Convex and decreasing absolute risk aversion is proper

Proper risk aversion, a pivotal concept in the study of behavioral conditions on utility functions, states that an undesirable risk can never be made desirable by the presence of an independent risk. It is well known that standard risk aversion is sufficient for this concept. We show in this short article that convex and decreasing absolute risk aversion is an alternative sufficient condition.     

The value of public information in a Cournot duopoly

We derive alternative sufficient conditions for the value of public information to be either positive or negative in a Cournot duopoly where firms technology exhibits constant returns to scale.     

ON THE EQUIVALENCE OF ALTERNATIVE MEASURES OF THE ELASTICITY OF SUBSTITUTION

This paper provides a necessary and sufficient condition for the equivalence of three alternative measures of the elasticity of factor substitution: the Allen-Uzawa partial elasticity, the shadow elasticity and the general two-factor two-price elasticity.     

A UNIFIED ANALYSIS OF TRADE GAINS IN THE PRESENCE OF PUBLIC GOODS*

It has long been known that free trade is potentially (after lumpsum compensatory transfers) beneficial for each trading country if the autarkic and post‐compensation free‐trade equilibria are perfectly competitive, with market distortions limited to non‐negative taxes on imports and exports. However these conditions are merely sufficient. It can now be shown that, under alternative sufficient conditions, free trade is potentially beneficial to each trading country even in the context of public goods.     

A note on small income effects

This note provides an alternative sufficient condition for the small income effect result that is first shown by Vives [Small income effects: a Marshallian theory of consumer surplus and downward sloping demand, Rev. Econ. Stud. 54(1) (1987) 87-103]. The condition is stated by ordinal terms only, whereas Vives assumes cardinal properties of utility representation. Second, as its application, we provide a sufficient condition for the preference being asymptotically quasi-linear, in a two good economy where the second good is a composition of a large number of goods.     

Efficient Estimation: The Rao-Zyskind Condition, Kruskal's Theorem and Ordinary Least Squares*

The paper emphasizes the practicability and accessibility of the necessary and sufficient condition for ordinary least squares to yield best linear unbiased estimators in several problems that are available in econometrics Two convenient equivalent alternative forms of the condition are presented It is shown that the condition is useful for analyzing different problems and is especially relevant for pedagogical purposes Several practical economic examples are presented     

The Fossil Production Function in a Vintage Model

This paper extends the fossil production function to incorporate embodied technical change. The fossil production function provides an alternative to the standard neoclassical explanation for the aggregate production function. In a Classical Ricardian spirit, the paper assumes that capital-using, labour saving technical change prevails, and shows that it generates a fossil production function in Cobb-Douglas form. The power term of the production function mediates the viability of new machines. A sufficient condition for viability is that the power term equals or exceeds the profit share on new machines. Empirical estimates show that this sufficient condition is satisfied, a result inconsistent with the neoclassical interpretation of the aggregate production function.     

A note on representability of consumer's behavior

Summary. We offer an alternative approach to the study of representability of choice behavior in a competitive framework that is based on recent advances in utility theory (cf. Alcantud and Rodrí guez-Palmero (1999)). Our technique enables us to tackle this classical problem efficiently in fairly general situations, thus obtaining alternative sufficient conditions as well as different proofs and generalizations of prior results. Received: July 14, 1999; revised version: February 15, 2001     

Alternative approach to determine the common cycle time for a multi-item production system with discontinuous deliveries and failure in rework

This study employs an alternative approach to determine common production cycle time for a multi-item production system with discontinuous deliveries and failure in rework. A straightforward approach using algebraic derivation is proposed here to reexamine a specific common cycle time problem studied by Chiu et al. (2013a,b), where they used the conventional method with the need of applying first-order and second-order differentiations to system cost function for proof of convexity before deriving the optimal common cycle time. The result of this study is confirmed to be identical to that was obtained in Chiu et al. (2013a,b). This alternative approach enables practitioners who may not have sufficient knowledge of differential calculus to manage the real-life multi-item production systems more effectively.     

Characterization of generalized weak orders and revealed preference

Summary This short paper provides an alternative framework to axiomatize various binary preference relations such as semiorder, weak semiorder etc. A set of simple axioms is presented in terms of revealed-preferred and revealed-inferior alternatives which makes the connection between various binary preference relations transparent; and every single axiom is necessary and sufficient for the existence of a binary preference relation of a specified type.We thank Bhasker Dutta, Peter Fishburn, Prasanta Pattanaik, Robert Russell and Thomas Schwartz for helpful suggestions     

Efficient commodity taxation

Necessary and sufficient conditions for a set of commodity taxes to be Pareto efficient are derived. Unlike the literature on optimal taxation these conditions are derived without reference to a social welfare function. One of the necessary conditions derived by a revealed preference argument is particularly useful. It is shown to yield the Ramsey rule for single-person economies and some alternative rules for many-person economies. These rules have the desirable feature that they depend only upon the properties of the aggregate household demand functions and aggregate technology.     

Single-crossing conditions in comparisons of tax progressivity

Statements to the effect that one tax is more progressive than another are frequently made, but seldom explained. Starting from a criterion of Lorenz domination, this paper shows how an intuitively appealing single-crossing condition on appropriately normalized tax schedules may be used in progressivity comparisons. This condition is closely related to, and illuminates, the necessary and sufficient condition derived by Jakobsson (1976) for the distributional implications of alternative taxes to be inferred from their schedules alone.     

Environmental Protection and Urban Unemployment: Environmental Policy Reform in a Polluted Dualistic Economy

This paper explores sufficient conditions for the welfare‐improving environmental policy reform in the Harris–Todaro economy. A rise in the pollution tax rate in the urban manufacturing has spillover effects on the two labor market distortions: the less‐than‐optimal manufacturing employment and the urban unemployment. If both are weakened the welfare improves. Otherwise, we need to develop an alternative sufficient condition. It is shown that there exists a range of welfare‐improving pollution tax rates, and that it corresponds to the lower values of tax rate. This range may shrink by the wage subsidy policy and the technological change toward less pollution‐intensive techniques.     

Comparing Conventional and New Policy Approaches for Carnivore Conservation: Theoretical Results and Application to Tiger Conservation

New policy approaches to facilitate the co-existence of wildlife and livestock are needed for situations where predation incidents greatly impact households’ income and retaliatory killing threatens endangered carnivore species’ survival. In this paper, models are developed to assess how two alternative policy approaches impact a herder’s decisions on carnivore hunting and livestock protection. We find that while the well-established ex-post compensation policy induces suboptimal livestock protection it can generate sufficient incentives for the herder to refrain from hunting so that the carnivore population reaches its socially optimal level. Performance payments are proposed as alternative policy. They are found not to distort livestock protection incentives and can also help achieve a socially optimal carnivore population level. Which of the two scheme types gives rise to less cost is ambiguous. An empirical analysis of the model with data from tiger-livestock conflicts in India is presented.     

Buyer-Option Contracts Restored: Renegotiation, Inefficient Threats, and the Hold-Up Problem

"Buyer-option" contracts, in which the buyer selects the productvariant to be traded and chooses whether to accept delivery,are often used to solve holdup problems. We present a simplegame that focuses sharply on subgames in which the buyer proposesinefficient actions in order to improve his bargaining position.We argue for one of several alternative ways to model this situation.We then apply that modeling choice to recent models of the foundationsof incomplete contracts and show that a buyer-option contractis sufficient to induce first-best outcomes.     

WHEN DOES CHAINING REDUCE THE PAASCHE–LASPEYRES SPREAD? AN APPLICATION TO SCANNER DATA

It is generally believed that chaining reduces the Paasche–Laspeyres spread if prices and quantities are monotonic over time. I consider three alternative definitions of monotonicity and show that none provide either necessary or sufficient conditions for chaining to reduce the Paasche–Laspeyres spread. What matters is the interaction between prices and quantities both in the same period and lagged one period. Sufficient conditions are derived, and the implications of these conditions for the measurement of inflation are considered. The paper concludes with an empirical illustration using scanner data.     

The Cass criterion, the net dividend criterion, and optimality

Abel, Mankiw, Summers, and Zeckhauser [Assessing dynamic efficiency: theory and evidence, Rev. Econ. Stud. 56 (1989) 1-20] propose the net dividend criterion as an easy to use sufficient condition for optimality in general stochastic overlapping generations economies with production. We provide examples based on the criterion due to Cass [On capital overaccumulation in the aggregative neoclassical model of economic growth: a complete characterization, J. Econ. Theory 4 (1972) 200-223] and its extensions, the usual tools for such problems, to show that the net dividend criterion need not give the right answer. We identify the flaw in their proof. We also provide an alternative condition which, by an argument unrelated to theirs, is a sufficient condition for optimality when dividends are nonnegative and then argue that the condition is not innocuous since it cannot be verified in actual economies.     

A note on external habits and efficiency in the AK model

This paper examines the implications for equilibrium efficiency of alternative formulations of habit formation in the AK model with external habits. Agent’s utility depends on how her current consumption compares to a reference consumption level—the habits stock—determined by average past consumption in the economy. We first prove that perfect substitutability between consumption and habits along the equilibrium path is necessary and sufficient for efficiency. Then, we prove that the competitive equilibrium is efficient if and only if habits enter utility in a subtractive form.     

IMF Conditionality as a Screening Device

A theoretical model is developed in which both buybacks and the adoption of an IMF programme can be used as screening devices which enable a creditor to discriminate between debtor countries which are willing to use debt relief in order to invest and repay and countries which are not. Asymmetric information is assumed. This problem can be solved if the country has sufficient resources to engage in a debt buyback and so gain the debt relief. When the country is credit constrained, an alternative screening mechanism is to undertake an IMF programme in return for debt reduction and possibly an IMF loan.     

Tests for structural change,aggregation, and homogeneity

Structural change can be considered by breaking up a sample into subsets and asking if these can be aggregated or pooled. Strategies for constructing tests for aggregation and structural change in this setting have not received sufficient attention in the literature. Our methodology for testing generalizes to multiple regimes a discussion of Pesaran et al. (1985) for the case of two regimes. This treatment permits a unified approach to a large number of testing problems discussed separately in the literature, as special cases or as parts of a test of homogeneity. We also provide a simple alternative to much more complex testing strategies currently being researched and developed in testing for structural change.