A note on the existence of Nash networks in one-way flow models

We study the one-way flow model of network formation with owner-homogeneous link costs and heterogeneous profits. Recently, several proofs of existence of Nash networks are discussed in literature. The proof by Billand et al. (Econ Theory, 2007, forthcoming) is based on a nice and clear idea, but the technical elaboration is tedious and too complex in our opinion. In this note, we provide an alternative and easy accessible proof based on the same idea. Also, we show by means of a counterexample that Nash networks may not exist for games where link costs are heterogeneous, but arbitrarily close to owner-homogeneity.     

Binary misclassification and identification in regression models

We study a regression model with a binary explanatory variable that is subject to misclassification errors. The regression coefficient is then only partially identified. We derive several results that relate different assumptions about the misclassification probabilities and the conditional variances to the size of the identified set.     

Transfers, the terms of trade, and capital accumulation

Abstract .  In the context of a two-sector overlapping-generations model it is demonstrated that a steady-state transfer paradox may arise under commodity trade with stability and without distortions or bystanders. The existence of the paradox is due to the effect of the transfer on world capital accumulation, which is shown to always (i.e., for any ranking of factor intensities and savings rates) improve the donor's terms of trade. Transfers may also improve steady-state welfare for both donor and recipient and produce paradoxical welfare results along the transition path.     

Two price economies in continuous time

Static and discrete time pricing operators for two price economies are reviewed and then generalized to the continuous time setting of an underlying Hunt process. The continuous time operators define nonlinear partial integro–differential equations that are solved numerically for the three valuations of bid, ask and expectation. The operators employ concave distortions by inducing a probability into the infinitesimal generator of a Hunt process. This probability is then distorted. Two nonlinear operators based on different approaches to truncating small jumps are developed and termed $QV$ for quadratic variation and $NL$ for normalized Lévy. Examples illustrate the resulting valuations. A sample book of derivatives on a single underlier is employed to display the gap between the bid and ask values for the book and the sum of comparable values for the components of the book.     

Cartelization Through Buyer Groups

Retailers may enjoy stable cartel rents in their output market through the formation of a buyer group in their input market. A buyer group allows retailers to commit credibly to increased input prices, which serve to reduce combined final output to the monopoly level; increased input costs are then refunded from suppliers to retailers through slotting allowances or rebates. The stability of such an ‘implied cartel’ depends on the retailers’ incentives to source their inputs secretly from a supplier outside of the buyer group arrangement at lower input prices. Cheating is limited if retailers sign exclusive dealing or minimum purchase provisions. We discuss the relevancy of our findings for antitrust policy.     

A characterization of the normal distribution by sufficiency of the least squares estimation

Summary For a linear modelY =ϑ + Z,ϑ ∈V,V ⊂ ℝ ⁿ a linear space, the following theorem is proved under simple conditions on the subspaceV: The projection onV (i.e. the least squares estimate forϑ) is a sufficient statistic iffZ is normally distributed. Further, this result is extended to the case of a multivariate linear model.