how endowments accumulations and choice determine the geography of agricultural productivity in ecuador spatial disparity in incomes and productivity is apparent across and within countries most studies of the determinants of such differences focus on cross country comparisons or location choice among firms less studied are the large differences in agricultural productivity within countries related to concentrations of rural poverty for policy understanding the determinants of this geography of agricultural productivity is important because strategies to reduce poverty often feature components designed to boost regional agricultural incomes census and endowment data for ecuador are used to estimate a model of endogenous technology choice to explain large regional differences in agricultural output and factor productivity a composite error estimation technique is used to separate systemic determinants from idiosyncratic differences simulations are employed to explore policy avenues the findings suggest a differentiation between the types of policies that promote growth in agriculture generally and those that are more likely to assist the rural poor

disagreement in bargaining an empirical analysis of opec abstract we consider a stylised model in which two cartel members bargain over the aggregate production quota in a world of asymmetric information we show that when the two cartel members are sufficiently different the probability of agreement depends on both the current state of demand and initial production specifically the probability of agreement is much lower when demand is low and initial production is relatively high than when demand is high and initial production is relatively low we also find that regardless of the current demand state the more extreme is initial production the higher is the probability of agreement using an event study where we take as events opec production quota announcements we demonstrate empirically that the predictions of the model are borne out

oligopoly equilibria in nonrenewable resource markets abstract most nash cournot oligopoly models of nonrenewable resources apply open loop equilibrium concepts and are based on physical resource depletion this paper studies feedback equilibria and economic depletion assuming affine quadratic functional forms the existence uniqueness and explicit solutions for the equilibria are derived for duopoly and n player oligopoly with multiple resource stocks for the cases of nonquadratic criteria we develop a numeric solution scheme for the nash feedback equilibrium this scheme is an application of a discrete time discrete state controlled markov chain approximation method originally developed for solving deterministic and stochastic dynamic optimization problems in our nash cournot equilibrium the degree of concentration in supply declines over time whereas the previous models with physical depletion and open loop equilibrium concepts predict that a nash cournot resource market will develop in the direction of monopoly supply

open loop and feedback models of dynamic oligopoly abstract a simple method of estimating the degree of oligopoly power in dynamic markets using either open loop or feedback subgame perfect strategies is developed new theoretical results are presented for families of oligopoly models differences between discrete time and continuoustime models and open loop and feedback models are demonstrated the effects of increasing the number of firms or adjustment costs are examined

international pollution control cooperative versus noncooperative strategies abstract international pollution control involving two neighboring countries is modeled as a simple two player dynamic game each country produces a good that is consumed by domestic households production of each consumption good results in emissions of pollutants households in each country derive utility from the consumption of the domestically produced good but incur costs through the total stock of pollution stock externality in this setting we characterize cooperative as well as noncooperative pollution control strategies of the governments of the two countries that maximize the discounted stream of net benefits of a representative consumer it turns out that when the governments are restricted to use linear strategies noncooperative behavior results in overall losses for both countries if on the contrary governments use nonlinear markov perfect strategies and the discount rate is small enough a pareto efficient steady state pollution stock can be supported as a differentiable subgame perfect equilibrium thus the emergence of first best solutions cooperative outcomes does not require any institutional arrangements threats retaliation etc but can be brought about through the use of nonlinear markov perfect equilibrium strategies

a dynamic theory of conjectural variations this paper explores the relationship between dynamic oligopolistic competition and static conjectural variations equilibria using an infinite horizon adjustment cost model the author demonstrates that any steady state closed loop subgame perfect equilibrium coincides with a conjectural variations equilibrium in the case of linear demand and quadratic costs the dynamic conjectures consistent with closed loop steady state equilibria are negative constant symmetric and vary continuously with the discount rate and the adjustment cost parameter in an interval between the static consistent conjectures and zero cournot copyright 1992 by blackwell publishing ltd

nonlinear strategies in dynamic duopolistic competition with sticky prices abstract we discuss nonlinear strategies in an infinite horizon duopoly game with sticky prices where firms maximize their discounted sum of profit we construct a stationary feedback equilibrium without guessing value functions and feedback strategies that solve the hamilton jacobi equation for this purpose we study the auxiliary equation that is derived from the hamilton jacobi equation we show that the domain of the state space plays an crucial role in characterizing feedback equilibria and discuss several implications of this observation in particular we find that when the upper bound of the state space is not very high previously unknown feedback equilibria emerge

limited liability and the modern corporation in theory and in practice the catastrophic consequences of a lack of public control over the operations of large private corporations have been thrown into sharp relief by two major events in the recent past the global financial crisis and the deepwater horizon oil spill in the gulf of mexico while these events obviously differ in scope and nature they nevertheless turn the spotlight on a fundamental problem of contemporary capitalism an economic system that facilitates the privatisation of gains in the hands of ever smaller elites while also socialising risk losses in an anarchic manner to the detriment of the many is not politically viable in the long run this is the case in particular if a core element of this system s legitimacy is its claim to promote democracy at home and around the world based on principles of transparency and accountability both the global financial crisis and the deepwater horizon oil spill have already attained the status of watershed events mainly because the social economic and environmental risks inflicted by private actors on very large groups of people were extraordinary and the causes of failure to manage these risks were systemic rather than accidental at the heart of the systemic nature of these watershed failures lies the gradual evolution of the modern corporation into organisations with the power to re shape in their favour a changing and varied history of precarious balancing acts between public and private interests in advanced capitalist economies from its beginnings capitalism has been defined by the primacy of economic over political organisation most famously encapsulated in adam smith s metaphor of the invisible hand much later albert hirschman s insightful account of how the interests gradually came to outweigh the passions hirschman 1977 provides a detailed analysis of such early legitimisation patterns according to which the pursuit of individual freedom and economic selforganisation would be the driving force of political pacification and collective civilisation yet from the beginning such high expectations were curbed by warnings of potential conflicts between private and public interests if the former became too powerful thus adam smith himself pointed out that t o widen the market and to narrow the competition is always the interest of the dealers to widen the market may frequently be agreeable to the interest of the public but to narrow the competition must always be against it and can serve only to enable the dealers by raising their profits above what they naturally would be to levy for their own benefit an absurd tax on the rest

a dynamic putty semi putty model of aggregate energy demand energy conservation dominated the adjustments of the energy decade the present study develops further the aggregate analysis to revisit the question of energy flexibility within the context of a multi factor dynamic model the resulting model preserves various adding up constraints cross equation parameter restrictions and consistent indexes within an ad hoc stock adjustment dynamic process applications to data for the usa and japan confirm the estimates of large long run elasticities under the assumption of a slow adjustment process

limited liability and multinational enterprises a case for reform in the context of corporate groups the legal principles of limited liability and corporate separation can lead to injustice in cases of harmto involuntary creditors by externalising risks that ought to be internalised by the enterprise as the better risk taker the avoidance of responsibility can be achieved by interposing a separate legal entity between the victims and the ultimate controller of the group be it a parent company or its controlling shareholders the resulting lack of legal responsibility could be remedied in a number of ways ranging from adaptations of existing exceptions to the doctrine of limited liability to outright abolition of limited liability preference is given to a statutory principle of enterprise liability for the controlling entity the implications of these doctrines are also discussed in relation to the choice of jurisdiction in which to bring a legal action

a theory of oil igopoly cournot equilibrium in exhaustible resource markets with fixed supplies the emergence of an effective and powerful cartel in the international petroleum market has stimulated considerable effort among economists to develop models of pricing and supply behavior for this industry 2 this modeling task poses two basic difficulties first as in the standard oligopoly problem one must characterize the behavior of several sellers in a market aware of each other and of their effect on market price second there is here the added difficulty of treating the explicitly intertemporal nature of suppliers decision wherein a limited stock must be optimally allocated over time this paper studies the implications of the simplest non trivial postulates about these two aspects of the problem it is assumed that suppliers are non cooperative cournot nash players each of whom is imagined to select an optimal supply strategy taking as given the strategies of the others moreover it is hypothesized that the feasible strategies are limited to open loop paths chosen at the initial date to maximize the present value of profits in light of the paths of supply which the others have chosen 3 these basic postulates together with a few technical assumptions concerning the structure of resource demand permit one to demonstrate the existence of at least one non cooperative equilibrium concerning thisequilibrium we show that 1 the average and marginal return on resource stocks is inversely related to the size of a player s initial endowment 2 aggregate production decreases over time until all stocks are exhausted while firms with smaller stocks exhaust their supplies no later than firms with larger stocks do 3 the present value of price net of extraction cost declines over time 4 industry production maximizes a weighted average of intertemporal consumer s surplus and producers profits

why competition may drive up prices abstract we show that the expected price of an incumbent firm may increase in response to increasing competition as it may become more profitable to exploit a rather immobile fraction of consumers instead of capturing a larger but more contested segment of the market to derive this result we consider two approaches of modelling the degree of competition first in a duopolistic setting competition is said to be more intense if the entrant s product becomes more attractive to the mobile fraction of buyers in this case we find that all buyers i e both the mobile and the immobile fraction may lose if the market becomes more competitive secondly in a model with two entrants competition is said to become intense if entrants serve an overlapping segment of the market for mobile buyers

dynamic duopoly with adjustment costs a differential game approach abstract this paper develops a differential game model of duopoly in which firms incur costs associated with how fast they change their level of output the analysis solves for a subgame perfect equilibrium to the model in which the steady state level of output lies strictly between the static cournot and perfect competition solutions furthermore we demonstrate that the limit game in which the speed of adjustment parameter approaches zero does not tend toward the static cournot equilibrium

strategic incentives in dynamic duopoly abstract we compare steady states of open loop and locally stable markov perfect equilibria mpe in a general symmetric differential game duopoly model with costs of adjustment strategic incentives at the mpe depend on whether an increase in the state variable of a firm hurts or helps the rival and on whether at the mpe there is intertemporal strategic substitutability or complementarity a full characterization is provided in the linear quadratic case then with price competition and costly production adjustment static strategic complementarity turns into intertemporal strategic substitutability and the mpe steady state outcome is more competitive than static bertrand competition

evolutionary consumers imply monopolies exit we address the question of how a monopolist should price when facing evolutionary consumers who gradually move in the direction of following their optimal strategy but may make temporary suboptimal choices we show that under a broad generalization of the most commonly used model of evolution the monopolist will set a path of prices such that all consumers eventually stop purchasing the monopolist s product

what have we learned from a decade of empirical research on growth comment on growth empirics and reality by william a brock and steven n durlauf

a dynamic model of duopoly with customer loyalties consider a static game model of duopoly in which price is the strategic variable production is costless capacity is limitless and all sales are made by the low price setter according to some fixed bounded demand function it is well known that in such a model there is a unique cournot bertrand nash equilibrium which involves both sellers setting a price of zero and earning zero l otits neither the model nor the outcome seems to be a good description of reality and many other models have been proposed in the literature as more realistic and for which more interesting strategic conclusions can be reached see for example friedman 2 for a discussion of some of these in this paper i consider a modification of the above model which is motivated by speculations about markets such as that for automobile insurance which are characterized by repeat buying of a homogeneous commodity which is supplied by a few sellers and expenditures on which form a relatively small part of each buyer s budget in any time period if expenditures by each buyer are small or if buyers expect that there is not a great difference between the prices set by different sellers buyers are not likely to expend many resources shopping for the best price or making complicated strategic decisions furthermore the repeat purchase aspect suggests that the seller from whom the buyer previously purchased has a natural advantage if information about price or quality for the entire market is not free the model which i propose here reflects these considerations specifically buyers do not optimize instead they act according to a simple rule of thumb each buyer purchases from the same seller from whom he purchased in the last period unless that seller has raised his price in which case the buyer purchases from the current period low price setter in either case the buyer purchases an amount which is a fixed function of the price he faces independent of time the identity of the seller and history assuming such 69 0022 053 l 82 030069 08 02 00 o

markov puppy dogs and related animals abstract it is shown that steady state markov perfect equilibria of discrete time infinite horizon quadratic adjustment cost games differ from equilibria of their infinitely repeated counterpart games with zero adjustment costs even though no adjustment costs are paid in the steady state in contrast to continuous time games the limit of these equilibria as adjustment costs approach zero is the same as the equilibria of their static counterpart games a classification scheme is presented and it is shown that the taxonomy is identical to that of analogous two stage games such as those analyzed by fudenberg and tirole american economic review papers and proceedings 1984 74 361 366 this classification is useful in that it implies that steady state equilibria need not be explicitly calculated to analyze qualitatively the effects of adjustment costs in strategic environments it is also argued that estimated conjectural variations parameters may capture a well defined property of strategic interaction in a dynamic game

limited liability shareholder rights and the problem of corporate irresponsibility there has long been a tendency to see the corporate legal form as presently constituted as economically determined as the more or less inevitable product of the demands of advanced technology and economic efficiency through an examination of its historical emergence focusing in particular on the introduction of general limited liability and the development of the modern doctrine of separate corporate personality this paper takes issue with this view arguing that the corporate legal form was and is in large part a political construct developed to accommodate and protect the rentier investor it is moreover a construct which institutionalises irresponsibility against this backdrop different ways of trying to resolve the problem of corporate irresponsibility are explored the key the paper suggests is to be found in decoupling the privilege of limited liability from rights of control

adaptation to land constraints is africa different since the seminal works of malthus and boserup scientists have long debated the impact of population growth and land constraints on the wellbeing of rural people today these concerns are particularly relevant to africa with its rapid population growth very small farms and chronic food insecurity in this paper we examine adaptation to falling land labor ratios using a comprehensive theoretical framework in which households faced with binding land constraints can respond in three ways intensifying agricultural production diversifying out of agriculture and reducing fertility rates using cross country data and drawing upon the existing literature we reach three conclusions first population density is associated with reduced fallows and more intensive use of land but not fertilizer use or irrigation indicating major challenges in achieving sustainable intensification or agricultural productivity growth second there is little evidence of successful non farm diversification in response to land pressures in africa from domestic or international income sources third rural africans in land constrained countries desire smaller families but have thus far benefited little from family planning policies these findings underscore the need for a coordinated multi sectoral approach to sustainably reduce poverty in the region

short run long run and cross elasticities of gasoline demand in brazil gasoline is one of the most important of the oil derived products its importance is closely related to its participation in the value of imports of many countries and in a number of cases it is one of the determinants of their balance of payment deficit fiscal deficit and economic growth as opposed to most nations brazil has had a gasoline substitute since 1985 alcohol many studies have tried to estimate the income and price elasticities of the demand for gasoline in several countries this paper extends previous studies by estimating the cross price elasticity between gasoline and alcohol our findings indicate that alcohol is an imperfect substitute for gasoline even in the long run as a consequence the need for a new fuel substitution must be initiated long before petroleum reserves vanish

on the oligopolistic extraction of non renewable common pool resources in recent literature the extraction of common pool resources ha s been discussed under the aspect of whether or not they can be used efficiently when a finite number of agents has access to the resource the objective of this paper is the derivation of a necessary equilibrium condition in a simple model this condition has severe consequences for existence propositions in papers of m c kemp and n v long 1980 j mcmillan and h w sinn 1984 and j f reinganum and n l stokey 1985 copyright 1986 by the review of economic studies limited

the root cause of economic growth under capitalism drawing on historical and other empirical evidence this paper provides a causal explanation of a central question why sustained per capita growth occurs in capitalist economies i e in what way capitalism differs from the market that gives it this property it describes an endogenous economic logic that is based on the institutional characteristics of capitalist firms in the non financial sector especially the flexibility of the inputs that they can call upon and of the size of the market that they can supply this perspective naturally generates a realistic theoretical account not only of the source of economic growth but also of the evolution of market structure the forces that produce divergence in for example profit rates a starting point for explaining price setting and a language for describing firms economic power it draws on previous traditions especially those based on the works of marx and schumpeter but differs from them in important respects copyright the author 2011 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

n firm oligopolies with production adjustment costs best responses and equilibrium abstract n firm single product oligopolies will be examined without product differentiation and with production adjustment costs the best response functions of the firms will be first determined in terms of the outputs of the rest of the industry and the firm s own outputs of the previous time period this function is always decreasing not necessarily continuous and might have two different values then the best response will be determined when the output of the rest of the industry is replaced by the output of the entire industry we will show that this function might have infinitely many values leading to infinitely many equilibria a complete description of the equilibrium set will also be given the theoretical findings will be illustrated with the case of linear price and linear cost functions

market share inertia with more than two firms an existence problem abstract when there is market share inertia there may exist an equilibrium in pure price strategies in a duopoly but when the number of firms is greater than two such an equilibrium never exists

dominant firms and their alleged decline abstract by way of a survey of recent literature on the theory of strategic competition this paper focuses on the question of whether dominant firms decline the traditional argument suggesting decline is found to be based on a rather unsatisfactory modelling of dominance and more acceptable conceptualizations suggest that such privileged positions will persist

capacity investment preemption and commitment in an infinite horizon model the commitment value of capacity is analyzed in an infinite horizon duopoly model the paper focuses on the role of alternative behavioral assumptions about the ability of firms to commit to investment paths each firm s investment strategy in a feedback nash equilibrium is shown to be a decreasing function of its rival s current capacity this creates an incentive for a firm to expand its capacity to preempt subsequent rival investment in a precommitment equilibrium there are no incentives to invest preemptively as a consequence steady state capacity levels are greater in a feedback nash equilibrium than in a precommitment equilibrium copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

monopolists and viscous demand we characterize the optimal dynamic price policy of a monopolist who faces viscous demand for its services demand is viscous if it adjusts relatively slowly to price changes we show that with the optimal policy the monopolist stops short of achieving 100 market penetration even when all of the consumers have the same long run willingness to pay for the service furthermore for certain parameter values in the model the price policy requires rapid oscillations of the price path

myopic solutions of markov decision processes and stochastic games sufficient conditions are presented for a markov decision process to have a myopic optimum and for a stochastic game to possess a myopic equilibrium point an optimum or an equilibrium point is said to be myopic if it can be deduced from an optimum or an equilibrium point of a static optimization problem or a static nash game the principal conditions are a each single period reward is the sum of terms due to the current state and action b each transition probability depends on the action taken but not on the state from which the transition occurs and c an appropriate static optimum or equilibrium point is ad infinitum repeatable these conditions are satisfied by several dynamic oligopoly models and numerous markov decision processes

dynamic demand and noncompetitive intertemporal output adjustments abstract this paper integrates dynamics on the demand and on the supply side which are characteristic for many goods in particular fuels due to costly adjustments furthermore firms often pursue a quantity strategy and decide on output adjustments additional capacities etc instead of fixing prices e g opec moved from posting prices to adjusting output in 1986 this paper provides a corresponding framework surprisingly ignored in the literature and derives intertemporal market equilibria cooperative and noncooperative in open loop and in markov strategies the equilibrium in markov strategies is different mostly opposite to the much discussed sticky price models the qualitative properties are non trivial and some of them are even surprising e g increased demand sluggishness can raise supply