On a generalization of a class of production functions

In Appl. Econ. Lett. 18 (2011), 1777–1784, as a natural generalization of some famous production models with two inputs, C.A. Ioan and G. Ioan introduced a new class of production functions with constant return to scale, called sum production function, and proved three theorems of characterization for such production models. In this article, we give new and more simple proofs of these theorems, extending also the results to the case of increased/decreased return to scale. The generalization to the case of an arbitrary number of inputs is also discussed.     

Computing a quasi-perfect equilibrium of a two-player game

Refining an algorithm due to Koller, Megiddo and von Stengel, we show how to apply Lemke’s algorithm for solving linear complementarity programs to compute a quasi-perfect equilibrium in behavior strategies of a given two-player extensive-form game of perfect recall. A quasi-perfect equilibrium is known to be sequential, and our algorithm thus resolves a conjecture of McKelvey and McLennan in the positive. A quasi-perfect equilibrium is also known to be normal-form perfect and our algorithm thus provides an alternative to an algorithm by von Stengel, van den Elzen and Talman. For the case of a zero-sum game, we devise variants of the algorithm that rely on linear programming rather than linear complementarity programming and use the simplex algorithm or other algorithms for linear programming rather than Lemke’s algorithm. We argue that these latter algorithms are relevant for recent applications of equilibrium computation to artificial intelligence.     

Optimal size of a residential area within a municipality

The purpose of this paper is to analyze the optimal size of a residential area within a municipality under different market structures. We find that under a private duopoly the optimal size of the residential area depends on the ratio between transportation costs and a negative externality due to congestion. The optimal size is the whole municipality when the ratio is low enough and a small area of the municipality when the ratio is high enough. The transition from a flat residential area to a more compact one is not continuous, so some large-enough residential areas are never optimal. Under a mixed duopoly the transition from a flat residential area to a more compact one is continuous as the ratio increases. By comparing the two cases we find that for intermediate values of this ratio a flat city is optimal for a private duopoly while compact cities emerge under a mixed duopoly.     

Commercialization of a demand-enhancing innovation: The release of a new apple variety by a public university

The upsurge of patented fruit varieties developed by university plant-breeding programs motivated this re-examination of optimal commercialization strategies when an innovator cares about profits for both itself and the licensees. Our theoretical findings suggest that the optimal licensing arrangement that maximizes weighted joint profits depends on the innovation level size, number of firms, and the weights assigned to the innovator and licensee profits. We designed an experiment to test the case with a small number of firms and found that the joint profits are the greatest under an exclusive per-unit royalty scheme. However, when the number of firms is large, as may be the case for a varietal introduction into the U.S. apple industry, our model suggests that the joint profits will be the largest under a nonexclusive contract, either with a two-part tariff, if the innovation level is high, or a per-unit royalty if the innovation level is low.     

Existence of a continuum of equilibria in a monetary random-matching model

In this paper, we study a monetary random-matching model where both goods and money are perfectly divisible, production is costly, and there is no exogenous upper bound on agents' money holdings, information on which is private to the agent. We show that there is a continuum of stationary equilibria where agents have either no money or a set amount, and buyers spend all their money. As in the previous studies, the equilibrium value function is step-like, which emerges as a self-fulfilling prophecy. The endogenous upper bound on agents' money holdings is the result of private information on agents' money holdings. Buyers post an offer that is accepted only by sellers without money, who set a higher value on money.     

Some unfamiliar dynamics of a familiar macro model a note

The idea that for small disturbances the full employment equilibrium is stable while for large disturbances it is unstable was coined by Leijonhufvud in the notion of a corridor. We discuss the existence of a corridor in the standard Keynesian-monetarist textbook macro-model. It turns out that though the full employment steady state of this model may be locally stable — which is the case when the well-known Cagan condition holds — the model is never globally stable. This is due to the inherent non-linearity in the demand for money function, arising from non-negativity of the nominal rate of interest. Thus, perhaps surprisingly, the Cagan condition is both necessary and sufficient for the existence of a corridor in the Keynesian-monetarist model.This note is adapted from a paper presented at the European Meeting of the Econometric Society, Bologna, August 1988. I would like to thank Søren Bo Nielsen and Peter Birch Sørensen (Copenhagen Business School), Thomas Lux (University of Bamberg), and two anonymous referees for helpful comments and suggestions. Remaining errors and shortcomings are mine.     

Robustness of a fixed-rent contract in a standard agency model

Summary. It is well known that there are infinitely many incentive contracts that achieve the full information outcome in the standard agency model when the agent is risk-neutral. However, since Harris and Raviv (1979), the fixed-rent contract has been the focal point among those infinitely many first-best contracts. This paper examines whether the fixed-rent contract is robust or not in various circumstances.Received: 6 June 2002, Revised: 9 June 2003, JEL Classification Numbers: J41, D82.Correspondence to: Susheng WangThe first authors work was supported by the Brain Korea 21 Project in 2003, and the grant for the Reform of university Education under the Brain Korea 21 Project of S.N.U. in 2001.     

更宽的视角下研判加工贸易

加工贸易在促进贸易增长和创汇方面,发挥了不可替代的作用,但是实证分析发现加工贸易就业弹性不断减弱。我国各省市、各行业加工贸易所占比重以及增值率指标存在着很大的差别。影响加工贸易规模的因素分析表明,外商直接投资额、产业结构等变量与加工贸易规模呈现正相关关系。     

The characteristics of a monetary economy: a Keynes-Schumpeter approach

Mainstream monetary theory considers money only as an instrumentmeant to facilitate trading without having any effect on incomeor on the evolution of the economic system. The aim of thispaper is to elaborate a monetary theory capable of supportingthe thesis of money non-neutrality based on the arguments developedby Keynes and Schumpeter. The synthesis of the theories of thesetwo great economists will be formulated starting from the twopoints which are common in the views of Keynes and Schumpeter.First, in contrast with mainstream theory, Keynes and Schumpeterstate that the diffusion of a fiat money induces a radical modificationinto the way in which the economic system works. Second, whenKeynes and Schumpeter describe the reasons why money and financialaggregates are not neutral, they highlight the fundamental roleof the credit market and of banks; in contrast with the mainstreamtheory, they do not consider the credit market as the mirrorimage of the goods market.     

Durability in a Monopoly With a Small Number of Buyers

This paper shows that the number of buyers is a crucial demand characteristic for a monopolist's choice of durability. When he sells to a few large buyers, he offers a more durable good than when selling to many small buyers. By increasing durability of the good sold to large buyers, the monopolist encourages current purchasing and can thus engage in greater intertemporal price discrimination and make more profit. Therefore Bulow's proposition of minimal durability does not survive in the case of few buyers. This has not been pointed out thus far.     

A Model of a Price-setting Duopoly with a Wage-rise Contract

This paper considers a wage-rise contract between a firm and its employees as the firm's strategy, and suggests a wage-rise-contract policy. The policy is a promise by the firm that it will announce a certain output level and a wage premium rate, and if it actually produces more than the announced output level, then it will pay each employee a wage premium uniformly. First, this paper examines the case in which one of two firms unilaterally offers the wage-rise-contract policy by using a two-stage price-setting duopoly model. It is then shown that there exists an equilibrium which coincides with the Stackelberg solution where the firm adopting the policy is the leader. Next, this paper examines the case in which both firms can offer the wage-rise-contract policy in the model. It is then shown that there exists an equilibrium which is more profitable for both firms than in the unilateral case.     

Ten lessons from a quarter of a century of post-communist economic transformation

The dominant idea in the early post-communist economic transition was that an early and comprehensive radical economic reform programme was needed. This program was accompanied by a clear programme of political economy reform, which included; a clear understanding that the old system was finished, a political breakthrough, new political leaders, new economic policymakers, the swift elaboration of a reform programme, a functioning parliament, sufficient international financial support, fast implementation, public understanding, and the overruling of any need for consensus. In hindsight, all of these factors worked when they were present. Critics warned of too sharp an output fall, which did not come to pass, lagging institutional development, and neglect of social reforms. The biggest problem has become the absence of real property rights because of captured judicial systems in the post-communist countries not belonging to the European Union.     

The dynamics of inflation: a study of a large number of countries

Over the last twenty years the statistical properties of inflation persistence has been the subject of intense investigation and debate without reaching a unanimous conclusion yet. In this article we attempt to shed further light to this debate using a battery of econometric techniques in order to provide robust evidence on the degree of inflation persistence and whether this has changed during the period in which several countries have followed inflation-targeting regimes or new monetary regimes. We consider the inflation rates of thirty developed and emerging economies using quarterly data for the period 1958 to 2007 which include alternative monetary policy regimes. The coefficient of the inflation parameter is estimated by Ordinary Least Squares (OLS), Autoregressive Moving Average (ARMA) and Autoregressive Fractionally Integrated Moving Average (ARFIMA) models. Furthermore, the grid-bootstrap Median Unbiased (MUB) estimator approach developed by Hansen (1999) is used to estimate the finite sample OLS estimates coupled with the 95% symmetric confidence interval. We also examine parameter stability of persistence coefficients by estimating a model with time-varying parameters.     

Tragedy of the Commons in a Stochastic Game of a Stock Externality

This paper investigates a tragedy of the commons where an Ito‐process traces the accumulation of pollution and differentiates between reversible (i.e., clean up is feasible) and irreversible emissions (past pollution cannot be undone). The reversible case allows for an explicit analytical solution, while other means are necessary to characterize irreversible outcomes. More precisely, a different characterization of equilibria (in Markov strategies) as smooth connections between an initial and a stopping manifold is suggested.     

The Relevance of a Choice of Auction Format in a Competitive Environment

We examine the relevance of an auction format in a competitive environment by comparing uniform and discriminatory price auctions with many bidders in a private values setting. We show that if the number of objects for sale is small relative to the number of bidders, then all equilibria of both auctions are approximately efficient and lead to approximately the same revenue. When the number of objects for sale is proportional to the number of bidders, then the particulars of the auction format matter. All equilibria of the uniform auction are efficient, while all of the equilibria of the discriminatory auction are inefficient. The relative revenue rankings of the auction formats can go in either direction, depending on the specifics of the environment. These conclusions regarding the efficiency and revenue ranking are in contrast to the previous literature, which focused on the case of independent information across agents.