“Upping the ante”: how to design efficient auctions with entry?

Of primary importance in auction design is the set of strategies available to the seller at the auction stage. We first formalize hold‐up regarding entry costs that preys on second‐price auctions when the seller may engage in a costly shill‐bidding activity. We derive the optimal reserve and show how shill bidding can make posted prices outperforming auctions. Second, we advocate for a new regulation where shills would be banned but with the possibility of canceling sales ex post, which offers some valuable flexibility: the English auction with jump bids implements, then, the first best in general environments.     

The Lorenz curve as an archetype: A historico-epistemological study

In 1905, Max O. Lorenz suggested a simple method of measuring the concentration of wealth, based on the visual representation of income distribution. The Lorenz curve is now very popular and can be considered as canonical. However, the path leading from Lorenz's original work to contemporary interpretations of his graph has been anything but simple. We thus propose to trace the origin, the evolution and the various subsequent interpretations of the Lorenz graph. We argue that the original Lorenz curve has been shifted in epistemological status as well as inverted in graphic appearance.     

A family production overlapping generations economy

This paper provides a theoretical analysis of an overlapping generations economy in which production decisions and input–output allocations are all carried out at the family level. I consider a single class of output allocation schemes and various degrees of knowledge about the production technology. Under complete knowledge, I show that a family organizational structure in which everyone receives his marginal contribution to output, invests less in physical capital than under a perfectly competitive equilibrium environment. Under incomplete knowledge, I analyze and compare how beliefs about the input–output relationship affect the physical capital accumulation dynamics and the long-run standards of living.     

Leverage and Corporate Performance: Does Institutional Environment Matter?

This paper aims to provide new empirical evidence on a major corporate governance issue: the relationship between leverage and corporate performance. We propose two major findings to this literature by applying frontier efficiency techniques to measure performance of medium-sized firms from seven European countries. A maximum likelihood procedure is used to estimate a stochastic cost frontier and the parameters of an equation relating cost inefficiency to leverage simultaneously. We find that the relationship between leverage and corporate performance varies across countries, which tends to support the influence of institutional factors on this link. We then suggest the influence of the efficiency of the legal system and in a lesser degree of the access to bank credit on the relationship between leverage and corporate performance.      

Is partial privatization of universities a solution for higher education?

This paper accounts simply for the link between higher education and the productive economy through educated workers. We study a model of vertical successive monopolies where students/workers acquire qualification from a University then “sell” skilled labor to a monopoly which itself sells its final product to consumers, linking through quality the education sector to the labor and output markets. We determine the optimal share the State should keep in the University to compensate for the market imperfections, while taking into account the inefficiencies of public management. The resulting partially privatized University fixes the tuition fees so as to maximize a weighted sum of profits and social welfare. We derive the optimal public share under the hypothesis that the State may subsidize the tuition fees/University losses, then under the constraint that the University should make a nonnegative profit. We prove that in both cases, the State should keep a substantial share (higher under the first hypothesis) in the University, unless public management is too inefficient in which case the University's management should be completely private.     

Natural oligopolies with exogenous sunk costs: A non-Suttonian result

In a spatial competition model with exogenous fixed costs and divisible goods, we obtain non-Suttonian results. When the economy is infinitely replicated, the number of firms does go to infinity but, as consumers’ income goes to infinity, the equilibrium number of firms tends toward a finite value. This occurs because the global demand to each firm becomes in the limit infinitely sensitive to price differentials since they give then rise to infinitely large differences in purchase expenditure.     

How well do classical credit risk pricing models fit swap transaction data?

Currency and interest rate swaps are subject to a complex, two-sided default risk. Several theoretical papers have recently addressed the problem of pricing this swap credit risk. We implement a recent credit risk pricing model in an attempt to evaluate one of the main lines of research in theoretical credit risk analysis. We compare the model's analytical results to actual transaction data thanks to a unique academic database on swap transaction data.     

Does competition influence bank failures?

There has been a notable debate in the banking literature on the impact of bank competition on financial stability. The aim of this article is to provide the first investigation of the role of bank competition on the occurrence of bank failures. We analyse this issue on a large sample of Russian banks for the period 2001–2007, as the Russian banking industry is a unique example of an emerging market which has undergone a large number of bank failures during the last decade. Our findings support the view that tighter bank competition enhances the occurrence of bank failures. Thus, measures that increase bank competition could undermine financial stability.