Browsing by Subject "Equilibrium (Economics)"
Now showing 1 - 8 of 8
Results Per Page
Sort Options
Item Bargaining, searching and price dispersion in consumption good markets(2008-12) Du, Yingjuan; Stahl, Dale O.In consumption goods markets, we observe both bargaining and searching. However, in this literature, very little work has been done to incorporate both features into one model. This study addresses this problem. In my first chapter, I add a bargaining parameter to a traditional sequential search model and solve for the new equilibrium in this set-up. Then, I do some comparative statics, changing the distribution of the bargaining parameter to see what happens to the equilibrium. Finally, I use the model to explain two seemingly contradicting empirical works in the literature of discrimination in the auto market. Ayres and Siegelman (1995), using data they collected from a controlled experiment, found that the initial offers for the minorities are higher. Yet Goldberg (1996), using consumer expenditure survey data (CES), reported that there is no significant difference between the final prices for minorities and non-minorities. My model reconciles these two results and shows that if minorities have a more dispersed bargaining parameter distribution and if the final transaction prices are the same at the mean level, then the initial offer distribution for the minorities first-order stochastically dominates that for the non-minorities. In my second chapter, I investigate how the bargaining process affects firms’ offer distribution and thus the final price distribution. Based on Varian (1980), I add a bargaining parameter into the model, and solve for the new equilibrium in this set up. Then, I do some comparative statics, changing the distribution of the bargaining parameter to see what would happen to the equilibrium. This model yields the same results as the first chapter. In the third chapter, I applied my theoretical model to the automobile market, and empirically test the model. I used CES data, and my findings support the theoretical model. The minority dummies are not significant in determining the mean level of consumers’ bargaining ability distribution, but are significantly positive in determining the variance of the distribution.Item An equilibrium theory of organizational forms : a complementary market analysis(2007-08) Cakirer, Kerem, 1979-; Stinchcombe, MaxwellThe dissertation develops an equilibrium theory of mergers in a complementary market setting where downstream firms sell a product which must have a compatible variety of products that are supplied by upstream firms. I map each of several different complementary market setting to a merger type, i.e vertical, counter, horizontal or none. I present the conditions under which a downstream firm will prefer integrating with an upstream firm, and conditions under a counter merger of firms occur. The analysis shows that a vertical merger is more likely to occur whenever one of the upstream firm is significantly productive than the other. However, counter integration of firms is also likely whenever the upstream firms are highly productive. Moreover, I present the conditions under which two downstream firms merge and form a new downstream firm. The findings support that the more competitive downstream market is , the more likely a horizontal merger is. In addition, a vertical merger, two vertical mergers and independent ownership can still be the outcome even though downstream competition is high. The results are obtained in a general two downstream firms and two upstream firms market setting that allows efficient compatibility contracts between upstream and downstream producers.Item Short-term debt and international banking crises(2004-08) Seo, Eunsook, 1968-; Cooper, Russell W., 1955-; Paal, BeatrixItem Three essays on financial macroeconomics(2004) Saunders, Drew Donald; Corbae, DeanI study financial arrangements that arise in economies with limited enforcement. Contractual promises are required to be rational for the obligated party at the time of fulfillment. Common also to each environment is perfect information. I study each economy in general equilibrium with competitive markets. In the first chapter, I study the provision of liquidity by one cohort of private agents to another building on the three-period model of Holmstrom and Tirole (Journal of Political Economy, 1998). Entrepreneurs issue financial liabilities to finance liquid investment. As a precaution against a random cost shock, entrepreneurs optimally buy, hold, and then sell a security that they cannot issue themselves. In contrast to Holmstrom and Tirole, I do not allow government liabilities to serve this purpose. Instead, I require that entrepreneurs liquidity needs be satisfied endogenously by circulation of third-party liabilities. The appropriate liabilities sell at a price premium relative to securities that do not serve the liquidity need. Liquidity uncertainty can distort production allocations among producers with different risk characteristics, and I show how issuers of circulating liabilities may be interpreted as banks. The second chapter presents an infinite time-horizon exchange economy wherein default cannot be punished by complete banishment from markets. An asset exists in the economy that cannot be confiscated, and that agents can never be prevented from trading. The payoff to an agent in default is a function of present and future prices and the agents ownership share of the non-collateral asset. Greater ownership implies a higher payoff upon default; but a higher default payoff reduces trading opportunities in equilibrium. Equilibration may generate volatile time-series for endogenous variables. I document the quantitative implications by computing equilibria of a plausibly calibrated economy. In the last chapter, I study the ability of a simple limited enforcement economy to explain arbitrary panel consumption data. Subject to satisfaction of mild inequality restrictions, if the consumption allocation implies that each agents wealth is finite, there is a feasible punishment institution that induces the data in equilibrium. The result shows that limited enforcement economies hold significant potential to explain anomalous features and implications of such data.Item Three essays on industrial organization(2007-05) Tran, Du Vinh, 1977-; Sibley, David S. (David Summer), 1947-Item Three essays on industrial organization(2007) Tran, Du Vinh; Sibley, David S.This thesis consists of three chapters. Chapter 1 explores the impact of compatibility regulation on the technological transition in industries with indirect network externalities. This chapter contrasts the scenario where firms make their own compatibility decisions with the scenario where compatibility is mandatory and shows that firms are better off in the first scenario and worse off in the second scenario. In some cases, technological transition takes place if there is no regulation, but may not take place if the compatibility regulation is in place. Beside regulation, the technological transition in these industries may be held back by either the coordination problem or the compensation problem. The analysis culminates by showing conditions in which these problems can be eliminated. Chapter 2 explores the coderelease decision of profit-maximizing software firms. Equilibrium results show that firms will not release code if the complementarity coefficient is either too low or too high. If the open source community can produce high quality open source software, then both firms may adopt the open source approach. If the open source community is moderately efficient and the complementarity coefficient falls in a middle range, then the decision to adopt open source approach depends on the efficiency gap between the two firms. Chapter 3 explores the impact of keyword auction on online retailers’ pricing strategies. The incumbent has positioning advantage on the search engine but the new entrant can bid for the sponsored advertisement place and neutralize such advantage. In equilibrium, preemptive advertisement exists. In one scenario, there is a pure equilibrium in which the incumbent charges a higher price and outbids the entrant in the sponsored ads auction. In the other scenario, there is a unique mixed equilibrium in which the incumbent can only partially deter the entrant from moving up.Item Three essays on volatility and persistence in dynamic economies(2005) Song, Min-Kyu; Corbae, DeanTo study the dynamic economies rather than the static ones allows us to understand chain reactions of economic behaviors explicitly, and so their volatility and persistence. This dissertation studies different output volatility across countries and across production sectors in a country and it examines an endogenous mechanism supportive to amplification and persistence in dynamic economies. In the first chapter, production connection through intermediate inputs is studied for an amplification mechanism, which stems from Leontief (1936) in the input-output analysis. It is known that developing industrial countries show larger output volatility than developed countries. Here I relate higher output volatility with higher intermediate input shares. When contrasting against the G-7 countries, twelve percentage of Asian developing industrial countries’ excessive output volatility is accounted for by their higher intermediate input shares. By contrast, Latin American countries show larger output volatility than G-7 countries but lower intermediate input shares; their exogenous shock against the G-7 group may be larger than when measured only by the typical Solow residuals. The second chapter studies the sector volatility against the overall or average volatility of an economy. I claim that the output volatility of a sector against the overall output volatility is associated with its final demands. In the U.S. economy, the industrial sector shows larger standard deviation than GDP. The ratio of its consumption share to investment share is 0.42, implying the final usage of industrial commodity is oriented more to investment than consumption. Considering rational people want smooth consumption over time, it is plausible that investment-oriented sector shows higher volatility. Seventy nine percentages of higher volatility in the industry sector are accounted for by the aggregate shocks. The third chapter suggests collateral constraints for an amplification and persistence mechanism. I introduce debt-collateral ratio, which measures strength of collateral constraints, into Kiyotaki and Moore (1997). The model shows trade-off relationship between persistence and amplification when debtcollateral ratio gets near to unity. With the theoretical model, I study the residential land usage in Korea. Assuming that there is no serial correlation of exogenous shock, I find debt-collateral ratio involved with the land usage; which is 0.8.Item Topics in money and banking(2003-08) Chang, Peter Hsiao-pen, 1975-; Freeman, Sco