why do suppliers charge larger buyers lower prices the phenomenon of input suppliers charging larger buyer firms relative to smaller buyer firms lower prices is commonly explained in terms of supplier economies of scale supplier competition for larger buyers and the larger bargaining power of larger buyers this paper provides an alternative explanation and shows that the observed direction of differential pricing can benefit the supplier by lowering the level of tacit collusion its buyers can sustain in their output market this result also provides a new mechanism through which a ban on price discrimination by input suppliers may lower consumer welfare

equilibrium properties of auctions and alternative procedures for allocating transferable permits abstract this paper examines the equilibrium properties of a range of auctions and related procedures placing emphasis on the types of procedures that are likely to be of special interest in environmental management applications nash equilibrium properties are first derived for a very general class of auctions for multiple homogeneous or heterogeneous objects or permits next it is shown that given appropriate assumptions three broad classes of public allocation procedures that do not generate revenues for the government would yield participants equal expected profits these classes are 1 incentive compatible auctions where bidders receive equal lump sum refunds 2 non incentive compatible procedures where refunds are a function of participants bids and 3 free initial distribution of permits on a lump sum basis followed by trading via a competitive market the applicability of the general results is then demonstrated by examining the particular non incentive compatible fair division procedure originally suggested by knaster finally implications of the theoretical results for applications including the allocation of transferable discharge permits and water rights are discussed

the role of firm size in bilateral bargaining a study of the cable television industry we examine the effect of buyer merger on bilateral negotiations between a supplier and n buyers merger may have bargaining effects in addition to the usual efficiency effects the effect of merger on the buyers bargaining position depends on the curvature of the supplier s gross surplus function merger enhances worsens the buyers bargaining position if the function is concave convex based on a panel of advertising revenue in the cable television industry our estimates indicate that the gross surplus function for suppliers of program services is convex this result suggests that cable operators integrate horizontally to realize efficiency gains rather than to enhance their bargaining position vis a vis program suppliers

effective sub simulation free upper bounds for the monte carlo pricing of callable derivatives and various improvements to existing methodologies abstract we present a new non nested approach for computing additive upper bounds for callable derivatives using monte carlo simulation it relies on the regression of greeks computed using adjoint methods we also show that it is possible to early terminate paths once points of optimal exercise have been reached a natural control variate for the multiplicative upper bound is introduced which renders it competitive to the additive one in addition a new bi iterative family of upper bounds is introduced which takes a stopping time an upper bound and a martingale as inputs

technology adoption under seed access constraints and the economic impacts of improved pigeonpea varieties in tanzania dry land legumes well adapted to drought prone areas have largely been neglected in the past despite the good opportunities they offer for income growth and food and nutritional security for the poor this study evaluated the adoption and impact of two farmer and market preferred and disease resistant pigeonpea varieties that were developed and promoted in semi arid tanzania the new varieties were resistant to fusarium wilt a fungal disease devastating the crop however farmers wanting to adopt new varieties did not adopt due to seed access constraints and under developed seed delivery systems adoption of new varieties is therefore analyzed using an augmented double hurdle model that allows estimating variety adoption conditional on seed access thresholds accounting for the additional information on sample separation the study identifies the crucial role of seed access local supply extension education participatory decision making capital and household assets in determining adoption the social economic benefits of the technology and policies for improved seed access were further analyzed using the extended economic surplus method dream model even under restrictive assumptions overall discounted benefits were found to be quite attractive indicating the need for additional efforts to scale up the success story analysis of changes in research benefits from relaxing the seed access constraint showed that net gains would increase by up to 30 if farmer access to improved seeds can be assured smallholder farmers are the major beneficiaries along with consumers and rural net buyers who gain from productivity induced lower market prices

environment market share and market power in this paper we develop a process model relating market share to firm profits in particular we specify average price and average cost equations as a function of previous year market share position changes in market share environmental conditions and interactions of environmental conditions with the lagged market position and market share change variables we estimate these equations using pims data after controlling for unobservable factors our results suggest that firms with high market shares derive no extra market power benefits except if they operate in environments with little buyer power instead environmental factors and changes in market share most strongly influence price and cost an analysis of the market share associated with maximal firm profits indicates that for the majority of firms in our sample steadily increasing market share does not always associate with increasing profits giving credence to the proposition that more market share is not always better

impact of modern agricultural technologies on smallholder welfare evidence from tanzania and ethiopia this paper evaluates the potential impact of adoption of improved legume technologies on rural household welfare measured by consumption expenditure in rural ethiopia and tanzania the study utilizes cross sectional farm household level data collected in 2008 from a randomly selected sample of 1313 households 700 in ethiopia and 613 in tanzania the causal impact of technology adoption is estimated by utilizing endogenous switching regression this helps us estimate the true welfare effect of technology adoption by controlling for the role of selection problem on production and adoption decisions our analysis reveals that adoption of improved agricultural technologies has a significant positive impact consumption expenditure in per adult equivalent terms in rural ethiopia and tanzania this confirms the potential role of technology adoption in improving rural household welfare as higher consumption expenditure from improved technologies translate into lower poverty higher food security and greater ability to withstand risk an analysis of the determinants of adoption highlighted inadequate local supply of seed access to information and perception about the new cultivars as key constraints for technology adoption

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

estimating demand for local telephone service with asymmetric information and optional calling plans in this paper i study the theoretical and econometric implications of agents uncertainty concerning their future consumption when a monopolist offers them either a unique mandatory nonlinear tariff or a choice in advance from a menu of optional two part tariffs agents uncertainty is resolved through individual and privately known shocks to their types in such a situation the principal may screen agents according to their ex ante or ex post type by offering either a menu of optional tariffs or a standard nonlinear schedule the theoretical implications of the model are used to evaluate a tariff experiment run by south central bell in two cities in kentucky in 1986 the empirical approach explicitly accounts for the existence of informational asymmetries between local telephone users and the monopolist leading to different nested econometric specifications under symmetric and asymmetric information the empirical evidence suggests that there exists a significant asymmetry of information between consumers and the monopolist under both tariff regimes all expected welfare components failed to increase with the introduction of optional tariffs for the estimated value of the parameters copyright 2002 wiley blackwell

the sensitivity of returns to research calculations to supply elasticity returns to research are thought to be robust under alternative supply elasticity assumptions we show both conceptually and numerically how advances in approximating social benefits make returns to research sensitive to the supply elasticity despite this greater sensitivity these advances retain conceptual and practical advantages we make recommendations for dealing with the increased sensitivity copyright 2002 oxford university press

countervailing power and price transparency we investigate whether improved transparency about prices may increase the countervailing power exercised by buyers of an intermediate good in a model with an informed manufacturer that sells to both informed and uninformed firms we show that full transparency cannot be part of equilibrium due to the strategic effect of the resulting informational spillover transparency policies introduce a distortion for informed segments and are unsuccessful in completely removing the distortion from the uninformed segment welfare effects are hence ambiguous and depend on the weight assigned to uninformed markets our results thus cast further doubt on the value of transparency

insurer hospital bargaining negotiated discounts in post deregulation connecticut this paper uses unique data from the state of connecticut to examine discounting patterns in the state s hospital industry for the years following deregulation 1995 1998 the data provide a rare opportunity to study payer level differences in negotiated discounts for hospital services in addition to presenting descriptive evidence on how discounts vary across payers payer types and hospital types this study uses matched revenue data to analyze the economic determinants of discount magnitudes payer size appears to affect bargaining power but the economic significance of the effect is small the data exhibit patterns consistent with a bargaining explanation in which discount magnitudes depend critically on payers abilities to channel patients to hospitals with which favorable discounts have been negotiated

policies for african seed enterprise development abstract the commercial seed sector has been slow to develop in sub saharan africa the paper examines the major impediments and identifies areas in which seed policies can be strengthened seed enterprise development has been hampered by regulatory frameworks that favor parastatal enterprises and that inhibit commercial innovation in addition government and donor projects provide large amounts of free or subsidized seed that further discourages seed enterprise development in addition to regulatory reform and the curtailment of many seed distribution projects there are other policy changes that need to be implemented national agricultural research institutes need to invest more resources in promoting their varieties and helping to stimulate commercial seed production greater emphasis is required on regional strategies for public plant breeding and private seed marketing national policies need to strengthen input marketing capacity and infrastructure finally donors governments and ngos should shift from trying to encourage village level commercial seed production and instead strengthen farmers capacities to assess new varieties and to be effective consumers of commercial inputs

symbiosis vs crowding out the interaction of formal and informal credit markets in developing countries abstract it is a common observation in many developing countries that enterprises are active borrowers in both formal and informal credit markets we propose a model in which the formal sector s superior ability in deposit mobilization is traded off against the informational advantage that lenders in the informal sector enjoy the formal sector can screen borrowers by providing only partial financing for projects thereby forcing borrowers to resort to the informal sector for the remainder of the loan we use the model to predict how the market structure responds to changes in the environment and we consider the policy implications of various forms of government intervention

hiring and leasing with nonlinear prices this paper examines the problem of a monopolist setting an optimal nonlinear pricing schedule in the face of consumers of unknown type who arrive randomly over time and self select a choice of hire period the major determinant of pricing policy is the customer arrival distribution with the overall level of price higher than in the atemporal yield management nonuniform pricing solution by a margin which increases with the average frequency with which potential customers arrive by contrast the solution is generally fairly insensitive to variations in the time rate of discount although there is a tendency for the rate of price discount to increase with increases in the time discount rate

fast delta computations in the swap rate market model abstract we develop an efficient algorithm to implement the adjoint method that computes sensitivities of an interest rate derivative to different underlying rates in the co terminal swap rate market model the order of computation per step of the new method is shown to be proportional to the number of rates times the number of factors which is the same as the order in the libor market model

a dynamic theory of countervailing power in this article i develop a model of an infinitely repeated procurement auction with one buyer and several sellers the buyer can accumulate a backlog of unfilled orders which similar to a boom in demand forces the sellers to collude on a low price to prevent undercutting if the buyer s cost of shifiing its consumption over time is low enough then the extent of collusion is bounded away from the joint profit maximizing level even for discount factors approaching one the model is extended to allow for multiple buyers large buyers are shown to obtain lower prices from the sellers buyer mergers increase pro t for all buyers not just the merging pair at the expense of the sellers in contrast buyer growth through addition harms buyers that do not grow and benefits sellers

are there systematic gender differences in the adoption of sustainable agricultural intensification practices evidence from kenya this paper uses sex disaggregated survey data at the plot level to test whether there are systematic gender differences in the adoption of multiple sustainable intensification practices sips in kenya we analyze plot level adoption decisions of sips by male female or joint plot managers within the household controlling for household characteristics asset wealth and land quality factors that condition investments in intensification options using a multivariate probit model we find gender differences in the adoption pattern for some sips compared to male plot mangers female managers are less likely to adopt minimum tillage and animal manure in crop production indicating the existence of certain socioeconomic inequalities and barriers for female farmers however we find no gender differences in the adoption of soil and water conservation measures improved seed varieties chemical fertilizers maize legume intercropping and maize legume rotations

targeting bias and expected impact of complex innovations on developing country agriculture evidence from malawi agronomic analyses of new technologies are often conducted under carefully controlled research station programs or trials managed by self selected farmers oftentimes the technologies are then scaled up with minimal evaluation under real world conditions yet the interim step between agronomic trials and large scale promotion is crucial to generate evidence on the social and economic impact of technologies that is both internally valid and generalizable the article focuses on a participatory action research program in malawi designed to test and identify scalable technology options to intensify the smallholder sector and contribute to poverty reduction and food and nutrition security we examine the socioeconomic characteristics of farmers testing technologies and find evidence of systematic targeting of better endowed farmers after controlling for observable differences using matching and a doubly robust estimator we find evidence of early positive effects on maize yield and harvest value although placebo tests suggest possible selection on unobservables we note that attention should be given to program design and household characterization to better define and improve targeting criteria technology selection and external validity

correlated demand shocks and price wars during booms the supergame theoretic model of price competition rotemberg and saloner 1986 is re examined in the case of serially correlated demand shocks the equilibrium price is shown to exhibit the same counter cyclical movement as in the i i d case if the discount factor and the number of firms satisfy certain relationship

revenue implications of money creation under leviathan most governments possess a monopoly franchise in the creation of money economists provide an analytical justification for this institutional arrangement either in terms of the use of monetary aggregates for macro economic stabilization or in terms of the alleged inability of competitive markets to generate tolerably efficient monetary results any complete case for the government s monetary monopoly must however depend on a comparison of market and political arrangements a comparison that requires predictions about how governments are likely to behave once a monopoly franchise is assigned similarly such predictions are crucial in evaluating restrictions that might be imposed on the government s exercise of its money creation power in designing a monetary constitution in the analysis of political arrangements the revenue implications of the money creation power are probably more significant than considerations of either macro economic stability or optimality in the money supply although those revenue implications are incidental to demonstrating the nature of market failure in monetary arrangements they are fundamental in understanding how the government might exploit a monopoly in money creation once granted our interest in the revenue effects of money creation stems from a broader study of constitutional restrictions on the revenueraising authority of government see our book the power to create money is naturally encompassed in this restrictions on the revenue raising power must embody restrictions on the power to create money consequently the fiscal constitution has important implications for the monetary constitution in this paper we examine both the revenue implications of money creation and desirable consitutional restrictions on the money creation power within the context of a specific model of political processes

optimal labour contracts under asymmetric information an introduction the review of economic studies has instituted a new series of lectures to be given annually by a younger british economist at the association of university teachers of economics meetings the choice of lecturer is determined by a panel whose members are currently professors hahn mirrlees and nobay this paper is a revised version of the first lecture in the series it was presented at the aute meeting held at the university of surrey in april 1982 and was refereed in the usual way mak

group purchasing nonlinear tariffs and oligopoly abstract loyalty discounts are nonlinear tariffs that condition rebates or marginal prices on meeting aggregate purchase or market share targets these discounts are widespread and are often the impetus for consumers to form buying groups or group purchase organizations gpos this paper models the competitive effects of the introduction of a gpo into a market within which the preferences of the gpo s members are horizontally differentiated while nonlinear tariffs are an effective way for a monopolist to extract consumer surplus when two suppliers compete using such schedules the results are far more competitive in comparison to simple bertrand nash competition with linear tariffs this result holds when the product of each of the suppliers is attractive to a substantial portion of consumers in our model the nonlinear schedule puts all customers in play to a degree that contrasts sharply with the competition at the margin characteristic of constant per unit prices moreover competing in nonlinear tariffs removes allocative inefficiency that can result from single price competition

peanut research and poverty reduction impacts of variety improvement to control peanut viruses in uganda a procedure is developed and applied for predicting ex ante impacts of agricultural research on aggregate poverty using as an example the poverty reducing impact of peanut research in uganda market level information on economic surplus changes is combined with a procedure for allocating income changes to individual households characteristics of farmers that affect their likelihood of technology adoption are used to create a technology adoption profile associated changes in poverty resulting from adoption are computed using poverty indices predicted income changes at the household level are aggregated to the market level and reconciled with calculations of economic surplus changes

cost functions in non linear pricing abstract this paper compares the optimal selling strategies with symmetric and asymmetric information when monopolist s cost function depends both on individual and aggregate production we show how standard underproduction and higher exclusion with incomplete information are affected

practical policy iteration generic methods for obtaining rapid and tight bounds for bermudan exotic derivatives using monte carlo simulation abstract we introduce a set of improvements which allow the calculation of very tight lower bounds for bermudan derivatives using monte carlo simulation these tight lower bounds can be computed quickly and with minimal hand crafting our focus is on accelerating policy iteration to the point where it can be used in similar computation times to the basic least squares approach but in doing so introduce a number of improvements which can be applied to both the least squares approach and the calculation of upper bounds using the andersen broadie method the enhancements to the least squares method improve both accuracy and efficiency results are provided for the displaced diffusion libor market model demonstrating that our practical policy iteration algorithm can be used to obtain tight lower bounds for cancellable cms steepener snowball and vanilla swaps in similar times to the basic least squares method

monopoly with incomplete information recent theoretical research on principal agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other s actions here we concentrate on the former constraint and consider the case of a single principal the monopolist the main contribution is to show that under a separability assumption strong conclusions can be drawn about the nature of optimal incentive schemes although the primary focus is on optimal quantity discounts in a monopolized market the results also shed light on related topics such as optimal income taxation and commodity bundling

optimal nonuniform prices we consider optimal nonuniform pricing schedules where the price depends upon the amount purchased such schedules are regularly used by public utilities and other services welfare optimal nonuniform prices are related to the theory of optimal uniform prices developed by ramsey we characterize situations in which upward or downward discontinuities in pricing schedules are optimal our results are applicable to a number of related problems including optimal taxation insurance and incentives economic theory has confined most of its attention to markets with uniform prices in which the price per unit charged is invariant to the level of a customer s purchases this focus is warranted when goods are resellable since any attempt to charge nonuniform prices could be circumvented by reselling amongst customers but when goods are not resellable nonuniform prices are not only possible but common public utilities have declining block pricing with lower unit charges for large levels of consumption many agencies providing services including communications transportation even education use two part pricing with a fixed entry or retainer charge and a further charge per unit consumption nonuniform price schedules can be expected to be ever more common as services become a larger fraction of total output the increasing prevalence of nonuniform pricing policies have made them the focus of recent public and economic attention oi 1971 feldstein 1972 and ng and weisser 1974 have examined optimal two part pricing policies leland and meyer 1976 examine block pricing and show by example that optimal welfare policies may require nonuniform prices if zero profit constraints are binding in this paper we consider arbitrary nonuniform pricing policies using variational techniques two part and block pricing schedules are of course special cases of the environment we consider the work most closely related to our examination is the seminal paper by spence 1978 and subsequent analysis by roberts 1979 spence however does not pay explicit attention to the key role played by constraints on optimal pricing schedules roberts considers upward price discontinuities which lead to bunching of consumers at a given level of consumption but not downward price discontinuities which lead to regions in which no consumer chooses to consume gaps bunching or gaps may appear in the optimal price schedule even when underlying demand and cost functions are smooth and well behaved the prevalence of discontinuous pricing schedules e g the block pricing structures of public utilities argues that these questions are of practical as well as theoretical interest

the simple economics of extortion evidence from trucking in aceh this paper tests whether the behavior of corrupt officials is consistent with standard industrial organization theory we designed a study in which surveyors accompanied indonesian truck drivers on 304 trips during which they observed over 6 000 illegal payments to police soldiers and weigh station attendants using plausibly exogenous changes in the number of checkpoints we show that market structure affects the level of illegal payments we further show that corrupt officials use complex pricing schemes including third degree price discrimination and a menu of two part tariffs our findings illustrate the importance of considering the market structure for bribes when designing anticorruption policy

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

buyers miscoordination entry and downstream competition this article shows that buyers coordination failures might prevent entry in an industry with an incumbent firm and a more efficient potential entrant if there were a single buyer or if all buyers formed a central purchasing agency coordination failures would be avoided and efficient entry would always occur more generally exclusion is less likely the lower the number of buyers for any given number of buyers exclusion is less likely the more fiercely buyers compete in the downstream market first intense competition may prevent miscoordination equilibria from arising second in cases where miscoordination equilibria still exist it lowers the maximum price that the incumbent can sustain at such exclusionary equilibria buyers have experienced increased concentration in many sectors in particular grocery retailing 1 2 this trend has triggered a wide debate on the effects of buyer power 3 we contribute to this debate by studying how concentration and competition among buyers affect the possibility of entry by a new upstream supplier in an industry characterised by scale economies in our model buyers fragmentation may lead to a situation where a new upstream firm does not manage to enter a market although endowed with lower marginal costs than an incumbent firm when several buyers decide independently from which supplier to purchase miscoordination equilibria may arise where all buyers buy from the incumbent even if the entrant sets a lower price if all buyers address the incumbent none of them has an incentive to deviate that is to switch to the entrant anticipating that a single order would not allow the

when are local incentive constraints sufficient we study the question of whether local incentive constraints are sufficient to imply full incentive compatibility in a variety of mechanism design settings allowing for probabilistic mechanisms we give a unified approach that covers both continuous and discrete type spaces on many common preference domains including any convex domain of cardinal or ordinal preferences single peaked ordinal preferences and successive single crossing ordinal preferences local incentive compatibility suitably defined implies full incentive compatibility on domains of cardinal preferences that satisfy a strong nonconvexity condition local incentive compatibility is not sufficient our sufficiency results hold for dominant strategy and bayesian nash solution concepts and allow for some interdependence in preferences

a reduced form optimal nonlinear income tax problem abstract for a finite population with quasilinear preferences it is shown how mirrlees optimal nonlinear income tax problem can be simplified to a reduced form problem involving only the allocation of the consumption good this result is a finite version of a proposition established in the continuum by s lollivier and j c rochet

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

managed care s price bargaining with hospitals research has shown that managed care mc slowed the rate of growth in health care spending in the 1990s primarily via lower unit prices paid however the mechanism of mc s price bargaining has not been well studied this article uses a unique panel dataset with actual hospital prices in massachusetts between 1994 and 2000 to examine the sources of mc s bargaining power i find two significant determinants of price discounts first plans with large memberships are able to extract volume discounts across hospitals second health plans that are more successful at channeling patients can extract greater discounts patient channeling can add to the volume discount that plans negotiate

intertemporal quality discrimination of a durable good monopolist abstract consider a durable good monopolist facing the technology constraint that when he introduces a new product he cannot produce a cheaper variant without a time lag we show that the qualities of his high end and low end products are higher than their efficient quality levels

bilateral monopolies and incentives for merger the paper presents a model of duopoly in which firms acquire inputs through bilateral monopoly relations with suppliers it combines a bargaining model with a duopoly model to examine how input pri

the loss leader is a turkey targeted discounts from multi product competitors abstract i show that multi product firms can compete for their more profitable customers by setting lower margins on goods that are purchased primarily by them effectively offering them discounts without offering these discounts to less profitable customers this suggests a theory of multi product pricing in which a good s profit margin is inversely related to the profitability of the customers who purchase it this theory i provides one explanation for firms offering lower prices to larger customers and ii suggests that loss leader pricing may allow firms to compete more vigorously for more profitable customers this can explain why stores sell turkeys as loss leaders at thanksgiving but may not discount flowers on mother s day or candy on valentines day

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

adoption of improved wheat varieties and impacts on household food security in ethiopia this article evaluates the impact of the adoption of improved wheat varieties on food security using a recent nationally representative dataset of over 2000 farm households in ethiopia we adopted endogenous switching regression treatment effects complemented with a binary propensity score matching methodology to test robustness and reduced selection bias stemming from both observed and unobserved characteristics we expand this further with the generalized propensity score gps approach to evaluate the effects of continuous treatment on the response of the outcome variables we find a consistent result across models indicating that adoption increases food security and farm households that did adopt would also have benefited significantly had they adopted new varieties this study supports the need for vital investments in agricultural research for major food staples widely consumed by the poor and efforts to improve access to modern varieties and services policies that enhance diffusion and adoption of modern wheat varieties should be central to food security strategies in ethiopia

an empirical analysis of fertilizer use in pakistan one of the stylized facts in developing countries is the wide variation in agricultural per acre input and output levels across farm households here we focus on the variation in the level of chemical fertilizer applied in particular to high yielding wheat the model used to explain the variation in fertilizer input across farms incorporates the process by which zeros are generated in particular differentiating between households who do not apply because of lack of access and those who do not apply out of choice we find that access is positively correlated with farm size but that among users per acre fertilizer levels decrease with farm size we interpret the latter by appealing to input choice under uncertainty with this interpretation our results suggest that although larger farms have a higher level of non stochastic wealth which in the presence of decreasing absolute risk aversion has the effect of increasing fertilizer intensity with farm size the presence of increasing relative risk aversion means that the net relationship between farm size and fertilizer intensity is negative this latter affect appears to dominate any tendancy for higher fertilizer intensity on larger farms arising from better knowledge or irrigation facilities

off farm labour allocation decisions in small scale rural households in zimbabwe the double hurdle model is used to analyse the off farm labour decisions of small scale agricultural household members in the shamva district of zimbabwe the approach permits the joint modelling of the decision to participate in the labour market and the decision regarding the amount of time allocated to work results indicate that a number of variables notably gender education and assets indeed have effects which are qualitatively and quantitatively different in terms of participation and hours worked overall the empirical analysis confirms the importance of individual characteristics such as gender and education and household farm characteristics e g land area accessible to the household productive assets remittances and the agricultural terms of trade in influencing the labour market decisions of rural household members

group buying on the web a comparison of price discovery mechanisms web based group buying mechanisms are being widely used for both business to business b2b and business to consumer b2c transactions we survey currently operational online group buying markets and then study this phenomenon using analytical models we build on the literatures in information economics and operations management in our analytical model of a monopolist offering web based group buying under different kinds of demand uncertainty we derive the monopolist s optimal group buying schedule under varying conditions of heterogeneity in the demand regimes and compare its profits with those that obtain under the more conventional posted price mechanism we further study the impact ofproduction postponement by endogenizing the timing of the pricing and production decisions in a two stage game between the monopolist and buyers our results have implications for firms choice of price discovery mechanisms in e markets and for the scheduling of production and pricing decisions in the presence and absence of scale economies of production

impact of tissue culture banana technology on farm household income and food security in kenya while tissue culture tc technology for vegetative plant propagation is gradually gaining in importance in africa rigorous assessment of broader welfare effects for adopting smallholder farm households is lacking using survey data and accounting for selection bias in technology adoption we analyze the impact of tc banana technology on household income and food security in kenya to assess food security outcomes we employ the household food insecurity access scale hfias a tool that has not been used for impact assessment before estimates of treatment effects models show that tc banana adoption combined with improved crop management causes considerable increases in farm and household income technology adoption also reduces relative food insecurity in a significant way these results indicate that tc technology can be welfare enhancing for adopting farm households adoption should be further promoted through upscaling appropriate technology delivery systems

the welfare effects of third degree price discrimination in intermediate good markets the case of bargaining this article examines the welfare effects of third degree price discrimination by a monopolist selling to downstream firms with bargaining power one of the downstream firms the chain store can integrate backward at lower cost than rivals bargaining powers also depend on disagreement profits bargaining weights and concession costs if the chain s integration threat is not credible price discrimination reduces the input price charged symmetric downstream firms and often reduces the average input price charged asymmetric downstream firms

seeing is believing evidence from an extension network experiment extension is designed to enable lab to farm technology diffusion decentralized models assume that information flows from researchers to extension workers and from extension agents to contact farmers cfs cfs should then train other farmers in their communities such a modality may fail to address informational inefficiencies and accountability issues the authors run a field experiment to measure the impact of augmenting the cf model with a direct cf training on the diffusion of a new technology all villages have cfs and access the same extension network in treatment villages cfs additionally receive a three day central training on the new technology they track information transmission through two nodes of the extension network from extension agents to cfs and from cfs to other farmers directly training cfs leads to a large statistically significant increase in adoption among cfs however higher levels of cf adoption have limited impact on the behavior of other farmers

adoption of improved chickpea varieties kribhco experience in tribal region of gujarat india abstract the study aims to track adoption of improved chickpea varieties and assess their on farm benefits in some remote and backward tribal villages in gujarat india where few newly developed varieties were introduced by a non government organization it also determines key factors which were influencing their adoption the study found that adoption of improved chickpea varieties was gradually increasing by replacing a prominent local variety duration of crop maturity farm size yield risk and farmers experience of growing chickpea crop were significantly influencing their adoption the on farm benefits as a result of improved varieties were realized in terms of increased yield levels higher income and labor productivity more marketable surplus price premium and stabilized yields in fluctuating weather breeding short duration varieties with stable yield levels under varying weather and organizing seed multiplication and dissemination in regions where moisture stress is a problem during maturity of chickpea are the major suggestions

equivalence between the diamond dybvig banking model and the optimal income taxation model abstract it is shown that the diamond dybvig journal of political economy 96 1983 768 banking model with a continuum of types of agents has the same analytical structure as the standard optimal income taxation model review of economic studies 38 1971 175 review of economic studies 43 1976 261 insights from the income taxation literature immediately imply that a bank run equilibrium exists in the banking model as long as the long term project is sufficiently costly to liquidate

welfare impacts of maize pigeonpea intensification in tanzania this article examines the driving forces behind farmers decisions to adopt improved pigeonpea and maize and estimates the causal impact of technology adoption on household welfare using data obtained from a random cross section sample of 613 small scale farmers in tanzania we use seemingly unrelated and recursive bivariate probit regressions to test the endogeneity and joint decision making of pigeonpea maize production a double hurdle model is used to analyze the determinants of the intensity of technology adoption conditional on overcoming seed access constraints to address the impact of adoption on welfare the article employs both propensity score matching and switching regression techniques results from bivariate probit models show that unobservable factors cause both decisions to be correlated but the finding does not support the conjecture that both decisions are made jointly overall the analysis of the determinants of adoption identifies inadequate local supply of seed access to information human capital and access to private productive asset as key constraints for pigeonpea technology adoption the causal impact estimation from both the propensity score matching and switching regression suggests that maize pigeonpea adoption has a positive and significant impact on income and consumption expenditure among sample households

the value of consumer choice and the decline in hmo enrollments i introduction and overview health insurance contracts may restrict consumers choice of medical provider in order to minimize moral hazard for example consumers who are insured for their marginal healthcare expenses have no incentive to enforce price discipline on their own in this case insurers may impose this discipline by restricting consumers choice of medical provider to those who offer competitive prices 1 this practice known as selective contracting sc may have other benefits as well including channeling consumers to efficient providers and achieving other efficiencies associated with partial vertical integration sc has been utilized by insurers both in the united states and abroad 2 however it is not a universal feature of health insurance contracts in part this is because reducing the choice set of medical providers imposes costs on consumers to the extent that consumers assign option value to choice capps dranove and satterthwaite 2003 for example sc was widely employed in the united states by health maintenance organizations hmos and other insurers in the 1990s and appears to have been an important cost control mechanism cutler mcclellan and newhouse 2000 robinson and phibbs 1989 however most private u s health insurers moderated their use of sc during the past decade at the same time that healthcare costs accelerated anecdotally a consumer and regulatory backlash against provider choice restrictions forced insurers to expand choice and largely abandon the practice blendon et al 1998 vita 2001 simultaneously hmo enrollments declined the purpose of this article is to explore the economic tradeoffs of sc with a particular focus on directly measuring the value that consumers assign to choice in medical markets i am interested in assessing whether the magnitude of any utility loss from choice restrictions can be offset by volume based price discounts that insurers may receive from hospitals my results bear on the larger question of whether an economic linkage can be drawn between consumers demand for choice and their apparent rejection of what is called tightly managed care they also have implications for many healthcare reform proposals that necessarily imply restrictions on the consumers choice sets i analyze health plan s sc of hospitals in the state of florida between 1999 and 2003 hospital sc restricts consumer choice in multiple ways including their choice of hospital in addition hospital choice restrictions imply restrictions over the use of specific physicians 3 i start by constructing hospital networks for each of a set of plan choices and then estimate a discrete choice model of health insurance demand conditional on each plan s restricted network for these purposes i use the capps dranove and satterthwaite 2003 measure of sc disutility that focuses on the option value of choice i employ several different discrete choice estimators to estimate the model including models with plan metropolitan statistical area msa fixed effects designed to control for unobserved plan attributes this provides me with estimates of disutility resulting from choice restrictions subsequently i project the estimated plan effects onto an instrumented value of plan price in order to estimate the price elasticity and also convert my disutility estimates into dollars my results show that consumers associated restrictive hospital networks with plan disutility during each of the years of the study period with choice elasticities that range from 0 10 to 0 32 in pooled estimates greater effects are obtained in 2003 using models where i allow the estimates to vary by year using my instrumental variables methodology to recover unbiased price coefficients i show that consumers associated a one standard deviation reduction in the size of a plan s hospital network with a reduction in plan value of between 62 and 118

nonlinear pricing and price cap regulation abstract this paper analyzes profit maximizing nonlinear pricing by a firm that is subject to price cap regulation two forms of regulatory constraint are considered i a cap on the firm s average revenue and ii a constraint that the firm must continue to offer each consumer the option of buying at the uniform price optimal nonlinear price schedules in these regimes are shown to have simple characterizations that are related to the nonlinear tariffs that an unregulated monopolist would charge of the regulatory regimes the firm prefers the average revenue constraint to the option constraint and likes uniform pricing least consumers in aggregate prefer the option regime to uniform pricing and like the average revenue constraint least but there are also distributional effects between consumers although the optional tariff regime pareto dominates uniform pricing it is ambiguous whether welfare is higher under uniform pricing or under the average revenue regime an example is used to illustrate the nature of the ambiguity

poverty reduction effects of agricultural technology adoption a micro evidence from rural tanzania abstract this article evaluates the impact of adoption of improved pigeonpea technologies on consumption expenditure and poverty status using cross sectional data of 613 households from rural tanzania using multiple econometric techniques we found that adopting improved pigeonpea significantly increases consumption expenditure and reduces poverty this confirms the potential role of technology adoption in improving household welfare as higher incomes translate into lower poverty this study supports broader investment in agriculture research to address vital development challenges reaching the poor with better technologies however requires policy support for improving extension efforts access to seeds and market outlets that stimulate adoption

involuntary unemployment and worker self selection abstract consider a firm that lacks information about the reservation wage or ability of any specific worker but is aware that workers with higher reservation wages tend to be more able on average we show that under a simple condition that the efficiency wage exceeds the lowest reservation wage the optimal hiring policy for the firm involves 1 no wage discrimination and 2 rationing of jobs when demand for its product is low the result also extends to the case where hours of work are variable provided each worker is most productive when working a strictly positive number of hours per week

a theory of hub and spoke collusion abstract we develop a model of hub and spoke collusion between a manufacturer and two retailers demand is stochastic and collusion between retailers is difficult the best collusive equilibrium is inefficient rotemberg and saloner 1986 in the hub and spoke collusive agreement retailers transmit their information about the state of demand to the supplier the supplier uses this information to adjust the wholesale price by organizing the collusion the supplier increases profits of the vertical chain we show that surprisingly this type of collusive agreement can under some conditions improve consumer welfare

primal dual simulation algorithm for pricing multidimensional american options this paper describes a practical algorithm based on monte carlo simulation for the pricing of multidimensional american i e continuously exercisable and bermudan i e discretely exercisable

determinants of farmers indigenous soil and water conservation investments in semi arid india abstract this paper investigates the determinants of farmers indigenous soil and water conservation investments in the semi arid tropics of india a simple theoretical model is used to develop hypotheses about the determinants of investment under alternative factor market conditions and these are tested using data on conservation investment from three villages we find that conservation investment is significantly lower on leased land in two of the study villages and lower on plots that are subject to sales restrictions in one village suggesting the potential for land market reforms to increase conservation investment in one village households with more adult males more farm servants and less land invest more in conservation as predicted by the model of imperfect labor markets and households with more debt and off farm income invest more consistent with the model of imperfect credit markets evidence that conservation investment is affected by factor market imperfections is weaker in the other villages where investments are much larger suggesting transaction costs as the source of the differences between villages other factors that have a significant effect on investment include the farmer s education and caste characteristics of the plot size slope irrigation status and quality ranking and the presence of existing land investments the results suggest the importance of accounting for differences across communities and households in factor market and agroclimatic conditions in designing programs to promote investments in soil and water conservation

customer concentration and over investment this paper investigates the impact of customer concentration on a supplier firm s over investment behaviour based on a large sample analysis on the us market we find that a supplier firm with hig

supermarkets and agricultural labor demand in kenya a gendered perspective abstract many developing countries are experiencing a rapid expansion of supermarkets new supermarket procurement systems could affect farming patterns and wider rural development while previous studies have analyzed farm productivity and income effects possible employment effects have received much less attention special supermarket requirements may entail intensified farm production and post harvest handling thus potentially increasing demand for hired labor this could also have important gender implications because female and male workers are often hired for distinct farm operations building on data from a recent survey of vegetable farmers in kenya a double hurdle model of hired labor use is developed and estimated farmer participation in supermarket channels increases the likelihood of hiring labor by 20 and demand for hired labor by 61 a gender disaggregation shows that positive employment effects are especially pronounced for female laborers who often belong to the most vulnerable population groups rural employment generation can be an important vehicle for poverty reduction

collusion and the choice of auction auctions are used in many different markets including the leasing of a substantial fraction of the natural resources in the united states the procedures used in the auctions conducted by the federal government have been a continuing source of controversy one of the concerns has been the possibility of collusion among bidders this article shows that cartels are stable if the seller uses open ascending bid oral auctions but not if he uses sealed high bid auctions this may help to explain the frequent use of sealed high bid auctions

vertical bargaining and retail competition what drives countervailing power this article investigates the effects of changes in market concentration on the equilibrium prices in a supply chain results are derived from a theoretical model of bilateral bargaining between upstream and downstream firms which allows for general forms of demand and retail competition whether countervailing buyer power arises in the form of lower input prices following greater concentration downstream depends on the pass through rate of input prices to retail prices countervailing buyer power generally does not translate into lower retail prices because of heightened market power at the retail level

collusion over the business cycle we present a theory of collusive pricing for markets in which demand alternates stochastically between fast growth boom and slow growth recession phases we show that 1 the most collusive prices are weakly procyclical countercyclical when demand growth rates are positively negatively correlated through time and 2 the amplitude of the collusive pricing cycle is larger when the expected duration of boom phases decreases and when the expected duration of recession phases increases we also offer a generalization of rotemberg and saloner s 1986 model interpreting their findings in terms of transitory demand shocks that occur within broader business cycle phases

why do larger buyers pay lower prices intense supplier competition abstract the paper provides a theoretical explanation of the common claim that larger buyers pay lower prices in the model suppliers compete more aggressively for the business of larger buyers much as they do in boom periods of rotemberg and saloner

the economic theory of vertical restraints the types of contracts arising in a typical vertical manufacturer retailer relationship are more sophisticated than a simple uniform price in addition to setting per unit prices manufacturers and retailers also revert to non linear pricing and non price instruments these instruments or contracts are referred to as vertical restraints and can take the form of franchise fees resale price maintenance exclusive dealing exclusive territories and slotting allowances the use and the effects of one type of instrument versus another depend crucially on specific market assumptions upstream and downstream and on the division of bargaining power between manufacturers and retailers this paper surveys the industrial organization literature on retail pricing and shows that vertical restraint instruments have important effects on producer and consumer prices market structure efficiency and welfare

the impact of cyclical demand movements on collusive behavior recent work by rotemberg and saloner 1986 investigates the effect of the business cycle on optimal collusive pricing by specifying that demand is subject to i i d shocks an implication of the i i d assumption is that firms expectations on future demand are unrelated to the current level of demand we put forth a model that allows for both the level of current demand and firms expectations on future demand to change over time thus it captures two important properties of the business cycle our analysis reveals that while the gain to deviating from a collusive agreement is greatest during booms firms find it most difficult to collude during recessions as the forgone profits from inducing a price war are relatively low an implication of this effect for pricing behavior is that at the same level of demand price is lower when demand is declining than when demand is rising consistent with previous theoretical work we find that firms price countercyclically for a range of values for the discount factor however numerical simulations reveal a greater tendency for firms to price countercyclically during recessions than during booms

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had