residual wage disparity and coordination unemployment how much of residual wage dispersion can be explained by an absence of coordination among firms to answer we construct a dynamic directed search model with identical workers where firms can create high or low productivity jobs and are uncoordinated in their offers to workers calibrated to the u s economy workers can exploit ex post opportunities once approached by firms and can conduct on the job search the stationary equilibrium wage distribution is hump shaped skewed significantly to the right and with baseline parameters generates residual dispersion statistics 75 90 of those found empirically however the model underestimates the average duration of unemployment

does monetary unification lead to excessive debt accumulation abstract if discretionary monetary policy gives rise to an inflation bias monetary unification boosts the accumulation of public debt the additional debt accumulation harms welfare if governments are sufficiently myopic in the presence of myopic governments debt ceilings play a useful role in avoiding excessive debt accumulation in a monetary union and allowing a conservative independent central bank to focus on price stability with supply shocks monetary unification results in excessive variability of public debt a debt target that constrains stabilization policy helps to prevent this

the probability of sale and price premiums in withdrawn auctioned properties this paper examines the impact of the auction process of residential properties that whilst unsuccessful at auction sold subsequently the empirical analysis considers both the probability of sale and the premium of the subsequent sale price over the guide price reserve and opening bid the findings highlight that the final achieved sale price is influenced by key price variables revealed both prior to and during the auction itself factors such as auction participation the number of individual bidders and the number of bids are significant in a number of the alternative specifications

temporary boycotts as self fulfilling disruptions of markets abstract this paper demonstrates how equilibrium involving anticipated boycotts and actual boycotts can occur even though consumers are negligible and only care about the price they pay and the timing of purchase the model is a two period durable goods monopoly game with demand uncertainty first a non boycott equilibrium is characterized under regularity assumptions ruling out multiplicative uncertainty there are additional equilibria in which the firm sets a low price in period 0 based on the anticipation that consumers will boycott whenever the price exceeds a threshold also the augmented game with a publicly observed sunspot has equilibria in which boycotts occur on the equilibrium path with positive probability

from the classical economists to empiricists a review of the terms of trade controversy contrary to the classical position the works of prebisch and singer in the middle of the last century launched the controversial hypothesis of a long term decline in the terms of trade of primary products vis a vis manufactured goods and a corresponding decline in the terms of trade of developing countries vis a vis advanced ones the present study traces the origin and evolution of the hypothesis and reviews the related statistical debate it also reviews the theoretical support for the prebisch singer hypothesis it is an exercise in the history of economic thought to trace how the controversies surrounding the terms of trade have evolved over time specifically noting that with the development of the field of econometrics the central thesis of the argument got lost somewhere in the realm of hi tech statistical debates

developing country exports of manufactures moving up the ladder to escape the fallacy of composition this paper tests for a fallacy of composition by analysing the demand for exports of the 18 developing countries that are most specialised in manufactures in the markets of the 10 largest industrial countries estimated export equations both time series and panel data suggest that most developing countries compete with other developing country exporters rather than with industrialised country producers a smaller number of countries that export more high technology products compete with industrialised country producers and also have higher expenditure elasticities for their exports thus the fallacy of composition applies mainly to the larger group of countries exporting mostly low technology products

on the choice of pricing policies ex ante commitment and prisoners dilemma abstract i study the endogenous formation of pricing policies posted uniform versus negotiated pricing by using a version of a two stage pricing game in a duopoly context the model explains the prevalence of uniform pricing in some markets countries and identifies a typical prisoners dilemma in these cases the sellers commitment to a pre announced price under uniform pricing mitigates the fear of buyers that they might be exploited once they start price negotiations while such buyers anticipation induces sellers to adopt uniform pricing in an attempt to capture more buyers it results in intensified competition with lower seller payoffs

equivalence of auctions and posted prices abstract we determine the equilibrium in two transaction mechanisms auctions and posted prices agents choose whether to participate in markets where trades are consummated by auctions or in markets where sellers post prices we show that the selling mechanisms are practically equivalent previous studies have shown that auction markets emerge as a unique evolutionary stable equilibrium when compared to bargaining markets posted price markets dominate bargaining markets similarly journal of economic literature classification numbers c78 c73 d44

revenue management with forward looking buyers a seller wishes to sell multiple goods by a deadline for example the end of a season potential buyers enter over time and can strategically time their purchases each period the profit maximizing mechanism awards units to the buyers with the highest valuations exceeding a sequence of cutoffs we show that these cutoffs are deterministic depending only on the inventory and time remaining in the continuous time limit the optimal mechanism can be implemented by posting anonymous prices when incoming demand decreases over time the optimal cutoffs satisfy a one period look ahead property and prices are defined by an intuitive differential equation

macroeconomic policy in a two party system as a repeated game this paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward looking wage setters if discretionary policies are followed an economic cycle related to the political cycle results in equilibrium this cycle is significantly different from the traditional political business cycle reputational mechanisms due to the repeated interaction of the two parties and the public or commitments to a common policy rule can improve upon the discretionary outcome by reducing or eliminating the magnitude of the economic fluctuations

central bank independence and public debt policy the various proposals for the institutional design of the european monetary union have drawn fresh attention to the link between monetary and public debt policies this paper explores the strategic interaction between fiscal authorities setting public debt and the central bank controlling monetary policy in the absence of political distortions an optimally designed conservative independent central bank is sufficient to establish the second best in the presence of political distortions or with coordination of monetary and fiscal policy however also a debt target is needed

persistent demi regs and robust tendencies critical realism and the singer prebisch thesis debate about whether the terms of trade for primary products relative to manufactures have a tendency to deteriorate has been ongoing for half a century the phenomenon itself provides an example of a persistent contrastive demi regularity this is viewed as the result of a robust tendency understood as an enduring and pervasive characteristic effect generated by a powerful and stable underlying causal mechanism on this basis the key problem for primary products lies in the biological limits on consumption to which may be added capitalism specific tendencies affecting processes of production and distribution the paper concludes by arguing that the relevant holistic generic tendency under capitalism involves a long term contraction in the primary product share of world trade copyright 2002 oxford university press

comparing revenue from auctions and posted prices i analyze the market for compact discs using an original data set of items listed for sale online over 5000 listings of both new and used compact discs were collected from ebay which provides sellers a choice between two mechanisms auction or posted price and its subsidiary half com which features only posted prices despite the often cited revenue dominance property of auctions many sellers choose to post a fixed price to explain this anomaly i examine empirically the determinants of the revenue earned by sellers in this market i find that posted price goods sell for higher prices while auctioned goods sell with a higher probability further results suggest that the size of a seller s inventory is the key factor in the choice between selling in an auction and posting a fixed price in particular sellers with large inventories are more likely to use the posted price mechanism

managing online auctions current business and research issues the internet s computational power and flexibility have made auctions a widespread and integral part of both consumer and business markets though online auctions are a multi billion dollar annual activity with a growing variety of sophisticated trading mechanisms scientific research on them is at an early stage this paper analyzes the current state of management science research on online auctions it develops a broad research agenda for issues such as the behavior of online auction participants the optimal design of online auctions the integration of auctions into the ongoing operation of firms and the use of the data generated by online auctions to inform future trading mechanisms these research areas will draw from applied and theoretical work spanning management science economics and information systems

how valuable is a good reputation a sample selection model of internet auctions on the online auction site ebay by convention sellers do not ship goods to winning bidders until after they have received payment so there is an opportunity for sellers to take advantage of bidders trust realizing this the designers of ebay created a system that relies on self enforcement using reputation several recent studies have found that bidders give little or no reward to sellers who have better reputations i show that in fact sellers are strongly rewarded for the first few reports that they have behaved honestly but marginal returns to additional reports are severely decreasing

who wants an independent central bank monetary policy making and politics the costs and benefits of cooperative monetary and fiscal policy are analysed in the framework of a partisan business cycles model it is shown that political parties with different ideologies prefer to choose different arrangements for macroeconomic policy making more specifically right wing parties favour independent central banks more than left wing parties an independent central bank is also the generally preferred option from a social welfare point of view in addition the form of policy making arrangements between the fiscal and monetary authorities is shown to influence the extent of partisan cycles

can reputation resolve the monetary policy credibility problem abstract this paper addresses three problems with reputational equilibria in the barro gordon monetary policy game the multiplicity of equilibria the coordination problem and a chisel prone credibility problem a chisel proof credibility condition ensures that in response to a small deviation from the low inflation rate by the central bank it never pays for the private sector to acquiesce if the private sector can coordinate then a low but nonzero inflation outcome can be supported as a subgameperfect and chisel proof credible noncooperative equilibrium for an atomistic private sector the result can still hold in a game between successive monetary administrations

simultaneous use of auctions and posted prices abstract i consider a model in which several identical objects are sold simultaneously via an auction and a posted price mechanism the model explains several empirical regularities regarding bidding behavior in ebay auctions such as the finding that some bidders bid multiple times over the course of the auction and that bidders tend to bid with greater frequency near the end of the auction than the beginning i also show that sellers prefer to simultaneously use auctions and posted prices than to use either mechanism individually

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

a theory of collective reputations with applications to the persistence of corruption and to firm quality the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by his past behaviour and because his track record is observed only with noise by the group s past behaviour as well the paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality 1 collective reputations collective reputations play an important role in economics and the social sciences countries ethnic racial or religious groups are known to be hard working honest corrupt hospitable or belligerent some firms enjoy substantial rents from their reputations for producing high quality products some departments are reported to treat their faculty or students fairly the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by her past behaviour and because her track record is observed only with noise by the group s past behaviour as well the paper studies the joint dynamics of individual and collective reputations in a model in which current generations are progressively replaced by new ones and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature see section 2 for a detailed comparison with the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality let us spell out the building blocks of our theory in more detail a a group s reputation is only as good as that of its members each member is characterized by individual traits such as talent diligence or honesty past individual behaviour conveys information about these traits and generates individual reputations

dynamic pricing behavior in perishable goods markets evidence from secondary markets for major league baseball tickets sellers of perishable goods increasingly use dynamic pricing strategies as technology makes it easier to change prices and track inventory this paper tests how accurately theoretical models of dynamic pricing describe sellers behavior in secondary markets for event tickets a classic example of a perishable good it shows that the simplest dynamic pricing models describe very accurately both the pricing problem faced by sellers and how they behave explaining why sellers cut prices dramatically by 40 percent or more as an event approaches the estimates also imply that dynamic pricing is valuable raising the average seller s expected payoff by around 16 percent

how do selling mechanisms affect profits surplus capacity and prices with unknown demand i analyze a model in which a seller wishes to sell multiple homogeneous goods to a large group of buyers with unknown demand the seller may either sell objects via a posted price mechanism a discriminatory price auction a uniform price auction their open bid analogs or a revelation mechanism in which the seller first asks all potential buyers to report their valuations and then sets a reserve price i show that the revelation mechanism leads to the greatest profits the auction mechanisms result in identical expected profits and the posted price mechanism results in the smallest profits however the more profitable mechanisms impose stronger informational requirements that may make these mechanisms infeasible in practice and the posted price mechanism also results in the greatest total surplus i also find the seller chooses a lower capacity and reserve price in an auction than in the posted price mechanism

sample selection bias in the estimation of recreation demand functions an application to sportfishing estimating the value of public actions through behavior implied by the demand for recreation has proved valuable in many settings early applications were based on grouped data however the sharpening of tools of welfare analysis has led economists to exploit individual rather than grouped data the appropriate use of individual observations in estimating recreational demand models is not obvious and depends on the economic theory and its behavioral implications and the statistical characteristics of models the difficulty in exploiting individual observations in estimating recreational demand functions is that a large portion of a randomly sampled population in a given geographical region is likely to be non participants in the recreational activity of interest that is they are observed to demand zero trips the qualitative implications of such samples seem to be recognized bockstael hanemann and strand 1986 mullahy 1987 but there are few smith 1988 shaw 1988 published comparisons of the implications of alternative models

trading mechanism selection with directed search when buyers are risk averse we endogenize the trading mechanism selection in a model of directed search with risk averse buyers and show that the unique symmetric equilibrium entails all sellers using fixed price trading mechanisms that prescribe the sale price as a function of the realized demand auctions bargaining discount pricing etc expose buyers to the price risk the uncertainty of not knowing how much to pay in advance fixed price trading eliminates the price risk which is why risk averse customers accept paying more to shop at such stores

dynamic competition with random demand and costless search a theory of price posting this paper studies a dynamic model of perfectly competitive price posting under demand uncertainty firms must produce output in advance after observing aggregate sales in prior periods firms post prices for their unsold output in each period the demand of a new batch of consumers is randomly activated existing customers who have not yet bought and then new customers arrive at the market in random order observe the posted prices and either purchase at the lowest available price or delay their purchase decision we construct a sequential equilibrium in which the output produced and its allocation across consumers is efficient thus consumers endogenously sort themselves efficiently with the highest valuations purchasing first transaction prices in each period rise continuously as firms become more optimistic about demand followed by a market correction by the last period prices are market clearing

arriving in time estimation of english auctions with a stochastic number of bidders we develop a new econometric approach for the estimation of second price ascending bid auctions with a stochastic number of bidders our empirical framework considers the arrival process of new bidders as well as the distribution of bidders valuations of objects being auctioned by observing the timing of bidder arrival the model is identified even when the number of potential bidders is stochastic and unknown the relevance of our approach is illustrated with an empirical application using a unique dataset of art auctions on ebay our results suggest a higher impact of sellers reputation on bidders valuations than previously reported in cross sectional studies but the impact of reputation on bidder arrival is largely insignificant interestingly a seller s reputation impacts not only the actions of the bidders but the actions of the seller as well in particular experience and a good reputation increase the probability of a seller posting items for sale on longer lasting auctions which we find inc

auctions versus posted price selling two popular selling methods posted price selling and auctions are compared here in an independent private values model without auctioning costs auctioning is always optimal when auctioning is costly auctions are still preferable if the marginal revenue curve is sufficiently steep the global steepness of the marginal revenue curve is found to coincide with the dispersion around the mean for a number of standard distributions finally the prices of the monopoly seller and of the social optimum are compared copyright 1993 by american economic association

structural distortions and decentralized fiscal policies in emu the combination of discretionary monetary policy labor market distortions and nominal wage rigidity yields excessive inflation as monetary policy tries to exploit nominal wage contracts to address labor market distortions an inflation target reduces inflation but creates a conflict between monetary policy and discretionary fiscal policy if fiscal policy is set at a higher frequency than nominal wages are preventing the associated excessive accumulation of public debt calls for debt ceilings if countries differ substantially in terms of structural distortions uniform debt ceilings must be complemented by country specific debt targets in order to prevent decentralized fiscal authorities from employing debt policy strategically

the bidder s curse traditional explanations for the popularity of auctions are efficiency and revenue maximization we argue that another reason is the potential for overbidding i e buyers bidding above their willingness to pay outside the auction the auction mechanism ensures that even if only few buyers overbid they affect prices and allocations we employ a novel approach to identify overbidding in the field comparing auction prices to simultaneous fixed prices for identical items on the same ebay webpage we argue that fixed prices provide an upper bound for auction bids in a detailed data set of board game auctions we find that the final price exceeds the simultaneous fixed price in 42 percent of the auctions the result is not explained by differences in item quality shipping costs or seller reputation prior auction experience does not eliminate overbidding the finding replicates in a second broad data set of a cross section of auctions 48 percent overbidding the substantial fraction of overbid auctions is induced by a small number of bidders only 17 percent ever bid above the fixed price using a simple model of second price auctions with alternative fixed prices we show that transaction costs of switching between auctions and fixed prices cannot explain the results given that even the expected auction price is higher than the fixed price consistent with limited attention the closer the fixed price is listed relative to an auction the less likely are overbids this effect is strongest for bidders first bids when they are likely to examine the auction and fixed price listings more closely

a structural model of competing sellers auctions and posted prices in an original data set of goods listed for sale online i observe that both auctions and posted prices are popular with buyers and sellers in the compact disc market to explain why these two mechanisms coexist i estimate a structural model of competing sellers who differ in the value of their outside options buyers are allowed to value auctioned and posted price goods differently but the estimated value distributions suggest that differences across buyers do not explain the mechanism coexistence that i observe in contrast differences across sellers outside options are important the value of the outside option segments the market with high outside option sellers choosing to post a fixed price there are two key forces at work that drive this empirical result first competition between sellers favors coexistence over an auction only or a posted price only marketplace because sellers prefer to be in a market with fewer rivals second sellers with more valuable outside options prefer the posted price mechanism because posted price goods sell less often than auctioned goods but at a higher price as a result a larger outside option reduces the loss from not selling and favors the posted price mechanism

why do sellers usually prefer auctions we compare the most common methods for selling a company or other asset when participation is costly a simple simultaneous auction and a sequential process in which potential buyers decide in turn whether to enter the bidding the sequential process is always more efficient but preemptive bids transfer surplus from the seller to buyers because the auction is more conducive to entry precisely because of its inefficiency it usually generates higher expected revenue we also discuss the effects of lock ups matching rights break up fees as in takeover battles entry subsidies etc

trends and cycles in the net barter terms of trade a new approach this study has two objectives first it uses time series techniques including unit root tests to reexamine the classic prebisch singer hypothesis that the relative prices of primary commodities in terms of manufactured goods are characterized by secular deterioration second commodity price movements are decomposed into permanent and cyclical components using the beveridge and nelson 1981 technique the latter information is valuable when assessing the viability of commodity stabilization funds and formulating countercyclical macroeconomic policy responses to commodity booms and busts copyright 1989 by royal economic society

auctions with a buy price the case of reference dependent preferences abstract in an auction with a buy price the seller provides bidders with an option to end the auction early by accepting a transaction at a posted price this paper develops a model of an auction with a buy price in which bidders use the auction s reserve price and buy price to formulate a reference price the model both explains why a revenue maximizing seller would want to augment her auction with a buy price and demonstrates that the seller sets a higher reserve price when she can affect the bidders reference price through the auction s reserve price and buy price than when she can affect the bidders reference price through the auction s reserve price only the comparative statics properties of bidding behavior are in sharp contrast to equilibrium behavior in other models where the existence and size of the auction s buy price have no effect on bidding behavior

trade liberalisation economic development and poverty alleviation in a distinguished career spanning more than four decades jagdish bhagwati has made numerous contributions to both trade theory and trade policy analysis the current paper focuses on bhagwati s major contribution to the ongoing debate surrounding the influence of trade liberalisation upon economic development and its potential to alleviate poverty in the world s poorest economies in order to highlight bhagwati s contributions in these fields we focus on the arguments developed in two of his numerous landmark publications first his seminal 1964 paper on the pure theory of international trade and second his 2004 book entitled in defense of globalization although separated in time by some four decades we argue that these two publications despite their very different characters each demonstrate beyond doubt the significance of bhagwati s work in improving our understanding of the true nature of international trade and its potential to address questions of global poverty

super cycles of commodity prices since the mid nineteenth century summary decomposition of real commodity prices suggests four super cycles during 1865 2010 ranging between 30 and 40 years with amplitudes 20 40 higher or lower than the long run trend non oil price super cycles follow world gdp indicating they are essentially demand determined causality runs in the opposite direction for oil prices the mean of each super cycle of non oil commodities is generally lower than for the previous cycle supporting the prebisch singer hypothesis tropical agriculture experienced the strongest and steepest long term downward trend through the twentieth century followed by non tropical agriculture and metals while real oil prices experienced a long term upward trend interrupted temporarily during the twentieth century

personalized prices and uncertainty in monopsony abstract we analyze personalized pricing by a monopsonist facing a finite number of ex ante identical capacity constrained suppliers with privately known costs when the distribution of costs is sufficiently smooth and regular the buyer chooses to make the same offer to all suppliers leading to a posted price when demand is sufficiently concave convex this price is lower higher than the classical monopsony price in the limit as the seller capacities tend to zero we obtain the classical monopsony price therefore our model provides a decentralized micro foundation for monopsony

selecting optimal selling format of a product in b2c online auctions with boundedly rational customers abstract the advancement of internet technology has enabled new formats for selling products in the b2c online auctions at present on the major online auction sites there exist three popular selling formats namely the posted price pure auction and buy price auction formats it is an important decision problem for a firm to select the most profitable format to sell its products through the internet the customer behavior is of course a crucial element of the decision process to the best of our knowledge most models available today assume that customers are perfectly rational to better understand the decision process in this paper we incorporate the concept of bounded rationality into consideration we first present a behavior choice function to characterize the behavior of the customers with bounded rationality then corresponding to each selling format we construct a revenue model based on the bounded rationality for analysis finally we conduct some elaborate computational experiments to investigate the performance of each revenue model for developing new managerial insights our computational results clearly demonstrate how the bounded rationality of customer behavior affects the choice of a preferable selling format for a b2c firm in an online auction

upping the ante how to design efficient auctions with entry of primary importance in auction design is the set of strategies available to the seller at the auction stage we first formalize hold up regarding entry costs that preys on second price auctions when the seller may engage in a costly shill bidding activity we derive the optimal reserve and show how shill bidding can make posted prices outperforming auctions second we advocate for a new regulation where shills would be banned but with the possibility of canceling sales ex post which offers some valuable flexibility the english auction with jump bids implements then the first best in general environments

loss of monetary discretion in a simple dynamic policy game abstract we analyze a simple policy game featuring monetary credibility problems and argue that loss of monetary discretion is not advantageous two elements form the basis of our analysis firstly we endogenize the source of credibility problems and secondly we consider a dynamic framework where credibility problems are not time invariant by doing this we are able to demonstrate that credibility problems are temporary and in steady state the government has removed these through sound policies a binding policy rule will only serve as an obstacle towards this steady state

inferring ascending auction participation from observed bidders abstract participation in internet auctions goes well beyond those who place a bid participants arrive in random order and if the auction s standing price has already exceeded a participant s valuation she will not bid even so her unreported valuation is a relevant part of demand for the item and in an alternate random order her bid would have been registered i provide a method to estimate the average number of participants from the average number of bidders per auction this enables estimation of the distribution of participant valuations from either the distribution of closing prices or the distribution of all observed bids

fiscal policy labor market structure and macroeconomic performance recent work on monetary policy design has investigated the interactions between labor market institutions and monetary policies and their implications for macroeconomic performance this paper argues that this link is not independent of the fiscal policymaking structure

the effectiveness of english auctions abstract we study the performance of the english auction under different assumptions about the seller s degree of bayesian sophistication we define the effectiveness of an auction as the ratio between the expected revenue it generates for the seller and the expected valuation of the object to the bidder with the highest valuation total surplus we identify tight lower bounds on the effectiveness of the english auction for general private values environments and for private values environments where bidders valuations are non negatively correlated for example when the seller faces 12 bidders who the seller believes have non negatively correlated valuations whose expectations are at least as high as 60 of the maximal possible valuation an english auction with no reserve price generates an expected price that is more than 80 of the value of the object to the bidder with the highest valuation

dual mechanism for an online retailer abstract while posted price and auction have typically been seen as alternatives to each other we observe web stores selling a product at a posted price and simultaneously running auctions for the identical product a phenomenon that has not been studied fully in this article we study a dual mechanism where an online retailer combines the two conventional mechanisms posted price and auction for multiple units of a product we demonstrate that the dual mechanism can be used to achieve market segmentation when customers discount the expected utility of auctions we characterize the customer s decision rule and formulate a retailer s profit function under the dual mechanism finally we compare the performance of three selling mechanisms posted price auction and dual through computational experiments

the economic case for international labour standards this paper explores the economic case for international labour standards granting workers rights of free association and collective bargaining confers both static and dynamic economic efficiencies static efficiencies refer to one time gains from improvements in economic practice dynamic efficiencies refer to gains from improvements to the growth path resulting from a shift away from a low road development path to a high road path these efficiencies raise wages employment and output in developing countries and they can also benefit workers in developed countries labour standards are an institutional mechanism for raising the quality of growth in both developing and developed countries in this sense they are a win win institution

pricing in the online invoice trading market first empirical evidence abstract in recent years online invoice trading has gained importance in providing smes with short term financing in this paper we present first empirical evidence concerning the question whether the risk of payment difficulties is appropriately reflected in the pricing variables to this end we investigate predictors of default of online invoice trading platforms we analyze both the probability of default and the loss rate and find that the interest rate the duration and the percentage funded have good predictive power furthermore we show that the pricing mechanism auction vs fixed prices helps to explain defaults on online invoice trading platforms

market mechanisms in online peer to peer lending online peer to peer lending p2p lending has emerged as an appealing new channel of financing in recent years a fundamental but largely unanswered question in this nascent industry is the choice of market mechanisms i e how the supply and demand of funds are matched and the terms price at which transactions will occur two of the most popular mechanisms are auctions where the crowd determines the price of the transaction through an auction process and posted prices where the platform determines the price while p2p lending platforms typically use one or the other there is little systematic research on the implications of such choices for market participants transaction outcomes and social welfare we address this question both theoretically and empirically we first develop a game theoretic model that yields empirically testable hypotheses taking into account the incentive of the platform we then test these hypotheses by exploiting a regime change from auctions to posted prices on one of the largest p2p lending platforms consistent with our hypotheses we find that under platform mandated posted prices loans are funded with higher probability but the preset interest rates are higher than borrowers starting interest rates and contract interest rates in auctions more important all else equal loans funded under posted prices are more likely to default thereby undermining lenders returns on investment and their surplus although platform mandated posted prices may be faster in originating loans auctions that rely on the crowd to discover prices are not necessarily inferior in terms of overall social welfare this paper was accepted by chris forman information systems

manufactured exports of developing countries and their terms of trade since 1965 abstract during the last 40 years since the prebisch singer terms of trade deterioration hypothesis was first proposed the commodity composition of exports of developing countries has undergone a major change in the direction of dominance of manufactures in their nonfuel exports with strong growth in the volume of their manufactured exports but this did not allow developing countries to escape unequal exchange relations with the industrial countries their barter terms of trade in manufactures showed signs of weakness rather than improvement and clearly failed to reflect the respective productivity trends leading to deterioration in factoral terms of trade

sorting versus screening search frictions and competing mechanisms in a market where sellers compete by posting trading mechanisms we allow for a general search technology and show that its features crucially affect the equilibrium mechanism price posting prevails when meetings are rival i e when a meeting by one buyer reduces another buyer s meeting probability under price posting buyers reveal their type by sorting ex ante only if the meeting technology is sufficiently non rival price posting is not an equilibrium multiple buyer types then visit the same sellers who screen ex post through auctions

fiscal activism under inflation targeting and non atomistic wage setting this paper presents a game between a fiscal authority an independent central bank and non atomistic wage setters the effects of fiscal activism and inflation targeting on labour market outcomes are analysed the results suggest that inflation targeting provides incentive for wage restraint moreover real wages are increasing in the degree of fiscal activism as wage setters exploit the response of a fiscal authority seeking to promote employment numerical results suggest that the benefits of targeting inflation are larger when the government pursues an activist policy and therefore that there is some substitutability between fiscal and monetary rules

buy price english auction abstract consider an english auction for a single object in which there is an option for a bidder to guarantee a purchase at a seller specified buy price b at any time we show that there exist v and v v such that a bidder purchases at the buy price immediately if his valuation v is no less than v or v v v and at least one other bidder is participating in the auction if b v v he purchases at the buy price once the current bid reaches a strategically chosen threshold price a properly set buy price increases expected social welfare and the expected utility of each agent when either buyers or seller are risk averse

all pay auctions with a buy price option all pay auctions this paper studies all pay auctions in which there is a buy price option for bidders to guarantee purchases at a seller specified price we analyze symmetric increasing bidding equilibria in the first and second price all pay auctions with the buy price option while the optimal buy price in the second price is higher than are those in the first price all pay auction both formats maintain the same expected profit with an endogenous entry process all pay auctions with the buy price can attract more consumers and ultimately reach a higher expected profit than does the uniform posted price selling mechanism jel d44 l11 l81

the imf the world bank and commodity prices a case of shifting sands abstract this paper examines some recent developments in the thinking of both the international monetary fund and the world bank regarding the macroeconomic determinants of commodity prices and the relative importance of secular and cyclical factors in explaining their recent behavior

consequences of a commodity boom in a controlled economy accumulation and redistribution in kenya 1975 83 the economic theory of dutch disease is extended and applied to the 1976 79 coffee boom in kenya in this article when a commodity boom is perceived as temporary a large fraction will tend to be saved out of transient income the spending effect of the boom is supplemented by relative price changes resulting from capital stock increases in the presence of foreign exchange and import controls the benefits of a sudden export price increase may be transferred intersectorally using a general equilibrium model it is estimated that in kenya the benefits of the boom were largely transferred from coffee growers to urban groups

monetary policy and policy credibility theories and evidence within the past decade there has been a significant shift in attitude by many western industrialized countries toward the objectives and conduct of national economic policy the events of the 1970s accelerating inflation and stagnant economic growth motivated the view that inflation had created its own stubborn self sustaining momentum that either was not amendable to the influences of conventional macroeconomic policy or else would yield to such influences only at unacceptable costs this led to the development of a program aimed at reestablishing control over prices while minimizing any adverse consequences of anti inflationary policies on output and employment seen as a new monetary experiment the essential ingredients included prudent financial management abstinence from discretionary intervention commitment to intermediate targets and above all prior announcement of these policies evidence of this program and its effects can be found oni the continents of europe north america and latin america and provide further important lessons in anti inflationary management this paper is a survey of recent theoretical developments in monetary policy which among other issues attempt to explain one rationale for this program and the likely consequences thereof to the extent that the new program of monetary and fiscal reform was deliberately made public and impressed upon citizens as an overriding commitment of governments in advance of its execution reflects a prevailing opinion that economic policies are more effective if they are credible to private economic agents this view emphasized forcefully by william fellner 1976 1979 may be seen as being mainly due to the assimilation of the rational expectations hypothesis

buybacks with costly participation abstract posted price offers and first price auctions along with the multi unit discriminatory auction extension are two widely used mechanisms for allocating conservation contracts the choice between the two typically hinges on the trade off between the posted price s simplicity and the potential revenue gains of the auction in this paper we introduce a novel mechanism that attempts to bridge the gap between the performance of posted price offers and auctions a two price and lottery schedule combines the simplicity of the former with some of the flexibility of the latter using a model that incorporates agents cognitive and information costs of bidding we analyze how the ranking of allocative efficiency and cost effectiveness between the mechanisms varies as the wedge of participation costs increases when the number of bidders is endogenously determined by participation costs bid shading associated with a lack of competition in the auction compromises its cost effectiveness vis a vis the posted price and the lottery schedule we use data from three recent buybacks for fishing licenses conducted in maryland to calibrate our model and identify conditions under which the two price schedule outperforms the other mechanisms

transactions technology and the time consistency of optimal policy abstract in a perfect foresight continuous time model of the macro economy turnovsky and brock 1980 have demonstrated that the government s choice of an optimal policy will be time inconsistent only if it is bound by a k rule regarding the growth of nominal monetary balances this result is shown to be invalid when bonds bear a liquidity yield under such circumstances it is shown that all optimal policies are time inconsistent the conclusion is that the liquidity properties of the government s financing instruments play an important role in determining the consistency properties of its optimal policies

the optimal listing strategies in online auctions this article proposes a unified framework to completely characterize the seller s optimal listing strategy in the online auction as a function of her rate of time impatience specifically the fixed price listing the regular auction and the buy it now bin auction are each a solution of the seller s single optimization problem under different values of the rate of intertemporal discount the perfectly patient seller adopts the regular auction the sellers with a medium range of time impatience adopt the bin auction and the most impatient of sellers adopt the fixed price listing moreover under mild conditions the reverse price is inversely related to the value of the seller s discount factor either within or across formats this in turn implies that the posted price in the fixed price sale is greater than the reserve price of the bin auction followed by that of the regular auction these predictions offer clear empirical implications

primary commodity prices manufactured goods prices and the terms of trade of developing countries what the long run shows the authors revisit in this article the empirical foundation of the alleged secular decline in the prices of primary commodities relative to those of manufactures they use a newly constructed index of commodity prices and two modified indexes of manufactured good prices and find that from 1900 to 1986 the relative prices of all primary commodities fell on trend by 0 5 percent a year and those of nonfuel primary commodities by 0 6 percent a year they thus confirm the sign but not the magnitude of the trend implicit in the work of prebisch but even the more limited secular decline shown by their relative price indexes may be magnified by an incomplete account of quality improvements in manufactures they then show that the evolution of terms of trade of nonfuel primary commodities is not the same as that of the net barter terms of trade of non oil exporting developing countries finally they find that despite the decline that has probably occurred during the current century in the terms of trade of nonfuel primary commodities the purchasing power of total exports of these products has increased considerably similarly the fall that may have occurred after world war ii in the net barter terms of trade of developing countries seems to have been more than compensated for by the steady improvement in their income terms of trade

political shocks and public debt the case for a conservative central bank revisited abstract we explore the dynamics of public debt and optimal institutions in the presence of political shocks arising from electoral uncertainty under commitment optimal stabilization is established by combining an inflation target with a debt target the inflation target should be contingent on the political shocks while the debt target forces the government to fully absorb the political shocks in the period in which it occurs in the absence of such inflation and debt targets but with monetary commitment a conservative central bank enhances stabilization an even more conservative central bank is optimal if monetary policy cannot commit

the long run behavior of the relative price of primary commodities statistical evidence and policy implications abstract this paper is concerned with both the statistical and policy issues surrounding the long run behavior of the ratio of primary commodities prices to those of manufactured goods seen as a measure of the barter terms of trade between primary producers and the producers of manufacturers the statistical evidence reported is found to offer support for the secular deterioration hypothesis the policy implications of this finding for less developed countries are explored

selecting a selling institution auctions versus sequential search we consider the seller s choice between sequential search and an auction when selling n homogeneous units of a good in the presence of informational asymmetries discounting and transaction costs our analysis shows that the expected return per unit from sequential selling decreases in n the number of units being sold for the auction with suitable restrictions the expected return per unit increases in n thus sequential search is the preferred institution if n is small whereas the auction is preferred if n is large historical details of the evolution of livestock markets closely fit our theoretical results

competing trade mechanisms and monotone mechanism choice abstract we investigate the choice between posted prices and auctions of competing sellers with private valuations assuming that buyers face higher hassle costs in auctions we show the existence of monotone pure strategy equilibria where sellers offer posted prices rather than auctions if and only if they have a sufficiently high reservation value posted prices sell with lower probability but yield a larger revenue in case of trade using an empirical strategy to compare revenues of posted prices and auctions that takes selling probabilities explicitly into account we find our theoretical predictions supported by data from ebay auctions on ticket sales for the euro 2008 european football championship

monetary union without fiscal coordination may discipline policymakers abstract with benevolent policymakers and fiscal leadership monetary unification reduces inflation taxes and public spending these disciplining effects of a monetary union which become stronger if the number of participants in the union increases are likely to raise welfare two types of arrangements are considered for the union s common central bank ccb making the ccb more conservative and imposing an inflation target on the ccb in contrast to the results of svensson 1997 svensson l e o 1997 optimal inflation targets conservative central banks and linear inflation contracts american economic review 87 98 114 an optimally designed conservative ccb may outperform inflation targeting finally we find that fiscal coordination offsets the disciplining effects of monetary unification hence subsidiarity in fiscal policymaking may enhance welfare

revenue management without commitment dynamic pricing and periodic flash sales a seller has a fixed number of goods to sell by a deadline at each time he posts a regular price and decides whether to hold a flash sale over time buyers privately enter the market and strategically time their purchases if a buyer does not purchase when she arrives she can pay an attention cost to recheck the regular price afterwards or she can wait for future flash sales where she may obtain a good at a discounted price in the unique markov perfect equilibrium the seller sporadically holds flash sales to lower the stock of goods a flash sale increases the willingness to pay of future buyers but decreases the willingness to pay of buyers who arrive early in the game when it is very likely that a buyer will obtain a good in a flash sale the seller holds a big initial flash sale for all but one unit of the good

note on loss of monetary discretion in a simple dynamic policy game jensen 1994a finds that loss of monetary discretion leads to lower welfare however by extending his model we show that if real base money holdings are relatively low as is likely to be the case for modern economics a zero inflation rule may well be preferable to monetary discretion if the emphasis on achieving the output and public spending targets falls a zero inflation rule is more likely to be preferred the increased support for binding policy rules thus conforms with a less tolerant attitude towards inflation

auctions versus negotiations which is the more profitable way to sell a company an auction with no reserve price or an optimally structured negotiation with one less bidder we show under reasonable assumptions that the auction is always preferable when bidders signals are independent for affiliated signals the result holds under certain restrictions on the seller s choice of negotiating mechanism the result suggests that the value of negotiating skill is small relative to the value of additional competition the paper also shows how the analogies between monopoly theory and auction theory can help derive new results in auction theory jel d44 g34 there are close analogies between standard price theory and the theory of auctions in an absolute english auction in which the price rises continuously until only one bidder remains and the seller is required to accept the final bid the sale price equals the lowest competitive price at which supply equals demand in the theory of optimal auctions the seller is treated as a monopolist who can choose any

a model of competing selling mechanisms abstract a model where sellers choose sequentially between any two selling mechanisms is studied with monotonicity and minimum mechanism difference there exists a unique equilibrium where all sellers choose the mechanism of higher per seller surplus at a critical number of sellers

the statistical debate on the net barter terms of trade between primary commodities and manufactures a comment and some additional evidence i950 p s hypothesis according to this hypothesis the net barter terms of trade nbtt between primary products and manufactures have over the longrun exhibited a downward trend spraos presented a detailed and thorough analysis of both the adequacy of the various statistical series available to proxy the nbtt s behaviour over the long run and the wide range of conceptual including quality problems involved in such an exercise on the basis of his analysis spraos concluded that the balance of the evidence for the seventy year period ending with the outbreak of world war ii supported the p s hypothesis of a secular deterioration in the nbtt it should however be noted that the evidence also suggested that the particular series cho sen for analysis by prebisch i950 himself did appear to exaggerate possibly to a large extent the rate of deterioration however when the analysis was extended to include the post world war ii period spraos found that while the deteriorating tendency cannot be decisively refuted it is open to doubt when the record up to the i970s is taken into account i980 p i26 as we shall see in this paper closer scrutiny reveals a statistical problem with spraos s analysis and the purpose of this paper is to show that once appropriate action is taken to overcome this problem some quite strong evidence in support of the p s hypothesis emerges the paper is organised as follows section i briefly discusses spraos s methodology and section ii discusses an econometric issue arising from this analysis section iii presents our empirical evidence while section iv summarises the main findings of the paper

mechanism choice and the buy it now auction a structural model of competing buyers and sellers a striking feature of many online sales platforms is the coexistence of multiple sales mechanisms items on ebay for instance are frequently offered through auctions posted prices and buy it now auctions in this article i study how this mechanism multiplicity influences the welfare of buyers and sellers i specify and estimate a structural model of mechanism choice in online markets in which i consider both sides of the market on the demand side buyers choices among available listings are equilibrium outcomes of an entry game on the supply side sellers make equilibrium decisions when choosing sales mechanisms and prices i estimate this model using data from sales of baseball tickets on ebay and calculate consumer and seller rents in three markets the actual market with all three sales mechanisms and two counterfactual markets with auctions and fixed prices or only fixed price listings respectively i find that the addition of auctions to fixed price markets hurts sellers and risk averse buyers but benefits risk neutral buyers additionally the consumer surplus increases when buy it now auctions are offered but the seller surplus is reduced further i discuss the intuition for the cause of this result

pricing and allocation for quality differentiated online services we explore the problem of pricing and allocation of unique one time digital products in the form of data streams we look at the short term problem where the firm has a capacitated shared resource and multiple products or service levels we formulate the allocatively efficient generalized vickrey auction gva for our setting and point out the computational challenges in determining the individual discriminatory transfer payments we propose an alternative uniform price computationally efficient revenue maximizing knapsack formulation called the multiple vickrey auction mva while not incentive compatible the mva mechanism achieves bounded posterior regret and can be solved in real time it has the added benefit of realizing imputed commodity prices for the various services a feature lacking in the discriminatory gva approach for service providers that are concerned about the incentive compatibility but want imputed service prices we suggest a maximal mva mmva uniform pricing scheme that trades off revenue maximization for allocative efficiency for sake of completeness we discuss the properties of a first price pay your bid scheme while np hard and not incentive compatible this formulation has the perceived benefit of cognitive simplicity on the parts of sellers and bidders

bargaining versus posted price selling abstract two popular selling methods bargaining and posted price selling are compared here in a dynamic model when bargaining costs no more than posted price selling we find that bargaining is always optimal when bargaining costs more however bargaining is still preferred if and only if the common cost for both selling methods is large enough we also find that an increase in the discount rate or the seller s bargaining power favors bargaining finally we find that if the distribution becomes more dispersed and the increase in a buyer s valuation is sufficiently large bargaining is more likely to be adopted

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices