the automobile technological systems an empirical analysis of four european countries the aim of this paper is to study the automobile industry of the most important european countries france germany great britain and italy from a sectoral system perspective the main relationships within and between the building blocks constituting the automobile technological system are mapped and evaluated both in cross sectional and in temporal terms the importance of the sectoral ts as the unit of our analysis appears evident at both levels some general sectoral properties emerge which however hold in the four countries to a different extent thus suggesting how the institutional set up works as a differentiating element a sustained process of change in the various elements of the automobile ts is detected nevertheless resulting in a relatively stable path of development the countries considered reveal different patterns of motor vehicles trade specialisation in different geographical areas with changes over time also foreign direct investments show the existence of very different trajectories and outward inward balances

colluding on relative prices firms sometimes agree to limit the discounts they offer a class of customers i e they collude on the price differences across consumer classes why courts have struck down agreements to limit discounts as violations of the laws against price fixing are these collusive agreements in fact efficient this article addresses these questions in a multiproduct duopoly model under one interpretation the incentive to collude on relative prices can be traced to heterogeneity in consumers time costs under fairly general conditions total surplus increases with the collusion this efficiency effect is most striking in the case where collusion raises the prices faced by all consumers over which firms compete

the welfare effects of third degree price discrimination with nonlinear demand functions the welfare effects of third degree price discrimination are analyzed when demand in one market is an additively shifted version of demand in the other market and both markets are served with uniform pricing social welfare is lower with discrimination if the slope of demand is log concave or the convexity of demand is nondecreasing in the price the demand functions commonly used in models of imperfect competition satisfy at least one of these sufficient conditions

long run purchasing power parity with asymmetric adjustment 1 introduction despite its intuitive appeal there is inconclusive evidence supporting purchasing power parity ppp between countries with low inflation rates during the post bretton woods period for example enders 1988 taylor 1988 and macdonald 1993 use various forms of cointegration tests called stage three tests and find that real exchange rates exhibit large fluctuations with slow rates of decay toward a long run mean froot and rogoff s 1995 literature review presents a consensus estimate that deviations from long run ppp have a half life of about three years this is somewhat disappointing since stage three tests seem to be well suited to the task they require no assumptions concerning exogeneity and they imply a sensible dynamic relationship among price levels and the exchange rate the vast literature on ppp is indicative of the importance of the issue and the ambiguity of the findings it is well recognized that standard cointegration tests have low power to reject the null hypothesis of no cointegration this observation is especially relevant for ppp since any mean reversion in real rates is very gradual and the length of the post bretton woods period sample period is relatively short efforts to increase the power of unit root and stage three tests have had mixed success for example lothian and taylor 1996 and mark 1990 have tried to circumvent the low power of stage three tests by using long spans of time series data unfortunately the use of long time spans raises the possibility of structural changes occurring during the period being examined panel unit root tests are generally more supportive of ppp than are bilateral tests of real exchange rate behavior for example oh 1996 wei and parsley 1995 and wu 1996 have used panel data in order to enhance the power of standard unit root tests although these particular articles are supportive of ppp panel studies must deal with the thorny issues of cross sectional correlation and the choice of the nations to include in the panel papell 1997 finds that allowing for serial correlation substantially weakens the evidence in favor of long run ppp o connell 1998 applies generalized least squares to panel data to eliminate any contemporaneous correlation in the error structure and finds no evidence supporting ppp the second problem with the standard unit root and cointegration tests is that they implicitly assume symmetric adjustment however official intervention in the foreign exchange market means that nominal exchange rate adjustment may be asymmetric under a managed float for example one of the monetary authorities might be more willing to tolerate currency appreciation than depreciation similarly a currency band mitigates exchange rate movements until the level of the band is altered furthermore the slow adjustment of real exchange rates is often explained by the stickiness of national price levels for example in the well known dornbusch 1976 overshooting model prices and the exchange rate move in the same proportion as the money supply in the very long run however in the short run prices are sticky and monetary shocks cause ppp deviations since the exchange rate moves proportionately more than prices rhee and rich 1995 and madsen and yang 1998 provide empirical evidence corroborating the implications of the asymmetric price adjustment models the key point to note is that if prices are primarily sticky in the downward direction there is no reason to presuppose that real exchange rate adjustment is symmetric in spite of the evidence supportive of asymmetric exchange rate and price adjustments there are only a few nonlinear tests of ppp although they do not explicitly test for ppp michael nobay and peel 1997 and taylor and sarno 1998 estimate real exchange rates as smooth transition threshold adjustment processes enders and falk 1998 formally apply various nonlinear unit root tests to real exchange rates and find little evidence of ppp

target zones and exchange rate dynamics this paper develops a simple model of exchange rate behavior under a target zone regime it shows that the expectation that monetary policy will be adjusted to limit exchange rate variation affects exchange rate behavior even when the exchange rate lies inside the zone and is thus not being defended actively somewhat surprisingly the analysis of target zones turns out to have a strong formal similarity to problems in option pricing and investment under uncertainty

intersectoral innovation flows and national technological systems network analysis for comparing italy and germany abstract the paper compares the innovative structure and performance of italy and germany by using the concept of the technological system which is defined as the result of the interaction of four different components the industrial the innovative the commercial domestic and foreign markets and the institutional sub systems the analysis of the intersectoral innovation flows within the two national technological systems is based on an input output database rearranged in vertically integrated sectors specific hypotheses have been formulated and valid proxies for the variables studied have been used the final results have been obtained by using network analysis methodology and indicators this called for a dicotornisation of the original matrices these results take into account separately the existing differences between italy and germany in both absolute terms dimension effect and relative terms proportion effect the paper shows that germany is characterised by a higher level of systemic connection both in absolute and generally in relative terms the italian technological system seems to be segmented in a dualistic structure where few high tech sectors co exist along with a pool of traditional ones rather peripheral in the innovation flow network the german system on the contrary appears to be homogeneous with a more evenly distributed structure of intersectoral innovation flows the paper concludes by considering the effects of the introduction of other sub systems namely foreign market and public intervention while the former introduces further elements of differentiation between italy and germany the latter seems to perform a similar role in both systems

third degree price discrimination with interdependent demands this paper analyzes the price output and welfare effects of third degree price discrimination for a monopolist who sells in two interdependent markets the case where the two goods sold by the monopolist are complements is analyzed as well as the more typical case where the two goods are substitutes the economic effects of price discrimination are shown to depend on the type and strength of demand interdependence the curvature of the demands and the slope of marginal cost the circumstances under which price discrimination causes both market prices to either rise or fall are also analyzed

third degree price discrimination under economies of scale there has long been a controversy in economics about whether or not a firm with monopoly power should be allowed to exploit its monopoly power by engaging in third degree price discrimination the effect of third degree price discrimination on welfare is two fold 1 output under price discrimination is misallocated because different groups are charged different prices but 2 if total output is different under price discrimination than under uniform pricing this will also affect welfare 2 schmalensee 8 varian 11 12 and schwartz 9 have shown that price discrimination must decrease welfare if output under price discrimination is the same or less than output under uniform pricing this fundamental result is quite robust and holds regardless of the number of sub markets or the behavior of marginal cost rising constant or falling it also holds even if the sub market demands are interdependent a necessary but not sufficient condition for price discrimination to be beneficial is that it increase total output perhaps the most common situation in which price discrimination will be beneficial is the case where only one sub market is served under uniform pricing but two or more sub markets are served under price discrimination in this case hausman and mackie mason 3 have pointed out that price discrimination will result in a pareto welfare improvement if marginal cost is constant or falling even when price discrimination does not open up new markets hausman and mackie mason 3 and nahata ostaszewski and sahoo 5 have shown that price discrimination can result in a pareto improvement by lowering prices in all sub markets hausman and mackie mason 3 257 argue that price discrimination is most likely to be beneficial when economies of scale are present 3

purchasing power parity for developing and developed countries what can we learn from non stationary panel data models the aim of this paper is to apply recently developed panel cointegration techniques proposed by pedroni 1999 2004 and generalized by banerjee and carrion i silvestre 2006 to examine the robustness of the ppp concept for a sample of 80 developed and developing countries we find that strong ppp is verified for oecd countries and weak ppp for mena countries however in african asian latin american and central and eastern european countries ppp does not seem relevant to characterize the long run behavior of the real exchange rate further investigations indicate that the nature of the exchange rate regime doesn t condition the validity of ppp which is more easily accepted in countries with high than low inflation

industrialization and substitutability a note abstract this paper analyzes the relationship between industrialization and technology in detail three main conclusions are obtained i the crucial factor for the existence of a poverty trap is the degree of substitutability among intermediate inputs ii the effects of technological progress in the manufactured good sector and the intermediate goods sector on industrialization differ with the degree of substitutability among intermediate inputs iii technological progress in the manufactured good sector and the intermediate goods sector weakens the lock in effect of historical events while strengthening the role of expectations these suggest that the degree of substitutability among intermediate inputs should be an important factor when we plan a development strategy

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

pareto price discrimination abstract as the collection of consumer data becomes more common online merchants are better equipped to price discriminate now more than ever before while standard first degree price discrimination benefits merchants and harms consumers relative to uniform pricing i derive an alternative first degree pricing strategy that achieves efficiency and pareto improves upon the uniform pricing equilibrium furthermore i show that price ceilings can enforce these pareto price discrimination strategies making pareto price discrimination a viable option for merchants and policy makers

purchasing power parity in less developed and transition economies a review paper abstract the concept of purchasing power parity ppp has been the subject of numerous studies many of which have been unable to prove conclusively this core principle of international finance although industrialized countries have received most of the attention studies that focus on less developed and transition economies have also attained mixed results this study surveys trends in this branch of the literature highlighting the econometric advances that have sought to solve this puzzle while pointing out that more needs to be done to address the reasons that might cause ppp not to hold

price discrimination and patent policy patent and antitrust policy are often presumed to be in conflict as an important example there is ongoing controversy about whether price discrimination by a patent holder is an illegal or socially undesirable exploitation of monopoly power in this article we show that no conflict exists in many price discrimination cases even ignoring the dynamic effects on incentives for innovation third degree price discrimination by patent holders can raise static social welfare in fact pareto improvements may well occur welfare gains occur because price discrimination allows patent holders to open new markets and to achieve economies of scale or learning further even in cases where discrimination incurs static welfare losses it may be efficient relative to other mechanisms such as length of patent life for rewarding innovators with profits

multiple bgps in a growth model with habit persistence this paper establishes multiple balanced growth paths in an otherwise standard competitive growth model without externality or distortions and with households preference dependent upon how his her consumption compares to a habit stock formed by his her own past consumption the key feature in our model is that consumption forms habits in combination with existing habits this model establishes multiple equilibria because habit persistence induces an internal intertemporal complementarity effect among consumption flows with current consumption reinforcing future consumption as a result there exist two balanced growth paths with one path exhibiting low consumption and habits and high economic growth and the other path exhibiting high consumption and habits and low growth that is not necessarily a development trap both steady states are saddles but global indeterminacy arises where a high balanced growth path co exists with a low balanced growth path where the two equilibrium paths cannot be pareto ranked and history need not matter for the selection of the equilibrium path

costly price discrimination abstract standard theory neglects that enacting price discrimination is costly to firms when this costliness is accounted for perfect price discrimination is often socially inefficient for pure monopolists it is sometimes socially inefficient for monopolistic competitors it is always socially inefficient

bounding the welfare effects of third degree price discrimination under pigouvian third degree price discrimination a profit maximizing monopolist typically charges different groups of customers different prices resale between groups is assumed to be impossible these differences in price entail a loss of efficiency because marginal valuations of the output are not equal across buyers the net welfare effect of allowing price discrimination is ambiguous though because the total output under discrimination may exceed that under uniform pricing nevertheless under quite general conditions third degree price discrimination by a monopolist can increase static welfare only if total output is greater under discriminatory pricing than under uniform pricing richard schmalensee 1981 hal r varian 1985 marius schwartz 1990 although there has been much analysis of whether price discrimination raises or lowers total output or welfare the size of these effects has remained largely unexplored varian 1985 compares discriminatory pricing to uniform pricing for a monopolist and provides some bounds for the change in welfare in terms of market prices and outputs but these relationships give little sense of the relative size of welfare changes resulting from third degree price discrimination i address this issue by asking what can be said about the ratio wd wu where wd and wu denote welfare under discriminatory and uniform pricing respectively welfare is measured as the sum of producer surplus and marshallian consumer surplus section i provides two examples showing that this ratio can range from zero to infinity in these examples all markets are served under uniform pricing and demand in one of the markets is strictly convex considering a two market model in which a monopolist with constant marginal cost serves two independent markets under uniform pricing i show in section iii that if demands in both markets are concave then wd w is bounded below by 2 the assumptions of constant marginal cost and independent demands allow producer surplus and consumer surplus to be identified separately for each market separability across markets is central to the approach taken in this paper following joan robinson 1933 i call a market strong weak if the discriminatory price in that market is at least as great as no greater than the profit maximizing uniform price surprisingly the key to bounding wd wu is that the demand function in the weak market be concave if one market is strong the other is weak and demand in the weak market is concave then wd w can be bounded above by 2 5 or even 1 75 or 1 6 with additional assumptions on the demand functions these bounds arise for several reasons first the monopolist s profit under uniform pricing must be at least as large as the profit in the weak market under discrimination moreover if at all prices demand in the strong market is as great as in the weak market then profit under uniform pricing must be at least twice as great as profit in the weak market under discrimination otherwise the monopolist could do better by charging the monopoly price for the weak market second this relationship between profits in the two markets is useful in bounding welfare because welfare in each market can be related to profit in that market section ii shows that if demand is con department of economics and a b freeman school of business tulane university new orleans la 70118 i thank marius schwartz and two anonymous referees for their comments on earlier drafts of this paper

price discrimination and social welfare studies the effect of price discrimination on social welfare using methods from duality theory features of the reservation model presented quasi linear utility and consumers surplus upper and lower bounds on welfare change bounds on welfare change with optimal price discrimination from ebsco

market frictions technology adoption and economic growth this paper develops an endogenous growth model with labor market matching and technology adoption while labor market search and entry frictions lengthen technology diffusion exogenous technology arrival may creatively destruct jobs in the short run such interrelationships give rise to multiple equilibria global and local indeterminacy under which a small autonomous technological improvement may create a large growth effect we characterize the effects of exogenous technology arrival on equilibrium matching adoption effort wage and the overall dispersion of wages social inefficiency arises as a result of individuals failure to account for free rider thick matching job destruction effects in making technology adoption decision

bounding the relative profitability of price discrimination we derive bounds on the ratio of a monopolist s profit from third degree price discrimination to that from uniform pricing if the monopolist serves n independent markets demand is continuous and the cost function is superadditive then the profit ratio is bounded by n a linear demand example is provided coming arbitrarily close to this bound we provide examples showing the profit ratio can be unboundedly large when marginal cost is decreasing demand is discontinuous or fixed cost is positive if the monopolist has access to certain demand rationing strategies under uniform pricing we can bound the profit ratio even for discontinuous demand functions and multiproduct cost functions

purchasing power parity in developing countries multi period evidence under the current float abstract using panel unit root tests we examine purchasing power parity ppp for us dollar real exchange rates of developing countries during the current floating rate period since evidence of ppp may vary from period to period we examine the data for moving 10 year periods from 1976 85 up to 1990 99 we organize panels based on country characteristics influencing the validity of ppp those characteristics include openness inflation and the level and growth rate of per capita gdp although we find stronger evidence of ppp after 1980 our examination of panel data over 15 10 year periods yields only limited support for ppp

differential pricing when costs differ a welfare analysis this article analyzes the welfare effects of monopoly differential pricing in the important but largely neglected case where costs of service differ across consumer groups cost based differential pricing is shown to increase total welfare and consumer welfare relative to uniform pricing for broad classes of demand functions even when total output falls or the output allocation between consumers worsens we discuss why cost based differential pricing tends to be more beneficial for consumers than its demand based counterpart third degree price discrimination we also provide sufficient conditions for welfare improving differential pricing when costs and demands differ across consumer groups

the nature of long run technological change innovation evolution and technological systems abstract the aim of this paper is to define the concept of technological system as a useful tool for analysing the technological performance of an economy in order to deal with system openness and related concepts the main methodological issues are presented paying particular attention to the evolutionary methodological foundations of the process of technological change then the main building blocks of a technological system and its dynamics are analyzed in order to highlight the relevant features of this approach an empirical comparison between german and italian technological systems is then performed

accounting for core and extra core relationships in technological systems a methodological proposal abstract the paper proposes a new intersectoral methodology to measure the core relationships of a technological system that is the relationships of its private business core pbc and to integrate them with a consistent analysis of its extra core relationships that is between the pbc and the public and the foreign sub system although more demanding in terms of data referring to sectoral r d financing rather than to sectoral r d expenditure and differentiating the diffusion channels which approximate these relationships accordingly turns out to be more accurate in methodological terms and more powerful in terms of applications in particular as far as network analysis indicators are concerned an illustrative application for 5 ts is provided with respect to 1985 and important insights are obtained about how to compare the structure of the different ts sub systems although to be further explored in more extended and updated applications these insights have to be considered as pros along with the cons the methodology we propose inevitably entails

do real exchange rates follow a nonlinear mean reverting process in developing countries in an effort to fight relatively high inflation many developing countries try to manage their nominal exchange rates through official intervention in addition developing countries tend to have high transportation costs tariffs and nontariff barriers these factors are among the sources of generating nonlinearity in real exchange rates and hence some nonlinear adjustment toward purchasing power parity ppp in developing countries in this paper we employ monthly real effective exchange rate reer data of 88 developing countries and test the null of nonstationarity versus an alternative of linear stationarity by the means of a conventional unit root test and compare the results with those obtained from a new test in which the null is the same but the alternative hypothesis is nonlinear stationarity the latter test supports the ppp theory in more developing countries compared with the former test suggesting that nonlinear adjustment toward ppp in developing countries is an important phenomenon reported country characterizations indicate that reversion in reer occurs more often for high inflation countries and for countries with high flexibility in their exchange rates

agricultural productivity and economic growth role of tax revenues and infrastructures 1 introductiondevelopment economists such as rostow 1960 and ranis and fei 1961 have stressed a positive linkage between agricultural productivity and industrialization the positive link however has been argued to be nonexistent by matsuyama 1992 in a two sector endogenous growth model of small open economies with a low elasticity of agricultural goods and the existence of learning by doing only in the domestic manufacturing sector 1 as a result of comparative advantage higher agricultural productivity solicits labor inputs from the manufacturing sector in his model leading to lower learning by doing and economic growth matsuyama s results however may not be consistent with what has actually happened in japan and other east asian economies in japan a land reform has been implemented and allocation of resources to agricultural research has been increased since the meiji restoration as a result of agricultural technical progress 2 agricultural productivity in japan is much higher than before the meiji restoration in particular evidence has shown that the agricultural technical change after the meiji restoration tends to increase nonagricultural output by pushing resources out of the agricultural sector into the nonagricultural sector for example see yamaguchi and binswanger 1975 table 7 for the quantitative effects of the agricultural technical change in japan on nonagricultural output column 3 and on input reallocation columns 5 and 7 in 1880 1965 similarly the agricultural technical change was higher in korea s and taiwan s early stages of economic development as they have founded agricultural research institutes and farmers associations during the japanese colonial period3 and implemented land reforms after world war ii for evidence see mason et al 1980 chapter 7 for the case of korea and thorbecke 1979 for the case of taiwan a world bank 1982 p 45 study reports that for the 23 developing countries whose agricultural growth rate in the 1970s exceeded 3 a year 17 countries had a gdp growth rate above 5 a year in the same period finally using cross country data for 14 asian developing countries in 1960 1986 mellor 1995 finds a positive and significant relationship between growth rate of per capita agricultural and nonagricultural gdps in which both agricultural and nonagricultural sectors grow more rapidly than 31 sub saharan and 20 latin american countries these above observations lead to interesting questions as to what mechanism lies in the positive impact of accelerated agricultural growth on nonagricultural growth what policies might increase the efficiency with which a productive agricultural sector moves a nonagricultural sector forward the purpose of this study is to revisit the linkages between agricultural productivity and economic growth with a government policy our model is based on matsuyama s 1992 framework with a small twist so that we can clearly identify the mechanism leading to a positive relationship the departure in this article lies in introducing a government which collects taxes and then conducts expenditures on infrastructures an important role played by higher agricultural productivity in an early stage of economic development is the one by which it renders the government larger tax revenues so that larger expenditure on infrastructures is facilitated 4 in a study investigating taiwan s rice for fertilizer bartering system in the 1950s and 1960s koo 1996 table 2 finds that the resulting hidden taxes on rice alone account for 10 20 of total tax revenue in the period extending from 1950 to 1969 along with other taxes the agricultural sector is thus an important source of government revenue in a developing economy 5 following barro 1991 public expenditure on infrastructures is assumed to be productive in that the learning by doing effect of the manufacturing sector becomes enhanced with public expenditure on infrastructures

validity of purchasing power parity for selected latin american countries linear and non linear unit root tests abstract the aim of this study is to examine empirically the validity of ppp in the context of unit root tests based on linear and non linear models of the real effective exchange rate of argentina brazil chile colombia mexico peru and venezuela for this purpose we apply the harvey et al 2008 linearity test and the non linear unit root test kruse 2011 the results show that the series with linear characteristics are argentina brazil chile colombia and peru and those with non linear characteristics are mexico and venezuela the linear unit root tests indicate that the real effective exchange rate is stationary for chile and peru and the non linear unit root tests evidence that mexico is stationary in the period analyzed the results show support for the validity of ppp in only three of the seven countries

emerging green tech specializations and clusters a network analysis on technological innovation at the metropolitan level abstract current models of production and energy use are promoting an effervescent green technology green tech market focused on innovation and improved environmental performance most green tech firms are innovative start ups or small and medium sized enterprises smes characterized by large intangible assets and technological uncertainty which makes it difficult to identify their research and development r d and innovation paths in addition green tech companies tend to aggregate spatially and throughout the world clusters are increasingly seen as a strategy to foster innovative production and r d activities and stimulate a sustainable energy transition this paper investigates green tech companies in san francisco new york and london to identify their specialization and underlying technological and or market complementarities and emerging aggregates and specific clusters based on information from crunchbase and the web we propose a network analysis using metadata on technological innovations produced by green tech companies in these three metropolitan areas metadata are keywords and terms that help to describe an item and in the database they identify the products services and technologies driving innovation the main metrics of the networks identified at both node and network level are discussed from an economic perspective the approach helps in the design and implementation of targeted and information based local policies and facilitates closer relationships between innovative companies suppliers and clients venture capitalists large corporations and research laboratories involved in the green tech industry

durable goods monopoly with limited choice of commitment strategy when should the monopolist precommit consider a firm a monopolist offering a unique product to a fixed number of potential customers suppose that no consumer desires more than one unit of the good within a given period or across periods that is there is no value to repeat purchases in addition suppose that customers vary with respect to their initial reservation prices which decline over time a natural interpretation is that the monopolist is selling a good that is durable alternatively the firm is providing an entertainment or fashion good consumers may place a premium on obtaining the product quickly before it becomes less useful less stylish or less novel coase 7 conjectured that this firm s ability to extract surplus is limited because the firm has to compete with itself across time periods high valuation customers would be unwilling to pay a high initial price because they would anticipate that over time the firm will be reducing the price in order to sell to lower valuation customers subsequent literature formalizes this as a time inconsistency problem faced by a monopolist unable to make intertemporal commitments a separate strand of the literature proceeds from the polar assumption that the monopolist can precommit to any multiperiod pricing strategy comparison to coase s monopolist is simple higher profits are obtainable under precommitment because more surplus is extracted from high valuation customers an important proposition due to stokey 22 is that it will be optimal for the monopolist to precommit to a declining intertemporal price schedule if consumers with higher initial valuations have a higher rate of time preference 2 otherwise the optimal strategy is to hold price constant at the static monopoly level and to sell no more than the static monopoly quantity 3

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

parallel imports and repair services abstract this study explores the welfare effects of parallel imports when the producer may refuse to provide repair services for parallel imported units which reduces the degree of price convergence between countries if the probability of the product s breakdown is endogenously determined by the producer permitting parallel imports could increase the probability because a higher probability leads to a larger price gap as a result it is possible that prices increase and welfare deteriorates in both countries this negative welfare effect is more likely to emerge as the liberalization of trade in goods proceeds the prohibition of service discrimination recovers the positive welfare effect

price discrimination in australia s retail electricity markets an analysis of victoria southeast queensland when capital intensive monopoly industries are restructured and deregulated consumer prices commence a natural drift from regulated uniform average cost tariffs to competitive differential prices and this can raise problems for policymakers deep discounts are welcomed high standing offers are not but price discrimination is unremarkable in economics indeed in industries where fixed sunk costs represent a significant portion of total cost discriminatory pricing is usually welfare enhancing conversely theory predicts and empirical evidence confirms that regulatory efforts to cherry pick differential prices in asymmetric markets will damage consumer welfare in this article we analyse differential retail electricity offer prices in the australian states of victoria and queensland and contrast these with industry average total cost and the marginal cost of retail supply we find deregulated victoria displays high price dispersion with standing offer tariffs 10 above industry average total cost and marginal offers at break even prices i e 20 below average total cost in the semi regulated southeast queensland market where a regulated price cap exists there is lower dispersion but marginal offers include a 6 7 retail mark up efficient pricing requires the marginal unit produced to be priced at marginal cost and victoria meets this criteria but we identify an episode of inter consumer misallocation due to high standing offers we conclude policy initiatives designed to help firms shift vulnerable households from standing offer tariffs is desirable

the rise of clusters of innovative industries in belgium during the industrial epoch abstract this article presents the notion of cluster of innovative industries in order to analyse long term techno industrial change in belgium this notion accounts for strong and dynamic techno economic linkages interdependencies and complementarities that may occur between a set of industries for a particular period of time each cluster has its roots in a set of closely related major innovations that link particular industries to each other through a dynamic process of transfer and feedback of technology via various mechanisms we identified a number of 12 clusters of innovative industries that have emerged in the leading industrial countries since the first industrial revolution we also present empirical outcomes concerning the extent to which belgium participated in these clusters during the industrial epoch the belgian case shows that lagging countries are incapable of developing fully these clusters major components of the clusters were either missing or underdeveloped or they emerged with a considerable delay due to first mover advantages among other reasons

a note on third degree price discrimination with interdependent demands by incorporating symmetric interdependency into linear demands this note shows that monopolistic third degree price discrimination can improve social welfare even if total output remains the same a result that counters one of the main results presented in layson this journal 1998 it is also shown that this positive change in social welfare benefits the monopoly side but that consumers surplus decreases as a whole

price discrimination in input markets quantity discounts and private information we consider a monopolistic supplier s optimal choice of wholesale tariffs when downstream firms are privately informed about their retail costs under discriminatory pricing downstream firms that differ in their ex ante distribution of retail costs are offered different tariffs under uniform pricing the same wholesale tariff is offered to all downstream firms in contrast to the extant literature on price discrimination with nonlinear wholesale tariffs we find that banning discriminatory wholesale contracts often improves welfare this also holds if the manufacturer is not an unconstrained monopolist moreover uniform pricing increases downstream investments in cost reduction in the long run

intertemporal emission trading with a dominant agent how does a restriction on borrowing affect efficiency in this paper we analyze how restricting intertemporal trading by prohibiting borrowing of emissions permits affects the ability of a dominant agent to exploit its market power we show that the monopolist could take advantage of the constraint on borrowing by not distributing the sale of permits cost effectively across periods furthermore we show that a constant present value price over time does not imply a cost effective distribution of abatement permit sales across periods

purchasing power parity over two centuries strengthening the case for real exchange rate stability a reply to cuddington and liang cuddington and liang 2000 purchasing power parity over two centuries journal of international money and finance 19 751 755 examine the long span of sterling dollar real exchange rate data of lothian and taylor 1996 real exchange rate behavior the recent float from the perspective of the past two centuries journal of political economy 104 488 509 and claim to reject long run purchasing power parity by fitting time trends or by considering very high order autoregresssive representations this reply demonstrates however that the central claims of lothian and taylor are in fact strengthened by the implications of cuddington and liang s analysis in that while the economic importance of introducing trend terms is slight this leads to a faster estimated speed of mean reversion c 2000 elsevier science ltd all rights reserved jel classification f31 f41 c22

sectoral role change in transition china a network analysis from 1990 to 2005 in this article by using the data collected from input output table we conduct a detailed investigation on the evolution pattern during economy development of china from 1990 to 2005 by using network analysis at national cluster and individual level we find some interesting insights also in order to identify the difference between cluster levels we proposed a cluster centralization method to analyse the role of the cluster in the network this study shows that during the transition process of china there exist some similarity and differences in each selected time each period studied have some similar distributions of key sectors including the cores i e chemical industry nonmetallic mineral products construction business however significant differences also exists for example the 2005 system is characterized as higher degrees of systemic connection and hierarchy while the 1990s system has looser density and less centralization additionally the high tech clusters i e electronics and

the purchasing power parity debate originally propounded by the 16th century scholars of the university of salamanca the concept of purchasing power parity ppp was revived in the interwar period in the context of the debate concerning the appropriate level at which to re establish international exchange rate parities broadly accepted as a long run equilibrium condition in the post war period it first was advocated as a short run equilibrium by many international economists in the first few years following the breakdown of the bretton woods system in the early 1970s and then increasingly came under attack on both theoretical and empirical grounds from the late 1970s to the mid 1990s accordingly over the last three decades a large literature has built up that examines how much the data deviated from theory and the fruits of this research have provided a deeper understanding of how well ppp applies in both the short run and the long run since the mid 1990s larger datasets and nonlinear econometric methods in particular have improved estimation as deviations narrowed between real exchange rates and ppp so did the gap narrow between theory and data and some degree of confidence in long run ppp began to emerge again in this respect the idea of long run ppp now enjoys perhaps its strongest support in more than 30 years a distinct reversion in economic thought

transactions costs and nonlinear adjustment in real exchange rates an empirical investigation eolquilibrium models of real exchange rate determination in the presence of transactions costs imply a nonlinear adjustment process toward purchasing power parity ppp conventional cointegration tests which ignore the effect of transactions costs may be biased against the long run ppp hypothesis our results using both monthly data for the interwar period and annual data spanning two centuries clearly reject the linear framework in favor of an exponential smooth transition autoregressive process the systematic pattern in the estimates of the nonlinear models provides strong evidence of mean reverting behavior for ppp deviations and helps explain the mixed results of previous studies

third degree price discrimination and consumer surplus this paper considers the effects of monopoly third degree price discrimination on aggregate consumer surplus discrimination is likely to reduce surplus relative to that obtained with a uniform price but surplus can rise under reasonable conditions if the ratio of the pass through coefficient to the price elasticity at the uniform price is higher in the market with the higher price elasticity then surplus is larger with discrimination for a large set of demand functions the relatively high pass through coefficient implies a large price reduction in this market with logit demand functions surplus is higher with discrimination if pass through is above 0 5

welfare and output in third degree price discrimination a note abstract one main result on the welfare effects of third degree price discrimination by a monopolist is that an increase in total output is a necessary condition for welfare improvement this note provides two examples showing that this proposition does not generalize to an oligopoly with heterogenous firms in these examples price discrimination makes competition more favorable to the low cost firm this induces a cost saving that overcomes the welfare loss associated with price discrimination

third degree price discrimination in linear demand markets effects on number of markets served and social welfare author affiliation victor kaftal department of mathematical sciences 839 c old chemistry building university of cincinnati cincinnati oh 45221 usa victor kaftal uc edudebashis pal department of economics 1204 crosley tower university of cincinnati cincinnati oh 45221 debashis pal uc edu corresponding author acknowledgment we are grateful to rick harbaugh laura razzolini david sappington and two anonymous reviewers debashis pal is also grateful to taft research center for financial support 1 introductiondoes monopolistic third degree price discrimination reduce social welfare the question has continued to intrigue economists and policy makers for more than half a century the seminal work of robinson 1933 shows that if a monopolist with a constant marginal cost sells in two distinct and independent markets having linear demands then welfare falls with third degree price discrimination almost half a century later schmalensee 1981 reexamines robinson s result and demonstrates that for any number of markets with linear demands third degree price discrimination lowers welfare schmalensee 1981 also establishes more generally that price discrimination increases welfare only if it increases aggregate output subsequently using ingenious duality approaches varian 1985 and schwartz 1990 generalize the results for correlated demands and nonlinear marginal costs 1it is therefore well known that for linear market demands and constant marginal costs monopolistic third degree price discrimination indeed lowers welfare it is important to note however that the welfare reducing effect of third degree price discrimination is derived under a crucial assumption it is assumed that if the monopolist is forced to charge the same price in all markets uniform pricing the monopolist would sell a positive quantity in each market in a recent article cowan 2007 considers various forms of nonlinear demands and presents the necessary and sufficient and or sufficient conditions for price discrimination to reduce welfare cowan 2007 however also assumes that all markets are served under uniform pricing yet when this assumption does not hold the welfare effects of monopolistic third degree price discrimination turn out to be significantly more intricate observe that when all markets are not served under uniform pricing price discrimination may increase welfare because price discrimination may serve markets that would not be served under uniform pricing thus relative to uniform pricing price discrimination has two countervailing effects on welfare aggregate welfare goes down in those markets that are originally served under uniform pricing whereas welfare goes up in those markets that are not served under uniform pricing therefore the additional welfare from the new markets under price discrimination may offset any loss of welfare in the markets that are originally served under uniform pricing the point is strongly emphasized in schmalensee s 1981 seminal work in the context of prescription drugs an identical sentiment is recently echoed in varian 2000 in the context of two markets the possibility of price discrimination opening up new markets is first analyzed graphically by battalio and ekelund 1972 layson 1994 also considers two markets but includes nonlinear demands and presents conditions for opening of new markets based on endogenous features such as elasticities in the context of patent policy opening of new markets by price discrimination is explicitly incorporated by hausman and mackie mason 1988 using two markets they show that price discrimination by a patent holder is socially desirable in many cases because it allows the patent holder to open new markets there is a related literature in spatial economics beginning with greenhut and ohta 1972 and holahan 1975 that deals with spatial price discrimination and market opening with linear demand

the welfare effects of third degree price discrimination in a differentiated oligopoly this article examines the welfare effects of third degree price discrimination under oligopolistic competition with horizontal product differentiation we derive a necessary and sufficient condition for price discrimination to improve social welfare the degree of substitution must be sufficiently greater in the strong market where the discriminatory price is higher than the uniform price than in the weak market where it is lower it is verified however that consumer surplus is never improved social welfare improves solely owing to an increase in the firms profits in the case of linear demands jel d43 l11 l13 i introduction this article examines the welfare effects of oligopolistic third degree price discrimination explicitly considering product differentiation as a source of market power and strategic interaction product differentiation is one of the main reasons why firms can enjoy market power it enables them to sell products that are no longer perfect substitutes for example coca cola and pepsico sell similar types of soda although it is arguable that they differ in taste each firm thereby attracts some consumers over another as a form of price discrimination coca cola was once reported to be testing a vending machine that would automatically raise prices in hot weather 1 although the plan triggered nationwide controversy and coca cola had to abandon the project as a result it could have changed the regime of uniform pricing to one of price discrimination in the soda market how would the resulting change affect consumer welfare and firms profits in other words is third degree price discrimination good or bad answering this question is important because it helps us to evaluate price discrimination under oligopoly in this article we focus on horizontal product differentiation to consider substitutability as well as complementarity 2 by assuming a linear quadratic utility function of a representative consumer and focusing on the symmetric equilibrium of a pricing game we characterize the conditions relating to such demand properties as substitutability and complementarity required for price discrimination to improve social welfare more specifically we derive a necessary and sufficient condition for price discrimination to improve social welfare the degree of substitution must be sufficiently greater in the strong market where the discriminatory price is higher than the uniform price than in the weak market where it is lower it is also shown that aggregate output must increase for price discrimination to improve social welfare we verify however that consumer surplus is never improved by price discrimination welfare improvement from price discrimination is solely owing to an increase in firms profits in the example above the degree of substitution would be higher in the strong market i e when the temperature is high because consumers care less about which brand when it is hot weather our analysis below implies that social welfare might improve in this case the degree of substitution can vary across markets even if consumers in each market face exactly the same products because consumers taste depends on various market specific factors such as geographical and natural conditions if the strong market is where consumers demand a product more eagerly caring less about which brand in the above example individuals demand soda more eagerly in hot weather then our results suggest that price discrimination has large potential to improve social welfare 3 why does allowing price discrimination improve social welfare notice that there are two forces that determine equilibrium prices in price setting oligopoly a larger market size raises the price whereas a larger substitutability parameter lowers the price for price discrimination to raise social welfare it is necessary that a high degree of substitutability mitigates an increase in the discriminatory price in the larger market

a century of purchasing power parity confirmed the role of nonlinearity abstract taylor 2002 claims that purchasing power parity ppp has held over the 20th century based on strong evidence of stationary for century long real exchange rates for 20 countries lopez et al 2005 however found much weaker evidence of ppp with alternative lag selection methods we reevaluate taylor s claim by implementing a recently developed nonlinear unit root test by park and shintani 2005 we find strong evidence of nonlinear mean reversion in real exchange rates that confirms taylor s claim we also find a possible misspecification problem in using the estar model that may not be detected with taylor approximation based tests

monopolistic third degree price discrimination under vertical product differentiation this paper shows in a vertical product differentiation model with variable costs of quality that monopolistic third degree price discrimination always reduces welfare regardless of whether the quality is fixed or is endogenous the results provide rich implications for antitrust policy

input price discrimination in the presence of downstream vertical differentiation abstract this paper investigates the competitive effects of input price discrimination ipd in a setting in which an upstream monopolist produces an essential input supplied to the downstream market where there is competition between two vertically differentiated retailers two different input pricing regimes are investigated i the uniform pricing regime in which third degree input price discrimination is prohibited and i i a discriminatory pricing regime under which the upstream monopolist may charge different prices to the two downstream firms we find that despite favoring the low quality firm ipd is welfare enhancing if and only if the quality gap is sufficiently high

self fulfilling expectations and economic growth a model of technology adoption and industrialization in this work the authors construct a model that integrates both industrialization and endogenous growth they feature the role of technology adoption in sustaining growth and achieving industrialization the authors economy contains multiple equilibria for an initial history they found that only self fulfilling expectations matter in selecting an equilibrium whereas history plays no role the authors equilibrium is shown to involve a threshold property when the economy starts above this threshold the economy is able to sustain growth otherwise it is not both the rate of economic growth and the process of industrialization increase gradually and approach an upper hound copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association