a further look at flexibilities and elasticities relationships between price elasticities and price flexibilities are examined with emphasis on comparing sizes of difference between a directly estimated demand matrix and an inverted demand matrix results show that by using inverted elasticities to represent flexibilities or vice versa sizable measurement errors may be committed in agricultural policy and program analysis a directly estimated demand matrix should be used

agricultural household models extensions applications and policy this book presents the basic model of an agricultural household that underlies most of the case studies undertaken so far the model assumes that households are price takers and is therefore recursive the decisions modeled include those affecting production and the demand for inputs and those affecting consumption and the supply of labor comparative results on selected elasticities are presented for a number of economies the empirical significance of the approach is demonstrated in a comparison of models that treat production and consumption decisions separately and those in which the decisionmaking process is recursive the book summarizes the implications of agricultural pricing policy for the welfare of farm households marketed surplus the demand for nonagricultural goods and services the rural labor market budget revenues and foreign exchange earnings in addition it is shown that the basic model can be extended in order to explore the effects of government policy on crop composition nutritional status health saving and investment and to provide a more comprehensive analysis of the effects on budget revenues and foreign exchange earnings methodological topics primarily the data requirements of the basic model and its extensions along with aggregation market interaction uncertainty and market imperfections are discussed the most important methodological issues the question of the recursive property of these models is also discussed

gaitl a generalised version of the almost ideal and translog demand systems abstract ai and translog are popular models in empirical demand literature in this paper we present a generalised model gaitl which nests both and moreover the lewbel 1989 demand system estimation and statistical testing based on italian household data suggests rejection of both in favour of the gaitl also when demographic effects are considered

household food demand in burkina faso implications for food policy abstract chronic food production deficits since the early 1970s have prompted policymakers of burkina faso to emphasize technological research with the goal of increasing the production of the most consumed locally grown cereals sorghum millet and maize meanwhile urban consumers have been developing preferences for rice and wheat cereals that are primarily imported this study estimates demand relationships among food items in ouagadougou burkina the results of the estimation suggest that prices income household composition education marital status and urbanization were jointly important in explaining household expenditure allocations both local and imported cereal consumption responded positively to an income increase however incremental income changes would lead to relatively greater consumption of locally produced cereals by low income households whereas high income households would consume relatively more wheat and rice the household model is then used to demonstrate its relevance in addressing food policy issues by forecasting the levels of urban grain demand under alternative income and demographic scenarios with increased production due to advances in technology the urban demand levels do not exhaust the rural surplus of local cereals but deficits persist in the rice wheat sector the results underscore the importance of technological research since burkina could become self sufficient in at least the production of sorghum millet and maize

social security and retirement decision a positive and normative approach social insurance for the elderly is judged responsible for the widely observed trend towards early retirement in a world of laissez faire or in a first best setting there would be no such trend however when first best instruments are not available because health and productivity are not observable the optimal social insurance policy may imply a distortion on the retirement decision the main point we make is that while there is no doubt that retirement systems induce an excessive bias towards early in many countries a complete elimination of this bias i e a switch to an actuarially fair system is not the right answer this is so and for two reasons first some distortions are secondbest optimal this is the normative argument second and on the positive side the elimination of the bias might be problematic from a political perspective depending on the political process it may either not be feasible or alternatively it may tend to undermine the political support for the pension system itself

trends in rankings of economics departments in the u s an update economics departments in the u s are ranked based on 1 the number of pages published in thirty six economics journals 2 publications in five of the top journals 3 output per faculty member and 4 an index of the concentration of research in a department evidence shows that the top twenty departments have generally retained their positions since the 1970s but rather large changes have occurred in departments ranked from 240 to 100 an economists hall of fame is developed listing the top fifty individual producers of research in the thirty six journal set and the top five journals

demographic structure and capital accumulation a quantitative assessment abstract in a recent paper d albis 2007 demographic structure and capital accumulation journal of economic theory 132 411 434 shows that the effect of population growth on capital accumulation is ambiguous in overlapping generations models with age specific mortality rates contrasting to the predicted negative effect in diamond 1965 national debt in a neoclassical growth model american economic review 55 1126 1150 and blanchard 1985 debt deficits and finite horizons journal of political economy 93 223 247 the quantitative exercises of this paper indicate that while in principle a positive relation between population growth and capital accumulation is possible this relation is practically always negative for industrial countries intuition based on capital dilution and aggregate saving effects is provided this paper also complements d albis 2007 demographic structure and capital accumulation journal of economic theory 132 411 434 in characterizing the steady state equilibrium in more familiar economic concepts

consequences of participant inattention with an application to carbon taxes for meat products despite widespread use in nonmarket valuation data quality remains an ongoing challenge for survey methods one key concern is whether participants attentively respond to survey questions or whether they exert less than full effort to determine the prevalence and consequences of inattention bias in surveys we estimate how meat demand varies across people who do and do not miss trap questions using a split sample design with discrete choice experiments for meat products we explore three different trap questions to determine how many potentially inattentive respondents are identified by each method we find that individuals who miss trap questions respond differently to the choice experiment than individuals who correctly answer the trap question inattention generates vastly different compensating variation estimates of a carbon tax ranging from 3 56 cents per meal choice for the least attentive to 6 13 cents per meal choice for the most attentive

social security and the retirement decision the effect of social security and private pensions on individual retirement decisions is modeled relaxing in turn three commonly maintained assumptions perfect capital markets actuarial fairness and certain lifetimes which together imply that there is no effect in each case raising the contribution level can cause systematic changes of either sign in general in individual retirement decisions for social security the effects associated with forced saving and deviations from actuarial fairness probably tend to advance retirement but those effects that arise solely from the insurance aspect of social security and private pensions are ambiguous in sign owing to the presence of a substitution effect that tends to delay retirement because the insurance benefits can be fully realized only by working longer

examining the heterogeneity in calorie income elasticities a meta analysis abstract several studies conducted over the past three decades on calorie income relationship appear to give inconclusive results this paper reviews these studies and employs meta regression analysis to examine the potential publication bias in the calorie income elasticity as well as the impact of specific study attributes on the elasticities that have been reported in the empirical literature a total of 40 empirical studies which yielded 99 estimated elasticities were considered the results indicate the presence of publication bias in the reported elasticities besides the estimates revealed evidence of positive and significant empirical effect of income on calorie intake from all the studies that goes beyond publication bias study attributes such as ranking of the journal panel data used in the analysis whether expenditure was used as proxy for income year of primary survey sample size and numbers of the years of primary data were found to have statistically significant impacts on the reported calorie income elasticities in the literature

vertical foreclosure with the choice of input specifications we develop an equilibrium model of vertical foreclosure with the choice of input specifications vertical foreclosure occurs as the upstream division of the integrated firm makes a specialized input for its sister downstream division while it would as an independent firm provide a generalized input the changes in incentives with vertical integration can be explained by the externalities the choice of a specialized input entails vertical integration allows the upstream firm to internalize the benefit of raising the rival firm s costs at the downstream level we derive conditions for equilibrium vertical foreclosure to occur and discuss its welfare consequences

tv wars exclusive content and platform competition in pay tv the article examines incentives for exclusive distribution of premium television programming static analysis shows that a vertically integrated operator with premium programming always supplies this content to the rival distributor using per subscriber fees to soften competition in a dynamic setting with switching costs exclusivity confers a market share advantage benefiting the operator in the future under certain conditions this future benefit outweighs the opportunity cost of forgone wholesale fees making exclusivity the preferred choice alternative dynamic mechanisms are explored identifying essential features the analysis explains the observed incidence of content exclusivity in pay tv and provides guidance for policy makers

social security retirement age and optimal income taxation it is often argued that implicit taxation on continued activity of elderly workers is responsible for the widely observed trend towards early retirement in a world of laissez faire or of first best efficiency there would be no such implicit taxation the point of this paper is that when first best redistributive instruments are not available because some variables are not observable the optimal policy does imply a distortion of the retirement decision consequently the inducement of early retirement may be part of the optimal tax transfer policy we consider a model in which individuals differ in their productivity and their capacity to work long and choose both their weekly labor supply and their age of retirement we characterize the optimal non linear tax transfer that maximizes a utilitarian welfare function when weekly earnings and the length of active life are observable while individuals productivity and health status are not observable c 2003 elsevier b v all rights reserved

models of vertical market relations abstract i contrast various models of vertical contracting that view upstream interactions either through the lenses of bilateral contracting and negotiations or through the lenses of a market interface with uniform contractual terms existing models contrast starkly in their policy implications in particular when imperfect horizontal competition on either the upstream or the downstream level interacts with differential buyer power depending on industry characteristics different assumptions on contracting may be appropriate even though the quest for an all encompassing modelling framework seems vain existing models can still be made more flexible so as to be of greater practical usage

gasoline demand revisited an international meta analysis of elasticities meta analysis is used to determine if there are factors that systematically affect price and income elasticity estimates in studies of gasoline demand four econometric models are estimated using long run and short run price and income elasticity estimates from previous studies as the dependent variables explanatory variables include functional form lag structure time span national setting estimation technique and other features of the model structure elasticity estimates are found to be sensitive to the inclusion or exclusion of some measure of vehicle ownership static models appear to overestimate short run elasticities underestimate long run price elasticities but pick up the full long run income responsiveness there is variation in the elasticity of demand across countries especially in the short run and gasoline demand appears to be getting more price elastic and less income elastic over time

no news is good news stochastic parameters versus media coverage indices in demand models after food scares we develop a stochastic parameter approach to model the time varying impacts of food scares on consumption as an alternative to the inclusion of news coverage indices in the demand function we empirically test the methodology on data from four food scares the 1982 heptachlor milk contamination in oahu hawaii and the bovine spongiform encephalopathy and two escherichia coli scares on u s meat demand over the period 1993 9 results show that the inclusion of time varying parameters in demand models enables the capturing of the impact of food safety information and provides better short term forecasts

the competitive impact of vertical integration by multiproduct firms we study the impact of vertical integration on pricing incentives in multiproduct industries to do so we exploit recent variation in vertical structure in the us carbonated beverage industry while the elimination of double marginalization with vertical integration is normally characterized as procompetitive economic theory predicts that it may cause anticompetitive price increases in multiproduct industries we indeed find that vertical integration causes price decreases in products with eliminated double margins but price increases in the other products sold by the integrated firm these results provide new evidence of anticompetitive effects of vertical mergers

upstream competition between vertically integrated firms we propose a model of two tier competition between vertically integrated firms and unintegrated downstream firms we show that even when integrated firms compete in prices to offer a homogeneous input the bertrand logic may collapse and the input may be priced above marginal cost in equilibrium these partial foreclosure equilibria are more likely to exist when downstream competition is fierce or when unintegrated downstream competitors are relatively inefficient we discuss the impact of several regulatory tools on the competitiveness of the wholesale market

household demand for convenience and nonconvenience foods states the budget shares are generally more responsive to prices than to real total expenditure additionally the quantities demanded of convenience and nonconvenience foods are generally more sensitive to changes in income and own prices than to changes in cross prices with regard to demographic variates primary users of convenience foods are white households with employed household managers less than 35 years of age

patents licensing and market structure in the chemical industry abstract the strategies of rent appropriation and industry structure are inter dependent how firms use patents depends upon industry structure and in turn affects industry structure in the 19th century market leaders in the chemical industry combined patents and secrecy to deter entry within cartels patents were used to stabilize cartels and organize technology licensing the role of patents changed in the less concentrated post world war ii markets in bulk organic chemicals and petrochemicals chemical producers use licensing as an important means of generating revenue from process innovations the increased importance of technology licensing is closely related to the emergence of a class of specialized process design and engineering firms that have played an important role in the development and diffusion of process innovations

the individual life cycle annuity market imperfections and economic growth we study the effects of an annuity market imperfection on individual agents life cycle decisions and on the macroeconomic growth rate in an overlapping generations model with single sector endogenous growth our model features both age dependent mortality and labour productivity we model imperfect annuities by introducing a load factor on the annuity rate faced by finitely lived agents our main finding is that annuity market imperfections decrease economic growth because less assets are necessary for consumption late in life in addition we find that both the quantitative and qualitative effects of annuity market imperfections are grossly overestimated in a partial equilibrium analysis because it disregards general equilibrium repercussions

endogenous price leadership with an essential input abstract the hamilton slutsky endogenous timing methodology is applied to differentiated duopolies where motivated by access pricing literature one firm owns an essential input sold wholesale to the rival both firms then set retail prices for their differentiated goods the scenario and results are different from standard endogenous timing duopolies encompassing three prices one wholesale two retail rather than two with unique timing game equilibrium which always entails retail price leadership by the input owner thus providing a new and powerful rationalisation for stackelberg the results call into question the generic access pricing assumption that simultaneous moves determine retail downstream prices

vertical foreclosure versus downstream competition with capital precommitment abstract the recent literature on vertical foreclosure suggests that vertical integration can have the anticompetitive effect of enabling an upstream firm to commit to restricting output to downstream firms at the monopoly level we allow the upstream firm to make an ex ante capital precommitment we show that if integration is outlawed the upstream firm will distort capital downward as an alternative device to restrict output we show that this alternative may be socially less efficient than vertical integration

infrastructure and inequality abstract we develop a model in which public capital is both an engine of growth and a determinant of the distributions of wealth income and welfare government investment increases wealth inequality over time regardless of its financing the time path of income inequality is however highly sensitive to financing policies and is often characterized by sharp intertemporal tradeoffs with income inequality declining in the short run but increasing in the long run public investment generates a positive correlation between growth and income inequality along the transition path but their short run and long run relationship depends critically on i how externalities impinge on allocation decisions ii financing policies and iii the time period of consideration finally these policies also generate sharp trade offs between average welfare and its distribution with government investment improving average welfare but also increasing its dispersion our results are obtained numerically but extensive sensitivity analysis confirms their robustness across key parameter values

vertical mergers and product differentiation this paper presents an equilibrium theory of vertical mergers that incorporates strategic behaviors in the hotelling type location model this enables one to consider the relationship between downstream firms strategies for product differentiation and vertical integration i show that vertical integration enhances the degree of product differentiation of the integrated firm under some conditions partial integration arises in equilibrium which may increase the profit of the nonintegrated downstream firm the paper also discusses the welfare implications of vertical integration

bias in estimating the almost ideal demand system with the stone index approximation this paper shows that the commonly used stone index approximation can bias the parameter estimates of the almost ideal demand system the bias mostly affects the price parameters and can be more serious when the budget share equations are estimated with individual household rather than aggregate data in the absence of strong substitution effects the price parameter bias can be largely corrected through simple reparameterization copyright 1993 by royal economic society

an inverse demand system for u s composite foods this article provides a theoretically consistent framework for estimating a complete price dependent demand system where the concept of distance function and its related substitution and scale effects are used the approach is applied to a u s demand system consisting of thirteen food and one nonfood categories

demand for beef and chicken products separability and structural change several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela tive prices or income braschler chavas dahlgran hudson and vertin moschini and meilke frank thurman most studies of structural change have focused on red meat consumption only thurman has looked closely at the poultry market and no one has considered poultry products yet the mix of chicken products marketed changed dramat ically during the last twenty years and should have influenced aggregate meat demand the share of broiler slaughter marketed as whole birds declined from 74 in 1965 to 28 in 1985 while cut up parts and processed chick en products increased from 26 to 72 whole birds are inferior goods and cut up parts and processed chicken are normal goods haidacher et al the shift in chicken prod uct mix away from whole birds should have increased the preference for total chicken in this article two related questions are ad dressed first do consumers allocate expendi tures among meats by animal origin or by product type second does disaggregation of meat into products in a meat demand model give insight into the causes of structural

successive oligopolies with differentiated firms and endogeneous entry we develop a model of successive oligopolies with endogenous entry allowing for varying degrees of product differentiation and entry costs in both markets we show that downstream conditions dominate the overall profitability of the two tier structure while upstream conditions mainly affect the distribution of profits we analyze how two part tariffs and resale price maintenance shape the endogenous market structure and study their welfare effects in contrast to previous literature we find that welfare under linear prices can be larger than under twopart tariffs although the latter avoids double marginalization this is because linear prices induce more downstream market entry

the paradigm of agricultural efficiency and its implication on food security in africa what does meta analysis reveal summary the study investigates whether african agricultural efficiency levels have been improving or not and what drives them over the years based on 442 frontier studies using meta regression analysis the results show that the mean efficiency estimates from studies decrease significantly as year of survey in the primary study increases also studies published in journals with parametric specification and with panel data produced significantly higher efficiency estimates while those with a focus on grain crops reported significantly lower efficiency estimates other results show that education followed by experience extension and credit are the major drivers of agricultural efficiency levels in africa

rice in asia is it becoming an inferior good empirical results using time series and cross sectional data indicate that rice in asia is becoming an inferior good income elasticities declined and in some cases became negative between 1961 and 1985 in most of the fourteen asian countries studied accordingly domestic demand for rice in these countries is not likely to grow as rapidly as it has in the past as a consequence there is a potential for excess supplies of rice to develop in asia putting downward pressure on rice prices while governments in asian countries may need to adjust their rice policies in the future world rice suppliers may need to develop new markets for rice

vertical integration raising rivals costs and upstream collusion abstract this paper analyzes the impact vertical integration has on upstream collusion when the price of the input is linear as a first step the paper derives the collusive equilibrium that requires the lowest discount factor in the infinitely repeated game when one firm is vertically integrated it turns out this is the joint profit maximum of the colluding firms the discount factor needed to sustain this equilibrium is then shown to be unambiguously lower than the one needed for collusion in the separated industry while the previous literature has found it difficult to reconcile raising rivals costs strategies following a vertical merger with equilibrium behavior in the static game they are subgame perfect in the repeated game studied here

indirect taxation in vertical oligopoly this paper analyzes the effects of specific and ad valorem taxation in an industry with downstream and upstream oligopoly we find that in the short run i e when the number of firms in both markets is exogenous the results concerning tax incidence tend to be qualitatively similar to models where the upstream market is perfectly competitive however both over and undershifting are more pronounced potentially to a very large extent instead in the long run under endogenous entry and exit overshifting of both taxes is more likely to occur and is more pronounced under upstream oligopoly as a result of this a tax increase is more likely to be welfare reducing we also demonstrate that downstream and upstream taxation are equivalent in the short run while this is not true for the ad valorem tax in the long run we show that it is normally more efficient to tax downstream

symmetric equilibrium existence and optimality in differentiated product markets abstract equilibrium existence and optimality are analysed in a market for products differentiated by their variety a game of three stages is analysed firms enter in the first stage choose varieties in the second stage and choose prices in the third stage the existence of subgame perfect equilibria is established at equilibrium products are symmetrically located in the space of characteristics and are offered at equal prices the surplus maximizing solution is characterized and it is shown that surplus maximizing product diversity is lower than the equilibrium one

on the competitive effects of vertical integration by a research laboratory abstract an independent research laboratory owns a patented process innovation ready to be used by an industry that produces differentiated goods we analyze whether the laboratory prefers to license the innovation as an external patentee or to merge with one of the firms in the industry licensing the innovation as an internal patentee under linear demand and cournot competition we show first that the vertical merger is profitable only in the case of small innovations whereas a merger increases welfare only for significant innovations second all profitable vertical mergers reduce welfare however some profitable mergers are welfare improving under price competition

do vertical mergers facilitate upstream collusion we investigate the impact of vertical mergers on upstream firms ability to collude when selling to downstream firms in a repeated game we show that vertical mergers give rise to an outlets effect the deviation profits of cheating unintegrated firms are reduced as these firms can no longer profitably sell to the downstream affiliates of their integrated rivals vertical mergers also result in an opposing punishment effect integrated firms typically make more profit in the punishment phase than unintegrated upstream firms the net result of these effects in an unintegrated industry is to facilitate upstream collusion we provide conditions under which further vertical integration also facilitates collusion

on the irrelevance of input prices for make or buy decisions this paper demonstrates that input prices need not reflect the costs of an efficient incumbent supplier in order to induce entrants to implement efficient make or buy decisions because of strategic downstream considerations entrants may always undertake efficient make or buy decisions regardless of the prices at which they are authorized to buy key inputs from incumbent suppliers

a leisurely reading of the life cycle consumption data abstract a puzzle in consumption theory is the observation of a hump in age consumption profiles this paper studies a general equilibrium life cycle economy with capital in which households include both consumption and leisure in their period utility function a calibrated version of the model shows that a significant hump in life cycle consumption is a feature of the equilibrium thus inclusion of leisure in household preferences may provide part of the explanation of observed life cycle consumption humps

demographic structures savings and international capital flows abstract this paper investigates how the different demographic characteristics of two countries will drive the flow of capital between them as inhabitants of the longer lived nation have a higher savings rate than do those with the shorter lifespan it is motivated by the recent us experience during which its net foreign asset position declined dramatically while simultaneously its longevity has fallen increasingly below that of other developed g7 economies our contribution is to address the issue by introducing empirically based survival mortality functions into a traditional two country macrodynamic framework in doing so we eliminate some of the unsatisfactory aspects associated with the traditional two country representative agent model the sensitivity of the capital flows and the resulting net foreign assets of the two economies to key structural characteristics and their consequences for savings are emphasized

intimidating competitors endogenous vertical integration and downstream investment in successive oligopoly this paper examines the interplay of endogenous vertical integration and cost reducing downstream investment in successive oligopoly analyzing a linear cournot model we establish the following key results i vertical integration increases own investment and decreases competitor investment intimidation effect ii asymmetric integration is a non degenerate equilibrium outcome iii compared to a benchmark model without investment complete vertical separation is a less likely outcome we argue that these findings generalize beyond the linear cournot model under reasonable assumptions

cross section versus time series income elasticities of canadian consumption abstract five canadian surveys are used to compute cross section and time series income elasticities within pseudo panel elasticities differ significantly from between elasticities for most consumptions thus income elasticities computed using cross section data cannot be used to predict changes in consumption over time

access to bottleneck inputs under oligopoly a prisoners dilemma we analyze the incentives of vertically integrated oligopolists to concede access to their bottleneck inputs to an entrant in the downstream market first two vertically integrated incumbents make access price offers to an entrant that chooses which one to accept if any second firms compete on salop s circle the firms may be asymmetrically located on the circle to reflect differences in consumer shares for some levels of asymmetry the incumbents face a prisoners dilemma with respect to conceding access to their bottleneck inputs entry by a downstream firm may lead to lower retail prices however entry may also lead to higher retail prices for the access provider and for the entrant we also consider the cases where there are several incumbents and where the entrant makes the access price offers

indirect versus direct constraints in markets with vertical integration for an assessment of market power on the wholesale or merchant market in the presence of vertically integrated firms we analyze the interaction of direct constraints arising from competition on the wholesale market and of indirect constraints arising from substitution on the retail market a vertically integrated firm that still participates in the merchant market exerts both direct and indirect constraints we analyze the factors that determine the importance of indirect constraints we find that in contrast to a common presumption indirect constraints are sometimes more powerful than direct constraints we furthermore analyze the incentives of integrated firms to still participate in the merchant market provided that this is technologically feasible

a cross section demand analysis of spanish provincial food consumption i follow the differential approach in building three demand models of spanish cross province food consumption patterns the models include quadratic income terms for estimating the widely varying income responses one expects from cross section data the proposed models are also flexible in permitting alternative levels of aggregation across goods a nonnested testing procedure is used to identify the best model both the flexibility of the quadratic income term and the flexibility of alternative aggregation levels are important in the analysis of spanish food consumption patterns

consumption over the life cycle facts from consumer expenditure survey data this paper uses consumer expenditure survey data and a seminonparametric statistical model to estimate life cycle profiles of consumption controlling for demographics cohort and time effects we construct age profiles for total and nondurable consumption as well as expenditure patterns for consumer durables special emphasis is placed on the comparison of different approaches to control for changes in demo graphics over the life cycle we find significant humps over the life cycle for total nondurable and durable expenditures changes in household size account for roughly half of these humps bootstrap simulations suggest that our empirical estimates are tight in that standard errors are small

entry deterrence by non horizontal merger we study when and how pure non horizontal mergers whether cross product or vertical can deter new entry organizational mergers implicitly commit firms to more aggressive price competition because heightened competition deters entry mergers can occur in equilibrium even when absent entry considerations they do not we show that in order to prevent a flood of entrants mergers arise even when a marginal merger costs incumbent firms more than does a marginal entrant

health spending savings and fertility in a lifecycle dynastic model with longevity externalities we investigate health spending savings fertility and policy implications in a lifecycle dynastic model with longevity externalities in annuity returns we show that such externalities engender not only excessive health spending but also under saving and excessive fertility social security and health subsidization increase health spending and savings but reduce fertility from laissez faire levels a publicly funded universal health system under labour income taxation raises fertility taxing health spending or using social security and public health together can obtain socially optimal health spending savings longevity and fertility numerical results based on us observations suggest substantial variations among these cases especially in old age health spending

demographic structure and capital accumulation this paper develops an overlapping generations olg model to analyze the consequences of demographic structure changes induced by an exogenous shift in the birth rate we first show that a finite growth rate of the population that maximizes long run capital per capita exists then we examine the theoretical properties of this growth rate by showing that i it corresponds to the demographic structure such that the average ages of capital holders and workers are equal ii it is associated to an efficient steady state iii it increases with compulsory transfers from younger to older generations finally we explain why standard olg models do not exhibit such a growth rate

vertical mergers and market foreclosure ythe model in this paper illustrates three effects of vertical mergers when both stages are oligopolistic and vertically integrated and unintegrated producers coexist first the merging firm increases its final good output second the resulting backward shift in the residual demand curve facing unintegrated final good producers ylowers their demand for the intermediate good third the merged firm withdraws from the intermediate good market the increased concentration pushes the intermediate good price upward which effect dominates depends on market structure under some conditions a vertical merger causes the price of the final good to increase

meat meets meta a quantitative review of the price elasticity of meat the price elasticity of meat has been estimated in numerous studies that utilize a variety of disparate modeling procedures in light of differences in the literature a meta analysis is performed to assess the sensitivity of the meat price elasticity to a number of characteristics including the type of meat specification of demand nature of data estimation method characteristics of the publication outlet and location of demand the results from estimating linear and box cox meta regressions coupled with different panel data treatments reveal that these characteristics have differing influence on the reported price elasticity

vertical integration as a source of hold up while vertical integration is traditionally seen as a solution to the hold up problem this article highlights instead that it can generate hold up problems for rivals we consider a successive duopoly where downstream firms invest and then secure support from an upstream supplier we first show that vertical integration generates ex ante incentives to create hold up problems an integrated supplier is willing to pre commit itself to appropriating or dissipating part of its customer s profits to expose the independent rival to being held up by the other supplier and discourage in this way the rival s investment we then show that even in the absence of any pre commitment vertical integration also creates hold up problems ex post when degrading the quality of the support provided to one downstream firm benefits its rival we also provide illustrations in terms of standard industrial organization models and of antitrust cases and discuss the robustness of the insights

is there anti competitive behaviour in the central canadian cement industry testing arbitrage cost hypotheses allegations of anticompetitive behavior in the central canadian cement industry have focused around the effects of cement producers buying their downstream distributors if indeed vertical integration is causing cement prices to rise the relevant economic theories imply that the arbitrage cost of shipping cement to central canada is greater than the cost of shipping cement from this region the authors investigate this theory by econometrically estimating the relevant arbitrage costs their analysis supports the hypothesis that vertical integration has increased barriers to entry for cement in toronto but it fails to support a similar hypothesis for montreal

demand for food in myanmar burma abstract aggregate quarterly time series data from 1975 to 1987 on government procurement prices and open black market prices were used in estimating an almost ideal demand system aids and double log models for consumption of foodstuffs in myanmar the results from the aids model were superior to those from the double log models the estimated income elasticity of demand for non meat foodstuffs was high even for low quality rice which has been shown to be an inferior good in other asian countries the income elasticities for the non cereals groundnut oil sesame oil pulses potato and onion are positive and less than one contrary to expectation the income elasticities for all meat items are low own price elasticities for most foodstuffs were less than one the estimated cross price elasticities indicate the complementary nature of the basic food items to rice a brief analysis of the effects of taxing myanmarese rice exports and subsidising consumers indicated that there are net costs to government unevenly distributed welfare gains to consumers and welfare losses to farmers

social security and endogenous growth abstract this paper examines the effects of social security on the steady state growth of per capita income in an endogenous growth model in which agents care about their own consumption the number of children and the welfare of each child it shows that an unfunded program may simulate growth by reducing fertility and increasing the ratio of human capital investment per child to per family income when bequests are positive also it may cause faster growth than funded programs especially when receipts from funded programs are independent of contributions when voluntary saving is positive funded social security is neutral if receipts are linked to contributions and most likely depresses growth if receipts are independent of contributions

incentives for input foreclosure we analyze the incentives of a vertically integrated firm to foreclose downstream rivals in contrast to the extant literature our model allows for upstream price competition between suppliers of only imperfectly substitutable inputs as the integrated firm decides on the degree of foreclosure through the scale of its continued participation in a merchant market the model can be applied also to cases where the foreclosed input is not essential as well as to cases where foreclosure is not complete we find that incentives to foreclose are much lower than in existing models with upstream cournot competition if there is also cournot competition downstream there will never be complete foreclosure in the case of linear demand potentially more important for practical purposes is our criticism of some explicit assertions made in the european commission s 2007 non horizontal merger guidelines we find that pre merger margins on the up and downstream markets are not necessarily good predictors of the incentives for subsequent i e post merger foreclosure

welfare reducing licensing abstract in this paper we characterize situations where licensing a cost reducing innovation to a rival firm using two part tariff contracts a fixed fee plus a linear per unit of output royalty reduces social welfare we show that it occurs if i the firms compete in prices ii the innovation is large enough but not drastic and iii the goods are close enough substitutes moreover we show that regardless of the type of competition first the optimal contract always includes a positive royalty and second even drastic innovations are licensed whenever the goods are not homogeneous

price and income elasticities of residential water demand a meta analysis this article presents a meta analysis of variations in price and income elasticities of residential water demand meta analysis constitutes an adequate tool to synthesize research results by means of an analysis of the variation in empirical estimates reported in the literature we link the variation in estimated elasticities to differences in theoretical microeconomic choice approaches differences in spatial and temporal dynamics as well as differences in research design of the underlying studies the occurrence of increasing or decreasing block rate systems turns out to be important with respect to price elasticities the use of the discrete continuous choice approach is relevant in explaining observed differences

elasticities in aids models in the literature a variety of approaches have been used to calculate demand elasticities in almost ideal demand system aids models of demand it is common to estimate the linear approximate almost ideal demand system la aids instead of the aids when the la aids is estimated all of the previously reported approaches to compute elasticities are theoretically incorrect this paper presents correct formulas for la aids elasticities and illustrates the potential errors from using incorrect computing the almost ideal demand system aids of deaton and muellbauer 1980a b has become popular in recent years anderson and blundell blanciforti and green 1983a b blanciforti green and king chalfant eales and unnevehr fujii khaled and mak fulponi heien and willett murray parsons ray a variety of approaches to computing elasticities has been used and some of the approaches may lead to significant errors this paper clarifies the differences between alternative approaches to estimating demand elasticities in aids models

the competition effects of industry wide vertical price fixing in bilateral oligopoly this paper examines the competition and welfare effects of vertical price fixing through industry wide resale price maintenance rpm arrangements such as those benefiting from exemption from a general prohibition against rpm a bilateral oligopoly framework is employed incorporating differentiation between manufacturer products and between retailer services transactions between the stages involve prices being determined through bargaining we do not find rpm to be universally undesirable however where retailer power is strong the social effects of rpm are likely to be adverse since the practice can assist in coordinating final price levels and prevent socially desirable countervailing power arising

how to compete cournot versus bertrand in a vertical structure with an integrated input supplier we study whether a quantity or a price contract is chosen at equilibrium by one integrated firm and its retail competitor in a differentiated duopoly using a similar vertical structure arya et al 2008 show that bertrand competition is more profitable than cournot competition which contrasts with conventional wisdom in this article we first demonstrate that such a result is robust to the endogenous determination of the type of contract second by introducing managerial incentives in the model we find that delegation to managers may lead each firm to choose a quantity contract and as long as products are sufficiently differentiated entails conflicting choices causing nonexistence of equilibrium in pure strategies significantly high product substitutability reconciles firms objectives under delegation leading unique or multiple equilibria with symmetric types of contracts to arise

market power vertical integration and the wholesale price of gasoline this paper examines empirically the relationship between vertical integration and wholesale gasoline prices we use discrete and differential changes in the extent of vertical integration generated by mergers in west coast gasoline refining and retailing markets to test for incentives to raise rivals costs the research design allows us to test for a relationship between vertical integration and wholesale prices controlling for horizontal market structure cost shocks and trends we find evidence consistent with the strategic incentive to raise competitors input costs this suggests that vertical integration can have a significant impact on wholesale prices

fiscal policy in an endogenous growth model in a neoclassical growth model it is possible to make a case for public debt because a balanced growth path may be dynamically inefficient this paper shows that this possibility no longer holds in an endogenous growth model with constant external returns to capital it is shown that an increase in public debt reduces the growth rate so there always exists a future generation that will be harmed and that a reduction in public debt although it increases the growth rate cannot be pareto improving one current generation must be harmed

social security growth and welfare in overlapping generations economies with or without annuities we examine the impact of a stylized pay as you go paygo social security program in an economy of overlapping generations with equilibrium growth we adopt realistic mortality and other demographic assumptions and allow for the presence or absence of life annuities in all cases steady state economies with paygo social security programs grow more slowly than those without also we find that lifetime expected utilities are lower for existing and future households in steady state economies with social security we also report the effect of social security on the age profile of consumption and explore the effects of longer life expectancy compensating social security program changes and capital subsidies

vintage human capital demographic trends and endogenous growth we study how economic growth is affected by demographics in an overlapping generations model with a realistic survival law individuals optimally chose the dates at which they leave school to enter the labor market and at which they retire endogenous growth arises thanks to the accumulation of generation specific human capital favorable shifts in the survival probabilities always induce longer schooling and later retirement but have an ambiguous effect on growth the relationship between the growth of population and per capita growth is hump shaped increases in longevity can be responsible for a switch from a no growth regime to a sustained growth regime and for a positive relationship between fertility and growth to vanish

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

income distribution and aggregation disaggregation biases in the measurement of consumer demand elasticities abstract we investigate the issue of aggregation and disaggregation biases in demand elasticities drawing on income distribution data for seven countries we calculate the likely range of differences between elasticities evaluated at average income and corresponding aggregate average elasticities

on the welfare impact of mergers of complements raising rivals costs versus elimination of double marginalization abstract a common view in antitrust analysis is that mergers of complements can have raising rivals costs and elimination of double marginalization effects with the net effect on consumer welfare thus unclear we revise this view in the context of a merger between a monopolist in one market and a duopoly producer of a complement good with linear demand and imperfect substitutability while such a merger increases the price of the monopolized component elimination of double marginalization dominates any raising rivals costs effects increasing consumer welfare we discuss a variety of extensions

the silence of the lambdas a test of the almost ideal and rotterdam models during the past decade the linear approximate la almost ideal demand system and the rotterdam model have been adopted by agricultural economists as the demand systems of choice in most applications the apparent explanation is that the two models are both second order locally flexible and compatible with demand theory they have identical data requirements and are equally parsimonious with respect to parameters and both are linear in the parameters while the two models are thus equally attractive in most respects and indeed appear very similar in structure they lead to different results in some applications this article develops a test of each against the other in an illustrative application to u s meat demand the almost ideal model is rejected while the rotterdam model is not

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase

dynamic analysis of an endogenous growth model with public capital this paper develops an endogenous growth model with productive public capital along with private capital in a spirit similar to that of r j barro 1990 since the authors model includes two stock variables it has transitional dynamics unlike most of the previous studies on endogenous growth including barro s where concerns are restricted to the steady state analysis first they show that the transitional path is unique and stable second the character of the transitional path is explored third the authors show that the optimal tax rate is smaller than the rate that maximizes the national growth rate with a log linear utility function copyright 1993 by the editors of the scandinavian journal of economics

equilibrium vertical foreclosure reply in ordover saloner and salop 1990 hereafter oss we showed that a downstream duopolist may have an incentive to backward integrate in order to foreclose its downstream rival from a source of upstream supply as a result of the vertical integration the downstream rival s input price increases giving the integrating firm a competitive advantage in the downstream market moreover in equilibrium the foreclosed downstream rival does not find it profitable to negate these effects by integrating itself oss considers a four stage game involving two upstream firms ul and u2 and two downstream firms dl and d2 in the first stage the downstream firms can bid to acquire ul if there is an acquisition say dl acquires ul to form f1 upstream input prices are set in the second stage in the third stage knowing the input prices it faces d2 can attempt to acquire u2 finally in the fourth stage dl and d2 compete a la bertrand with differentiated products in his comment david reiffen 1992 makes three distinct points first he notes that once dl has acquired ul the equilibrium of the subsequent subgame depends critically on how upstream prices are set in the second stage he argues that our results depend on the ability of fl to commit to a high upstream price this criticism previously has been made by oliver hart and jean tirole 1990 we show below that the results in oss do not depend on the ability of fl to commit instead our main result stems from the fact that vertical integration changes the firm s incentives to engage in price cutting in the input market the notion that vertically integrated firms behave differently from unintegrated ones in supplying inputs to downstream rivals would strike a businessperson if not an economist as common sense 1 we show that there is theoretical merit to that common sense view second reiffen argues that the game considered by oss is similar to a game in which there is no vertical integration but rather where a nonintegrated dl has a first mover advantage in the downstream market in such a game dl benefits from the ability to commit to the price that its stackelberg leadership position gives it reiffen considers this to be additional evidence in support of the claim that oss depends critically on fl s ability to commit not on vertical integration we explain why the mechanism by which dl is able to raise its profits in the sequential one shot game considered by reiffen is conceptually quite different from the mechanism by which dl profits from vertical integration in oss third reiffen argues that our results depend on there being only two upstream firms this is correct in the symmetric bertrand model analyzed however as we discuss below our results do obtain as long as the upstream price is decreasing in the number of firms as occurs in many oligopoly models particularly when costs vary across firms the next section summarizes the conceptual problems pertaining to upstream pricing these problems are resolved in section ii by means of simple and natural price ordover department of economics new york university 269 mercer st 7th floor new york ny 10003 saloner graduate school of business stanford university stanford ca 94305 salop georgetown university law center 600 new jersey avenue nw washington dc 20001 we have benefited greatly from several discussions with faruk gul research support from the national science foundation grant 8813943 iri the sloan foundation and the c v starr center for applied economics at nyu is gratefully acknowledged for example the japan u s strategic impediments initiative is predicated on the proposition that the loosely linked japanese firms that form the various keiretsu do discriminate against nonaffiliated firms