a strategic market game with complete markets abstract an exchange economy is modeled as a strategic market game with all pairwise markets available existence of noncooperative equilibria is proved it is shown that if resources are distributed in a skewed manner in equilibrium prices may not satisfy the no arbitrage condition one round of trade even with all goods serving as money is not sufficient to provide enough liquidity for efficient trade

trade fragmentation and coordination in strategic market games abstract this paper analyzes the incentives to trade and the validity of the law of one price in three strategic market games with multiple trading posts in bilateral oligopolies where traders have corner endowments in one commodity all agents participate in all the markets the law of one price holds in bilateral oligopolies and in the buy or sell market game where equilibrium strategies are locally unique when traders can simultaneously buy and sell on every market the law of one price fails and the set of equilibrium prices generically has the same dimension as the number of active markets journal of economic literature classification numbers d43 d51

parental education labor market experience and earnings new wine in an old bottle evidence from us data suggests that increases in parental education significantly steepen the slope of male experience earnings profiles during early career years other things equal

are rising earnings profiles a forced saving mechanism this paper tests the hypothesis that rising earnings profiles are a mechanism by which individuals engage in forced saving it does this by examining the cross sectional relationship between overwithholding on income tax payments behavior that is consistent with a preference for forced saving and the slopes of age earnings profiles the forced saving hypothesis receives support from earnings regression estimates individuals who receive tax refunds are on earnings profiles that are significantly steeper and have significantly lower intercepts copyright 1995 by royal economic society

market contestability in the presence of sunk entry costs this article extends previous laboratory experimental research to examine the competitive discipline of contested markets with a natural monopoly type cost structure where sunk costs are neither zero nor infinite several alternative conjectures as to how or whether sunk costs can weaken the discipline of contested markets are presented and interpreted in the context of the experimental design sunk costs are found to weaken the support for strong interpretations of the contestable markets hypothesis and thus yield a wide diversity of dynamic patterns of market performance yet the disciplining power of contestability remains impressive with no indications of sustained monopoly pricing

the multiple unit double auction the note outlines institutional features of an open outcry market that permit multiple unit or block trades the purpose of the note is to introduce the process as a tool to be used in economics experiments the detailed rules governing the multiple unit double auction muda are stated for the case where offers are tendered by voice as opposed to through a computer the results of markets that use the rules are reported as a demonstration that convergence to equilibrium price traditionally observed in experimental markets remains with the use of the muda process

endogenous strategic business cycles this paper examines an overlapping generations version of the shapley shubik market game we show existence of equilibria for the simple one commodity model and analyze the dynamics of the equilibrium trajectories generated in the model because of the non linearities generated by strategic interaction of agents in the model we find that complex and chaotic equilibrium dynamics are possible in this model for a much broader range of preferences than those for which grandmont econometrica53 no 5 1995 995 1045 found complicated dynamics in the perfectly competitive version of this model these results then provide an alternative to the usual technology based explanation for the historical fact that business cycles became an important economic phenomenon only with the onset of industrialization journal of economic literatureclassification numbers c72 c73 d51 l16

advance production and cournot outcomes an experimental investigation abstract an experiment designed to assess the effects of advance production decisions on posted offer market performance is reported six of the twelve triopolies were conducted under standard posted offer rules in the remaining markets sellers made binding production commitments prior to posting prices an alteration that shifts the unique stage game nash equilibrium from the competitive to the cournot outcome as predicted advance production decisions raised prices and lowered output nevertheless stable cournot outcomes were never observed

estimating a firm s age productivity profile using the present value of workers earnings in hiring new workers risk neutral employers equate the present expected value of each worker s compensation to the present expected value of his her productivity data detailing how present expected compensation varies with the age of hire embed therefore information about how productivity varies with age this paper infers age productivity profiles using data on the present expected value of earnings of new hires of a fortune 1000 firm for each of the five occupation sex groups considered productivity falls with age with productivity exceeding earnings for young workers and vice versa for older workers

are earnings profiles steeper than productivity profiles we test competing explanations of rising age earnings profiles by obtaining direct estimates of marginal productivity differentials between workers in different age groups and comparing these to associated earnings differentials using contemporary data from israeli manufacturing firms the results indicate that controlling for other productive inputs and firm characteristics for the unskilled or less skilled workers who represent most of the workers in our sample both earnings and productivity profiles are upward sloping moreover these profiles mirror each other closely and are statistically indistinguishable however the estimates of the profiles are sufficiently imprecise that even sizable deviations between point estimates of earnings growth and productivity growth would not be statistically significant while we view the results as most consistent with a general human capital model of rising earnings profiles over the life cycle there is not strong evidence with which to reject alternative models

income schooling and ability evidence from a new sample of identical twins we develop a model of optimal schooling investments and estimate it using new data on approximately 700 identical twins we estimate an average return to schooling of 9 percent for identical twins but estimated returns appear to be slightly higher for less able individuals simple cross section estimates are marginally upward biased these empirical results imply that abler individuals attain more schooling because they face lower marginal costs of schooling not because of higher marginal benefits

economies of scale natural monopoly and imperfect competition in an experimental market this paper reports on the behavior of markets in which all agents have identical costs with economies of scale over the entire range of demand each firm by choosing a larger scale of plant and a larger volume can experience lower average cost thus the markets are characterized by the fundamental technological property that has motivated decades of theorizing about natural monopoly and imperfect competition the primary question posed by the research is whether or not a natural monopoly emerges and sets prices at monopoly levels or whether the data are more closely approximated by some alternative model of imperfect competition such as monopolistic competition cournot oligopoly or contestable market theory the results are that monopoly emerges and charges prices closely approximated by contestable market theory no support is found for cournot forms of oligopoly or for other types of monopolistic competition

empirical age earnings profiles the human capital earnings function in which earnings are expressed as a quadratic in potential experience is probably the most widely accepted empirical specification in economics in spite of its widespread acceptance the human capital earnings function provides a very poor approximation of the true empirical relationship between earnings and experience the standard formulation understates early career earnings growth by about 30 50 and overstates midcareer growth by 20 50 however simple alternative specifications that fit the data are available

very nice trivial equilibria in strategic market games abstract following shapley theory of measurement of economic externalities academic press new york 1976 we study the problem of the existence of a nash equilibrium ne in which each trading post is either active or legitimately inactive and we call it a shapley ne we consider an example of an exchange economy borrowed from cordella and gabszewicz games econ behav 22 1998 162 169 which satisfies the assumptions of dubey and shubik j econ theory 17 1978 1 20 and we show that the trivial equilibrium the unique ne of the associated strategic market game is not very nice in the sense that it is not legitimately trivial this result has the more general implication that under the dubey and shubik s assumptions a shapley ne may fail to exist

noncooperative oligopoly in economies with infinitely many commodities and traders in this paper we extend the noncooperative analysis of multilateral oligopoly to exchange economies with infinitely many commodities and trader types where exchange is modelled using a strategic market game with commodity money and trading posts we prove the existence of an active cournot nash equilibrium and its convergence to a walras equilibrium when the economy is replicated

nice trivial equilibria in strategic market games an example of an exchange economy is provided satisfying all of the assumptions of dubey and shubik 1978 for which the trivial nash equilibrium is the unique equilibrium point of the associated market game from this example we are led to propose an argument related to the intensity of competition explaining whv there could be no trade at an equilibrium point c 1998 academic press

natural monopoly and contested markets some experimental results a firm may become a monopolist because the average cost of producing the product reaches a minimum at an output rate that is big enough to satisfy the entire market at a price that is profitable in a situation of this sort if there is more than one firm producing the product each must be producing at a higher thanminimum level of average cost each may be inclined to cut the price to increase its output rate and reduce its average costs the result is likely to be economic warfare and the survival of a single victor the monopolist

liquid markets and competition abstract a market is liquid if no individual s actions have a big effect on the prices of goods traded in that market perfectly competitive markets are therefore perfectly liquid it is well known that market liquidity can be achieved by increasing the number of traders so that individual trades are small compared to total trades we show that even when there are only few traders market liquidity can be achieved through large short sales in which net trades are small relative to gross trades in particular for a natural variant of the market game which permits unlimited short sales we show that there is always a nash equilibrium allocation arbitrarily close to a competitive equilibrium allocation of course not all ne are near competitive only the large short sales ne are nearly liquid and hence close to ce

some evidence on the relationship between performance related pay and the shape of the experience earnings profile we investigate the relationship between performance related pay prp and the shape of workers experience earnings profiles in particular we argue that the slope of the profile depends critically upon the degree of equity held by workers in their enterprise as measured by the extent of prp the implication is that the slope of the profile for prp workers falls between those of their zero equity fixed wage and one hundred per cent equity self employed counterparts our empirical analysis of three british data sets namely the british social attitudes survey the british household panel survey and the british family expenditure survey supports this prior in this paper we explore the shape of the experience earnings profile for individuals employed under different types of contracts fixed wage performance related pay prp and self employment contracts we follow lazear 1979 1981 and lazear and moore 1984 in hypothesizing that the slope of the experience earnings profile reflects agency costs and the reduction thereof with increased agency costs inducing steeper profiles if monitoring costs are high firms may implement compensation schemes designed to encourage employees to self select behavior in the firms interests one such scheme defers a substantial amount of compensation until the later years of tenure the resulting experience earnings profile provides a penalty for shirking lazear and moore 1984 we therefore presume that the profiles of workers employed under fixed wage contracts are steeper than those of self employees for whom the issue of agency does not arise because of the duality of principal and owner lazear and moore 1984 the interesting case is that of workers employed under prp if such contracts represent a hybrid between fixed wage and self employment then one would expect their experience earnings profiles to lie somewhere between these two extreme