Jean J. Gabszewicz
- Published in print:
- 2000
- Published Online:
- November 2003
- ISBN:
- 9780198233411
- eISBN:
- 9780191596292
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198233418.001.0001
- Subject:
- Economics and Finance, Microeconomics
Perfect competition provides a model of a frictionless economy in which economic agents behave independently of each other, abandoning to the market the task of coordinating their individual ...
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Perfect competition provides a model of a frictionless economy in which economic agents behave independently of each other, abandoning to the market the task of coordinating their individual decisions. This model is extensively studied in traditional price theory textbooks.Imperfect competition is the paradigm that develops when, on the contrary, economic agents interact in a conscious manner, which is necessarily the case when competition takes place ‘among the few’. In this system, agents act strategically, taking into account the impact of their own decisions on competitors ‘behaviour and on the price mechanism. Such situations commonly arise when firms differentiate their products, erect strategic entry barriers, or exploit the imperfect information of their customers about the price or characteristics of their product.This book explores the theoretical richness of these economic contexts, using some basic concepts of game theory. The four assumptions underlying the paradigm of perfect competition (no barriers to entry, large number of agents, product homogeneity, and perfect information) constitute the natural departure points of the theories of imperfect competition: whenever at least one of these assumptions is violated, imperfect competition is present. The framework of the book is organized around the four corresponding themes: the role of collusion and entry barriers in the degree of market competition (Ch. 3), product differentiation (Ch. 4) and the information of agents as an instrument of competition (Ch. 5). Finally, Ch. 6 illustrates the possibility of extending the theory to a general equilibrium framework.Less
Perfect competition provides a model of a frictionless economy in which economic agents behave independently of each other, abandoning to the market the task of coordinating their individual decisions. This model is extensively studied in traditional price theory textbooks.
Imperfect competition is the paradigm that develops when, on the contrary, economic agents interact in a conscious manner, which is necessarily the case when competition takes place ‘among the few’. In this system, agents act strategically, taking into account the impact of their own decisions on competitors ‘behaviour and on the price mechanism. Such situations commonly arise when firms differentiate their products, erect strategic entry barriers, or exploit the imperfect information of their customers about the price or characteristics of their product.
This book explores the theoretical richness of these economic contexts, using some basic concepts of game theory. The four assumptions underlying the paradigm of perfect competition (no barriers to entry, large number of agents, product homogeneity, and perfect information) constitute the natural departure points of the theories of imperfect competition: whenever at least one of these assumptions is violated, imperfect competition is present. The framework of the book is organized around the four corresponding themes: the role of collusion and entry barriers in the degree of market competition (Ch. 3), product differentiation (Ch. 4) and the information of agents as an instrument of competition (Ch. 5). Finally, Ch. 6 illustrates the possibility of extending the theory to a general equilibrium framework.
Alessandra Giorgi
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199571895
- eISBN:
- 9780191722073
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199571895.001.0001
- Subject:
- Linguistics, Semantics and Pragmatics, Syntax and Morphology
This book considers the syntax of the left periphery of clauses in relation to the extra‐sentential context. The prevailing point of view, in the literature in this field is that the external context ...
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This book considers the syntax of the left periphery of clauses in relation to the extra‐sentential context. The prevailing point of view, in the literature in this field is that the external context does not intervene at all in the syntax of the sentence, and that the interaction between sentence and context takes place post‐syntactically. This monograph challenges this view and proposes that reference to indexicality is syntactically encoded in the left‐most position of the clause, where the speaker's temporal and spatial location is represented. To support this hypothesis, it analyses various kinds of temporal dependencies in embedded clauses, such as indicative versus subjunctive, and proposes a new analysis of the imperfect and the future‐in‐the‐past. The book also compares languages such as Italian and English with languages which have different properties of temporal interpretation, such as Chinese. Finally, analysis of the literary style known as Free Indirect Discourse also supports the hypothesis, showing that it may have a wide range of consequences.Less
This book considers the syntax of the left periphery of clauses in relation to the extra‐sentential context. The prevailing point of view, in the literature in this field is that the external context does not intervene at all in the syntax of the sentence, and that the interaction between sentence and context takes place post‐syntactically. This monograph challenges this view and proposes that reference to indexicality is syntactically encoded in the left‐most position of the clause, where the speaker's temporal and spatial location is represented. To support this hypothesis, it analyses various kinds of temporal dependencies in embedded clauses, such as indicative versus subjunctive, and proposes a new analysis of the imperfect and the future‐in‐the‐past. The book also compares languages such as Italian and English with languages which have different properties of temporal interpretation, such as Chinese. Finally, analysis of the literary style known as Free Indirect Discourse also supports the hypothesis, showing that it may have a wide range of consequences.
George J. Mailath and Larry Samuelson
- Published in print:
- 2006
- Published Online:
- January 2007
- ISBN:
- 9780195300796
- eISBN:
- 9780199783700
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195300796.003.0007
- Subject:
- Economics and Finance, Behavioural Economics
This chapter provides the basic technical tools for working with games of imperfect public monitoring, with games of perfect monitoring as a special case. It introduces the central notions of a ...
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This chapter provides the basic technical tools for working with games of imperfect public monitoring, with games of perfect monitoring as a special case. It introduces the central notions of a public strategy and perfect public equilibrium (PPE), and shows that PPE has a recursive structure. Readers particularly interested in imperfect public monitoring can move straight from Chapter 2 to this chapter. This chapter develops and illustrates the ideas of decomposability, enforceability, and self-generation, the basic tools for working with games of incomplete information, as well as presenting the bang-bang theorem.Less
This chapter provides the basic technical tools for working with games of imperfect public monitoring, with games of perfect monitoring as a special case. It introduces the central notions of a public strategy and perfect public equilibrium (PPE), and shows that PPE has a recursive structure. Readers particularly interested in imperfect public monitoring can move straight from Chapter 2 to this chapter. This chapter develops and illustrates the ideas of decomposability, enforceability, and self-generation, the basic tools for working with games of incomplete information, as well as presenting the bang-bang theorem.
George J. Mailath and Larry Samuelson
- Published in print:
- 2006
- Published Online:
- January 2007
- ISBN:
- 9780195300796
- eISBN:
- 9780199783700
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195300796.003.0011
- Subject:
- Economics and Finance, Behavioural Economics
This chapter illustrates how the theory of repeated games with imperfect public monitoring can be used in economic applications. It examines collusion in oligopoly with imperfectly monitored demand, ...
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This chapter illustrates how the theory of repeated games with imperfect public monitoring can be used in economic applications. It examines collusion in oligopoly with imperfectly monitored demand, oligopoly games with privately observed costs and hence adverse selection, risk sharing and insurance, and repeated principal-agent problems. The latter example also illustrates review strategies.Less
This chapter illustrates how the theory of repeated games with imperfect public monitoring can be used in economic applications. It examines collusion in oligopoly with imperfectly monitored demand, oligopoly games with privately observed costs and hence adverse selection, risk sharing and insurance, and repeated principal-agent problems. The latter example also illustrates review strategies.
Kaivan Munshi
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780195305197
- eISBN:
- 9780199783519
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195305191.003.0026
- Subject:
- Economics and Finance, Development, Growth, and Environmental
The pervasiveness and persistence of nonmarket institutions in developing economies demand an explanation from economists. This essay describes what has been learned about these institutions: why ...
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The pervasiveness and persistence of nonmarket institutions in developing economies demand an explanation from economists. This essay describes what has been learned about these institutions: why they emerge, why they persist, the inefficiencies that are associated with their presence, and how the presence of these institutions might affect the design of development policy. These institutions serve a useful purpose when markets function imperfectly. At the same time, the restrictions on individual behavior within these institutions may leave the community ill equipped to respond to a changing world. This, in turn, suggests a role for policy. How external interventions can help move the community out of its traditional equilibrium when the economic environment changes is discussed.Less
The pervasiveness and persistence of nonmarket institutions in developing economies demand an explanation from economists. This essay describes what has been learned about these institutions: why they emerge, why they persist, the inefficiencies that are associated with their presence, and how the presence of these institutions might affect the design of development policy. These institutions serve a useful purpose when markets function imperfectly. At the same time, the restrictions on individual behavior within these institutions may leave the community ill equipped to respond to a changing world. This, in turn, suggests a role for policy. How external interventions can help move the community out of its traditional equilibrium when the economic environment changes is discussed.
Joseph E. Stiglitz, José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199288144
- eISBN:
- 9780191603884
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199288143.003.0011
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Underlying the failure of CML was an overly simple model that assumed efficient and complete markets. There are, however, problems with externalities and weak or absent insurance markets, especially ...
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Underlying the failure of CML was an overly simple model that assumed efficient and complete markets. There are, however, problems with externalities and weak or absent insurance markets, especially in developing countries, that these models did not consider. This chapter focuses on major categories of ‘market failures’. It examines the direct externalities associated with capital flows, and looks at how capital market liberalization can exacerbate the problems posed by coordination failures and broader macroeconomic failures. It also looks at the effect of imperfect information on investor behavior and the market failures associated with capital markets. It concludes with a discussion of the major objectives of government intervention.Less
Underlying the failure of CML was an overly simple model that assumed efficient and complete markets. There are, however, problems with externalities and weak or absent insurance markets, especially in developing countries, that these models did not consider. This chapter focuses on major categories of ‘market failures’. It examines the direct externalities associated with capital flows, and looks at how capital market liberalization can exacerbate the problems posed by coordination failures and broader macroeconomic failures. It also looks at the effect of imperfect information on investor behavior and the market failures associated with capital markets. It concludes with a discussion of the major objectives of government intervention.
Robert N. Johnson
- Published in print:
- 2011
- Published Online:
- January 2012
- ISBN:
- 9780199599349
- eISBN:
- 9780191731556
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199599349.001.0001
- Subject:
- Philosophy, Moral Philosophy, History of Philosophy
Is there any moral obligation to improve oneself, to foster and develop various capacities in oneself? From a broadly Kantian point of view, Self-Improvement defends the view that there is such an ...
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Is there any moral obligation to improve oneself, to foster and develop various capacities in oneself? From a broadly Kantian point of view, Self-Improvement defends the view that there is such an obligation, and that it is an obligation that each person owes to him- or herself. The defence addresses a range of arguments philosophers have mobilized against this idea, such as it being impossible to owe anything to yourself, or the belief that an obligation to improve oneself is overly ‘moralistic’. It argues against Kantian universalization arguments for a duty of self-improvement, as well as arguments that bottom out in a supposed value humanity has, but defends arguments based on the notion that self- and other-respecting agents would, under the right circumstances, accept a requirement of self-improvement, and would leave it up to each to be the person to whom this duty is owed.Less
Is there any moral obligation to improve oneself, to foster and develop various capacities in oneself? From a broadly Kantian point of view, Self-Improvement defends the view that there is such an obligation, and that it is an obligation that each person owes to him- or herself. The defence addresses a range of arguments philosophers have mobilized against this idea, such as it being impossible to owe anything to yourself, or the belief that an obligation to improve oneself is overly ‘moralistic’. It argues against Kantian universalization arguments for a duty of self-improvement, as well as arguments that bottom out in a supposed value humanity has, but defends arguments based on the notion that self- and other-respecting agents would, under the right circumstances, accept a requirement of self-improvement, and would leave it up to each to be the person to whom this duty is owed.
Roman Frydman and Michael D. Goldberg
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691155234
- eISBN:
- 9781400846450
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691155234.003.0005
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines the imperfect knowledge imperative in modern macroeconomics and finance theory. It argues that the Rational Expectations Hypothesis (REH) has nothing to do with how even ...
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This chapter examines the imperfect knowledge imperative in modern macroeconomics and finance theory. It argues that the Rational Expectations Hypothesis (REH) has nothing to do with how even minimally reasonable profit-seeking individuals forecast the future in real-world markets. It attributes REH's insurmountable epistemological difficulties and widespread empirical problems to a single, overarching premise that underpins contemporary macroeconomics and finance theory: nonroutine change is unimportant for understanding outcomes. It also suggests that contemporary behavioral finance models rest on the same core premise as their REH-based counterparts. Finally, it introduces an alternative approach to modeling individual behavior and aggregate outcomes: Imperfect Knowledge Economics, which opens macroeconomics and finance models to nonroutine change and the imperfect knowledge that it engenders.Less
This chapter examines the imperfect knowledge imperative in modern macroeconomics and finance theory. It argues that the Rational Expectations Hypothesis (REH) has nothing to do with how even minimally reasonable profit-seeking individuals forecast the future in real-world markets. It attributes REH's insurmountable epistemological difficulties and widespread empirical problems to a single, overarching premise that underpins contemporary macroeconomics and finance theory: nonroutine change is unimportant for understanding outcomes. It also suggests that contemporary behavioral finance models rest on the same core premise as their REH-based counterparts. Finally, it introduces an alternative approach to modeling individual behavior and aggregate outcomes: Imperfect Knowledge Economics, which opens macroeconomics and finance models to nonroutine change and the imperfect knowledge that it engenders.
Ken Binmore
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780195300574
- eISBN:
- 9780199783748
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195300574.001.0001
- Subject:
- Economics and Finance, Microeconomics
This book provides an introduction to game theory that seeks to answer all three questions: what is game theory about? How do I apply game theory? Why is game theory right? The topics covered include ...
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This book provides an introduction to game theory that seeks to answer all three questions: what is game theory about? How do I apply game theory? Why is game theory right? The topics covered include utility theory, backward induction, minimax theory, imperfect competition, repeated games, Bayesian decision theory, refinements of Nash equilibrium, Harsanyi's theory of incomplete information, bargaining theory, applications to ethics, coalition formation, mechanism design, and auction theory. Topics such as bargaining and imperfect competition are covered in a great amount of detail.Less
This book provides an introduction to game theory that seeks to answer all three questions: what is game theory about? How do I apply game theory? Why is game theory right? The topics covered include utility theory, backward induction, minimax theory, imperfect competition, repeated games, Bayesian decision theory, refinements of Nash equilibrium, Harsanyi's theory of incomplete information, bargaining theory, applications to ethics, coalition formation, mechanism design, and auction theory. Topics such as bargaining and imperfect competition are covered in a great amount of detail.
Raymond Plant
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199281756
- eISBN:
- 9780191713040
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199281756.003.0013
- Subject:
- Political Science, Comparative Politics, Political Theory
This chapter focuses on the critique of rights when they extend beyond protecting negative liberty as set out in Chapter 5. First of all, if the idea of negative liberty is defective, then so too is ...
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This chapter focuses on the critique of rights when they extend beyond protecting negative liberty as set out in Chapter 5. First of all, if the idea of negative liberty is defective, then so too is a theory of rights, which limits role to the protection of such liberties. Building on the more comprehensive account of liberty set out in Chapter 10 it is argued that there is no justification for arguing that there is a categorical distinction to be drawn between negative rights to protect individuals from the coercion of others including the state and social and economic or positive rights. This claim does not depend solely upon the argument about freedom but is also based upon a critical analysis of other salient ideas which have been used to reject positive rights such as scarcity, the illusory nature of social justice, and the indefiniteness of corresponding obligations in respect of positive rights.Less
This chapter focuses on the critique of rights when they extend beyond protecting negative liberty as set out in Chapter 5. First of all, if the idea of negative liberty is defective, then so too is a theory of rights, which limits role to the protection of such liberties. Building on the more comprehensive account of liberty set out in Chapter 10 it is argued that there is no justification for arguing that there is a categorical distinction to be drawn between negative rights to protect individuals from the coercion of others including the state and social and economic or positive rights. This claim does not depend solely upon the argument about freedom but is also based upon a critical analysis of other salient ideas which have been used to reject positive rights such as scarcity, the illusory nature of social justice, and the indefiniteness of corresponding obligations in respect of positive rights.
Ken Binmore
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780195300574
- eISBN:
- 9780199783748
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195300574.003.0010
- Subject:
- Economics and Finance, Microeconomics
This chapter is an introduction to the theory of imperfectly competitive markets — a subject that was largely terra incognita before the advent of game theory. The models studied include those of ...
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This chapter is an introduction to the theory of imperfectly competitive markets — a subject that was largely terra incognita before the advent of game theory. The models studied include those of Cournot, Bertrand, and Stackelberg. An unusual feature is a discussion of the Bertrand-Edgeworth model, both with efficient and proportional rationing.Less
This chapter is an introduction to the theory of imperfectly competitive markets — a subject that was largely terra incognita before the advent of game theory. The models studied include those of Cournot, Bertrand, and Stackelberg. An unusual feature is a discussion of the Bertrand-Edgeworth model, both with efficient and proportional rationing.
Ken Binmore
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780195300574
- eISBN:
- 9780199783748
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195300574.003.0001
- Subject:
- Economics and Finance, Microeconomics
This chapter uses the Prisoner's Dilemma as the linking idea in an overview of many of the topics covered later in the book. The basic ideas are that of a dominated strategy and a Pareto-efficient ...
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This chapter uses the Prisoner's Dilemma as the linking idea in an overview of many of the topics covered later in the book. The basic ideas are that of a dominated strategy and a Pareto-efficient outcome. Various fallacies that promote the latter notion over the former are considered. At the same time, the chapter introduces problems in the private provision of public goods, the economic theory of imperfect competition, repeated games, the tragedy of the commons, and mechanism design. The idea of a Nash equilibrium is introduced.Less
This chapter uses the Prisoner's Dilemma as the linking idea in an overview of many of the topics covered later in the book. The basic ideas are that of a dominated strategy and a Pareto-efficient outcome. Various fallacies that promote the latter notion over the former are considered. At the same time, the chapter introduces problems in the private provision of public goods, the economic theory of imperfect competition, repeated games, the tragedy of the commons, and mechanism design. The idea of a Nash equilibrium is introduced.
Graeme D. Ruxton, Thomas N. Sherratt, and Michael P. Speed
- Published in print:
- 2004
- Published Online:
- September 2007
- ISBN:
- 9780198528609
- eISBN:
- 9780191713392
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198528609.003.0011
- Subject:
- Biology, Animal Biology
If an undefended species (the mimic) were to adopt the same warning signal as a defended species (the model), then it might be able to gain protection from predators without investing in defence. ...
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If an undefended species (the mimic) were to adopt the same warning signal as a defended species (the model), then it might be able to gain protection from predators without investing in defence. This Batesian mimicry may weaken the protection which the signal gives individuals of the defended species, since the predator experiences a less clear relationship between signal and defence as it samples both models and mimics. This chapter examines both the theory of this phenomenon and the empirical evidence for it. The outstanding questions and controversies in this area are addressed.Less
If an undefended species (the mimic) were to adopt the same warning signal as a defended species (the model), then it might be able to gain protection from predators without investing in defence. This Batesian mimicry may weaken the protection which the signal gives individuals of the defended species, since the predator experiences a less clear relationship between signal and defence as it samples both models and mimics. This chapter examines both the theory of this phenomenon and the empirical evidence for it. The outstanding questions and controversies in this area are addressed.
Jonathan Owens
- Published in print:
- 2006
- Published Online:
- September 2007
- ISBN:
- 9780199290826
- eISBN:
- 9780191710469
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199290826.003.0006
- Subject:
- Linguistics, Historical Linguistics
This chapter continues the concentration on contemporary Arabic. Arabic dialects show considerable diversity in the tolerance of short, open syllables. Some allow them, some allow only low vowels in ...
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This chapter continues the concentration on contemporary Arabic. Arabic dialects show considerable diversity in the tolerance of short, open syllables. Some allow them, some allow only low vowels in them, some allow no short open syllables. In those dialects with a restriction on the vowels, rules of deletion and repair through epenthesis can become quite complex. This chapter proposes that rules of epenthesis can be understood relative to three parameters: the role of consonantal sonority in epenthesis; whether epenthesis occurs within verb and noun stems; and whether consonantal sequence determines epenthesis. According to these criteria, contemporary dialects can be classified according to how far they have moved away from the reconstructed pre-diasporic situation. Particular attention is paid to Nigerian Arabic, whose complex rules of epenthesis based on sonority provide important insights into the diachronic processes involved.Less
This chapter continues the concentration on contemporary Arabic. Arabic dialects show considerable diversity in the tolerance of short, open syllables. Some allow them, some allow only low vowels in them, some allow no short open syllables. In those dialects with a restriction on the vowels, rules of deletion and repair through epenthesis can become quite complex. This chapter proposes that rules of epenthesis can be understood relative to three parameters: the role of consonantal sonority in epenthesis; whether epenthesis occurs within verb and noun stems; and whether consonantal sequence determines epenthesis. According to these criteria, contemporary dialects can be classified according to how far they have moved away from the reconstructed pre-diasporic situation. Particular attention is paid to Nigerian Arabic, whose complex rules of epenthesis based on sonority provide important insights into the diachronic processes involved.
Pol Antràs
- Published in print:
- 2015
- Published Online:
- October 2017
- ISBN:
- 9780691168272
- eISBN:
- 9781400873746
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691168272.003.0003
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter develops simple imperfect-contracting variants of the Melitz model of exporting and discusses empirical evidence suggestive of the role of these frictions as determinants of the ...
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This chapter develops simple imperfect-contracting variants of the Melitz model of exporting and discusses empirical evidence suggestive of the role of these frictions as determinants of the structure of international trade flows. It explores both theoretically as well as empirically the significance of weak contract enforcement for the export decisions of firms and, more broadly, for the structure of international trade flows. As explained in Chapter 1, the rapid growth in intermediate input trade has been one of the most prominent developments in the world economy in recent years. At the same time, the contractual relationships that support the phenomenon of offshoring are much more intricate than those that support the mere shipment of goods across countries. Thus, weak contract enforcement has the potential to affect the global organization of production in more profound ways than has been studied so far.Less
This chapter develops simple imperfect-contracting variants of the Melitz model of exporting and discusses empirical evidence suggestive of the role of these frictions as determinants of the structure of international trade flows. It explores both theoretically as well as empirically the significance of weak contract enforcement for the export decisions of firms and, more broadly, for the structure of international trade flows. As explained in Chapter 1, the rapid growth in intermediate input trade has been one of the most prominent developments in the world economy in recent years. At the same time, the contractual relationships that support the phenomenon of offshoring are much more intricate than those that support the mere shipment of goods across countries. Thus, weak contract enforcement has the potential to affect the global organization of production in more profound ways than has been studied so far.
Roman Frydman and Michael D. Goldberg
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691155234
- eISBN:
- 9781400846450
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691155234.003.0007
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter considers an alternative approach to economic analysis, Imperfect Knowledge Economics (IKE), and introduces a model of asset prices and risk that has explicit mathematical ...
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This chapter considers an alternative approach to economic analysis, Imperfect Knowledge Economics (IKE), and introduces a model of asset prices and risk that has explicit mathematical microfoundations and yet remains open to nonroutine change. The IKE model consists of representations of individuals' preferences, forecasting behavior, constraints, and decision rules in terms of a set of causal (often called “informational”) variables, which portray the influence of economic policy, institutions, and other features of the social context. It also entails an aggregation rule and processes for the informational variables. The chapter examines irregular swings in asset prices and their relationship to financial risk. It also presents an IKE account of asset price swings before concluding with an analysis of contingent predictions of long swings and their compatibility with rationality.Less
This chapter considers an alternative approach to economic analysis, Imperfect Knowledge Economics (IKE), and introduces a model of asset prices and risk that has explicit mathematical microfoundations and yet remains open to nonroutine change. The IKE model consists of representations of individuals' preferences, forecasting behavior, constraints, and decision rules in terms of a set of causal (often called “informational”) variables, which portray the influence of economic policy, institutions, and other features of the social context. It also entails an aggregation rule and processes for the informational variables. The chapter examines irregular swings in asset prices and their relationship to financial risk. It also presents an IKE account of asset price swings before concluding with an analysis of contingent predictions of long swings and their compatibility with rationality.
Katarina Juselius
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691155234
- eISBN:
- 9781400846450
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691155234.003.0011
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines the relationship between speculation in the currency markets and aggregate activity in the real economy by drawing on the Structural Slumps theory and the theory of Imperfect ...
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This chapter examines the relationship between speculation in the currency markets and aggregate activity in the real economy by drawing on the Structural Slumps theory and the theory of Imperfect Knowledge Economics (IKE). It first considers exchange rate determination in two models, one based on the Rational Expectations Hypothesis (REH) and the other on the theory of IKE, before discussing some general principles for how to structure the observed persistence in the data, and how these principles can be used in the cointegrated vector autoregressive model. The chapter also explains how foreign currency speculation under IKE interacts with a customer market economy where profit shares are adjusting to fluctuations in real exchange rates and where the natural rate of unemployment is a function of nonstationary real long-term interest rates.Less
This chapter examines the relationship between speculation in the currency markets and aggregate activity in the real economy by drawing on the Structural Slumps theory and the theory of Imperfect Knowledge Economics (IKE). It first considers exchange rate determination in two models, one based on the Rational Expectations Hypothesis (REH) and the other on the theory of IKE, before discussing some general principles for how to structure the observed persistence in the data, and how these principles can be used in the cointegrated vector autoregressive model. The chapter also explains how foreign currency speculation under IKE interacts with a customer market economy where profit shares are adjusting to fluctuations in real exchange rates and where the natural rate of unemployment is a function of nonstationary real long-term interest rates.
Kazumichi Iwasa and Kazuo Nishimura
- Published in print:
- 2011
- Published Online:
- September 2012
- ISBN:
- 9780198073970
- eISBN:
- 9780199081615
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198073970.003.0005
- Subject:
- Economics and Finance, Microeconomics
Some market distortional factors such as factor-generated externalities and imperfect competition can give rise to multiple equilibrium paths, or indeterminacy, in dynamic general equilibrium models. ...
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Some market distortional factors such as factor-generated externalities and imperfect competition can give rise to multiple equilibrium paths, or indeterminacy, in dynamic general equilibrium models. Despite numerous studies on indeterminacy in two-country models, it is assumed that either market distortional factors or inferiority in consumption (one good is an inferior good at the steady state) will make indeterminacy possible. This chapter considers a dynamic two-country model with technological differences and illustrates how indeterminacy can arise even without any market distortional factor and inferiority in consumption. In cases where a pure consumption good is more labour-intensive than a consumable capital good, the chapter demonstrates that multiple equilibrium paths arise when the former is inferior. In cases where a pure consumption good is more capital-intensive than a consumable capital good, multiple equilibrium paths can arise even when both goods are normal.Less
Some market distortional factors such as factor-generated externalities and imperfect competition can give rise to multiple equilibrium paths, or indeterminacy, in dynamic general equilibrium models. Despite numerous studies on indeterminacy in two-country models, it is assumed that either market distortional factors or inferiority in consumption (one good is an inferior good at the steady state) will make indeterminacy possible. This chapter considers a dynamic two-country model with technological differences and illustrates how indeterminacy can arise even without any market distortional factor and inferiority in consumption. In cases where a pure consumption good is more labour-intensive than a consumable capital good, the chapter demonstrates that multiple equilibrium paths arise when the former is inferior. In cases where a pure consumption good is more capital-intensive than a consumable capital good, multiple equilibrium paths can arise even when both goods are normal.
Flavio M. Menezes and Paulo K. Monteiro
- Published in print:
- 2004
- Published Online:
- April 2005
- ISBN:
- 9780199275984
- eISBN:
- 9780191602214
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/019927598X.003.0002
- Subject:
- Economics and Finance, Microeconomics
This chapter presents the concept of a Bayesian Nash equilibrium as defined by Harsanyi (1967). His approach was to transform a game of incomplete information into one of imperfect information; any ...
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This chapter presents the concept of a Bayesian Nash equilibrium as defined by Harsanyi (1967). His approach was to transform a game of incomplete information into one of imperfect information; any buyer who has incomplete information about other buyers’ values is treated as if he were uncertain about their types. A brief introduction to auctions is provided, and how these can be viewed as games of incomplete information is explained. The notations that will be used throughout the book are defined.Less
This chapter presents the concept of a Bayesian Nash equilibrium as defined by Harsanyi (1967). His approach was to transform a game of incomplete information into one of imperfect information; any buyer who has incomplete information about other buyers’ values is treated as if he were uncertain about their types. A brief introduction to auctions is provided, and how these can be viewed as games of incomplete information is explained. The notations that will be used throughout the book are defined.
John Knight and Lina Song
- Published in print:
- 2005
- Published Online:
- April 2005
- ISBN:
- 9780199245277
- eISBN:
- 9780191602207
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199245274.003.0009
- Subject:
- Economics and Finance, South and East Asia
This chapter examines the role of information and social network on the employment and pay of rural-urban migrants in the city of Handan, Hebei Province, China. It is shown that the general ...
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This chapter examines the role of information and social network on the employment and pay of rural-urban migrants in the city of Handan, Hebei Province, China. It is shown that the general information about the urban labour market is not as important as information about specific jobs. Most migrants came to Handan without any general information about its labour market, while three-fourths received specific information about jobs. The source of such information was the migrant’s social network made up of family, relatives, friends, and fellow villagers.Less
This chapter examines the role of information and social network on the employment and pay of rural-urban migrants in the city of Handan, Hebei Province, China. It is shown that the general information about the urban labour market is not as important as information about specific jobs. Most migrants came to Handan without any general information about its labour market, while three-fourths received specific information about jobs. The source of such information was the migrant’s social network made up of family, relatives, friends, and fellow villagers.
