Effects of rotation scheme on fishing behaviour with price discrimination and limited durability: Theory and evidence

This paper examines how rotation arrangement between two groups of fishers with different institutional arrangements affects fishing behaviour and economic outcomes in a particular economic environment characterised by price discrimination and product durability. In one group, fishers cooperate and maximise the extraction of rents, while members in the second group behave non-cooperatively. Applying a model of alternating duopoly, we show that the cooperating group behaves like a price discriminating monopolist and tends to uphold prices. When the two groups rotate fishing days the cooperating group tends to produce more, which prevents the non-cooperating group from unprofitable demand preemption.     

How do consumers switch between close substitutes when price variation is small? The case of cigarette types

Past empirical studies report ambiguous results regarding the magnitude and significance of substitution between different types of smoking tobacco. Since all types of tobacco contain nicotine this is quite surprising. Using a 20-year rotating panel data set of Norwegian households and a multinomial logit model, we find evidence that consumers switch between tobacco types: first, estimated price effects on choice probabilities have mostly expected signs, albeit their statistical significance vary across different metrics, second, household characteristics affect tobacco composition significantly. These findings suggest that consumers’ choices are ‘locked’ when the relative price variation is small, as has been the case in most of the data period, but that larger changes could induce large-scale switching between tobacco types. Our conjecture is that there is a latent potential for switching, which will become manifest if prices change sufficiently. Similar considerations are likely to have relevance for other close substitutes.     

Visualization of multi-scale dynamics of hydrous cold plumes at subduction zones

Recent increases in the computational power of high-performance computing systems have led to a large gap between the high-resolution runs of numerical simulations—typically approaching 50–100 million tracers and 1–5 million grid points in two dimensions—and the modest resolution of 1–2 million pixels for conventional display devices. This technical problem is further compounded by the variety of fields produced by numerical simulations and the limited bandwidth available through the Internet in the course of collaborative ventures. We have developed a visualization system using the paradigm of web-based inquiry to address these mounting problems. We have employed, as a case study, a problem involving two-dimensional multi-scale dynamics of hydrous cold plumes at subduction zones. A Lagrangian marker method, in which the number of markers varies dynamically, is used to delineate the many different fields, such as temperature, viscosity, strain, and chemical composition. We found commercially available software to be insufficient for our visualization needs and so we were driven to develop a new set of tools tailored to high-resolution, multi-aspect, multi-scale simulations, and adaptable to many other applications in which large datasets involving tens of millions of tracers with many different fields are prevalent. In order to address this gap in visualization techniques, we have developed solutions for remote visualization and for local visualization. Our remote visualization solution is a web-based, zoomable image service (WEB-IS) that requires minimal bandwidth while allowing the user to explore our data through time, across many thermo–physical properties, and through different spatial scales. For local visualization, we found it optimal to use bandwidth-intensive, high-resolution display walls for performing parallel visualization in order to best comprehend the causal and temporal relationships between the multiple physical and chemical properties in a simulation.     

Anchoring effects in experimental discount rate elicitation

Discount rates are often elicited using incentivized or hypothetical multiple price lists. We conduct two multiple price lists according to Coller and Williams (Experimental Economics 2: 107–127, 1999) with varying ranges of larger–later payments. Participants carry out both tasks and are randomly assigned to a task order as well as to a payment or no-payment treatment. Our results indicate that the range of the first completed task anchors discount rate decisions. Participants who begin the task with the lower range of the larger–later payments stated lower discount rates than participants who start with the task containing a wider range. Paying monetary incentives does not influence the detected anchor effect.     

Modelling the dynamics of European carbon futures price: A Zipf analysis

This article investigates the European carbon futures price dynamics by applying the Zipf analysis. The results show that: first, carbon price behaviour is asymmetric, and the long-term bearish probability is greater than the long-term bullish probability. Second, time-scales of investment and speculators' expectations of returns have dual effects on carbon price behaviour. The longer the time-scales of investment, the higher the bearish probability. The lower the expectations of returns, the smaller the distortion of carbon price behaviour. Third, the differences in carbon market cognitions from non-greedy speculators with different expectations of returns mainly lie in the amplitudes and occasions of carbon price fluctuations, rather than in the carbon price fluctuations themselves. Fourth, speculators' expectations of returns have critical points. Once the critical points are reached, they will no longer be able to distort carbon price behaviour. Finally, we discuss some investment advice for supports of the decision-makers. For non-greedy-type speculators, they will choose to hold negatively in the short term and buy and hold in the long term, while for greedy-type speculators they will sell their European Union Allowances (EUAs) in the short term, and buy and hold in the long term. The results are helpful to hedge against unwanted carbon price movements, and to understand the transactions between different types of agents.     

A Mixed Duopoly With Switching Costs

We examine the effects of switching costs in a two‐period Hotelling‐type model where a profit‐maximising private firm competes with a welfare‐maximising public firm. We show that, in contrast with the case in which both firms are private, where switching costs raise prices in both periods, in the mixed duopoly they raise prices in the second period but reduce them in the first period. Moreover, the first‐period price reduction is of such magnitude that switching costs reduce firms’ profits and raise consumer welfare. We also find that switching costs affect the consequences of privatisation in favour of firms and against consumers.     

Revealed smooth nontransitive preferences

In the present paper, we are concerned with the behavioural consequences of consumers having nontransitive preference relations. Data sets consist of finitely many observations of price vectors and consumption bundles. A preference relation rationalizes a data set provided that for every observed consumption bundle, all strictly preferred bundles are more expensive than the observed bundle. Our main result is that data sets can be rationalized by a smooth nontransitive preference relation if and only if prices can normalized such that the law of demand is satisfied. Market data sets consist of finitely many observations of price vectors, lists of individual incomes and aggregate demands. We apply our main result to characterize market data sets consistent with equilibrium behaviour of pure-exchange economies with smooth nontransitive consumers.     

China's housing bubble burst?

In this paper, we developed the recursive unit root tests to identify the beginning and end of potential speculative bubbles in the Chinese housing price cycles during 2006–2013 for the 70 major cities of China. The method is best suited for a practical implementation with a time series and delivers a consistent date‐stamping strategy for the origination and termination of multiple bubbles. Simulations demonstrate that the test significantly improves discriminatory power and leads to distinct power gains when multiple bubbles occur. Overall, the results indicate that the speculative housing price bubbles in China are not bursting, and they indicate that the stationarity of the housing price level varies across the different city sizes. Between the cities, approximately one‐fourth of the bubbles have burst up to December 2013, while the first‐tier city bubble may not burst due to the urbanization process.     

Behavioural heterogeneity in wine investments

We introduce a heterogeneous agent model to explain the dynamics of fine wine investments. Our results show evidence of the existence of both fundamentalists – those who trade on mean-reversion towards a fair value – and chartists – those who extrapolate recently observed price trends – in the wine market. Moreover, we document that market participants switch between the two trading strategies, allocating more weight to the strategy that has been the most accurate in forecasting wine index values in the recent past. This switching behaviour can explain the large variations in index values (bubbles and crashes) that are observed in the fine wine market.     

A comparison of different contract forms for consumers with switching costs and changed preferences

This paper compares three contract forms, including short-term contract with price discrimination, short-term contract without price discrimination, and long-term contract with price commitment for consumers with switching costs and changed preferences. We find that long-term contract generates the largest profit for firms. Moreover, we find that switching costs make the market more competitive when consumers have changed preferences, and the higher the switching costs, the more competitive. Our theory combines linear-city duopoly and switching-cost model and the results are consistent with literature, for example price commitment is valuable. Our findings shed light on the practice of different forms of dynamic pricing in various industries including telecommunication industry and airline industry.     

Axiomatization of the core of assignment games

The core of assignment games is characterized by two different lists of axioms. The first list consists of Pareto optimality, consistency, pairwise monotonicity, and individual monotonicity. The second list is obtained from the first one replacing the last axiom by population monotonicity. As a corollary, individual monotonicity and population monotonicity are equivalent under the other axioms. The core is also characterized by the second list on the restricted domain in which the worth of each pair is non-negative and every reservation value is zero.     

Equilibrium Price Dispersion with Consumer Inventories

A model with two types of consumers, shoppers and captives, is constructed that leads to an equilibrium price dispersion. Shoppers may hold inventories of the good; the level of consumer inventories leads to state-dependent price dispersions. It is shown that prices and quantities display negative serial correlation. The model is tested using grocery store data, which display the predicted correlations. Journal of Economic Literature Classification Numbers: D43, L13, D83, L81.     

Time- or state-dependent price setting rules? Evidence from micro data

We use two rich micro-datasets on Portuguese firms to analyse the ability of time- and state-dependent price setting rules to explain durations of price spells, or the probability of price changes. Using a duration model with time-varying regressors, we find some evidence of state-dependent price setting behaviour, which suggests that time-dependent models are unable to fully describe the features of the data. Specifically, we find statistically significant impacts on the probability of a price change of inflation, the level of economic activity and the magnitude of the last price change. Besides being statistically significant, in some cases these effects are also economically important. Finally, it is found that negative and positive values of the covariates have different impacts on the expected duration of prices.     

Export price adjustments under financial constraints

Exploiting data on the product‐destination‐level transactions of a large panel of Italian firms, we provide evidence that financial constraints affect price variation across exporters. Constrained exporters charge higher prices than do unconstrained firms that export to the same product‐destination market. This pattern is the result of a two‐fold effect. Distressed firms pass on their higher production costs through prices. However, they also charge higher mark‐ups. We explain this evidence referring to models in which rival firms produce different brands of the same product for customers with significant switching costs and producers face capital market imperfections when they need external financing. Our empirical investigations corroborate this explanation: price gaps are higher when switching costs or other forms of demand rigidity are expected to be more relevant.     

The impact of bargaining on markets with price takers: Too many bargainers spoil the broth

In this paper we study how bargainers impact on markets in which firms set a list price to sell to those consumers who take prices as given. The list price acts as an outside option for the bargainers, so the higher the list price, the more the firms can extract from bargainers. We find that an increase in the proportion of consumers seeking to bargain can lower consumer surplus overall, even though new bargainers receive a lower price. The reason is that the list price for those who do not bargain and the bargained prices for those who were already bargaining rise: sellers have a greater incentive to make the bargainers’ outside option less attractive, reducing the incentive to compete for price takers. Competition Authority exhortations to bargain can therefore be misplaced. We also consider the implications for optimal seller bargaining.     

Are there bubbles in Chinese RMB–dollar exchange rate? Evidence from generalized sup ADF tests

This article uses recently developed generalized sup ADF (GSADF) unit root tests into the analysis of nominal RMB–dollar exchange rates bubbles. Based on the results from the GSADF tests, we find strong evidence of explosive behaviour in the nominal exchange rate and investigate two bubbles there. The first bubble is during 2005–2006 which is determined neither by the relative prices of traded goods nor the relative price of nontraded goods. The second bubble busts in 2008 during subprime crisis period, and which is determined by the relative prices of traded goods but not the relative price of nontraded goods. There is no bubble before 2005 as the exchange rate is under fixed regime. As for this result, some expansionary monetary and fiscal policies are required in China since these are the most efficient and effective under a bubble burst scenario.     

A history of European electricity day-ahead prices

In this article, we examine the development of day-ahead prices in five European markets which became more connected over recent years. Where previous studies examined the convergence of price levels over time, we focus on patterns in estimates for the parameters in a switching regimes model. This makes it possible to distinguish between prices under normal market conditions and under non-normal market conditions, those market conditions that can cause extreme price spikes. We expect that increased connectivity yields additional supply in the short-term and therefore will reduce the impact of price spikes. Our results indicate that the impact of price spikes and volatility decreased over time, that prices behave more random, and that the parameter estimates between various connected markets seem to have converged between the Belgian, Dutch, French, German and Nordic day-ahead markets over the years 2003 through 2010. These results can be explained by increased connectivity and improved liquidity.     

Evidence of price discovery on the Indonesian stock exchange

The Indonesian stock market is emerging and very little is known about price discovery mechanisms. This paper addresses this research gap by compiling and utilizing a unique stock-level dataset (consisting of 342 stocks) to examine existence and behaviour of price discovery processes. Using the Indonesian sectoral spot price index, and the Bloomberg Markit iTraxx Asia and the CDX high yield index, we test for price discovery. Our findings suggest that pricing behaviour on Indonesian stock exchange is contributed by the credit risk market. We also note that our findings are robust to a different measure of credit risk.     

Does customer satisfaction have directional predictability for U.S. discretionary spending?

Research indicates that past growth in customer satisfaction is an important factor in explaining the in-sample behaviour of growth in discretionary spending. Motivated by such evidence, we take an out-of-sample forecasting approach to examine whether customer satisfaction has directional predictability for two types of discretionary spending. These include spending on motor vehicles and spending on recreation services, which display frequent negative growth for the period 1995–2015. Our results indicate that customer satisfaction accurately predicts the direction of change in both types of spending under symmetric loss. To augment, we further show that the widely reported consumer sentiment has no directional predictability for either types of discretionary spending.     

构建经济和谐增长的利益兼容机制——基于价格改革的角度

价格是各方面利益关系的交汇点.当前我国经济生活中利益矛盾突出的重要原因是价格没有理顺.所以.要促进人与自然、人与社会的和谐,必须充分发挥价格的利益表达、利益分配和利益均衡职能,构建"政府调控市场,市场形成价格,价格调节利益"的协整模式,通过深化价格改革,促进各经济主体的利益兼容.