Stackelberg Beats Cournot — On Collusion and Efficiency in Experimental Markets

We report on an experiment designed to compare Stackelberg and Cournot duopoly markets with quantity competition. We implement both a random matching and a fixed-pairs version for each market. Stackelberg markets yield, regardless of the matching scheme, higher outputs than Cournot markets and, thus, higher efficiency. For Cournot markets, we replicate a pattern known from previous experiments. There is stable equilibrium play under random matching and partial collusion under fixed pairs. We also find, for Stackelberg markets, that competition becomes less intense when firms remain in pairs but we find considerable deviations from the subgame perfect equilibrium prediction which can be attributed to an aversion to disadvantageous inequality.     

Plant-level employment development before collective displacements: comparing mass layoffs,plant closures and bankruptcies

This article analyzes the development of employment levels and worker flows before bankruptcies, plant closure without bankruptcies and mass layoffs. Utilizing administrative plant-level data for Germany, we find no systematic employment reductions prior to mass layoffs, a strong and long-lasting reduction prior to closures, and a much shorter shadow of death preceding bankruptcies. Employment reductions in closing plants, in contrast to bankruptcies and mass layoffs, do not come along with increased worker flows. These patterns point to an intended and controlled shrinking strategy for closures without bankruptcy and to an unintended collapse for bankruptcies and mass layoffs.     

MULTIATTRIBUTE UTILITY THEORY,INTERTEMPORAL UTILITY,AND CORRELATION AVERSION

Convenient assumptions about qualitative properties of the intertemporal utility function have generated counterintuitive implications for the relationship between atemporal risk aversion and the intertemporal elasticity of substitution. If the intertemporal utility function is additively separable, then the latter two concepts are the inverse of each other. We review a theoretical specification with a long lineage in the literature on multi‐attribute utility and use this theoretical structure to guide the design of a series of experiments that allow us to identify and estimate intertemporal correlation aversion. Our results show that subjects are correlation averse over lotteries with intertemporal income profiles.     

Rationing and rationality

This paper investigates a simple three-good two-sector macromodel with fixed prices. In order to omit any ad hoc assumptions about the market outcomes we analyse the model as a game played by (fully) rational players. Whereas the notion of rationality underlying the concept of Nash equilibria implies a multiplicity of solutions (with different trades and different excess demands) the refined notion of uniformly perfect equilibria yields uniqueness. Interestingly, the unique solution implies excess demands differing from previously discussed suggestions. Accordingly, the amount of involuntary unemployment may here be different from those in former models even though transactions are the same. In principle, the model provides a reasonable basis to interpret the magnitude of excess demands, what seems important since excess demands serve as signals not only for markets but also for policy makers.     

Aggregate information cascades

We introduce a new model of aggregate information cascades where only one of two possible actions is observable to others. Agents make a binary decision in sequence. The order is random and agents are not aware of their own position in the sequence. When called upon, they are only informed about the total number of others who have chosen the observable action before them. This informational structure arises naturally in many applications. Our most important result is that only one type of cascade arises in equilibrium, the aggregate cascade on the observable action. A cascade on the unobservable action never arises.     

Entrepreneurship as translation: Understanding entrepreneurial opportunities through actor-network theory

Entrepreneurship scholars argue that opportunities are at the heart of entrepreneurial activity. Yet, there is still a heated debate on the nature of opportunities. The discovery view argues that opportunities are discovered and have objective existence prior to the entrepreneurial process. The creation view argues that the discovery view is incomplete and makes wrongful assumptions about agency, process and opportunities in entrepreneurship. More conceptual development, however, is needed for the creation view to become a fully developed theoretical alternative to the discovery view. In this article, Actor-Network Theory is used to develop the creation view and further our understanding of entrepreneurial processes.     

Improving access to health facilities in Nouna district,Burkina Faso

The Nouna health district in Burkina Faso, has a population of approximately 275,000 people living in 281 villages, and is served by 25 health facilities, as of 2006. For many people, the time and effort required in traveling to a health facility, which may demand a journey of many kilometers over poor roads on foot, is a deterrent to seeking proper medical care. In this study we examine how access to health facilities in Nouna may be improved by considering the configuration of the road network in addition to the locations of the facilities. We model the situation as a facility location–network design problem and draw conclusions about how best to improve the physical access of the health facilities. Our model shows the extent to which access can be improved when the road network is considered along with facility locations, in contrast to facility locations considered alone.     

Exchange Market Pressure and Monetary Policy in Emerging Market Economies: New Evidence from Treatment‐effect Estimations

The way central banks react to exchange market pressure is likely to affect the subsequent economic development and the associated economic costs. In a situation of currency pressure the central bank can in principle decide to let the currency float freely, to maintain the peg or to implement a managed float policy, i.e. a mix of depreciation and intervention. As the central bank's choices are subject to self selection and endogeneity, we use propensity score matching to adequately cope with these methodical challenges. We find that monetary authorities have two options to keep down the economic costs in terms of output, namely stabilizing the exchange rate or letting the currency float freely. In contrast, a managed float under currency pressure is accompanied by the worst possible outcome with an average loss of gross domestic product (GDP) between 5% and 6%.     

Das Glühbirnendekret der EU – ein unnötiges Verbot

Since September 2009, the European market for household lamps is subject to EU regulation 244/2009, which enforces the gradual phase-out of incandescent light bulbs. As of September 2012, only energy-efficient lighting sources such as halogen lamps, light-emitting diodes (LED), or compact fluorescent lamps—often referred to as energy-saving lamps—will be allowed for sale. The EU’s justification for the phase-out of conventional light bulbs maintains that a reduction in the electricity consumed will not only lead to lower energy costs for private households and industrial consumers, but at the same time lead to a decrease in greenhouse gas emissions. This article discusses possible reasons for the slow market diffusion of energy-saving lamps and shows that the investment in energy-efficient lamps does not necessarily lead to significant cost reductions in every case. Drawing on some illustrative examples, we demonstrate that the use of cheaper incandescent bulbs instead of energy-saving lamps can be economically rational in cases of rather low usage times, in which the higher initial purchasing price might only pay off after very long time spans. Furthermore, due to the coexistence with the Emissions Trading Scheme (ETS), this regulation will not lead to any additional reduction of carbon emissions exceeding the amount caused by the ETS. We thus conclude that the general ban of incandescent light bulbs is inappropriate and should be abolished by the Commission.