an experimental examination of competitor based price matching guarantees we use experimental methods to demonstrate the anti competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies our findings establish that when costs are symmetric price matching guarantees significantly increase market prices in markets with cost asymmetries guaranteed prices remain high relative to prices without the use of guarantees but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference lesser use of guarantees combined with lower average prices and slower convergence to the collusive level suggest that the mere presence of cost asymmetries may curtail collusive behavior

price discrimination through offers to match price in this paper a firm discriminates between two classes of customer who have a different cost of information by coupling a list price with an offer to match the pr ice of any other shop if the list price elsewhere is lower the firm will be successful in discrimination the list price of each firm is increasing in the number of sellers and the total sales are decreasi ng in the number of sellers furthermore if sellers coordinate they discriminate more efficaciously and increase their profits by increa sing their total sales copyright 1987 by the university of chicago

backtesting marginal expected shortfall and related systemic risk measures this paper proposes an original approach for backtesting systemic risk measures this backtesting approach makes it possible to assess the systemic risk measure forecasts used to identify the finan

price matching policy and the principle of minimum differentiation this paper shows that if duopolists are allowed to choose their product locations a price matching policy and their prices sequentially and independently both tacit collusion and minimum differentiation occur copyright 1995 by blackwell publishing ltd

on the competitive effects of price matching policies abstract this paper challenges the conventional wisdom that price matching policies lead to supracompetitive prices by reducing firms incentives to undercut rivals i argue that price matching and price beating policies are more appropriately viewed as a means of price discrimination and develop a model that demonstrates their use as such analysis of this model shows that in contrast to the results of the existing literature price matching and price beating may raise or lower equilibrium prices relative to the equilibrium in which firms may not adopt such policies

bank regulation property prices and early warning systems for banking crises in oecd countries abstract early warning systems ews for banking crises generally omit bank capital bank liquidity and property prices most work on ews has been for global samples dominated by emerging market crises where time series data on bank capital adequacy and property prices are typically absent we estimate logit crisis models for oecd countries finding strong effects from capital adequacy and liquidity ratios as well as property prices and can exclude traditional variables higher capital adequacy and liquidity ratios have a marked effect on the crisis probabilities implying long run benefits to offset some of the costs that such regulations may impose

public information and coordination evidence from a credit registry expansion this paper provides evidence that lenders to a firm close to distress have incentives to coordinate lower financing by one lender reduces firm creditworthiness and causes other lenders to reduce financing to isolate the coordination channel from lenders joint reaction to new information we exploit a natural experiment that forced lenders to share negative private assessments about their borrowers we show that lenders while learning nothing new about the firm reduce credit in anticipation of other lenders reaction to the negative news about the firm the results show that public information exacerbates lender coordination and increases the incidence of firm financial distress

valuing research leads bioprospecting and the conservation of genetic resources bioprospecting has been touted as a source of finance for biodiversity conservation recent work has suggested that the bioprospecting value of the marginal unit of genetic resources is likely to be vanishingly small creating essentially no conservation incentive this result is shown to flow specifically from a stylized description of the research process as one of brute force testing unaided by an organizing scientific framework scientific models channel research effort toward leads for which the expected productivity of discoveries is highest leads of unusual promise then command information rents associated with their role in reducing the costs of search when genetic materials are abundant information rents are virtually unaffected by increases in the profitability of product discovery and decline as technology improvements lower search costs numerical simulation results suggest that under plausible conditions the bioprospecting value of certain genetic resources could be large enough to s

the role of media in the credit crunch the case of the banking sector using a vector autoregression framework this paper investigates the dynamic relationship between the intensity of negative media speculation and the market performance of financial institutions evidence is provided that over the sub prime crisis period pessimistic coverage granger caused the returns on banking indices while causality in the opposite direction proved weaker these findings may imply that journalists not only report on the state of economic reality but also play an active role in creating it investors acting upon sentiment implicit in media reports would have been able to improve their investment performance as measured by sharpe ratios and jensen s alphas

price match announcements in a consumer search duopoly using a model of sequential search we show that announcements to price match raise prices by altering consumer search behavior first price matching diminishes firms incentives to lower prices to attract consumers who have no search costs second for consumers with positive search costs price matching lowers the marginal benefit of search inducing them to accept higher prices finally price matching can lead to asymmetric equilibria where one firm runs fewer sales and both firms tend to offer smaller discounts than in a symmetric equilibrium price increases grow in the proportion of consumers who invoke price matching guarantees and in the level of equilibrium asymmetry

on the incidence and variety of low price guarantees abstract this paper provides evidence of the incidence and variety of low price guarantees promises to match or beat a rival s price using data obtained from newspaper advertisements in 37 metropolitan areas in the united states we have a total of 515 low price guarantees in our sample we document their features and we infer firms motives and effects from these features the evidence suggests that the majority of low price guarantees are not consistent with their use as a facilitating device because they tend to apply only to rival firms advertised prices or they are associated with high hassle costs the evidence also suggests that price beating and price matching guarantees differ significantly in their features the former are associated with higher hassle costs apply disproportionately to rival firms advertised prices and are more likely to allow postsale search than are price matching guarantees

reflections on northern rock the bank run that heralded the global financial crisis in september 2007 television viewers and newspaper readers around the world saw pictures of what looked like an old fashioned bank run that is depositors waiting in line outside the branch offices of a united kingdom bank called northern rock to withdraw their money the previous u k bank run before northern rock was in 1866 at overend gurney a london bank that overreached itself in the railway and docks boom of the 1860s bank runs were not uncommon in the united states up through the 1930s but they have been rare since the start of deposit insurance backed by the federal deposit insurance corporation in contrast deposit insurance in the united kingdom was a partial affair funded by the banking industry itself and insuring only a part of the deposits at the time of the run u k bank deposits were fully insured only up to 2 000 pounds and then only 90 percent of the deposits up to an upper limit of 35 000 pounds when faced with a run the incentive to withdraw one s deposits from a u k bank was therefore very strong for economists the run on northern rock at first seemed to offer a rare opportunity to study at close quarters all the elements involved in their theoretical models of bank runs the futility of public statements of reassurance the mutually reinforcing anxiety of depositors as well as the power of the media in galvanizing and channeling that anxiety through the power of television images however the storyline of the northern rock bank run does not fit the conventional narrative on september 13 2007 the bbc s evening television news broadcast first broke the news that northern rock had sought the bank of england s support the next morning the bank of england announced that it would provide emergency liquidity support it was only after that announcement that is after the

dynamic duopoly with best price clauses this article investigates best price clauses as a strategic devise to facilitate collusion in a dynamic duopoly game best price clauses guarantee rebates on the purchase price if a customer finds a better price after his purchase two different price clauses are distinguished most favored customer and meet or release i examine the collusive potential of both clauses in a finite horizon duopoly model with homogeneous durable goods in each period new consumers enter the market i show that in this context meet or release clauses have a greater anticompetitive potential than most favored customer clauses

the creditor channel of liquidity crises this paper presents a model to study the transmission of liquidity shocks across financial institutions through the creditor channel in the model a borrower institution obtains funds from a large institutional lender and small investors when the large lender s asset market is hit by a liquidity shock it might decide to withdraw funding extended to the borrower the potential withdrawal by the large lender causes small investors to panic and to close positions even if the large lender does not facing funding problems the borrower has to cut its activities contributing to further shocks to the supply of market liquidity the original shock is exacerbated which reinforces withdrawals by all creditors the model helps explain how the spreading of liquidity shocks from the broker dealer sector to the hedge fund sector and the feedback contribute to a systemic crisis

valuing biodiversity for use in pharmaceutical research biodiversity prospecting has been touted as a mechanism for both discovering new pharmaceutical products and saving endangered ecosystems it is unclear what values may arise from such activities however evidence from transactions is incomplete and existing theoretical models are flawed we calculate an upper bound on the value of the marginal species even under favorable assumptions this bound is modest slightly modified assumptions lead to drastically lower estimates we extend our findings to the value of the marginal hectare of habitat and find that the incentives for habitat conservation generated by private pharmaceutical research are also at best very modest

output decisions and price matching theory and experiment we study the effects of price matching in a setting in which each firm selects both its price and output simultaneously we show that the availability of a price matching option leads to the cournot outcome in this setting our experimental study confirms this result in the laboratory our finding is a stark contrast to the one obtained in the standard price competition that the most likely market price in the presence of a price matching option is the monopolistic price in addition we show that price matching benefits consumers in markets with a large number of firms if a market has a few firms then the effects of price matching on consumers depend on the market demand and cost functions thus our study suggests that the effect of price matching depends on the strategic variables of the firms data and the online appendix are available at https doi org 10 1287 mnsc 2017 2788 this paper was accepted by eric anderson marketing

automated pricing rules in electronic posted offer markets i introduction electronic commerce affords the opportunity to automate the process by which buyers and sellers engage in an exchange at a mutually agreeable price for example buyers on the internet can use software agents to automate the gathering of information on price and other product attributes in online retail markets that are traditionally organized as posted offer markets 1 this technology obviously reduces the consumer transaction costs of comparing prices which presumably would induce stronger competition among sellers however as hal varian remarked in the e commerce magazine wired everybody thinks more information is better for consumers that s not necessarily true bayers 2000 215 the same technology that reduces consumer transaction costs can be employed by sellers to automate the monitoring of rivals prices which might mitigate or even overwhelm the procompetitive effect of reduced consumer search costs in addition electronic markets grant more than just ideal information on competitors pr ices with electronic commerce a seller can commit to implementing an automated algorithm that could possibly sustain tacitly collusive prices in this article we study the supply side effects of three automated pricing algorithms that use price information as an input that could be retrieved from consumer price gathering technology in an electronic market two of the three algorithms that we study have the theoretical potential to facilitate collusion low price matching and a trigger strategy the third and presumably more competitive algorithm which we refer to as undercutting is drawn from the common retail practice of beating competitors prices using the experimental method this article explores how sellers deploy these three automated pricing algorithms in electronic markets more specifically we ask 1 do sellers prefer to set their price manually or to adopt automated algorithms that adjust price more frequently 2 are markets with automated pricing algorithms more competitive or less competitive than markets with manually posted prices 3 does increased commitment to an automated pricing mechanism facilitate tacit collusion to study the impact of automated pricing on seller behavior we base our work on the model of price dispersion in retail markets by varian 1980 thus our article also explores how well a theory of mixed strategy pricing organizes the behavior of sellers in a market with a nearly continuous stream of differentially informed fully revealing customers 2 as a preview of the results we find that 1 sellers employ automated pricing algorithms more often than they manually set their own price 2a automated undercutting leads to prices similar to the game theoretic prediction 2b automated low price matching generates prices significantly higher than the game theoretic prediction 2c automated trigger pricing results in market prices below the game theoretic prediction and 3 greater commitment to automated low price matching shifts prices closer to the joint profit maximizing outcome the structure of the article is as follows section ii presents the three automated pricing algorithms we consider the experimental design and procedures are in section iii section iv presents and discusses our results and section v briefly concludes ii automated pricing algorithms the market environment is motivated by the model of sales in varian 1980 3 in this model there are n sellers that supply buyers who each desire to purchase at most one unit of a homogeneous product each seller has a commonly known constant marginal cost c of supplying a unit to a buyer and posts a price p which the buyer can accept or reject the private value v for each nonstrategic buyer is assumed to be a random variable drawn independently from a known uniform distribution with a support v v buyers differ based on the number of firms from which price quotes are received prior to making a purchasing decision

competitive price matching guarantees equilibrium analysis of the availability verification clause under demand uncertainty price matching guarantees involve a retailer matching the lower price of a competitor for an identical product in reality retailers often make such guarantees contingent on the verification of product availability at the competitor s location and decline a price match request if the product is not available there this creates certain consternation on the part of customers in this paper we investigate the availability contingency strategy from the perspectives of both the retailers and the customers our analysis shows that availability contingency clauses intensify inventory competition between retailers and reinstitutes price competition which is otherwise eliminated by unconditional price matching guarantees consequently despite what customers may think about the availability verification it actually increases their surplus on the other hand such a clause reduces profits and hence is not the equilibrium strategy for retailers subsequently we discuss how a likely customer behaviour pattern may be a plausible explanation regarding the use of the clause by the retailers in practice this paper was accepted by yossi aviv operations management

a macroprudential approach to financial regulation many observers have argued that the regulatory framework in place prior to the global financial crisis was deficient because it was largely microprudential in nature a microprudential approach is one in which regulation is partial equilibrium in its conception and aimed at preventing the costly failure of individual financial institutions by contrast a macroprudential approach recognizes the importance of general equilibrium effects and seeks to safeguard the financial system as a whole in the aftermath of the crisis there seems to be agreement among both academics and policymakers that financial regulation needs to move in a macroprudential direction in this paper we offer a detailed vision for how a macroprudential regime might be designed our prescriptions follow from a specific theory of how modern financial crises unfold and why both an unregulated financial system as well as one based on capital rules that only apply to traditional banks is likely to be fragile we begin by identifying the key market failures at work why individual financial firms acting in their own interests deviate from what a social planner would have them do next we discuss a number of concrete steps to remedy these market failures we conclude the paper by comparing our proposals to recent regulatory reforms in the united states and to proposed global banking reforms

a year of living dangerously the management of the financial crisis in 2008 there are many reasons to regret the decision of u s financial authorities to insert the government into the resolution of the investment bank bear stearns in march 2008 the federal reserve s use of its discount window built up false hope of future rescues paying off the uninsured creditors of bear stearns overcompensated them at the time and invited speculative attacks on the equity of similarly situated firms i will argue that the market seizure after lehman brothers decision to seek the protection of bankruptcy was an echo of the prior official decision to protect bear stearns

the role of demandable debt in structuring optimal banking arrangements demandable debt finance by banks warrants explanation because it entails costs of bank suspension liquidation and idle reserve holdings an explanation is developed in which demandable debt provides incentive compatible intermediation where the banker has comparative advantage in allocating investment funds but may act against the interests of uninformed depositors demandable debt attracts funds by giving depositors an option to force liquidation its usefulness in transacting follows from information sharing between monitors and nonmonitors copyright 1991 by american economic association

relationship lending under asymmetric information a case of blocked entry abstract a national bank with a low cost of capital can choose to enter a two period credit market and compete with incumbent banks to supply relationship loans to de novo entrepreneurs under short term contracting the terms on loan contracts are determined by market competition in the current period in this setting we find that the second period competitive pressure the national bank exerts on the incumbent banks turns out to give the incumbent banks a first period advantage when trying to attract new clients as a result the low cost bank may be blocked from entering the market

capital shortfall a new approach to ranking and regulating systemic risks the financial crisis of 2007 2009 has given way to the sovereign debt crisis of 2010 2012 yet many of the banking issues remain the same we discuss a method to estimate the capital that a financial firm would need to raise if we have another financial crisis this measure of capital shortfall is based on publicly available information but is conceptually similar to the stress tests conducted by us and european regulators we argue that this measure summarizes the major characteristics of systemic risk and provides a reliable interpretation of the past and current financial crises

effective price matching a comment abstract corts economic lett 47 1995 417 showed that when allowing for price beating policies in addition to price matching policies the competitive outcome prevails in lieu of monopoly pricing i show by expanding the strategy set further to include effective price strategies the possibility of monopoly pricing is restored

oligopolistic competition as a common agency game oligopolistic competition is analyzed in a complete information multi principal common agency framework where principals are firms supplying differentiated goods and the agent is a representative consumer we first propose a canonical formulation of common agency games and a parameterization of the set of equilibria based on the lagrange multipliers associated with the participation and the incentive compatibility constraints of each principal this is used to characterize the set of equilibria in the intrinsic and non intrinsic games the former includes the latter as well as the standard price and quantity equilibrium outcomes it may also include the collusive solution

succession financing in family firms business succession is one of the primary management challenges for family firms however many family firms fail at this task because of financial issues although a vast number of studies have investigated the succession process research thus far has failed to determine how and why family firms select particular forms of financing for succession related expenditures accordingly this study conceptually and empirically investigates succession financing we introduce a conceptual framework that investigates the reasons behind an owner manager s intent to use debt for succession financing specifically our model accounts for general and succession related personal factors however we also include a set of firm specific financing behavioral controls in our research the empirical results are derived from a sample of 187 german family firms and the results highlight financial knowledge attitudes succession experience and succession planning as significant determinants of the owner managers debt usage intentions the implications and avenues for future research are discussed

bubbles and crises the role of house prices and credit this paper utilizes quarterly panel data for 20 oecd countries over the period 1975 q1 2014 q2 to explore the importance of house prices and credit in affecting the likelihood of a financial crisis

public choice and the improvement of policy instruments for environmental management abstract currently used policy instruments have failed to halt environmental deterioration of sensitive ecological systems such as estuaries on the basis of efficiency criteria economists have made comprehensive recommendations for improving policy instruments the general rejection of efficiency based policy instruments indicates the need for a broader set of criteria for improving environmental management this paper suggests a public choice approach to environmental management under which the design of more effective policy instruments would be based not only upon economic efficiency but also upon scientific validity including ecological sustainability distributional equity and interest group acceptability examples are given for the chesapeake bay

globalisation and sustainability environmental kuznets curve and the wto abstract economic globalisation is seen by many as a driving force for global economic growth yet opinion is divided about the benefits of this process as highlighted by the wto meeting in seattle in late 1999 proponents of economic globalisation view it as a positive force for environmental improvement and as a major factor increasing the likelihood of sustainable development through its likely boost to global investment these proponents mostly appeal to analysis based on the environmental kuznets curve ekc to support their views about environmental improvement but ekc analysis has significant deficiencies furthermore it is impossible to be confident that the process of economic globalisation will result in sustainable development if weak conditions only are satisfied strong conditions probably need to be satisfied to achieve sustainable development and given current global institutional arrangements these are likely to be violated by the economic globalisation process global political action seems to be needed to avert a deterioration in the global environment and to prevent unsustainability of development this exposition demonstrates the limitations of ekc analysis identifies positive and negative effects of economic globalisation on pollution levels and highlights connections between globalisation and the debate about whether strong or weak conditions are required for sustainable development the article concludes with a short discussion of the position of wto in relation to trade and the environment and the seemingly de facto endorsement of wto of weak conditions for sustainable development it suggests that wto s relative neglect of environmental concerns is no longer politically tenable and needs to be reassessed in the light of recent developments in economic analysis the skew of economic growth e g in favour of developing countries is shown to be extremely important from a global environmental perspective

back to the future backtesting systemic risk measures during historical bank runs and the great depression abstract we evaluate the performance of two popular systemic risk measures covar and srisk during eight financial panics in the era before fdic insurance bank stock price and balance sheet data were not readily available for this period we rectify this shortcoming by constructing a novel dataset for the new york banking system before 1933 our evaluation exercise focuses on two challenges ranking systemically important financial institutions sifis and financial crisis prediction we find that covar and srisk meet the sifi ranking challenge that is they help identify systemic institutions in periods of distress beyond what is explained by standard risk measures up to six months before panics in contrast aggregate covar and srisk are only somewhat effective at predicting financial crises

on the use of low price guarantees to discourage price cutting abstract this paper formulates a novel test to assess whether and to what extent firms might be using low price guarantees to discourage their rivals from cutting prices the test is based on a comparison of paired observations of advertised prices that are set by competing firms at the same point in time on similar items where one price is set by a firm that has a low price guarantee and the other by a firm that does not have a low price guarantee using data on retail tire prices we find that the majority of paired observations involving firms that have price matching guarantees are consistent with what one would expect if firms were using them to discourage price cutting whereas the majority of paired observations involving firms that have price beating guarantees are not this suggests that price matching and price beating guarantees may be serving different purposes the evidence also suggests that guarantees that apply to advertised prices only may be serving different purposes than guarantees that apply to both advertised and selling prices

interest rate derivatives at commercial banks an empirical investigation abstract i analyze the effects of bank characteristics and macroeconomic shocks on interest rate risk management behavior of commercial banks my findings are consistent with hedging theories based on cost of financial distress and costly external financing banks with higher probability of financial distress manage their interest rate risk more aggressively both by means of on balance sheet and off balance sheet instruments as compared to the derivative users the derivative non user banks adopt conservative asset liability management policies in tighter monetary policy regimes finally i show that the derivative non user bank s lending volume declines significantly with the contraction in the money supply derivative users on the other hand remain immune to the monetary policy shocks my findings suggest that a potential benefit of derivatives usage is to minimize the effect of external shocks on a firm s operating policies

experimental duopolies under price guarantees in a symmetric differentiated experimental duopoly we test the ability of price guarantees pgs to raise prices above the competitive levels different types of pgs aggressive and soft price beating and price matching are implemented either as an exogenously imposed market rule or as a business strategy our results show that pgs may lead close to the collusive outcome depending on whether the interaction between duopolists is repeated and provided that the guarantee is not of the aggressive price beating type

property rights regimes and natural resources a conceptual analysis the term common property resource is an example of a term repeatedly used to refer to property owned by a government or by no one it is also used for property owned by a community of resource users such usage leads to confusion in scientific study and policy analysis in this paper we develop a conceptual schema for arraying property rights regimes that distinguishes among diverse bundles of rights ranging from authorized user to claimant to proprietor and to owner we apply this conceptual schema to analyze findings from a variety of empirical settings including the maine lobster industry

different selling strategies in bertrand oligopoly abstract i analyse a bertrand oligopoly game where firms can choose between selling strategies i price announcements ii price announcements and offers to price match i establish the set of nash equilibria and show that only the monopoly price nash equilibrium satisfies iterative dominance

matching own prices rivals prices or both many retailers promise that they will not be undersold by rivals and extend their promise to include their own future prices that is many retailers combine elements of both price matching guarantees and retroactive most favored customer clauses this is puzzling because the extant literature has shown that each practice independently has the potential to facilitate supracompetitive prices and thus one might think the two practices are substitutes in this paper we show that price matching guarantees and most favored customer clauses complement each other when offered unilaterally by a single firm and can lead to higher prices than either one could have facilitated by itself

price matching guarantees as a direct signal of low prices if consumers believe that stores offering price matching guarantees pmgs charge low prices high search cost consumers will purchase from pmg stores this leads pmg stores demand to be less pric

dynamic debt runs we develop a dynamic model of debt runs on a rm which invests in an illiquid asset by rolling over staggered short term debt contracts i e dierent contracts mature at dierent times we derive a unique threshold equilibrium in which creditors coordinate their asynchronous rollover decisions based on the rm s publicly observable and time varying fundamental the coordination problem ampli es the creditors concerns about the rm s future rollover risk created by its time varying fundamental and causes each maturing creditor to run ahead of others even when the current fundamental is substantially higher than its liability our model provides a set of implications on the roles played by volatility illiquidity and debt maturity in driving debt runs as well as on rms capital adequacy standards and credit risk

biodiversity and international stakes a question of access abstract this paper examines three main questions is it possible to create a market for genetic resources is it a perfectly or an imperfectly competitive market what impact could this market have on the management of biodiversity in the context of sustainable development i analyse the conditions for access and use of knowledge of genetic resources and the genetic resources themselves i then consider the consequences on the management of genetic resources and social welfare trends in the context of sustainable development i present product and technology transfers in terms of access and user rights i show that the lack of information on the quality of biological resources and on their value on both the demand and supply sides lead to an imperfect market model i examine how benefit sharing can be achieved via public research institutions in developed countries and the conditions of their access to private patent licences my main conclusion is that a valorisation of developing countries genetic resources is a means among others of accomplishing a sustainable management of biodiversity by an equitable access and benefit sharing from the use of biodiversity direct use of natural and biological resources valorisation of genetic resources development of new economic sectors etc furthermore it enables taking part in the economic and social development of these countries increasing the social welfare in a context of sustainable development by widening the access to genetic resources

deposit insurance and subsidized recapitalizations the 2007 2009 financial crisis saw a vast expansion in deposit insurance guarantees around the world and yet our understanding of the design and consequences of deposit insurance schemes is in its infancy we provide a new rationale for the provision of deposit insurance in our model the banking sector exhibits both adverse selection and moral hazard which implies that the social benefits of bank monitoring must for incentive reasons be shared between depositors and banks consequently socially too few deposits are made in equilibrium deposit insurance or equivalently bank recapitalization corrects this market failure we find that deposit insurance should be funded not by banks or depositors but out of general taxation the optimal level of deposit insurance varies inversely with the quality of the banking system hence when the soundness of the financial sector is uncertain governments should consider supporting deposit insurance schemes and undertaking subsidized recapitalizations

is financial inclusion good for bank stability international evidence abstract financial inclusion has become an important public policy priority following the recent global financial crisis yet we know very little of how it impacts soundness of the providers of financial services using an international sample of 2635 banks in 86 countries over the period 2004 12 we find that higher level of financial inclusion contributes to greater bank stability the positive association is particularly pronounced with those banks that have higher customer deposit funding share and lower marginal costs of providing banking services and also with those that operate in countries with stronger institutional quality the results are robust to instrumental variables analysis controlling for bank fixed effects alternative measures of financial inclusion among several other robustness tests our results highlight that the importance of ensuring inclusive financial system is not only a development goal but also an issue that should be prioritised by banks as such a policy drive is good for their stability

species preservation and biodiversity value a real options approach abstract we evaluate biodiversity in a real options framework when the resources in use are substitutable we examine optimal conservation decisions given that a biodiversity loss is irreversible and that future use values are uncertain while species substitutability has been shown to reduce the value of diversity we show that the flexibility associated with substitutability is a source of value marginal species value is decreasing in the number of species but rising and convex in the value of the marginal species as we show in the two species homogenous model increased volatility raises biodiversity value and a positive correlation between species values both reduces the value of the pool of species and the value of biodiversity the role played by the correlation between the value of a species and the value of other species is reminiscent of the beta of a financial asset just like an asset with a negative beta derives additional value by providing insurance against fluctuations in the market portfolio a species whose value tends to move in the opposite direction as the species in use derives additional value from its higher probability to be available for substitution if the value of the species in use diminishes

impact of the financial crisis on bank run risk danger of the days after abstract we examine the developments of depositor knowledge attitudes and behavior throughout the recent financial crisis and discuss their impact on bank run risk based on a self collected data set surveying depositors before 2007 at 2008 and after the peak of the crisis 2009 we observe a worrying dynamic pattern at the peak depositors knew more about deposit insurance placed more importance on deposit security and slightly raised their deposits however in the aftermath of the crisis the enhanced depositor knowledge proved to be non permanent while the increased importance of deposit security and the exposure of depositors persisted the proportion of completely uninformed strongly involved and highly exposed depositors who carry the highest risk of triggering a bank run was reduced around the peak of the crisis but rebounded strongly afterwards even exceeding pre crisis levels these findings point to a higher bank run risk in the aftermath than during the financial crisis

making long term economic growth more sustainable evaluating the costs and benefits currently traditional development issues such as economic stagnation poverty hunger and illness as well as newer challenges like environmental degradation and globalisation demand attention sustainable development including its economic environmental and social elements is a key goal of decisionmakers optimal economic growth has also been a crucial goal of both development theorists and practitioners this paper examines the conditions under which optimal growth might be sustainable by assessing the costs and benefits of growth key environmental and social aspects are considered the ecol opt growth 1 model analyses economic ecological interactions including resource depletion pollution irreversibility other environmental effects and uncertainty it addresses some important issues including savings investment technical progress substitutability of productive factors intergenerational efficiency equity and policies to make economic growth more sustainable a basic element of the sustainomics framework the empirical results support growing concerns that costs of growth may outweigh its benefits resulting in unsustainability basically in a wide range of circumstances long term economic growth is unsustainable due to increasing environmental damage nevertheless the model has many options that can be explored by policy makers to make the development path more sustainable as advocated by sustainomics one example suggests that government supported abatement programs are needed to move towards sustainable development since the model runs without abatement were infeasible the optimal rate of abatement increases over time abatement of pollution is necessary to improve ecosystem viability and increase sustainability further research is necessary to seek conditions under which alternative economic growth paths are likely to become sustainable

how useful is the marginal expected shortfall for the measurement of systemic exposure a practical assessment abstract we explore the practical relevance from a supervisor s perspective of a popular market based indicator of the exposure of a financial institution to systemic risk the marginal expected shortfall mes the mes of an institution can be defined as its expected equity loss when the market itself is in its left tail we estimate the dynamic mes recently proposed by brownlees and engle 2012 for a panel of 68 large us banks over the last decade and a half running panel regressions of the mes on bank characteristics we first find that the mes can be roughly rationalized in terms of standard balance sheet indicators of bank financial soundness and systemic importance we then ask whether the cross section of the mes can help to identify ex ante i e before a crisis unfolds which institutions are more likely to suffer the most severe losses ex post i e once it has unfolded unfortunately using the 2007 2009 crisis as a natural experiment we find that some standard balance sheet ratios are better able than the mes to predict large equity losses conditionally to a true crisis

threshold arch models and asymmetries in volatility this paper attempts to enlarge the class of threshold heteroscedastic models tarch introduced by zakoian 1991a we show that it is possible to relax the positivity constraints on the parameters of the conditional variance unconstrained models provide a greater generality of the paths allowing for nonlinearities in the volatility cyclical behaviour is permitted as well as different relative impacts of positive and negative shocks on volatility depending on their size we give empirical evidence using french stock returns

do low price guarantees guarantee low prices evidence from competition between amazon and big box stores it has long been understood in theory that price match guarantees can be anticompetitive but to date scant empirical evidence is available outside of some narrow markets this paper broadens the scope of empirical analysis studying a wide range of products sold on a national online market using an algorithm that extracts data from charts i obtain a novel source of data from online price trackers i examine prices of goods sold on amazon before and after two big box stores target and best buy announced a guarantee to match amazon s prices employing both difference in difference and regression discontinuity approaches i robustly estimate a positive causal effect of six percentage points the effect was heterogeneous with larger price increases for initially lower priced items my results support anticompetitive theories which predict price increases for amazon a firm that did not adopt the guarantee and are consistent with plausible mechanisms for the heterogeneous impact

research note consumer heterogeneity and competitive price matching guarantees price matching guarantees are widely used in consumer and industrial markets previous studies argue that they are a marketing tactic that facilitates implicit price collusion this is because once a store adopts this marketing tactic its rivals can no longer steal its customers by undercutting its price and hence they have little incentive to initiate price cuts while a store with price matching guarantees has no fear of losing customers to rivals price cuts it has every incentive to raise its own price to charge a higher price to its loyal consumers a growing body of legal literature uses this argument today to justify calls for antitrust actions against stores employing this marketing tactic however this theoretical conclusion baffles practitioners and industry experts in practice sellers typically embrace this marketing tactic in response to heavier competition and a growing bargain consciousness among shoppers the introduction of price matching guarantees by a store is frequently interpreted by industry observers as the initiation of a price war rather than a signal of price collusion this assertion is supported in many instances by the fact that stores that introduce price matching guarantees also roll back their prices and typically suffer subsequent loss of profits most ironically the favorite examples used by researchers to illustrate how price matching guarantees can enforce price collusion crazy eddie and nobody beats the wiz have subsequently either gone bankrupt or filed for federal bankruptcy protection in this study we show that price matching guarantees can indeed facilitate competition the expected prices and profits can be strictly lower when all stores adopt price matching guarantees than when they are not allowed to this is because the adoption of price matching guarantees generates not only a competition dampening effect which has been recognized in the literature but also a competition enhancing effect this latter effect comes from the fact that price matching guarantees encourage price search by those consumers who prefer to shop at a particular store but are mindful of saving opportunities these consumers will have incentives to obtain the rival store s price when their favorite store offers price matching guarantees to avail themselves of the lowest possible price at their favorite store as a result price matching guarantees reduce the number of purchases at the store from those consumers who would have paid the full price and thus prompt a store to price more aggressively to bid for more incremental sales this competition enhancing effect can more than offset the competition dampening effect in markets where consumers differ in their price search costs and store loyalty thus our study casts doubt on the advisability of blanket prohibition on price matching guarantees our argument relies only on consumer segmentation and on the phenomenon of periodic sales both of which are common in retail markets we arrive at our conclusion by incorporating bargain shoppers and opportunistic loyals into the standard sales promotion models in contrast the past literature on price matching guarantees ignores the ubiquitous phenomenon of sales in retail markets and overlooks those consumers who prefer to shop at a particular store but are alert to saving opportunities as a result it is troubled by two awkward conclusions on the one hand price matching guarantees simply remove rivals incentives to undercut in price and hence also their incentives to run sales this implies that the adoption of price matching guarantees in a market will eliminate the phenomenon of sales which is obviously counterfactual on the other hand in equilibrium no consumer actually invokes price matching guarantees as each player has incentives to close any price gap in the market this is obviously false based on our casual observations and our conversations with store managers theoretical research on the subject thus far has been overwhelmingly one sided and empirical or experimental studies are conspicuously lacking we hope that our conclusion will spark further research in both directions a healthy debate will broaden our perspective on an issue of great importance in formulating public policies and in managerial decision making