Search results for "microeconomics"
showing 10 items of 442 documents
Entry and exit in a vertically differentiated industry
2011
This paper presents a duopoly model of firm rivalry in a vertically differentiated industry when market dynamics is explicitly accounted for. It shows how the interplay between demand (degree of product differentiation, demand elasticity) and cost (fixed and quality costs) factors determine firms’ relative strength when quality is irreversible. The main strategic choices are product quality, price and the timing of entry and exit. Further, firms incur sunk quality costs at time of entry and operating fixed costs of maintaining quality. Although the low quality firm may outlast its rival in the declining phase, both firms wish to be the “quality leader”.
Price discrimination and market power in export markets: The case of the ceramic tile industry.
2005
This paper combines the pricing-to-market equation and the residual demand elasticity equation to measure the extent of competition in the export markets of ceramic tiles, which has been dominated by Italian and Spanish producers since the late eighties. The findings show that the tile exporters enjoyed substantial market power over the period 1988-1998, and limited evidence that the export market has become more competitive over time.
Group Buying of Competing Retailers
2010
Under group buying, quantity discounts are offered based on the buyers' aggregated purchasing quantity, instead of individual quantities. As the price decreases with the total quantity, buyers receive lower prices than they otherwise would be able to obtain individually. Previous studies on group buying focus on the benefit buyers receive in reduced acquisition costs or enhanced bargaining power. In this paper, we show that buyers can instead get hurt from such cooperation. Specifically, we consider a two-level distribution channel with a single manufacturer and two retailers who compete for end customers. We show that, under linear demand curves, group buying is always preferable for symme…
Intergovernmental Fiscal Relations: The Efficiency Effect of Taxes, Transfers, and Fiscal Illusion
2012
The purpose of this paper is to evaluate the efficiency cost of transfers. To this end, we develop a model of individual demand decisions about the provision of a regional public good that encompasses a continuum of tax–transfer scenarios to finance regional public expenditure. We assume that individuals have identical quasi-linear preferences defined over private consumption and the regional public good, that endowment income varies between individuals and regions, and that regions have different predetermined sizes. In an economy-wide resource constrained framework we show that, despite its simplicity, this model is capable of discriminating the efficiency properties of the different scen…
Schelling-Voter Model: An Application to Language Competition
2013
In this work we analyze the language competition problem by using an interacting agent-based model which interpolates the classical Schelling and Voter models. Briefly, an agent may change its place of residence or his language when he is surrounded by more individuals of the other kind than the ones he can tolerate. We analyze this dynamic process in terms of the free space to move in, the pressure to change the language, and the propensity to change location. We identify the different regimes and the relationship with the language competition problem. Fil: Caridi, Délida Inés. Universidad de Buenos Aires. Facultad de Ciencias Exactas y Naturales. Instituto de Cálculo; Argentina. Consejo N…
Gains from Trade and Efficiency under Monopolistic Competition: A Variable Elasticity Case
2006
We present a general equilibrium model of monopolistic competition with variable demand elasticities and investigate the impact of free trade on welfare and efficiency. First, contrary to the constant elasticity case, in which all gains from trade are due to increasing product diversity, our model features gains from pro-competitive effects. Second, we prove that the market outcome is not efficient because too many firms operate at an inefficiently small scale. Last, we illustrate that free trade raises efficiency by reducing the gap between the equilibrium utility and the optimal utility.
A bargaining model of Farrell inefficiency
1998
Abstract An enormous number of empirical papers have estimated technical efficiency, the distance of firms inside a frontier, following the model of Farrell (Farrell, 1957. The measurement of productive efficiency. Journal of the Royal Statistical Society Series A 120 (3), 253–290). We propose a theory that explains the distance these empirical papers seek to measure. The theory is based on the idea that workers can bargain low `effort' (high crew sizes etc.) if they and the firm have some monopoly power. We provide simple theoretical expressions for the empirical measures of technical and allocative efficiency and compare them to those in the statistical literature. We also consider the re…
Public provision versus private provision of industrial land: a hedonic approach
2005
Abstract This study examines the factors that explain the differences observed between the industrial land prices offered by the public sector and those offered by the private sector by means of estimating three hedonic pricing models. The results obtained show that location, defined as the distance to a highway, the distance to the city business district and the distance to the capital of the province, have an important impact on industrial land value. However, this impact is greater when private developers provide the land. Other variables considered, such as who is behind the provision of the industrial land, have an important impact on sale prices.
Are decisions in a real choice experiment consistent with reservation prices elicited with BDM 'auction'? The case of French baguettes
2014
Abstract The aim of this study was to compare consumer choices observed in a real choice experiment and their reservation prices elicited with the BDM mechanism in order to assess the rationality of participant behaviors. One hundred and seventy-seven participants tested four French baguettes in each task. For the real choice experiment, participants were faced with 17 scenarios (17 × 4 baguette-price combinations). In each method, participants could select a “no purchase” option. Comparing choices and reservation prices made it possible to assess the rationality of participant behaviors. From a strict economic standpoint, 50% of observed choices were fully rational. When one baguette was a…
A Novel Operating Strategy for Customer-Side Energy Storages in Presence of Dynamic Electricity Prices
2015
In the wholesale energy market, electricity prices are determined by the balance between supply and demand. Normally, customers are not exposed to these variations but pay a constant electricity price. In an attempt to reduce demand peaks, several utilities are moving from a conventional fixed-rate pricing scheme to a new market-based model, based on time-of-use or real-time pricing, able to closely reflect the wholesale energy price. Electricity customers can thus take profit from the installation of storage systems, shifting their energy consumption from on-peak to off-peak periods. This paper presents a novel charging strategy to manage customer storage systems in presence of hourly elec…