organic practices and the subsequent decision to certify those practices using data from a survey of us fruit and vegetable producers we document that many producers are using organic practices but choosing not to certify philosophical beliefs and perceived risk of losses due to disease weeds and insects have the largest impact on the decision to use organic practices producers who use organic practices and direct market are less likely to certify moreover we find that the certification process discourages certification

what drives program choice in food security crises examining the response analysis question over the past decade the analysis of food security crises has improved and a wider range of responses is available but the question remains is improved analysis driving program response choices in food security interventions this research considers the response analysis question in the horn of africa and documents the role of evidence and other factors influencing program choice based on interviews with donor agency and government staff this paper briefly notes existing tools proposes a road map for response analysis explores the way in which donor resources have changed and outlines major factors that constrain or shape response choice

subjectively assessed welfare and international remittances evidence from tonga using data from a customised household survey in tonga we assess the responsiveness of migrants remittances to perceived needs of recipients we extend a mixed motives model incorporating subjectively assessed recipient welfare we find evidence supportive of altruism for households below a subjective threshold implying that remittances provide important social protection for the poor we also find a positive relationship for those above the threshold implying that welfare improvements in migrant sending countries could increase or decrease remittance flows depending on pre transfer welfare level the effects of remittances on poverty alleviation and income distribution are hence more complex and ambiguous than previous studies suggest