grading minimum quality standards and the labeling of genetically modified products we relate the labeling of genetically modified gm products to the theory of grading and minimum quality standards the model represents three stages in the supply chain assumes a vertical product differentiation framework allows for the accidental commingling of non gm products and treats regulation as a purity threshold for non gm products we find that a non gm purity level that is too strict leads to the disappearance of the non gm product and that some quality standard benefits farmers indeed the standard that is optimal from the perspective of producers is stricter than what is optimal for consumers and for societal welfare

eco labelling by a for profit certifier countervailing power and its consequences for profit certifier s eco labelling is common in industries where firms have some countervailing power on sharing gains from labelling we show that the certification standard for an environmental quality is lowered when firms have strong power a certifier with too low bargaining power will prefer to sell to the best offer rather than bargain this switch in the selling mechanism also thwarts his incentives in setting the standard this is consequential for evaluating policies the dimensions and even signs of welfare changes induced by taxes and subsidies depend upon the mechanism used and ultimately upon firms countervailing power

investment uncertainty and liquidity we analyze the dynamic investment decision of a firm subject to an endogenous financing constraint the threat of future funding shortfalls lowers the value of the firm s timing options and encourages acceleration of investment beyond the first best optimal level as well as highlighting another way by which capital market frictions can distort investment behavior this result implies that 1 the sensitivity of investment to cash flow can be greatest for high liquidity firms and 2 greater uncertainty has an ambiguous effect on investment

inserting gm products into the food chain the market and welfare effects of different labeling and regulatory regimes the purpose of this article is to examine the system wide effects of the introduction of genetically modified gm products with and without labeling and to compare these two regimes to a third regime where gm products are not present either because they have not yet been developed or because they have been banned for each regime the decisions and welfare of consumers producers and life science companies are examined the article explicitly incorporates the consumer response to the introduction of gm technology and considers different market structures of the life science sector

competitive search equilibrium in this paper i construct an equilibrium for markets with frictions which is competitive in the sense that all agents are price takers and maximize utility subject to a set of market parameters i show that the equilibrium allocation is socially optimal i also show how the competitive search equilibrium can be achieved if employers with vacancies can advertise publicly the wages they pay

innovation and trade with endogenous market failure the case of genetically modified products a partial equilibrium two country model is developed to analyze implications from the introduction of genetically modified gm products in the model innovators hold proprietary rights farmers are competitive adopters some consumers deem gm food to be inferior in quality to traditional food and the mere introduction of gm crops affects the costs of non gm food because of costly identity preservation among the results derived it is shown that although gm innovations have the potential to improve efficiency some groups can be made worse off indeed it is even possible that the costs induced by gm innovations outweigh the efficiency gains

income maintenance and labor force participation the paper studies the optimal tax subsidy schedules in an economy where the only decision of the agents is to work or not with an application to the case of france given an income guarantee provided by the welfare state the tax schedule that maximizes government revenue provides a benchmark the laffer bound above which it is inefficient to tax in fact under mild conditions a feasible allocation is second best optimal if and only if the associated taxes are lower than the laffer bound the only restriction that efficiency puts on the shape of the tax scheme is this upper laffer bound the laffer tax scheme itself can be computed from the joint distribution of the agents productivities and work opportunity costs depending on the economy it can take widely different forms and exhibit for instance negative marginal tax rates after estimating the joint distribution of productivities and work opportunity costs on french data i compute the laffer bound for two subpopulations single women and married women with two children or more quite surprisingly the actual incentives to work appear to be very close to the bound

who pays the costs of non gmo segregation and identity preservation our aim is to explore who pays the costs and who reaps the benefits of maintaining a dual market system of genetically modified organisms gmos and non gmos we analyze the welfare effects of the introduction of consumer hatred given gmo technology and the introduction of gmo technology given hatred making alternative assumptions of competitive and then monopolistic supply we recognize that identity preservation ip of non gmos creates costs for ip and non ip producers we model these costs as depending on the sizes of the two supply channels copyright 2003 oxford university press

credence attributes voluntary organizations and social pressure abstract credence attributes of products are unobservable through search or experience some consumers are willing to pay a premium for their provision and in addition citizens can apply social pressure on firms to supply credence attributes firms have formed voluntary organizations to assure the provision of credence attributes and the credible provision provides product differentiation this paper provides a theory of the voluntary provision of credence attributes in the presence of demand pull from consumers and social pressure from ngos where an organization chooses a credence standard and firms compete given the standard the credence standard is lower the larger the organization and social pressure results in a higher standard

a divisible search model of fiat money this paper extends the kiyotaki wright search model of fiat money to allow for divisible money and goods the extension allows me to examine the standard issues in monetary economics such as the neutrality and superneutrality of money by severing the artificial link in the kiyotaki wright model between the money supply and the number of money holders it is shown that money is neutral but not superneutral money growth generates a trading opportunity effect it changes the fraction of different agents in the economy and hence changes the probability with which agents have a successful match in addition money growth has a negative effect on the real money balance that is familiar in walrasian monetary models the balance of the two effects can imply a positive optimal money growth rate

downstream labeling and upstream price competition this paper analyses the economic consequences of labeling in a setting with two vertically related markets labeling on the downstream market affects upstream price competition through two effects a differentiation effect and a ranking effect the magnitude of these two effects determines who in the supply chain will receive the benefits and who will bear the burden of labeling for instance whenever the ranking effect dominates the differentiation effect the low quality upstream firm loses from labeling while all downstream actors are individually better off by decreasing the low quality input price the label acts as a subsidy and leads to an increase of the downstream market welfare this analysis furthers our understanding of the economic consequences of labeling in cases like those of gmos or restaurants

standards vs labels with imperfect competition and asymmetric information abstract i demonstrate that providing information about product quality is not necessarily the best way to address asymmetric information problems when markets are imperfectly competitive in a vertical differentiation model i show that a minimum quality standard which retains asymmetric information generates more welfare than a label which provides full information

how should food safety certification be financed an analytical framework where consumers are imperfectly informed about the safety of products is used to investigate the welfare effects of a public certification system several certification fees under alternative structures of certification cost are analyzed by maintaining competition among numerous sellers voluntary certification financed by a per unit fee is efficient and sufficient to signal product safety however mandatory certification linked with a fixed user fee may be necessary if a seller wields monopoly power further certification by a single private agency results in a distorted fee copyright 2001 oxford university press

financial intermediation business failures and real business cycles in this paper a general equilibrium business cycle model is construct ed that when subjected to real disturbances mimics observed qualita tive comovements among real output money business failures risk pr emia intermediary loans and prices in contrast monetary disturban ces generate cycles that have several inconsistencies with empirical evidence thus providing support for real business cycle theory at th e expense of monetary theories of the business cycle financial inter mediation arises endogenously in the model and intermediation matters for business cycle behavior a credit supply mechanism acts in tande m with an intertemporal substitution effect in propagating stochastic disturbances copyright 1987 by university of chicago press

investment options and the business cycle abstract this paper extends r mehra e c prescott recursive competitive equilibrium the case of homogeneous households econometrica 48 1980 1365 1380 to a production economy with two capital goods it is an rbc model in which each unit of investment requires a new idea an option when options are scarce new capital is harder to put in place and the value of old capital rises thus the stock market and tobin s q are negative indexes of intangibles during a boom q rises gradually as options are used up because investment represents an exercise of options it has an intertemporal substitution tradeoff that is absent from the adjustment cost model equilibrium may be efficient even without markets for knowledge the stock market may suffice

geographical indications public goods and sustainable development the roles of actors strategies and public policies summary the protection of geographical indications gis is being explored more and more worldwide as a tool for supporting local sustainable development focusing on wine and coffee value chains this paper will set out in what way gi protection schemes can contribute to the provision of public goods and illustrate how this contribution is being threatened by different failures that may occur within both valorization strategies and legal protection policies by examining how private collective and public interventions front these failures this paper will put forward economic arguments supporting a more comprehensive policy approach to ensure gis contribution to sustainable development

liquidity assets and business cycles abstract the objective here is to evaluate the quantitative importance of financial frictions in business cycles the analysis shows that a negative financial shock can cause aggregate investment employment and consumption to fall with output despite this realistic comovement among macro quantities a negative financial shock generates an equity price boom as the shock tightens firms financing constraint this counterfactual response of the equity price is robust to a wide range of variations in how financial frictions are modeled and whether financial shocks affect asset liquidity or firms collateral constraints some possible resolutions to this puzzle are discussed

credence goods efficient labelling policies and regulatory enforcement we analyse the optimality of information revelation of hidden attributes of credence goods via alternative labelling procedures when consumers are heterogeneous in their willingness to pay for the hidden attribute producers can either self label their products or have them certified by a third party the government can impose self or third party labelling requirements on either the green or the brown producers our benchmark model develops a condition that links the optimal imposition of third party labelling to the relative market share of each type of the good under complete information we extend our analysis to incorporate asymmetric information and cheating by the producers when corrupt producers can affix spurious labels the government needs to supplement the labelling policy with costly monitoring activities we find that mandatory self labelling schemes generally dominate mandatory third party labelling unless the market share effect greatly exceeds the incentive to cheat effect

effects of carbon reduction labels evidence from scanner data we investigate the effects of carbon reduction labels using a detailed scanner data set using a difference in differences estimation strategy we find that having a carbon label has no impact on detergent prices or demand we also investigate possible heterogeneous effects of carbon labels using the synthetic control method we find no evidence to indicate that the prices for the counterfactual detergents without the label would have been any different from the prices of the carbon labeled detergents we investigate the reasons for these results and conclude that the specific design of the carbon label is responsible for its lack of success jel d12 d83 l15 q54

taxation and redistribution of residual income inequality this paper studies the optimal redistribution of income inequality caused by the presence of search and matching frictions in the labor market we study this problem in the context of a directed search model of the labor market populated by homogeneous workers and heterogeneous firms the optimal redistribution can be attained using a positive unemployment benefit and an increasing and regressive labor income tax the positive unemployment benefit serves the purpose of lowering the search risk faced by workers the increasing and regressive labor tax serves the purpose of aligning the cost to the firm of attracting an additional applicant with the value of an application to society

financial frictions investment delay and asset market interventions we construct a dynamic macro model to incorporate financial frictions and investment delay investment is undertaken by entrepreneurs who face liquidity frictions in the equity market and a collateral constraint in the debt market after calibrating the model to the u s data we quantitatively examine how aggregate activity is affected by a shock to equity liquidity and a shock to entrepreneurs borrowing capacity we then analyze the effectiveness of government interventions in the asset market after such financial shocks in particular we compare the effects of government purchases of private equity and of private debt in the open market in addition we examine how these effects of government interventions depend on the option to delay investment

on the economics of labels how their introduction affects the functioning of markets and the welfare of all participants are labels good or bad for consumers and firms the answer may seem straightforward since labels improve information yet economic theory reveals situations where their introduction reduces the welfare of at least some market participants this essay reviews the theoretical literature on labels in order to identify and explain the main reasons that may cause labeling to produce undesirable side effects in contrast to earlier reviews that either concentrate on narrow topics or treat the subject in a more or less informal way we bring together the main results from all the relevant topics by presenting and discussing the assumptions and model building techniques that underpin them the advantage of this approach is that it identifies the origin of the differences between results thus allowing the synthesis of results that sometimes appear even to be contradictory we focus on quality labels and examine the impact of labeling on market structure the side effects of costly certification issues related to the label s trustworthiness the rationale for mandatory vs voluntary labeling the level at which the label s standard is set according to the agency that selects it the political economy of labels that is pro or anti label lobbying lobbying to affect the label s standard and lobbying in favor or against the label s mandatory imposition these topics cover a wide range of applications including genetically modified organism gmos organic produce geographic indicators controlled origin eco labels etc we conclude by identifying topics that require further research

machine replacement and the business cycle lumps and bumps this paper explores investment fluctuations due to discrete changes in a plant s capital stock the resulting aggregate investment dynamics are surprisingly rich reflecting the interaction between a replacement cycle the cross sectional distribution of the age of the capital stock and an aggregate shock using plant level data lumpy investment is procyclical and more likely for older capital further the predicted path of aggregate investment that neglects vintage effects tracks actual aggregate investment reasonably well however ignoring fluctuations in the cross sectional distribution of investment vintages can yield predictable nontrivial errors in forecasting changes in aggregate investment

can information costs affect consumer choice nutritional labels in a supermarket experiment this paper investigates whether information costs under currently regulated nutritional labeling prevent consumers from making healthier food choices we implement five nutritional shelf label treatments in a market level experiment these labels reduce information costs by highlighting and summarizing information available on the nutritional facts panel following a difference in differences and synthetic control method approach we analyze weekly store level scanner data for microwave popcorn purchases from treatment and control stores our results suggest that consumer purchases are affected by information costs implemented low calorie and no trans fat labels increase sales in contrast implemented low fat labels decrease sales suggesting that consumer response is also influenced by consumers taste perceptions a combination of these claims into one label treatment increases information costs and does not affect sales significantly

private vs public regulation political economy of the international environment minimum standards set by a world environmental organization weo and ngo labelling are promoted as alternative approaches to international environmental protection we explore the potential inter play between these two approaches when the weo is subject to pressure from producers we find that if weo and ngo schemes are mutually exclusive then the existence of an ngo alternative increases industry resistance to weo proposals and this may reduce welfare if however the schemes are run in parallel existence of the ngo lessens producer opposition to weo activities this allows the weo to be bolder in its proposals which is good for welfare

endogenous quality choice price vs quantity competition two versions of a vertical product differentiation model one with fixed and the other with variable costs of quality are analyzed to study how the hypotheses of price versus quantity competition affect equilibrium solutions product differentiation arises under all the scenarios considered contrasting previous findings of symmetric quality choices under cournot behavior however to relax harsher market competition firms differentiate more under bertrand than under cournot a simple welfare measure also indicates that the economy is better off when firms compete on prices with fixed costs of quality not only consumer but also producer surplus is higher under price competition copyright 1993 by blackwell publishing ltd

geographical indications and the competitive provision of quality in agricultural markets the economics of geographical indications gis is assessed within a vertical product differentiation framework that is consistent with the competitive structure of agriculture it is assumed that certification costs are needed for gis to serve as collective credible quality certification devices and production of high quality product is endogenously determined we find that gis can support a competitive provision of quality and lead to clear welfare gains although they fall short of delivering the constrained first best the main beneficiaries are consumers producers may also accrue some benefit if production of the high quality products draws on scarce factors that they own copyright 2008 oxford university press

green markets eco certification and equilibrium fraud abstract consumers voluntarily pay significant price premiums to acquire unobservable environmental attributes in green markets this paper considers the performance of eco certification policy under circumstances where consumers cannot discern environmental attributes in goods but are able to form rational expectations regarding the extent of illicit activities in the green market the main results are i fraud is less prevalent in green markets when entry barriers limit the number of firms ii conventional environmental policies on polluting techniques increase the incidence of fraud and can even preclude the use of non polluting techniques which would otherwise emerge in green markets iii voluntary eco certification policies can decrease fraud increase output and raise profits per firm and iv in cases where the socially optimal resource allocation can be supported the optimal policy involves negative unit certification fees positive fixed certification fees and is revenue generating for the certifying agent