competition and the number of firms in a market are duopolies more competitive than atomistic markets this paper uses a variant of the standard search model to examine market equilibrium and the consequences for market equilibrium of an increase in the number of firms if marginal search costs increase with the number of searches then the demand curve facing any firm will be kinked with the elasticity of demand with respect to price decreases being less than with respect to price increases prices may not change in response to changes in marginal costs as the number of firms increases the maximum price that is consistent with equilibrium increases to the monopoly price but the minimum price decreases on the other hand if marginal search costs decrease with the number of searches equilibrium if it exists is characterized by a

discrete equilibrium price dispersion an explicit solution of an equilibrium model with price setting firms and searching customers makes possible a number of comparativestatics predictions about how cost differences among firms search costs of customers and taxes will affect the mean and variance of the distribution of market prices another implication of the model is that a firm s demand depends on the difference between its price and the average price in the market

wage and price controls in the equilibrium sequential search model abstract in this paper we study the effects of wage and price controls on employment output and welfare in a simplified version of the benabou j econom theory 60 1993 140 equilibrium sequential search model with bilateral heterogeneity we show that a price ceiling increases output but the change in welfare depends on three effects the reduction in aggregate search costs the increase in surplus due to increased output and the transfer of production to the least efficient firm the model is formally identical to a standard equilibrium search model of the labor market so analogous results hold for the minimum wage

the effects of firm optimizing behaviour in matching models this paper considers a matching model of which the search behaviour of jovanovic 1979 and albrecht and jovanovic 1984 are special cases the nature of the generality is that each unemployed worker has more information than firms about his average productivity this results in wage offers falling over the length of an unemployment spell because a long spell is a signal of lower than average productivity the results of the paper are similar to the scarring effect of heckman and borjas 1980 and greenwald 1986 and the discouraged worker effect of schweitzer and smith 1974

search and consumer theory a consumer faces list prices for commodities but can buy one at a discount discounts vary randomly between sellers the number of quotations sought depends on list prices search costs and wealth this function is homogeneous of degree zero and provided some sufficient conditions are satisfied is increasing in wealth decreasing in search cost independent of the list price of the discounted commodity if indirect utility is multiplicatively separable increasing in the list price if the commodity is a necessity increasing in the list price of substitutes slutsky s equation is generalized to include search

price matching in a model of equilibrium price dispersion some sellers announce openly to prospective buyers that they will match any competitor s lower price on similar products this practice is visible among many retailers of consumer durables such as tv sets stereo components cameras and personal computers in more covert and informal forms price matching is ubiquitous it exists whenever individual sellers of a product are known to be generally willing to lower their prices when confronted by prospective buyers who can demonstrate information of lower prices elsewhere attempts to demonstrate and verify such information usually constitute part of the haggling process one often wonders will prices consumers ultimately pay indeed be lower with such haggling will apparently aggressive price matching strategies result in lower or higher equilibrium prices this paper deals with an environment in which information is not perfect and buyers engage in costly sequential search it will be shown that with price matching prices ultimately charged to consumers are higher the crucial assumption here is that buyers marginal search cost increases with the number of searches already performed with this assumption the main idea driving our results is as follows in the presence of increasing marginal search cost price matching encourages search therefore there will be more prospective buyers who will have performed a larger number of searches their marginal search cost will be higher on the average thus firms will be able to take advantage of this and charge higher prices but why would price matching encourage search if marginal search cost is increasing the answer lies in that price matching implies costless recall in sequential search models with consumers facing a known price distribution and constant marginal search cost whether recall is costless or costly is immaterial for then consumers optimal strategy is a constant reservationprice strategy implying that prices rejected earlier will never be acceptable the desire to recall never arises so that it does not matter to the searcher whether recall is costly or costless in such an environment firms do not have the incentive to offer price matching but as rothschild 7 has cautioned us the two assumptions of costly and costless recall are not always interchangeable they are not when marginal search cost is increasing for then if a consumer having a price

testing models of consumer search using data on web browsing and purchasing behavior using a large data set on web browsing and purchasing behavior we test to what extent consumers are searching in accordance to various classical search models we nd that the benchmark model of sequential search with a known distributions of prices can be rejected based on the recall patterns we observe in the data moreover we show that even if consumers are initially unaware of the price distribution and have to learn the price distribution observed search behavior for given consumers over time is more consistent with non sequential search than sequential search with learning our

conflict management style accounting for cross national differences a problem in joint ventures between u s and asian firms is that cultural differences impede the smooth resolution of conflicts between managers in a survey of young managers in the u s china philippines and india we find support for two hypotheses about cultural differences in conflict style and the cultural values that account for these differences chinese managers rely more on an avoiding style because of their relatively high value on conformity and tradition u s managers rely more on a competing style because of their relatively high value on individual achievement

illustrating adverse selection in health insurance markets with a classroom game this paper describes a classroom game that illustrates the effects of asymmetric information and adverse selection in health insurance markets the first part of this game simulates a market in which buyers can purchase insurance from sellers in some periods government regulation prevents sellers from using information about buyer type to determine premiums the results demonstrate the classic prediction that asymmetric information will result in adverse selection here low risk buyers will forego the purchase of insurance at a measurable loss of potential earnings in the second part of the game sellers and buyers can trade two different types of health insurance policies one moderate and another generous under government mandated community rating and limits on premium increases no buyers will purchase the generous plan questions are provided to stimulate discussion of the causes and consequences of adverse selection for consumers and insurers and possible solutions for employer and government sponsored programs

minimum prices in a model with search frictions and price posting in this paper i consider the effects of a minimum price maximum wage in a random search model with price wage posting i show that with a minimum price the price distribution will have a mass point if the minimum price is sufficiently high the price distribution will become degenerate

an equilibrium model of search unemployment this paper develops a simple general equilibrium model with sequential search in which a nondegenerate wage offer distribution is endogenously determined we use this model to analyze the comparati

china s transition and its implications for international business this paper focuses on institutional change as the central and most consequential contextual aspect of china s transition identification of key characteristics of china s emergent institutions leads to propositions on their relevance for international business practice china s transition also raises issues for theory development including the way that transition is modeled the need to draw upon multiple perspectives and the concomitants of a contextual approach

the impact of demand and price expectations on the behavior of prices the effects of demand and price expectations on price behavior are analyzed using data from the manufacturing sector and a model formulated to pinpoint the demand oriented factors affecting prices and to incorporate price expectations as a direct influence on price behavior the expected normal demand is seen to have a strong and systemic influence on price behavior the expected normal level of new orders is found to be an adequate measure with sector data in general although some industries require more specification the effects of inventories and unfilled orders on prices are sporadic and across sectors and industries demand oriented forces are concluded to perform as well statistically as cost push determinants expectations concerning the current normal industry price level have a significant and consistent impact on price behavior this supports the idea that firms setting prices take into account their estimates of competitor s prices future price expectations appear to have little effect on current price information 15 references

price dispersion with directed search we model a market where identical buyers direct their search to identical capacity constrained sellers sellers cannot fully commit to the list price so strategic bargaining may determine the sale price we study search and pricing behavior in symmetric equilibrium sale prices exhibit equilibrium dispersion as they respond naturally to local demand conditions uncoordinated search decisions lead to equilibrium demand heterogeneity so sellers realizing large demand bargain prices up we characterize the sale price distribution parametrically studying how different commitment limitations and market features affect pricing and surplus shares we also determine endogenously

measuring the effects of search costs on equilibrium prices and profits abstract this paper assesses the effects of search costs on equilibrium prices and profits using an estimated model of demand and costs in a laundry detergent market i find that some firms profits initially rise and then fall with search costs overall the magnitude and direction of the search costs effects on prices and profits are heterogeneous this is because search costs create conflicting incentives for a firm to reduce prices to attract the attention of searching consumers yet also raise prices to harvest profit from consumers who are unaware of competing products these effects can vary with the relationship between the firms actual prices and the consumers pre search beliefs about prices

ripoffs lemons and reputation formation in agency relationships a laboratory market study this paper examines the effect of the moral hazard problem in an agency relationship where the principal cannot observe the level of service provided by the agent using data from laboratory markets we demonstrate that the presence of moral hazard leads to shirking by agents however this lemons phenomenon occurs only about one half of the time while there is evidence of reputation effects in these markets seemingly reputable agents are often able to use opportunities for false advertising to their advantage and ripoff principals there has been considerable discussion about the price and quality of services provided within certain principal agent relationships for example the securities and exchange commission and congress have focused a great deal of attention on the price and quality of outside audit services to investors the securities and exchange commission and the department of justice have considered the regulation of investment banking contracts because of their concern over the price and level of services provided finally a large and growing literature has focused attention on the conflict between owners and managers and the problem of shirking by managers the above examples share a feature common to most agency relationships in that the services provided by the agent have a hidden characteristic specifically the principal cannot costlessly observe the level of service provided by the agent and thus cannot determine whether an unfavorable outcome is due to the agent s shirking or due to an unfortunate occurrence of a state of nature a large theoretical literature has developed e g shavell 9 which proposes remedies for dealing with the moral hazard problem that arises in these situations yet to our knowledge there has been no direct empirical test demonstrating that the moral hazard problem does in fact lead to shirking by agents furthermore the theoretical literature provides a number of competing models about the market s ability to provide pareto optimal levels of service in the presence of moral hazard

retail gasoline price dynamics and local market power using monthly data from the 48 contiguous states except nevada for the 1988 2002 period it is shown that retail gasoline prices respond faster to wholesale price increases than to equivalent wholesale price decreases moreover markets with high average retail wholesale margins experience a slower adjustment and a more asymmetric response since gasoline is the only variable input average margins in a state likely reflect the degree of retail market power this suggests that sticky prices and response asymmetries in the gasoline market are at least partially a consequence of retail market power

employer search training and vacancy duration we develop a model of optimal employer search strategy when information about match quality is endogenous the model is tested using four data sets two of which have not previously been used as theory predicts we find that when filling positions requiring more training employers search more intensively and extensively employers also search more extensively when hiring workers with more education and with prior experience these findings provide strong evidence of systematic variation in search strategies based on the characteristics of the positions and job applicants factors that influence employer search also affect the duration of a vacancy

costly diagnosis and price dispersion abstract in the standard search model under monopolistic competition when the consumer encounters a seller he knows the price before purchasing the commodity consequently the price cannot exceed the consumer s reservation price in a market with rational and homogeneous agents the price distribution must therefore be degenerate in markets for indivisible professional services the consumer does not necessarily know the price of the service when he encounters the seller this possibility arises when the cost of ascertaining the price the diagnosis cost is high and the consumer decides to enter the market without searching in contrast to the standard model under monopolistic competition price dispersion in equilibrium is possible even when fully rational economic agents on both sides of the market are homogeneous we characterize such equilibria and provide a sufficient condition for their existence we then study the effect of manipulating the search technology typically through a professional code of ethics on the equilibrium in markets for such professional services

price dispersion in an automobile insurance market from automobile insurance data for alberta over the period 1974 81 we find thatpremiums are highly correlated across driver classes in a given year but that premiums for a given driver class are not correlated over a period of more than 5 years firms relative market shares among drivers over age 25 and married males under 25 are inversely related to their deviations from the mean premiums in these driver classes the variance of real premiums decreases with the numberof firms in the market and increases with the real loss cost per car insured and the number of cars insured from these results we conclude that the price dispersion in automobile insurance in alberta is based on costly consumer search

turning a blind eye costly enforcement credible commitment and minimum wage laws in many countries non compliance with minimum wage legislation is widespread and authorities may be seen as having turned a blind eye to a legislation that they have themselves passed but if enforcement is imperfect how effective can a minimum wage be and if non compliance is widespread why not revise the minimum wage this paper examines a minimum wage policy in a model with imperfect competition imperfect enforcement and imperfect commitment and argues that it is the combination of all three that produces results which are consistent with a wide range of stylized facts that would otherwise be difficult to explain within a single framework we demonstrate that turning a blind eye can indeed be an equilibrium phenomenon with rational expectations subject to an ex post credibility constraint since credible enforcement requires in effect a credible promise to execute ex post a costly transfer of income from employers to workers a government with an objective function giving full weight to efficiency but none to distribution is shown paradoxically to be unable to credibly elicit efficiency improvements via a minimum wage reform

number of sellers average prices and price dispersion abstract a variety of models provide differing predictions regarding the effect of an increase in the number of competitors in a market seller density on prices and price dispersion we review different approaches to generating equilibrium price dispersion and then empirically estimate the relationship between seller density average product price and price dispersion in the retail gasoline industry using four unique gasoline price data sets controlling for station level characteristics we find that an increase in station density consistently decreases both price levels and price dispersion across four geographical areas

the impact of strategy on conflict a cross national comparative study of u s and japanese firms an empirical test of 290 u s and 653 japanese managers using the miles and snow typology provides a cross national examination of strategy s impact on conflict results substantially support the study s predictions and indicate that firms should 1 monitor their conflict handling mechanisms 2 emphasize integrative approaches and 3 appropriately use formalization for conflict handling despite a convergence of management practices globally findings indicate that considerable differences still exist between u s and japanese firms

output price markups and producer size abstract this paper examines how output prices and markups vary across the size distribution of producers it uses unique plant level data on physical output revenue and input expenditures for six homogeneous u s manufactured products the results reveal that for five of the six products output prices decline systematically with increases in plant size in the most extreme case corrugated boxes the smallest producers have prices that average 20 percent above the mean price while the largest producers average 10 percent below the mean at the other extreme the price dispersion for gasoline is small and unrelated to plant size plant specific markups of price over marginal cost vary across the size distribution of producers for five of the products in three cases they decline in two cases they increase and one product gasoline shows no systematic variation

equilibrium price distributions equilibrium price distributions for a homogeneous product consistent with individual incentives are investigated they arise in informationally imperfect markets in which the only primitive datum is the distribution of search costs it is shown that single multi and continuous price distributions are all viable long run phenomena depending on the nature of search costs a method for computing equilibrium price distributions is also provided jevons law of one price has long been an accepted dictum in economic theory in a classroom presentation it still serves sometimes implicitly as a major premise in many micro models of market interaction much of the descriptive theory as well as welfare analysis hinges on this assumption yet one s day to day experience reveals that price differentials are a viable phenomenon and that looking for lower prices may very well be a rewarding activity the prospects of eventually hitting a bargain and the resulting price reduction would more than compensate for the cost incurred during the search process moreover the existence of price dispersions appear to be an empirically stable phenomenon snapshots of markets for relatively homogeneous products reveal substantial and recurring price differentials stigler 1961 and pratt wise and zeckhauser 1979 for example report some evidence supporting this claim an important article by stigler 1961 focused economists attention on the crucial role played by the informational structure of markets it gave rise to the study of the

nonstandard foundations of equilibrium search models abstract we develop an equilibrium sequential search model which includes most of the literature as special cases in particular the model can accommodate heterogeneity in buyers search costs and demand functions and firms cost functions with general demand and cost functions we identify conditions which ensure existence of equilibrium in pure strategies utilizing recent progress in the theory of large games by khan and sun these conditions elucidate the essential structure of equilibrium search models although we focus on sequential search our methodology can be used for other classes of equilibrium search models as well

relationship between spatial agglomeration and hotel prices evidence from business and tourism consumers abstract in this paper we examine the relationship between number of local competitors and both the average and the dispersion of retail prices in urban hotels using a dataset from the metropolitan area of madrid spain by controlling for hotel characteristics and spatial factors we obtained results for each of the days in one week in line with predictions derived from the traditional monopolistic approach empirical results consistently indicate that a greater density of competitors implies a lower average and less dispersion of local prices moreover we found evidence which supports the idea that the effect of local agglomeration on average prices is particularly weaker at weekends this in turn indirectly suggests that within the metropolitan area there is a greater degree of substitution in hotel locations for tourism consumers than for business consumers

advertising intensity and welfare in an equilibrium search model i analyze an equilibrium search model in a duopoly setting with bilateral heterogeneities in production and search costs in which firms can advertise by announcing price i compare the market advertising level to the socially optimal level where i find that costly search can improve welfare and that firms may under or over advertise relative to the social optimum depending on the costs of search the results suggest that in markets with sufficiently low search costs firms are likely over advertising relative to the socially optimal level and vice versa for markets with sufficiently high search costs

austrian style gasoline price regulation how it may backfire in january 2011 a price regulation was established in the austrian gasoline market which prohibits firms from raising their prices more than once per day similar restrictions have been discussed in new york state and germany despite their intuitive appeal this article argues that austrian type policies may actually harm consumers in a two period duopoly model with consumer search i show that under the regulation firms will distort their prices intertemporally in such a way that their aggregate expected profit remains unchanged this implies that as some consumers find it optimal to delay their purchase due to expected price savings but find it inconvenient to do so a friction is introduced that decreases net consumer surplus in the market

the effects of cultural adaptation on business relationships americans selling to japanese and thais a 2 4 culture of participants degrees of cultural adaptation experimental design with 145 thai and 101 japanese professionals is used to investigate the effect of cultural adaptation on attraction and outcomes when americans adapt to japanese and thais this study extends the research of francis 1991 the curvilinear relationship between adaptation and attraction found in francis is not replicated for thais the relationship appears monotonic positive for japanese it reaches a plateau beyond moderate adaptation

a simple model of price dispersion abstract this article considers a simple stock flow matching model with fully informed market participants unlike the standard matching literature prices are assumed to be set ex ante when sellers pre commit themselves to sell their products at an advertised price the unique equilibrium is characterized by price dispersion due to the idiosyncratic match payoffs in a marketplace with full information this provides new insights into the price dispersion literature which instead commonly assumes that buyers are not perfectly informed and engage in a costly search

task success based on contingency fit of managerial culture and embeddedness the article extends research on the contingency of fit in international management at the level of managerial tasks foreign firms managerial tasks are embedded in two environments with different profiles and different managerial cultures fit them to ensure task success study 1 analyzes 18 critical incidents summarizes chinese and japanese managerial cultures and identifies three types of managerial tasks we hypothesize that task success depends on the fit between task type and the chosen managerial culture such that foreign firms can have their operational local and people tasks successfully completed using home host or integrated managerial cultures respectively study 2 tests our hypotheses using 112 critical incidents the fit pattern at the level of managerial tasks advances the contingency perspective in international management and equips managers with cultural agility to confront international challenges

equilibrium price dispersion in retail markets for prescription drugs this study seeks to establish the empirical importance of price dispersion due to costly consumer search by examining retail prices for prescription drugs posted prices in two geographically distinct markets are shown to vary considerably across pharmacies within the same market even after one controls for variation due to pharmacy differences pharmacy heterogeneity accounts for at most one third of the observed price dispersion the empirical analysis hinges on the observation that consumers incentives to price shop depend on characteristics of the drug therapy cross sectional patterns in price distributions across drugs are consistent with the predictions of a search model prices for repeatedly purchased prescriptions for which the expected benefits of search are highest exhibit significant reductions in both dispersion and price cost margins

strategic pricing consumer search and the number of firms discover prices there are three distinct price dispersed equilibria characterized by low moderate and high search intensity the effects of an increase in the number of firms on search behaviour expected prices price dispersion and welfare are sensitive i to the equilibrium consumers search intensity and ii to the status quo number of firms for instance when consumers search with low intensity an increase in the number of firms reduces search does not affect expected price leads to greater price dispersion and reduces welfare in contrast when consumers search with high intensity increased competition results in more search and lower prices when the number of competitors in the market is low to begin with but in less search and higher prices when the number of competitors is large duopoly yields identical expected price and price dispersion but higher welfare than an infinite number of firms a question that has received much attention in economic theory is how the number of competitors and market outcomes are related despite the existence of work showing the contrary see e g satterthwaite 1979 rosenthal 1980 the prediction that emerges from a market where firms interact in a cournot fashion has come to dominate economic thought namely that an increase in the number of competitors leads to larger aggregate production lower market price and improved market performance measured in terms of some social welfare criterion ruffin 1971 this paper challenges the generality of this belief by presenting an oligopoly model with consumer search where the equilibrium expected price may be constant increasing or nonmonotonic in the number of firms we present an economy with two types of consumers consumers who search for prices at no cost fully informed and consumers who must pay a fixed search cost for each price quotation they observe less informed 1 all buyers have the same willingness to pay for the good and buy either a single unit or nothing at all on the supply side of the market there are n firms producing a homogeneous good at constant marginal cost we analyse a one shot simultaneous move game firms set prices and consumers decide how many prices to search for at the same moment in time our model is essentially an oligopolistic version of burdett and judd 1983 where some consumers search costlessly in this model consumers search using a fixed sample size search strategy i e they choose the number of prices to observe before receiving any offer nonsequential search is appealing when consumers find it more advantageous to gather price information quickly morgan and manning 1985 this occurs when the search outcome is observed with delay and delay is costly for instance an mba graduate looking for a job 1 the presence in the model of consumers who search costlessly captures the fact that some people have a

classroom games a market for lemons abstract the incentives that arise in markets with asymmetric information are illustrated in the classroom exercise presented here student sellers choose both a quality grade and a price for their products initially both prices and grades for all sellers are posted and buyers select from these offerings in this full information setup the market prices and grades quickly reach efficient levels that maximize total surplus next although sellers continue to choose grades and prices only prices not grades are posted for buyers to see when they shop the grades and prices then fall to inefficiently low levels the observed market outcomes in this exercise can stimulate useful discussion of asymmetric information market failure and remedies such as quality standards and warranties

advertising and product quality in posted offer experiments advertising and product quality in posted offer experiments i introduction for years the federal trade commission ftc has attacked unfair and deceptive advertising recently it has turned its attention to errors of omission rather than commission by challenging agreements among sellers to limit advertising even when it is truthful one reason for eliminating advertising restrictions is to stimulate competition in the advertised dimension of the good or service for example price advertising may result in more price competition on the other hand professional associations argue that price competition causes product quality to deteriorate because sellers of high quality services are forced to match the lower prices of sellers of low quality products and through their codes professional associations have implicitly or explicitly discouraged some forms of advertising including price advertising restrictions of this nature still exist in some local markets although they have become the subject of ftc litigation 1 the quality deterioration argument of professional associations is plausible only when buyers are unable to observe quality prior to purchase 2 when buyers cannot distinguish quality moral hazard invites sellers to lower cost by providing lower quality adverse selection can result from price advertising causing lower cost products to drive out higher cost products as argued by akerlof 1970 the opposite point of view is that even when quality cannot be determined prior to purchase price advertising may enable sellers to signal quality and develop reputations 3 moreover transactions repeatedly involving the same buyers and sellers may enable buyers to form expectations about seller quality based on their experience that can make it worthwhile for a seller to provide higher quality the series of laboratory experiments described here permits the evaluation of market performance when buyers have very limited information the claim to be investigated is that price advertising prevents quality deterioration and improves market efficiency reputation formation through advertising is emphasized instead of other mechanisms such as warranties that may prevent quality deterioration 4 so that quality can be kept relatively neutral and easily understood by subjects we represent it as the grade of a commodity the structure underlying the experiments is based on holt s model of the determination of industry quality which is summarized in schmalensee 1979 demand is induced through the values for which buyers can redeem their purchases value is linearly related to grade so that no difference between average and marginal valuation of quality can arise to cause nonoptimal quality as it did in spence 1976 the production cost for each seller is quadratic in the grade selected by the seller therefore the efficient grade level is unique the most closely related experimental work on product quality decisions is reported in lynch miller plott and porter 1986 in their experiments sellers chose one of two quality levels prices were determined in an oral double auction efficient price and quality outcomes resulted when prospective buyers were given full information about quality removing the identities of sellers and allowing only post purchase quality information sometimes resulted in a lemons outcome in which sellers offer a low quality product even though the market would be more efficient with the production and sale of a high quality product private information tended to yield less efficient outcomes than full public information the posted offer experiments reported in this paper differ from the oral double auction experiments in lynch miller plott and porter because one of our objectives was to examine the effect of advertising restrictions on market efficiency in our experiments price advertising is implemented in a standard posted offer auction

queues not just mediocrity inefficiency in decentralized markets with vertical differentiation abstract we analyze a dynamic decentralized market with endogenous entry where in each period the active sellers supply one unit of an indivisible service at varying degrees of quality the customers that have entered the market are randomly matched with the active sellers and prices are set by complete information pair wise bargaining in its unique steady state the market leads to an excess diversity of quality and customers may have to suffer costly delays notably efficiency is not regained as per period delay costs disappear we also show that setting minimal quality standards such as licensing rules by a professional college will improve welfare and even consumer surplus relative to the free market whenever the inefficiency is caused by a large enough excess supply

the impact of collusion on price behavior empirical results from two recent cases abstract we use extended arch and garch models to examine the differences in the behavior of the first two moments of the price distribution during collusive and competitive phases of two recently discovered conspiracies citric acid and lysine according to our results the conspirators managed to raise prices by 9 and 25 cents per pound in the short run relative to non collusive periods also the variance of prices during the lysine conspiracy was lower and the variance of prices during the citric acid conspiracy was higher than during more competitive periods the proposed methodology may be used for antitrust screening and prosecution purposes

classroom games trading in a pit market this paper describes a classroom exercise that resembles trading in the pit of some financial and futures markets playing cards are used to induce supply and demand functions instructions and helpful hints are provided the exercise facilitates an understanding and appreciation of the robustness and efficiency of the textbook model of perfect competition

predation asymmetric information and strategic behavior in the classroom an experimental approach to the teaching of industrial organization abstract classroom market experiments can complement the theoretical orientation of standard industrial organization courses this paper describes various experiments designed for such courses and presents details of a multi market game with entry and exit in this experiment incumbents have a cost advantage in their home markets and mobile firms decide which market to enter after entry decisions are made firms choose prices and quantities to offer for sale predatory pricing is possible with this setup and the experiment can be used to motivate discussions of monopoly competition entry and efficiency other classroom experiments with an industrial organization focus are surveyed

an expectancy model of chinese american differences in conflict avoiding this paper develops an expectancy model for chinese american differences in conflict avoiding and tests this model using a scenario study with respondents from taiwan and the us our results show that a higher chinese tendency to avoid conflict is explained by higher chinese expectations that direct conflict will hurt the relationship with the other party and by greater concern for the other party among chinese it is not however explained by differences in the expected career costs benefits of good bad relations with others also chinese are more sensitive to hierarchy than americans so that avoiding is heightened more for chinese than for americans when the other party is of higher status qualitative results suggest that chinese american differences in time frames may also explain differences in avoiding implications for businesses and management are suggested journal of international business studies 2006 37 76 91 doi 10 1057 palgrave jibs 8400172

search costs and equilibrium price dispersion in auction markets abstract a leading explanation for price dispersion in posted price markets is search costs we incorporate this insight into a model of competing second price auctions similar to ebay by doing so we extend the narrow literature on competing auctions to capture price dispersion and grow the already large literature on price dispersion to include auctions we provide evidence on search costs and price dispersion using data collected from ebay identifying search costs by exploiting a discontinuity in the visibility of auctions due to ebay s search tool

the perverse effects of wage and price controls in search markets abstract this paper examines the effects of price ceilings and minimum wages on the performance of markets in which agents must invest in costly search to become informed about prices or wages in this context it is found that the market equilibrium may respond to changes in policy instruments in strikingly counterintuitive ways in particular the imposition of price ceilings and minimum wages may respectively result in consumer price increases and wage decreases thus an important implication of our analysis is that when unions fight to increase wages by raising the minimum wage they may paradoxically actually be reducing the average wage of its members

consumer protection and the incentive to become informed we discuss the impact of consumer protection policies on consumer incentives to become informed of the best deals available in the market in a market with costly consumer search we find that imposing a cap on suppliers prices reduces the incentive to engage in search with the result that prices paid by consumers both informed and uninformed may rise in a related model where consumers have the ability to refuse to receive marketing we find that this ability softens price competition and can make all consumers worse off

a model of market power in customer markets we develop a model for studying dynamic competition in environments with frictions that lead to partial lock in of customers to products the dynamic aspects associated with customer retention and acquisition introduce pricing incentives that do not exist in more traditional static product markets the proposed model while highly stylized maintains certain symmetry properties that allow us to obtain equilibrium existence and uniqueness we then study the comparative statics of the model and derive a closed form relationship between average equilibrium markups and the herfindahl index we illustrate how the model can be used by analyzing mergers in such a dynamic environment

consumer discrimination and self employment self employment rates and incomes differ significantly by race we show that these differentials arise in markets with consumer discrimination and incomplete information about the price of the good and the race of the seller equilibrium income distributions have two properties mean black incomes are lower than mean white incomes and the returns to ability are lower for black than for white sellers able blacks therefore are less likely to self select into the self employment sector than able whites using the 1980 census data we find that observed racial differences in the self employment income distributions are consistent with the theoretical predictions

when in rome the effects of cultural adaptation on intercultural business negotiations drawing on social identity and similarity attraction theories as well as empirical studies in intercultural communication hypotheses were developed to test the effects of three degrees of adaptive behaviors during intercultural buyer seller negotiations hypotheses covered both the positive and negative effects of adaptation on the adjudged interpersonal attractiveness of the adaptor these hypotheses were tested in two experimental studies using scenario based manipulations the first study looked at american subjects responses to adaptive behaviors of japanese business people to test the generalizability of these findings to a less familiar culture a replication looking at american subjects responses to adaptive behaviors of korean business people was also conducted the findings partially support the notion that moderate adaptation may be the optimal strategy in intercultural negotiations moderate adaptation was found to improve the adjudged attraction of the japanese business people relative to no adaptation and substantial adaptation however this finding was not replicated with korean business people

price price dispersion and number of sellers at a low entry cost shopbot abstract shopbots function as market intermediaries by providing unprecedented quantities of information to buyers and sellers this paper explores the role of market structure across shopbot mediated markets using an unbalanced panel of 399 digital camera models it extends prior work by using an ultra low entry cost site additionally allowing controls for life cycle and popularity effects we find a robust negative relationship between seller number and price which persists even as markets become crowded with sellers the results are capable of either an scp or a carlson mcafee heterogeneous cost interpretation but observed entry behaviour here is consistent with the latter

acting on anger cultural value moderators of the effects of consumer animosity the recent rise in protectionism and demonization of foreign countries has increased the risk of brands falling victim to the negative effects of consumer animosity or strong negative affect directed at a foreign country we investigate the role of cultural values as moderating the relationship between consumer animosity and willingness to buy the combined results of a meta analysis and six experiments in the us and china offer strong evidence that collectivism and long term orientation mitigate the negative effects of consumer animosity and support the contention that animosity s effect on willingness to buy is much stronger than on product judgments

product differentiation search costs and competition in the mutual fund industry a case study of s p 500 index funds we investigate the role that non portfolio fund differentiation and information search frictions play in creating two salient features of the mutual fund industry the large number of funds and the sizeable dispersion in fund fees in a case study we find that despite the financial homogeneity of s p 500 index funds this sector exhibits the fund proliferation and fee dispersion observed in the broader industry we show how extra portfolio mechanisms explain these features these mechanisms also suggest an explanation for the puzzling late 1990s shift in sector assets to more expensive and often newly entered funds an influx of highinformation cost novice investors

buyer search and price dispersion a laboratory study we study markets with costly buyer search in which sellers simultaneously post prices buyers costlessly observe one or with probability 1 q two of the posted prices and can accept one or pay to search again the experiment varies q the search cost and the number of buyers equilibrium theory predicts a unified very low high price for q 0 q 1 and predicts specific distributions of dispersed prices for q 1 3 and 2 3 actual prices conform closely to the predictions in some treatments buyers reservation prices are biased away from the extremes however and sellers prices have positive autocorrelation and cross sectional correlation

face and favor the chinese power game western research on interpersonal behavior patterns and rules of exchange needs to move beyond the assumption of isolated individuals socialized to make rational decisions on the basis of self inte

entry and price dynamics in a perfect foresight model abstract this paper studies firms entry and price dynamics in a model that combines the assumptions of free entry and perfect foresight with the hypothesis of consumer s loyalty postulated by phelps and winter the analysis of the transition to long run equilibrium reveals that in such a model the entry of firms is related to the difference between current prices and costs in relation to the growth of the firms output it is shown that the model is consistent with gibrat s law finally it is shown that the size distribution of firms approaches asymptotically a pareto distribution

from the editors student samples in international business research the jibs statement of editorial policy states that empirical submissions utilizing undergraduate student samples are usually discouraged wording is important here usually does not imply always this statement suggests that while student samples are appropriate in principle undergraduate ones are not except in unusual situations the purpose of this from the editors column is to discuss the pros and cons of student samples in international business ib research are student samples appropriate for developing and testing ib theories when are student samples appropriate and when are they not appropriate is there a difference between undergraduate and graduate samples what are the best practices this editorial is intended to provide ib researchers with guidelines as to when student samples and which types of student samples are appropriate in ib research

price distributions and competition considerable evidence demonstrates that significant dispersion exists in the prices charged for seemingly homogeneous goods this paper adopts a simple flexible equilibrium model of search to investigate the way the market structure influences price dispersion using the noisy search approach the paper demonstrates the effects of having a single large price leading firm with multiple outlets and a competitive fringe of small firms with one retail outlet each

income taxation in a frictional labor market a new model of wage dispersion is used to examine welfare aspects of income taxation the model retains the dynamics of wage posting models while exogenizing search effort therefore allowing more insight into policy issues the results highlight effects that standard analyses do not take into account the optimal income tax should depend on an incidence effect between workers and firms this incidence effect arises from firms trying to lower wages as much as possible an employment tax proves in certain cases to be the best method to encourage labor force participation

firm size distribution testing the independent submarkets model in the italian motor insurance industry this paper tests the presence of multiple independent submarkets in the italian motor insurance industry independence is motivated by administrative boundaries among provinces and by further locational reasons we find that the independence effects are sufficient to induce a minimum degree of inequality in the size distribution of firms once submarkets are aggregated these results are fully consistent with the predictions of sutton 1998 we also show that the degree of skewness in the firms size distribution is related to characteristics such as the population living in an area its density and the riskiness of a submarket