Stability and Segregation in Group Formation

This paper presents a model of group formation based on the assumption that individuals prefer to associate with people similar to them. It is shown that, in general, if the number of groups that can be formed is bounded, then a stable partition of the society into groups may not exist. (A partition is defined as stable if none of the individuals would prefer be in a different group than the one he is in.) However, if individuals' characteristics are one-dimensional, then a stable partition always exists. We give sufficient conditions for stable partitions to be segregating (in the sense that, for example, low-characteristic individuals are in one group and high-characteristic ones are in another) and Pareto efficient. In addition, we propose a dynamic model of individual myopic behavior describing the evolution of group formation to an eventual stable, segregating, and Pareto efficient partition. Journal of Economic Literature Classification Numbers: C72, H41.     

ARAB-ISRAELI POTENTIAL TRADE: THE ROLE OF INPUT SHARING

In this article we sought to develop a methodology for estimating the level and composition of potential trade between Israel and its Arab neighbors. The need for such a methodology derives from the fact that the existing trade of these countries with the rest of the world constitutes an insufficient basis for predicting bilateral trade patterns between them. Trade based on input sharing can be an important source of ''new trade'' that is, trade that is not necessarily related to goods and services currently traded by the countries in question. New trade based on input sharing pertains to the imports by Arab countries of inputs in which Israel has a proven comparative advantage, and to imports by Israel of inputs produced in Arab countries in which the latter have a proven comparative advantage. It stands to reason that branches characterized by comparative advantage in the exporting country can improve the competitive position of the import ing country, when incorporated in the latter's final products. The analysis confirms that in agricultural produce, food products, and certain sub-branches of the textiles and clothing industry, Jordan, Syria, and Egypt all appear to be potential suppliers to Israel. Inter alia, the results show that the Israeli import potential of inputs from Jordan appears to be both larger and more evenly distributed among the different branches than the import potential from Syria and even from Egypt. This finding does not accord with expectations in view of the fact that Jordan has a smaller population and a lower gross domestic product than either Egypt or Syria. Jordan stands out in that its construction industry, including ceramic products, nonmetallic minerals, and structural metals, are also potential suppliers. The methodology developed in this article specifically concerns potential trade between Israel and its Arab neighbors. It can be usefully employed in other situations where trade between pairs of countries is either nonexistent or severely distorted by political or other factors. Examples which come to mind include trade between countries which in the past belonged to the Soviet bloc, or trade between these countries and the rest of the world. In such cases it is improper to base one's trade predictions on the countries' existing trading patterns. New trade, which can be very substantial, and which may have a very different composition from current trade of the parties concerned, must be added to the equation. The methodology demonstrated in this article can be easily adapted for this purpose.     

A Note on Farmers' Retirement and Succession Considerations: Evidence from a Household Survey

Retirement and succession considerations of family farm operators in Maryland are considered in this paper. Retirement decisions are found to be mainly determined by personal considerations, and only secondary importance is given to succession considerations. However, the relative importance of succession considerations is positively related to the importance of the farm enterprise relative to other income-generating activities of the family. The conclusion is that retirement and succession decisions in family farms are not separable.     

Sales demands on securities brokers

Measurement and prediction of salesmen's performance are perennial interests of marketing researchers [1, 5, 6]. The question of the criteria used to evaluate salesmen and the relationship between these criteria and the salesmen's career cycle, however, has yet to be systematically analyzed [4, 10]. The salesman's role includes several tasks, some of which impose conflicting demands upon him. This article explores the implications of conflicting demands on the performance of the role of a salesman, and considers their affect on his career path.     

Farmers' time allocation between farm work and off-farm work and the importance of unobserved group effects: evidence from Israeli cooperatives

Agricultural cooperatives differ in many attributes which affect members' farm and off-farm earnings in different ways. As a result, time allocation patterns between farm work and off-farm work will vary significantly across cooperatives. Participation equations in farm work and off-farm work of farmers who are members of Israeli moshavim are estimated jointly, including a cooperative-specific factor in each equation. The fixed effects are found to be significant and important, but can be only partly explained by observed cooperative attributes. This provides another support to the Monte Carlo results of Borjas and Sueyoshi, that controlling for group effects is superior to alternative models. The results also imply that unobserved factors have considerable effects on farmers' time allocation, and hence should be controlled for whenever possible.     

Efficient Sorting in a Dynamic Adverse-Selection Model

We discuss a class of markets for durable goods where efficiency (or approximate efficiency) is obtained despite the presence of information asymmetries. In the model, the number of times a good has changed hands (the vintage of the good) is an accurate signal of its quality, each consumer self-selects into obtaining the vintage that the social planner would have assigned to her, and consumers' equilibrium trading behaviour in secondary markets is not subject to adverse selection. We show that producers have the incentive to choose contracts that lead to the efficient allocation, and to supply the efficient output. We also provide a contrast between leasing contracts, resale contracts, and different kinds of rental contracts. Resale contracts do not lead to the efficient allocation. A specific kind of rental contract provides the appropriate incentives to consumers.     

Local dimensions of global investment: Israeli property firms in Central Europe

Transnational property investment has increased dramatically during the last few decades. This process has been traced by literature focusing on capital‐rich countries (e.g. the United States, Canada, Japan) and on major world cities. More recently, in tandem with the collapse of the Berlin Wall, the geographical horizons of foreign investors have broadened to include former socialist countries. This article examines the recent surge in Israeli property investment in Central Europe and argues that global flows depend on relationships between place of origin and destination. Mobility of property capital creates networks that connect cities on a transnational basis. Les investissements immobiliers transnationaux ont énormément augmenté au cours des dernières décennies. Cet aspect a été suivi et documenté surtout pour les pays riches en capitaux (Etats‐Unis, Canada, Japon, par exemple) et les grandes villes mondiales. Plus récemment, parallèlement à la chute du Mur de Berlin, les horizons géographiques des investisseurs étrangers se sont élargis aux anciens pays socialistes. L'article examine l'afflux récent d'investissements immobiliers israéliens en Europe centrale, affirmant que les flux planétaires dépendent des relations entre les lieux d'origine et de destination. La mobilité des capitaux immobiliers crée des réseaux qui relient des villes au plan transnational.     

Auctions with a random number of identical bidders

We examine and compare the (normally, mixed) symmetric equilibrium bidding strategies in first-price and all-pay common value multiple item auctions with a random number of bidders, who only seek one of the identical items and have the same budget.     

Do family farms really converge to a uniform size? The role of unobserved farm efficiency*

We analyse the growth of family farms in Israeli cooperative villages during a period of economic turmoil. We use instrumental variables to account for the endogeneity of initial farm size, and correct for selectivity as a result of farm survival. We also include a technical efficiency index, derived from the estimation of a stochastic frontier production model, as an explanatory variable. Our aim is to check whether ignoring efficiency could have been the reason for convergence results obtained elsewhere in the literature. We found that technical efficiency is an important determinant of farm growth, and that not controlling for technical efficiency could seriously bias the results. In particular, larger farms are found to grow faster over time, while without controlling for technical efficiency the farm growth process seemed to be independent of initial farm size. The increasing polarisation of farm sizes in Israel has ramifications for the inefficiencies induced by the historical quota system, for the political power of the farm sector and for the social stability of farm communities.     

A Test of the Advertising Life-cycle Theory

New evidence is presented that lends support to Steiner's advertising life-cycle theory.