The conservative equal costs rule, the serial cost sharing rule and the pivotal mechanism: asymptotic welfare loss comparisons for the case of an excludable public project

We examine the asymptotic behavior of two strategyproof mechanisms discussed by Moulin for public goods – the conservative equal costs rule (CER) and the serial cost sharing rule (SCSR) – and compare their performance to that of the pivotal mechanism (PM) from the Clarke–Groves family. Allowing the individuals’ valuations for an excludable public project to be random variables, we show under very general assumptions that expected welfare loss generated by the CER, as the size of the population increases, becomes arbitrarily large. However, all moments of the SCSR’s random welfare loss asymptotically converge to zero. The PM does better than the SCSR, with its welfare loss converging even more rapidly to zero.     

A nonparametric analysis of multi-product oligopolies

We develop revealed preference tests for models of multi-product oligopoly, building on the work in Carvajal et al. (Econometrica 81(6):2351–2379, 2013). We analyze a Cournot model with multiple goods and show that it has testable restrictions when at least one good is produced by two or more firms. We also develop a revealed preference test for Bertrand oligopoly in a setting where each firm produces a single differentiated good, and these goods are potentially substitutes for each other. Our tests require qualitative assumptions on the shape of the demand curves and (in the Bertrand case) their evolution across observations, but they do not rely on the estimation of market demand.     

Regulation,Minimum Wage and Informality: Introduction to Symposium

Are markets in developing and transition economies over‐regulated or under‐regulated? This is a perennial question in the development discourse, but one for which answers appear to come more from preset ideology than from context‐specific analysis and evidence. These issues become even more pressing when the debate turns to the links between regulation, deregulation and inequality. The recent experience of rising inequality in many countries has also brought to the fore predictable policy positions. A key aspect of labor regulation in developing countries, and one becoming more prominent in the era of rising inequality, is the minimum wage. The range of issues around regulation, minimum wage and informality was addressed by papers presented to a conference held in New Delhi on December 17–18, 2014. The conference was co‐sponsored by the World Bank, UK Department for International Development, Cornell University and Columbia University. The organizers of the conference were Kaushik Basu, Stefan Dercon, Ravi Kanbur and Jan Svejnar. A selection of papers from the conference which passed the usual review procedures of the Review of Development Economics, and a further selection of papers from those submitted to the journal, form this symposium.     

Observability and Sorting in a Market for Names

Can firm names be tradeable assets when changes in name ownership are observable? Earlier literature focuses on trading of firm names when trading is not observable to the consumer. Yet, casual empiricism suggests that shifts in name ownership are often publicly known. This paper studies how firm names can be traded even under full observability. In equilibrium, even when consumers see a reputed name being divested they continue to trust it and so, these names are tradeable. I further demonstrate an appealing “sorting” property of these equilibria. Competent firms can separate themselves by buying valuable names, and incompetent firms can give themselves away by using worthless names.     

Consumer perceptions of product variants positioned on atypical attributes

How do consumers perceive new product variants that are positioned on atypical attributes? The authors investigate the joint effects of three factors? brand familiarity, retail shelf display, and consumer goal orientation. The study focuses on snack foods positioned on the atypical attribute of low fat. There are three main findings. First, although high (vs. low) brand familiarity causes relatively unfavorable perceptions on the positioning attribute, it also creates sufficiently favorable perceptions on another determinant attribute, product taste, resulting in a net positive effect for brand equity on purchase likelihood. Second, goal-based versus taxonomic shelf display (i.e., placement with health foods vs. regular snack foods) results in relatively negative perceptions on the positioning attribute, yet more favorable buying intentions. Finally, more (vs. less) health-oriented consumers rate such product variants less favorably on fat content but more favorably on product taste; the former segment is also more likely to buy such product variants.     

A Tale of Two Indices: The Story of the NASDAQ and the SENSEX

Using the daily data on SENSEX and NASDAQ from January to October of 2000, the paper attempts to find out to what extent the “news” on NASDAQ helps price formation at the beginning and at the end of a trading day at the Indian bourses. The possible impact of NASDAQ on SENSEX is analyzed through OLS equations under cointegration and error correction framework. The results indicate that the “news” on NASDAQ plays an important role in price formation at the beginning of a trading day at the Indian bourses. However, as the impact of NASDAQ fades a lot during the trading hours when the Indian market remains open and the US market remains closed, the closing figures at SENSEX could not be predicted well with this information.

     

Maximal surplus from the pivotal mechanism: a closed form solution

The paper derives a closed form solution for the maximal surplus generated by the pivotal mechanism in the case of a binary public good. The formula may be used to compare the pivotal mechanism to other mechanisms. An illustration is provided to demonstrate how such a comparison may be made. Received: 30 April 1997 / Accepted: 16 June 1998     

Adverse influence of brand commitment on consideration of and preference for competing brands

This research investigates if commitment towards a target brand limits set size and preference towards competing brands in memory‐based consideration sets across three situations: (1) situations in which the situational goal matches the benefit offered by the target brand; (2) situations in which the situational goal matches the benefit offered by a competitor brand; and (3) situations in which a new benefit is introduced in the category for the first time. Findings confirm the set size and preference biases of committed consumers against a competitor brand in the first two situations. However, in the third situation, committed consumers favorably or unfavorably view the competitor brand depending on whether it is the first brand to introduce the new benefit in the category. © 2007 Wiley Periodicals, Inc.