coal overcapacity in china multiscale analysis and prediction gaining a quantitative understanding of the causes of coal overcapacity and accurately predicting it are important for both government agencies and coal enterprises following the decomposition reconstruction prediction concept a combined ensemble empirical mode decomposition least square support vector machine autoregressive integrated moving average eemd lssvm arima model is proposed for quantitatively analyzing and forecasting coal overcapacity in china the results show that the main causes of coal overcapacity in china include insufficient demand market failure and institutional distortion institutional distortion with an influence degree of 73 75 is the most fundamental and influential factor from 2017 to 2019 the scale of coal overcapacity in china will reach between 1 721and 1 819 billion tons suggesting that coal overcapacity will remain a serious problem the rate of coal overcapacity caused by insufficient demand will fluctuate slightly while coal overcapacity caused by market failure will trend downward but the impact of institutional distortion on coal overcapacity will be exacerbated a statistical analysis demonstrates that the eemd lssvm arima model significantly outperformed other widely developed baselines e g arima lssvm eemd arima and eemd lssvm

semicollusion in the norwegian cement market abstract a model of semicollusion where firms collude on prices and compete on capacities is tailor made to the characteristics of the norwegian cement market and tested on this particular market for the period 1927 1982 the results indicate that the rapid increase in capacity and thereby in exports in the period 1956 1967 the late phase of the price cartel best can be explained by the market sharing agreement each firm overinvested in capacity to receive a large quota in the domestic market

predicting exchange rate crises mexico revisited abstract this paper predicts ex ante probabilities of currency crises and sizes of expected devaluations month by month for mexico between 1980 and 1986 the forces contributing to speculative attacks on the mexican peso include domestic fiscal and monetary shocks external credit shocks and relative price shocks reducing domestic credit growth increasing the uncertainty surrounding this growth and reducing the size and perhaps increasing the frequency of currency realignments might have greatly reduced the amount of currency speculation against the peso between 1980 and 1986 anticipated external credit supply shocks played a relatively minor role during mexico s balance of payments crises

the fundamental determinants of interest rate differentials in the erm the paper analyses the sources of persistent interest rate differentials vis a vis germany that have existed in belgium denmark france ireland italy and the netherlands in a target zone system like the erm interest rate differentials mainly reflect devaluation expectations which are measured here by raw 1 month euromarket interest rate differentials drift adjusted 1 month differentials and differentials in long term government bond yields the role of a large set of fundamental macroeconomic variables that may have affected these devaluation expectations is investigated within a vector autoregressive var setting by means of granger causality tests impulse response functions and variance decompositions we find no evidence that fundamentals are more relevant to drift adjusted devaluation risk than for unadjusted interest rate differentials a significant impact of inflation budget deficits and unemployment becomes evident for almost all erm participants

informational smallness and the scope for limiting information rents abstract for an incomplete information model of public good provision with interim participation constraints we show that efficient outcomes can be approximated with approximately full surplus extraction when there are many agents and each agent is informationally small the result holds even if agents payoffs cannot be unambiguously inferred from their beliefs the contrary result of neeman z neeman the relevance of private information in mechanism design j econ theory 117 2004 55 77 rests on an implicit uniformity requirement that is incompatible with the notion that agents are informationally small because there are many other agents who have information about them

real aspects of exchange rate regime choice with collapsing fixed rates abstract typical evaluations of the choice of exchange rate regime examine the performance of the real economy and assume that the regimes last indefinitely in contrast actual regimes are quite transitory this paper examines how the predictions of two popular models for the determination of some real economic variables must be modified when agents rationally perceive that a fixed rate regime will be transitory the models studied are simple stochastic versions of the models in dornbusch 1976 and flood and marion 1982

speculative currency attacks with endogenously induced commercial bank crises abstract to date all models of exchange rate crises ignore the existence of a commercial banking sector however if deposit money internal drain is used to purchase foreign exchange external drain then an external drain may give rise to a banking crisis the paper illustrates how an internal drain alters the dynamics of a speculative attack when it results in a cash payments restriction by interrupting the external drain such a restriction postpones devaluation and reduces the size of the initial devaluation the us internal and external drains of 1893 are discussed to provide motivation and support for the model

strategic investment in merchant transmission the impact of capacity utilization rules abstract in this paper we look at the relative merits of two capacity utilization regimes in the merchant electricity transmission network must offer mo where the entire capacity installed has to be made available for transmission and non must offer nmo where some capacity could be withheld we look at two specific cases i demand for transmission varies across time and ii vertical integration is allowed between investors in transmission network and electricity generators in the case of time varying demand under mo we find that a monopolist may underinvest in transmission when compared to nmo although nmo may lead to more capacity withholding in the case of vertical integration we find that when the market power is with the generators of the exporting node without vertical integration no welfare enhancing merchant investment would occur neither under mo nor nmo further if the generators in the importing node have market power in case vertical integration is allowed mo is better than nmo finally we also argue that the incentive to collude among various transmission network investors is mitigated with mo in place

sterilization costs and exchange rate targeting abstract we examine the movements of exchange rates and capital inflows in an environment where an optimizing central bank pursuing the joint goals of inflation and output targeting engages in costly sterilization activities our results predict that when faced with increased sterilization costs the central bank will choose to limit its sterilization activities allowing target variables such as the nominal exchange rate to adjust we then test the predictions of a linearized version of the saddle path solution to the model for a cross country panel of developing countries we use ols iv and gmm specifications to allow for the endogeneity of capital inflows our results confirm that monetary policy does respond to sterilization costs

asymmetric enforcement of cooperation in a social dilemma we use a public good experiment to analyze behavior in a decentralized asymmetric punishment institution the institution is asymmetric in the sense that players differ in the effectiveness of their punishment at the aggregate level we observe remarkable similarities between outcomes in asymmetric and symmetric punishment institutions controlling for the average punishment effectiveness of the institutions we find that asymmetric punishment institutions are as effective in fostering cooperation and are as efficient as symmetric institutions at the individual level we find that players with higher punishment effectiveness contribute similar amounts to the public account but have higher earnings and punish more than their weak counterparts

likelihood versus timing of speculative attacks a case study of mexico abstract this paper estimates a survival model to identify the role of macroeconomic fundamentals on the likelihood and the timing of a currency crisis for mexico during 1982 1994 foreign reserve losses expansionary output expansionary monetary and fiscal policies an increase in inflation differentials and an appreciation of the real exchange rate appear to have contributed to the speculative pressures on the other hand the decline in foreign reserves and the increase in the share of short term foreign currency indexed debt seem to be the main factors which determined the timing of speculative attacks

fiscal deficits exchange rate crises and inflation this paper extends earlier work on unsustainable monetary policies by endogenizing the regime switch that ultimately restores sustainability within this framework we analyse exchange rate based stabilization programmes and show how constraints on central bank borrowing during an exchange crisis influence timing and nature of the post collapse equilibrium such constraints introduce non neutralities more restrictive pre collapse credit policies increase the post collapse inflation rate external shocks can destroy consistency between fiscal programmes and inflation targets causing reserve losses exchange rate changes and higher inflation balance of payments crises are the mechanism through which fiscal imbalances translate into higher inflation rather than an alternative explanation of it this paper deals with inflation fiscal deficits and exchange rate policy in high inflation countries the experience of the past decade has presented a series of puzzles for example countries attempting to stabilize inflation through an exchange rate freeze often saw inflation accelerate after the collapse of the experiment to levels well above those observed before the programme was implemented another puzzle concerns the relation between inflation and balance of payments crises in many countries a bop crisis forcing a change in exchange rate policy often led to a persistent increase in inflation liviatan and piterman 1984 this has led to doubts about the relevance of fiscal deficits in explaining inflationary episodes leading many to see bop crises as an independent explanation of inflation but this apparent relation is a puzzle a bop crisis cum devaluation can at most explain a jump in the price level but not a sustained increase in inflation in this paper we demonstrate that these puzzles can be explained fully by drawing on the public finance approach to inflation initiated by phelps 1973 thus the fiscal versus bop controversy is not a real one our analysis shows that bop crises and exchange rate shifts are part of the mechanisms through which fiscal imbalances translate into higher inflation rather than alternative explanations to make these points we present a simple open economy model to analyse the transition to a fixed exchange rate regime discuss sustainability and demonstrate what happens when policy measures are inconsistent and the fixed regime unsustainable we also demonstrate how the constraints under which the central bank has to operate the exchange rate regime influence the timing of the attack the post collapse inflation rate and the effects of pre collapse fiscal policy on the post collapse equilibrium the analysis builds on the work of sargent and wallace 1982 and liviatan 1984 on unsustainable monetary policies cf buiter 1988 1989 and drazen and helpman 1987 for open economy variants contrary to this literature we link the timing of the regime switch towards sustainable policies to rational speculative behaviour rather than assuming it to be exogenous the introduction of rational speculators forcing a regime switch draws on the literature on speculative attacks on central bank reserves initiated by 8i

intertemporal effects of environmental mandates environmental mandates can impose large costs on the businesses that must comply with them understanding the effects of those costs on production decisions may require a dynamic framework if environmental damages and the costs of complying with mandates depend on cumulative production or the passage of time this paper focuses on the time dimension of general categories of fixed and variable costs arising from different types of mandates the paper develops an optimal control model to predict how such costs may jointly affect current production rates plant closure dates and cumulative production theoretical results derived from the comparative statics of the system of equations describing the solution to that model identify circumstances in which the policy goals of greater production and greater environmental protection may not always be at odds

do reputation feedback systems really improve trust among anonymous traders an experimental study feedback systems are claimed to be a crucial component of the success of electronic marketplaces like ebay or amazon marketplace this article aims to compare the effects of various feedback systems on trust between anonymous traders through a set of experiments based on the trust game our results indicate that trust is significantly improved by the introduction of a reputation feedback system however such mechanisms are far from being perfect and are vulnerable to strategic ratings and reciprocation our findings indicate that some changes in rating rules may significantly improve the efficiency of feedback systems by avoiding strategic rating or reciprocation and hence stimulate trust and trustworthiness among traders in particular a system in which individuals are not informed of their partner s rating decision before making their own decision provides better results both in terms of trust and earnings

excess capacity and collusion in this paper the authors analyze a restricted class of equilibria in the dynamic model of j p benoit and v krishna 1987 in which firms choose their scale of operation before engaging in a repeated game of price competition benoit and krishna established that all firms carry excess capacity in all collusive equilibria as the authors are interested in the relationship between excess capacity and collusion in price they examine equilibria in which firms tacitly collude in price but not in investment decisions copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

horizontal mergers and collusive behavior abstract in the industrial organization literature it is generally felt that mergers hurt consumers not only because of the increased industrial concentration they effect but also because collusion becomes more likely in this paper we show that at least in one important case this intuition is misguided if a tacitly collusive agreement enforced by trigger strategies is not initially sustainable mergers will tend to reduce the chance that it becomes sustainable in the future this is so because the threat point implicit in the agreement becomes more favorable for outsiders

buying and selling attacks on fixed exchange rate systems abstract in this paper we show how rational expectations models of speculative attacks on fixed exchange rate systems can be extended to take into account the possibility that the central bank could be forced to either devalue or revalue essential to the analysis are the concepts of buying attack and selling attack by means of which we were able to describe how expectations about the future exchange rate are formed we also provide a discussion on the problem of uniqueness of the equilibrium that may arise in this kind of speculative attack models

majority voting and the welfare implications of tax avoidance abstract a benchmark result in the political economy of taxation is that majority voting over a linear income tax schedule will result in an inefficiently high tax rate whenever the median voter has a below average income the present paper examines the role of tax avoidance for this welfare result for a right skewed distribution of taxed income we show that the political distortion from majority voting is increasing in the median voter s avoidance vice versa keeping the decisive voter s avoidance constant the political inefficiency is decreasing in the average level of avoidance in the economy

balance of payments crises and devaluation the collapse of a fixed exchange rate is typically marked by a sudden balance of payments crisis in which speculators fleeing from the domestic currency acquire a large portion of the central bank s foreign exchange holdings faced with such an attack the central bank often withdraws temporarily from the foreign exchange market allowing the exchange rate to float freely before devaluing and returning to a fixed rate regime this paper links the timing of the initial speculative attack to the magnitude of the expected devaluation and to the length of the transitional period off loating an implication of the analysis is that there exist devaluations so sharp and transition periods so short that acrisis must occur the moment the market first learns that the current exchange parity will eventually be altered for sufficiently long transition periods the floating exchange rate overshoots its new peg before appreciating back toward it for shorter periods the rate depreciates monotonically to its new fixed level accordingly the central bank s return tothe foreign exchange market can occasion a capital outflow or a capital inflow this abstract was borrowed from another version of this item

domestic bank runs and speculative attacks on foreign currencies abstract the paper extends the international transmission of financial crisis literature by illustrating how a domestic bank run can cause a speculative attack on foreign currencies the idea is that when domestic banks invest abroad a domestic bank run will give way to a repatriation of foreign capital if the repatriation causes a depletion of the foreign central bank s foreign exchange reserves then the foreign currency will be devalued as such a devaluation will render domestic banks insolvent in the rational equilibrium domestic bank runs will 1 cause a speculative attack on the foreign currency and 2 be self justified

to commit or not to commit revisiting quantity vs price competition in a differentiated industry previous studies have shown that quantity commitment by all firms in an industry mitigates price competition this paper shows that when firms have a choice asymmetric outcomes can arise with some firms choosing to commit to a quantity and other firms choosing not to to study the commitment decision we analyze a multistage game within a duopoly of differentiated firms a la hotelling in the first stage of the game firms choose whether or not to commit to a quantity in the second stage each firm that chose to commit sets a quantity which represents an upper bound on how much it can sell to consumers in the third stage both firms set prices strategically regardless of whether or not they committed in the final stage demand is allocated as consumers maximize their utilities firm s that chose not to commit to a quantity in the first stage can fulfill any quantity that consumers demand at the equilibrium prices we find that if product differentiation is sufficiently low both firms choose to co

takeovers managerial incompetence or managerial shirking agency theory identifies managerial shirking as the cause for takeovers while other explanations focus on low ability managers this paper formalizes jensen s free cash flow variant of agency theory by constructing a simple two period game which captures the distinctive empirical implications of the two theories using data for petroleum firms following the oil price shock of 1979 80 we find that firms undergoing financial restructuring exhibited higher values of tobin s q additionally evidence of management turnover and workforce cuts emphasizes that takeovers appear primarily designed to address agency concerns i introduction recent explanations for the causes of takeovers focus on the need to enhance managerial efficiency but there are two competing theories grossman and hart 1980 and shleifer and vishny 1986 postulate that takeovers replace managers of low ability jensen 1986 in contrast argues that takeovers emerge from agency problems specifically the need to restrain managers from dissipating free cash flow 1 to jensen takeovers increase managerial effort by raising debt obligations which commit otherwise free cash flows thus a takeover could be required either to replace incompetent managers or to constrain existing managers to more effectively pursue shareholder interests an agency problem unlike previous research which tends to be either theoretical 2 or empirical 3 this paper formalizes and tests a general model of takeovers that incorporates both types of managerial inefficiencies we attempt to bring out the distinctive implications of these theories and then test between them our theoretical model building on the earlier work of grossman and hart 1980 1982 and shleifer and vishny 1986 uses a game theoretic framework to formalize how free cash flow affects the incentives of managers it shows how stochastic shocks financial structure and the probability of bankruptcy interact to determine the optimal level of managerial effort one implication of the agency explanation for managerial inefficiency is that an exogenous increase in earnings will decrease managerial effort below efficient levels to attenuate this agency problem firms will financially recapitalize by increasing the debt equity ratio restoring the effort of existing managers to ex ante efficient levels alternatively when managerial incompetence motivates takeovers the target firms should be underperforming the industry the takeover should then lead to changes in management rather than recapitalization this paper uses a unique data set from the petroleum industry in the early 1980s to test between these distinctive theories the heavy takeover activity in this industry provides an excellent sample for empirical tests by restricting the analysis to firms within the same industry we control for inter industry effects which could otherwise vitiate the empirical findings the broad similarity of the firms also permits us to use tobin s q as a measure of firm performance since the asset bases and competitive conditions of the firms are highly similar another key advantage of using this industry is the availability of independent valuations of individual petroleum firm s assets this independent measure enables us to reliably measure asset values which can also limit tobin s q analysis section ii describes the theoretical model section iii examines three highly varied types of empirical evidence each aimed at separating the effects of managerial ability versus managerial effort as explanations for takeovers section iv recapitulates the major findings ii a game theoretic model of takeovers incorporating agency effects grossman and hart 1980 pioneered the development of game theoretic models of takeovers leading to further advances by shleifer and vishny 1986 in borrowing extensively from these earlier works our objective is to construct a simple model incorporating both types of managerial inefficiencies in order to derive their distinctive empirical implications

collapsing exchange rate regimes shocks and biases abstract patterns in domestic credit creation stemming from inconsistent fiscal policies have received widespread attention for their role in aggrevating speculative attacks on central bank foreign exchange reserves and contributing to the collapse of exchange rate regimes this paper acknowledges the importance of monetary and fiscal discipline but also emphasizes the importance of other random shocks to the domestic money market most notably shocks from external credit supplies and relative prices policies of the domestic fiscal authorities are only partial catalysts for speculative attacks on a currency expansion of domestic credit stemming from the monetization of fiscal imbalances may be dominated by involuntary domestic credit expansions which are necessitated by surprise shortages in supplies of external capital further the unexpected availability of external capital translates into a lower net critical reserve floor making the depletion of central bank reserves by a speculative attack more difficult to accomplish relative price shocks also randomize the demand for nominal money balances and therefore may also have a strong direct influence on the probability of an exchange regime collapse empirical studies of exchange rate crises that neglect these considerations will produce biased estimates of both expected collapse probabilities and anticipated post collapse exchange rates

speculative attacks and macroeconomic fundamentals evidence from some european currencies abstract this paper evaluates the role of macroeconomic fundamentals in generating episodes of speculative pressures on six currencies of the european exchange rate mechanism erm the observed regime changes are first estimated by a set of speculative pressure indicators the contribution of economic fundamentals are then examined by using the implications of the basic speculative attack literature in general episodes of speculative pressures appear to be associated with a deterioration in economic fundamentals only for some of the sample currencies confirming the view that consistent macro policies are necessary but not sufficient to ensure the maintenance of an exchange rate peg

asymmetric network monitoring and punishment in public goods experiments abstract we extend the recent experimental literature on incomplete punishment networks in linear public goods games in these games we use an exogenous network to restrict both monitoring and the set of feasible punishment flows in addition to two baseline structures the complete network and the circle network we examine a novel asymmetric network in which both punishment responsibility and exposure differ across players average contributions are significantly lower in the asymmetric network driven entirely by the under monitored player who faces only one potential punisher we formulate and examine the hypothesis that asymmetry among a player s potential punishment targets may lead to discriminatory patterns of punishment in particular players might wish to punish targets for whom they are solely responsible discriminately more than targets for whom they share responsibility the experimental data do not support this hypothesis although they do suggest a compelling explanation as to why specifically we find that the under monitored player in the network retaliates against previous punishment significantly more often than others in the group which deters their only potential punisher from issuing stronger sanctions thus an additional complication of asymmetry in the network is that it may lead to more instances of anti social retaliation inhibiting the effectiveness of the decentralized punishment institution

do non strategic sanctions obey the law of demand the demand for punishment in the voluntary contribution mechanism abstract the prospect of receiving a monetary sanction for free riding has been shown to increase contributions to public goods we ask whether the impulse to punish is unresponsive to the cost to the punisher or whether like other preferences it interacts with prices to generate a conventional demand curve in a series of experiments we randomly vary the cost of reducing the earnings of other group members following voluntary contribution decisions in our design new groups are formed after each interaction and no subject faces any other more than once so there is no strategic reason to punish we nonetheless find significant levels of punishment and we learn that both price and the extent to which the recipient s contribution is below the group mean are significant determinants of the quantity of punishment demanded moreover punishment is mainly directed at free riders even when it costs nothing to the punisher

collusive pricing with capacity constraints in the presence of demand uncertainty we explore the response of collusive prices to changing demand conditions when firms operate under capacity constraints in the presence of demand uncertainty we find support for the conventional view that periods of low demand lead through the emergence of excess capacity to a breakdown of collusive pricing we also find that the nature of price wars depends on the degree of excess capacity in the industry while small amounts of excess capacity can lead firms to engage in mild price wars characterized by uniform price reductions and market share stability more severe price wars characterized by price undercutting and market share instability can emerge if excess capacity is sufficiently great finally our results lend support to the view that market share instability is a symptom of ineffective collusion

strategic incentives in dynamic duopoly abstract we compare steady states of open loop and locally stable markov perfect equilibria mpe in a general symmetric differential game duopoly model with costs of adjustment strategic incentives at the mpe depend on whether an increase in the state variable of a firm hurts or helps the rival and on whether at the mpe there is intertemporal strategic substitutability or complementarity a full characterization is provided in the linear quadratic case then with price competition and costly production adjustment static strategic complementarity turns into intertemporal strategic substitutability and the mpe steady state outcome is more competitive than static bertrand competition

the role of feed in tariff in the curtailment of wind power in china abstract while china s wind power initiative has experienced rapid growth serious curtailment issues persist though some studies have investigated this matter we explain this phenomenon from the novel perspective of excess capacity we first set up a theoretical model to explore the mechanism behind excess investment and find that the sticky feed in tariff fit and declining costs of wind power generate high mark up for wind power investors leading to a higher probability of excessive investment the theoretical prediction is empirically tested with a probit and tobit model using provincial level data between 2009 and 2016 the estimation results show that a 0 1 yuan increase in the mark up leads to a 2 3 increase in the rate of curtailed wind power based on the estimation results we simulate several scenarios to assess quantitatively how an improved policy design could have alleviated the curtailment issue simply increasing the frequency of the fit rate adjustment while maintaining the same subsidy reduction level between 2009 and 2016 could have reduced the curtailed wind power by 23 to 27 billion kwh accounting for 15 17 of actual curtailed wind power if the policy were better designed to reflect the declining trend of wind power costs more accurately the curtailment rates could have been further reduced by 2 81 corresponding to a reduction in wasted wind energy of 43 billion kwh or 28 of actual curtailment although accepting curtailment for a certain period could help to accelerate renewable energy deployment our analysis shows that the fit policy design could have been improved to reduce welfare loss these findings can not only assist the chinese government in framing effective policies but also may be applied to other emerging technologies or industries that require subsidy support

explaining the duration of exchange rate pegs abstract this paper is an empirical investigation of the duration of exchange rate pegs in 16 latin american countries and jamaica we identify factors that influence peg duration using logit analysis the real exchange rate and the level of international liquidity are significant determinants of the monthly likelihood of devaluation structural variables such as the openness of an economy and its geographical trade concentration and political variables such as changes in the executive also significantly affect the likelihood of a devaluation there is some evidence that the likelihood of a devaluation first rises and subsequently declines during the first year of a peg

voluntary import expansions and voluntary export restraints in an oligopoly model with capacity constraints in a three country generalization of the kreps scheinkman 1983 duopoly model with price competition and capacity constraints the author analyzes the effects of discriminatory voluntary import expansions and voluntary export restraints on equilibrium capacity and pricing decisions voluntary export restraints are shown to be bad for the exporting country contradicting recent results in the literature by r harris 1985 and k krishna 1989 voluntary import expansions are shown to decrease competition cases are analyzed where voluntary import expansions may actually lead to import contraction or to increases in efficiency in the home country

equilibrium vertical differentiation in a bertrand model with capacity precommitment both quality differentiation and capacity commitment have been shown to relax price competition however their joint influence on the outcome of price competition has not yet been assessed in this article we consider a three stage game in which firms choose quality then commit to capacity and finally compete in price when the cost of quality is negligible we show that firms do not differentiate their products in a subgame perfect equilibrium in other words capacity precommitment completely eliminates the incentive to differentiate by quality

judo economics reconsidered capacity limitation entry and collusion abstract the capacity investment by a new firm into an established market is explored in a repeated price game if the entrant expects collusion to prevail upon entry it may not practice judo economics but instead choose to install enough capacity to serve the entire market this occurs when collusion involves optimal punishment paths if instead collusion is based upon the static nash equilibrium punishment and the incumbent has excess capacity and the entrant is at a cost disadvantage the entrant will strategically limit its capacity so as to restrain the incumbent s price response to entry

firm size inequality and market power abstract in this paper we reexamine the relationship between firm size inequality fsi and market power in light of modern oligopoly theory using a model with capacity constraints and endogenous conduct we show that the market power fsi relationship is more complex than the positive link traditionally predicted we show that two separate effects are at work leading to a u shaped relationship between market power and fsi we also show that prices should be more unstable in markets where fsi is high we test these predictions on data for the u s airline industry and find results that support them

charitable bequests and taxes on inheritances and estates aggregate evidence from across states and time this paper examines the impact of wealth transfer taxes on charitable bequests we exploit the fact that federal and state taxes on estates and inheritances vary over time states and real wealth levels the effects of taxes are estimated using pooled cross sectional data spanning several decades based on aggregated information from federal estate tax returns under several different specifications we find evidence of a strong incentive effect of estate and inheritance taxes on charitable bequests

cartel pricing dynamics in the presence of an antitrust authority cartel pricing is characterized when firms are concerned about creating suspicions that a cartel has formed balancing concerns about maintaining the stability of the cartel with those of avoiding detection the cartel may either i gradually raise price to its steady state level or ii gradually raise price and then have it decline to its steady state level antitrust laws may have a perverse effect as they make cartel stability easier and thus allow for higher cartel prices

financial policy and speculative runs with a crawling peg argentina 1979 1981 abstract in this paper we present a model of a balance of payments crisis and examine the argentine experiment with a crawling peg between december 1978 and february 1981 the approach taken allows us to examine the evolution of a crisis when a collapse is not perfectly foreseen and yields plausible estimates of one month ahead probabilities of a collapse of the crawling peg the results suggest that the viability of an exchange rate regime depends on the consistency of exchange rate policy with domestic credit policy if the two are not consistent confidence in exchange rate policy is undermined

the value of collusion with endogenous capacity and demand uncertainty collusion has often been alleged in industries where long lived capacity investments are important this article develops a computational duopoly model with capacity investments demand shocks and either competitive or collusive pricing it shows that allowing for endogenous capacity investments can sometimes make collusion less valuable than competition and that it can change the normal relationships between the profitability of collusion and both the discount rate and industry wide demand shocks

alternative models of managerial behavior empirical tests for the petroleum industry explanations for takeovers often focus on managerial inefficiency as an explanation this paper utilizes panel data for a set of petroleum firms to test two competing hypotheses about managerial inefficiency the heterogeneous managerial model versus the free cash flow variant of agency theory by focusing on specific investment categories like exploration bidding and leasing activity and r 50d the effects of changes in management and cash flow are better isolated the empirical results provide considerable support for the free cash flow variant of agency theory showing that reduced cash flow due to restructuring will curtail investments in exploration bidding and leasing activity and r 50d copyright 1989 by mit press

rational and self fulfilling balance of payments crises speculative attacks on a pegged exchange rate must sometimes occur ifasset price paths are to be free of abnormal profit opportunities suchattacks are fully rational as they reflect the market s response to aregime breakdown that is inevitable the authors shows that under someexpectations about policy balance of payments crises can also be purely self fulfilling events in such cases even a permanently viableregime may collapse and the economy will possess multiple equilibriacorresponding to different subjective assessments of the probability ofa crisis the behavior of the domestic interest rate will naturally reflect the possibility of a speculative attack copyright 1986 by american economic association

fixed fee liscensing of innovations and collusion unlike other types of licensing agreements such as those with output restrictions market division clauses or output royalties licensing contracts with only a fixed fee have been perceived as having no anticompetitive consequences this paper illustrates that fixed fee licensing may facilitate collusion by enhancing the licensee s ability to credibly punish deviations from the collusive outcome on the part of the licenser antitrust implications of the result and potential ways of detecting collusion motivated licenses are discussed copyright 1996 by blackwell publishing ltd

an anatomy of cartel contracts we study cartel contracts using data on 18 contract clauses of 109 legal finnish manufacturing cartels one third of the clauses relate to raising profits the others deal with instability through incentive compatibility cartel organization or external threats cartels use three main approaches to raise profits price market allocation and specialization these appear to be substitutes choosing one has implications on how cartels deal with instability simplifying we find that large cartels agree on prices cartels in homogenous goods industries allocate markets and small cartels avoid competition through specialization

managerial incentives and collusive behavior abstract i characterize the effects of empirically observed managerial incentives on long run oligopolistic competition when managers have a preference for smooth time paths of profits as revealed by the empirical literature on income smoothing manager led firms can sustain collusive agreements at lower discount factors capped bonus plans and incumbency rents with termination threats make collusion supportable at any discount factor independent of contracts duration when managers have these preferences incentives and demand fluctuates price wars during booms need not occur the most collusive price may then be pro cyclical

competition and collusion with fixed output in many industries output is fixed by exogenous constraints so firms compete by allocating a given stock of supplies between different markets this paper shows that collusion in such industries leads firms to shift output from high margin markets to low margin markets as a result welfare is generally reduced although prices decrease in some markets and increase in others

a test of the free cash flow hypothesis results from the petroleum industry over the period 1979 85 the petroleum industry offers a unique test of the agency theory of corporat e restructuring a panel data set for twenty five firms indicates con siderable support for a hybrid free cash flow model in which explorat ion expenditures appear guided by neoclassical profitability measures but at the margin cash flow also exerts an independent influence the magnitude of the parameter estimates suggests that the free cash flow hypothesis does not fully explain the gains from restructuring copyright 1988 by mit press

collapsing exchange rate regimes some linear examples abstract we construct a pair of linear examples to study the collapse time of a fixed exchange rate regime the first example is a perfect foresight continuous time model which allows calculation of the exact collapse time and the tracking of reserves the second example is a discrete time stochastic model which yields an endogenous probability distribution over the collapse time and produces a forward discount of the exchange rate

the exact timing of the collapse of an exchange rate regime and its impact on the relative price of traded goods as of february 28 1983 ninety four countries are classified as having a fixed exchange rate regime 38 are pegged to the u s dollar 13 to the french franc 14 to the special drawing right and 24 to different baskets of currencies the choice of a fixed exchange rate peg implies a specific monetary discipline namely monetary growth equal to the growth rate of the currency or currencies to which a country is pegged monetary policy is thus subject to an exchange rate rule rather than to either a monetary growth rule or alternatively to discretionary policy a fixed exchange rate is a specific case of an active crawling peg where the preannounced rate of change in the exchange rate is zero active crawling peg rules whereby the exchange rate is adjusted downward by a preannounced amount over a specified period of time have been practiced in various places particularly in latin america recent experiments include argentina beginning december 1978 brazil during the 1980 calendar year chile from february 1978 to june 1979 jamaica from may 1978 to may 1979 portugal from august 1977 to june 1979 and uruguay beginning october 1978 1 at times the prean

borrowing to defend the exchange rate and the timing and magnitude of speculative attacks abstract the paper analyses the implications for the timing and magnitude of a speculative attack on a fixed exchange rate of government borrowing to increase the stock of international reserves it is shown that such borrowing reduces the likelihood of an early collapse and increases the likelihood of an eventual collapse the magnitude of the speculative attack also increases

a dynamic oligopoly with collusion and price wars we provide a collusive framework with heterogeneity among jirms investment entry and exit it is a symmetric information model in which it is hard to sustain collusion when there is an activejim that is likely to exit in the near future numerical analysis is used to compare a collusive to a noncollusive environment only the collusive industry generates price wars also the collusive industry offers both more and higherquality products to consumers albeit often at a higher price the positive effect of collusion on variety and quality more than compensates consumers for the negative effect of collusive prices so that consumer surplus is larger with collusion

exchange rate crises with domestic bank runs evidence from the 1980s abstract the sherman silver purchase act of 1890 led to inflation fears and a series of flights from the dollar in spite of these runs the dollar was never devalued the question remains why grilli 1990 argues that it was the treasury s ability to borrow that prevented collapse while this explains why the gold standard endured from 1894 to 1896 it does not explain why there was no successful attack before that time the paper argues that the gold standard endured during 1893 because an internal drain of commercial bank funds stopped the external drain a revised series of collapse probabilities is provided and shown to be zero during the internal drain

when zero interest rate differentials signal a lack of currency peg credibility abstract a negative shock to bank insolvency fears causes a positive domestic foreign interest rate differential if the currency peg is credible and a differential equal to zero if it is not this is contrary to what is expected from interest rate parity

the determination of price and output quotas in a heterogeneous cartel applying a selection criterion that uses both subgame perfection and the nash bargaining solution this paper investigates the relationship between firms cost functions and collusive behavior it is found that the optimal collusive price exceeds the price that the low cost firm would set if it was a monopolist comparative statics reveal that the optimal collusive price is increasing in the low cost firm s unit cost but is decreasing in the high cost firm s unit cost when the cost differential between firms is sufficiently large copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

speculative attacks with unpredictable or unknown foreign exchange reserves during a currency crisis speculators usually do not know the value of a central bank s foreign exchange reserves in this paper i show that modelling speculators as having imperfect knowledge of reserves enriches the predictions of the classical model of specula tive attacks with realistic lags in reserve reporting and costs to unsuccessful speculation successful speculative attacks will involve a jump depreciation unsuccessful attacks may occur attacks may occur when fundamentals are improving attacks may not be preceded by large increases in interest rates and fixed exchange rates may be abandoned with no attack and no decline in the money supply jel classification f3 1 attaques speculatives quand les reserves de devises etrangeres sont soit imprevisibles soit inconnues au cours d une crise monetaire les speculateurs ne connaissent pas normalement la valeur des reserves de devises etrangeres que la banque centrale a en main ce memoire montre qu une modelisation des speculateurs en postulant qu ils ont une connaissance imparfaite des reserves permet d enrichir les predictions du modele classique des attaques speculatives a partir d une evaluation realiste des delais dans les rapports sur la quantite de reserves et des couits d une speculation ratee on deter mine que les attaques speculatives reussies vont impliquer que se produise une deprecia tion discontinue que des attaques speculatives ratees puissent se produire que des attaques peuvent se produire quand les donnees fondamentales s ameliorent que des at taques ne peuvent pas etre precedees par de fortes augmentations des taux d interet et que des taux de change fixes peuvent etre abandonnes sans attaques et sans chute dans

tacit collusion in the presence of cyclical demand and endogenous capacity levels abstract we analyze tacit collusion in an industry characterized by cyclical demand and long run scale decisions firms face deterministic demand cycles and choose capacity levels prior to competing in prices our focus is on the nature of prices we find that two types of price wars may exist in one collusion can involve periods of mixed strategy price wars in the other consistent with the rotemberg and saloner 1986 definition of price wars we show that collusive prices can also become counter cyclical we also establish pricing patterns with respect to the relative prices in booms and recessions if the marginal cost of capacity is high enough holding current demand constant prices in the boom are generally lower than the prices in the recession this reverses the results of haltiwanger and harrington 1991 in contrast if the marginal cost of capacity is low enough then prices in the boom are generally higher than the prices in the recession for costs in an intermediate range numerical examples are calculated to show specific pricing patterns

thirty years of currency crises in argentina external shocks or domestic fragility participation has been quite volatile in the early 1800s in the midst of the lending boom fueled by the end of the napoleonic wars argentina and many other countries in latin america were able to issue bonds in london to finance their wars of independence and the civil wars that followed this lending boom ended in the summer of 1825 when the bank of england raised the discount rate to stop the drain in its reserves the tightening of liquidity was followed by stock market crashes banking problems and recessions in england and on the continent within months the crisis also spread to latin america argentina defaulted in 1827 in the midst of what is known as the first latin american debt crisis only resuming payments in 1857 similar international capital flow booms to emerging markets occurred in 1867 72 1880 90 1893 1913 and 1920 29 fueled by an easing monetary stance in the financial centers of those times and by the financial needs of railway expansion urbanization and development of the banking sector of countries in the periphery while argentina was heavily involved in all these capital flow bonanzas its participation was quite volatile with financial crises often following booms 1

consumer choice and cournot behavior in capacity constrained duopoly competition in a two stage model of duopolistic capacity choice and subsequent price competition consumer switching costs can deter some consumers from seeking service at a low price firm that lacks sufficient capacity to serve the entire market in this setting firms residual demand functions are aggregatedfrom thefirm selection decisions of individual consumers based on firms prices and their induced degrees of service reliability if consumers are approximately risk neutral with respect to service reliability then capacity constrained duopoly competition has a unique subgame perfect equilibrium in which firms choose cournot capacities and prices the equilibrium robustness of cournot behavior extends to duopoly markets in which consumer switching costs are induced by subscription pricing