Inferring Transactions from Financial Statements*

In this paper, we embed the double entry accounting structure in a simple belief revision (estimation) problem. We ask the following question: Presented with a set of financial statements (and priors), what is the reader's “best guess” of the underlying transactions that generated these statements? Two properties of accounting information facilitate a particularly simple closed form solution to this estimation problem. First, accounting information is the outcome of a linear aggregation process. Second, the aggregation rule is double entry.     

Multimarket and multiproject collusion

Summary If firms meet in a number of markets, they may respond to an action in one market by reacting in another market. Fear for such retaliation may induce multimarket firms to collude across markets. The paper assesses available theoretical and empirical evidence on the multimarket collusion theory. Moreover, the paper suggests that the theory can be fruitfully applied in the context of European integration. The focus is on collusion by firms which meet in product markets as well as in joint R&D projects. A model develops three propositions, which shed light on the subsequently provided (tentative) evidence on multidimensional contact in an integrating Europe. The discussion may serve as a framework for future research into both the theoretical and the empirical domain with applications to the issue of European integration.We gratefully acknowledge John Hagedoorn for providing access to the MERIT/CATI database, and two referees for their comments. Of course, the usual disclaimer applies     

Some experimental evidence regarding collusion

The authors are indebted to James M. Walker for helpful comments on this and a related study. We have also benefited from conversations with Jay Stewart, Margaret Ray, and Marjorie Baldwin. We gratefully acknowledge financial support from Indiana University, South Bend, and Indiana University, Bloomington (Office of Research and Graduate Development). We also wish to express our gratitude to the subjects from Indiana University, Bloomington, and the University of Notre Dame who willingly participated in the experiments and interviews.     

Market structure,the exchange rate,and pricing behavior by firms: Some evidence from computable general equilibrium trade models

Zusammenfassung Marktstruktur, Wechselkurs und Preisverhalten der Firmen: Einige Rechenergebnisse aus einem Modell des allgemeinen Gleichgewichts für den internationalen Handel. - Die Verfasserin benutzt ein Modell des allgemeinen Gleichgewichts für den internationalen Handel, um die Auswirkungen einer zehnprozentigen Aufwertung des US-Dollar auf das Preisniveau in den Vereinigten Staaten im Verh?ltnis zu den Preisen auf anderen M?rkten abzusch?tzen. In einigen Industrien werden die M?rkte segmentiert, und von den Firmen wird angenommen, da\ sie den Absatz der jeweils anderen Firmen als fix ansehen. Die Autorin kommt zu dem Ergebnis, da\ eine solche Aufwertung des Dollar das Preisniveau auf dem amerikanischen Markt um 2 bis 3 vH senkt und die Preise in der restlichen Welt um 0 bis 6 vH erh?ht. Das bedeutet, da\ im Gefolge der Aufwertung einer W?hrung signifikante Abweichungen von der Kaufkraftparit?t eintreten k?nnen.

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Resumen Estructura de mercado, tasa de cambio y politica de precios de la empresa: evidencia en modelos de equilibrio general computable de comercio. - La autora utiliza un modelo de equilibrio general computable de comercio para evaluar el efecto de una revaluation del dolar USA del 10 por ciento sobre el nivel de precios prevaleciente en el mercado estadounidense en comparación con los precios de otros mercados. En algunas industrias los mercados están segmentados; se asume que las empresas presentan un comportamiento tipo Cournot. Los resultados demuestran que una revaluatión reduce el nivel de precios en el mercado estadounidense en un 2–3 por ciento y aumenta los precios en el resto del mundo en un 0–6 por ciento. Esto implica que pueden ocurrir deviaciones significativas de la paridad de poder adquisitivo después de una revaluación de la moneda.

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Résumé Structure du marché, taux de change et politique de prix des entreprises: Quelque évidence d’un modèle d’équilibre général de commerce international. - L’auteur se sert d’un modèle d’équilibre général pour estimer l’effet d’une réévaluation de 10 pour cent du US dollar sur le niveau des prix dans les Etats-Unis comparé au niveau des prix sur les marchés dans les autres pays. Les marchés de quelques industries sont segmentés et on suppose que les entreprises regardent les ventes des concurrents comme fixes. L’auteur trouve qu’une telle réévaluation réduit le niveau des prix sur les marchés des Etats-Unis de deux à trois pour cent et augmente les prix dans les autres pays de zéro à 6 pour cent. Cela indique que des déviations considérables de la parité du pouvoir d’achat peuvent se passer en conséquence d’une réévaluation de la monnaie.

     

Exchange rate and pricing behavior: Comparison of Taiwan with Japan for manufacturing industries

This paper investigates a theoretical model that explains the relationship between exchange rate and profit when it takes the effect of exchange rate on both input and output prices into account. Using the panel data of 19 two-digit Taiwanese and 17 two-digit Japanese manufacturing industries over the period of 1984–1994, the empirical evidence shows that a higher degree of net external exposure in Taiwan than it in Japan. The empirical results also suggest that an appreciation of home currency, industries of Taiwan take advantage of the appreciation of the New Taiwan dollar, enjoying a reduction in the price of imported inputs into production. As far as this study shows, however, the merit to imported inputs of a strong Japanese Yen has not been confirmed in Japan.     

Competition and collusion in a government procurement auction market

This paper tests the structure performance hypothesis by examining a highway construction industry in Florida. In the first-price sealed bid auction literature, there is little evidence on how many bidders are required for these markets to be competitive. Two different indicators are used to capture the transition from collusion to competition—a discontinuous effect of the number of bidders on winning bid price, and an associative effect of repeat bidding of a contractor with the same set of firms. The results suggest that winning bids decrease as the number of bidders rises until there are about six to eight firms. Since subsequent entry has no effect on the winning bid price, it is concluded that the highway construction market becomes competitive with about eight bidders.     

Road pricing

Summary Under conditions of congestion, the social costs of motoring will exceed the private costs. The formula is: Social Cost=Private Cost (1+the elasticity of cost with respect to traffic flow). Thus the optimum tax under these conditions is equal to this elasticity coefficient×100 per cent of the private cost. A fluid-dynamic model, borrowed from physics, is used to develop a simple formula for the elasticity ofvelocity with respect to traffic flow. By postulating a relationship between cost and speed, this elasticity is convertedinto an estimate of the elasticity coefficient. And so one can obtain, for any specified speed, a value of this coefficient and cost; the product of these two then gives an estimate of the difference between social and private cost. In practice one cannot determine the speed independently; it emerges from the demand-supply interactions and so one must also postulate a demand function; but data problems are severe on the demand side. Lastly, some developments are considered — including network models and dynamic demand models. Lecture delivered in the Faculty of Economics of the University of Groningen, The Netherlands, on 21st May 1968. The author is Professor of Econometrics and Social Statistics at the University of Birmingham, and Advisor on Research, Graduate Centre for Management Studies.     

Road pricing

Summary Among the main problems in the public sector of the economy are those of road congestion on the one hand and under-utilisation of roads on the other. Partly this is a consequence of inefficient price policies for the use of roads. But road pricing involves many technical and distributional problems. A preliminary survey of the effects suggests that quite simple road pricing systems, such as a differentiated urban rural license fee, may be a most efficient way of introducing road pricing. Tolls on critical access points may be another efficient way of introducing congestion charges. At the same time it is important to attempt to reduce charges on uncongested roads, and this is especially necessary for developing countries. A preliminary survey of the effects of such a rearrangement of road taxation suggest that there would be no marked redistributional effects. But much more work is required on this aspect of road pricing. Adviser on Research, Graduate Centre for Management Studies. This paper was written in 1967 during a period as Visiting Professor at M.I.T., with some special reference to conditions in the United States.     

Cementing the case for collusion under the National Recovery Administration

Macroeconomists have long debated the aggregate effects of anti-competitive provisions under the “Codes of Fair Conduct” promulgated by the National Industrial Recovery Act (NIRA). Despite the emphasis on these provisions, there is only limited evidence documenting any actual effects at the micro-level. We use a combination of narrative evidence and a novel plant-level dataset from 1929, 1931, 1933, and 1935 to study the effects of the NIRA in the cement industry. We develop a test for collusion specific to this particular industry. We find strong evidence that before the NIRA, the costs of a plant's nearest neighbor had a positive effect on a plant's own price, suggesting competition. After the NIRA, this effect is completely eliminated, with no correlation between a plant's own price and its neighbor's cost.     

Auditors' legal liability,collusion with management,and investors' loss*

Abstract. The purpose of this paper is to model the legal exposure of auditors and to study the extent to which limitations on this exposure affect auditors' chosen audit intensity and collusion with management. Résumé. L'article qui suit a pour but de modéliser les risques auxquels sont exposés les vérificateurs de par la loi et de voir dans quelle mesure les limites de ce risque influent sur l'intensité de la vérification dont décident les vérificateurs et sur la collusion avec la direction.     

房地产市场中的土地价格问题——土地价格刚性探讨

一、地价越高越好吗?——一个价值判断问题主流(目前政府部门所采纳)的观点认为:随着我国城市建设的飞速发展,城市基础设施、配套服务及周边环境的改善使土地价值日益凸显,地价作为土地价值的反映,理应有所提升。地价的上涨反映了市场供求状况,有利于土地这种稀缺资源的优化配置。另外,较高的地价有利于筹集更多的城市建设资金,城市的发展与地价之间会形成一种良性互动。反对者(主要是房地产企业)从宏观经济发展的角度出发,认为:地价的不断上涨催升了房价上涨,一方面形成了房地产泡沫,另一方面提高了城市居住和土地资源利用的成本,不利于吸…     

浅析天然气管道运输定价

天然气管道运输定价对于天然气市场的发展有着重要的作用,我国传统的天然气定价机制不能够适应天然气管输的特性,与我国天然气市场的需求已不相适应,本文将我国现阶段的一部制天然气定价方法与国外成熟的两部制天然气定价方法相比较,为我国的天然气管输定价机制的改革提出了合理性建议。     

Agricultural pricing policy in Kenya

This paper examines Kenya's agricultural pricing policy, its role in the development of key sectors of the agricultural economy during the 1970s and its impact on different classes of producers. Toward this end, the paper describes the process of agricultural price determination in Kenya, and examines trends in real producer price indices for selected crop groupings and by size of holding.The most important finding of the paper is that agricultural pricing policy has been used in Kenya to create incentives for the growth of marketed agricultural production. In addition, the paper shows that the Government of Kenya has also used pricing and marketing policy instruments to achieve its goal of promoting the agricultural development of smallholders, who constitute the dominant mode of agricultural production in Kenya. Significantly, these findings are contrary to the widely accepted notion that pricing policy in developing countries has uniformly been biased in favor of the urban sector and against agricultural producers.