Entry and market share success of new brands in concentrated markets

Two hypotheses related to the concentration/entry issue were tested. Unlike previous studies that have approached the issue from the standpoint of the number of firms that enter concentrated versus relatively nonconcentrated industries, the concentration/entry issue was studied at the brand level. Specifically, two hypotheses were tested: 1) an inverse relationship exists between brand concentration and number of brand entrants, and 2) an inverse relationship exists between brand concentration and success of brand entrants. Whereas the results did reveal the existence of an inverse relationship between concentration and number of entrants, it was extremely weak. The second hypothesis that the market share success of new brand entrants is inversely related to brand concentration was not supported by test results.     

Wages and the Composition of Experience

This paper provides evidence on the relation between alternative forms of experience and wages using data drawn from the National Longitudinal Survey of Youth. Prior labor market experience is segmented into mutually exclusive categories based on industry and occupation to examine how subsequent employers value skills acquired on previous jobs. We find that most forms of experience, including tenure at the current job, provide a comparable return. However, the wage return to prior experience in a different occupation and industry is significantly lower. Such “career changes” constitute over half of all prior work experience among workers in their mid-30s.     

Spanning and efficiency in an economy with collective and individual risks

Much of the literature on incomplete markets emphasizes the study of conditions under which security market returns, either with or without derivative securities, span some exogenous set of cash flows. It is argued here that the only set of exogenous cash flows to which this literature is applicable are those that are contingent on existing assets' returns. The reason for this is that cash flows created by firms' production decisions are likely to be influenced by individual (unique) risk that is not incorporated into the market's existing information structure. The results of this article show that, if individual risk is pervasive, efficient allocation is likely to be achieved only in a large asset market which allows for the diversification of individual risk. The conditions for such diversification are derived and their implications discussed.     

Some results on analytic optimal control solution of a simple rational expectations model

In this note, we correct a technical error in a well-known stabilization analysis in the context of a simple macroeconomic model, formulated as an optimal control problem. This error originated in a slip in an unpublished but widely circulated paper by D.A. Livesey, suggesting a procedure for obtaining a solution to a class of optimal control problems frequently encountered in a stabilization literature. We then propose an ad hoc solution method which makes clear the intuition of the solution to the particular model to which the Livesey method was applied, and of the larger class of models to which it belongs. Our solution is so formulated that the contrast between it and the Livesey result is made transparent.     

Optimal monetary-fiscal stabilizers under an indexed versus nonindexed tax structure

This article analyzes the optimal coordination of automatic monetary and fiscal stabilization parameters in a rational expectations context. Optimal joint settings for the average level of tax rates, the progressivity of the tax structure, and the response of the money stock to the current level of the interest rate are derived to minimize the variance of output and price.     

Airway Industrial Partners: A Case Study for Seller Financing

This study provides a survey of the housing and mortgage market policies applied between 1976 and 1994 in Chile.