interfering with secondary markets we present a model to address in a unified manner four ways in which a monopolist can interfere with secondary markets in the model consumers have heterogeneous valuations for quality so that used good markets play an allocative role our results are the following 1 in contrast to swan s famous independence result a monopolist does not provide socially optimal durability 2 allowing the monopolist to rent does not restore socially optimal durability and increases the monopolist s market power in the used market however forcing the monopolist to sell the goods may be a bad policy because it would lead to either lower output or lower durability 3 the manufacturer benefits from a well functioning used good market despite the fact that used goods provide competition for new goods 4 the monopolist prefers to restrict consumers abilities to maintain the good

durable goods and product obsolescence the issue of product obsolescence is addressed by examining the optimal sales strategy of a monopolist firm that may introduce an improved version of its current product consumers expectations of a forthcoming product lowers the price that they are willing to pay for the current product because of its loss in value due to obsolescence the new product is characterized by consumers increased willingness to pay and by its competitive interaction with the old product these characteristics affect the tradeoff that the firm makes between the cost of waiting for new product sales versus the cost of cannibalizing these sales we analyze the effect of these characteristics of the new product on the firm s optimal sales strategy we consider the various policy measures available to the firm including limiting initial sales in order to lower cannibalization of the new product buying back the earlier version of the product in order to generate greater demand for the new product and announcements of future product introductions we find that for modest levels of product improvement the firm s optimal policy is to phase out sales of the old product while for large improvements a buy back policy is more profitable lastly we find that the firm is better off if it informs consumers whether a new product is forthcoming

delegation and commitment in durable goods monopolies this paper studies a simultaneous move infinite horizon delegation game in which the principal of a durable goods monopoly entrusts pricing decisions to a manager who enjoys consuming her monetary rewards but dislikes production effort the delegation contract allows for continual interference with managerial incentives in each period the principal rewards the manager according to her performance we show that when the cost of delegation is low relative to profits the principal can attain the precommitment price plan in a perfect rational expectations equilibrium the paper analyzes the robustness of this result under alternative specifications of timing and objectives we also provide a numerical characterization of the equilibrium strategies for the case of linear quadratic payoffs

the lechatelier principle the lechatelier principle in the form introduced into economics by paul a samuelson asserts that at a point of long run equilibrium the derivative of long run compensated demand with respect to own price is larger in magnitude than the derivative of short run compensated demand the authors introduce an extended lechatelier principle that applies also to large price changes and to uncompensated demand as well as to a wide range of concave and nonconcave maximization problems outside the scope of demand theory this extension also clarifies the intuitive basis of the principle copyright 1996 by american economic association

micro data heterogeneity and the evaluation of public policy nobel lecture this paper summarizes the contributions of microeconometrics to economic knowledge four main themes are developed 1 microeconometricians developed new tools to respond to econometric problems raised by the analysis of the new sources of micro data produced after the second world war 2 microeconometrics improved on aggregate time series methods by building models that linked economic models for individuals to data on individual behavior 3 an important empirical regularity detected by the field is the diversity and heterogeneity of behavior this heterogeneity has profound consequences for economic theory and for econometric practice 4 microeconometrics has contributed substantially to the scientific evaluation of public policy

trade ins and introductory offers in a monopoly we model the commonly used marketing practices of offering discounts to either repeat buyers trade ins or new buyers introductory offers of a quasi durable good we analyze these practices in terms of their potential for intertemporal and third degree price discrimination in our two period model the monopolist sets a first period price that segments the second period market optimally into holders and nonholders of the good in the second period different prices are quoted to the two market segments we present three versions of the model with varying assumptions on consumers rationality

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

the role and growth of new car leasing theory and evidence abstractthere has been substantial growth in rates of new car leasing over the last few decades building on recent theoretical research we construct a model of the leasing decision in which leasing mitigates adverse selection and reduces transaction costs but moral hazard limits its use in our model the prevalence of leasing is related to new car reliability which suggests that the recent growth in leasing is at least partly due to improvements in new car reliability we use this model to derive testable implications and then conduct an empirical analysis to investigate whether the operation of the new and used car markets is consistent with the predictions of this theoretical approach our empirical results support the theoretical predictions of our model in particular we provide direct evidence that leasing mitigates adverse selection and that an important factor in the growth in new car leasing rates has indeed been the growth of new car reliability

commitment and monopoly pricing in durable goods models this article investigates the issue of commitment by a durable goods monopolist two models of the interaction between durability recycling and market power are compared the two differ according to the ability f the seller to credibly commit to a given salec qtrn egy this article takes the standard durable goods monopoly model extends it to allow for depreciation and compares the monopoly markup with swan s predicted markup for a recycled good the difference between the two models is shown to reduce to a single parameter in the markup equation

durable goods theory for real world markets the early 1970s witnessed three major advances in durable goods theory swan 1970 1971 and sieper and swan 1973 on optimal durability coase 1972 on time inconsistency and akerlof 1970 on adverse selection this paper surveys durable goods theory starting with these three contributions where much of the focus is on recent literature and on models that explain real world phenomena in addition to the ideas found in the contributions of swan coase and akerlof topics covered include why producers sometimes practice planned obsolescence the role of adverse selection in new car leasing and reasons for aftermarket monopolization

technological progress and optimal factor demand abstract this paper analyzes the employment and investment demands of the competitive firm when technological progress embodied in new investment goods is a source of productivity improvements it is shown that technological progress reduces the implicit cost of capital services as well as its sensitivity to variations in the price system several versions of lechatelier s principle are established showing how technological progress modifies the price sensitivity of the factor demands rapid technological progress makes the factor demands less sensitive to price variations however employment demand becomes less more sensitive to interest rate changes when capital and labor are complements substitutes

poverty dynamics empirical evidence for canada poverty low income dynamics are explored using tax filer data covering the period 1992 to 1996 the distributions of short and long term episodes are identified and reveal substantial differences by sex and family type entry and exit models explore the relationships between poverty transitions and sex family status and other personal and situational attributes duration effects on exiting and re entering poverty are found to be important and models including past poverty experiences point to strong occurrence dependence for poverty entry and incidence fixed effect panel data models confirm the above and reveal asymmetries in the impacts of household transitions on poverty jel classification i3 la dynamique de la pauvrete resultats empiriques pour le canada les auteurs examinent la dynamique de la pauvrete bas revenus a l aide des donnees disponibles pour les citoyens qui ont soumis leurs rapports d impot entre 1992 et 1996 on identifie les distributions d episodes courts et longs de pauvrete et celles ci revelent des differences significatives selon le sexe et les attributs familiaux les modeles d entree et sortie identifient les relations entre le statut de pauvrete le sexe le statut familial et d autres attributs personnels et situationnels il appert que les effets de duree sur les periodes de sortie et de re entree dans un statut de pauvrete sont importants les modeles qui prennent en compte les episodes de pauvrete anterieurs montrent qu il y a une forte correlation occurrence dependence tant pour le passage au statut de pauvrete que pour l incidence de tels episodes les resultats des etudes transversales confirment ces resultats et revelent des asymetries dans les impacts des transitions dans les menages sur la pauvrete

innovation and the durable goods monopolist the optimality of frequent new version releases when an improvable durable good such as packaged software saturates the market the seller could be tempted to release new versions too frequently hurting her profit a novel contractual device which i term as a free new version rights warranty free nvr warranty can help the seller overcome this temptation in a two period game theoretic model involving a monopolist firm facing heterogeneous consumers i derive conditions under which a rational monopolist can act suboptimally she could face a commitment problem and offer the new version even if doing so lowers her overall profit profit is hurt because when consumers expect a new version a fewer consumers buy the initial version and b the monopolist is forced to charge a lower price for the initial version i show how the free nvr warranty which requires the monopolist to offer consumers the right to receive the new version for free for a limited period can solve her commitment problem this is a new surprising finding by bundling new version rights with the initial version the monopolist at first appears to be denying herself future revenue i derive conditions under which this apparently unprofitable action is optimal which is my main contribution when free nvr is offered consumer surplus decreases and social surplus increases this work extends prior literature on durable goods and the coase conjecture to innovative durable goods with network externalities the findings have important practical implications for firms selling new versions of innovative durable goods subject to network effects as well as for their consumers

dual distribution channels the competition between rental agencies and dealers managerial decisions involving marketing channels are among the most critical that an organization must make part of the reason for this importance is that relationships between manufacturers and their intermediaries usually involve long term commitments that are difficult to change on the other hand in order to respond to the realities of the market place an organization must be ready to adapt its distribution practices sometimes under considerable uncertainty about the long term consequences such a problem faces the u s automobile industry which has led manufacturers to experiment with various channel structures when manufacturers first changed their distribution policies they were clear about the short term effect on sales but were unsure about its longer term impact on profitability in this article we develop a model to analyze the marketing of durable products through multiple channels our analysis suggests that even though it was not apparent at the time manufacturers were indeed behaving optimally when they changed their policies our model provides insights not only to automobile manufacturers but also to practitioners and academics who are interested in understanding the unique problems associated with marketing durable products through multiple channels we develop a two period model by assuming that a single manufacturer markets a durable product through two retailers a rental agency and a dealer the rental agency focuses mainly on renting the product in a daily rental market while the dealer focuses on selling the product to a different set of customers in the sales market to model the development of channels in the u s automobile industry we analyze three different channel structures the first structure a separate channel reflects the state of the industry through most of the 1980s when rental agencies were franchised solely to rent and dealers solely to sell the cars in response to a decrease in overall sales manufacturers encouraged rental agencies to sell their slightly used rental cars in the consumer market resulting in the second structure an overlapping channel dealers did not like this arrangement however and in the next experiment a buyback channel some manufacturers began buying back used rental cars and selling them through dealers in terms of the consumer side of the model we assume that consumers are heterogeneous and have product valuations that are distributed uniformly between a low and a high value in addition they recognize that as the durable depreciates with use its secondhand market value decreases while both sold and rented goods depreciate with use we assume based on an analysis of market prices that sold goods depreciate at a higher rate than rented goods given these different depreciation rates and consumers underlying utility functions we develop the market demand functions in the dealer s and rental agency s markets then for each of the channel structures we solve the intermediaries and manufacturer s problems the main contribution of this article is that it allows us to evaluate the profitability associated with various channel structures for all the players in our analysis the dealer the rental agency and the manufacturer in terms of the intermediaries we find that the overlapping channel is the most profitable structure for the rental agency on the other hand it is the least profitable for the dealer in terms of manufacturer profitability our model suggests that the separate channel is the least profitable and the overlapping channel is the most profitable it is interesting to note that the distribution structure in existence today is more akin to a buyback channel this strikes us as a compromise channel which alleviates dealer concerns with the overlapping channel and yet does not harm rental agencies as much as a separate channel these are surprising results because conventional wisdom has been that the overlapping channel was competing away profits for all players this suggests to us that automobile manufacturers were indeed on the right track when they began experimenting with the structure of their distribution channels

outside options and the failure of the coase conjecture a buyer wishes to purchase a good from a seller who chooses a sequence of prices over time each period the buyer can also exercise an outside option abandoning their search or moving on to another seller we show there is a unique equilibrium in which the seller charges a constant price in every period equal to the monopoly price contravening the coase conjecture we then embed the singleseller model into a search framework and show the result provides a foundation for the usual no haggling assumption jel c78 d42 d43 l12 l13 the coase conjecture is a cornerstone of modern microeconomic theory informing monopoly theory and providing a canonical example of the problem of commitment the idea is that for any given price high value buyers are more likely to purchase than low value buyers leading to negative selection in the demand pool accordingly the seller cuts its price over time causing high value buyers to delay their purchases the seller s inability to commit thus leads its later selves to exert a negative externality on its former selves reducing its overall profit gul sonnenschein and wilson 1986 this idea of negative selection is robust versions of it hold when costs are nonlinear kahn 1986 when goods depreciate over time bond and samuelson 1984 when there is entry of new buyers sobel 1991 and when the buyers face future competition fuchs and skrzypacz 2010 in this article we show that the coase conjecture fails in a natural environment where buyers have an outside option they can choose to exercise we consider a seller who faces a buyer or a continuum of buyers with unknown value for the good and unknown outside option each period the seller chooses price p t the buyer then chooses to buy wait or exercise his option and terminate the game the outside option may come from the possibility of buying another product for example when waiting for the price of the iphone to fall a customer could instead buy a comparable phone from a competitor similarly when bargaining over the price of a car a buyer may abandon negotiations and move on to the next dealer the outside option may also come from pursuing other objectives once the negotiation has terminated for example after he finishes bargaining at a bazaar a tourist could start seeing local attractions

learning by doing and optimal factor demand abstract in this paper we consider the problem of the firm s optimal plans for factor usage under conditions of profit maximization two factors of capital and labor are considered in a dynamic choice system where labor is endowed with a capacity to learn on the job but capital is not by specifying the problem as an optimal control process two shadow prices of capital and labor services are derived we then advance a theory of investment demand and labor employment as a joint process the effects of learning by doing and labor turnover rate on the paths of optimal investment and employment plans are investigated using the method of sensitivity analysis we also derive testable hypotheses about the effects of variations in the market wage rate and the interest rate on the optimal investment and employment plans of the firm

the coase conjecture need not hold for durable good monopolies with depreciation abstract we consider the optimal sales policy for a monopoly seller of a durable good in a non stationary rational expectations equilibruim with replacement sales we show that coase s conjecture that the monopolist will sell the competitive stock as period length approaches zero may not hold under these assumptions

why would a durable good monopolist also produce a cost inefficient nondurable good abstract we develop both commitment and time consistent stationary policies for a monopolist who produces a mixture of goods distinguished by production costs and degree of durability under commitment only the cost efficient durable good is produced and the monopoly output is realized each period for the time consistent stationary case there is an interval for the degree of durability where only the durable good is produced and a higher non overlapping interval where both the cost efficient durable and the cost inefficient nondurable good are produced for any period length when the degree of durability is such that both durable and nondurable goods are provided combined output is less than the competitive output and decreases in the degree of durability approaching the single period monopoly output when both goods are produced the coase conjecture does not hold

moral hazard and dynamic insurance data this paper exploits dynamic features of insurance contracts in the empirical analysis of moral hazard we first show that experience rating implies negative occurrence dependence under moral hazard individual claim intensities decrease with the number of past claims we then show that dynamic insurance data allow to distinguish this moral hazard effect from dynamic selection on unobservables we develop nonparametric tests and estimate a flexible parametric model we find no evidence of moral hazard in french car insurance our analysis contributes to a recent literature based on static data that has problems distinguishing between moral hazard and selection and dealing with dynamic features of actual insurance contracts methodologically this paper builds on and extends the literature on state dependence and heterogeneity in event history data jel d82 g22 c41 c14

durable goods oligopoly abstract this paper models a durable goods oligopoly as a differential game two cases are treated sales where firms cannot lease but must sell the good in question and leasing where firms do not sell but only rent in the sales case firms face increasing marginal cost of production and the good in question depreciates for this case a rational expectations feedback nash equilibrium is constructed for which monopoly or oligopoly output is less than the efficient level this gap between oligopoly and competitive output diminishes as the number of firms increases when firms can only lease the good the good is assumed not to depreciate and the monopoly level of steady state output is compared with the level of steady state output for a feedback equilibrium duopoly for this case the duopoly equilibrium has steady state output that is less than the corresponding efficient level but greater than the monopoly level the leasing model is shown to be isomorphic to the adjustment cost duopoly model of driskill and mccafferty journal of economic theory 49 1989 324 338

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

competition in durable goods markets the strategic consequences of leasing and selling in marketing durable goods manufacturers use varying degrees of leasing and selling to consumers e g cars photo copiers personal computers airplanes etc the question that this raises is whether the distinction between leases and sales is simply one of price or whether the proportion of leases and sales effects a firm s ability to compete in the market in this paper we use two approaches to argue that leasing and selling create strategic consequences that extend beyond prices first we develop a stylized theoretical model that shows that the optimal proportion of leases and sales depends on the competitiveness of the market and on the inherent reliability of the firm s product and second we find support for the implications of our theoretical model with data from the automobile industry the u s automobile industry has seen a large increase in leasing over the last five years however the extent to which leasing has been embraced varies widely across manufacturers for example in 1993 the sport utility segment had the following lease percentages ford explorer 29 jeep grand cherokee 24 toyota 4 runner 11 and chevrolet blazer 9 in addition manufacturers often vary lease percentages across models for example in 1993 ford leased 22 of its crown victoria model 35 of its taurus model and 42 of its probe model a popular argument for why we see these differences is that higher priced cars are leased more often because leasing makes them more affordable however this rationale is not compelling in the face of our data for example the ford probe was priced significantly lower than the crown victoria and yet it was leased almost twice as often to develop a better understanding of why we observe differences in the proportion of leasing we develop a two period model of a duopoly in which each manufacturer chooses its optimal quantity and the fraction of units it wants to lease we find that in equilibrium neither firm leases all its units either they use a mix of leasing and selling or they use only selling our analysis suggests that the fraction of leased cars decreases as the manufacturers products become more similar and the competition between them increases the intuition for this result is that a higher fraction of leases puts the firm at a competitive disadvantage in the future this occurs because unlike firms that sell their product firms that lease are at a price disadvantage another important finding in this paper is that the extent of leasing chosen by a manufacturer depends on the reliability of its product in particular all else being equal the lower a product s reliability the lower its proportion of leases within the context of the automobile industry this suggests that more expensive cars may be leased more often because they are of higher quality and not necessarily because they are more expensive finally we test the implications of our theoretical model with data from the u s automobile market in particular for 1993 model year cars we develop a measure of reliability using data from consumer reports in addition we develop a measure of the extent of competition in each segment of the automobile market we support our hypotheses by finding that the extent to which a car model is leased depends strongly on its predicted reliability and on the competitive intensity within the segment

market structure and spells of employment and unemployment evidence from the construction sector in egypt summary this paper investigates the links between market structure and spells of employment and unemployment in the construction sector in egypt using an augmented job search framework two key features of the model are the reservation frontier which allows for a trade off between wages and expected duration of employment and the dependency of unemployment durations on expected employment durations and expected wages these as well as conjectures concerning the influence of demand side forces obtained from the expressions for the transition rates out of employment and unemployment are examined using weibull log logistic and generalized gamma parameterizations of the hazard rate the parametric assumptions are exploited to resolve problems associated with selectivity and use of generated regressors

why monopolists prefer to make their goods less durable this paper considers goods that depreciate in terms of quality over time and permits consumers to differ in their attitude concerning the usability of a durable good after it has depreciated given this it is shown that even if a monopoly can costlessly increase the durability of its product it may choose not to do so this does not happen in competition copyright 1988 by the london school of economics and political science

growth accounting when technical change is embodied in capital this paper revisits the hypothesis that technical change is embodied in capital it extends old results to make them more relevant to the contemporary debates about the adjustment of investment goods for quality change and about the role of embodied technical change as a source of economic growth it is shown that the failure to adjust capital for quality change has the effect of suppressing the quality effects into the conventional total factor productivity residual and it is found that approximately 20 percent of the residual growth of quality adjusted output could be attributed to embodied technical change copyright 1992 by american economic association

what should you do when your competitors send in the clones this paper develops a model to address an important problem facing a manufacturer of a durable product that is how can it plan its new product introductions to minimize the obsolescence of the old product preserve its market for the new product and keep copycat products at bay we analyze these issues by developing a two period model in which a firm sells an old product in period 1 and a new product in period 2 we consider various new product introduction strategies such as product replacement line extension and upgrading we find that the optimal response to a threat of competitive clones is to increase the level of product innovation this increase in innovation coupled with the entry of a competitive product implies that the incumbent firm has less of an incentive to leapfrog the old product or shelve the new product

optimal best price policy abstract a best price policy bp is a promise by a seller to give her customer a refund if she reduces her price after the customer has already purchased the product we characterize the optimal bp policy as when the seller can control both the policy length when the promise expires and the refund scale what portion of the price difference is refunded we explain why the policy length is finite and varies across industries in a setting where consumers valuations decline over time we show that a finite length bp allows the seller to commit to not lowering her price too soon while at the same time letting her capture some of the benefits of intertemporal price discrimination however because the decline in consumers valuations is uncertain a bp does not allow the monopolist to achieve the profit she could earn with a full commitment

job separation in a non stationary search model a structural estimation to evaluate alternative unemployment insurance systems this paper considers a job search model in which the environment is not constant throughout the unemployment spell and where jobs do not last for ever in this situation reservation wages can be lower than they would be in a model without consideration of such separations but they can initially be higher precisely because of the non constant environment the model is estimated structurally by using spanish data for the period 1985 1996 the main finding is that after controlling for unobserved heterogeneity the unemployment hazard rate is almost flat during the first six months however after this duration the highly decreasing job offer arrival rate comes to be the only significant factor given that acceptance probabilities become equal to one the estimated parameters are used to evaluate different unemployment insurance designs we conclude that a non monotonic pattern in unemployment benefits joint with a tax paid by workers and based on unemployment duration makes this duration 13 2 lower than it currently is in spain copyright 2006 john wiley sons ltd

the increasingly mixed proportional hazard model an application to socioeconomic status health shocks and mortality we introduce a duration model that allows for unobserved cumulative individual specific shocks which are likely to be important in explaining variations in duration outcomes such as length of life and time spent unemployed the model is also a useful tool in situations where researchers observe a great deal of information about individuals when first interviewed in surveys but little thereafter we call this model the increasingly mixed proportional hazard imph model we compare and contrast this model with the mixed proportional hazard mph model which continues to be the workhorse of applied single spell duration analysis in economics and the other social sciences we apply the imph model to study the relationships among socioeconomic status health shocks and mortality using 19 waves of data drawn from the german socio economic panel soep the imph model is found to fit the data statistically better than the mph model and unobserved health shocks and socioeconomic status are shown to play

an economic theory of planned obsolescence planned obsolescence is the production of goods with uneconomically short useful lives so that customers will have to make repeat purchases however rational customers will pay for only the present value of the future services of a product therefore profit maximization seemingly implies producing any given flow of services as cheaply as possible with production involving efficient useful lives this paper shows why this analysis is incomplete and therefore incorrect monopolists are shown to desire uneconomically short useful lives for their goods oligopolists have the monopolist s incentive for short lives as well as a second incentive that may either increase or decrease their chosen durability however oligopolists can generally gain by colluding to reduce durability and increase rentals relative to sales some evidence is presented that appears to be generally consistent with the predictions of the theory

reputation in bargaining and durable goods monopoly this paper analyzes durable goods monopoly in an infinite horizon discrete time game we prove that as the time interval between successive offers approaches zero all seller payoffs between zero and static monopoly profits are supported by subgame perfect equilibria this reverses a well known conjecture of coase alternatively one can interpret the model as a sequential bargaining game with one sided incomplete information in which an uninformed seller makes all the offers our folk theorem for seller payoffs equally applies to the set of sequential equilibria of this bargaining game

monopoly with endogenous durability abstract a multi period formulation for a durable good monopoly is developed where production and durability are decision variables when commitment to production is possible neither the level nor the depreciation rate of initial stock has an effect on the selected efficient degree of durability with time consistent production policy the optimal degree of durability is less than the efficient rate and typically increasing in the initial stock and initial degree of durability when a monopolist can switch at any time from an inefficient non durable to an efficient durable there exists a cutoff durability above which only the non durable will be produced otherwise the efficient durable will be produced

urban congestion and developer precommitments unilateral solutions to dynamic inconsistency the sale of housing creates a dynamic inconsistency problem for residential developers who find it profit maximising to overdevelop an area once ownership of the existing housing stock has been transferred to local residents rational buyers lower the prices they are willing to pay in expectation of this future congestion it is therefore in the developers interest to attract higher prices by credibly precommitting themselves unilaterally to construction plans that are optimal for each housing tract if the externalities associated with congestion affect quality of life in neighbouring tracts however development will still exceed the efficient level the introduction of master planned communities where a single development company commits future developer builders to a plan for the construction of multiple contiguous housing tracts can create the expectation of future population densities that will be optimal on a city wide level

leasing lemons and moral hazard abstract a number of recent papers have analyzed leasing in the new car market as a response to the adverse selection problem in the used car market originally explored in the seminal 1970 paper by george akerlof in this paper we consider a model characterized by both adverse selection as in these earlier papers and moral hazard concerning the maintenance choices of new car drivers we show that this approach provides explanations for a number of empirical findings concerning real world new and used car markets including that leasing has become more popular over time very high income new car drivers lease more and used cars that were leased when new sell for more than used cars that were purchased when new we also compare and contrast our approach to new car leasing with alternative approaches

a new perspective on planned obsolescence automobile manufacturers have long had a policy of introducing annual style changes into their new model cars textbook publishers have a policy of periodically bringing out revised editions of their popular books recently ibm changed the operating system used in its personal computers causing a reduction in the compatibility between its old and new machines if one were to ask the typical man in the street to explain what is happening in these markets he would not hesitate before giving the following answer in economists terminology he would say that for the above firms the incentive to introduce new products that make old units obsolete is too high i e the firms have an incentive to practice planned obsolescence of course just as is true for the man in the street economists have also long observed and commented on the speed with which new products are introduced for example galbraith 1958 suggests that the annual model changes of automobile manufacturers are socially wasteful while fisher griliches and kaysen 1962 provide empirical estimates of the costs of these changes there have also been numerous theoretical attempts to model the idea of planned obsolescence or the related idea of killing off the market for secondhand goods but most of these models have in fact considered the choice a monopolist faces concerning how much durability to build initially into his product rather than the monopolist s incentive to introduce new versions of his product over time 1 in this paper i consider planned obsolescence from the standpoint of a firm that can change the nature of what it sells and show that the man in the street is in fact correct in many settings the incentive for a durable goods monopolist to introduce new products that make old units obsolete will be above that which is socially optimal

investigating household purchase timing decisions a conditional hazard function approach the purchase timing decision is an important component of the dynamics of a household s purchase behavior this decision is influenced by marketing and other variables and the modeling of this dependence has recently received attention in the literature in this paper we build on previous studies and develop a comprehensive stochastic model that incorporates the major factors influencing interpurchase times specifically we use a generalized version of cox s proportional hazard model to test among competing probability distributions for the interpurchase times while incorporating effects due to marketing variables observed household characteristics and unobserved heterogeneity across households the empirical finding from analyzing the iri coffee data suggests that the interpurchase times cannot be adequately described by probability distributions such as exponential erlang 2 or weibull the effects of unobserved heterogeneity are significant and they impact the estimates of the effects of the covariates we also find that a nonparametric procedure for estimating the effects of unobserved heterogeneity provides the best overall fit to the data and yields covariate estimates that are more consistent with prior expectations our model is validated by replicating the substantive empirical findings on an additional product category

technical change and full employment the result of a major research project which assesses the effects of technical change on employment levels the structure of employment and the nature of work itself this study concludes that social changes must accompany and even precede technical innovation

technological progress and optimal supply price abstract this article presents an analysis of the firm s optimal product price decision as a joint process with optimal production planning the production decision is formulated as a dynamic optimization problem over an infinite horizon under conditions of profit maximization and rational expectation given a set of market and technical progress information the problem is solved to obtain the time paths of shadow prices of capital and labor services these shadow prices of factors are combined to construct the time path of the optimal supply price sensitivity analysis are conducted on the optimal supply price to isolate the variational effects of technical progress and labor turnover rate the results are stated as propositions

durable goods monopolists rational consumers and improving products we consider the case of a monopolist supplying an improving durable product to a population that is heterogeneous in its valuation of product quality in a two period framework we show that if consumers expect the product to improve in present value terms then intertemporal discrimination might result in the first period marginal consumer being left with zero surplus and some higher end consumers postponing purchase the resulting trajectories for quality and price do not constitute a subgame perfect equilibrium one of our conclusions is that the logic of profit maximization in the context of rational consumer choice imposes a demand side constraint on the rate of product improvement we also emphasize the disequilibrium consequences of improving a product so rapidly that high end consumers are tempted to wait for a future new and improved version finally the formulation adopted in the paper may be useful to understand observed differences in product improvement rates in different markets

staying ahead and getting even risk attitudes of experienced poker players abstract frequent online poker players with extensive experience calculating probabilities and expected values might be expected to behave as expected utility maximizers in that small shocks to their wealth would not affect risk preferences rabin 2000 by contrast reference dependent loss aversion as in prospect theory koszegi and rabin 2006 kahneman and tversky 1979 predicts that risk aversion decreases as wealth moves away from the reference point in either direction in terms of continuing to play as well as a more aggressive playing style we find strong evidence for the break even effect the increased pursuit of risk as a player is losing within a session players behavior also appears consistent with existing evidence on reference dependent labor supply in their tendency to reduce effort and risk taking in response to being ahead our findings provide evidence for reference dependent behavior in a flexible high skilled setting under conditions of well understood monetary risk

planned obsolescence and the r d decision by investing in rd i e the r d choice that maximizes current profitability does not maximize overall profitability the result is that if output is sold rather than rented then in its r d decision the monopolist has an incentive to practice a type of planned obsolescence that lowers its own profitability

monopoly extraction of a durable non renewable resource failure of the coase conjecture the author studies a perfect information rational expectations markov equilibrium for the situation where a monopolist extracts a nonrenewable resource that is converted to a durable good even if short run extraction costs are constant the coase conjectur e fails provided that the depreciation rate of the durable good is positive copyright 1993 by the london school of economics and political science

the multivariate flexible accelerator model its empirical restrictions and an application to u s manufacturing this paper derives an exhaustive set of restrictions implied by the multistock flexible accelerator specification of the adjustment cost model for the firm the flexible accelerator specification of the demand for capital and labor is estimated using u s manufacturing annual data for the 1947 1976 period the consistency of the data with the model is examined by testing the validity of the derived restrictions finally the conditions which permit aggregation over firms are determined and tested empirically the flexible accelerator specification has been popular in the empirical literature on interrelated investment and employment decisions see nadiri and rosen 38 coen and hickman 10 and schramm 40 more recent examples include sargent 39 berndt fuss and wavermann 4 berndt and morrison 6 and meese 34 under suitable assumptions the specification may be rationalized by the adjustment cost model of the firm eisner and strotz 13 lucas 30 mortensen 35 extends the work of lucas and derives some empirically testable restrictions of the accelerator specification that are implied by the adjustment cost framework the broad objective of this paper is to provide a more rigorous and comprehensive test of the adjustment cost model than is presently found in the literature this objective is achieved in three stages first we offer an alternative derivation of the mortensen restrictions and more importantly we prove theorem 1 that his restrictions are exhaustive i e we establish an integrability result for the flexible accelerator adjustment cost model second the flexible accelerator specification of the demand for capital and labor is estimated using total u s manufacturing annual data for the 1947 76 period it is assumed that firms minimize expected production costs subject to a technology which implies that capital and labor stocks are costly to adjust while a third factor materials is freely adjustable the consistency of the data with the adjustmentcost framework is examined by testing for the validity of the derived restrictions further we test the validity of some separability restrictions on the adjustmentcost technology that to varying degrees are imposed a priori in all of the cited empirical studies finally we provide a complete characterization of the individual firm technologies which justify the common assumption of the existence of a representative firm this problem of aggregation over firms which has been

heterogeneity and unemployment dynamics many previous articles have studied the contribution of inflows and outflows to the cyclical variation in unemployment but ignored the critical role of unobserved heterogeneity across workers thi

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

endogenous censoring in the mixed proportional hazard model with an application to optimal unemployment insurance in economic duration analysis it is routinely assumed that the process which led to censoring of the observed duration is independent of unobserved characteristics the objective of this paper is to examine the sensitivity of parameter estimates to this independence assumption in the context of an economic model of optimal unemployment insurance we assume a parametric model for the duration of interest and leave the distribution of censoring unrestricted allowing it to be correlated with both observed and unobserved characteristics this leads to loss of point identification we provide a practical characterization of the identified set with moment inequalities and suggest methods for estimating this set in particular we propose a profiled procedure that allows us to build a confidence set for a subvector of the model parameters we apply this approach to estimate the elasticity of exit rate from unemployment with respect to unemployment benefit and find that both positive and negative values of this elasticity are supported by the data when combined with the welfare formula in chetty 2008 these estimates do not permit us to put an upper bound on the size of the welfare change due to an increase in the unemployment benefit we conclude that given the available data alone one cannot credibly judge if the unemployment benefits in the us are close to the optimal level

depreciation erodes the coase conjecture if a durable good monopolist produces at constant marginal costs and the good depreciates there exists a family of strong markov perfect equilibrium smpe one member of this family entails instantaneous production of the level of stock produced in a competitive equilibrium this is consistent with the coase conjecture other smpe in the family entail steady state production at a stock level lower than in the competitive equilibrium there may be a jump to these steady states or they may be approached asymptotically monopoly profits are positive in these equilibria and the coase conjecture fails

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

one is almost enough for monopoly it has been argued that two factors product durability and potential entry may force a monopolist to price at marginal cost this article shows that when these two forces coexist the tendency toward competition may be negated first we prove that durable goods oligopolists without commitment powers may attain joint profits arbitrarily close to those of a monopolist with perfect commitment power second we demonstrate that the presence of a potential entrant may enable a durable goods monopolist to act as if he had commitment power thus potential as well as actual entry may restore monopoly power

evaluating the impact of french employment policies on individual labour market histories this paper deals with the evaluation of some public employment policies set up in france during the 1980 s to improve the labour market prospects of unskilled young workers the evaluation implemented in this paper is restricted to the impact of such public measures on durations and outcomes of subsequent spells of unemployment and employment the econometric study is conducted with non experimental longitudinal microdata recording individual labour nlarket histories a particular attention is paid to the differential effects of various types of measures according to the educational level of recipients programmes involving a higher level of on thejob training such as alternating work training programmes in private firms are principally beneficial to the less educated young workers in contrast for more educated young workers work fare programmes in the public sector decrease the intensity of transition from the subsequent unemployment spell to regular jobs for that subgroup work fare programmes may act as a signal of low employment performance

durable goods price cycles theory and evidence from the textbook market i introduction one of the features of the market for new textbooks is that the price of new textbooks is relatively inflexible over the life of an edition in the sense that it fails to decline as the end of an edition approaches this inflexibility seems surprising because the availability of used textbooks which are a close substitute for new textbooks rises as the textbook ages furthermore the willingness to pay of a purchaser of a new textbook who plans to resell the book should decline at the end of the edition as the introduction of a new edition will destroy the resale value of the previous edition both of these factors would be expected to put downward pressure on the price of the good as the edition ages our goal of this article is to develop a model of textbook pricing that is capable of explaining this price inflexibility over the life of an edition we model the textbook pricing decision as that of a monopoly seller of a durable good over the life of an edition of the good where the life of the edition is exogenously given at two periods and the introduction of a new edition kills off the used market for the previous edition we assume that the market for the good is made up of two types of consumers high valuation buyers who will keep the good and low valuation buyers who value the option of being able to resell the good in the used market after using the services of the good in the current period the willingness to pay of high valuation buyers will thus be constant over the life of an edition while that of the low valuation buyers will decline in the second period due to the elimination of the used market we show that this model may lead to an optimal price for the durable good that may either rise or fall over the life of an edition and identify two effects that influence the monopolist s pricing decision the first we refer to as the used goods supply effect which is the impact of the quantity of goods available in the used market on the optimal price of new goods in the second period we show that if the quantity of high valuation buyers is sufficiently low the price of new goods may be increasing in the quantity of used goods in the second period this results from the fact that the increased supply of used goods may reduce the elasticity of demand for new goods making it optimal for the monopolist to sell only to high valuation buyers in the second period the second effect is the potential for resale effect which is due to the fact that the ability to sell goods in the used market will raise the willingness to pay of low valuation buyers relative to that of high valuation buyers in the first period the combination of these two effects leads to the possibility that the monopolist will choose to sell to both types of buyers in the first period of the edition but to sell only to high valuation buyers in the second period our empirical analysis tests for the presence of used goods supply and potential for resale effects on the prices of new textbooks we utilize a panel dataset from college bookshops that contains price and quantity information for economics textbooks for each semester between 1997 and 2003 we estimate simple pricing equations with textbook fixed effects instrumental variables are also used to account for the potential endogeneity of a regressor we find that textbook prices increase as the share of used textbooks increases which is consistent with the presence of a used good supply effect in which the increased presence of used goods makes the demand curve for new goods less elastic we also find evidence that prices of the goods are higher in the last period of an edition controlling for the stock of used goods in the market this is consistent with the potential for resale effect our theoretical model can be distinguished from other work that has analyzed the optimal pricing problem for a monopoly seller of a durable good

a theory of finitely durable goods monopoly with used goods market and transaction costs we construct a dynamic game to model a monopoly of finitely durable goods the solution concept is markov perfect equilibria with general equilibria embedded in every time period our model is flexible enough to simultaneously explain or accommodate many commonly observed phenomena or stylized facts such as concurrent leasing and selling active secondary markets for used goods heterogeneous consumers endogenous consumption patterns depreciation an infinite time horizon and nontrivial transaction costs within our model consumers have incentives to segment themselves into various consumption classes according to their willingness to pay and nontrivial transaction costs to sell used goods put strong constraints on consumers consumption sequences in time as a direct consequence of the finite durability the market power of the monopolist remains intact leasing manifests itself as a facilitator of price discrimination by debundling the durable good into new and used portions that are naturally bundled together under outright sales the concurrent leasing and selling reflects the degree of the comparative advantage the monopolist has over consumers in disposing used goods this comparative advantage which is partially exploited by the monopolist and partially shared by the consumers provides a sufficient mechanism to gain pareto improvement on the market

quality upgrades and equilibrium in a dynamic monopoly market abstract we examine an infinite horizon model of quality growth for a durable goods monopoly the seller may offer any bundle s of current and previous quality improvements upgrades subgame perfect equilibrium seller payoffs range from capturing the full social surplus down to only the initial flow value of each good as long as the value of all future quality growth exceeds the value of a single unit each of these payoffs is realized in a markov perfect equilibrium that follows the socially efficient path however inefficient delay equilibria with bundling exist for innovation rates above a threshold

empirical evidence on the sign of the slope of the hazard rate from unemployment from a fixed effects model empirical evidence on the sign of the slope of the hazard rate from unemployment is obtained from a fixed effects model based on the gamma distribution for unemployment duration the data used are pairs of unemployment spells for adult males in the control and experimental groups of the denver income maintenance experiment the sample selection issue involved in selecting the pair of spells used in the empirical work is discussed the empirical results suggest that for these samples the hazard function is monotone decreasing and support the assumptions that the first two spells of unemployment are identically distributed and can be modelled using the gamma distribution

the effects of age and unemployment percentage on the duration of unemployment evidence from aggregate data abstract in this paper models for the duration of unemployment are estimated using aggregate data on incomplete unemployment spells in particular the elasticities of the probability of leaving unemployment with respect to age and unemployment percentage are estimated special attention is paid to the time dependence of the re employment probability and to the effect of omitted regressors because models are fitted for male and female unemployed separately these groups can be compared we find that their position on the labour market is different

true and spurious duration dependence the identifiability of the proportional hazard model lancaster and nickell 1980 have argued that in the proportional hazard model the effects of time dependence true duration dependence and unobserved sample heterogeneity spurious duration dependence cannot be distinguished we show that both effects can be distinguished if the model allows for observed explanatory variables in the hazard we also discuss the application of our result to practical situations

optimal mandates and the welfare cost of asymmetric information evidence from the u k annuity market much of the extensive empirical literature on insurance markets has focused on whether adverse selection can be detected once detected however there has been little attempt to quantify its welfare cost or to assess whether and what potential government interventions may reduce these costs to do so we develop a model of annuity contract choice and estimate it using data from the u k annuity market the model allows for private information about mortality risk as well as heterogeneity in preferences over different contract options we focus on the choice of length of guarantee among individuals who are required to buy annuities the results suggest that asymmetric information along the guarantee margin reduces welfare relative to a first best symmetric information benchmark by about 127 million per year or about 2 percent of annuitized wealth we also find that by requiring that individuals choose the longest guarantee period allowed mandates could achieve the first best allocation however we estimate that other mandated guarantee lengths would have detrimental effects on welfare since determining the optimal mandate is empirically difficult our findings suggest that achieving welfare gains through mandatory social insurance may be harder in practice than simple theory may suggest

search models and applied labor economics individual effects in a nonlinear model explicit treatment of heterogeneity in the empirical job search model this paper extends the empirical version of a job search model to permit heterogeneity in the location of wage offer distributions population variance in wage offers is decomposed into variance due to heterogeneity and variance facing each individual heterogeneity is found to be an important source of offer variance in the population the amount of pure wage offer dispersion facing individuals is found to contribute little to population variance

the anatomy of unemployment dynamics abstract this paper examines the relation between individual unemployment durations and incidence inflow size on the one hand and the time varying macroeconomic conditions in the economy on the other we develop a model for the analysis of aggregate unemployment incidence and duration data and estimate this model on quarterly french data over the period 1982 1994 stratified by sex we find upward trends in both incidence and durations the former is relatively important for females the latter for males male incidence and durations are countercyclical with only a minor role for cohort effects on durations in contrast female cohorts entering at the top of the cycle have relatively short unemployment spells and the female incidence is if anything procyclical there is strong seasonal variation in particular in the incidence finally we find relatively small non monotonic individual duration dependence in the first six quarters of unemployment unobserved heterogeneity explains the observed negative duration dependence at these durations we provide some evidence that negative individual duration dependence and not heterogeneity is important at higher durations

durability and strategic trade are there rents to be captured abstract this paper analyzes strategic trade policy when home and foreign duopolists produce a durable good that is either sold or leased in a third country durability is important for two reasons it characterizes most of the products discussed in the strategic trade literature and it also calls for explicit dynamic modeling for duopolists who sell their product in a third country market this paper finds the optimal policy to be a tax on domestic output for duopolists who lease the good in a third country market though the optimal policy is a subsidy

durable goods monopoly increasing marginal cost and depreciation this paper combines increasing marginal cost and depreciation in a continuous time model of a durable goods monopolist in contrast to the case of increasing marginal cost but no depreciation analysed by kahn and the case of depreciation with constant marginal cost analysed by bond and samuelson steady state output in this model is less than in the competitive case a turnpike result shows that choice of a long enough time horizon can make the equilibrium path of output in a finite horizon game arbitrarily close to the path of the infinite horizon game

durable goods monopoly with entry of new consumers this paper analyzes a model of a dynamic monopolist who produces at constant unit cost each period a new cohort of consumers enters the market each entering cohort is identical consumers within a cohort have different tastes for the good my main results are if players are sufficiently patient any positive average profit less than the maximum feasible level can be attained in a subgame perfect equilibrium in the subset of subgame perfect equilibria in which players use stationary strategies the seller cannot make sales at prices significantly greater than the lowest willingness to pay when period length goes to zero and the seller attains the maximum profit when commitment is feasible by charging the same static monopoly price in every period this paper analyzes a model of a dynamic monopolist who operates in a market in which there is a regular flow of new consumers the seller produces a durable good at constant unit cost each period a new cohort of consumers enters the market consumers wish to buy exactly one unit of the item but are willing to wait resales are not allowed each entering cohort is identical

a bayesian semiparametric competing risk model with unobserved heterogeneity this paper generalizes existing econometric models for censored competing risks by introducing a new flexible specification based on a piecewise linear baseline hazard time varying regressors and unobserved individual heterogeneity distributed as an infinite mixture of generalized inverse gaussian gig densities nesting the gamma kernel as a special case a common correlated latent time effect induces dependence among risks our model is based on underlying latent exit decisions in continuous time while only a time interval containing the exit time is observed as is common in economic data we do not make the simplifying assumption of discretizing exit decisions our competing risk model setup allows for latent exit times of different risk types to be realized within the same time period in this setting we derive a tractable likelihood based on scaled gig laplace transforms and their higher order derivatives we apply our approach to analyzing the determinants of unemployment duration with exits to jobs in the same industry or a different industry among unemployment insurance recipients on nationally representative individual level survey data from the us department of labor our approach allows us to conduct a counterfactual policy experiment by changing the replacement rate we find that the impact of its change on the probability of exit from unemployment is inelastic copyright 2014 john wiley sons ltd

turnover and promotion of lawyers an inquiry into gender differences this paper analyzes the turnover and promotion of male and female lawyers using data on two cohorts of lawyers one which entered law firms between 1969 and 1973 and the other entering between 1980 and 1983 this study considers whether law firm promotion decisions have differed for women and if so whether these differences have declined over time a competing risks duration model is employed to capture the link between the lawyer s decision to stay or leave and the firm s decision to grant or deny promotion we find that over the entire sample period women are considerably less likely to be promoted and slightly more likely to leave the firm without being promoted however we also find that the parametric differential between men and women in partnership hazards has been reduced substantially and in the most general of our specifications eliminated across the two cohorts in contrast the gap between male and female job turnover rates does not appear to change over time we find that the gap between males and females in the cumulative partnership rate at seven years of experience falls from 32 to 14 percent the turnover gap increases about 0 2 percent with females slightly more likely to exit from the firm in the later period

does amd spur intel to innovate more we estimate an equilibrium model of dynamic oligopoly with durable goods and endogenous innovation to examine the effect of competition on innovation in the personal computer microprocessor industry firms make dynamic pricing and investment decisions while consumers make dynamic upgrade decisions anticipating product improvements and price declines consistent with schumpeter we find that the rate of innovation in product quality would be 4 2 percent higher without amd present though higher prices would reduce consumer surplus by 12 billion per year comparative statics illustrate the role of product durability and provide implications of the model for other industries

durable good monopolies with rational expectations and replacement sales a monopoly producer of a durable good is examined under the previously uninvoked assumption that the good depreciates and hence that replacement sales must occur if a fixed stock of the good is to be maintained we find two ways in which the no depreciation result that the monopoly will always at least eventually produce a stock equal to that produced by a competitive market may not hold if the length of the trading period is nonzero the limiting stock produced by the firm will be lower than the competitive stock to ensure the profitability of future replacement sales if the firm is able to constrain its production capacity it may choose a constraint that always binds in the sense that it will be impossible for the firm to achieve a stock equal to the competitive stock

imperfect durability and the coase conjecture this article considers a market served by a monopolist who sells a durable good that depreciates stochastically over time we show that there exist three types of stationary equilibria a coase conjecture equilibrium a monopoly equilibrium and a reputational equilibrium when the depreciation rate is low the coase conjecture equilibrium is the unique equilibrium for intermediate values of the depreciation rate all three equilibrium types coexist when the depreciation rate is high the monopoly equilibrium is the unique equilibrium consequently when selling a good of sufficiently low durability the monopolist does not lose any of her monopoly power furthermore the steady state output in the reputational equilibrium falls below the monopoly quantity hence in durable goods markets welfare losses due to monopoly power may be larger than in markets for perishables

timing is everything curvilinear effects of age at entry on new firm growth and survival and the moderating effect of ipo performance abstract theory suggests that an earlier age at international entry results in improved growth but also decreased survival chances empirical studies tell a different story providing mixed and equivocal results that challenge the tenets of extant theory to begin to bridge the gap between theory and results we develop theoretical explanations for curvilinear inverted u shaped relationships between age at entry and both firm growth and firm survival as well as the moderating impact of resource providing initial public offering ipo on the resource intensive internationalization process our findings support the inverted u shaped relationships and that ipo performance steepens the growth curve and flattens the survival curve taken together our study enhances understanding of the effects of age at entry bridges the ipo and international entrepreneurship literatures and offers avenues for extending the micro foundations of the development of capabilities for new foreign market entry in doing so we advance knowledge about the conditions under which earlier or later internationalization leads some firms to thrive while others fail

unemployment dynamics and duration dependence a major issue in the analysis of unemployment durations concerns distinguishing genuine duration dependence of the exit rate out of unemployment from unobserved heterogeneity we present a method for the nonparametric estimation of both phenomena designed to be applicable to time series data on aggregate outflows from different duration classes the model explicitly takes into account that individual exit rates are affected by the business cycle and by seasonal effects the method is applied to u s data we find diverging duration effects among black and white individuals however except for white males duration dependence is dominated by unobserved heterogeneity

coase and hotelling a meeting of the minds in this paper we tie together the two literatures of durable goods monopoly and exhaustible resource pricing we show that the intertemporal no arbitrage condition that arises if the durable good monopolist seller can commit to a price path mirrors the intertemporal no arbitrage condition if the monopsonist buyer of an exhaustible resource can commit to a price path the intuition is that the durable good monopolist initially announces high future prices to get high valuation buyers to buy early and subsequently lowers the price to attract additional buyers on the other hand the monopsonist buyer of the exhaustible resource initially announces low future prices to encourage sellers to supply their units early and subsequently as the stock of the resource declines raises the price to call forth additional supply as the period of commitment shrinks to zero the durable good s price drops to its marginal cost and the exhaustible resource s price jumps to its choke level all in a twinkling of the eye a

research note the role of production lead time and demand uncertainty in marketing durable goods firms often have to make their production decisions under conditions of demand uncertainty this is especially true for product categories such as automobiles and technology goods where the lead time needed for manufacturing forces firms to make production decisions well in advance of the selling season once the firm has produced the goods the available production volume affects the firm s subsequent marketing decisions in this paper we study the relationship between the firm s production and marketing decisions for a durable goods manufacturer we develop a dynamic model of a durable product market in which the demand functions are developed from a micromodeling of consumer utility functions and an equilibrium analysis of consumer strategies after taking into account the demand uncertainty as well as the potential for cannibalization of future sales the manufacturer makes its production and sales decisions we find that the firm s optimal inventory level is u shaped in the durability of the product and that the firm suffers a larger loss due to uncertainty when it is leases rather than sells its products furthermore unlike the case for nondurables for durable goods we find that the effect of uncertainty persists even after the uncertainty has been resolved