a general equilibrium analysis of production subsidy in a harris todaro developing economy an application to india since 1950s india has advocated import substituting industrialization policies to promote its manufacturing sector the end result was creation of a dual economy highly favored manufacturing sector with high and rigid wages and neglected agricultural sector with low wages and poverty because of the higher wages in the manufacturing sector the rural laborers migrate to the urban sector a typical characteristic of the harris todaro developing economy realizing this crisis the indian government recently initiated policies to boost agricultural production to curb the labor migration and improve the welfare of the rural population in this study we develop a computable general equilibrium cge model for india by incorporating harris todaro economic characteristics of unemployment labor migration farm dependant population and labor intensive agriculture we use the model to analyze the effects of agricultural production subsidy policies on employment factor price output price output levels and we

market frictions a unified model of search costs and switching costs it is well known that search costs and switching costs can create market power by constraining the ability of consumers to change suppliers while previous research has examined each cost in isolation this paper demonstrates the benefits of examining the two types of friction in unison the paper shows how subtle distinctions between the two costs can provide important differences in their effects upon consumer behaviour competition and welfare in addition the paper also illustrates a simple empirical methodology for estimating separate measures of both costs while demonstrating a potential bias that can arise if only one cost is considered

enterprises compliance with government carbon reduction labelling policy using a system dynamics approach abstract a carbon reduction labelling scheme is an effective policy tool for motivating enterprises or organizations to reduce their life cycle based carbon emissions to benefit the environment this paper uses system dynamics to model enterprises compliance with a combined government policy instrument for a carbon reduction labelling scheme that is government subsidies and economic sanctions a case study of paper enterprises in china is provided to demonstrate the application of the proposed model in which two optional technological plans to reduce the enterprises carbon emissions are examined the technological plans are categorized as a low cost and high cost plan the simulation results show that both the technological plans are vulnerable to the combined policy making and the high cost plan shows superior environmental performance for carbon emissions reduction however the enterprises are more inclined to choose the low cost plan because of superior economic performance the study offers insights to help enterprises select optimal actions on carbon emissions reduction and to inform government of possible sustainable policy design to promote low carbon development the model limitations are discussed as a basis for further improvements in low carbon development

expanding demand through price advertisement abstract retail stores frequently advertise prices when consumer search is costly advertising low prices expands the number of consumers who visit and buy we show that this demand enhancement may offset a retailer s loss in margins from the low price making advertisement desirable we further show that a multi product monopolist may choose to advertise low prices only for select products even when advertised and non advertised products are substitutes for duopolist retailers at a common location an equilibrium exists in which for some range of advertising costs one store advertises and the other free rides on its competitor

has work sharing worked in germany industry by industry basis in an attempt to raise employment whether this work sharing works is theoretically ambiguous i exploit the cross industry variation in standard hours reductions to examine their impact on actual hours worked wages and employment analysis of industry level data suggests that work sharing may have reduced employment in the period 1984 1994 using individual data from the german socio economic panel i substantiate the union claim of full wage compensation the hourly wage rose enough to offset the decline in actual hours worked

monopolistic competition in the spirit of chamberlin a general model this paper develops a model of large group chamberlinian monopolistic competition in which 1 there are many firms producing differentiated commodities 2 each firm is negligible in that it can ignore its impact on and hence reactions from other firms 3 free entry leads to zero profit of operating firms but 4 each firm faces a downward sloping demand curve the existence of a monopolistically competitive equilibrium is established in a companion paper more particular questions such as whether the market provides too many or too few products are addressed for a special case of the model

a search cost model of obfuscation this article develops models in which obfuscation is individually rational for oligopolistic firms firms sell a homogeneous good to rational consumers who incur search costs to learn prices search costs are endogenized by allowing obfuscation firms have an unobservable action that increases the time needed to learn their price one model involves search costs convex in shopping time we show that slight convexity can dramatically alter the equilibrium price distribution a second model examines an informational linkage between current and future search costs consumers are uncertain about a component of search costs here a signal jamming mechanism can lead to equilibrium obfuscation

using price distributions to estimate search costs we show how the equilibrium restrictions implied by standard search models can be used to estimate search cost distributions using price data alone we consider both sequential and nonsequential search strategies and develop estimation methodologies that exploit equilibrium restrictions to recover estimates of search cost heterogeneity that are theoretically consistent with the search models we illustrate the method using online prices for several economics and statistics textbooks

price directed consumer search abstract we extend stahl s 1989 model to a setting with differentiated products to study the effects of price directed consumer search consumers engage in costly search to find out whether products meet their needs consumer search is directed by prices when they are observable before search in contrast to the case in which prices are discovered only after search where search is naturally random the equilibrium under price directed search differs substantially from that under random search despite certain similarities we show that as search costs decrease sales become more likely and firms earn higher expected profits under price directed search whereas the opposite holds under random search moreover compared with random search under price directed search firms expected profits are always lower but consumer surplus and total welfare are higher provided that the search cost is sufficiently small

search costs and investment in quality in this paper we analyze how lower search costs aect rms incentives to invest in quality we identify two con icting eects on the one hand lower search costs increase incentives to invest in quality by eroding the market share of low quality rms and increasing the market share of high quality rms on the other hand by intensifying price competition lower search costs adversely aect high quality rms more than low quality rms the net eect of a change in the search cost on quality is shown to depend on the initial quality distribution there is a critical value such that if the average quality in the market is initially above this value lower search costs lead to lower quality whereas if the initial quality is below this value lower search cost leads to higher quality we show that our results are consistent with a superstar eect

economic and environmental impacts of electricity subsidy reform in kuwait a general equilibrium analysis abstract this paper examined economic and environmental impacts of reducing electricity subsidy in kuwait a social accounting matrix sam was constructed together with energy consumption with co2 emission were compiled and then calibrated with a computable general equilibrium cge model a simulation experiment was conducted by applying a 30 reduction of subsidy to the electricity sector this policy shock was applied to the model in two scenarios in scenario 1 the subsidy reduction was applied and results were compared with the baseline scenario given in the sam this yielded adverse economic effects on most endogenous variables but positive environmental benefits in terms of co2 emission reduction electricity tariff increased by three fold from 2 to 6 fils 0 7 cents to 2 cents per kwh gdp fell by 0 5 and aggregate household welfare declined by 0 8 in scenario 2 subsidy reduction was accompanied with cash transfers to compensate user losses the subsidy deducted from the electricity sector was allocated to users according to their share in base year total expenditure on electricity the results indicated that such transfers would reduce the adverse economic effects co2 emissions fell by 0 5 the gdp and household welfare effects were reversed rising by 0 4 and 0 1 respectively

scenario analysis on co2 emissions reduction potential in china s electricity sector abstract with the approach of the year 2012 a new round of international negotiations has energized the entire climate change community with this analyses on sector based emissions reduction and mitigation options will provide the necessary information to form the debate in order to assess the co2 emissions reduction potential of china s electricity sector this research employs three scenarios based on the long range energy alternative planning system leap model to simulate the different development paths in this sector the baseline scenario the current policy scenario and the new policy scenario seek to gradually increase the extent of industrial restructuring and technical advancement results imply that energy consumption and co2 emission in china s electricity sector will rise rapidly in all scenarios until 2030 triple or quadruple the 2000 level however through structural adjustment in china s electricity sector and through implementing technical mitigation measures various degrees of abatement can be achieved these reductions range from 85 to 350 million tons co2 per year figures that correspond to different degrees of cost and investment demand side management and circulating fluidized bed combustion cfbc ranked in order are employed prior to use to realize emissions reduction followed by supercritical plants and the renovation of conventional thermal power plants in the long term nuclear and hydropower will play the dominant role in contributing to emissions reduction it is also suggested that a self restraint reduction commitment should be employed to help contribute to the reduction of emission intensity an avenue that is more practical for china in light of its current development phase setting the year 2000 as the base year the intensity reduction target could possibly range from 4 2 to 19 4 dependent on the implementation effectiveness of various mitigation options

estimates of energy subsidies in china and impact of energy subsidy reform abstract for a transitional economy such as china some energy subsidies are reasonable and sometimes even necessary for achieving social goals however with rising energy prices and environmental concerns we see conflicts emerging between energy subsidies energy demand supply fundamentals and climate change considerations energy subsidies have important implications for sustainable development through their effects on energy use efficiency and the choice of fuel source this paper applies the price gap approach to estimate china s energy subsidies results indicate that china s energy subsidies amounted to cny 356 73 billion in 2007 equivalent to 1 43 of gdp subsidies for oil products consumption are the largest followed by subsidies for the electricity and coal sectors furthermore a cge model is used to analyze the economic impacts of energy subsidy reforms our findings show that removing energy subsidies will result in a significant fall in energy demand and emissions but will have negative impacts on macroeconomic variables we conclude that offsetting policies could be adopted such that certain shares of these subsidies are reallocated to support other sustainable development measures which could lead to reducing energy intensity and favoring the environment

quality incentives in a regulated market with imperfect information and switching costs capitation in general practice we model a system akin to the british national health service nhs in which general practictioners gps are paid by capitation from general taxation gps are horizontally and vertically differentiated and compete for patients via their imperfect observed quality we show that for any given capitation fee quality is lower and the incentive effects of the fee on quality are smaller when there is imperfect information there are diminishing welfare gains from improving patient information but increasing welfare gains from reducing switching costs gps do not act efficiently to improve patient information via advertising or to reduce the costs of switching

an evaluation of the impact of reducing energy subsidies on living expenses of households abstract a policy of subsidizing energy has been pursued in the islamic republic of iran to help the poor and to utilize the relative advantages of the country but it has been realized that energy subsidy has led to market distortion and welfare loss hence elimination of energy subsidy is considered as a crucial matter changes in energy policy are hindered by the uncertainty on the impact of reducing energy subsidy on the living expenses of population in the present article the distribution of resources through energy subsidy is evaluated and the direct and indirect effect of eliminating energy subsidies on the living expenses is estimated with the help of an analytical tool that has been developed it is then concluded that additional financial resources obtained from reduction of energy subsidies could be allocated for compensating the decrease in purchasing power of households the results of analysis reveal that more egalitarian distribution of resources and helping the poor could be achieved through implementation of a progressive policy of social security that is supported by financial resources available from elimination of energy subsidies

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

consumer search with observational learning this article studies observational learning in a consumer search environment consumers observe the purchasing decision of a predecessor with similar preferences consumers rationally emulate by initiating their search at the firm from which their predecessor purchased free riding on search effort and reacting less to price changes prices are nonmonotone in search costs and may be as low as marginal costs we discuss several extensions and show that the effect of emulation on prices is stronger when i the number of firms increases ii consumers first visits are more elastic with respect to market shares and iii prices are adjusted more frequently

procurement via sequential search numerous design and repair services are nonstandard and have to be tailored to the needs of the individual buyers prospective sellers have to make preliminary efforts in order to come up with a plan and buyers often consult a number of sellers before making a purchase the literature on procurement studies such situations for the case of a large buyer who can commit to a procurement mechanism the present paper considers the case of a small buyer who cannot commit to a mechanism it develops a simple sequential procurement model and investigates its equilibria and welfare optima the main qualitative conclusion concerns the inherent inefficiency of the equilibria the price competition results in too low consultation fees which induce overly intense search by buyers which in turn erodes sellers effort incentives

equilibrium with product differentiation tive consumer formulations is used to examine the properties of single and multiple price equilibria conditions under which decreases in the intensity of consumer preferences reduce price are given it is shown that with certain types of demand curves entry can eliminate price cost markups even given product differentiation if competition is localized it is demonstrated that entry does not affect the markup finally the effect of spurious product differentiation on price is examined

consumer search with asymmetric price sampling we explore asymmetries in the way consumers sample prices in a simple sequential search framework in equilibrium the price distribution of a firm catering to more local consumers first order stochastically dominates that of its rival prices rise in the degree of asymmetry

reducing fuel subsidies and the implication on fiscal balance and poverty in indonesia a simulation analysis abstract there is an urgent need for phasing out fuel subsidies in indonesia due to a severe budget deficit and a worsening of income distribution fuel subsidies of which almost 72 are enjoyed by the 30 of the richest income groups have consumed on average 63 8 of the total subsidies between 1998 and 2013 this paper aims at evaluating the relationship between existing fuel subsidies and fiscal balance and at analysing the poverty impact of phasing out fuel subsidies applying a cge microsimulation this study found that removing 25 of fuel subsidies increases the incidence of poverty by 0 259 percentage points if this money were fully allocated to government spending the poverty incidence would decrease by 0 27 percentage points moreover the 100 removal of fuel subsidies and the reallocation of 50 of them to government spending transfers and other subsidies could decrease the incidence of poverty by 0 277 percentage points however these reallocation policies might not be effective in compensating for the adverse impacts of the 100 removal of fuel subsidies if economic agents try to seek profit through mark up pricing over the increase of production costs

reducing subsidies on household fuels in india how will it affect the poor kerosene and lpg are widely used in households in india for lighting and cooking these fuels have historically been subsidized as part of the restructuring of the energy sector the government is committed to limiting these subsidies this paper examines the impact of reducing energy subsidies on the welfare of the poor the paper uses data from nationally representative surveys of over 100 000 households the paper concludes that the case for reducing lpg subsidies is strong although the kerosene subsidy is an inefficient means of subsidizing fuel use by the poor reduction in it will need to be supported by other policies that would limit the adverse impacts

optimal search for product information consumers often need to search for product information before making purchase decisions we consider a tractable continuous time model of gradual learning in which consumers incur search costs to learn further product information and update their expected utility of the product at each search occasion we characterize the optimal stopping rules for either purchase or no purchase as a function of search costs and of the importance informativeness of each attribute this paper also characterizes how the likelihood of purchase changes with the ex ante expected utility search costs and the importance informativeness of each attribute we discuss optimal pricing the impact of consumer search on profits and social welfare and how the seller chooses its price to strategically affect the extent of the consumers search behavior we show that lower search costs can hurt the consumer because the seller may then choose to charge higher prices discounting creates asymmetry in the purchase and no purchase search thresholds and may lead to lower prices if search occurs in equilibrium or higher prices if there is no search in equilibrium this paper also considers searching for signals of the value of the product heterogeneous importance of attributes endogenous intensity of search and social learning this paper was accepted by pradeep chintagunta marketing

consumer search and double marginalization the well known double marginalization problem understates the inefficiencies arising from vertical relations in consumer search markets where consumers are uninformed about the wholesale prices charged by manufacturers to retailers consumer search provides a monopoly manufacturer with an additional incentive to increase its price worsening the double marginalization problem and lowering the manufacturer s profits nevertheless manufacturers in more competitive wholesale markets may not have an incentive to reveal their prices to consumers we show that retail prices decrease in search cost and so both industry profits and consumer surplus increase in search cost jel d11 d42 d83 l12 l25 l60 l81 in markets where consumers do not know retail prices and need to invest time and resources to get to know them they often also do not know retailers marginal costs even though consumers are not directly interested in retailers costs these costs are indicative for whether consumers should buy at the current shop or continue to search for the next offer this is particularly true when there is a significant common component in retailers costs for the same observed price at a particular retailer if the common cost is low the retailer s margin is high and it is more beneficial to check the price at the next retailer as he is likely to maintain a lower margin and hence to charge a lower price this paper studies consumer search in markets where retailers have a common marginal cost that is set by a manufacturer as a reference point we consider the unrealistic case where consumers are fully informed about the wholesale price that retailers must pay the manufacturer and show how the familiar double marginalization problem arises we then consider the more realistic setting where consumers

new product introduction with costly search abstract in the usual model of product market search a low search cost can turn out to have detrimental incentives on new product introduction as the low search cost erodes firms market power attenuating the profit from innovation this paper studies a model of monopolistic competition with costly search where the point of departure is that of a fixed cost of initiating search in this environment a low search cost could turn out to be favorable to innovation at a low search cost more consumers may decide to start searching possibly resulting in higher profits for firms in the larger market despite the erosion of market power

price quality and reputation evidence from an online field experiment we examine the link between price quality seller claims and seller reputation in internet auctions after purchasing actual baseball cards and having them professionally graded we find that some buyers in the online graded market are misled by incredible claims of quality they pay higher prices but do not receive better quality and in fact are defrauded more often online seller reputation is effective for identifying good faith sellers but conditional on completed auctions reputable sellers do not provide better quality evidence also suggests that high claim sellers target less experienced buyers we attribute these patterns to two loopholes in the ebay rating system we benefited from the comments of austan goolsbee raphael thomadsen john shea dan vincent david reiley larry ausubel peter cramton v joseph hotz jeff smith jimmy chan vincent crawford mark duggan and attendees at numerous seminars and conferences we are particularly grateful to seth sanders and john list for their constructive advice at the early stage of the research to timothy bresnahan rachel kranton and thomas hubbard for their detailed suggestions in reshaping earlier versions and to editor ariel pakes and two anonymous referees for their careful readings special thanks to eight friends who acted as our agents in purchasing baseball cards in retail markets and to numerous sports card store owners who shared their insights on the sportscard industry excellent research assistance from randy alexander moore and krzysztof fizyta is gratefully acknowledged any remaining errors are ours

search frictions and market power in negotiated price markets we provide a framework for empirical analysis of negotiated price markets using mortgage market data and a search and negotiation model we characterize the welfare impact of search frictions and

co2 emissions from electricity generation in seven asia pacific and north american countries a decomposition analysis abstract the logarithmic mean divisia index lmdi method of complete decomposition is used to examine the role of three factors electricity production electricity generation structure and energy intensity of electricity generation affecting the evolution of co2 emissions from electricity generation in seven countries these seven countries together generated 58 of global electricity and they are responsible for more than two thirds of global co2 emissions from electricity generation in 2005 the analysis shows production effect as the major factor responsible for rise in co2 emissions during the period 1990 2005 the generation structure effect also contributed in co2 emissions increase although at a slower rate in contrary the energy intensity effect is responsible for modest reduction in co2 emissions during this period over the 2005 2030 period production effect remains the key factor responsible for increase in emissions and energy intensity effect is responsible for decrease in emissions unlike in the past generation structure effect contributes significant decrease in emissions however the degree of influence of these factors affecting changes in co2 emissions vary from country to country the analysis also shows that there is a potential of efficiency improvement of fossil fuel fired power plants and its associated co benefits among these countries

prices and heterogeneous search costs we study price formation in a model of consumer search for differentiated products in which consumers have heterogeneous search costs we provide conditions under which a pure strategy symmetric nash equilibrium exists and is unique search costs affect two margins the intensive search margin or search intensity and the extensive search margin or the decision to search rather than to not search at all these two margins affect the elasticity of demand in opposite directions and whether lower search costs result in higher or lower prices depends on the properties of the search cost density

the demand for hours of labor direct evidence from california california s longstanding requirement that most women receive time and a half pay for workhours beyond eight in one day was extended to men in 1980 analyzing current population survey data from 1973 1985 and 1991 we find that this overtime penalty substantially reduced the amount of daily overtime worked by california men relative to men in other states comparisons that use women to control for california specific shocks show even stronger effects the estimates imply a price elasticity of demand for overtime hours of at least 20 5

consistent conjectures in monopolistic competition abstract models of monopolistic competition such as dixit and stiglitz and spence typically assume firms take market variables as parametric this conjectural variation corresponds to chamberlin s large group approximation although these models need not have a large number of firms the present note following perry shows that consistent conjectures about the size and number of rivals can provide a more satisfactory basis for this assumption

non reservation price equilibrium and search without priors we analyse a model of oligopolistic competition in which consumers search without priors consumers do not have prior beliefs about the distribution of prices charged by firms and thus try to use a robust search procedure we show that the optimal stopping rule is stochastic and that for any distribution of search costs there is a unique market equilibrium which is characterised by price dispersion although listed prices approach the monopoly price as the number of firms increases the effective price paid by consumers does not depend on the number of firms

a model of recommended retail prices manufacturers frequently post nonbinding public price recommendations but neither the rationale for this practice nor its impact on prices is well understood i develop a model in which recommendations signal a manufacturer s production cost to searching consumers who then form beliefs about retail prices increasing search makes consumers reject offers for the manufacturer s and competitors products more often and i show that both consumers and the manufacturer prefer more search when the production cost is low and less search when it is high with incentives thus aligned manufacturer recommendations inform consumers via cheap talk and their removal harms both parties

the unequal benefits of fuel subsidies a review of evidence for developing countries summary this paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries on average the burden of subsidy reform is substantial and is approximately neutrally distributed across income groups a 0 25 decrease in the per liter subsidy results in a 5 decrease in income for all groups more than half of this impact arises from the indirect impact on prices of other goods and services consumed by households fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups in absolute terms the top income quintile captures six times more in subsidies than the bottom

energy consumption and economic growth the case of oil exporting countries this paper examines the causal relationship between the per capita energy consumption and the per capita gdp in a panel of 11 selected oil exporting countries by using panel unit root tests and panel cointegration analysis the results show a unidirectional strong causality from economic growth to energy consumption for the oil exporting countries the findings have practical policy implications for decision makers in the area of macroeconomic planning in most major oil exporting countries government policies keep domestic prices bellow free market level resulting in high levels of domestic energy consumption the results imply that the energy conservation through reforming energy price policies has no damaging repercussions on economic growth for this group of countries

competition in large markets this paper develops a simple and robust implication of free entry followed by competition without substantial strategic interactions increasing the number of consumers leaves the distributions of producers prices and other choices unchanged in many models featuring non trivial strategic considerations producers prices fall as their numbers increase hence examining the relationship between market size and producers actions provides a nonparametric tool for empirically discriminating between these distinct approaches to competition to illustrate its application i examine observations of restaurants seating capacities exit decisions and prices from 224 u s cities given factor prices and demographic variables increasing a city s size increases restaurants capacities decreases their exit rate and decreases their prices these results suggest that strategic considerations lie at the heart of restaurant pricing and turnover

a model of directed consumer search abstract we present a framework to study directed consumer search firms sell products with two attributes one is readily observable the other is observed only after visiting a firm search is directed as the order of search is influenced by the observable characteristics moreover if prices are readily observable firms also influence search direction by their choice of price we show that when consumers observe prices before search prices and profits are lower than when they do not a lower price then not only retains more consumers but is also more likely to attract them the latter effect makes demand more elastic when consumers observe prices before searching prices decrease in search costs consumer surplus initially increases in search costs but may ultimately decrease

consumer search costs and preferences on the internet we conduct an empirical analysis of consumer preferences and search costs on an internet platform using data from a major french platform priceminister we show descriptive evidence of substantial price dispersion among adverts for the same product of consumers often not choosing the cheapest advert and sometimes choosing an advert dominated in price and non price characteristics by another available advert we consider a sequential search model where consumers sample adverts in an endogenous order based on their preferences and search costs we show that the optimal search and purchase strategy can be characterized by a set of inequalities which can feasibly be tested on transaction and advert data this allows us to estimate for each transaction a set of preference and search cost parameter values thus allowing for flexible consumer heterogeneity in preferences and search costs the estimated model can then describe a wide range of consumer search and purchase behaviours we find that the model can explain almost all transactions in the data and requires non zero preferences and search costs for at least 50 and 22 respectively of observations we also find evidence of heterogeneous and sometimes substantial search costs

an empirical model of search with vertically differentiated products this paper presents a nonsequential search model that allows for vertical product dierentiation in the unique symmetric equilibrium firms with dierent characteristics draw utilities from a common utility distribution because the firms dier in their characteristics this leads to dierent price distributions the model therefore provides a theoretical rationale for explaining price dispersion as a result of quality dierences and search behavior of consumers together using the equilibrium conditions derived from the model it is shown how to estimate search costs by maximum likelihood using only price data a data set on prices from dutch supermarkets reveals that the amount of search has decreased over the sampling period moreover ignoring vertical product dierentiation results in an overestimation of search costs

the political economy of the fair labor standards act of 1938 this paper examines the congressional passage of the american minimum wage law the fair labor standards act of 1938 voting on the act is modeled as a function of the concentration of the constituencies for minimum wage legislation north south differentials and legislator ideology it is shown that the house radically altered the final content of the bill abandoning a proposed wages and hours board with discretionary powers to determine minimum wages in favor of a flat rate following the objections of several interest groups north south divisions over the bill had little influence over congressional voting and the influence of constituent groups increased relative to legislators ideology as the bill became an important election issue

targeted search and the long tail effect we develop a search model to explain the long tail effect search targetability or the quality of search is explicitly modelled consumers are searching for the right products within the right categories as search costs decrease or search targetability increases additional variety of goods catering to long tail consumers will be provided and the concentration of sales across different categories of goods decreases the effects of a decrease in search costs or an increase in search targetability on consumer utility prices and profits depend on whether the type coverage increases decreases in search costs and increases in search targetability have different qualitative effects

paying for prominence we investigate three ways in which firms can become prominent and thereby influence the order in which consumers consider options first firms can affect an intermediary s sales efforts by means of commission payments when firms pay commission to a salesman the salesman promotes the product with the highest commission and steers ignorant consumers towards the more expensive product second sellers can advertise prices on a price comparison website so that consumers investigate the suitability of products in order of increasing price in such a market equilibrium prices are lower when search costs are higher since a firm s benefit from being investigated first increases with search costs finally consumers might first consider their existing supplier when they purchase a new product which suggests a relatively benign rationale for the prevalence of cross selling in markets such as retail banking

information cost and consumer choices of healthy foods this article examines whether or not a reduction in consumer search cost for nutritional information increases the probability that heterogeneous consumers will choose healthier food products empirical results from the ready to eat breakfast cereal rtec market confirm the conceptual analysis that lowering information cost via simplified nutritional labeling increases the healthfulness of consumer choices the healthfulness attribute weighs 28 44 more heavily in consumers decision making with simpler labeling systems on average introducing front of package labeling increased the probability of a consumer choosing a healthy rtec by 3 49 and reduced the probability of choosing an unhealthy rtec by 3 81 calories sugar saturated fat and sodium consumption decrease by 0 31 2 63 6 94 and 1 97 respectively fiber intake increases by 3 24 further results show that less educated and smaller households with less frequent purchases benefit the most from a reduction in information cost overall this article shows the potentially positive role that voluntary more convenient labeling could play in improving market and public health outcomes

the impact of the overtime policy reform evidence from the low paid workers in taiwan this article investigates the effects of shortening standard workweek on workers with different income levels using two repeated cross sectional survey data the taiwanese manpower utilization survey and human resource survey we estimate the impacts of the new policy on working hours and monthly income our results show that the new standard workweek in taiwan has made the working hours drop but the scale of decrease becomes smaller in the following 3 years although the hours drop has gradually risen back for every worker the rate of increase is higher for the low income workers the monthly incomes of the high income female workers have decreased however the decreases in the hourly wage rates are less than their average wage rates our results also show that the firms have automatically adapted under the new law and a poor enforcement scheme after a period of time

dynamic markets with competitive bidding the model features a dynamic market in steady state in which prices are determined in first price auctions it combines competition over time familiar from the pairwise meeting models with instantaneous bidding competition it inquires how different properties of the model determine the relative importance of these two aspects of the competition and in particular how the non market clearing price result of the matching and bargaining models is affected by the

value of an additional firm in monopolistic competition the paper develops a model of monopolistic competition in which the satisfaction levels consumers get from products are independently and identically distributed potential substitution among products then generates demand curves through the mechanism of order statistics the value of extra variety can be calculated directly pareto lognormal and beta distributions are investigated using numerical integration some but not all cases support the argument that the optimal number of firms exceeds the equilibrium number

beliefs and consumer search in a vertical industry this paper studies vertical relations in a search market as the wholesale arrangement between a manufacturer and its retailers is typically unobserved by consumers their beliefs about who is to be blamed for a price deviation play a crucial role in determining wholesale and retail prices the common assumption in the consumer search literature is that consumers exclusively blame an individual retailer for a price deviation we show that in the vertical relations context predictions based on this assumption are not robust in the sense that if consumers assign just a small probability to the event that the upstream manufacturer is responsible for the deviation equilibrium predictions are qualitatively di erent for the robust beliefs the vertical model can explain a variety of observations such as retail price rigidity or alternatively low cost pass through non monotonicity of retail prices in search costs and seemingly collusive retail behavior the model can be used to study a monopoly online platform that sells access to nal consumers

competition advertising and meeting competition clauses abstract pricing according to meeting competition clauses mcc s is often argued to enforce collusive agreements our analysis incorporates uncertainty and advertising we show within a spatial model that mcc s permit price discrimination but at the expense of lower profits

a simple model of search engine pricing we present a simple model of how a monopolistic search engine optimally determines the average relevance of firms in its search pool in our model there is a continuum of consumers who use the search engine s pool and there is a continuum of firms whose entry to the pool is restricted by a price per click set by the search engine we show that a monopolistic search engine may have an incentive to set a relatively low price per click that encourages low relevance advertisers to enter the search pool in general the ratio between the marginal and average relevance in the search pool induced by the search engine s policy is equal to the ratio between the search engine s profit per consumer and the equilibrium product price these conclusions do not change if the search engine charges a fixed access fee rather than a price per click a search engine is a platform that serves a two sided market it is based on a technology that potentially improves the quality of consumer search before the advent of internet search engines yellow pages were the closest example of a search engine firms pay to be included in the yellow pages with various degrees of prominence the yellow pages organise the set of firms according to some categorisation system in internet environments consumers use search engines by submitting a query in a language dictated by the search engine the objects that the query elicits depend on the search engine s

water subsidy policies comparison of the chilean and colombian schemes analysis of two water subsidy schemes a means tested subsidy in chile and a geographically targeted subsidy in colombia shows that the means tested system is better able to identify poor households than the geographically targeted scheme however the overall distributive impact of both schemes is quite similar at least for the three lowest income deciles because the amount of benefits per household in the geographically targeted colombian scheme are differentiated by the socioeconomic classification of household despite the relative merits of the chilean means tested scheme targeting errors are still quite large more than 60 percent of subsidies accrue to households that are above the third decile of the income distribution if the policy objective in chile is to benefit a significant proportion of households in the lowest income deciles then either the targeting mechanism must be improved or the number of subsidies has to increase to take into account these targeting imperfections in colombia almost all households receive some kind of benefit implying an unnecessarily high fiscal cost an improvement in the targeting mechanism could lower this cost without jeopardizing benefits to lower income households some suggestions for additional research and for improving both schemes are discussed

lowering customer evaluation costs product differentiation and price competition when match uncertainty is resolved via costly evaluation the first product sampled by a customer is more likely to make the sale this prompts firms to lower their products evaluation costs to attract customers to sample their products first such efforts by firms are called customer learning investment cli when product quality is freely observable but horizontal match is not we examine how cli choices interact with quality and price competition in a duopoly cli has a competition effect in that a higher cli of a firm increases its demand but decreases that of its rivals in the market covered duopoly both qualities will decrease increase when the high end low end firm invests more in customer learning and remain unchanged when they invest equally relative to when neither firm invests we further show that the firm with a higher relative production efficiency invests more in customer learning than the competitor in the market not covered duopoly cli by the low end firm also creates a market

prominence and consumer search this article examines the implications of prominence in search markets we model prominence by supposing that the prominent firm will be sampled first by all consumers if there are no systematic quality differences among firms we find that the prominent firm will charge a lower price than its less prominent rivals making a firm prominent will typically lead to higher industry profit but lower consumer surplus and welfare the model is extended by introducing heterogeneous product qualities in which case the firm with the highest quality product has the greatest incentive to become prominent and making it prominent will boost industry profit consumer surplus and welfare

impact of energy subsidies on energy consumption and supply in zimbabwe do the urban poor really benefit abstract twenty percent of zimbabwe s urban poor households are still to be connected to the grid the majority of these households are poor there are several reasons why the zimbabwe urban poor are still not connected to the grid the most important one being the household incomes and the cost of different sources of energy in order to facilitate wider usage of electricity by the poor the policy makers have introduced a subsidy policy the objective of this paper is to ascertain the extent to which the poor urban households could afford the cost of electricity with or without subsidies this gives an indication on whether contrary to the current thinking subsidies are decisive for the affordability of electricity by the urban households the paper also examines the distribution of the subsidies amongst the different urban household income categories and other economic sectors furthermore the impact of such subsidies on the utility s finances is assessed

search and segregation abstract consumers willingness to pay for an identical product e g as caused by differences in local income or tastes may differ greatly across locations yet while a large literature examines consumers optimal price and product search behavior under various market configurations the equilibrium effects of such consumer segregation remain unexplored to this end i study a stylized model in which two local monopolistic markets differ in size and their consumers willingness to pay after observing their native market s price a subset of flexible consumers may travel to the other market at positive cost hoping for a bargain i show that as long as the proportion of flexible high valuation consumers is not too large active and directed search to the lower valuation market will occur in equilibrium if the higher valuation market is relatively large in size complex mixed strategy pricing emerges in equilibrium for regulators increasing the fraction of flexible consumers tends to be more effective than manipulating search costs

utility subsidy reform in abu dhabi a review and a computable general equilibrium analysis abstract electricity and water consumption in abu dhabi has increased substantially in recent years along with rapid economic and population growth as one of the oil producing economies located in arid regions abu dhabi s electricity and water are produced predominantly with fossil fuel based power water co generation which generate carbon emissions the consumption of electricity and water is heavily subsidized to support industrial growth lower cost of living and distribute state wealth to the population the low utility prices however may have contributed to high per capita carbon emissions for the emirate this paper reviews critical literature on energy subsidy policy for oil exporting economies we then examine the economic and environmental effects of water and electricity subsidy reduction in abu dhabi using a computable general equilibrium analysis the result shows that utility subsidy reduction alone increases gross domestic product gdp of the emirate through expanding the high value added service sector and reduces carbon emissions with decreasing carbon intensive industrial and utility productions meanwhile private consumption declines with decreasing wage electricity subsidy reduction in general has greater economic and environmental effects than water subsidy reduction the positive economic and environmental gains may incentivize utility subsidy reform in the long run when the negative wage effect is mitigated

the effects of overtime pay regulation on worker compensation proponents claim that a statutory overtime premium by raising the relative cost of overtime may encourage firms to substitute employment for overtime hours the author argues that there will be no real effects if firms reduce straight time wages so as to offer the same package of weekly compensation and hours of work that was acceptable initially empirical analysis suggests that wage differentials do arise to mitigate the purely demand driven effects predicted by previous models but these differentials are not large enough to neutralize overtime pay regulation completely copyright 1991 by american economic association

hours of work and the fair labor standards act a study of retail and wholesale trade 1938 1950 when the fair labor standards act was first implemented a 5 reduction in the length of the standard workweek reduced by at least 18 the proportion of men and women working more than 40 hours per week this analysis based on monthly time series data from 1935 41 bls surveys and individual level data from the 1940 and 1950 censuses shows that the act s impact was larger in the south where the proportion of men and women working over 40 hours fell by 23 and 43 respectively than in the north because of much lower pre act wages in the south than in the north the minimum wage provisions of the act were much more binding in the south southern employers were less able than northern employers to adjust straight time wages in response to the act s overtime provisions

maximum hours legislation and female employment a reassessment the causes and consequences of state maximum hours legislation for female workers passed from 1848 to the 1920s are found to differ from a recent interpretation although maximum hours legislation served to reduce scheduled hours in 1920 the impact was minimal curiously the legislation appears to have operated equally for men legislation affecting only women was symptomatic of a general desire by labor for lower hours and these lower hours were achieved in the tight and otherwise special world war i labor market most important the restrictiveness of the legislation had no adverse effect on the employment share of women in manufacturing

comparative advertising disclosing horizontal match information improved consumer information about horizontal aspects of products of similar quality leads to better consumer matching but also to higher prices so consumer surplus can go up or down while profits rise with enough quality asymmetry though the higher quality and hence larger firm s price falls with more information so both effects benefit consumers this occurs when comparative advertising is used against a large firm by a small one comparative advertising as it imparts more information therefore helps consumers although it also improves the profitability of the small firm overall welfare goes down because of the large loss to the attacked firm

testing the effectiveness of the french work sharing reform a forecasting approach the macroeconomic impact of the french work sharing reform of 2000 a reduction of standard working hours in combination with wage subsidies is analysed using a vector error correction model vecm for several labour market variables as well as inflation and output out of sample forecasts for 2000 2001 are produced a comparison of these forecasts which serve as a benchmark simulation without structural shifts to the realized values with shifts suggests significant beneficial employment effects of the policy mix other shifts were absent and thus cannot explain the outcome output productivity hourly labour costs and inflation are only transitorily affected or not at all

kuwait s energy subsidy reduction examining economic and co2 emission effects with or without compensation abstract this paper examined economy wide impacts of reducing energy subsidy in kuwait a social accounting matrix sam was constructed and a computable general equilibrium cge model was developed the cge model was used to simulate separate and combined effects of a 25 reduction of subsidy to three energy products natural gas oil and electricity this policy shock was applied to the model in two scenarios in each round the subsidy reductions were applied to each energy product separately in turn and then finally simultaneously to all energy products in the first scenario subsidy reductions were applied and results were compared with the baseline scenario given in the sam this yielded adverse effects across a range of endogenous variables it leads to large energy price increases as high as 255 for electricity gross domestic product gdp marginally declined by 0 28 in scenario 2 the subsidy reduction was accompanied with cash transfers to energy users a compensation for welfare loss the amount of transfer was equivalent to the sum of the amount of subsidy reductions the results indicated that such transfers would reduce the adverse effects of the policy reform the effects on gdp was reversed it rose by 1 01 the price effect was slightly lower electricity price rose by 245 finally sensitivity of the model results was examined by varying the elasticity of the substitution of composite energy and capital in production greater possibility of substitution seems to cause subsidy reform to have much larger positive or smaller adverse economy wide effects the simulation experiments suggest that subsidy reform would need to be accompanied by demand side stimulus or supply side initiatives to encourage energy conservation

product differentiation with imperfect information the paper employs a model of monopolistic competition and product differentiation with consumers who are not well informed about the specification of the offered brands welfare analysis of the degree of product differentiation in such a market concludes that the socially desirable product variety is limited due to consumers imperfect information consequently when the number of consumers is sufficiently large or economies to scale in production are sufficiently weak the market would offer excessive variety the literature on product differentiation is motivated by the observation that only some of the potential brands of a differentiated product are produced and sold it studies issues such as the role of the market structure in the determination of product diversity and the welfare performance of alternative markets in making this product selection for example see lancaster 1979 and salop 1979 in the spatial models tradition spence 1976 and dixit and stiglitz 1977 in the diversifying representative consumer tradition these studies model product selection as an equilibrium outcome of monopolistic competition the welfare analysis focuses on the tradeoff between consumer benefits which naturally increase with variety and production efficiency which owing to economies to scale decreases with variety they find no natural relation between the socially optimal variety and the market outcome the latter can be smaller or larger than the former depending on the parameters of the model although it is natural to expect that in some markets for differentiated products consumers are imperfectly informed about the available brands all these studies assume that consumers possess perfect information the present paper assumes that consumers are imperfectly informed and indeed obtains qualitatively different results first regardless of how significant are the production economies of scale the optimal variety is below a predetermined level that depends on the parameters of consumer utility and information second when consumer population is sufficiently large or economies to scale in production are sufficiently weak the market would offer excessive variety the explanation is that consumers imperfect information limits the extent to which they can exploit the variety offered in the market it is therefore a social waste to increase variety to a level that consumers cannot benefit from

opportunities and challenges for renewable energy policy in china renewable energy is the inevitable choice for sustainable economic growth for the harmonious coexistence of human and environment as well as for the sustainable development government support is the key and initial power for developing renewable energy in this article an overall review has been conducted on renewable energy development policy including laws and regulations economic encouragement technical research and development industrialized support and government model projects etc in china on this basis a systematic analysis has been conducted on the disadvantages of renewable energy development policy on the point of long term effective system for renewable energy development a series of policy advice has been offered such as strengthening the policy coordination enhancing regional policy innovation echoing with clean development mechanism implementing process management constructing market investment and financing system it is expected that the above advices could be helpful to ever improvement of renewable energy development policy c 2007 elsevier ltd all rights reserved

true monopolistic competition as a result of imperfect information the paper restates hart s 1985a 1985b definition of large group monopolistic competition distinguishes it from oligopolistic competition and raises the question of whether there are reasonable circumstances that give rise to true monopolistic competition as defined the purpose is to show that consumers imperfect information may create conditions that will turn an otherwise oligopolistic market into a truly monopolistically competitive one