vintage technologies and skill constraints evidence from u s exports of new and used machines when countries import production machinery they must choose between new and used equipment this article looks at that choice in the presence of labor saving technical progress and complementarity between technologies and skills within the firm it develops a theoretical model of the market for used machines it then analyzes data on united states u s exports of metalworking machine tools by country of destination classifying machines according to their vintage and their technological characteristics the data show that the share of used equipment imported is higher if the importing country has a lower level of development as measured by income per capita econometric estimation of the determinants of this share shows that it also is higher the greater is the technological change embodied in the machine or the greater is the change in the skills required to run the machine efficiently these results indicate that technological factors and skill constraints may be as important as factor prices in determining the choice of technique in developing countries the policy recommendation emerging from this work avoid constraints on imports of used equipment is similar to that in the existing literature but the reasoning is different instead of emphasizing inappropriate capital labor ratios for low wage countries the results indicate that investment in advanced technologies is effective only if importing countries have the skills to use them

cities regions and competitiveness turok i 2004 cities regions and competitiveness regional studies38 1061 1075 competitiveness is a complex concept used in a variety of ways and contexts the paper reviews some of the main ideas particularly as they apply to cities and regions its definition should include the relative position of a region s firms in external markets the productivity of local resources and the extent to which they are used competition takes both an institutionalized form local public agencies competing overtly for investment and other resources and more importantly a less organized form involving firms trading in wider markets there are two contrasting perspectives on the competitive advantages of city regions one emphasizes the benefits of scale and diversity that flow from concentrations of economic activity the other stresses the quality of the interactions between firms and supporting institutions recent studies suggest that the significance of localized business networks or clusters might be exagge

extremism campaigning and ambiguity this paper studies a model of how political parties use resources for campaigning to inform voters each party has a predetermined ideology drawn from some distribution parties choose a platform and campaign to inform voters about the platform we find that the farther away parties are from each other on average the less resources are spent on campaigning on average thus if parties are extreme less information is supplied than if parties are moderate we also show that if a public subsidy is introduced we have policy convergence given some mild technical restrictions on the public subsidy

existence of stationary equilibrium in the markets for new and used durable goods abstract we prove the existence of stationary equilibrium in the primary and secondhand markets for an indivisible consumer durable in a general model with stochastic degradation and endogenous scrappage decisions unlike rust econometrica 53 1985 783 we introduce transaction costs in the model as a motivation for consumer holdings of durables across multiple quality levels our technique allows for both multiple types of durables e g porsche and bmw and relaxation of the single crossing condition on consumer tastes we provide a simple example showing how increasing transaction costs affect secondhand prices eventually for sufficiently costly transactions closing the secondhand market altogether

a quantitative analysis of the used car market we quantitatively investigate the allocative and welfare effects of secondary markets for cars an important source of gains from trade in these markets is the heterogeneity in the willingness to pay for higher quality newer goods but transaction costs are an impediment to instantaneous trade calibration of the model successfully matches several aggregate features of the u s and french used car markets counterfactual analyses show that transaction costs have a large effect on volume of trade allocations and the primary market aggregate effects on consumer surplus and welfare are relatively small but the effect on lower valuation households can be large

innovation in europe a tale of networks knowledge and trade in five cities this paper identifies four groups of theory that seek to explain the relationships between innovation and space these are traditional agglomeration theory networking learning and new competitiveness theory evidence on the last three most recent theories is sought by analysing the results of comparable surveys of innovative firms in amsterdam london milan paris and stuttgart the empirical results show that differences occur in the external relationships between firms and the global economy with respect to specific innovation projects broadly speaking the main differences identified show that in regional cities such as stuttgart and milan innovative activities are more linked to their regional and national economies than they are in the international world cities such as paris and london this suggests that attempts to generalize the network paradigm on industrial production are premature at least as far as innovation is concerned conversely the data demonstrate the significance of trading syste

information aggregation through costly political action information about various policy alternatives is dispersed among the individual members of a society prior to a vote over the alternatives some people take costly political action to signal their private information to voters by informing voting decisions political action has potential to decrease the likelihood that voters cast mistaken votes perhaps surprisingly preelection communication may be counterproductive the dispersed information is partially aggregated by the vote and political action may contribute noise to the voting process in some cases the voting mechanism is more likely to implement the full information voting outcome in the absence of preelection political action copyright 1994 by american economic association

expressive voting and electoral equilibrium there are two rival accounts of rational voting in the public choice tradition the mainstream instrumental account that sees the vote as a revelation of preference over possible electoral outcomes essentially analogous to a market choice and the expressive account that sees the vote as expressing support for one or other electoral options rather like cheering at a football match this paper attempts to lay out some of the implications of the expressive account of voting for the issue of who votes as well as for the nature of political equilibrium and to compare these implications with those derived from the instrumental account we also identify and discuss the alternative views of the domain of electoral politics associated with the instrumental and expressive accounts of voting and sketch a route towards the integration of expressive and instrumental ideas in the analysis of rational electoral politics

information polarization and term length in democracy abstract this paper considers term lengths in a representative democracy where the political issue divides the population on the left right scale parties are ideologically different and better informed about the consequences of policies than voters are a short term length makes the government more accountable but the re election incentive leads to policy distortion as the government seeks to manipulate swing voters beliefs to make its ideology more popular this creates a trade off a short term length improves accountability but gives distortions a short term length is best for swing voters when the uncertainty is large and parties are not very polarized partisan voters always prefer a long term length when politicians learn while in office a long term length becomes more attractive for swing voters

a direct test of the lemons model the market for used pickup trucks of the implications of models of markets with asymmetric information in the seminal paper on markets with asymmetric information george akerlof 1970 pointed out two possible outcomes that may occur where sellers have better information about the quality of products than do buyers one possibility is that bad products will drive out good products if buyers cannot distinguish quality until after the purchase has been made there will be no incentive for sellers to provide good quality products and the average quality in the market will decline in the case of cars an often cited example of this phenomenon owners who discover that they have a lemon will attempt to sell it in the used car market to an unsuspecting buyer the owner of a creampuff will not sell his car since it is indistinguishable from a lemon to buyers and must therefore sell for the price of a car of average quality the effect of quality uncertainty is to reduce the volume of transactions in the used car market below the socially optimal level a second possibility suggested by akerlof is that institutions may develop to counteract the effects of quality uncertainty warranties and brand names can be used to give the buyer some assurance of quality these institutions may prevent good products from being driven from the market but they will

revealing information in electoral competition electoral competition between two expert candidates may lead to inefficient platform choices the present paper studies electoral competition between two experts and a third uninformed candidate the latter behaves populistically this seemingly useless candidate restores efficiency the paper then endogenizes information acquisition if the information acquisition costs are low then equilibria with i three expert candidates or ii two experts and one uninformed candidate may arise there are costs such that the latter equilibrium is the only pure strategy equilibrium in which information is transmitted

credibility and policy convergence in a two party system with rational voters the traditional approach to modeling political parties behavior based upon the contribution of anthony downs 1957 assumes that the parties unique objective is to win elections thus they maximize their popularity the crucial implication of this assumption for a two party system is that if the two parties have the same information about voters preferences full convergence of policies results from electoral competition this is the crucial implication of the median voter theorem more generally it may be argued that different parties are motivated differently because they represent different constituencies parties may not care only about winning elections per se but also about the quality of the policies resulting from an election in this case the candidates of the two parties view winning an election not only as a goal per se but also as a means of implementing a better policy for their respective constituencies this paper shows that electoral competitions imply dynamic inconsistency if the voters are modeled as rational and forwardlooking agents and parties do not care exclusively about being elected but also about which policy to implement once elected the dynamic inconsistency arises as follows the parties have an incentive to announce convergent platforms to increase their chances of election however if the elected party is not committed to its electoral platform it has an incentive to follow its most preferred policy rather than the policy announced in its platform if voters are rational they account for this incentive thus in general in a one shot electoral game the only timeconsistent equilibrium is one in which no convergence is possible the two parties follow their most preferred policies and the voters rationally expect this outcome full convergence of parties platforms results only as a limiting case when the parties are completely indifferent with respect to the quality of the policies resulting from the election thus these results differ from the existing literature on ideologically motivated politicians for instance donald wittman 1977 1983 randall calvert 1985 which implicitly assumes the possibility of binding commitments to electoral platforms complete or partial policy convergence can be the outcome of political competition if the interaction between the parties and the voters is modeled as an infinitely repeated game in fact if the candidates have concave objective functions the welfare maximizing policy rule implies a complete convergence of parties policies however this cooperative and agreed upon policy may or may not be sustainable as a subgame perfect equilibrium depending on parameter values in particular it depends on the discount rates of the two parties the degree of polarization of their preferences and the relative popu graduate school of industrial administration carnegie mellon university pittsburgh pa 15213 and national bureau of economic research cambridge ma 02138 this paper is based upon a chapter of my unpublished doctoral dissertation at harvard university i am greatly indebted to jeffrey sachs for directing my attention toward these issues and for many conversations i also wish to thank andrew abel dilip abreu olivier blanchard ramon caminal andrew caplin alex cukierman morris fiorina benjamin friedman herschel grossman howard rosenthal and the referees for very useful comments the responsibilitv af anv n mtnkieis af calrirp nfnlv mine the result of policy convergence in a two party system is more general than the median voter theorem for discussions of convergence results not at the median see john ledyard 1984 peter coughlin 1984 coughlin and shmuel nitzan 1981 melvin hinich 1977 for earlier work on spatial competition see richard mckelvey 1975 hinich ledyard and peter ordeshook 1972 1973 and the references quoted therein the present paper focuses on the result of convergence rather than on the median voter theorem per se

limit pricing when incumbents have conflicting interests abstract this paper considers entry into a market with two incumbents where one prefers entry and one dislikes it unlike the entrant incumbents know market demand in separating equilibria incumbents play full information nash equilibrium strategies when beliefs are unprejudiced separating equilibria only exist if entry is relatively unimportant for an incumbent in growing markets this condition will tend to be violated so that only pooling equilibria may exist

proportional representation with citizen candidates we construct a simple model incorporating bothcitizen candidates and proportional representation andinvestigate its properties in a basic case with auniform distribution of citizen ideal points and purepolicy motivations and in further cases which allowof office rents and other distributions ofpreferences the idea of citizen candidates developedby osborne and slivinski 1996 besley and coate 1997 endogenises the decision to stand as acandidate and allows explicit study of the number andtype of candidates as an equilibrium phenomenon theidea of proportional representation allows a moreflexible relationship between the pattern of votescast and the final policy outcome and also providesa richer model of political representation ourdiscussion points to the widespread possibility ofequilibria involving non median policy outcomes provides insights into the relationship betweenproportional representation and the equilibrium numberof candidates and also provides an explicit accountof the trade off between candidate benefitsdistributed on a winner take all basis and those thatare mediated through proportional representation

the politics of persuasion when voters are rational a democratic society is considered where the voters but not the politicians are uncertain about how the economy works the parties therefore have a strategic motive to misinform the voters will the voters learn how the economy works and will the policy decisions be efficient it turns out that the degree of polarization of the political parties is crucial if the parties are very polarized voters will not trust the parties and the policy will not reflect how the economy actually works whereas the opposite is true if the parties are less polarized

the insurance is the lemon failing to index contracts we model the widespread failure of contracts to share risk using available indices a borrower and lender can share risk by conditioning repayments on an index the lender has private information about the ability of this index to measure the true state that the borrower would like to hedge the lender is risk averse and thus requires a premium to insure the borrower the borrower however might be paying something for nothing if the index is a poor measure of the true state we provide sufficient conditions for this effect to cause the borrower to choose a nonindexed contract instead

the effect of used markets with endogenous replacement of durable goods the purpose of this paper is to examine the effect of used asset markets for a particular class of durable goods markets where replacement and trading ages are endogenous and where the imperfect substitutability between new and used goods results from the heterogeneity of buyers durable goods are assumed to be like automobiles the quality of the service declines with the age of the durable but the time at which the durable is traded and replaced with a new one is a choice variable for the owner as in my earlier work on heterogeneous buyers 3 it is assumed that the decline in service value with age is lower for some buyers so that these buyers will specialize in used assets in the presence of used markets however this paper departs from previous work by allowing the retirement age and the age at which goods are traded in the used market to be endogenously determined this extension has important implications because it will be shown that retirement age durability will be affected by the presence of used asset markets this paper examines the question of whether a competitive industry will favor a ban on used markets previous authors 2 6 8 have examined this question in markets where durable goods are like textbooks the used asset markets exist because the length of the demand for services by the purchaser is less than the lifetime of the durable in these models the presence of a used asset market is equivalent to a lengthening of the lifetime of the good however in the model of this paper the opening of a used asset market results in uniformity of the lifetime of the durable good since all of the oldest durables will be held by the user type that places the highest value on old durables this uniform retirement age with the used market will be shown to lie between the retirement ages adopted by the two user types when there are no used markets thus the average age of the stock of durables could rise or fall with the introduction of used markets second the model of this paper allows for the analysis of restrictions on used markets that raise the cost of used market transactions but do not eliminate trading it will be shown that the effects of a per unit tax on used market transactions will differ from that of an ad valorem tax because of the greater incentive created by an ad valorem tax to postpone used market transactions this result is in the spirit of barzel s 1 result that the form of the tax is important because different types of taxes may affect characteristics of the good in different ways in the present context goods

almost efficient information transmission in elections abstract we study a model in which two parties compete by announcing their policies after receiving conditionally independent private signals about the true state of the world parties are both office and policy motivated our model can explain radically different policy positions even when parties receive identical signals and have unbiased preferences this holds in an asymmetric equilibrium in which both parties reveal their private information to the voters and the implemented policy is almost first best for all possible realizations of parties signals in this equilibrium one party adopts extreme and the other one moderate policy positions

monetary policy delegation and polarisation there is by now a comprehensive literature beginning with rogoff 1985 arguing that a government should delegate monetary policy to a central banker who is independent and more conservative than the government itself this will reduce the inflationary bias typically at the cost of stabilisation for a democratic society this result would suggest that the median voter should prefer that monetary policy is delegated to an independent central banker who is more conservative than herself typically the central banker is chosen by the government and the government is chosen by the electorate thus there is some albeit perhaps a weak link between the preferences of the electorate and the central banker although the central banker presumably should be chosen for a long period of time waller and walsh 1996 he has to be chosen at some point in time this paper contains a political economy model where the central issue in politics is the choice of central banker and

policy biases with voters uncertainty about the economy and the government abstract we model policy choices where parties competing for election are better informed than voters about the state of the economy in addition voters are uncertain about the incumbent s preferences and the median voter s vote potentially depends on the state of the economy the incumbent may bias his policy in order to convey information to the voters and raise his chance of reelection the bias depends crucially on which kind of uncertainty is the most important uncertainty about preferences leads to moderate policies while uncertainty about the state of the economy leads to extreme policies

scientific labour markets networks and regional innovation systems lawton smith h and waters r scientific labour markets networks and regional innovation systems regional studies while quality of the labour force in a locality is the single most important component of local competitiveness the regional innovation systems literature has relatively neglected processes of labour force development this paper addresses two questions what is the role of labour markets in the making of regions as innovative systems and what is the role of labour markets in regional innovation systems the labour market and specifically the networks that exist between highly skilled workers are positioned at the centre of the analysis using evidence from the uk high technology economies of cambridgeshire and oxfordshire lawton smith h and waters r lawton smith h et wat

elections with privately informed parties and voters this paper studies a situation in which parties are betterinformed than voters about the optimal policies for voters weshow that voters are able to infer the parties information byobserving their electoral positions even if parties have policypreferences which differ substantially from the median voter s unlike previous work that reach opposite conclusions we assumethat voters have some private information of their own if theinformation available to voters is biased parties attempts toinfluence voters beliefs will result in less than fullconvergence even if parties know with certainty the optimalpolicy for the median voter

the politics of ambiguity politicians face a trade off between the policies that maximize their chances of reelection and their most preferred policies or the policies most preferred by the constituency which they represent this paper analyzes this trade off in a dynamic electoral model in which the voters are not fully informed about the preferences of the incumbent first we show that the incumbent follows a policy which is intermediate between the other party s ideal policy and his own ideal policy second we show that often the incumbent has an incentive to choose procedures which make it difficult for voters to pinpoint his preferences with absolute precision thus politicians may prefer to be ambiguous

pandering and electoral competition abstract we study an election with two perfectly informed candidates voters share common values over the policy outcome of the election but possess arbitrarily little information about which policy is best for them voters elect one of the candidates effectively choosing between the two policies proposed by the candidates we explore under which conditions candidates always propose the voters optimal policy the model is extended to include strategic voting policy motivated candidates imperfectly informed candidates and heterogeneous preferences

a model of electoral competition with incomplete information a model of two candidate electoral competition is developed in which voters are uncertain about the policy either candidate would implement if elected candidates simultaneously announce policy positions from which voters attempt to infer the true positions the candidates would adopt announcing a position different from the true position is costly to the winning candidate with these costs increasing as the difference between the true policy and the announced policy increases a refinement of the sequential equilibrium concept is used to describe the behavior of candidates and voters

media as watchdogs the role of news media in electoral competition abstract we develop an equilibrium model to analyze the role of the media in electoral competition when policy payoffs are state dependent party policies do not converge to the median voter s ideal policy if the media report only party policies news analysis about the state though possibly biased can discipline off equilibrium deviations and make the parties adopt more centrist policies since voters are rational the party favored by the media need not win with a higher probability instead media bias may reduce the effectiveness of electoral competition and lead to more polarized policies

searching for good policies policymaking is hard policymakers typically have imperfect information about which policies produce which outcomes and they are left with little choice but to fumble their way through the policy space via a trial and error process this raises a question at the heart of democracy do democratic systems identify good policies to answer this question i introduce a novel model of policymaking in complex environments i show that good policies are often but not always found and i identify the possibility of policymaking getting stuck at outcomes that are arbitrarily bad notably policy stickiness occurs in the model even in the absence of institutional constraints this raises the question of how institutions and the political environment impact experimentation and learning i show how a simple political friction uncertainty over voter preferences interacts with political competition and policy uncertainty in a subtle way that surprisingly improves the quality of policymaking over time

financing durable assets this paper studies the nancing of durable assets in a model with collateral constraints due to limited enforcement durability aects the ease of nancing we show that more durable assets require larger down payments of internal funds per unit of capital making them harder to nance because durability raises the price of an asset and hence the overall nancing need more than its collateral value thus nancial constraints have a bigger impact on purchases of more durable capital such as land structures and durable equipment this basic insight has implications for the choice between new and used capital technology adoption and the rent versus buy decision since new assets are more durable than used ones unconstrained borrowers buy new assets and sell them when they are used while constrained borrowers purchase used assets financial constraints inhibit technology adoption as constrained borrowers may adopt less durable low quality assets that are otherwise dominated technologies more durable assets are more likely to be rented given their larger nancing need legal enforcement aects trade in durable assets and technology adoption with weak legal enforcement economies being net importers of used assets and investing a larger fraction in less durable low quality assets

hiding information in electoral competition abstract we model a two candidate electoral competition in which there is uncertainty about a policy relevant state of the world the candidates receive private signals about the true state which are imperfectly correlated we study whether the candidates are able to credibly communicate their information to voters through their choice of policy platforms our results show that the fact that private information is dispersed between the candidates creates a strong incentive for them to bias their messages toward the electorate s prior information transmission becomes more difficult the less correlated are the candidates signals the lower is the signals quality and the stronger is the electorate s prior indeed for weak priors welfare decreases as the prior becomes stronger and welfare always decreases as the signals become less correlated

making friends or making things interfirm transactions in the sheffield metal working cluster the paper comprises an examination of the material inputs of a sample of 70 small firms in the sheffield metal working cluster and an assessment of the extent to which purchases are accompanied by face to face embodied transactions it is shown that there are no significant differences between the level of embodied transactions accompanying local intra cluster material links and those associated with non local flows it seems that on this measure at least and within this cluster the sheffield metal working cluster lacks the dense network of embodied transactions with local suppliers suggested in the wider literature the lower than expected measures of embodied transactions suggest that one of the mechanisms for the transfer of knowledge between buyers and suppliers within an industrial cluster is poorly developed in this particular case

monopoly agenda control and asymmetric information this paper extends the romer rosenthal 1978 1979 model of monopoly agenda control to an environment where only the agenda setter knows with certainty the outcome associated with a failed proposal the presence of this asymmetric information implies that any take it or leave it proposal may provide information crucial to the decision calculus of the voters a fact which an optimal proposal strategy will incorporate the equilibrium behavior of the agenda setter and voters is characterized and contrasted with that in the complete information environment and a number of empirical predictions concerning the nature of elections with monopoly controlled agendas are derived

turnover of used durables in a stationary equilibrium are older goods traded more this paper develops a dynamic model with transaction costs to determine the equilibrium resale pattern in a market for a durable good the key result is that the probability of resale is nonmonotonic in the age of the good trade volume is relatively low in the very beginning and in the middle of a good s life this result helps explain observed variations of resale rates across vintages for the u s market of used cars

economic policy economic performance and elections this paper explores the role of reelection pressures in determining economic policy by assuming that voters are uncertai n as to the efficacy of different policies a reelection process is derived that depends on both a politician s past policies and the level of economic activity during his time in office it is shown th at the less uncertain are voters as to which policy is best the more likely is a politician to manipulate policy for reelection purposes manipulation entails implementing the policy that is more likely to be well received rather than the one that maximizes income copyright 1993 by american economic association

revisiting marshall s agglomeration economies technological relatedness and the evolution of the sheffield metals cluster potter a and watts h d revisiting marshall s agglomeration economies technological relatedness and the evolution of the sheffield metals cluster regional studies according to alfred marshall firms receive increasing returns from a trinity of agglomeration economies a local pool of skilled labour local supplier linkages and local knowledge spillovers this article re examines the mechanisms underlying marshall s agglomeration economies in the sheffield metals cluster wherein marshall discovered them despite the cluster s decline empirical evidence is found that the mechanisms underlying marshallian agglomeration economies continue to occur within the surviving metals industry however upon closer examination marshallian agglomeration economies have evolved to become more prevalent amongst plants that use related metals technology the results highlight the importance of technological relatedness to cluster survival

trade in used equipment with heterogeneous firms this paper examines the pattern of trade in used asset markets where firms have differing factor prices and utilization rates of capital goods depreciation is modeled as an increase in down time as machines age and a measure of comparative advantage is derived that will explain the pattern of trade when there are two types of firms it is shown that with heterogeneous firms the price of used machines will reflect the characteristics of firms as well as the productivity of used machines and the implications of this result for the study of depreciation are discussed finally the relationship between firm characteristics and choice between purchasing new and used truck tractors is presented as an illustration of the predictions of the model

polarization and inefficient policies of the economy in this case the costs of producing a public good the parties each propose a policy an election is held and the policy of the winning party is implemented voters and parties care about the level of the public good and costs two kinds of sequential equilibria exist revealing where voters learn the true costs and the implemented policy adjusts to costs and non revealing if parties preferences are polarized only non revealing equilibria fulfill a refinement criterion like the intuitive criterion if they are alike only revealing equilibria fulfill this criterion thus less political polarization improves information revelation in electoral democracies policy motivated parties are likely to be better informed about the functioning of the economy than are voters this paper presents a model where two parties but not voters are informed about the cost of producing a public good we study whether an electoral democracy leads to efficient production of the public good given this asymmetry of information in particular under which circumstances will the implemented policy the level of the public good reflect actual costs the main result is that the policy will reflect costs if and only if at least one of the parties has preferences which are sufficiently similar to the median voter s in this sense polarization leads to inefficiency the public good can be for instance infrastructure medicare or military services both a continuum of voters and the parties have preferences over the amount of the good that is provided by the government the preferences of the two parties are situated on each side of those of the median voter the costs of providing the good are not precisely known to the voters who only know the distribution of costs and that they will pay for these costs as taxpayers on the other hand the parties know the costs

gains from trade in used goods evidence from automobiles abstract i investigate the welfare effects of trade liberalization by exploiting a natural policy experiment in the economy of cyprus a 1993 law relaxed import restrictions on used vehicles and enabled the importation of second hand japanese automobiles into the country this led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market welfare gains computed from a structural demand system average 2000 per purchaser per year over a four year period after the policy change the findings are suggestive of the potential for substantial gains from liberalizing trade in used goods

ideologues or pragmatists we study a model of electoral control where the politician is a policy expert but the voter is not first we focus on the case of an ideologue namely a politician who always wants the same policy implemented regardless of the state we show that the voter s lack of policy expertise comes at no cost to him but may come at an electoral cost to the politician next we turn to the case of a pragmatist namely a politician whose preferences are state contingent we show that the voter s lack of policy expertise does come at a cost to him as a consequence the voter may fare better with an ideologue than with a pragmatist this can occur even if the pragmatist s preferences are arbitrarily close to and perfectly correlated with the voter s

new or used investment with credit constraints abstract used capital is cheap up front but requires higher maintenance payments later on we argue that the timing of these investment cash outflows makes used capital attractive to financially constrained firms since it is cheap when evaluated using their discount factor in contrast it may be expensive from the vantage point of an unconstrained agent we provide an overlapping generations model and determine the price of used capital in equilibrium agents with less internal funds are more credit constrained invest in used capital and start smaller firms empirically we find that the fraction of investment in used capital is substantially higher for small firms and varies significantly with measures of financial constraints

partners forever an empirical study of relational ties in two small firm clusters many researchers take as axiomatic the proposition that economic action in clusters is embedded in dense durable and trust based social networks it is suggested here that the bias towards high trust enduring relations obscures the competitive dynamics of networks even where co operation can be identified drawing attention to the competitive motives underlying the construction of social networks an investigation is made into the duration and brokering of dyadic relations in business owners advice networks the analysis of 668 dyadic ties in a population of 113 small business owners in two textile and clothing clusters in germany reveals considerable variation in the duration of social relations and the likelihood that they were formed through third party brokers many of whom were direct competitors creating more ephemeral links the findings suggest that marketless conceptions of social networks in clusters need to be balanced with a stronger concern for the role of competition in the social embe

polarization political instability and active learning in a multiperiod setting decision makers can learn about the consequences of their decisions through experimentation we examine how polarization and political instability affect learning through experimentation we distinguish two cases i the decision to be made is not salient and does not affect the outcome of subsequent elections exogenous elections and ii the decision is salient and the election outcome depends on it endogenous elections it is shown that while the possibility of learning increases activism the existence of political instability distorts learning furthermore we demonstrate that when elections are exogenous polarization between political parties does not always decrease active learning

quality standards for used durables an indirect subsidy abstract we construct a theoretical framework to study the impact of quality standards for used durable goods on trade ows pro ts and consumer welfare we show that asymmetric quality standards generate trade in used goods from high to low standard countries while at the same time reducing trade in new goods producers in the exporting country bene t from this change while consumers lose in the importing country consumers are better off but domestic industry is hurt these ndings suggest that quality standards on used goods may be a powerful policy tool whose use should be monitored by the wto

spatial proximity and firm survival in a declining industrial district the case of knitwear firms in baden wu rttemberg the literature on small firm networks in industrial districts postulates the importance of territorial proximity for business innovation and regional development but empirical research to test this proposition is sparse while there is some research on the extent of interfirm co operation little is known about the performance outcomes of co operation i develop competing hypotheses from institutional ecological and random action theories concerning the survival chances of firms located in geographic proximity and test them with data on the complete population of knitwear firms in baden wurttemberg germany for the period from 1960 to 1998 proportional hazard estimates show that location in clusters of firms in the same industry increased business failure rates and location in diversified clusters of firms operating in complementary industries reduced failure rates the empirical results are most consistent with the ecological model of localized competition in resource environments la documentation

oligopoly limit pricing in the lab we examine the behavior of senders and receivers in the context of oligopoly limit pricing experiments in which high prices chosen by two privately informed incumbents may signal to a potential entrant that the industry wide costs are high and that entry is unprofitable the results provide strong support for the theoretical prediction that the incumbents can credibly deter unprofitable entry without having to distort their prices away from their full information levels yet in a large number of cases asymmetric information induces incumbents to raise prices when costs are low the results also show that the entrants behavior is by and large bi polar entrants tend to enter when the incumbents prices are low but tend to stay out when the incumbents prices are high