Nonconvexity,efficiency and equilibrium in exhaustible resource depletion

We consider the problem of efficiency and existence of a competitive equilibrium in exhaustible resource markets where extraction costs are nonconvex. Nonconvexity is shown to imply that (1) (efficient) extraction ceases to the left of the minimum efficient scale, i.e., where average costs exceed marginal costs; and (2) a competitive equilibrium does not exist. Introduction of a backstop technology (which induces a flat portion of the industry demand curve) restores both existence and efficiency, provided that the backstop price is sufficiently low. If firms face even a small amount of uncertainty regarding their rivals' stocks, a backstop technology is sufficient to restore existence of competitive equilibrium, even if the backstop price is very high. In this case, however, the competitive equilibrium is not efficient.     

Local competition, entry, and agglomeration

This paper analyzes competition between two spatially differentiated multi-product retailers who encounter entry from a low-cost discounter. We assess how entry affects the pricing of the incumbent stores and the role played by the location of the entrant. Our primary objective is to identify how traditional retailers respond to new forms of low-cost retailing. Results show that post entry, the prices for some products are higher than the pre entry. However, which product prices increase depends on the incumbent’s location. Contrary to conventional wisdom, we find that the store closer to the entrant is better off compared to the incumbent located further away. We empirically demonstrate the main workings of our theory using sales data from several grocery stores that saw entry by discount stores in their trading areas.     

Daily price adjustments in the U.S. market for natural gas

A daily model of cash market for natural gas in the U.S. is presented and estimated over 1997. The model develops the notion that the expected rather than the actual amount of gas in storage (along with weather) and storage changes impact the current daily cash price. These notions are supported by the estimations presented. At the daily observation level, reported changes in storage levels are signals that actual consumption or production are either as expected and result in no price pressure or are not as expected and do result in price pressures.     

WHAT AUSTRIAN BUSINESS CYCLE THEORY DOES AND DOES NOT CLAIM AS TRUE

Contemporary economic commentators have a habit of dismissing Austrian business cycle theory on the grounds that the implications for policy responses are unconvincing. Often the ‘Austrian’ position is misunderstood. But even if we wish to draw on other schools of thought to understand depressions, this does not affect the importance of Austrian insights to explain the boom.     

Can Voluntary Workplace Partnership Deliver Sustainable Mutual Gains?

This article draws on two Irish case studies to examine the nature and outcomes of voluntary workplace partnership (WP), and the conditions affecting its durability. We found that WP delivered mutual gains for all stakeholders at Aughinish Alumina (AAL), which were quite equally divided. While WP delivered most gains for management at Waterford Crystal (WC), and some for the union, worker gains were less. The WC partnership broke down after 10 years, but the AAL partnership continues. Voluntarist mutual gains partnership is feasible, but success and durability depends on specific clusters of contextual conditions, notably management support, a quality‐focused competitive strategy, insulation from market pressures, union postures, vertically aligned bundles of mutual gains practices, institutional supports, emphasis on fairness, all party commitment to performance enhancement and capital‐intensive technology. Conditions supporting WP were stronger at AAL than WC. More generally, as supports for WP in Ireland are weaker than retardants, we conclude that few mutual gains partnerships will take root, and even fewer will endure.