improving prediction market forecasts by detecting and correcting possible over reaction to price movements abstract we examine the impact of price trends on the accuracy of forecasts from prediction markets in particular we study an electronic betting exchange market and construct independent variables from market price odds time series from 6058 individual markets a dataset consisting of over 8 4 million price points using a conditional logit model we find that a systematic relationship exists between trends in odds and the accuracy of odds implied event probabilities the relationship is consistent with participants over reacting to price movements in particular in different time segments of the market increasing and decreasing odds lead respectively to under and over estimation of odds implied probabilities we develop a methodology to detect and correct the erroneous forecasts associated with these trends in odds in order to considerably improve the quality of forecasts generated in prediction markets

does the public sector over provide club goods a general result abstract with nondistortionary user charges the first best and second best of a single club exogenous income economy with identical individuals coincide they differ if incomes differ overprovision of a superior club good then occurs in the second best

exclusion and moral hazard the case of identical demand abstract this paper examines the problem of costly exclusion of individuals from a public good previous analyses of exclusion have treated it as solely a question of technologies in our analysis exclusion depends on technology and incentives in this paper providers of the good design a mechanism to provide an optimal level of deterrence to free riders if individuals are heterogeneous optimal deterrence may allow some free riders we examine the effect of costs of exclusion on the samuelson condition for optimal provision and see that the desire to deter free riding leads to underprovision of the good irrespective of the degree of rivalry of the good

the economic theory of clubs some clarifications abstract we provide a classification of club models and relate differences in implications to differences in assumptions then we address two main controversies one concerning the optimality of market provisions of public goods and their optimality and the other concerning the desirability of segregation

should congestion tolls be set by the government or by the private sector the knight pigou debate revisited this paper clarifies issues debated by a c pigou and frank knight about correcting inefficient use of congestible resources focusing for concreteness on their original example of road congestion instead of government imposed pigouvian access fees knight favoured access fees set by private toll setters we consider the case of n 2 congestible roads and an uncongestible road of arbitrary speed knight argued that in the case of a single congestible road a private toll setter would always choose the toll that pigou recommended hence the allocation would minimize aggregate commute time without government meddling we find instead that two or more toll setters would never choose pigouvian tolls except in the special case of a sufficiently fast uncongestible road moreover for uncongestible roads of slower speed the allocation of motorists under knight s proposal is almost never efficient whenever it is inefficient motorists are strictly worse off when they pay tolls set by private firms instead of paying government imposed tolls and aggregate toll revenue is also lower nevertheless if the private sector does set tolls then the full cost to motorists can be limited if the government provides an uncongestible alternative such as a train to offer potential competition along the same route

optimal asset allocation aid system from one size vs tailor made performance ratio abstract optimal asset allocation well fitting investors goals is a pressing challenge in risk management making a step forward to the sharpe ratio the parameter dependent sortino satchell generalized rachev and farinelli tibiletti performance ratios are suggested for personalizing asset allocation tailor made optimal asset paths for five different investor risk profiles are traced over a rolling 12 month investing horizon our simulations show a satisfactorily good match between asset allocation and correspondent risk profile specifically generalized rachev ratios outperform in personalized allocation for extreme risk profiles i e conservative and aggressive investors whereas sortino satchell and farinelli tibiletti ratios for those that are more moderate sharpe ratio confirms its ability in constructing steady diversified portfolios although underperformed

impact of counter urbanization on size population mix and welfare of an agricultural region the article explains the phenomenon of counter urbanization which has become prominent in most developed countries we develop a model that provides an economic rationalization for the observed willingness of incumbent farmers of a rural region to absorb nonfarmer urban migrants the analytical findings show that counter urbanization increases the region s welfare maximizing population decreases the optimal number of incumbent farmers and increases the per capita welfare the empirical results which are based on data from rural israel demonstrate that while the optimal population of farmers decreases slightly the total optimal population of the region more than triples and farmers per capita welfare almost doubles

ski lift pricing with applications to labor and other markets reply after we wrote our paper on pricing at ski areas barro and romer 1987 we received several comments like that of tyler cowen and amihai glazer 1991 noting that our results could be interpreted as special cases of results that have been established in club theory we also received comments claiming that our results were clearly wrong because they contradicted standard results in club theory we now sympathize with the economist who was reportedly told by a critic that your result is trivial wrong and i already proved it when we wrote our paper we were aware that ski areas were sometimes mentioned as examples of club goods see for example the paper by suzanne scotchmer 1985 we did not pursue the literature on clubs because our problem contained no club goods the goods we dealt with rides up a chair lift are conventional private goods our result also contradicted the one result from club theory that we knew the standard club analysis of a ski area treats it as a shared facility each member in the club decides how intensively to use this facility in this setting eitan berglas 1976 first showed that both a membership fee and a usage fee are necessary to support an efficient allocation our finding was that queues with no usage fee support an efficient allocation nevertheless cowen and glazer are correct that our results have much in common with results from club theory specifically our results can be interpreted as special cases of results for clubs that are not subject to variable intensity of usage there are therefore two interesting questions why does the analysis of a problem with private goods resemble the analysis of a problem with club goods and why does our problem resemble a club problem in which people cannot vary how often they use the shared facilities the answer to both of these questions depends on the observation that it is possible to treat a bundle of private goods as a

oil prices and the global economy a general equilibrium analysis a global computable general equilibrium model is used to analyze the economic impacts of rising oil prices with endogenously determined availability of biofuels to mitigate those impacts the negative effects on the global economy are comparable to those found in other studies but the impacts are unevenly distributed across countries regions or sectors the agricultural sectors of high income countries which are relatively energy intensive will suffer more from a rising oil prices than that in lower income countries whereas the reverse is true for the impacts across manufacturing sectors the impacts are especially strong for oil importers with relatively energy intensive manufacturing and trade such as india and china while the availability of biofuels does mitigate some of the negative impacts of rising oil prices the benefit is small because capacity of biofuels to economically substitute for fossil fuels on a large scale remains limited

oil price shocks and real gdp growth empirical evidence for some oecd countries this study assesses empirically the effects of oil price shocks on the real economic activity of the main industrialized countries multivariate var analysis is carried out using both linear and non linear models the latter category includes three approaches employed in the literature namely the asymmetric scaled and net specifications evidence of a non linear impact of oil prices on real gdp is found in particular oil price increases are found to have an impact on gdp growth of a larger magnitude than that of oil price declines with the latter being statistically insignificant in most cases among oil importing countries oil price increases are found to have a negative impact on economic activity in all cases but japan moreover the effect of oil shocks on gdp growth differs between the two oil exporting countries in the sample with the uk being negatively affected by an oil price increase and norway benefiting from it

optimality of a competitive equilibrium in a small open city with congestion abstract consider a small spatial economy with a congestion externality in the public transportation sector we prove that the competitive equilibrium allocation coincides with the social optimum allocation despite the presence of the congestion externality to this end we first specify a set up conditions for a competitive equilibrium allocation and then we find another set of conditions for social optimality by comparing the two set of conditions we prove that the competitive allocation is compatible with the social optimal allocation we would like to emphasize the fact that no optimal external toll such as the optimal congestion toll collected by a transportation authority is required to attain the optimal allocation our privately owned and selfish profit maximizing transportation companies end up with charging the price exactly equivalent to the optimal toll

on the dynamic effects of oil price shocks a study using industry level data abstract this paper analyzes the effects of oil price shocks on demand and supply in various industries the impulse responses of identified var models indicate that for industries that have a large cost share of oil such as petroleum refinery and industrial chemicals oil price shocks mainly reduce supply in contrast for many other industries with the automobile industry being a particularly important example oil price shocks mainly reduce demand the paper suggests that oil price shocks influence economic activities beyond that explained by direct input cost effects possibly by delaying purchasing decisions of durable goods

exclusion and the theory of clubs this paper examines the competitive provision of club goods with costly exclusion we consider two exclusion regimes fine and coarse with fine exclusion a provider can charge both a membership fee and a per use price with coarse exclusion a provider can charge a membership fee only we show that competitive club good providers choose both the efficient exclusion regime which depends on the costs of exclusion and the associated efficient resource allocation thus with costly exclusion the competitive provision of club goods is constrained pareto efficient

quantities qualities and multiple public services in the tiebout model abstract this paper introduces a new more realistic characterization of local public services this characterization fits education parks and streets none of which are a pure samuelsonian good it is shown that tiebout s hypothesis holds for this new type of services provided correct user charges are adopted introducing several local services considerably affects the results the paper emphasizes the difference in tastes with regard to quality as opposed to quantity earlier literature is shown to apply to the role of quality and ignores the role of quantity the effect of the latter makes mixed communities more efficient than segregated ones it is shown that efficient allocation with mixed communities is an equilibrium in a costless mobility tiebout type setting

production functions for climate policy modeling an empirical analysis abstract quantitative models for climate policy modeling differ in the production structure used and in the sizes of the elasticities of substitution the empirical foundation for both is generally lacking this paper estimates the parameters of 2 level ces production functions with capital labour and energy as inputs and is the first to systematically compare all nesting structures using industry level data from 12 oecd countries we find that the nesting structure where capital and labour are combined first fits the data best but for most countries and industries we cannot reject that all three inputs can be put into one single nest these two nesting structures are used by most climate models however while several climate policy models use a cobb douglas function for part of the production function we reject elasticities equal to one in favour of considerably smaller values finally we find evidence for factor specific technological change with lower elasticities and with factor specific technological change some climate policy models may find a bigger effect of endogenous technological change on mitigating the costs of climate policy

competitive equilibrium and the core in club economies with anonymous crowding in club economies with anonymous crowding competitive equilibrium states of the economy are efficient and coincide with the core when there is only one private good anonymous admission prices permit consumers with different tastes to share facilities consumers might do so when their demands for facility size and crowding coincide in which case sharing is efficient thus similarity of demands is the relevant consideration for efficiently grouping consumers with different tastes

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

local income redistribution a club theoretic analysis abstract this paper analyzes optimal income redistribution in a club model where interclub transfers are ruled out redistribution must proceed on a local level in heterogeneous clubs this assumption induces a trade off between equity and efficiency in that the efficiency loss associated with club heterogeneity must be borne in order for redistribution to occur the optimal club structure depends on society s evaluation of this trade off

a comparison of the effects of exogenous oil supply shocks on output and inflation in the g7 countries a comparison of the effects of exogenous shocks to global crude oil production on seven major industrialized economies suggests a fair degree of similarity in the real growth responses an exogenous oil supply disruption typically causes a temporary reduction in real gdp growth that is concentrated in the second year after the shock inflation responses are more varied the median cpi inflation response peaks after three to four quarters exogenous oil supply disruptions need not generate sustained inflation or stagflation typical responses include a fall in the real wage higher short term interest rates and a depreciating currency with respect to the dollar despite many qualitative similarities there is strong statistical evidence that the responses to exogenous oil supply disruptions differ across g7 countries for suitable subsets of countries homogeneity cannot be ruled out a counterfactual historical exercise suggests that the evolution of cpi inflation in the g7 countries would have been similar overall to the actual path even in the absence of exogenous shocks to oil production consistent with a monetary explanation of the inflation of the 1970s there is no evidence that the 1973 1974 and 2002 2003 oil supply shocks had a substantial impact on real growth in any g7 country whereas the 1978 1979 1980 and 1990 1991 shocks contributed to lower growth in at least some g7 countries jel e31 e32 q43

the market provision of club goods in the presence of scale economies a natural club monopoly exists when economies of scale are so significant relative to population size that in the efficient allocation the entire population is included in a single club under these circumstances an uncontested monopolist will inefficiently exclude some individuals from the club if marginal congestion costs are sufficiently high when the entire population is included if admitting that the entire population is profit maximizing then the facility size chosen is also efficient a perfectly contestable monopoly is always efficient external economies of scale exist when the cost of each facility declines as more facilities are provided this externality leads a competitive market to provide too few clubs but a monopolist will provide an efficient allocation because it internalizes the cost externality copyright 1990 by the london school of economics and political science

when is efficiency separable from distribution in the provision of club goods abstract using the homogeneous of degree zero inverse congestion quality function employed most frequently in the literature we characterise completely the families of utility functions which are then necessary and sufficient for break even utilitarian welfare maximising provision of club goods with self selection to be separable from distribution two types of separation involving alternatively a the price and quality b the price quality facility size and total utilisation are considered when separation is possible utility functions and optimal decisions take simple intuitive forms our results extend the scope of separation results previously obtained only for pure public goods journal of economic literature classification numbers d62 h23 h40

clubs local public goods and transportation models a synthesis abstract clubs local public goods and transportation models are analyzed within a unified model the emphasis is on the derivation of optimal allocation pricing and the size of the sharing group we derive the conditions under which optimal prices will yield surplus or deficit as well as those under which competitive provision will be efficient given heterogeneous tastes we prove that segregation according to tastes is generally efficient although several cases where this result does not hold are also discussed we show that the existing literature is unnecessarily restrictive and that the unified approach suggested here considerably extends the existing analysis of clubs local public goods and the transportation problems

economies of scale and self financing rules with non competitive factor markets abstract when a firm or public enterprise prices output at marginal cost its profits are related to the degree of local scale economies in its cost function i show that contrary to common belief this result holds even when scale economies are affected by a rising factor supply curve thus marginal cost pricing may be profitable even with constant returns to scale examples are provided for a monopsonist both with and without price discrimination and for a case such as highways where congestion prone inputs are supplied by users court rulings governing land purchase for highways illustrate the applicability of the results

profit maximizing clubs abstract we study a nash equilibrium among profit maximizing clubs which choose facility size and admission price the number of clubs is endogenous entry is deterred whenever the symmetric nash equilibrium with one additional firm would yield negative profit equilibrium exists with positive profit the equilibrium price is higher than the congestion price and the equilibrium number of clubs is bounded below by one fewer than the efficient number in general there will be too much entry than too little one can choose an economy sufficiently large that the equilibrium price is within epsilon of the competitive price

implications of alternate policies on welfare of slum dwellers evidence from pune india abstract in this paper we examine how slum dwellers value location based amenities in most developing country cities residents living in slums have poor quality dwellings and limited access to basic public services and amenities using data from pune india we estimate the residential location choices of slum dwellers which are conditional on housing quality neighborhood amenities and community structure we use these estimates to simulate the impact of alternate interventions on household welfare we find that households derive benefits from housing quality and neighborhood amenities while relocating households to the periphery has adverse consequences for household welfare we show that households could be adequately compensated out of the increased tax revenue accruing from alternative uses of the vacated central land

club theory thirty years later this paper presents a self contained survey of club theory with an emphasis on the contributions of the last fifteen years club goods are contrasted with pure public goods and equilibrium and optimality notions are contrasted after presenting three basic representations of club theory we focus on recent advances and generalizations that include heterogeneous memberships transaction costs uncertain utilization asymmetric information and noncompetitive influences an agenda for research is indicated that includes further analysis of asymmetric information institutional structure and applications

transaction costs and equilibrium pricing of congested public goods with imperfect information abstract this paper examines the role of transaction costs in pricing a congested public facility which can be used with variable intensity when there exists information asymmetry between consumers and firms if a per visit price toll requires a large transaction cost of toll gates a lump sum price season ticket price may be used in equilibrium however under the lump sum price together with imperfect information high demanders in terms of visits to the facility have an incentive to patronize facilities designed for low demanders to exploit a price difference thus an adverse selection problem may arise and equilibrium is in general inefficient depending on the magnitude of the transaction cost

entrepreneurial land developers joint production local externalities and mixed housing developments abstract housing developments condos and suburban developments are not necessarily homogeneous developers provide different types of units of various sizes and other characteristics catering to different types of customers in this paper we allow joint production and local consumption externalities within each development and show that land developers who seek a profit maximizing set of units in developments may provide mixed developments we show that there exists an equilibrium and that every equilibrium is pareto efficient we provide examples in which mixed developments arise in a long run equilibrium we relate this work to a widely used hedonic pricing model by rosen 1974 and to an equilibrium concept under asymmetric information by rothschild and stiglitz 1976

probabilistic forecasting with discrete choice models evaluating predictions with pseudo coefficients of determination abstract probabilistic forecasts from discrete choice models which are widely used in marketing science and competitive event forecasting are often best evaluated out of sample using pseudo coefficients of determination or pseudo r 2 s however there is a danger of misjudging the accuracy of forecast probabilities of event outcomes based on observed frequencies because of issues related to pseudo r 2 s first we show that mcfadden s pseudo r 2 varies predictably with the number of alternatives in the choice set then we evaluate the relative merits of two methods bootstrap and asymptotic for estimating the variance of pseudo r 2 s so that their values can be appropriately compared across non nested models finally in the context of competitive event forecasting where the accuracy of forecasts has direct economic consequence we derive new r 2 measures that can be used to assess the economic value of forecasts throughout we illustrate using data drawn from uk and ireland horse race betting markets

why are the 2000s so different from the 1970s a structural interpretation of changes in the macroeconomic effects of oil prices in the 1970s large increases in the price of oil were associated with sharp decreases in output and large increases in inflation in the 2000s even larger increases in the price of oil were associated with much milder movements in output and inflation using a structural var approach blanchard and gali in j gali and m gertler eds 2009 international dimensions of monetary policy university of chicago press pp 373 428 argued that this reflected a change in the causal relation from the price of oil to output and inflation they then argued that this change could be due to a combination of three factors a smaller share of oil in production and consumption lower real wage rigidity and better monetary policy their argument based on simulations of a simple new keynesian model was informal our purpose in this paper is to take the next step and to estimate the explanatory power and contribution of each of these factors to do so we use a minimum distance estimator that minimizes over the set of structural parameters and for each of two samples pre and post 1984 the distance between the empirical svar based impulse response functions and those implied by a new keynesian model our empirical results point to an important role for all three factors

oil and the macroeconomy since the 1970s economists have long been intrigued by empirical evidence that suggests that oil price shocks may be closely related to macroeconomic performance this interest dates back to the 1970s the 1970s were a period of growing dependence on imported oil unprecedented disruptions in the global oil market and poor macroeconomic performance in the united states thus it was natural to suspect a causal relationship from oil prices to u s macroeconomic aggregates since then a large body of work has accumulated that purports to establish this link on theoretical grounds and to provide empirical evidence in its support we do not attempt a comprehensive survey of this literature but rather provide an idiosyncratic synthesis of what we view as the key issues in this debate and the insights gained over the last 30 years the timing seems right for such an account although the experience of the 1970s continues to play an important role in discussions of the link between oil and the macroeconomy there have been a number of new oil price shocks since the 1970s notably the 1986 collapse of oil prices and the 2000 boom in oil prices as well as the oil price increases associated with the 1990 1991 gulf war and the 2003 iraq war given this richer case history we are arguably in a better position than two decades ago to distinguish the idiosyncratic features of each oil crisis from the systematic effects increases in oil prices have been held responsible for recessions periods of excessive inflation reduced productivity and lower economic growth in this paper we review the arguments supporting such views first we highlight some of the conceptual difficulties in assigning a central role to oil price shocks in explaining

a theory of intergenerational clubs intertemporal pareto efficient conditions for provision and maintenance of the shared good tolls membership size and financing are presented for intergenerational clubs an optimal membership span is also determined for nonlifetime members these pareto efficient conditions account for atemporal crowding intertemporal depreciation due to utilization and the sequence of members adequate incentives exist for privately owned clubs to act with foresight but do not necessarily exist for government owned clubs nevertheless privately owned clubs must be operated by a firm rather than the members if free rider problems regarding maintenance are to be avoided

two tier pricing of shared facilities in a free entry equilibrium we explore how well the market will provide shared facilities which are subject to congestion it is usually efficient to have multiple facilities because it is more efficient to spend resources on facilities than to endure crowding costs we assume firms can charge a membership price and a visit price we present a symmetric nash equilibrium in these two prices we show that ifthe number offirms is large the membership price will be small thus the membership price is a measure of market power when entry occurs in response to positive profit but such that entry is deterred by the prospect of negative profit in a symmetric nash equilibrium the endogenous number offirms is bounded below by one fewer than the efficient number thefees paid by a client converge to an appropriately defined competitive price as the economy is replicated

decentralization in replicated club economies with multiple private goods abstract we show that exhaustion of blocking opportunities is a sufficient condition such that every allocation in the core of a replicated club economy can be decentralized as a competitive equilibrium and that a related condition efficient scale is necessary and under an assumption on endowments sufficient such that competitive equilibrium exists and the core is nonempty these results do not require the euclidean structure and monotonicity assumed in lindahl equilibrium do not require convexity of preferences or costs and do not require the strong assumption that private goods are essential journal of economic literature classification numbers d46 d50 d61 h40

opposites attract the effect of the federal income tax code on community composition abstract if houses in two homogeneous but dissimilar communities are reorganized as a single heterogeneous community property tax payments are shifted from owners of small houses to owners of large houses we consider three aspects of the federal income tax code which causes this shifting to raise aggregate property values in the heterogeneous community first the property tax is deductible and the tax rate structure is progressive second some families do not itemize third the restriction on saving in tax deferring assets suggests the use of different interest rates to capitalize future property taxes because of these aspects heterogeneous communities are established provided the different family types desire similar levels of public service

competition and two part tariffs monopoly power of some sort is thought to have viewed two part tariffs as price discrimibe a necessary condition for a firm to have the nation devices empower to price discriminate for example a firm ployed exclusively by prefers to use a two part tariff see oi 1971 firms with market rather than charge a single price for output power this paper ofhowever a competing firm could always charge fers an explanation for the use of such price a single price that consumers would prefer and schedules by firms in earn nonnegative profits thus it seems that the highly competitive marexistence of competition in a market would result kets such as health in the elimination of any two part tariff howclubs it is argued that ever the existence of two part tariffs in many in a world with buyer markets that are or appear to be competitive uncertainty about future demands they can belies this standard assumption this paper exprovide insurance for plains why monopoly power is not required for risk averse buyers the the existence of a two part tariff i show circumfixed entry fee finances stances in which price discrimination using a a marginal price below marginal cost it is two part tariff is preferred by consumers to a sinshown that the benefits gle price and therefore why this pricing method from this lower price will be found in competitive markets such pricwill under certain ing occurs in environments with uncertainty bespecified conditions cause two part tariffs act as a form of insurance outweigh the costs of ex ante consumers plan consumption however the entry fee there is a random component to their consump

optimal and equilibrium membership in clubs in the presence of spillovers abstract this paper treats a partial equilibrium club economy in which clubs impose positive or negative externalities on one another both spillovers in congestable good and crowding are studied it is shown that an increase the relative strength of the first type of spillover may result in either an increase or decrease in the optimal club size and public good levels spillovers in crowding on the other hand have a definite effect on the optimal membership and production of public good these optimal outcomes are then compared to nash equilibrium club size and public good provision when clubs are established by profit maximizing entrepreneurs instead of a social planner

the city network paradigm measuring urban network externalities in recent years network behaviour has been analysed extensively as the emerging model for economic growth by network behaviour a metaphor for co operative behaviour among individuals corporate

the impact of biofuels on commodity food prices assessment of findings for years agriculture has provided most of the fuel for vehicular transportation concerns about availability of fuels balance of trade and climate change led to the introduction of biofuel programs in the united states brazil europeanunion eu andothercountries the impacts of these programs and the relationship between the food and fuel markets have become major topics of economic research this paper summarizes the main findings of alternative lines of research on the relationship between the food and fuel markets and identifies gaps and quandaries that warrant further research this is not meant to be a complete survey and it emphasizes several of our studies within the broader literature the paper distinguishes between two bodies of literature one on the relationship between food and fuel prices and another on the impact of the introduction of biofuel on commodity food prices while biofuel prices do not seem to affect food commodity prices we explain why the introduction of biofuel does moreover biofuelshavenotbeenthemostdominant contributor to the recent food price inflation and different biofuels have different impacts

economic impact of oil price shocks on the turkish economy in the coming decades a dynamic cge analysis as a small open economy turkey depends on both imported oil and natural gas importing almost two thirds of its primary energy demand this paper analyzes the economic effects of oil price shocks for turkey as a small open oil and gas importing country to analyze the potential long term effects of oil price shocks on macroeconomic variables of interest including gdp consumer price inflation indirect tax revenues trade balance and carbon emissions we developed turgem d a dynamic multisectoral general equilibrium model for the turkish economy using turgem d we analyzed the impact of oil price shocks under three distinct scenarios reference high and low oil prices the simulation results show that these oil prices have very significant effects on macro indicators and carbon emissions in the turkish economy

efficiency equilibrium and exclusion when the poor chase the rich using a simple adverse selection model we characterize equilibrium when the rich chase the poor if communities are established by competitive entrepreneurs the equilibrium exists is unique and is efficient it involves either complete separation or complete pooling different income groups may rank these qualitative outcomes differently we show how restrictions imposed by a central government may alter the nature of equilibrium such restrictions may be explained as the choice of a low income majority altering the equilibrium to the pooling outcome which they prefer

beyond sharpe ratio optimal asset allocation using different performance ratios abstract as the assumption of normality in return distributions is relaxed classic sharpe ratio and its descendants become questionable tools for constructing optimal portfolios in order to overcome the problem asymmetrical parameter dependent performance ratios have been recently proposed in the literature the aim of this note is to develop an integrated decision aid system for asset allocation based on a toolkit of eleven performance ratios a multi period portfolio optimization up covering a fixed horizon is set up at first bootstrapping of asset return distributions is assessed to recover all ratios calculations at second optimal rebalanced weights are achieved at third optimal final wealth is simulated for each ratios eventually we make a robustness test on the best performance ratios empirical simulations confirm the weakness in forecasting of sharpe ratio whereas asymmetrical parameter dependent ratios such as the generalized rachev sortino satchell and farinelli tibiletti ratios show satisfactorily robustness

how tame will leviathan become in institutional competition competition among governments in the provision of public goods this article critically examines thehypothesis of brennan and buchanan that competition amonggovernments in the provision of publicgoods can serve as a substitute forconstitutional constraints on governments since leviathan type governments withfree choice of tax instruments will be ableto escape competitive pressure by shiftingtaxes to immobile factors one could thinkof a rule of competition which prohibitstaxes on immobile factors indeed such arule leads to a nash equilibriumwhere the tax burden lies on the mobilefactor however net income of the citizensmay or may not increase as a result fromsuch a rule depending on a number ofvariables presented in this article acomplete substitution of constitutionalconstraints by the rule of competition may depending on the same variables evendecrease net income moreover somepotential for increases in net income maybe forgone since capital allocation andthe supply of public goods will usually beinefficient in equilibrium finally applying the rule in a real worldenvironment will be difficult and may evenlead to further serious inefficiencies forthese reasons such a rule will hardly everbe introduced hence competition amonggovernments cannot be viewed as a propersubstitute for constitutional constraints whoever is afraid of leviathan shouldthus not rely on competition amonggovernments alone

land rents optimal taxation and local fiscal independence in an economy with local public goods abstract a general equilibrium model of an economy with cities farms and free migration of population is constructed the cities produce internationally traded goods via production functions subject to economies of scale they also produce housing and a local public good two areas are defined to be disjoint if households performing an economic activity in one area are not operating in the other an area is exclusive if it is disjoint to its complement the economic surplus of an area is then defined to be the value of the area s net export of goods and resources local efficiency of an area is defined to be a state in which its economic surplus attains its maximum value this state is proved to be a necessary condition for pareto optimality of the economy it is then proved that beside piguvian corrective taxes the only taxes necessary and sufficient to finance local government activities efficiently are taxes on land rents furthermore if jurisdiction of a local government is over an exclusive area no intervention of central government is necessary and local authorities can be fully autonomous if the economy can be divided into pairwise disjointed exclusive areas those areas are optimal jurisdictions in the sense that efficiency in the economy can be achieved with local authorities only

dynamic price competition with discrete customer choices abstract for many years dynamic pricing has proven to be an effective tool to increase revenue in the airline and other service industries most studies however focused on monopolistic models and ignored the fact that nowadays consumers can easily compare prices on the internet in this paper we develop a game theoretic model to describe real time dynamic price competition between firms that sell substitutable products by assuming the real time inventory levels of all firms are public information we show the existence of nash equilibrium we then discuss how a firm can adapt if it knows only the initial but not the real time inventory levels of its competitors we compare a firm s expected revenue under different information structures through numerical experiments

oil and the macroeconomy when prices go up and down an extension of hamilton s results in an important paper hamilton 1983 demonstrated a strong correlation between oil price changes and gross national product growth in u s data however his study pertained to a period in which all the large oil price movements were upward and thus it left unanswered the question whether the correlation persists in periods of price decline moreover the price variable he used was somewhat distorted by price controls in the 1970s this note investigates whether hamilton s results continue to hold when the sample is extended to include the recent oil market collapse and the oil price variable is corrected for the effects of price controls particular attention is given to the possibility of asymmetric responses to oil price increases and decreases as suggested in the structural employment literature loungani 1986 davis 1987 hamilton 1988 like hamilton i based my investigation on the gnp equation in sims s 1 980b six variable quarterly vector autoregressive model