the spatial and temporal diffusion of house prices in the uk abstract this paper provides a method for the analysis of the spatial and temporal diffusion of shocks in a dynamic system we use changes in real house prices within the uk economy at the level of regions to illustrate its use adjustment to shocks involves both a region specific and a spatial effect shocks to a dominant region london are propagated contemporaneously and spatially to other regions they in turn impact on other regions with a delay we allow for lagged effects to echo back to the dominant region london in turn is influenced by international developments through its link to new york and other financial centers it is shown that new york house prices have a direct effect on london house prices we analyse the effect of shocks using generalised spatio temporal impulse responses these highlight the diffusion of shocks both over time as with the conventional impulse responses and over space

are there reasons against open ended research into solar radiation management a model of intergenerational decision making under uncertainty solar radiation management srm has been proposed as a means of last resort against dangerous climate change we propose a stylized model of intergenerational decision making on srm research greenhouse gas abatement and srm deployment under uncertainties about a the extent of future climate damage and b effectiveness and potential harmful side effects of srm open ended research may reveal either that srm effectively reduces climate damage or that it would cause more harm than benefits we find that srm research increases the likelihood of deployment slippery slope and derive conditions that it decreases abatement effort in expectation moral hazard neither of these provides a rationale against srm research though the rational decision is to perform srm research unless i discounting is hyperbolic and ii the absolute prudence of expected climate damage is smaller than absolute risk aversion these results generalize to the case where srm research also provides information on climate sensitivity

the economics of investor protection isds versus national treatment abstract investor state dispute settlements isds are supposed to protect foreign investors against domestic policies causing unjustified harm this paper scrutinizes the effects of isds and national treatment provisions in a two period model where foreign investment is subject to a hold up problem it shows that isds may increase welfare but comes with additional regulatory distortions in the first period a national treatment provision avoids these regulatory distortions but implies entry distortions because it makes the hold up problem also apply to domestic firms if the domestic regulatory framework applies to many domestic firms a national treatment provision welfare dominates isds

modeling regional economic dynamics spatial dependence spatial heterogeneity and nonlinearities abstract spatial modeling of economic phenomena requires the adoption of complex econometric tools which allow us to deal with important methodological issues such as spatial dependence spatial unobserved heterogeneity and nonlinearities in this paper we describe some recently developed econometric approaches i e spatial autoregressive semiparametric geoadditive models which address the three issues simultaneously we also illustrate the relative performance of these methods with an application to the case of house prices in the lucas county

the hyperbolic consumption model calibration simulation and empirical evaluation ur preferences for the long run tend to conflict with our short run behavior when planning for the long run we intend to meet our deadlines exercise regularly and eat healthfully but in the short run we have little interest in revising manuscripts jogging on the stairmaster and skipping the chocolate souffleala mode delay of gratification is a nice long term goal but instant gratification is disconcertingly tempting this gap between long run intentions and short run actions is apparent across a wide range of behaviors including saving choices a 1997 survey found that 76 percent of respondents believe they should be saving more for retirement looking only at respondents who believed they were at an age where you should be seriously saving already the survey found that 55 percent reported being behind in their savings and only 6 percent reported being ahead farkas and johnson 1997 the report on the survey concluded t he gaps between people s atti tudes intentions and behavior are troubling and threaten increased insecurity and dissatisfaction for people when they retire americans are simply not doing what logic and their own reasoning suggests they should be doing a 1993 luntz webber merrill lynch survey found similar answers when baby boomers were asked what percentage of your annual household income do you think you should save for retirement and what percentage of your annual

expropriation and direct investment abstract the paper considers a model in which private foreign investors make direct long lived capital investments in a small developing country that is subject to stochastic shocks to production depending upon the preferences of the host country we find that expropriation can occur because of either desperation or opportunism we show that under reasonable assumptions increased investment makes expropriation less likely to occur and that the level of investment chosen by atomistic foreign investors may be non optimal

foreign direct investment intra firm trade and ownership structure abstract asymmetric information about true opportunity cost in trade between a multinational and its foreign affiliate can alleviate the hold up problem in foreign direct investment selling shares in the affiliate to locals is also beneficial because it increases the parent multinational s information rent that is protected from a host government s confiscatory taxation

tax competition when governments lack commitment excess capacity as a countervailing threat consider a multinational firm that can produce for the world market from two countries in each country the firm has to make a costly ex ante investment in capacity after which each government chooses a tax rate and then the firm determines output levels if there were only one country there would be the standard timeinconsistency problem the government would set a confiscatory tax ex post the firm would realize this ex ante and no investment would be made the interesting point of this paper is that the situation is very different when there are two countries the firm invests in both countries so as to gain leverage ex post if the firm holds more capacity than is needed to meet world demand then this induces tax competition for capacity utilization among governments ex post because the firm can threaten to serve the market at least partially from a plant in a different country competition leads to low enough tax rates to justify the initial investment in excess capacity when capacity costs are sufficiently low when capacity costs are too high the firm will not invest at all as the standard timeinconsistency problem suggests thus the paper generates and combines tax competition and lack of government commitment within a single framework the above logic provides also a novel argument for becoming a multinational firm there is some evidence in support of the strategic use of excess capacity for example general motors gm announced it will build almost identical plants in several risky countries which allows gm to shift production easily at the same time the newly established capacity will probably exceed gm s sales another application is the problem of how multinationals export oil from the caspian sea the caspian sea is surrounded by politically unstable countries multinationals started to build and lobby for multiple pipelines through several countries in order to keep transit fees low these and other applications are discussed in more detail in section v the paper sheds new light on the relationship between multinational firms and host governments on the one hand a multinational firm can be viewed as the powerful agent in the relationship because the firm decides in which country to invest eager governments often offer substantial tax benefits in order to attract investment this view is underlying the literature on tax competition see for example john d wilson 1986 dan a black and william h hoyt 1989 ian king et al 1993 on the other hand and in a separate literature multinational firms are portrayed as the potential victims of host governments who may renege on tax promises after the firm has made a sunk investment and has become partially immobile see for example eric w bond and larry samuelson 1989 chris doyle and sweder van wijnbergen 1994 jonathan thomas and tim worrall 1994 hence the host government is the powerful agent and this may lead to underinvestment if anticipated by the firm 2 while both views capture elements of truth it is unsatisfactory that our understanding of the relationship seems to department of economics university of colorado boulder co 80309 e mail janeba colorado edu this research was undertaken while i was at indiana university in bloomington i am grateful to mike baye susanne janeba dave schmidt greg shaffer jay wilson and two anonymous referees as well as participants at the stanford institute for theoretical economics 1998 and workshop participants at the universities of bonn colorado indiana michigan munich pennsylvania state and toronto for very helpful comments the usual disclaimer applies l in a different context patrick j kehoe 1989 considers also tax competition after a private sector decision is made in his model however atomistic individuals decide on savings and cannot influence the degree of tax competition 2 it should be noted that in the second literature strand tax holidays are sometimes derived endogenously in an infinite horizon game tax holidays help overcome lack of commitment see for instance doyle and van wijnbergen 1994

large investors regulatory taking and investor state dispute settlement abstract this paper offers an economic analysis of an international investor state dispute settlement regime isds in markets with large investors it identifies a reason for strategic overinvestment by the domestic industry leading to permissive regulation in the absence of isds an ideal investor state dispute settlement arrangement efficiency oriented transaction cost free with untouchable fully reliable and unbiased judges has positive and negative effects in this framework it generates an equal level playing field for domestic and foreign investors but it magnifies an existing overinvestment problem and may reduce world welfare the results explain anecdotal evidence according to which isds that protects foreign investors is liked by the domestic industry and disliked by other interest groups in the host country

estimating markups and market conduct with multidimensional product attributes we demonstrate how to estimate a model of oligopoly pricing when products are multi dimensionally differentiated we provide an empirical counterpart to recent theoretical work on product differentiation using specifications informed by economic theory we estimate price cost margins for products differentiated in many dimensions

on market integration and the development of institutions the case of international commercial arbitration abstract this paper suggests that the institutional basis necessary to support efficient international trade is provided not only by treaties among national governments but also by international coalitions of private agents international commercial arbitration is an important example of these private coalitions the paper reviews the provisions and the practice of international arbitration and presents a general equilibrium model of the relationship between the expansion of international trade and the adoption of arbitration the model shows that arbitration alters the size and composition of markets while at the same time responding to exogenous changes in trade

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

the taking of land when should compensation be paid the analysis focuses on the question of whether the payment of compensation for land taken by eminent domain is efficient when the taking decision is independent of land use zero compensation is efficient but full compensation is not when the project decision is no longer independent of land use and can be affected by investor decisions neither compensation rule is generally efficient because of the moral hazard problem with risk averse consumers and risk neutral firms the previous conclusions remain essentially unchanged however when the project decision rule involves a budgetary fiscal illusion additional compensation may be necessary to correct the incentives facing the project decision maker

spatial differentiation and vertical mergers in retail markets for gasoline this paper studies an empirical model of spatial competition applied to gasoline markets the main feature is to specify commuting paths as the locations of consumers in a hotelling style model as a result spatial differentiation depends in an intuitive way on the structure of the road network and the direction of traffic flows the model is estimated using panel data on the quebec city gasoline market and used to evaluate the consequences of a recent vertical merger difference in difference and counterfactual simulation methods are compared and the results to a large extent validate the assumptions of the demand model jel g34 l13 l42 l81 q41 r41

lumpy price adjustments a microeconometric analysis based on a reduced form state dependent pricing model with random thresholds we specify and estimate a nonlinear panel data model with an unobserved factor representing the common cost or demand components of the unobserved optimal price using this model we are able to assess the relative importance of common and idiosyncratic shocks in explaining the frequency and magnitude of price changes in the case of a wide variety of consumer products in belgium and france we find that the mean level and variability of the random thresholds are key for explaining differences across products in the frequency of price changes we also find that the idiosyncratic shocks represent the most important driver of the magnitude of price changes supplementary materials for this article are available online

to be consumed with moderation abstract we study the optimal behavior of a hyperbolic discounting agent who has incomplete information about his own preferences and can only learn them through consumption we show that even if moderate current consumption and moderate future consumption always dominates abstinence the agent may optimally decide not to consume as a commitment device against inefficient learning that would lead to future excesses this provides a rationale for why smokers gamblers or compulsive buyers stick to second best personal rules of behavior such as abstinence without invoking standard habit formation arguments we also study how urges modify the strategy of the individual

mergers with differentiated products the case of the ready to eat cereal industry traditional merger analysis is difficult to implement when evaluating mergers in industries with differentiated products i discuss an alternative which consists of demand estimation and the use of a model of postmerger conduct to simulate the competitive effects of a merger i estimate a brand level demand system for ready to eat cereal using supermarket scanner data and use the estimates to 1 recover marginal costs 2 simulate postmerger price equilibria and 3 compute welfare effects under a variety of assumptions the methodology is applied to five mergers two of which occurred and for which i compare predicted to actual outcomes

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

dynamic pricing in retail gasoline markets supergame models of tacit collusion show that supportable price cost margins increase with expected future collusive profits ceteris paribus as a result collusive margins will be larger when demand is expected to increase or marginal costs are expected to decline using panel data on sales volume and gasoline prices in 43 cities over 72 months we find behavior consistent with tacit collusion in retail gasoline markets controlling for current demand and cost current margins increase with expected next month demand and decrease with expected next month cost the results are not consistent with intertemporal l inkages due to inventory behavior or customer loyalty

price competition in u s brewing this study utilizes a brand level dataset that captures a unique natural experiment a 100 increase in the excise tax to evaluate different pricing models in the u s beer industry to assess the plausibility of different models the increase in marginal cost resulting from the tax increase is exploited observed prices in the post increase period are compared to the prices that should be observed under various pricing models three types of models are analyzed bertrand nash leadership and collusion results indicate that extreme cases of collusion can be confidently ruled out while several models may explain the observed prices equally well

monopolistic competition and preference diversity approach our model is especially attractive because it starts from economic primitives a specification of the set of possible individual preference patterns it shows how specific properties of the distribution of preferences translate into properties of aggregate demand this allows us to understand the relationship between the distribution of preferences and the degree to which the market introduces biases in product selection this paper presents a general model of the demand for differentiated products which has as special cases two of the most popular approaches used to analyse welfare and competition in monopolistically competitive markets the model of spatial competition on the circle and the model of symmetric aggregate demand the circle model is attractive because both demand and costs have a definite and easy to visualize physical foundation and because it is tractable salop 1979 provides an exemplary modem analysis with this model one can analyze the relationship between the optimal amount of product variety and the amount which a monopolistically competitive market will support in many plausible cases competition produces too much variety such a strong conclusion raises questions of robustness almost simultaneously spence 1976 and dixit and stiglitz 1977 developed an alternative approach to monopolistic competition based upon the chamberlinian assumption of symmetry see also shubik 1959 rather than specifying a distribution of preferences and deriving demand through aggregation as did salop and his predecessors these authors started by specifying a symmetric aggregate benefit function indicating how social welfare depends on the amounts of the various products supplied both spence and dixit stiglitz were able to show that the welfare conclusions from the circle model were not robust depending on the functional form of the benefit function equilibrium may entail either excessive or insufficient product variety 1 the assumption of symmetric demand has proven fruitful in the analysis of many economic problems it is therefore natural to ask what distribution of tastes would give

regional housing price cycles a spatio temporal analysis using us state level data kuethe t h and pede v o regional housing price cycles a spatio temporal analysis using us state level data regional studies a study is presented of the effects of macroeconomic shocks on housing prices in the western united states using quarterly state level data from 1988 1 to 2007 4 the study contributes to the existing literature by explicitly incorporating locational spillovers through a spatial econometric adaptation of vector autoregression spvar the results suggest these spillovers may granger cause housing price movements in a large number of cases spvar provides additional insights through impulse response functions that demonstrate the effects of macroeconomic events in different neighbouring locations in addition it is demonstrated that including spatial information leads to significantly lower mean square forecast errors kuethe t h et pede v o la variation cyclique regionale du prix du logement une analyse geographico temporelle des donnees sur les etats aux e u regional s

mergers brand competition and the price of a pint abstract mergers in the uk brewing industry have reduced the number of national brewers from six to four the number of brands in contrast has remained relatively constant we analyze the effects of mergers on brand competition and pricing brand level demand equations are estimated from a panel of draft beers to model brand substitution possibilities we estimate the matrix of cross price elasticities semiparametrically our structural model is used to assess the strength of brand competition along various dimensions and to evaluate the mergers in particular we compute equilibria of pricing games with different numbers of players

a spatial merger estimator with an application to school district consolidation abstract this paper develops a spatial merger estimator to explain political integration generally and then applies this method to a wave of school district mergers in the state of iowa during the 1990s our estimator is rooted in the economics of matching and thus accounts for three important features of typical merger protocol two sided decision making multiple potential partners and spatial interdependence rather than simply explaining when a particular region is likely to experience a wave of political integration our method allows us to explore the factors driving which specific subregional mergers take place this allows us to explore how those districts that merge choose with which of their neighbors to do so our results highlight the importance of state financial incentives for consolidation economies of scale diseconomies of scale and a variety of heterogeneity measures in this particular application we also demonstrate the power of our estimator relative to existing estimators to detect a statistically significant role for heterogeneity factors while our application is limited to school district consolidation our method can be adapted to include the salient features of many spatial integration problems

voting for protection does direct foreign investment influence legislator behavior the political economy of trade protection has long been of interest to economists and policy makers the idea that levels of protection may be endogenous with trade flows has been a particularly important issue in the literature in general the endogenous protection literature postulates that import penetration will cause domestic interests to lobby more intensely for protection thus higher levels of import penetration lead to increased protection as a result a number of papers see for example arye l hillman 1982 wolfgang mayer 1984 robert e baldwin 1985 stephen p magee et al 1989 ronald d fischer 1992 have established that foreign firms will import less under a regime of endogenous protection than one where the level of protection is exogenous to trade flows on the empirical side daniel trefler 1993 finds that ignoring the endogeneity of trade and protection understates the impact of u s protection on imports by a magnitude of ten this abstract was borrowed from another version of this item

competition and collusion in the american automobile industry the 1955 price war movements in total quantity and in quality adjusted price suggest a supply side shock in the american automobile market in 1955 this paper tests the hypothesis that the shock was a transitory change in industry conduct a price war the key ingredients of the test are alternative equilibrium models of oligopoly under product differentiation in nonnested cox tests of hypotheses a collusive solution is sustained in 1954 and in 1956 while a competitive solution holds in 1955 the result does not appear to be an artifact since it is robust in tests against alternative specifications copyright 1987 by blackwell publishing ltd

spillovers and international competition for investments abstract two jurisdictions compete to attract shares of the investment budget of a large multinational enterprise whose investments confer positive spillovers on national firms the firm has private information about its efficiency and about spillovers it is shown that the firm may be harmed by tax competition relative to a cooperative tax agreement tax competition may induce excessive investments in the country where the positive spillover effects are lowest also with sufficiently asymmetric spillovers investments under competition will be excessively spread out not properly concentrated to the country where spillovers would be largest

exogeneity tests of market boundaries applied to petroleum products us antitrust law makes market definition and the calculation of marketshare statistics an integral part of the determination of the anticompetitive impact of a merger because markets frequently overlap however market definition is rarely an easy task a statistical test that can be used as an aid in defining markets is proposed here time series techniques are used to test if price in one region is exogenous to the process that determines price in another the rejection of exogeneity can be an indication that the two regions are economically linked and thus may belong to a common geographic market the test is applied to petroleumproduct prices from various regions of the united states time series techniques have long been appreciated by macroeconomists the uses to which they have been put range from testing for the exogeneity of variables used in the construction of macroeconomic models sims 1972 for example to discovering empirical regularities in macroeconomic data without imposing a priori structure on the observations ashenfelter and card 1982 for example in contrast these techniques have not been so

the value of information when preferences are dynamically inconsistent the paper reviews the main findings on individual decision making under time inconsistent preferences incomplete information and different learning environments first when agents choose whether to learn or not avoiding costless information can be their optimal strategy strategic ignorance predicts a systematic bias in the agents perceived payoff second when information flows exogenously as in the literature on investment under uncertainty agents may undertake irreversible investments anticipating expected losses such decisions are taken only as a commitment device against the acquisition of future information undesirable from the current perspective furthermore several equilibria coexist the agent will succeed in avoiding investments with losses or not depending on the degree of trust on his future behavior third under learning through consumption abstention can be part of an equilibrium strategy in activities where moderate consumption if feasible would yield a higher payoff c 2000 elsevier science b v all rights reserved

on the extent of the market wholesale gasoline in the northeastern united states this paper develops the classical view of the extent of markets by introducing explicitly in the analysis the concept of arbitrage costs arbitrage or transaction costs imply that market boundaries are essentially stochastic while a set of products or regions may have binding arbitrage conditions i e may be in the same market at a given point in time they may not at another thus in defining a market the probability that a set of agents or regions would h3ve binding arbitrage conditions has to be assessed this paper develops an econometric methodology to estimate the transaction costs required to arbitrage among a given set of products as well as the probability that that set of products would be bound by binding arbitrage condi tions finally the methodology is applied to wholesale gasoline in the northeastern part of the united states address for communications pablo t spiller herbert hoover memorl l bldg 9348 stanford ca 94305

spatial price competition a semiparametric approach we investigate the nature of price competition among firms that produce differentiated products and compete in markets that are limited in extent we propose an instrumental variables series estimator for the matrix of cross price response coefficients demonstrate that our estimator is consistent and derive its asymptotic distribution our semiparametric approach allows us to discriminate among models of global competition in which all products compete with all others and local competition in which products compete only with their neighbors we apply our semiparametric estimator to data from u s wholesale gasoline markets and find that in this market competition is highly localized

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

decreasing impatience a criterion for non stationary time preference and hyperbolic discounting despite recent interest in hyperbolic discounting there has been little discussion of exactly what property of time preferences is instantiated by hyperbolic or quasi hyperbolic functional forms the paper revives an earlier proposal in prelec 1989 that the key property is prattarrow convexity of the log of the discount function which corresponds to decreasing impatience di at the level of preferences di provides a natural criterion for assessing the severity of departure from stationarity in that greater di is equivalent to more choices of dominated options in two stage decision problems as well as greater convexity of the log of the discount function inefficient choices may arise as intentional precommitments or as unintended reversals of preference by naive agents

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

self confidence and personal motivation the maintenance and enhancement of self esteem has always been identified as a fundamental human impulse philosophers writers educators and of course psychologists have all emphasized the crucial role played by self image in motivation affect and social interactions the aim of this chapter is to bring these concerns into the realm of economic analysis and show that this has important implications for how agents process information and make decisions conversely the tools of economic modelling can help shed light on a number of apparently irrational behaviours documented by psychologists

the role of spatial demand on outlet location and pricing abstract in this article the authors consider the problem of outlet pricing and location in the context of unobserved spatial demand the analysis constitutes a scenario in which capacity constrained firms set prices conditional on their location demand and costs this enables firms to develop maps of latent demand patterns across the market in which they compete the analysis further suggests locations for additional outlets and the resultant equilibrium effect on profits and prices using bayesian spatial statistics the authors apply their model to seven years of data on apartment location and prices in roanoke va they find that spatial covariation in demand is material in outlet choice the 95 spatial decay in demand extends 3 6 miles in a region that measures slightly more than 9 5 miles they also find that capacity constraints can cost complexes upward of 100 per apartment as they predict price elasticities and costs are biased downward when spatial covariance in demand is ignored costs a

demand for differentiated products discrete choice models and the characteristics approach we propose a specific characteristics framework in order to construct linkages between alternative conceptual approaches to modelling product differentiation first it is shown that a demand system which satisfies the gross substitutes property imposes specific requirements on the locations of products in particular the dimension of the characteristics space must be larger than or equal to the number of products minus one we then identify a method for casting a given demand system subject to certain restrictions into our characteristics framework this is illustrated for the logit probit and linear probability models of discrete choice theory finally we find a characteristics representation of the ces representative consumer

intertemporal tradeoffs for gains and losses an experimental measurement of discounted utility this article provides a parameter free measurement of utility in intertemporal choice and presents new and more robust evidence on the discounting of money outcomes intertemporal utility was concave for gains and convex for losses consistent with a hypothesis put forward by loewenstein and prelec 1992 discount rates declined over time but less so than previously observed under the assumption of linear utility for approximately 40 of our subjects constant discounting provided the best fit the remaining 60 were most consistent with harvey s 1986 power discounting our data provide little support for the popular quasi hyperbolic model which is widely used in economics today we observed an asymmetry in the discounting of gains and losses that unlike earlier findings cannot be explained by a framing effect

strategic ignorance as a self disciplining device we analyse the decision of an agent with time inconsistent preferences to consume a good that exerts an externality on future welfare the extent of the externality is initially unknown but may be learned via a costless sampling procedure we show that when the agent cannot commit to future consumption and learning decisions incomplete learning may occur on a markov perfect equilibrium path of the resulting intra personal game in such a case each agent s incarnation stops learning for some values of the posterior distribution of beliefs and acts under self restricted information this conduct is interpreted as strategic ignorance all equilibria featuring this property strictly pareto dominate the complete learning equilibrium for any posterior distribution of beliefs

when the weak win the role of investment in environmental lobbying abstract old and environmentally damaging industries often lobby effectively for less stringent regulations and are slow to adopt new and cleaner technologies this paper explains the lobbying success of these industries in terms of the strategic role of investment as a credible commitment device it is demonstrated that if governments are predisposed to special interest groups underinvestment in new technology enables firms to lobby more effectively such industries are shown to be better placed to extract policy concessions despite contributing less to the government in political donations the analysis therefore suggests that political considerations may provide a significant incentive for firms to reject environmentally beneficial investments even when these lower production costs

semi structural models of advertising competition we propose a semi structural discrete choice model that can be used to estimate static or dynamic decision rules it is particularly useful in strategic contexts when games involve a rich set of choices when private information is correlated and when one wants to uncover the effect of historic behavior on for example prices sales and profits we apply our discrete choice estimator to study decision rules for a dynamic game of price and advertising competition and we evaluate the long run consequences of those rules

product differentiation and oligopoly in international markets the case of the u s automobile industry this paper develops and estimates a model of the u s automobile industry on the demand side a discrete choice model is adopted that is estimated using micro data from the consumer expenditure survey the estimation results are used in conjunction with population weights to derive aggregate demand on the supply side the automobile industry is modelled as an oligopoly with product differentiation equilibrium is characterized by the first order conditions of the profit maximizing firms the estimation results are used in counterfactual simulations to investigate two trade policy issues the effects of the ver and exchange rate pass through

international agreements economic sovereignty and exit abstract we develop a model in which realisations of an ex ante uncertain domestic policy environment can make it attractive to a sovereign nation to renege on an international agreement we show in a fairly general setting in which the likelihood of exit is affected by the degree of cooperation that the possibility of exit reduces the optimal degree of initial cooperation full cooperation will never be optimal and the optimal degree of cooperation will never be such as to squeeze out any possibility of exit however an increase in global uncertainty may imply an increase in cooperation when exit risks are already large to begin with

measuring the diffusion of housing prices across space and over time how fast and how long and to what magnitude does a change in housing prices in one region affect its neighbors in this paper i apply a time series technique for measuring impulse response functions from local projections to a spatial autoregressive model of housing prices for a dynamic panel of california counties the data reveal that the diffusion of regional housing prices across space lasts up to two and half years this result and the econometric techniques employed should be of interest not only to housing and regional economists but to a variety of applied econometricians as well copyright 2009 john wiley sons ltd