Component efficient solutions in line-graph games with applications

Recently, applications of cooperative game theory to economic allocation problems have gained popularity. We investigate a class of cooperative games that generalizes some economic applications with a similar structure. These are the so-called line-graph games being cooperative TU-games in which the players are linearly ordered. Examples of situations that can be modeled like this are sequencing situations and water distribution problems. We define four properties with respect to deleting edges that each selects a unique component efficient solution on the class of line-graph games. We interpret these solutions and properties in terms of dividend distributions, and apply them to economic situations. This research has been done while the third author was visiting Tinbergen Institute at the Free University, Amsterdam. The research is part of the Research Programme “Strategic and Cooperative Decision Making” at the Department of Econometrics. Financial support from the Netherlands Organization for Scientific Research (NWO) in the framework of the Russian-Dutch programme for scientific cooperation, is gratefully acknowledged. The third author also appreciates partial financial support from the Russian Leading Scientific Schools Fund (grant 80.2003.6) and Russian Humanitarian Scientific Fund (grant 02-02-00189a). We thank three anonymous referees for their valuable comments.     

Late entry,market shares and competitive survival: The case of synthetic fibers

This paper examines product policy in relation to the experience curve and product life cycle concepts in the context of the experience of the thirteen major firms in the Western European synthetic fibers industry. It examines the hypothesis based on Boston Consulting Group and the Profit Impact of Market Share (PIMS) evidence that late entrants to a market will be at a competitive disadvantage because they lack the accumulated experience of the pioneering firms. For each of the three main synthetic fibres, acrylic, nylon and polyester, it was found that the early entrants who established major market shares early in the growth phase of the product life cycle were able to maintain that leadership nearly twenty years later. In contrast not only did almost all the late entrants fail to achieve significant market shares but in the difficult market conditions between 1974 and 1981 they provided seven out of nine market withdrawals.     

Henry George and Europe

A bstract . In the eyes of European scholars, publicists and politicians who studied Henry George's work, he, as a social philosopher , had adopted the position of the natural law philosophers of the 18th century. The latter inspired the Declaration of Independence, the U.S. Constitution and its Bill of Rights, as well as the poiitical philosophy of Jeffersonian democracy , the ethos of the 18th and 19th century pioneer settlers. George rejected Social Darwinism. He saw natural law as the only true and reliable basis for a just social order. Like Karl Marx he mastered Ricardian economics ; unlike Marx, George made two factors the basis of his system, labor and land. George saw that each person had a natural right —and a natural imperative for survival —to apply his or her productive capacity to the earth –as living space and as storehouse of nutrients and raw materials. The person-land relationship , he discovered, lay at the basis of human culture. And so the land's rent , now monopolized by the few, had to be appropriated to meet the needs of society, most efficiently and justly by a land value tax.     

Decomposing Redistributive Effects of Taxes and Transfers in Australia: Annual and Lifetime Measures

This paper decomposes the redistributive effect on annual and lifetime inquality of a range of taxes and transfers in Australia, using a dynamic cohort lifetime simulation model. The redistributive effect is decomposed into vertical, horizontal and reranking effects. Horizontal inequities in the tax and transfer system are found to be negligible. The extent of reranking is greater in the lifetime than in the annual context and is affected by the equivalence scales used to adjust household incomes. If no adjustment is made to household incomes, reranking is about nine per cent of the reduction in lifetime inequality. However, if each child is counted as equivalent to one-third of an adult, reranking is found to be less than one per cent.     

Evolution of harvesting strategies: replicator and resource dynamics

Abstract. Economic theories of managing renewable resources, such as fisheries and forestry, traditionally assume that individual harvesters are perfectly rational and thus able to compute the harvesting strategy that maximizes their discounted profits. The current paper presents an alternative approach based on bounded rationality and evolutionary mechanisms. It is assumed that individual harvesters face a choice between two harvesting strategies. The evolution of the distribution of strategies in the population is modeled through a replicator dynamics equation. The latter captures the idea that strategies yielding above average profits are demanded more than strategies yielding below average profits, so that the first type ends up accounting for a larger part in the population. From a mathematical perspective, the combination of resource and evolutionary processes leads to complex dynamics. The paper presents the existence and stability conditions for each steady-state of the system and analyzes dynamic paths to the equilibrium. In addition, effects of changes in prices are analyzed. A main result of the paper is that under certain conditions both strategies can survive in the long-run. Correspondence to: J. Noailly     

Wage inflation and labour conflicts in the Netherlands : An empirical investigation using the co-integration approach

The ‘wage space’, which is defined as the sum of price inflation and labour productivity growth, has played a major role as an indicator of allowable wage increases in the post-war wage negotiations in the Netherlands. This paper shows that: (a) wages and the wage space are co-integrated; (b) the deviation between wages and the wage space may act as an error correction term in the wage equation when both variables are identified as I(2); and (c) political consensus and the threat of labour conflicts (rather than actual strike activity) may be identified as the ‘mechanism’ behind this error correction in the wage equation.     

OPPORTUNISTIC MATCHING IN THE HOUSING MARKET*

We construct a model of the housing market in which agents differ in their flow values while searching. Agents enter the market relaxed (with high flow values) but move to a desperate state (low flow values) at a Poisson rate if they have not already transacted. We characterize the equilibrium steady‐state matching pattern and the joint distribution of price and time to sale (for sellers). The expected price conditional on time to sale falls with time spent on the market, whereas the conditional variance of price first rises and then falls with time on the market.