INFLATION AND THE TIMING OF PRICE CHANGES (*)

Consider an oligopolistic industry in which the firms produce perfect substitutes and incur transaction costs of changing price. Under constant inflation, there is an equilibrium in which the firms change their nominal prices at equally spaced time-points. Increasing the inflation rate increases the size of price changes, increases the frequency of price changes, and increases the average real price paid by buyers. The analysis derives its significance from its implications for the welfare costs of inflation: the inflation-induced distortions in relative prices are larger the more sticky nominal prices are; and are larger the greater the tendency for firms to stagger (rather than synchronize) their price changes.     

THE EXPLORATION AND PRODUCTION OF A LONG-LIVED NATURAL RESOURCE(*)

This paper, a synthesis of previous work by the author, examines both the exploration and the production decisions of a firm in a durable natural resource industry, and finds that monopoly power leads to a slowing in the rate of extraction and a reduction in the exploration rate. Thus in a durable resource industry such as gold, the effect of monopoly is multi-plied: less of the resource will be « discovered », and the stock of the re-source will be extracted more slowly so that early-period prices may be kept above the competitive level.     

THE TERMS OF TRADE IN THE PRESENCE OF RE-EXPORT TRADE: SOME FURTHER DEVELOPMENTS(*)

Abstract. In this paper we examine the measure of terms of trade changes, adjusted to take re-export trade into account, proposed by Lloyd and Sandilands (1985), and introduce two additional (but very basic) complications: a positive rate of growth and substitutability between imports and the domestic factor(s). We show that in such cases one can no longer establish a precise analogy with the traditional measure, and argue that the very notion of « a terms of trade change » becomes somewhat ambiguous. As an alternative view, we derive a measure of the impact of international price changes on what will be called « trade augmented » productivity; such a measure will be based on the movements of the wage-rate of profit frontier.     

COST-PRICES WITH VARIABLE RETURNS(*)

In this paper a model of oligopolistic competition is presented. Firms use a mark-up in order to price but the model does not rely necessarily on the assumption of constant returns to scale. An existence theorem is proved for such an economy.