The evolution of exchange

Stochastic stability is applied to the problem of exchange. We analyze the stochastic stability of two dynamic trading processes in a simple housing market. In both models, traders meet in pairs at random and exchange their houses when trade is mutually beneficial, but occasionally they make mistakes. The models differ in the probability of mistakes. When all mistakes are equally likely, the set of stochastically stable allocations contains the set of efficient allocations. When more serious mistakes are less likely, the stochastically stable states are those allocations, always efficient, with the lowest envy level.     

Inequality Stagnation in Latin America in the Aftermath of the Global Financial Crisis

Between 2003 and 2010, Latin America experienced a solid record of economic growth, coupled with a notable reduction in income inequality. The regional Gini coefficient fell from 0.556 to 0.521 and declined in all 15 out of 17 countries in which frequent data are available. However, previous studies have warned about problems in the sustainability of the decline in income inequality and this study presents evidence of stagnation on this front between 2010 and 2013. The results are robust to various measures of income inequality, but differ across the region. While largely attributable to the recovery from the global financial crisis in Mexico and some countries in Central America, the results are also supported by the demonstrated slowdown in inequality reduction in other countries, including Brazil, Ecuador and Bolivia.     

INSTITUTIONS,ECONOMICS AND THE DEVELOPMENT QUEST

Institutions crucial for the analysis of how agents deal with uncertainty have been gaining increasing relevance on the economic research agenda. In this paper, we analyze the institutional literature aiming to explain why this perspective obtains better results than others in development economics. In particular, we stress the relevance of New Institutional Economics as an adequate framework for a broad understanding of development issues.     

Countercyclical markups and news-driven business cycles

The standard one-sector real business cycle model is unable to generate expectations-driven fluctuations. The addition of countercyclical markups and modest investment adjustment costs offers an easy fix to this conundrum. The simulated model replicates the regular features of U.S. aggregate fluctuations.     

Competitive advantages of the mobile phone operators in the Asia Pacific region: analysis from the strategic groups approach

This paper studies the existence of strategic groups in the mobile phone industry. The analysis has been conducted in an international context characterised by major differences in regional wireless infrastructures, types of customers, government regulations and economic development, such as the Asia Pacific region. The purpose is to find the competitive advantages of the groups identified and the strategies that have led them to achieve them. The empirical research was carried out using data from a sample of the 28 largest firms of the industry in 2013. The results reveal the existence of three different strategic groups pursuing different strategies. The main determinant variables of the competitive advantages are price and size. The differences in environmental characteristics in this industry might explain the formation of strategic groups.     

A Genetic Algorithm Approach to Farm Investment

A farm portfolio model is specified with two risky enterprises and a risk-free asset which may be held short or long by the farmer. The model is solved numerically using a genetic algorithm. It is shown that the assumption of competitive adaptation leads to a violation of normative efficiency. Those who survive are not the most efficient in a normative sense.     

Who actually goes to university?

Access to higher education (HE) is a major policy issue in England and Wales. There is concern that children from lower socio-economic backgrounds are far less likely to get a degree. We analyse the changing association between socio-economic background and the likelihood of going to university, using data from the Youth Cohort Study (YCS), spanning the period 1994–2000. We find evidence of substantial social class inequality in HE participation but conclude that this is largely due to education inequalities that emerge earlier in the education system. Conditional on GCSE and A level performance, we find no additional role for socio-economic background or parental education in determining pupils’ likelihood of going to university.     

Bioeconomic modeling for control of weeds in natural environments

When a weed invasion is first discovered a decision has to be made on whether to attempt to eradicate it, contain it or do nothing. Ideally, these decisions should be based on a complete benefit-cost analysis, but this is often not possible. A partial analysis, combining knowledge of the rate of spread, seedbank longevity, costs of control and techniques of economic analysis, can assist in making a good decision. This paper presents a decision model to determine when immediate eradication of a weed should be attempted, or more generally whether weed control should be attempted at all. The technique is based on identifying two ‘switching points’: the invasion size at which it is no longer optimal to attempt eradication but where containment may be an option; and the invasion size at which it becomes optimal to apply no form of control at all. The model is applied to a woody perennial weed in a natural environment. The results show that seedbank longevity is the main constraint on the maximum eradicable area and spread rate is the main constraint on the maximum containment area. Stochastic simulations are undertaken to derive probability distributions of costs which are than used to evaluate the effect of budget constraints on areas that can be eradicated. We find that, in the absence of a budget constraint, it may be desirable to eradicate invasions from areas as large as 8000 ha, but when budget constraints typical of those faced by agencies in Australia are introduced, feasible eradicable areas are less than 1000 ha.