microéconomie 05/10/09

Source : NEP (New Economics Papers) | RePEc

1. Cournot Oligopoly and Concavo-Concave Demand

   Date:	2009-09
   By:	Christian Ewerhart
   URL:	http://d.repec.org/n?u=RePEc:zur:iewwpx:427&r=mic
   The N-firm Cournot model with general technologies is reviewed to derive generalized and unified conditions for existence of a pure strategy Nash equilibrium. Tight conditions are formulated alternatively (i) in terms of concavity of two-sided transforms of inverse demand, or (ii) as linear constraints on the elasticities of inverse demand and its first derivative. These conditions hold, in particular, if a firm’s marginal revenue decreases in other firms’ aggregate output, or if inverse demand is logconcave. The analysis relies on lattice-theoretic methods, engaging both cardinal and ordinal notions of supermodularity. As a byproduct, a powerful test for strict quasiconcavity is obtained.
   Keywords:	Cournot competition, existence of Nash equilibrium, concavity of demand, supermodular games, strict quasiconcavity
   JEL:	L13

2. Optimal Policy and Non-Scale Growth with R&D Externalities

   Date:	2009-08
   By:	Simone Valente (CER-ETH – Center of Economic Research at ETH Zurich, Switzerland)
   URL:	http://d.repec.org/n?u=RePEc:eth:wpswif:09-116&r=mic
   An established result of the endogenous growth literature is that competitive equilibria in expanding-varieties models are suboptimal due to the rent-effect: monopolistic pricing drives the equilibrium quantity of each intermediate below the efficient level, implying that it is optimal to subsidize final producers. This paper shows that, if scale effects are eliminated by including R&D spillovers in the model, normative prescriptions change. Since the laissez-faire economy under-invests into R&D activity, the share of resources devoted to intermediates’ production increases, and this reallocation effect contrasts the rent-effect. In many scenarios, including the polar case of logarithmic preferences, the reallocation effect surely dominates: the equilibrium quantity of each intermediate exceeds the optimal one, and the optimal policy consists of taxing final producers because fiscal authorities must internalize th e overshooting mechanism generated by under-investment in R&D.
   Keywords:	Endogenous Growth, Scale Effects, R&D Externalities, Optimal Policy
   JEL:	O41

3. Indirect network effects with two Salop circles: the example of the music industry

   Date:	2009
   By:	Dewenter, Ralf Haucap, Justus Wenzel, Tobias
   URL:	http://d.repec.org/n?u=RePEc:zbw:tuiedp:63&r=mic
   This paper analyses the interdependency between the market for music recordings and concert tickets, assuming that there are positive indirect network effects both from the record market to ticket sales for live performances and vice versa. Using a model with two interrelated Salop circles we show that prices in both markets are corrected down- wards when compared to the standard Salop model. Furthermore, we show that the effects of file sharing on firms’ profitability and on variety are ambiguous. File sharing can increase profits through increased concert ticket demand and thereby also lead to additional market entry and additional variety.
   Keywords:	Music Industry,Indirect Network Effects,Salop Model,File Sharing
   JEL:	L13

4. Demand reduction and preemptive bidding in multi-unit license auctions

   Date:	2009-09
   By:	Jacob K. Goeree Theo Offerman Randolph Sloof
   URL:	http://d.repec.org/n?u=RePEc:zur:iewwpx:430&r=mic
   Multi-unit ascending auctions allow for equilibria in which bidders strategically reduce their demand and split the market at low prices. At the same time, they allow for preemptive bidding by incumbent bidders in a coordinated attempt to exclude entrants from the market. We consider an environment where both demand reduction and preemptive bidding are supported as equilibrium phenomena of the ascending auction. In a series of experiments, we compare its performance to that of the discriminatory auction. Strategic demand reduction is quite prevalent in the ascending auction even when entry imposes a (large) negative externality on incumbents. As a result, the ascending auction performs worse than the discriminatory auction both in terms of revenue and efficiency, while entrants chances are similar across the two formats.
   Keywords:	Multi-license auctions, demand reduction, external effects, preemption
   JEL:	D44

5. Price-increasing competition: the curious case of overdraft versus deferred deposit credit

   Date:	2009
   By:	Brian T. Melzer Donald P. Morgan
   URL:	http://d.repec.org/n?u=RePEc:fip:fednsr:391&r=mic
   We find that banks charge more for overdraft credit when depositors have access to a potential substitute: deferred deposit (“payday”) credit. We attribute this rise in prices partly to adverse selection created by banks’ practice of charging a flat fee regardless of the overdraft amount–pricing that favors depositors prone to large overdrafts. When deferred deposit credit priced per dollar borrowed is available, depositors prone to small overdrafts switch to that option. That selection works against banks; large overdrafts cost more to supply and, if depositors default, banks lose more, so prices rise. Consistent with this adverse-selection hypothesis, we document that the average dollar amount per returned check at banks and other depository institutions increases when depositors have access to deferred deposit credit. Beyond documenting another case of price-increasing competition, our findings bear on theories of adv erse selection in credit markets and contribute to the debate over the pros and cons of payday credit.
   Keywords:	Overdrafts ; Bank competition ; Banks and banking – Service charges ; Bank deposits

6. Uncertainty aversion and equilibrium existence in games with incomplete information

   Date:	2009-09-29
   By:	Azrieli, Yaron Teper, Roee
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:17615&r=mic
   We consider games with incomplete information a la Harsanyi, where the payoff of a player depends on an unknown state of nature as well as on the profile of chosen actions. As opposed to the standard model, players’ preferences over state–contingent utility vectors are represented by arbitrary functionals. The definitions of Nash and Bayes equilibria naturally extend to this generalized setting. We characterize equilibrium existence in terms of the preferences of the participating players. It turns out that, given continuity and monotonicity of the preferences, equilibrium exists in every game if and only if all players are averse to uncertainty (i.e., all the functionals are quasi–concave). We further show that if the functionals are either homogeneous or translation invariant then equilibrium existence is equivalent to concavity of the functionals.
   Keywords:	Games with incomplete information, equilibrium existence, uncertainty aversion, convex preferences.
   JEL:	D81

7. Transdisciplinarity and Social Innovation Research

   Date:	2009
   By:	Andreas Novy Barbara Beinstein
   URL:	http://d.repec.org/n?u=RePEc:wiw:wiwsre:sre-disc-2009_01&r=mic

8. Liquidity, innovation and growth

   Date:	2009-09
   By:	Aleksander Berentsen Mariana Rojas Breu Shouyong Shi
   URL:	http://d.repec.org/n?u=RePEc:zur:iewwpx:441&r=mic
   Many countries simultaneously suffer from high rates of inflation, low growth rates of per capita income and poorly developed financial sectors. In this paper, we integrate a microfounded model of money and finance into a model of endogenous growth to examine the effects of inflation and financial development. A novel feature of the model is that the market for innovation goods is decentralized. Financial intermediaries arise endogenously to provide liquid funds to the innovation sector. We calibrate the model to address two quantitative issues. One is the effects of an exogenous improvement in the productivity of the financial sector on welfare and per capita growth. The other is the effects of inflation on welfare and growth. Consistent with the data but in contrast to previous work, reducing inflation generates large gains in the growth rate of per capita income as well as in welfare. Relative to reducing inflation, im proving the efficiency of the financial market increases growth and welfare by much smaller amounts.
   Keywords:	Money, Credit, Innovation, Growth

9. Vote-Share Contracts and Learning-by-Doing

   Date:	2009-07
   By:	Markus Müller (CER-ETH – Center of Economic Research at ETH Zurich, Switzerland)
   URL:	http://d.repec.org/n?u=RePEc:eth:wpswif:09-114&r=mic
   We examine the interaction between vote-share contracts and learning-by-doing. Candidates for a political office are allowed to offer vote-share thresholds. The elected politician has to achieve at least this threshold value in his reelection result to remain in office for a second term. We assume there are learningby- doing effects for incumbents and show that competition leads to vote-share contracts implementing the socially optimal threshold, which is above one-half. Vote-share contracts improve the average ability level of a reelected politician and increase effort in the first term of an incumbent. On the other hand, vote-share contracts reduce the probability that learning-by-doing takes place. However, the overall effect of vote-share contracts is welfare-enhancing, even under the assumption of learning-by-doing.
   Keywords:	elections, political contracts, vote-share thresholds, learning-by-doing effects, incumbency advantage
   JEL:	D82

10. The potential cost of a failed doha round:

    Date:	2009
    By:	Bouet, Antoine Debucquet, David Laborde
    URL:	http://d.repec.org/n?u=RePEc:fpr:ifprid:886&r=mic
    “This study offers new conclusions on the economic cost of a failed Doha Round. The first section is devoted to an analysis of how trade policies evolve in the long and medium runs. We show that even under normal economic conditions, policymakers modify tariffs to cope with the evolution of world markets. We then use the MIRAGE Computable General Equilibrium model to assess the potential outcome of the Doha Round, and then examine four protectionist scenarios. Under a scenario where applied tariffs of major economies increase up to the currently bound tariff rates, we find that world trade decreases by 7.7 percent and world welfare drops by US$353 bn. We then compare a resort to protectionism when the Doha Development Agenda (DDA) is implemented versus a resort to protectionism when the DDA is not implemented. We find that this trade agreement could prevent the potential loss of US$ 809 bn of trade, and could therefore ac t as an efficient multilateral insurance scheme against the adverse consequences of “beggar-thy-neighbor” trade policies.” from authors’ abstract
    Keywords:	Trade negotiations, Computable general equilibrium (CGE) modeling, Bound duties, Domestic support, Globalization, Markets, Doha Development Agenda,

11. An experimental study of auctions versus grandfathering to assign pollution permits

    Date:	2009-09
    By:	Jacob K. Goeree Charles A. Holt Karen Palmer William Shobe Dallas Burtraw
    URL:	http://d.repec.org/n?u=RePEc:zur:iewwpx:429&r=mic
    We experimentally study auctions versus grandfathering in the initial assignment of pollution permits that can be traded in a secondary spot market. Low and high emitters compete for permits in the auction, while permits are assigned for free under grandfathering. In theory, trading in the spot market should erase inefficiencies due to initial mis-allocations. In the experiment, high emitters exercise market power in the spot market and permit holdings under grandfathering remain skewed towards high emitters. Furthermore, the opportunity costs of “free” permits are fully “passed through.” In the auction, the majority of permits are won by low emitters, reducing the need for spot-market trading. Auctions generate higher consumer surplus and slightly lower product prices in the laboratory markets. Moreover, auctions eliminate the large “windfall profits” that are observed in the treatment with free, grandfathere d permit allocations.
    Keywords:	Pollution permits, auctions, grandfathering, experiments
    JEL:	C92

12. How Certain Is the Uncertainty Effect?

    Date:	2009-07
    By:	Ondrej Rydval Andreas Ortmann Sasha Prokosheva Ralph Hertwig
    URL:	http://d.repec.org/n?u=RePEc:cer:papers:wp385&r=mic
    We replicate three pricing tasks of Gneezy, List and Wu (2006) for which they document the so-called uncertainty effect, namely, that people value a binary lottery over non-monetary outcomes less than other people value the lottery’s worse outcome. While the authors implemented a verbal lottery description, we use a physical lottery format which makes misinterpretation of the lottery structure highly unlikely. We also provide subjects with complete information about the goods they are to value (book gift certificates and one-year deferred payments). Contrary to Gneezy et al. (2006), we observe for all three pricing tasks that subjects’ willingness to pay for the lottery is significantly higher than other subjects’ willingness to pay for the lottery’s worse outcome.
    Keywords:	Decision under risk, framing, experiments, task ambiguity.
    JEL:	C81

13. Estimating the border effect: some new evidence

    Date:	2009
    By:	Gita Gopinath Pierre-Olivier Gourinchas Chang-Tai Hsieh Nicholas Li
    URL:	http://d.repec.org/n?u=RePEc:fip:fedbwp:09-10&r=mic
    To what extent do national borders and national currencies impose costs that segment markets across countries? To answer this question the authors use a dataset with product-level retail prices and wholesale costs for a large grocery chain with stores in the United States and Canada. They develop a model of pricing by location and employ a regression discontinuity approach to estimate and interpret the border effect. They report three main facts: One, the median absolute retail price and wholesale cost discontinuities between adjacent stores on either side of the U.S.-Canadian border are as high as 21 percent. In contrast, within-country border discontinuity is close to 0 percent. Two, the variation in the retail price gap at the border is almost entirely driven by variation in wholesale costs, not by variation in markups. Three, the border gaps in prices and costs co-move almost one-to-one with changes in the U.S.-Canadi an nominal exchange rate. They show these facts suggest that the price gaps they estimate provide only a lower bound on border costs.
    Keywords:	Prices ; Price indexes ; Wholesale price indexes ; Retail trade

14. Eroding market stability by proliferation of financial instruments

    Date:	2009-10
    By:	Fabio Caccioli Matteo Marsili Pierpaolo Vivo
    URL:	http://d.repec.org/n?u=RePEc:arx:papers:0910.0064&r=mic
    We contrast Arbitrage Pricing Theory (APT), the theoretical basis for the development of financial instruments, with a dynamical picture of an interacting market, in a simple setting. The proliferation of financial instruments apparently provides more means for risk diversification, making the market more efficient and complete. In the simple market of interacting traders discussed here, the proliferation of financial instruments erodes systemic stability and it drives the market to a critical state characterized by large susceptibility, strong fluctuations and enhanced correlations among risks. This suggests that the hypothesis of APT may not be compatible with a stable market dynamics. In this perspective, market stability acquires the properties of a common good, which suggests that appropriate measures should be introduced in derivative markets, to preserve stability.

15. Crisis and protection in the automotive industry : a global value chain perspective

    Date:	2009-09-01
    By:	Sturgeon, Timothy J. Van Biesebroeck, Johannes
    URL:	http://d.repec.org/n?u=RePEc:wbk:wbrwps:5060&r=mic
    In this paper the authors apply global value chain (GVC) analysis to recent trends in the global automotive industry, with special attention paid to government interventions triggered by the recent economic crisis. The authors first highlight some of the defining characteristics of GVCs in this important industry, especially the unusually strong regional structure of production and sales. National political institutions create pressure for local content, which drives production close to end markets, where it tends to be organized nationally or regionally. They then examine policy reactions to the recent economic crisis, and provide some discussion of the government interventions in the industry. The authors end with a number of policy conclusions that highlight the likely impact of the interventions on the evolution GVCs and the growth of the industry in developing countries.
    Keywords:	Markets and Market Access,Economic Theory&Research,Labor Policies,Water and Industry,Debt Markets

16. Beautiful Politicians

    Date:	2009-08
    By:	Amy King Andrew Leigh
    URL:	http://d.repec.org/n?u=RePEc:auu:dpaper:616&r=mic
    Are beautiful politicians more likely to be elected? To test this, we use evidence from Australia, a country in which voting is compulsory, and in which voters are given ‘How to Vote’ cards depicting photos of the major party candidates as they arrive to vote. Using raters chosen to be representative of the electorate, we assess the beauty of political candidates from major political parties, and then estimate the effect of beauty on voteshare for candidates in the 2004 federal election. Beautiful candidates are indeed more likely to be elected, with a one standard deviation increase in beauty associated with a 1½ – 2 percentage point increase in voteshare. Our results are robust to several specification checks: adding party fixed effects, dropping well-known politicians, using non-Australian beauty raters, omitting candidates of non-Anglo Saxon appearance, controlling for age, and analyzing the ‘beauty gap’ be tween candidates running in the same electorate. The marginal effect of beauty is larger for male candidates than for female candidates, and appears to be approximately linear. Consistent with the theory that returns to beauty reflect discrimination, we find suggestive evidence that beauty matters more in electorates with a higher share of apathetic voters.
    Keywords:	economics of beauty, elections, voter rationality, information shortcuts, thin slices
    JEL:	D72

17. Income, happiness, and the disutility of labor

    Date:	2009
    By:	Knabe, Andreas Rätzel, Steffen
    URL:	http://d.repec.org/n?u=RePEc:zbw:fubsbe:200912&r=mic
    We reexamine the claim that the effect of income on subjective well-being suffers from a systematic downward bias if one ignores that higher income is typically associated with more work effort. We analyze this claim using German panel data, controlling for individual unobserved heterogeneity, and specifying the impact of working hours in a non-monotonic form. Our results suggest that the impact of working hours on happiness is rather small and exhibits an inverse U-shape. We do not find evidence that leaving working hours out of the analysis leads to an underestimation of the income effect.
    Keywords:	Happiness,life satisfaction,income,disutility of labor
    JEL:	D60

microéconomie 27/09/09

Source : NEP (New Economics Papers) | RePEc

1. Mixed Source

   Date:	2009-09
   By:	Ramon Casadesus-Masanell (Harvard Business School, Harvard University) Gaston Llanes (Harvard Business School, Harvard University)
   URL:	http://d.repec.org/n?u=RePEc:net:wpaper:0906&r=mic
   We study competitive interaction between profit-maximizing firms that sell software and complementary goods or services. In addition to tactical price competition, we allow firms to compete through business model reconfigurations. We consider three business models: the proprietary model (where all software modules offered by the firm are proprietary), the open source model (where all modules are open source), and the mixed source model (where a few modules are open). When a firm opens one of its modules, users can access and improve the source code. At the same time, however, opening a module sets up an open source (free) competitor. This hampers the firm’s ability to capture value. We analyze three competitive situations: monopoly, commercial firm vs. non-profit open source project, and duopoly. We show that: (i) firms may become “more closed” in response to competition from an outside open source project; (ii) firms are more likely to open substitute, rather than complementary, modules to existing open source projects; (iii) when the products of two competing firms are similar in quality, firms differentiate through choosing different business models; and (iv) low-quality firms are generally more prone to opening some of their technologies than firms with high-quality products.
   Keywords:	Open Source, User Innovation, Business Models, Complementarity, Vertical Differentiation, Value Creation, Value Capture
   JEL:	O31

2. Price Competition and Consumer Confusion

   Date:	2009-09-01
   By:	Chioveanu, Ioana Zhou, Jidong
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:17340&r=mic
   This paper proposes a model in which identical sellers of a homogenous product compete in both prices and price frames (i.e., ways to present price information). We model price framing by assuming that firms’ frame choices affect the comparability of their price offers: consumers may fail to compare prices due to frame differentiation, and due to frame complexity. In the symmetric equilibrium the firms randomize over both price frames and prices, and make positive profits. This result is consistent with the observed coexistence of price and price frame dispersion in the market. We also show that (i) the nature of equilibrium depends on which source of consumer confusion dominates, and (ii) an increase in the number of firms can increase industry profits and harm consumers.
   Keywords:	bounded rationality; framing; frame dispersion; incomplete preferences; price competition; price dispersion
   JEL:	L13

3. Raising capital in an insurance oligopoly market

   Date:	2009-09-16
   By:	Julien Hardelin (Department of Economics, Ecole Polytechnique – CNRS : UMR7176 – Polytechnique – X, AgroParisTech ENGREF – (-)) Sabine Lemoyne De Forges (Department of Economics, Ecole Polytechnique – CNRS : UMR7176 – Polytechnique – X, AgroParisTech ENGREF – (-))
   URL:	http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00417573_v1&r=mic
   We consider an oligopoly of firms that compete on price. Firms produce a non-stochastic output, insurance coverage, which is sold before the true cost is known. They behave as if they were risk-averse for a standard reason of costly external finance. The model consists in a two-stage game. At stage 1, each firm chooses its internal capital level. At stage 2, firms compete on price. We characterize the conditions for Nash equilibria and analyze the strategic impact of capital choice on the market. We discuss the model with regard to insurance industry specificity and regulation.
   Keywords:	Price Competition; Risk-averse Firms; Insurance Market; Capital Choice.

4. Dynamic Competition with Consumer Inertia

   Date:	2009
   By:	Pot Erik Flesch János Peeters Ronald Vermeulen Dries (METEOR)
   URL:	http://d.repec.org/n?u=RePEc:dgr:umamet:2009039&r=mic
   We study a framework where two duopolists compete repeatedly in prices and where cho-sen prices potentially affect future market shares, but certainly do not affect current sales.This assumption of consumer inertia causes (noncooperative) coordination on high pricesonly to be possible as an equilibrium for low values of the discount factor. In particular,high discount factors increase opportunism and aggressiveness of competition to such anextent that high prices are no longer sustainable as an equilibrium outcome (not even intrigger strategies). In addition, we find that both monopolization and enduring marketshare and price fluctuations (price wars) can be equilibrium path phenomena withoutrequiring exogenous shocks in market or firm characteristics.
   Keywords:	microeconomics ;

5. Quantity-setting games with a dominant firm

   Date:	2009-09-25
   By:	Attila Tasnádi
   URL:	http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2009_25&r=mic
   We consider a possible game-theoretic foundation of Forchheimer’s model of dominant-firm price leadership based on quantity-setting games with one large firm and many small firms. If the large firm is the exogenously given first mover, we obtain Forchheimer’s model. We also investigate whether the large firm can emerge as a first mover of a timing game. Keywords
   Keywords:	Forchheimer; Dominant firm; Price leadership.
   JEL:	D43

6. A Computational View of Market Efficiency

   Date:	2009-08
   By:	Jasmina Hasanhodzic Andrew W. Lo Emanuele Viola
   URL:	http://d.repec.org/n?u=RePEc:arx:papers:0908.4580&r=mic
   We propose to study market efficiency from a computational viewpoint. Borrowing from theoretical computer science, we define a market to be \emph{efficient with respect to resources $S$} (e.g., time, memory) if no strategy using resources $S$ can make a profit. As a first step, we consider memory-$m$ strategies whose action at time $t$ depends only on the $m$ previous observations at times $t-m,…,t-1$. We introduce and study a simple model of market evolution, where strategies impact the market by their decision to buy or sell. We show that the effect of optimal strategies using memory $m$ can lead to “market conditions” that were not present initially, such as (1) market bubbles and (2) the possibility for a strategy using memory $m’ > m$ to make a bigger profit than was initially possible. We suggest ours as a framework to rationalize the technological arms race of quantitative trading firms.

7. A Dynamic Model of Lawsuit Joinder and Settlement

   Date:	2009-09
   By:	Andrew F. Daughety (Department of Economics, Vanderbilt University) Jennifer F. Reinganum (Department of Economics, Vanderbilt University)
   URL:	http://d.repec.org/n?u=RePEc:van:wpaper:0911&r=mic
   In this paper we examine a dynamic model of the process by which multiple related lawsuits may be filed and combined; we also examine actions a defendant may employ that may disrupt the formation of a joint suit. Our initial model involves two potential plaintiffs, with private information about the harm they have suffered, in a multi-period setting with positive costs of filing a suit. If two plaintiffs file, they join their suits to obtain a lower per-plaintiff trial cost and a higher likelihood of prevailing against the defendant. We find that some plaintiff types never file, some wait to see if another victim files and only then file, some file early and then drop their suits if not joined by another victim and, finally, some file and pursue their suits whether or not they are joined; thus, the equilibrium resembles a Òbandwagon.Ó We then consider the effect of allowing preemptive settlement offers by the defendant aimed at discouraging follow-on suits. Preemptive settlement results in a Ògold rushÓ of cases into the first period. In general, plaintiffs (ex ante) strictly prefer that such preemptive settlements not be allowed, and computational results suggest this may be broadly true for defendants as well; however, the inability of defendants to commit to such a policy results in an equilibrium with preemptive settlement. Finally, we consider partial unawareness of victims as to the source of harm; this provides a role for plaintiffs’ attorneys, who may seek additional victims to join a combined lawsuit. Confidential preemptive settlements in the case of partial unawareness restrict the plaintiff’s attorney from seeking additional victims and therefore leads to higher preemptive settlement amounts. Moreover, the defendant strictly prefers to employ preemptive settlement if the fraction of unaware victims is sufficiently high.
   Keywords:	Lawsuits, settlement, aggregation, dynamics
   JEL:	K41

8. Oligopolistic Competition and Optimal Monetary Policy

   Date:	2009-09
   By:	Ester Faia
   URL:	http://d.repec.org/n?u=RePEc:kie:kieliw:1552&r=mic
   The literature has shown that product market frictions and firms dynamic play a crucial role in reconciling standard DSGE with several stylized facts. This paper studies optimal monetary policy in a DSGE model with sticky prices and oligopolistic competition. In this model firms’ monopolistic rents induce both intra-temporal and intertemporal time-varying wedges which induce inefficient fluctuations of employment and consumption. The monetary authority faces a trade-off between stabilizing inflation and reducing inefficient fluctuations, which is resolved by using consumer price inflation as a state contingent sale subsidy. An analysis of the welfare gains of alternative rules show that targeting mark-ups and asset prices might improve upon a strict inflation targeting
   Keywords:	product market frictions, oligopolistic competition, optimal monetary policy
   JEL:	E3

9. Incomplete Contracts, Irreversible Investments and Entry Deterrence

   Date:	2009-08
   By:	Antonio Nicita Massimiliano Vatiero
   URL:	http://d.repec.org/n?u=RePEc:usi:wpaper:566&r=mic
   When renegotiation under incomplete contracts follows the outside option principle, hold-up may occur as the ex-post degree of competition increases on investor’s side. However, under this framework, asset specificity may play the counterintuitive role of an entry deterrence device, thus decreasing the probability of hold-up. Our result contrasts with standard literature in three respects: i) an equilibrium with overinvestment may emerge; ii) the ‘intimidating effect’ of overinvestment acts as an endogenous enforcement device; iii) a pervasive trade-off may emerge between ex-post efficient entry and ex-ante efficient specific investments
   Keywords:	strategic and specific investments, hold-up, outside options, entry deterrence
   JEL:	D23

10. Financial Innovation and Endogenous Growth

    Date:	2009-09
    By:	Stelios Michalopoulos Luc Laeven Ross Levine
    URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:15356&r=mic
    We model technological and financial innovation as reflecting the decisions of profit maximizing agents and explore the implications for economic growth. We start with a Schumpeterian endogenous growth model where entrepreneurs earn monopoly profits by inventing better goods and financiers arise to screen entrepreneurs. A novel feature of the model is that financiers also engage in the costly, risky, and potentially profitable process of innovation: Financiers can invent more effective processes for screening entrepreneurs. Every existing screening process, however, becomes less effective as technology advances. Consequently, technological innovation and, thus, economic growth stop unless financiers continually innovate. Historical observations and empirical evidence are more consistent with this dynamic model of financial innovation and endogenous growth than with existing models of financial development and growth.
    JEL:	G0

11. First We Try, Then We Trust! Real Options and the Cooperation-Competition Tension in Strategic Alliance Social Dilemmas

    Date:	2009-01
    By:	McCarter, Matthew W. (University of Illinois at Urbana-Champaign) Mahoney, Joseph T. (University of Illinois at Urbana-Champaign) Northcraft, Gregory B. (University of Illinois at Urbana-Champaign)
    URL:	http://d.repec.org/n?u=RePEc:ecl:illbus:09-0101&r=mic
    The cooperation-competition tension in strategic alliances creates a social dilemma wheremember and alliance interests are in conflict. Because social dilemmas have significantnegative implications for strategic alliance and member success, understanding thepsychological mechanisms underpinning the cooperation-competition tension and ways tonavigate this tension holds important theoretical implications for strategic alliance research.This paper proposes a real options approach to navigating strategic alliance social dilemmas.Acquiring a real option at the alliance level provides alliance members access to achieving asmall win of mutual cooperation, and, when the small win is realized, members are morelikely to cooperate in the larger strategic alliance. The increase of cooperation is becausealliance member’s perceived vulnerability is reduced. The level of exposure when acquiringthe real option may influence the effect of a small win on perceived vulnerability through thedevelopment of trust.

12. Strategies to Fight Ad-sponsored Rivals

    Date:	2009-09
    By:	Ramon Casadesus-Masanell (Strategy Unit, Harvard Business School) Feng Zhu (Management and Organization, Marshall School of Business, University of Southern California)
    URL:	http://d.repec.org/n?u=RePEc:net:wpaper:0909&r=mic
    We analyze the optimal strategy of a high-quality incumbent that faces a low-quality ad-sponsored competitor. In addition to competing through adjustments of tactical variables such as price or advertising intensity, we allow the incumbent to consider changes in its business model. We consider four alternative business models, two pure models (subscription-based and ad-sponsored) and two mixed models that are hybrids of the two pure models. We show that the optimal response to an ad-sponsored rival often entails business model reconfigurations, a phenomenon that we dub “competing through business models.” We also find that when there is an ad-sponsored entrant, the incumbent is more likely to prefer to compete through a pure, rather than a mixed, business model because of cannibalization and endogenous vertical differentiation concerns. We discuss how our study helps improve our understanding of notions of strategy, busin ess model, and tactics in the field of strategy.
    Keywords:	Strategy, Business models, Tactics, Ad-sponsored, Subscription-based
    JEL:	L12

13. Behavioural and Dynamical Scenarios for Contingent Claims Valuation in Incomplete Markets

    Date:	2009-03
    By:	Lampros Boukas Diogo Pinheiro Alberto Pinto Stylianos Xanthopoulos Athanasios Yannacopoulos
    URL:	http://d.repec.org/n?u=RePEc:arx:papers:0903.3657&r=mic
    We study the problem of determination of asset prices in an incomplete market proposing three different but related scenarios. One scenario uses a market game approach whereas the other two are based on risk sharing or regret minimizing considerations. Dynamical schemes modeling the convergence of the buyer’s and of the seller’s prices to a unique price are proposed.

14. The scale of market quakes

    Date:	2009-09
    By:	T. Bisig A. Dupuis V. Impagliazzo R. B. Olsen
    URL:	http://d.repec.org/n?u=RePEc:arx:papers:0909.1690&r=mic
    We define a methodology to quantify market activity on a 24 hour basis by defining a scale, the so-called scale of market quakes (SMQ). The SMQ is designed within a framework where we analyse the dynamics of excess price moves from one directional change of price to the next. We use the SMQ to quantify the FX market and evaluate the performance of the proposed methodology at major news announcements. The evolution of SMQ magnitudes from 2003 to 2009 is analysed across major currency pairs.

15. The evolution of an industrial cluster in China:

    Date:	2009
    By:	Fleisher, Belton Hu, Dinghuan McGuire, William Zhang, Xiaobo
    URL:	http://d.repec.org/n?u=RePEc:fpr:ifprid:896&r=mic
    “We use two rounds of surveys, taken in 2000 and 2008 in the Zhili Township children’s garment cluster in Zhejiang Province, to examine in depth the evolution of this industrial cluster. Firm size has grown on average in terms of output and employment, and increasing divergence in firm sizes has been associated with a significant rise in specialization and outsourcing among firms in the cluster. Although the investment amount needed to start a business has more than tripled, this amount remains low enough that formal bank loans remain an insignificant source of finance. Because of low entry barriers, the number of firms in the cluster has risen, driving down profits and bidding up wages, particularly since the year 2000. Facing severe competition, more firms have begun to upgrade their product quality. By the year 2007, nearly half of the sampled firms had established registered trademarks and nearly 20 percent had become International Office of Standardization (ISO) certified.” from authors’ abstract
    Keywords:	Cluster, Industrialization, Growth, Development strategies,

16. Public Provision of Private Goods and Nondistortionary Marginal Tax Rates: Some Further Results

    Date:	2009-09-18
    By:	Blomquist, Sören (Department of Economics)
    URL:	http://d.repec.org/n?u=RePEc:hhs:uunewp:2009_013&r=mic
    The incidence and efficiency losses of taxes have usually been analyzed in isolation from public expenditures. This negligence of the expenditure side may imply a serious misperception of the effects of marginal tax rates. The reason is that part of the marginal tax may in fact be a payment for publicly provided goods and reflects a cost that the consumers should bear in order to face the proper incentives. Hence, part of the marginal tax may serve the same role as a market price in the sense that it conveys information about a real social cost of working more hours. <p> We develop this idea formally by studying an optimal income tax model in combination with a type of public provision scheme not analyzed before; the provision level is individualized and positively associated with the individual’s labor supply. As examples we discuss child care, elderly care, primary education and health care. We show that there i s a potential gain in efficiency where public provision of such services replaces market purchases. We also show that it is necessary for efficiency that, other things equal, marginal income tax rates are higher than in economies where the services are purchased in the market. This because the optimal tax should be designed so as to face the taxpayers with the real cost of providing the services. Hence, it might very well be that economies with higher marginal tax rates have less severe distortions than economies with lower marginal tax rates.
    Keywords:	Nonlinear income taxation; Marginal income tax rates; Public provision of private goods; In-kind transfers
    JEL:	H21

17. Adversarial versus Inquisitorial Testimony

    Date:	2009-09
    By:	Winand Emons Claude Fluet
    URL:	http://d.repec.org/n?u=RePEc:ube:dpvwib:dp0904&r=mic
    An arbiter can decide a case on the basis of his priors, or the two parties to the conflict may present further evidence. The parties may misrepresent evidence in their favor at a cost. At equilibrium the two parties never testify together. When the evidence is much in favor of one party, this party testifies. When the evidence is close to the prior mean, no party testifies. We compare this outcome under a purely adversarial procedure with the outcome under a purely inquisitorial procedure (Emons and Fluet 2009). We provide sufficient conditions on when one procedure is better than the other one.
    Keywords:	evidence production; procedure; costly state falsification; adversarial; inquisitorial
    JEL:	D82

microéconomie_09/09/2009

Source : NEP (New Economics Papers) | RePEc

1. Mobile Termination and Mobile Penetration

   Date:	2009-07-31
   By:	Sjaak Hurkens Doh-Shin Jeon
   URL:	http://d.repec.org/n?u=RePEc:aub:autbar:777.09&r=mic
   In this paper, we study how access pricing affects network competition when subscription demand is elastic and each network uses non-linear prices and can apply termination-based price discrimination. In the case of a fixed per minute termination charge, we find that a reduction of the termination charge below cost has two opposing effects: it softens competition but helps to internalize network externalities. The former reduces mobile penetration while the latter boosts it. We find that firms always prefer termination charge below cost for either motive while the regulator prefers termination below cost only when this boosts penetration. Next, we consider the retail benchmarking approach (Jeon and Hurkens, 2008) that determines termination charges as a function of retail prices and show that this approach allows the regulator to increase penetration without distorting call volumes.
   Keywords:	Mobile Penetration, Termination Charge, Access Pricing, Networks, Interconnection, Regulation, Telecommunications.
   JEL:	D4

2. Entry, Exit, and the Determinants of Market Structure

   Date:	2009-09
   By:	Timothy Dunne Shawn Klimek Mark Roberts Daniel Yi Xu
   URL:	http://d.repec.org/n?u=RePEc:cen:wpaper:09-23&r=mic
   Market structure is determined by the entry and exit decisions of individual producers. These decisions are driven by expectations of future profits which, in turn, depend on the nature of competition within the market. In this paper we estimate a dynamic, structural model of entry and exit in an oligopolistic industry and use it to quantify the determinants of market structure and long-run firm values for two U.S. service industries, dentists and chiropractors. We find that entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are all important determinants of long run firm values and market structure. As the number of firms in the market increases, the value of continuing in the market and the value of entering the market both decline, the probability of exit rises, and the probability of entry declines. The magnitude of these effects differ s ubstantially across markets due to differences in exogenous cost and demand factors and across the dentist and chiropractor industries. Simulations using the estimated model for the dentist industry show that pressure from both potential entrants and incumbent firms discipline long-run profits. We calculate that a seven percent reduction in the mean sunk entry cost would reduce a monopolist’s long-run profits by the same amount as if the firm operated in a duopoly.
   Keywords:	entry, exit, market structure, competition, service industry
   JEL:	L11

3. Markets and linguistic diversity

   Date:	2009-09-01
   By:	Ramon Caminal
   URL:	http://d.repec.org/n?u=RePEc:aub:autbar:781.09&r=mic
   The choice of language is a crucial decision for firms competing in cultural goods and media markets with a bilingual or multilingual consumer base. To the extent that multilingual consumers have preferences over the intrinsic characteristics (content) as well as over the language of the product, we can examine the efficiency of market outcomes regarding linguistic diversity. In this paper, I extend the spokes model and introduce language as an additional dimension of product differentiation. I show that: (i) if firms supply their product in a single language (the adoption model) then the degree of linguistic diversity is inefficiently low, and (ii) if some firms supply more than one linguistic version (the translation model) then in principle the market outcome may exhibit insufficient or excessive linguistic diversity. However, excessive diversity is associated to markets where the fraction of products in the minority l anguage is disproportionately high with respect to the relative size of the linguistic minority.
   Keywords:	Product variety, language, translation
   JEL:	D43

4. Young, open and international: the impact of search strategies on the internationalization of new ventures

   Date:	2009
   By:	Zimmermann, Jörg Grimpe, Christoph Sofka, Wolfgang
   URL:	http://d.repec.org/n?u=RePEc:zbw:zewdip:09017&r=mic
   Young firms with the ability to internationalize early and decisively have received much attention in recent academic discussion. However, relatively little is known about the underlying processes that enable them to skip several stages of the internationalization process. We contribute to this research stream by establishing theoretical links with the emerging open innovation paradigm of firms optimizing their R&D activities by interconnecting them with external partners such as leading customers, universities or specialized suppliers. Based on a sample of more than 2,500 firms in Germany we contrast young and mature firms with regard to the effect of open innovation strategies on internationalization performance. Our results show that both the breadth and depth of search strategies for external knowledge help young firms to enter international markets. Once they have entered these markets, though, the drivers for su ccess seem to shift from general knowledge sourcing to targeted and specific ones.
   Keywords:	New ventures,internationalization,innovation,search strategies,entrepreneurship

5. Bimodal Bidding in Experimental All-Pay Auctions

   Date:	2009-08
   By:	Christiane Ernst Christian Thöni
   URL:	http://d.repec.org/n?u=RePEc:usg:dp2009:2009-25&r=mic
   We report results from experimental first-price, sealed-bid, all-pay auctions for a good with a common and known value. We observe bidding strategies in groups of two and three bidders and under two extreme information conditions. As predicted by the Nash equilibrium, subjects use mixed strategies. In contrast to the prediction under standard assumptions bids are drawn from a bimodal distribution: very high and very low bids are much more frequent than intermediate bids. Standard risk preferences cannot account for our results. However, bidding behavior is consistent with the predictions of a model with reference dependent preferences as proposed by the prospect theory.
   Keywords:	All-pay Auction; Prospect Theory, Experiment
   JEL:	D44

6. Signaling the Strength of a Market Entrant

   Date:	2009-08-29
   By:	Janda, Karel
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:17007&r=mic
   This article belongs to the game theoretic and information economics literature dealing with the problem of signaling in the context of game theoretical models of entry into the industry. As opposed to the majority of literature we consider the situation of asymmetric information where the private information belongs to the entrant. We model the capacity decision of the entrant as a signal of his strength. We show that in the Stackelberg model of market entry for some values of underlying parameters the entrant fully utilizes his capacity while for other parameter values he builds excess capacity. The model may be empirically relevant for industrial organization analysis of the entry of a new supplier to the existing supply chain.
   Keywords:	Signaling; Entry; Capacity
   JEL:	L13

7. The Micro-Dynamics of Skill Mix Changes in a Dual Labor Market: The Spanish Manufacturing Experience

   Date:	2009-05
   By:	Adela Luque C.J. Krizan
   URL:	http://d.repec.org/n?u=RePEc:cen:wpaper:09-12&r=mic
   As in many other developed countries, the share of skilled workers in Spain’s labor force dramatically increased during the 1990s. This paper decomposes the aggregate skill mix change by a set of key firm characteristics and in the context of Spain’s dual labor market. We find that continuing firms were the major drivers of skill mix growth and that expanding firms in particular increased their ratio of skilled workers. Net entry played a smaller but positive role due to higher-skilled entrants and lower-skilled exiters. Finally, we find that although firms with higher concentrations of temporary workers make bigger employment changes overall, firms’ low-skilled employment is more strongly pro-cyclical than is high skilled employment.
   Keywords:	Microdata, Skill Mix, Decomposition Methodology, Business Cycle, Dual Labor Markets
   JEL:	L2

8. Credit Market Competition and the Nature of Firms

   Date:	2009-04
   By:	Nicola Cetorelli
   URL:	http://d.repec.org/n?u=RePEc:cen:wpaper:09-07&r=mic
   Empirical studies show that competition in the credit markets has important effects on the entry and growth of firms in nonfinancial industries. This paper explores the hypothesis that the availability of credit at the time of a firm’s founding has a profound effect on that firm’s nature. I conjecture that in times when financial capital is difficult to obtain, firms will need to be built as relatively solid organizations. However, in an environment of easily available financial capital, firms can be constituted with an intrinsically weaker structure. To test this conjecture, I use confidential data from the U.S. Census Bureau on the entire universe of business establishments in existence over a thirty-year period; I follow the life cycles of those same establishments through a period of regulatory reform during which U.S. states were allowed to remove barriers to entry in the banking industry, a development that resu lted in significantly improved credit competition. The evidence confirms my conjecture. Firms constituted in post-reform years are intrinsically frailer than those founded in a more financially constrained environment, while firms of pre-reform vintage do not seem to adapt their nature to an easier credit environment. Credit market competition does lead to more entry and growth of firms, but also to complex dynamics experienced by the population of business organizations.

9. Carbon leakage, the green paradox and perfect future markets

   Date:	2009
   By:	Thomas Eichner Rüdiger Pethig
   URL:	http://d.repec.org/n?u=RePEc:sie:siegen:136-09&r=mic
   Policies of lowering carbon demand may aggravate rather than alleviate climate change (green paradox). In a two-period three-country general equilibrium model with finite endowment of fossil fuel one country enforces an emissions cap in the first or second period. When that cap is tightened the extent of carbon leakage depends on the interaction of various parameters and elasticities. Conditions for the green paradox are specified. All determinants of carbon leakage resulting from tightening the first-period cap work in opposite direction when the second-period cap is tightened. Tightening the second-period cap does not necessarily lead to the green paradox.
   Keywords:	carbon leakage, green paradox, emissions cap
   JEL:	H22

10. Multi-Product Firms and Trade Liberalization

    Date:	2009-08
    By:	Andrew Bernard Stephen Redding Peter Schott
    URL:	http://d.repec.org/n?u=RePEc:cen:wpaper:09-21&r=mic
    This paper develops a general equilibrium model of international trade that features selection across firms, products and countries. Firms’ export decisions depend on a combination of firm “productivity” and firm-product-country “consumer tastes”, both of which are stochastic and unknown prior to the payment of a sunk cost of entry. Higher-productivity firms export a wider range of products to a larger set of countries than lower-productivity firms. Trade liberalization induces endogenous reallocations of resources that foster productivity growth both within and across firms. Empirically, we find key implications of the model to be consistent with U.S. trade data.
    Keywords:	heterogeneous firms, endogenous product scope, love of variety, core competency
    JEL:	F12

11. Social choice with approximate interpersonal comparisons of well-being

    Date:	2009-09-01
    By:	Pivato, Marcus
    URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:17060&r=mic
    Some social choice models assume that precise interpersonal comparisons of utility (either ordinal or cardinal) are possible, allowing a rich theory of distributive justice. Other models assume that absolutely no interpersonal comparisons are possible, or even meaningful; hence all Pareto-efficient outcomes are equally socially desirable. We compromise between these two extremes, by developing a model of `approximate’ interpersonal comparisons of well-being, in terms of an incomplete preorder on the space of psychophysical states. We then define and characterize `approximate’ versions of the classical egalitarian and utilitarian social welfare orderings. We show that even very weak assumptions about interpersonal comparability can yield preorders on the space of social alternatives which, while incomplete, are far more complete than the Pareto preorder (e.g. they select relatively small subsets of the Pareto frontier as b eing `socially optimal’). Along the way, we give sufficient conditions for an incomplete preorder to be representable using a collection of utility functions. We also develop a variant of Harsanyi’s Social Aggregation Theorem.
    Keywords:	interpersonal comparisons of utility; interpersonal comparisons of well-being; social choice; social welfare; approximate egalitarian; approximate utilitarian; Suppes-Sen; utility representations of partial orders; utility representations of preorders
    JEL:	D81

12. Optimal Climate Change Policies When Governments Cannot Commit

    Date:	2009-08
    By:	Alistair Ulph David Ulph
    URL:	http://d.repec.org/n?u=RePEc:san:wpecon:0909&r=mic
    This paper examines the optimal design of climate change policies in the context where governments want to encourage the private sector to undertake significant immediate investment in developing cleaner technologies, but the carbon taxes and other environmental policies that could in principle stimulate such investment will be imposed over a very long future. The conventional claim by environmental economists is that environmental policies alone are sufficient to induce firms to undertake optimal investment. However this argument requires governments to be able to commit to these future taxes, and it is far from clear that governments have this degree of commitment. We assume instead that governments cannot commit, and so both they and the private sector have to contemplate the possibility of there being governments in power in the future that give different (relative) weights to the environment. We show that this lack o f commitment has a significant asymmetric effect. Compared to the situation where governments can commit it increases the incentive of the current government to have the investment undertaken, but reduces the incentive of the private sector to invest. Consequently governments may need to use additional policy instruments – such as R&D subsidies – to stimulate the required investmen
    Keywords:	Climate Change; Emissions Taxes; Impact on R&D; Timing and Commitment
    JEL:	H23

13. Pricing Asian Interest Rate Options with a Three-Factor HJM Model

    Date:	2009-06
    By:	Claudio Henrique da Silveira Barbedo José Valentim Machado Vicente Octávio Manuel Bessada Lion
    URL:	http://d.repec.org/n?u=RePEc:bcb:wpaper:188&r=mic
    Pricing interest rate derivatives is a challenging task that has attracted the attention of many researchers in recent decades. Portfolio and risk managers, policymakers, traders and more generally all market participants are looking for valuable information from derivative instruments. We use a standard procedure to implement the HJM model and to price IDI options. We intend to assess the importance of the principal components of pricing and interest rate hedging derivatives in Brazil, one of the major emerging markets. Our results indicate that the HJM model consistently underprices IDI options traded in the over-the-counter market while it overprices those traded in the exchange studied. We also find a direct relationship between time to maturity and pricing error and a negative relation with moneyness.

14. A Newton Collocation Method for Solving Dynamic Bargaining Games

    Date:	2009-08
    By:	John Duggan (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158) Tasos Kalandrakis (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158)
    URL:	http://d.repec.org/n?u=RePEc:roc:wallis:wp60&r=mic
    We develop and implement a collocation method to solve for an equilibrium in the dynamic legislative bargaining game of Duggan and Kalandrakis (2008). We formulate the collocation equations in a quasi-discrete version of the model, and we show that the collocation equations are locally Lipchitz continuous and directionally differentiable. In numerical experiments, we successfully implement a globally convergent variant of Broyden’s method on a preconditioned version of the collocation equations, and the method economizes on computation cost by more than 50% compared to the value iteration method. We rely on a continuity property of the equilibrium set to obtain increasingly precise approximations of solutions to the continuum model. We showcase these techniques with an illustration of the dynamic core convergence theorem of Duggan and Kalandrakis (2008) in a nine-player, two-dimensional model with negative quadratic prefe rences.

15. Intermarriage and Immigrant Employment:The Role of Networks

    Date:	2009-08
    By:	Delia Furtado Nikolaos Theodoropoulos
    URL:	http://d.repec.org/n?u=RePEc:ucy:cypeua:3-2009&r=mic
    Social networks are commonly understood to play a large role in the labor market success of immigrants. Using 2000 U.S. Census data, this paper examines whether access to native networks, as measured by marriage to a native, increases the probability of immigrant employment. We start by confirming in both least squares and instrumental variables frameworks that marriage to a native indeed increases immigrant employment rates. Next, we show that the returns to marrying a native are not likely to arise solely from citizenship rights acquired through marriage or characteristics of native spouses. We then present several pieces of evidence suggesting that networks obtained through marriage play an important part in explaining the relationship between marriage decisions and employment.
    Keywords:	Immigration, Marriage, Employment, Networks

16. Expectational stability under non-zero trend inflation

    Date:	2009-09-03
    By:	Kobayashi, Teruyoshi Muto, Ichiro
    URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:17082&r=mic
    This study examines the expectational stability of the rational expectation equilibria(REE) under Taylor rules when trend inflation is non-zero. We find that whether or not a higher (lower) trend inflation makes the REE more (less) unstable depends largely on the data (such as contemporaneous data, forecasts and lagged data) used in the conduct of monetary policy.
    Keywords:	adaptive learning; E-stability; Taylor rule; trend inflation
    JEL:	D84

17. Fully Aggregative Games

    Date:	2009-08
    By:	Richard Cornes Roger Hartley
    URL:	http://d.repec.org/n?u=RePEc:acb:cbeeco:2009-505&r=mic
    A game is fully aggregative if payoffs and marginal payoffs depend only on a player’s own strategy and a function of the strategy profile which is common to all players. We characterize the form which this function must take in such a game and show that the game will be strategically equivalent to another game in which the function is the simple sum of strategies.
    JEL:	C72

microéconomie_24/08/2009

Source : NEP (New Economics Papers) | RePEc

1. Global poverty reduction and Pareto-improving redistribution

   Date:	2009-08
   By:	Chu, Angus C.
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:16809&r=mic
   Can a transfer of wealth from the US to least developed countries be Pareto improving? We analyze this question in an open-economy innovation-driven growth model, in which the high-income (low-income) country produces innovative (homogenous) goods. We find that wealth redistribution to the low-income country simultaneously reduces global inequality and stimulates innovation through an increase in labor supply in the high-income country. Given that the market equilibrium of R&D-growth models is usually inefficient due to R&D externalities, the wealth redistribution may lead to a Pareto improvement, which occurs if the discount rate is sufficiently low or R&D productivity is sufficiently high.
   Keywords:	innovation-driven growth; wealth redistribution; Pareto improvement
   JEL:	O41

2. Optimal stabilization policy with endogenous firm entry

   Date:	2009
   By:	Aleksander Berentsen Christopher J. Waller
   URL:	http://d.repec.org/n?u=RePEc:fip:fedlwp:2009-32&r=mic
   We study optimal monetary stabilization policy in a dynamic stochastic general equilibrium model where money is essential for trade and firm entry is endogenous. We do so when all prices are flexible and also when some are sticky. Due to an externality affecting firm entry, the central bank deviates from the Friedman rule. Calibration exercises suggest that the nominal interest rate should have been substantially smoother than the data if preference shocks were the main disturbance and much more volatile if productivity was the driving shock. This result is a direct consequence of policy actions to control entry.
   Keywords:	Monetary policy ; Econometric models

3. Bimodal Bidding in Experimental All-Pay Auctions

   Date:	2009-08
   By:	Christiane Ernst Christian Thöni
   URL:	http://d.repec.org/n?u=RePEc:usg:dp2009:2009-24&r=mic
   We report results from experimental first-price, sealed-bid, all-pay auctions for a good with a common and known value. We observe bidding strategies in groups of two and three bidders and under two extreme information conditions. As predicted by the Nash equilibrium, subjects use mixed strategies. In contrast to the prediction under standard assumptions bids are drawn from a bimodal distribution: very high and very low bids are much more frequent than intermediate bids. Standard risk preferences cannot account for our results. However, bidding behavior is consistent with the predictions of a model with reference dependent preferences as proposed by the prospect theory.
   Keywords:	All-pay Auction; Prospect Theory, Experiment
   JEL:	D44

4. Playing the Admissions Game: Student Reactions to Increasing College Competition

   Date:	2009-08
   By:	John Bound Brad Hershbein Bridget Terry Long
   URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:15272&r=mic
   Gaining entrance to a four-year college or university, particularly a selective institution, has become increasingly competitive over the last several decades. We document this phenomenon and show how it has varied across different parts of the student ability distribution and across region, with the most pronounced increases in competition being found among higher-ability students and in the Northeast. Additionally, we explore how the college preparatory behavior of high school seniors has changed in response to the growth in competition. We also discuss the theoretical implications of increased competition on longer-term measures of learning and achievement and attempt to test them empirically; the evidence and related literature, while limited, suggests little long-term benefit.
   JEL:	I2

5. Labor-Market Matching with Precautionary Savings and Aggregate Fluctuations

   Date:	2009-08
   By:	Per Krusell Toshihiko Mukoyama Aysegul Sahin
   URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:15282&r=mic
   We analyze a Bewley-Huggett-Aiyagari incomplete-markets model with labor-market frictions. Consumers are subject to idiosyncratic employment shocks against which they cannot insure directly. The labor market has a Diamond-Mortensen-Pissarides structure: firms enter by posting vacancies and match with workers bilaterally, with match probabilities given by an aggregate matching function. Wages are determined through Nash bargaining. We also consider aggregate productivity shocks, and a complete set of contingent claims conditional on this risk. We use the model to evaluate a tax-financed unemployment insurance scheme. Higher insurance is beneficial for consumption smoothing, but because it raises workers’ outside option value, it discourages firm entry. We find that the latter effect is more potent for welfare outcomes; we tabulate the effects quantitatively for different kinds of consumers. We also demonstrate that product ivity changes in the model—in steady state as well as stochastic ones—generate rather limited unemployment effects, unless workers are close to indifferent between working and not working; thus, recent findings are corroborated in our more general setting.
   JEL:	D31

6. Taxes and Trading versus Intensity Standards: Second-Best Environmental Policies with Incomplete Regulation (Leakage) or Market Power

   Date:	2009-08
   By:	Stephen P. Holland
   URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:15262&r=mic
   This paper investigates whether an emissions tax (equivalent to an emissions cap) maximizes social welfare (defined as the sum of consumer and producer surplus) in the presence of incomplete regulation (leakage) or market power by analyzing an intensity standard regulating emissions per unit of output. With no other market failures, an intensity standard indeed yields lower welfare, although combining it with a consumption tax eliminates this discrepancy. For incomplete regulation, I show that under certain conditions an intensity standard can yield higher welfare than any emissions tax (including the optimal emissions tax). This result persists even with the addition of a consumption tax, which ameliorates output distortions and can sometimes help the intensity standard attain the first best (when an emissions tax/consumption tax combination cannot). Comparing intensity standards to output-based updating shows that the l atter yields higher welfare because of its additional flexibility. Finally, I show that with market power an intensity standard can yield higher welfare than the optimal emissions tax. The intuition of these results is relatively straightforward. The weakness of an intensity standard is that it relies more on substitution effects than output effects to reduce emissions. With incomplete regulation or market power, this disadvantage may be helpful since leakage may offset gains from reducing output and since market power already inefficiently reduces output.
   JEL:	H23

7. Genuine Saving under Stochastic Growth

   Date:	2009-08-13
   By:	Li, Chuan-Zhong (Department of Economics) Löfgren, Karl-Gustaf (Department of Economics, Umeå University)
   URL:	http://d.repec.org/n?u=RePEc:hhs:umnees:0779&r=mic
   The concept of genuine saving appeared for the first time in a proof of a now well known theorem in Weitzman (1976). It was reinvented and used as a local welfare indicator by Pearce and Atkinson (1993). The purpose of this paper is to generalize this welfare measure to a stochastic Brownian motion context. We will use a stochastic version of a growth model introduced by Ramsey (1928). The particular model was developed by Merton (1975). Although the model is simple, it is enough to understand what its welfare results will look like in a general case.
   Keywords:	Welfare measures under growth and uncertainty; diversified risk versus undiversified risk
   JEL:	D60

8. Spring Cleaning: Rural Water Impacts, Valuation and Property Rights Institutions

   Date:	2009-08
   By:	Michael Kremer Jessica Leino Edward Miguel Alix Peterson Zwane
   URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:15280&r=mic
   In many societies, social norms create common property rights in natural resources, limiting incentives for private investment. This paper uses a randomized evaluation in Kenya to measure the health impacts of investments to improve source water quality through spring protection, estimate the value that households place on spring protection, and simulate the welfare impacts of alternative water property rights norms and institutions, including common property, freehold private property, and alternative “Lockean†property rights norms. We find that infrastructure investments reduce fecal contamination by 66% at naturally occurring springs, cutting child diarrhea by one quarter. While households increase their use of protected springs, travel-cost based revealed preference estimates of households’ valuations are only one-half stated preference valuations and are much smaller than levels implied by health pl anners’ typical valuations of child mortality, consistent with models in which the demand for health is highly income elastic. Simulations suggest that, at current income levels, private property norms would generate little additional investment while imposing large static costs due to spring owners’ local market power, but that private property norms might function better than common property at higher income levels. Alternative institutions, such as “modified Lockean†property rights, government investment or vouchers for improved water, could yield higher social welfare.
   JEL:	C93

9. The Deterrence Effect of Prison: Dynamic Theory and Evidence

   Date:	2009-07
   By:	David S. Lee (Princeton University and NBER) Justin McCrary (University of California, Berkeley and NBER)
   URL:	http://d.repec.org/n?u=RePEc:pri:cepsud:1168&r=mic
   Using administrative, longitudinal data on felony arrests in Florida, we exploit the discontinuous increase in the punitiveness of criminal sanctions at 18 to estimate the deterrence effect of incarceration. Our analysis suggests a 2 percent decline in the log-odds of offending at 18, with standard errors ruling out declines of 11 percent or more. We interpret these magnitudes using a stochastic dynamic extension of Becker’s (1968) model of criminal behavior. Calibrating the model to match key empirical moments, we conclude that deterrence elasticities with respect to sentence lengths are no more negative than -0.13 for young offenders.
   JEL:	D9

10. Internal and external political competition

    Date:	2009-08-10
    By:	David Hugh-Jones
    URL:	http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-067&r=mic
    All rulers face political competition, both from rivals within their state, and from other states to which their subjects may exit. In a simple model, both kinds of competition are substitutes. Internal competition (democracy) bene?ts citizens by allowing them to replace rent-seeking rulers. But it also weakens these rulers’ incentives to invest. External competition forces rent-seeking rulers to invest so as to prevent migration. As a result, citizens are less willing to ?ght for democracy, and rulers are less eager to oppose it, when external competition is high. In a panel of countries, there are fewer changes towards democracy when states have low GDP relative to their neighbours.
    Keywords:	political competition, dictatorship, democracy, transitions
    JEL:	D72

11. Continuity of the value and optimal strategies when common priors change

    Date:	2009-07
    By:	Einy, Ezra Haimanko, Ori Tumendemberelz, Biligbaatar
    URL:	http://d.repec.org/n?u=RePEc:hit:econdp:2009-09&r=mic
    We show that the value of a zero-sum Bayesian game is a Lipschitz continuous function of the players’ common prior belief, with respect to the total variation metric (that induces the topology of setwise convergence on beliefs). This is unlike the case of general Bayesian games, where lower semi-continuity of Bayesian equilibrium payoffs rests on the convergence of conditional beliefs (Engl (1994), Kajii and Morris (1998)). We also show upper, and approximate lower, semi-continuity of the optimal strategy correspondence with respect to the total variation norm, and discuss approximate lower semi-continuity of the Bayesian equilibrium correspondence in the context of zero-sum games.
    Keywords:	Zero-Sum Bayesian Games, Common Prior, Value, Optimal Strategies, Upper Semi-Continuity, Lower Approximate Semi-Continuity
    JEL:	C72

12. Easy come, easy go – The role of windfall money in lab and field experiments

    Date:	2009-08-11
    By:	Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University) He, Haoran (Department of Economics, School of Business, Economics and Law, Göteborg University) Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    URL:	http://d.repec.org/n?u=RePEc:hhs:gunwpe:0374&r=mic
    A growing number of experimental studies focus on the differences between the lab and the field. Important in this issue is the role of windfall money. By conducting a dictator game, where the recipient is a charity organization, in exactly the same way in the laboratory and in the field, we investigate the influence of windfall and earned endowment on behavior. We find a strong effect on donation amounts of earned endowment in the lab and the field. Subjects donate more if the endowment is a windfall gain. Thus, windfall money is important not only in a lab environment. However, even for earned endowment, there is a significant difference in behavior between the lab and the field.<p>
    Keywords:	Charitable giving; Dictator game; Laboratory experiment; Field experiment; Windfall money
    JEL:	C91

13. Evaluating marginal policy changes and the average effect of treatment for individuals at the margin

    Date:	2009-07
    By:	Pedro Carneiro (Institute for Fiscal Studies and University College London) James Heckman (Institute for Fiscal Studies and University of Chicago) Edward Vytlacil (Institute for Fiscal Studies and Columbia University)
    URL:	http://d.repec.org/n?u=RePEc:ifs:cemmap:21/09&r=mic
    <p>This paper develops methods for evaluating marginal policy changes. We characterize how the effects of marginal policy changes depend on the direction of the policy change, and show that marginal policy effects are fundamentally easier to identify and to estimate than conventional treatment parameters. We develop the connection between marginal policy effects and the average effect of treatment for persons on the margin of indifference between participation in treatment and nonparticipation, and use this connection to analyze both parameters. We apply our analysis to estimate the effect of marginal changes in tuition on the return to going to college.</p>

14. Financing Constraints and Entrepreneurship

    Date:	2009-08
    By:	William R. Kerr (Harvard Business School, Entrepreneurial Management Unit) Ramana Nanda (Harvard Business School, Entrepreneurial Management Unit)
    URL:	http://d.repec.org/n?u=RePEc:hbs:wpaper:10-013&r=mic
    Abstract is not available at this time

15. The Rug Rat Race

    Date:	2009-08
    By:	Garey Ramey Valerie A. Ramey
    URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:15284&r=mic
    After three decades of decline, the amount of time spent by parents on childcare in the U.S. began to rise dramatically in the mid-1990s. Moreover, the rise in childcare time was particularly pronounced among college-educated parents. Why would highly educated parents increase the amount of time they allocate to childcare at the same time that their own market returns have skyrocketed? After finding no empirical support for standard explanations, such as selection or income effects, we offer a new explanation. We argue that increased competition for college admissions may be an important source of these trends. The number of college-bound students has surged in recent years, coincident with the rise in time spent on childcare. The resulting “cohort crowding†has led parents to compete more aggressively for college slots by spending increasing amounts of time on college preparation. Our theoretical model shows th at, since college-educated parents have a comparative advantage in college preparation, rivalry leads them to increase preparation time by a greater amount than less-educated parents. We provide empirical support for our explanation with a comparison of trends between the U.S. and Canada, and a comparison across racial groups in the U.S.
    JEL:	J13

16. Science and teaching: Two-dimensional signalling in the academic job market

    Date:	2009-08-10
    By:	Schneider, Andrea (Helmut Schmidt University, Hamburg)
    URL:	http://d.repec.org/n?u=RePEc:ris:vhsuwp:2009_095&r=mic
    Post-docs signal their ability to do science and teaching to get a tenure giving universities the possibility of separating highly talented agents from the low talented ones. However separating that means signalling effort for the highly talented becomes even more important in a two-dimensional signalling case. This attracts notice to time constraints. Under weak conditions separating equilibria do not exist if time constraints are binding. The existing equilibria are more costly but without additional information compared to the one-dimensional case. Considering this, the efficiency of the current two-dimensional academic job market signalling can be improved by switching to a one-dimensional one.
    Keywords:	Multi-dimensional signalling; Academic job market; Teaching and Research
    JEL:	D82

17. Does deceptive advertising reduce political participation? Theory and evidence

    Date:	2009-08
    By:	Daniel Houser (George Mason University) Sandra Ludwig (LMU Munich) Thomas Stratmann (George Mason University)
    URL:	http://d.repec.org/n?u=RePEc:gms:wpaper:1011&r=mic
    We examine the effect of deceptive advertising on voting decisions in elections. We model two-candidate elections in which 1) voters are uncertain about candidates’ attributes; and 2) candidates can inform voters of their attributes by sending advertisements. We compare political campaigns with truthful advertising to campaigns in which there is a small chance of deceptive advertising. Our theoretical model predicts that informed voters should act on the information contained in the advertisement. Thus, even in deceptive campaigns, informed voters should either vote for the candidate from whom they received an advertisement or abstain from voting; they should never vote for the opposing candidate. We test our model in laboratory elections, and, as predicted, find higher participation among informed voters in elections that allow only for truthful advertisement than in elections that permit deceptive advertising. Contrary to our theoretical predictions, we find substantial differences in voting behavior between truthful and deceptive campaigns. When faced with a small probability of deception, informed voters in deceptive campaigns vote for the candidate who did not send an advertisement, thereby making sub-optimal voting choices. Even when there is only a small chance that an advertisement is deceptive, voters are more likely to elect the candidate who generates less welfare.

18. Price Dispersion in the Online Auction Markets

    Date:	2009-07-07
    By:	Sha Luo
    URL:	http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2009_07&r=mic
    Along the standard measures of price dispersion, this paper proposes a new method, the residual variance model, to examine the levels of price and price variation within and across 10 kinds of physically identical products on eBay UK. The results find that the price levels and price dispersions on eBay are lower than the ones reported in the prior literature regarding other online markets, but the ’law of one price’ has not prevailed in any sample category. It further suggests an important interaction between the extent of price dispersion and the heterogeneities of consumers and sellers.
    Keywords:	Price Dispersion, Online Auction Markets.
    JEL:	D44

19. Negative marginal tax rates and heterogeneity

    Date:	2009-05
    By:	Philippe Choné Guy Laroque (Institute for Fiscal Studies and INSEE – CREST)
    URL:	http://d.repec.org/n?u=RePEc:ifs:ifsewp:09/12&r=mic
    <p>Heterogeneity is likely to be an important determinant of the shape of optimal tax schemes. This article addresses the issue in a model à la Mirrlees with a continuum of agents. The agents differ in their productivities and opportunity costs of work, but their labor supplies depend only on a unidimensional combination of their two characteristics. Conditions are given under which the standard result that marginal tax rates are everywhere non-negative holds. This is in particular the case when work opportunity costs are distributed independently of productivities. But one can also get negative marginal tax rates: economies where negative tax rates are optimal at the bottom of the income distribution are studied, and a numerical illustration is given, based on UK data. </p>
    Keywords:	Optimal taxation, heterogeneity, welfare.
    JEL:	H21

20. A New Paradigm: A Joint Test of Structural and Correlation Parameters in Instrumental Variables Regression When Perfect Exogeneity is Violated

    Date:	2009-08-14
    By:	Caner, Mehmet Morrill, Melinda
    URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:16790&r=mic
    The instrumental variables strategy is commonly employed in empirical research. For correct inference using this econometric technique, the instruments must be perfectly exogenous and relevant. In fact, the standard t-ratio test statistic used in this context yields unreliable and often inaccurate results even when there is only a slight violation of the exclusion restriction. It is crucial to realize that to make reliable inferences on the structural parameters we need to know the true correlation between the structural error and the instruments. The main innovation in this paper is to identify an appropriate test in this context: a joint null hypothesis of the structural parameters with the correlation between the instruments and the structural error term. Since correlation cannot be estimated, we propose a test statistic involving a grid search over correlation values. To address inference under violations of exogeneit y, significant contributions have been made in the recent literature by assuming some degree of non-exogeneity. We introduce a new approach by deriving a modified t-statistic that corrects for the bias associated with non-exogeneity of the instrument. A key advantage of our approach over that of the previous literature is that we do not need to make any assumptions about the degree of violation of exogeneity either as possible values or prior distributions. In particular, our method is not a form of sensitivity analysis. Since our modified test statistic is continuous and monotonic in correlation it is easy to conduct inference by a simple grid search. Even though the joint null may seem to be limiting in interpreting rejection, we can still make accurate inferences on the structural parameters because of a feature of the grid search over correlation values. The procedure for calculating the modified coefficients and statistics is illustrated with two empirical examples.
    Keywords:	Violation of exogeneity; Instrumental variables regression: Joint test
    JEL:	C20

21. On the Relevance and Composition of Gifts within the Firm: Evidence from Field Experiments

    Date:	2009-08
    By:	Bellemare, Charles (Université Laval) Shearer, Bruce S. (Université Laval)
    URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp4339&r=mic
    We investigate the economic relevance and the composition of gifts within a firm where output is contractible. We develop a structural econometric model that identifies workers’ optimal reaction to monetary gifts received from their employer. We estimate the model using data from two separate field experiments, both conducted within a tree-planting firm. We use the estimated structural parameters to generalize beyond the experiment, simulating how workers would react to different gifts on the part of the firm, within different labour-market settings. We find that gifts have a role to play within this firm, increasing in importance when the workers’ outside alternatives deteriorate. Profit-maximizing gifts would increase profits within slack labour markets by up to 10% on average and by up to 17% for certain types of workers. These gifts represent significant increases in worker earnings; the average gift paid to workers a ttains 22% of average expected earnings in the absence of gifts. We find that gifts should be given by setting piece-rates above the market-clearing level rather than through fixed wages.
    Keywords:	gift giving, structural models, field experiments
    JEL:	J33

22. Hypothesis testing of multiple inequalities: the method of constraint chaining

    Date:	2009-06
    By:	Le-Yu Chen (Institute for Fiscal Studies and Academia Sinica) Jerzy Szroeter
    URL:	http://d.repec.org/n?u=RePEc:ifs:cemmap:13/09&r=mic
    <p><p>Econometric inequality hypotheses arise in diverse ways. Examples include concavity restrictions on technological and behavioural functions, monotonicity and dominance relations, one-sided constraints on conditional moments in GMM estimation, bounds on parameters which are only partially identified, and orderings of predictive performance measures for competing models. In this paper we set forth four key properties which tests of multiple inequality constraints should ideally satisfy. These are (1) (asymptotic) exactness, (2) (asymptotic)similarity on the boundary, (3) absence of nuisance parameters from the asymptotic null distribution of the test statistic, (4) low computational complexity and boostrapping cost. We observe that the predominant tests currently used in econometrics do not appear to enjoy all these properties simultaneously. We therefore ask the question : Does there exist any nontrivial test which, as a mathematical fact, satisfies the first three properties and, by any reasonable measure, satisfies the fourth ? Remarkably the answer is affirmative. The paper demonstrates this constructively. We introduce a method of test construction called chaining which begins by writing multiple inequalities as a single equality using zero-one indicator functions. We then smooth the indicator functions. The approximate equality thus obtained is the basis of a well-behaved test. This test may be considered as the baseline of a wider class of tests. A full asymptotic theory is provided for the baseline. Simulation results show that the finite-sample performance of the test matches the theory quite well.</p></p>

23. Terror and the Costs of Crime

    Date:	2009-08
    By:	Gould, Eric D. (Hebrew University, Jerusalem) Stecklov, Guy (Hebrew University, Jerusalem)
    URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp4347&r=mic
    This paper argues that terrorism, beyond its immediate impact on innocent victims, also raises the costs of crime, and therefore, imposes a negative externality on potential criminals. Terrorism raises the costs of crime through two channels: (i) by increasing the presence and activity of the police force, and (ii) causing more people to stay at home rather than going out for leisure activities. Our analysis exploits a panel of 120 fatal terror attacks and all reported crimes for 17 districts throughout Israel between 2000 and 2005. After controlling for the fixed-effect of each district and for district-specific time trends, we show that terror attacks reduce property crimes such as burglary, auto-theft, and thefts-from-cars. Terror also reduces assaults and aggravated assaults which occur in private homes, but increases incidents of trespassing and “disrupting the police.” Taken as a whole, the results are consistent wi th a stronger deterrence effect produced by an increased police presence after a terror attack. A higher level of policing is likely to catch more people trespassing, and at the same time, reduce the number of property crimes. The decline in crimes committed in private houses is likely an indication that the tendency for individuals to stay home after a terror attack further increases the costs of crime.
    Keywords:	crime, police, terror
    JEL:	K4

24. Does Leaving Welfare Improve Health? Evidence for Germany

    Date:	2009-08
    By:	Martin Huber Michael Lechner Conny Wunsch
    URL:	http://d.repec.org/n?u=RePEc:usg:dp2009:2009-21&r=mic
    Using exceptionally rich linked administrative and survey information on German welfare recipients we investigate the health effects of transitions from welfare to employment and of assignments to welfare-to-work programmes. Applying semi-parametric propensity score matching estimators we find that employment substantially increases (mental) health. The positive effects are mainly driven by males and individuals with bad initial health conditions and are largest for males with poor health. In contrast, the effects of welfare-to-work pro-grammes, including subsidized jobs, are ambiguous and statistically insignificant for most outcomes. Robustness checks that include a semi-parametric instrumental variable approach do not provide reasons for concern.
    Keywords:	Welfare programs, health effects
    JEL:	I38

25. Exploring the Robustness of the Balance of Payments-Constrained Growth Idea in a Multiple Good Framework

    Date:	2009-08
    By:	Arslan Razmi (University of Massachusetts Amherst)
    URL:	http://d.repec.org/n?u=RePEc:ums:papers:2009-10&r=mic
    This paper derives the balance of payments-constrained growth (BPCG) model as a special case of a three good framework that incorporates exportables, importables, and non-tradables. The conditions under which the canonical form of the BPCG rate can be derived are made explicit and the assumptions scrutinized. It is shown that the presence of non-tradables, substitutability between exportables and importables, and incomplete specialization in expenditure generally dampen the externally-constrained growth rate. These findings help explain why empirical estimates tend to overestimate the BPCG rate. Overall our findings underscore the observation that tests of the BPCG hypothesis are as much a test of the internal structure of the economy under consideration. JEL Categories:

26. Cultural neuroeconomics of intertemporal choice

    Date:	2009
    By:	Takahashi, Taiki Hadzibeganovic, Tarik Cannas, Sergio Makino, Takaki Fukui, Hiroki Kitayama, Shinobu
    URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:16814&r=mic
    According to theories of cultural neuroscience, Westerners and Easterners may have distinct styles of cognition (e.g., different allocation of attention). Previous research has shown that Westerners and Easterners tend to utilize analytical and holistic cognitive styles, respectively. On the other hand, little is known regarding the cultural differences in neuroeconomic behavior. For instance, economic decisions may be affected by cultural differences in neurocomputational processing underlying attention; however, this area of neuroeconomics has been largely understudied. In the present paper, we attempt to bridge this gap by considering the links between the theory of cultural neuroscience and neuroeconomic theory of the role of attention in intertemporal choice. We predict that (i) Westerners are more impulsive and inconsistent in intertemporal choice in comparison to Easterners, and (ii) Westerners more steeply discoun t delayed monetary losses than Easterners. We examine these predictions by utilizing a novel temporal discounting model based on Tsallis’ statistics (i.e. a q-exponential model). Our preliminary analysis of temporal discounting of gains and losses by Americans and Japanese confirmed the predictions from the cultural neuroeconomic theory. Future study directions, employing computational modeling via neural networks, are briefly outlined and discussed.
    Keywords:	Cultural neuroscience; neuroeconomics; intertemporal choice; attention allocation; Tsallis’ statistics; neural networks
    JEL:	C63

27. How universal is happiness?

    Date:	2008-10-13
    By:	Veenhoven, Ruut
    URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:16853&r=mic
    There is a longstanding discussion on whether happiness is culturally relative or not. The following questions are addressed in that context: 1) Do we all assess how much we like our life? 2) Do we appraise our life on the same grounds? 3) Are the conditions for happiness similar for all of us? 4) Are the consequences of happiness similar in all cultures? 5) Do we all seek happiness? 6) Do we seek happiness in similar ways? 7) Do we enjoy life about equally much? The available data suggest that all humans tend to assess how much they like their life. The evaluation draws on affective experience, which is linked to gratification of universal human needs and on cognitive comparison which is framed by cultural standards of the good life. The overall appraisal seems to depend more on the former, than on the latter source of information. Conditions for happiness appear to be quite similar across the world and so are the conseq uences of enjoying life or not. There is more cultural variation in the valuation of happiness and in beliefs about conditions for happiness. The greatest variation is found in how happy people are.
    Keywords:	happiness; life satisfaction; cultural relativism; human nature; utilitarianism
    JEL:	Z10

28. The Political Economy of Regulatory Risk

    Date:	2009-08
    By:	Roland Strausz
    URL:	http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2009-040&r=mic
    I investigate the argument that, in a two–party system with different regulatory objectives, political uncertainty generates regulatory risk. I show that this risk has a fluctuation effect that hurts both parties and an output–expansion effect that benefits one party. Consequently, at least one party dislikes regulatory risk. Moreover, both political parties gain from eliminating regulatory risk when political divergence is small or the winning probability of the regulatory–risk–averse party is not too large. Because of a commitment problem, direct political bargaining is insufficient to eliminate regulatory risk. Politically independent regulatory agencies solve this commitment problem.
    Keywords:	regulation, regulatory risk, political economy, independent regulatory agency
    JEL:	D82

29. Patience and Prosperity

    Date:	2009-07
    By:	Strulik, Holger
    URL:	http://d.repec.org/n?u=RePEc:han:dpaper:dp-426&r=mic
    This paper introduces wealth-dependent time preference into a simple model of endogenous growth. The model generates adjustment dynamics in line with the historical facts on savings and economic growth in Europe from the High Middle Ages to today. Along a virtuous cycle of development more wealth leads to more patience, which leads to more savings and even higher wealth. Savings rates and income growth rates are thus jointly increasing during the process of development until they converge towards constants along a balanced growth path. During the transition to modern growth an economy in which the association of wealth and patience is stronger overtakes an otherwise identical economy and generates temporarily diverging growth rates. It is shown how wealth-dependent time preference can explain the existence of a locally stable poverty trap as well as the phenomenon of simultaneously falling interest rates and rising growth rates.
    Keywords:	economic growth, savings, time preference, poverty trap, moral consequences of economic growth.
    JEL:	O11

30. Population and Health Policies

    Date:	2009-08
    By:	Schultz, T. Paul (Yale University)
    URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp4340&r=mic
    The program evaluation literature for population and health policies is in flux, with many disciplines documenting biological and behavioral linkages from fetal development to late life mortality, chronic disease, and disability, though their implications for policy remain uncertain. Both macro- and microeconomics seek to understand and incorporate connections between economic development and the demographic transition. The focus here is on research methods, findings, and questions that economists can clarify regarding the causal relationships between economic development, health outcomes, and reproductive behavior, which operate in many directions, posing problems for identifying causal pathways. The connection between conditions under which people live and their expected life span and health status refers to “health production functions.” The relationships between an individual’s stock of health and productivity, well-b eing, and duration of life encompasses the “returns to health human capital.” The control of reproduction improves directly the well-being of women, and the economic opportunities of her offspring. The choice of population policies may be country specific and conditional on institutional setting, even though many advances in biomedical and public health knowledge, including modern methods of birth control, are now widely available. Evaluation of a policy intervention in terms of cost effectiveness is typically more than a question of technological efficiency, but also the motivation for adoption, and the behavioral responsiveness to the intervention of individuals, families, networks, and communities. Well-specified research strategies are required to address (1) the economic production of health capacities from conception to old age; (2) the wage returns to increasing health status attributable to policy interventions; (3) the conditions affecting fertility, family time all ocation, and human capital investments; and (4) the consequences for women and their families of policies which change the timing as well as number of births.
    Keywords:	fertility and family planning, biology of health human capital, economic development, health
    JEL:	D13

microéconomie_13/07/2009

Source : NEP (New Economics Papers) | RePEc

1. Industry Equilibrium with Open Source and Proprietary Firms

   Date:	2009-06
   By:	Gastón Llanes (Harvard Business School, Entrepreneurial Management Unit) Ramiro de Elejalde (Universidad Carlos III de Madrid)
   URL:	http://d.repec.org/n?u=RePEc:hbs:wpaper:09-0xx&r=mic
   We present a model of industry equilibrium to study the coexistence of Open Source (OS) and Proprietary (P) firms. Two novel aspects of the model are: (1) participation in OS arises as the optimal decision of profit-maximizing firms, and (2) OS and P firms may (or may not) coexist in equilibrium. Firms decide their type and investment in R&D, and sell packages composed of a primary good (like software) and a complementary private good. The only difference between both kinds of firms is that OS share their technological advances on the primary good, while P keep their innovations private. The main contribution of the paper is to determine conditions under which OS and P coexist in equilibrium. Interestingly, this equilibrium is characterized by an asymmetric market structure, with a few large P firms and many small OS firms.
   Keywords:	Industry Equilibrium, Open Source, Innovation, Complementarity, Technology Sharing, Cooperation in R&D
   JEL:	O31

2. Secret Santa: Anonymity, Signaling, and Conditional Cooperation

   Date:	2009-07-02
   By:	David Hugh-Jones (Max Planck Institute for Economics, Jena) David Reinstein (Department of Economics, Essex University)
   URL:	http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-048&r=mic
   Costly signaling of commitment to a group has been proposed as an explanation for participation in religion and ritual. But if the signal’s cost is too small, freeriders will send the signal and behave selflshly later. Effective signaling may then be prohibitively costly. If the average level of signaling in a group is observable, but individual effort is not, then freeriders can behave selflshly without being detected, and group members will learn about the average level of commitment among the group. We develop a formal model, and give examples of institutions that enable anonymous signaling, including ritual, religion, music and dance, voting, charitable donations, and military institutions. We explore the value of anonymity in the laboratory with a repeated two-stage public goods game with exclusion. When first-stage contributions are anonymous, subjects are better at predicting second-stage behavior, and maintain a s ubstantially higher level of cooperation.
   Keywords:	signaling, anonymity, public goods
   JEL:	H41

3. Social Norms, Information and Trust among Strangers: Theory and Evidence

   Date:	2009-07
   By:	John Duffy Huan Xie Yong-Ju Lee
   URL:	http://d.repec.org/n?u=RePEc:pit:wpaper:384&r=mic
   How do norms of trust and reciprocity arise? We investigate this question by examining behavior in an experiment where subjects play a series of indefinitely repeated trust games. Players are randomly and anonymously matched each period. The parameters of the game are chosen so as to support trust and reciprocity as a sequential equilibrium when no reputational information is available. The main questions addressed are whether a social norm of trust and reciprocity emerges under the most extreme information restriction (community-wide enforcement) or whether trust and reciprocity require additional, individual-specific information about a player’s past history of play and how long that history must be. In the absence of such reputational information, we find that a social norm of trust and reciprocity is difficult to sustain. The provision of reputational information on past individual decisions significantly increases trust and reciprocity, with longer histories yielding the best outcomes. Importantly, we find that making reputational information available at a small cost may also lead to a significant improvement in trust and reciprocity, despite the fact that most subjects do not choose to purchase this information.
   JEL:	C72

4. Combining discrete and continuous representations of preference heterogeneity: a latent class approach

   Date:	2009
   By:	Angel Bujosa Bestard (Centre de Recerca Econòmica (UIB · Sa Nostra)) Antoni Riera Font (Centre de Recerca Econòmica (UIB · Sa Nostra)) Robert L. Hicks (The College of William and Mary)
   URL:	http://d.repec.org/n?u=RePEc:pdm:wpaper:2009/2&r=mic
   This paper investigates heterogeneity in preferences for forest recreators in Mallorca, Spain. We develop a latent class approach combining discrete and continuous representations of tastes and compare it with the conventional latent class and random parameter logit approaches. We investigate the performance of the discrete-continuous model by comparing welfare estimates and predictive accuracy. The discrete-continuous model outperforms latent class and mixed logit approaches when comparing goodness-of-fit and in- sample site-choice forecasts. We find that the discrete-continuous model for preference heterogeneity reveals variation among individuals’ preferences and WTP, and for some policy changes our results reveal striking differences in means and distributions of WTP.
   Keywords:	Travel Cost Method, latent class model, random parameter model, recreation demand, forests

5. A remark on the supposed equivalence between complete markets and perfect foresight hypothesis

   Date:	2009-06
   By:	Fratini, Saverio M. Levrero, Enrico Sergio
   URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:15988&r=mic
   We consider a sequential equilibrium model over two periods, during the first of which agents have perfect information and their expectations are formed as if there were complete future markets. We show that, in the second period, equilibrium prices may well be different from those expected, without any unexpected change having occurred. This result highlights a lack of correspondence between the perfect foresight hypothesis and that of complete markets.
   Keywords:	Arrow-Debreu equilibrium; Complete markets; Sequential equilibrium; Perfect foresight; Indeterminacy
   JEL:	D46

6. Competition and Innovation: Evidence from Financial Services

   Date:	2009-06
   By:	Jaap W.B. Bos Ryan C.R. van Lamoen James W. Kolari
   URL:	http://d.repec.org/n?u=RePEc:use:tkiwps:0916&r=mic
   In this paper we seek to contribute to the literature on competition and innovation by focusing on individual firms within the U.S. banking industry in the period 1984-2004. We measure innovation by estimating technology gaps and find evidence of an inverted-U relationship between competition and the technology gaps in banking. This finding is robust over several different specifications and is consistent with theoretical and empirical work by Aghion, Bloom, Blundell, Griffith, and Howitt (2005b). The optimal amount of innovation requires a slightly positive mark up. Also, we find that the U.S. banking industry as a whole has consolidated beyond this optimal innovation level and that state-level interstate banking deregulation has lowered innovation.
   Keywords:	competition, innovation, stochastic frontier analysis, technology gap ratio, banking
   JEL:	D21

7. Market liberalization in the European Natural Gas Market The importance of capacity constraints and efficiency differences

   Date:	2009-07
   By:	Steven Brakman Charles van Marrewijk Arjen van Witteloostuijn
   URL:	http://d.repec.org/n?u=RePEc:use:tkiwps:0915&r=mic
   In the European Union, energy markets are increasingly being liberalized. A case in point is the European natural gas industry. The general expectation is that more competition will lead to lower prices and higher volumes, and hence higher welfare. This paper indicates that this might not happen for at least two reasons. First, energy markets, including the market for natural gas, are characterized by imperfect competition and increasing costs to develop new energy sources. As a result, new entrants in the market are less efficient than incumbent firms. Second, energy markets, again including the market for natural gas, are associated with capacity constraints. Prices are determined in residual markets where the least efficient firms are active. This is likely to lead to price increases, rather than decreases.
   Keywords:	natural gas, capacity constraints, efficiency, market liberalization
   JEL:	Q4

8. Financial Constraints and the Cyclicality of R&D Investment:Evidence from Slovenia

   Date:	2009
   By:	Simona Bovha-Padilla Joze P. Damijan Jozef Konings
   URL:	http://d.repec.org/n?u=RePEc:lic:licosd:23909&r=mic
   This paper uses firm level data to show how R&D investment responds to shocks in sales growth in credit constrained firms. A credit constrained firm has to rely on its cash flow and borrowing capacity to survive its short-run liquidity shock when hit by a negative shock. This reduces the possibility for further borrowing in order to invest in non-tangible long term R&D, hence a negative shock should hit R&D investments more in firms that are more credit constrained. We find that in financially constrained firms sales growth is positively associated with R&D investment, suggesting procyclical behavior of R&D investment in credit constrained firms. In contrast, we find that in firms with no financial constraints R&D investment is negatively correlated with sales growth, suggesting countercyclical behavior of R&D, consistent with the Schumpeterian idea of restructuring. Furthermore, we find that t he firm level response in R&D investment to sales growth is stronger in firms that are more financially dependent, such as firms that are no part of a multinational, firms not receiving subsidies or firms with less collateral.
   Keywords:	R&D investment, financial constraints, cyclicality

9. Are Social Preferences Skin Deep? Dictators under Cognitive Load

   Date:	2009-07-03
   By:	Hauge, Karen Evelyn (Department of Economics, Oslo University) Brekke, Kjell Arne (Department of Economics, Oslo University) Johansson, Lars-Olof (Department of Psychology, University of Gothenburg) Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University) Svedsäter, Henrik (Organisational Behaviour, London Business School)
   URL:	http://d.repec.org/n?u=RePEc:hhs:gunwpe:0371&r=mic
   We study the impact of cognitive load in dictator games to test two conflicting views of moral behavior. Are social preferences skindeep in the sense that they are the result of humans’ cognitive reasoning while the natural instinct is selfish, or is rather the natural instinct to share fairly while our cognitive capacities are able to adjust moral principles in a selfserving manner? Some previous studies in more complex settings give conflicting answers, and to disentangle different possible mechanisms we use simple games. We study both charitable giving and the behavior of dictators under high and low cognitive load, where high cognitive load is assumed to reduce the impact of cognitive processes on behavior. In the dictator game we use both a give frame, where the dictator is given an amount and may share some or all of it to a partner, and a take frame, where dictators may take from an amount initially allocated to the partner. The results from four different studies indicate that the effect of cognitive load is small if at all existing.<p>
   Keywords:	Social Preferences; experiments; dictator game; cognitive load
   JEL:	C91

10. Multinational ownership and R&D intensity: The role of external knowledge sources and spillovers

    Date:	2009
    By:	Filip De Beule Ilke Van Beveren
    URL:	http://d.repec.org/n?u=RePEc:lic:licosd:24209&r=mic
    This paper analyzes the drivers of multinational affiliates’ R&D intensity, using a unique dataset based on the fourth Community Innovation Survey for Belgium. Specifically, we investigate the role of foreign affiliates’ local (host country) embeddedness and of host country spillovers on foreign affiliates’ research efforts. Our findings show that foreign affiliates who are able to tap into local knowledge sources demonstrate a higher research intensity, compared to firms lacking such access. Links to clients and public research institutions, in particular, have a powerful impetus on the research effort by foreign subsidiaries. Our findings suggest a complementary relationship between foreign firms’ R&D intensity and the internal research efforts of their competitors as a result of demonstration effects, while the use of external R&D by competitors has a negative impact on the research effort of foreign affili ates as a result of technological spillovers. Our findings have important policy implications, especially in terms of the high dependency of the Belgian economy on foreign R&D. One way to attain the R&D intensity put forward by the Lisbon agenda would be to increase public expenditure on research and development, which would also indirectly increase the research intensity of (foreign) firms.
    Keywords:	R&D intensity, multinational ownership, knowledge sources, spillovers
    JEL:	F23

11. Regional Dynamics of Innovation Investigating the Co-Evolution of Patents, R&D, and Employment

    Date:	2009-06-25
    By:	Matthias Bürger (Friedrich-Schiller-University Jena, RTG 1411 – The Economics of Innovative Change) Tom Brökel (Utrecht University, Urban and Regional Research Centre Utrecht (URU)) Alex Coad (Max Planck Institute of Economics, Jena; Centre d’Economie de la Sorbonne, Univ. Paris 1)
    URL:	http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-046&r=mic
    We investigate the lead-lag relationship between growth of patent applications, growth of R&D, and growth of total sectoral employment for 270 German labour market regions over the period 1999-2005. Our unique panel dataset includes information on four two-digit industries, namely Chemistry, Transport equipment, Medical & Optical Equipment as well as Electrics & Electronics. The results obtained from a vector autoregression model show that an increased innovative activity is associated with subsequent growth of employment in the Medical & Optical Equipment industry as well as in the Electrics & Electronics sector. With respect to the latter growth of patent applications is also associated with subsequent growth of R&D employees indicating either a “success-breeds-success” story or benefits due to agglomeration economies at the level of the region. However we do not find those effects for the other industries due to their idiosyncratic innovation and patenting behaviour.
    Keywords:	Innovation, Agglomeration, Employment
    JEL:	O18

12. Learning How to Consume and Returns to Product Promotion

    Date:	2009-06
    By:	Zakaria Babutsidze
    URL:	http://d.repec.org/n?u=RePEc:esi:evopap:2009-05&r=mic
    This paper presents the computational model of consumer behaviour. We consider two sources of product specific consumer skill acquisition, termed here as learning how to consume: learning by consuming and consumer socialization. Consumers utilize these two sources in order to derive higher valuations for products they are consuming. In this framework we discuss the behavior of returns to product promotion relative to the changes in product characteristics, such as quality and user-friendliness, as well as in case of varying intensity of consumer socialization. The main finding is that in case of duopoly the dependence of returns to advertising on product quality is not monotonic as it has been claimed by earlier studies. Additional important finding indicating the importance of the models with interacting agents is that returns to advertising exhibit qualitatively different behavior in case of zero intensity of consumer s ocialization.
    Keywords:	Consumer skills, learning by consuming, consumer socialization, product promotion, returns to advertising Length 23 pages
    JEL:	D11

13. Modeling a Multi-Choice Game Based on the Spirit of Equal Job Opportunities (New)

    Date:	2009-07-01
    By:	Hsiao, Chih-Ru Chiou, Wen-Lin
    URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:16023&r=mic
    The H&R Shapley value defined by Hsiao and Raghavan for multi-choice cooperative game is redundant free. If the H&R Shapley value is used as the solution of a game, there won’t be any objection to a player’s taking redundant actions. Therefore, the spirit of the law on equal job opportunities is automatically fulfilled. Also, if the H&R Shapley value is used as the solution of a game, it makes no difference to the players whether they have the same number of options or not. Moreover, the D&P Shapley value, the P&Z Shapley value and the WAC value are linear combinations of the H&R Shapley value, hence, they have all the same dummy free properties and the independent property as does the H&R Shapley value. Finally the N&P Shapley value is not redundant free.
    Keywords:	Shapley value; multi-choice cooperative game; redundant free; independent of non-essential players.
    JEL:	C7

14. Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia

    Date:	2009-06
    By:	Eslava, Marcela (Universidad de los Andes) Haltiwanger, John C. (University of Maryland) Kugler, Adriana (University of Houston) Kugler, Maurice (Wilfrid Laurier University)
    URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp4256&r=mic
    We use plant output and input prices to decompose the profit margin into four parts: productivity, demand shocks, mark-ups and input costs. We find that each of these market fundamentals are important in explaining plant exit. We then use variation across sectors in tariff changes after the Colombian trade reform to assess whether the impact of market fundamentals on plant exit changed with in creased international competition. We find that greater international competition magnifies the impact of productivity, and other market fundamentals, on plant exit. A dynamic simulation that compares the distribution of productivity with and without the trade reform shows that improvements in market selection from trade reform help to weed out the least productive plants and increase average productivity. In addition, we find that trade liberalization increases productivity of incumbent plants and improves the allocation of activit y within industries.
    Keywords:	trade liberalization, plant exit, market selection
    JEL:	F43

15. Designing Competition in Health Care Markets

    Date:	2009-06-30
    By:	Dalen, Dag Morten (BI Norwegian School of Management) Moen, Espen R (BI Norwegian School of Management) Riis, Christian (BI Norwegian School of Management)
    URL:	http://d.repec.org/n?u=RePEc:hhs:oslohe:2001_003&r=mic
    In this paper we propose a simple, market based mechanism to set prices in health care markets, namely a system where the patients are auctioned out to the hospitals. Our aim is to characterize principles as to how such an auction should be designed. In the case of elective treatment, health authorities thus organize a competition between hospitals. The hospital with the lowest price signs a contracts with authority (or the insurer) that commits him to treat a given number of patients within a predetermined period. However, this is not a simple mechanism that identi…es the hospital with the lowest treatment cost. Due to potentially rapid and unpredictable shifts in demand, treatment capacity may be hard to know in advance. There is always a risk that treatment must be canceled due to arrival of patients that require acute treatment. This calls for a market design that accounts for the risk of default. Our main result is that the expected cost for the government is reduced if the government chooses to ”subsidize” default. This could be thought of as a system in which the government buys treatment in the spot market in the case of default, and let the hospital pay a default fee that is lower than the spot price. The reason why this reduces expected costs for the government is that the e¤ect on the bids is asymmetric: The second lowest bid is on average reduced more than the winning bid. Hence, the winner’s profit tends to shrink. This is due to what we characterize an endogenous correlation. Since the cost of treatment increases in the default risk (as the hospital must pay a penalty if it defaults), high cost hospitals typically have larger default risks than low costs hospitals.
    Keywords:	Health care markets; health care; hospitals; competition
    JEL:	I11

16. Bilateral oligopoly and quantity competition

    Date:	2009
    By:	Alex Dickson Roger Hartley
    URL:	http://d.repec.org/n?u=RePEc:man:sespap:0911&r=mic

17. Regional Dynamics of Innovation – Investigating the Co-Evolution of Patents, R&D, and Employment

    Date:	2009-06
    By:	Matthias Buerger Tom Broekel Alex Coad
    URL:	http://d.repec.org/n?u=RePEc:egu:wpaper:0908&r=mic
    We investigate the lead-lag relationship between growth of patent applications, growth of R&D, and growth of total sectoral employment for 270 German labour market regions over the period 1999-2005. Our unique panel dataset includes information on four two-digit industries, namely Chemistry, Transport equipment, Medical & Optical Equipment as well as Electrics & Electronics. The results obtained from a vector autoregression model show that an increased innovative activity is associated with subsequent growth of employment in the Medical & Optical Equipment industry as well as in the Electrics & Electronics sector. With respect to the latter growth of patent applications is also associated with subsequent growth of R&D employees indicating either a ‘success-breeds-success’ story or benefits due to agglomeration economies at the level of the region. However we do not find those effects f or the other industries due to their idiosyncratic innovation and patenting behaviour.
    Keywords:	innovation, regional dynamics, r&d growth, employment growth, patent growth
    JEL:	O18

18. PRIVATIZATION, REGULATION AND AIRPORT PRICING: AN EMPIRICAL ANALYSIS FOR EUROPE

    Date:	2009-06-09
    By:	Germà Bel Xavier Fageda
    URL:	http://d.repec.org/n?u=RePEc:rsc:rsceui:2009/27&r=mic
    This paper examines factors determining prices that airports charge to airlines. Using data for 100 large airports in Europe, we find that they charge higher prices when they move more passengers. Additionally, competition from other transport modes and other nearby airports imposes some discipline on the pricing behavior of airports. Low-cost carriers and airlines with a high market share seem to have a stronger countervailing power. Finally, we find that private airports not regulated charge higher prices than public or regulated airports. From our analysis, we can infer that market power of each airport is dependent upon its specific characteristics.
    Keywords:	Privatization; regulation, pricing; air transportation; airports

microéconomie_06/07/2009

Source : NEP (New Economics Papers) | RePEc

1. The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence

   Date:	2009-05
   By:	Dirk Czarnitzki Federico Etro Kornelius Kraft
   URL:	http://d.repec.org/n?u=RePEc:mib:wpaper:163&r=mic
   We develop a simple model of competition for the market that shows that, contrary to the Arrow view, endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more than the average firm. We test these predictions with a Tobit model based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innovation Panel). In line with our predictions, endogenous entry threats perceived by the firms reduce R&D intensity for the average firm, but not for an incumbent leader. Moreover, the size of the firms and their patent stocks, proxy for the protection of IPRs, are positively related to R&D intensity. These results hold after a number of robustness tests with instrumental variables.
   Keywords:	R&D, Entry, Endogenous market structures, Leadership
   JEL:	O31

2. A small firm leads to curious outcomes: Social surplus, consumer surplus, and R&D activities

   Date:	2009-06
   By:	Toshihiro Matsumura Noriaki Matsushima
   URL:	http://d.repec.org/n?u=RePEc:dpr:wpaper:0742&r=mic
   This paper investigates an asymmetric duopoly model with a Hotelling line. We find that helping a small (minor) firm can reduce both social and consumer surplus. This makes a sharp contrast to existing works showing that helping minor firms can reduce social surplus but always improves consumer surplus. We also investigate R&D competition. We find that a minor firm may engage in R&D more intensively than a major firm in spite of economies of scale in R&D activities.

3. Vertical Relations in the Presence of Competitive Recycling

   Date:	2009-06
   By:	Liliane Karlinger
   URL:	http://d.repec.org/n?u=RePEc:vie:viennp:0910&r=mic
   This paper studies the vertical relations between a manufacturer and one or more retailers over two periods in the presence of a competitive recycling sector. In a bilateral monopoly, contracting is (generally) efficient, i.e. the manufacturer will produce the joint-profit-maximizing output. However, both competition downstream and upstream may lead to inefficient outcomes: Under retailer competition, some rent will be siphoned off by the recycling sector, and so the manufacturer will either overproduce in the second period or underproduce in the first period. If instead upstream entry occurs and full rent extraction is not possible, then the incumbent may overproduce in the pre-entry period. Vertical restraints that restore profit maximization (e.g. loyalty rebates) will harm consumers whenever the manufacturer would overproduce otherwise.
   JEL:	L12

4. Endogenous managerial incentive contracts in a differentiated duopoly, with and without commitment

   Date:	2009-06-15
   By:	Constantine Manasakis (Department of Economics, University of Crete, Greece) Evangelos Mitrokostas (Department of Economics, University of Crete) Emmanuel Petrakis (Department of Economics, University of Crete, Greece)
   URL:	http://d.repec.org/n?u=RePEc:crt:wpaper:0905&r=mic
   In a differentiated Cournot duopoly, we examine the contracts that firms’ owners use to compensate their managers and the resulting output levels, profits and social welfare. If products are either sufficiently differentiated or sufficiently close substitutes, owners use Relative Performance contracts. For intermediate levels of product substitutability, they use Market Share contracts. When owners do not commit over the types of contracts, each type is an owner’s best response to his rival’s choice. Product substitutability has differential effects on output levels and profits, depending on the configuration of contracts in the industry. Finally, managerial incentive contracts are welfare enhancing if they increase consumers’ surplus.
   Keywords:	Oligopoly; Managerial delegation; Endogenous contracts
   JEL:	D43

5. Starting an R&D Project under Uncertainty

   Date:	2009-05-15
   By:	Sabien Dobbelaere (VU University Amsterdam) Roland Iwan Luttens (SHERPPA, Ghent University, and CORE, Université Catholique de Louvain) Bettina Peters (Centre for European Economic Research (ZEW))
   URL:	http://d.repec.org/n?u=RePEc:dgr:uvatin:20090044&r=mic
   We study a two-stage R&D project with an abandonment option. Two types of uncertainty influence the decision to start R&D. Demand uncertainty is modelled as a lottery between a proportional increase and decrease in demand. Technical uncertainty is modelled as a lottery between a decrease and increase in the cost to continue R&D. We relate differences in uncertainty to differences in risk premia. We deduct testable hypotheses on the basis of which we empirically analyze the impact of uncertainty on the decision to start an R&D project. Using data for about 4000 German firms in manufacturing and services (CIS IV), our model predictions are strongly confirmed.
   Keywords:	Investment under uncertainty; R&D; demand uncertainty; technical uncertainty; entry threat
   JEL:	D21

6. What role should public enterprises play in free-entry markets?

   Date:	2009-06
   By:	Hiroaki Ino (Kwansei Gakuin University) Toshihiro Matsumura (University of Tokyo)
   URL:	http://d.repec.org/n?u=RePEc:kgu:wpaper:46&r=mic
   We investigate a desirable role of public enterprise in mixed oligopoly in free-entry markets. We compare the following three cases: (i) a public firm produces before private firms (public leadership), (ii) all firms produce simultaneously (Cournot), (iii) a public firm produces after private firms (private leadership). We find that private leadership is best and public leadership is worst, in contrast to the cases without entries and exits of private firms. We also investigate the welfare implication of privatization. We find that some important results shown by existing works do not hold under private leadership.
   Keywords:	free-entry market, Stackelberg, Cournot, mixed oligopoly, commitment
   JEL:	H42

7. The Combined Effect of Salary Restrictions and Revenue Sharing on Club Profits, Player Salaries, and Competitive Balance

   Date:	2009-06
   By:	Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich) Markus Lang (Institute for Strategy and Business Economics, University of Zurich) Alexander Rathke (Institute for Empirical Research in Economics, University of Zurich)
   URL:	http://d.repec.org/n?u=RePEc:spe:wpaper:0909&r=mic
   This article provides a standard “Fort and Quirk”-style model of a professional team sports league and analyzes the combined effect of salary restrictions (caps and floors) and revenue-sharing arrangements. It shows that the invariance proposition does not hold even under Walrasian conjectures if revenue sharing is combined with either a salary cap or a salary floor. In leagues with a binding salary cap for large clubs but no binding salary floor for small clubs, revenue sharing will decrease the competitive balance and increase club profits. Moreover, a salary cap produces a more balanced league and decreases the cost per unit of talent. The effect of a more restrictive salary cap on the profits of the small clubs is positive, whereas the effects on the profits of the large clubs as well as on aggregate profits are ambiguous. In leagues with a binding salary floor for the small clubs but no binding salary cap for the lar ge clubs, revenue sharing will increase the competitive balance. Moreover, revenue sharing will decrease (increase) the profits of large (small) clubs. Implementing a more restrictive salary floor produces a less balanced league and increases the cost per unit of talent. Furthermore, a salary floor will result in lower profits for all clubs.
   Keywords:	Team sports leagues, invariance proposition, competitive balance, revenue sharing, salary cap, salary floor
   JEL:	C72

8. Quantity Precommitment with Price Competition versus Quantity Precommitment with Market Clearing Prices in the Laboratory

   Date:	2009-06
   By:	David Goodwin Stuart Mestelman
   URL:	http://d.repec.org/n?u=RePEc:mcm:deptwp:2009-04&r=mic
   The paper reports the results of 39 laboratory duopoly markets for which pricing institution and participant experience are treatments. Cournot (C) duopolies (quantity precommitment and a price determined to clear the market) are contrasted with Kreps-Scheinkman (KS) duopolies (quantity precommitment and posted prices). Inexperienced participants in KS markets have much more difficulty selecting capacities consistent with the theoretical predictions than do those in C markets. With experience, the differences disappear.
   Keywords:	Duopoly; Laboratory experiment; Quantity precommitment; Posted prices; Price competition; Market-clearing prices; Experience
   JEL:	C92

9. Knowledge Structures.

   Date:	2009
   By:	Moritz Müller Robin COWAN Geert Duysters Nicolas JONARD
   URL:	http://d.repec.org/n?u=RePEc:ulp:sbbeta:2009-24&r=mic
   This paper investigates how technological distance between firms affects their network of R&D alliances. Our theoretic model assumes that the benefit of an alliance between two firms is given by their technological distance. This benefit-distance relationship determines the ego-network of each firm as well as the overall network structure. Empirical relevance is confirmed for the bio-pharmaceutical industry. Although we find that the network structure is largely explained by firm size, technological distance determines the positioning of firms in the network.
   Keywords:	technological distance, research alliance, network formation, pharmaceutical industry.

10. Creative Destruction and Productive Preemption

    Date:	2009-06-10
    By:	Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)) Persson, Lars (Research Institute of Industrial Economics (IFN)) Svensson, Roger (Research Institute of Industrial Economics (IFN))
    URL:	http://d.repec.org/n?u=RePEc:hhs:iuiwop:0799&r=mic
    We develop a theory of commercialization mode (entry or sale) of entrepreneurial inventions into oligopoly, and show that an invention of higher quality is more likely to be sold (or licensed) to an incumbent due to strategic product market effects on the sales price. Moreover, preemptive acquisitions by incumbents are shown to stimulate the process of creative destruction by increasing the entrepreneurial effort allocated to high-quality invention projects. Using detailed data on patents granted to small firms and individuals, we find evidence that high-quality inventions are often sold, and that they are sold under bidding competition.
    Keywords:	Acquisitions; Entrepreneurship; Innovation; Start-ups; Patent; Ownership; Quality
    JEL:	G24

11. Advertising for Attention in a Consumer Search Model

    Date:	2009-04-16
    By:	Marco A. Haan (University of Groningen) José Luis Moraga-González (University of Groningen)
    URL:	http://d.repec.org/n?u=RePEc:dgr:uvatin:20090031&r=mic
    We model the idea that when consumers search for products, they first visit the firm whose advertising is more salient. The gains a firm derives from being visited early increase in search costs, so equilibrium advertising increases as search costs rise. This may result in lower firm profits when search costs increase. We extend the basic model by allowing for firm heterogeneity in advertising costs.
    Keywords:	Advertising; attention; consumer search; saliency
    JEL:	D83

12. The structure and dynamics of the global network of inter-firm R&D partnerships 1989-2002

    Date:	2009-05-07
    By:	Bojanowski, Michał Corten, Rense Westborck, Bastian
    URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:15741&r=mic
    This paper examines the structure and dynamics of the global network of inter-firm research and development (R&D) partnerships using longitudinal data for 1989–2002. We contribute to a recent literature that has attributed patterns and changes in the network to major political and technological developments, but which has omitted the structure in the underlying firm population. Two often made claims are that R&D collaboration is important in nowadays fierce competitive environment, but that the importance of international partnerships has declined over time. We integrate data on firms and alliances and confront both hypotheses with our data and a novel set of methods, which enable to control for structure in the firm population.
    Keywords:	Inter-firm collaboration; R\&D partnerships; International technology transfer; Social network analysis
    JEL:	L14

13. Blue Ocean versus Competitive Strategy: Theory and Evidence

    Date:	2009-05-29
    By:	Burke, A.E. Stel, A.J. van Thurik, A.R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    URL:	http://d.repec.org/n?u=RePEc:dgr:eureri:1765016037&r=mic
    Blue ocean strategy seeks to turn strategic management on its head by replacing ‘competitive advantage’ with ‘value innovation’ as the primary goal where firms must create consumer demand and exploit untapped markets. Empirical analysis has been focused on case study evidence and so lacks generality to resolve the debate. We provide a methodological synthesis of the theories enabling us to bring statistical evidence to the debate. Our analysis finds that blue ocean and competitive strategies overlap and managers do not face a discrete either/or decision between each strategy. Our evidence for the Dutch retail industry indicates that blue ocean strategy has prevailed as a dominant long term viable strategy.
    Keywords:	blue ocean strategy;competitive advantage;innovation;entrepreneurial discovery;retailing

14. The evolution of markets and the revolution of industry: A quantitative model of England’s development, 1300-2000

    Date:	2009-05-25
    By:	Klaus Desmet (Universidad Carlos III de Madrid) Stephen L. Parente (University of Illinois)
    URL:	http://d.repec.org/n?u=RePEc:imd:wpaper:wp2009-06&r=mic
    This paper argues that an economy\’s transition from Malthusian stagnation to modern growth requires markets to reach a critical size, and competition to reach a critical level of intensity. By allowing an economy to produce a greater variety of goods, a larger market makes goods more substitutable, raising the price elasticity of demand, and lowering mark-ups. Firms must then become larger to break even, which facilitates amortizing the fixed costs of innovation. We demonstrate our theory in a dynamic general equilibrium model calibrated to England\’s long-run development and explore how various factors affect the timing of takeoff.
    Keywords:	competition; industrial revolution; innovation; market revolution; unified growth theory
    JEL:	N33

15. Heterogeneous Firms, ‘Profit Shifting’ FDI and International Tax Competition

    Date:	2009
    By:	Sebastian Krautheim Tim Schmidt-Eisenlohr
    URL:	http://d.repec.org/n?u=RePEc:eui:euiwps:eco2009/15&r=mic
    We develop a stylized model of international tax competition between a large country and a tax haven. In the large country, firms in a monopolistically competitive industry generate positive profits which can be taxed by the government. Firms have heterogeneous productivity levels and can choose to undertake `profit shifting’ FDI in order to benefit from lower tax rates abroad. We find that economies with a low degree of firm heterogeneity and a high degree of monopolistic market power are less affected by international tax competition. They face lower out flows of the tax base and can set higher tax rates.
    Keywords:	heterogeneous firms, monopolistic competition, tax competition, tax havens
    JEL:	F23

16. Network-independent partner selection and the evolution of innovation networks.

    Date:	2009
    By:	Joel BAUM Robin COWAN Nicolas JONARD
    URL:	http://d.repec.org/n?u=RePEc:ulp:sbbeta:2009-23&r=mic
    Empirical research on strategic alliances has focused on the idea that alliance partners are selected on the basis of social capital considerations. In this paper we emphasize instead the role of complementary knowledge stocks (broadly defined) in partner selection, arguing not only that knowledge complementarity should not be overlooked, but that it may be the true causal force behind alliance formation. To marshal evidence on this point, we design a simple model of partner selection in which firms ally for the purpose of learning and innovating, and in doing so create an industry network. We abstract completely from network-based structural and strategic motives for partner selection and focus instead on the idea that firms’ knowledge bases must “fit” in order for joint leaning and innovation to be possible, and thus for an alliance to be feasible. The striking result is that while containing no social capital con siderations, this simple model replicates the firm conduct, network structure, and contingent effects of network position on performance observed and discussed in the empirical literature.

17. Risk Aversion and Tacit Collusion in a Bertrand Duopoly Experiment

    Date:	2009-06-11
    By:	Lisa R. Anderson (Department of Economics, College of William and Mary) Beth A. Freeborn (Department of Economics, College of William and Mary) Jason P. Hulbert (Department of Economics, College of William and Mary)
    URL:	http://d.repec.org/n?u=RePEc:cwm:wpaper:84&r=mic
    We investigate the relationship between collusive behavior in Bertrand oligopoly experiments and subject heterogeneity in risk preferences. We find that risk aversion is positively associated with tacit collusion when the goods are complements, but find no evidence of collusive behavior when the goods are substitutes. Furthermore, risk aversion is associated with lower prices with complement goods, but does not impact pricing behavior with substitute goods. In both treatments, we find that subjects tend to follow the price change of the other seller. In the complements treatment, however, this tendency increases with the degree of risk aversion.
    Keywords:	Bertrand duopoly, risk aversion, collusion, experiment
    JEL:	C9

18. A Dynamic Model of Price Discrimination and Inventory Management at the Fulton Fish Market

    Date:	2009-06
    By:	Graddy, Kathryn Hall, George
    URL:	http://d.repec.org/n?u=RePEc:cpr:ceprdp:7315&r=mic
    We estimate a dynamic profit-maximization model of a fish wholesaler who can observe consumer characteristics, set individual prices, and thus engage in third-degree price discrimination. Simulated prices and quantities from the model exhibit the key features observed in a set of high quality transaction-level data on fish sales collected at the Fulton fish market. The model’s predictions are then compared to the case in which the dealer must post a single price to all customers. We find the cost to the dealer of posting a uniform price to be extremely small.
    Keywords:	dynamic programming; fish; indirect inference; price discrimination; yield management
    JEL:	C15