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Author: Gaurav Somenath Ghosh
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In my first essay I report results from an analysis where representative methods of estimation from the Classical and Bayesian approaches to statistical inference are empirically compared. The chosen Classical methods are based on Least Squares and Maximum Likelihood and the chosen Bayesian method is the Hierarchical model. Each method is applied to a spatial hedonic property value model. The resulting estimates are then compared using nonparametric tests. The comparisons are then used to make inferences on the relative accuracy, precision and quality of the different methods of estimation. The Hierarchical Bayesian and Classical Maximum Likelihood methods are found to supply the best estimators of the spatial regression model and predictors of house price. Significant differences are also found in the relative accuracy and precision of the methods. I infer that the Hierarchical Bayesian and Classical Maximum Likelihood methods are best suited to prediction and estimation of spatial hedonic property value models. In my second essay I compare two tradable permit markets in their ability to meet a stated environmental target at least cost when some polluters have stochastic and non-measurable emissions. The environmental target is of the safety-first type, which requires probabilistic control of emissions. One market is built around the trading ratio, which defines the substitution rate between stochastic and deterministic pollution, and is modeled on existing markets for water quality trading. The other market is built around a new definition of the traded commodity as a multi-attribute good, where the attributes supply information to the market on the environmental risks associated with stochastic pollution. The latter market is found to out-perform the trading ratio market in its ability to satisfy the safety-first environmental target at least cost. This result comes about because polluters are able to directly price risk in the latter market. In the former market risk is not a factor in the trading decision and can only be controlled under highly restrictive conditions. In my third essay I report results from an economic experiment where the two markets developed in the previous essay are compared in a testbed that captures important features of existing markets for water quality trading. In the interests of tractability these features were abstracted from in the previous theoretical analysis. One feature is that of oligopsony and the second feature is that of a discrete trading environment where polluters generate credits by implementing one of a small set of emission-reducing technologies. The experimental results indicate that the market with multi-attribute goods generates a superior environmental outcome to the trading ratio market. Furthermore, the average cost of pollution control is lower in the former market. Market power is independent of the type of market institution, but I do find that large buyers have more market power than small buyers. Finally, I find that sellers of credits learn to resist market power as they gain experience, but at the cost of market efficiency since their resistance causes a fall in the number of trades. Overall, the results support the thesis of the second essay, that the market with multi-attribute goods generates better environmental outcomes than the trading ratio market.
Author: Gaurav Somenath Ghosh
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In my first essay I report results from an analysis where representative methods of estimation from the Classical and Bayesian approaches to statistical inference are empirically compared. The chosen Classical methods are based on Least Squares and Maximum Likelihood and the chosen Bayesian method is the Hierarchical model. Each method is applied to a spatial hedonic property value model. The resulting estimates are then compared using nonparametric tests. The comparisons are then used to make inferences on the relative accuracy, precision and quality of the different methods of estimation. The Hierarchical Bayesian and Classical Maximum Likelihood methods are found to supply the best estimators of the spatial regression model and predictors of house price. Significant differences are also found in the relative accuracy and precision of the methods. I infer that the Hierarchical Bayesian and Classical Maximum Likelihood methods are best suited to prediction and estimation of spatial hedonic property value models. In my second essay I compare two tradable permit markets in their ability to meet a stated environmental target at least cost when some polluters have stochastic and non-measurable emissions. The environmental target is of the safety-first type, which requires probabilistic control of emissions. One market is built around the trading ratio, which defines the substitution rate between stochastic and deterministic pollution, and is modeled on existing markets for water quality trading. The other market is built around a new definition of the traded commodity as a multi-attribute good, where the attributes supply information to the market on the environmental risks associated with stochastic pollution. The latter market is found to out-perform the trading ratio market in its ability to satisfy the safety-first environmental target at least cost. This result comes about because polluters are able to directly price risk in the latter market. In the former market risk is not a factor in the trading decision and can only be controlled under highly restrictive conditions. In my third essay I report results from an economic experiment where the two markets developed in the previous essay are compared in a testbed that captures important features of existing markets for water quality trading. In the interests of tractability these features were abstracted from in the previous theoretical analysis. One feature is that of oligopsony and the second feature is that of a discrete trading environment where polluters generate credits by implementing one of a small set of emission-reducing technologies. The experimental results indicate that the market with multi-attribute goods generates a superior environmental outcome to the trading ratio market. Furthermore, the average cost of pollution control is lower in the former market. Market power is independent of the type of market institution, but I do find that large buyers have more market power than small buyers. Finally, I find that sellers of credits learn to resist market power as they gain experience, but at the cost of market efficiency since their resistance causes a fall in the number of trades. Overall, the results support the thesis of the second essay, that the market with multi-attribute goods generates better environmental outcomes than the trading ratio market.
Author: Shyh-Fang Ueng
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 118
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Book Description
This research investigates three issues related to the economic performance of oligopolistic markets where firms produce differentiated products and compete in prices. First of all, this dissertation uses a Markov Perfect Equilibrium approach with fixed periods of commitment of actions to answer the question of what prices a duopolists will charge in equilibrium if they produce horizontally differentiated products, move alternatingly, and compete in prices forever. It is found that firms charge prices which are higher than Nash equilibrium prices but lower than the fully collusive equilibrium prices. Also, contrasted with the Nash equilibrium of the one-shot constituent game, the firm having the significantly higher demand responsiveness to its own price always charges a lower price than the other firm does although it has higher marginal cost. The dissertation then proceeds to study whether a firm can overcome its cost disadvantage by upgrading its product over the rival's, and if so, whether there exists a profit-division which will induce the low cost firm and the high cost firm to collude and no one has an incentive to cheat. The results show that (1) the ability of upgrading the product over the rival's can allow a high cost firm to earn higher profit than a cost advantaged low cost firm; (2) there exists at least one profit-division which can sustain full collusion; and (3) in the collusive equilibrium firms enlarge their quality differences to alleviate the price tension between their products. Finally, this work investigates the welfare effect of mergers which occur in an oligopolistic industry where firms produce differentiated products. It is shown that for the merger to be socially beneficial, the number of the merging firms must be less than the total number of firms in the industry minus the ratio of the products' own elasticity to cross elasticity. The analysis indicates that the welfare effect of a merger of a specific size depends on the substitutability among products of the industry.
Author: John Beath
Publisher: Cambridge University Press
ISBN: 9780521335522
Category : Business & Economics
Languages : en
Pages : 220
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Book Description
There are few industries in modern market economies that do not manufacture differentiated products. This book provides a systematic explanation and analysis of the widespread prevalence of this important category of products. The authors concentrate on models in which product selection is endogenous. In the first four chapters they consider models that try to predict the level of product differentiation that would emerge in situations of market equilibrium. These market equilibria with differentiated products are characterised and then compared with social welfare optima. Particular attention is paid to the distinction between horizontal and vertical differentiation as well as to the related issues of product quality and durability. This book brings together the most important theoretical contributions to these topics in a succinct and coherent manner. One of its major strengths is the way in which it carefully sets out the basic intuition behind the formal results. It will be useful to advanced undergraduate and graduate students taking courses in industrial economics and microeconomic theory.
Author: Jonas Häckner
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 126
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Author: Ching-jen Sun
Publisher:
ISBN:
Category : Prices
Languages : en
Pages : 120
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Book Description
Abstract: This dissertation develops three essays on dynamic pricing to investigate two important topics in industrial organization: price dispersion and price discrimination. The first essay considers a stylized model of dynamic price competition in which each seller sells one unit of a homogeneous commodity by posting prices in every period to maximize the expected profits with discounting. A random number of buyers come to the market in each period. Each buyer demands at most one unit of the good, and they all have a common reservation price. They know all prices posted by all firms in the market; hence search is costless. I show that when there is a positive probability of excess demand, the model has a unique (symmetric) mixed-strategy equilibrium. In this equilibrium, each seller posts a price in every period according to a non-degenerate distribution, which is determined by the number of sellers remaining in the market in that period. Sellers play mixed strategies as they are indifferent between selling sooner at a lower price and waiting to sell at a higher price later. Thus, price dispersion not only exists in every period among firms, but also persists over time. In the second essay, I consider a monopolist who can sell vertically differentiated products over two periods to heterogeneous consumers. Consumers each demand one unit of the product in each period. In the second period, consumers are sorted into different segments according to their first-period choice, and the monopolist can offer different menus of contracts to different segments. In this way, the monopolist can price discriminate consumers not only by product quality, but also by purchase history. I fully characterize the monopolist's optimal pricing strategy when the type space is discrete and a simple condition is given to determine whether the monopolist should price discriminate consumers by product quality in the first period. When the consumers' type space is a continuum, I show that there is no fully separating equilibrium, and some properties of the optimal menu of contracts (price-quality pairs) are characterized within the class of partition PBE (Perfect Bayesian Equilibrium). The monopolist will offer only one quality in the first period when the social surplus function is log submodular or the firm and consumers are patient. If it is optimal for the firm to offer only one quality in the first period, the optimal market coverage in the first period is smaller than that in the static model. Furthermore, in equilibrium there are some high-type consumers choosing to downgrade the product in the second period, a phenomenon that has never been addressed in the literature. In the second essay, when the consumers' type space is a continuum, the analysis of the optimal menu of contracts is restricted within the class of partition PBE. The third essay provides a justification for this qualification. I ask whether an optimal menu of contracts can induce a non-partition continuation equilibrium by scrutinizing the example constructed by Laffont and Tirole (1988). They construct a non-partition continuation equilibrium for a given first-period menu of incentive contracts and conjecture that this continuation equilibrium need not be suboptimal for the whole game under small uncertainty. I construct two first-period incentive schemes leading to a partition continuation equilibrium and show that, regardless of the extent of uncertainty, their non-partition continuation equilibrium generates a smaller payoff than one of two partition continuation equilibria for the principal. In this sense, Laffont and Tirole's menu of contracts, giving rise to a non-partition continuation equilibrium, is not optimal. I provide an intuition behind this result, hoping to shed light on the problem of dynamic contracting without commitment.
Author: Sneha Bakshi
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 204
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Book Description
These essays examine how imperfect information amongst buyers in homogeneous goods markets affect sellers' incentives to compete, collude, and choose pricing rules. The first essay focuses on the price matching policy in a duopoly market when sellers have different marginal costs of production and some buyers know only one price in the market. It illustrates the incredibility of a seller price matching below its cost, which helps restore the low cost seller's incentive to price competitively, if the cost gap between the two sellers is large. Characterizing the equilibria of the model without price matching, I find that when the proportion of fully informed buyers is low, posting monopoly prices is the unique equilibrium. Market power of this kind is eliminated by price matching, because a seller adopting it promises to buyers unaware of its price to sell at their known price. Price matching thus reduces prices in equilibria if either the cost gap is large or if there are a large proportion of imperfectly informed buyers. The second essay investigates the endogenous choices of pricing rules by sellers with different costs in large markets, where buyers vary in their information regarding market prices. Inviting buyers to quote bids is ruled out because of adverse selection, and I find that price matching cannot be used by sellers with costs in the upper tail of the distribution of seller costs. The range of prices in equilibrium and the extent of the adoption of price matching to separate buyer types are found to depend on the price of the lowest cost seller in the market. The third essay examines how a distribution of imperfectly informed buyers affects (posted) price competition between identical sellers. I find that finite markets have multiple prices, as the only equilibrium is in mixed strategies with positive profits. The support of equilibrium prices is bounded below by a function of the size of the market, such that a larger market reduces profits. Only in the limit as the market becomes infinitely large, can a single price prevail, equaling marginal cost, where sellers earn zero profits.
Author: George Norman
Publisher: Taylor & Francis
ISBN: 9780850861211
Category : Business & Economics
Languages : en
Pages : 190
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Author:
Publisher:
ISBN:
Category : Marketing
Languages : en
Pages : 252
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Author: Kim Weonseek
Publisher:
ISBN:
Category :
Languages : en
Pages : 308
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Author: Robert Mochrie
Publisher: Bloomsbury Publishing
ISBN: 1137091665
Category : Business & Economics
Languages : en
Pages : 672
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Book Description
This innovative textbook contains everything students need to know on an intermediate microeconomics course. Combining classic theory and models with the latest developments, it gently guides learners through the topics and helps them to become increasingly independent. Mathematical understanding is a crucial part of mastering the subject, but can be tricky to obtain. Consequently, numerical tools and engaging exercises are expertly woven into the broader, conceptual discussion of economic theory. This process is progressive and incremental, with steps explained in great detail in the opening chapters to help students gain mathematical fluency and confidence. A microeconomics textbook that is essential reading for any intermediate level course at university. Although primarily aimed at two-semester undergraduate modules, the comprehensive and accessible writing style means that it is also suitable for certain postgraduate and one-semester courses. The author provides helpful notes on how to adapt the book to your course.
