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Perfect Competition (perfect + competition)
Selected AbstractsDefault and Punishment in General Equilibrium,ECONOMETRICA, Issue 1 2005Pradeep Dubey We extend the standard model of general equilibrium with incomplete markets to allow for default and punishment by thinking of assets as pools. The equilibrating variables include expected delivery rates, along with the usual prices of assets and commodities. By reinterpreting the variables, our model encompasses a broad range of adverse selection and signalling phenomena in a perfectly competitive, general equilibrium framework. Perfect competition eliminates the need for lenders to compute how the size of their loan or the price they quote might affect default rates. It also makes for a simple equilibrium refinement, which we propose in order to rule out irrational pessimism about deliveries of untraded assets. We show that refined equilibrium always exists in our model, and that default, in conjunction with refinement, opens the door to a theory of endogenous assets. The market chooses the promises, default penalties, and quantity constraints of actively traded assets. [source] Investor Reaction to Inter-corporate Business Contracting: Evidence and ExplanationECONOMIC NOTES, Issue 3 2006Fayez A. Elayan We examine the stock market reaction to 1227 inter-corporate ordinary business contract announcements reported by Dow Jones between January 1, 1990 and December 31, 2001. Around contract announcement dates, we find statistically significant positive average abnormal returns and abnormal trading volume for contractors, but insignificant positive abnormal returns and negative abnormal volume for contractees. Cross-sectionally, contract announcement period returns are higher for contractors who are small relative to the contract size, have higher return volatility, larger market-to-book ratios and higher profitability. The announcement period returns of contract-awarding firms are not significant and are only marginally related to cross-sectional explanatory factors. The results are consistent with two explanatory stories: contractor quasi-rents induced by the winner's curse and information signalling about contractor production costs. The results are not consistent with perfect competition, with contracts having positive net present values for both parties, and with a version of incomplete contracting theory. [source] Competition Tests with a Non-Structural Model: the Panzar,Rosse Method Applied to Germany's Savings BanksGERMAN ECONOMIC REVIEW, Issue 1 2009Horst Gischer Banking; competition; market behaviour Abstract. In this paper we adopt the Panzar,Rosse approach to assess the competitive conditions in the German banking market for the period from 1993 to 2002. We suggest several improvements to the empirical application of the approach and show that frequently used empirical models that apply price rather than revenue functions lead to biased results. Using disaggregated annual data from more than 400 savings banks (Sparkassen) the empirical findings indicate monopolistic competition, the cases of monopoly and perfect competition are strongly rejected. Furthermore, small banks seem to enjoy even more market power than larger institutions. [source] Environmental Taxation and Induced Structural Change in an Open Economy: The Role of Market StructureGERMAN ECONOMIC REVIEW, Issue 1 2008Christoph Böhringer Environmental taxation; imperfect competition; structural change Abstract. Studies of structural change induced by environmental taxation usually proceed in a perfect-competition framework and typically find structural change to be quite moderate under realistic emission reduction scenarios. By observing that some of the industries affected are likely to operate under imperfect rather than perfect competition, additional mechanisms emerge which may amplify structural change beyond the extent identified as yet. Especially, changes in economies of scale may arise which weaken or strengthen the competitive position of industries over and above the initial cost effect. Using a computable general equilibrium model for Germany to examine the effects of a unilaterally introduced carbon tax, we find that induced structural change is more pronounced under imperfect competition than under perfect competition. At the macroeconomic level, we find that aggregate losses in economies of scale are larger than aggregate gains, implying that the total costs of environmental regulation are higher under imperfect competition than under perfect competition. [source] Trade Policies for Exporting Industries under Free EntryGERMAN ECONOMIC REVIEW, Issue 4 2001Roberto A. De Santis This paper computes optimal export taxes and domestic production subsidies for exporting industries under free entry. We show that domestic welfare is not at maximum, as is typically believed, when the export price is a monopoly price, and the domestic price is a competitive price, because a market structure effect has to be taken into account. Furthermore, we show that the optimal tax/subsidy formulas for an oligopoly coincide with those under perfect competition, if foreign and domestic demand functions are both linear. We also discuss optimal trade policies when only one instrument is available, and we run numerical simulations to determine and compare optimal trade taxes under endogenous and exogenous market structures. [source] A Relational Approach to Measuring Competition Among HospitalsHEALTH SERVICES RESEARCH, Issue 2 2002Min-Woong Sohn Objective. To present a new, relational approach to measuring competition in hospital markets and to compare this relational approach with alternative methods of measuring competition. Data Sources. The California Office of Statewide Health Planning and Development patient discharge abstracts and financial disclosure files for 1991. Study Design. Patient discharge abstracts for an entire year were used to derive patient flows, which were combined to calculate the extent of overlap in patient pools for each pair of hospitals. This produces a cross-sectional measure of market competition among hospitals. Principal Findings. The relational approach produces measures of competition between each and every pair of hospitals in the study sample, allowing us to examine a much more "local" as well as dyadic effect of competition. Preliminary analyses show the following: (1) Hospital markets are smaller than thought. (2) For-profit hospitals received considerably more competition from their neighbors than either nonprofit or government hospitals. (3) The size of a hospital does not matter in the amount of competition received, but the larger hospitals generated significantly more competition than smaller ones. Comparisons of this method to the other methods show considerable differences in identifying competitors, indicating that these methods are not as comparable as previously thought. Conclusion. The relational approach measures competition in a more detailed way and allows researchers to conduct more fine-grained analyses of market competition. This approach allows one to model market structure in a manner that goes far beyond the traditional categories of monopoly, oligopoly, and perfect competition. It also opens up an entirely new range of analytic possibilities in examining the effect of competition on hospital performance, price of medical care, changes in the market, technology acquisition, and many other phenomena in the health care field. [source] On the stabilizing virtues of imperfect competitionINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 4 2005Thomas Seegmuller D43; E32 We analyze the stabilizing role of imperfect competition on fluctuations as a result of indeterminacy and endogenous cycles. In this paper, imperfect competition is a source of monopoly profits, because of producer market power. Considering an overlapping generations model with capital accumulation and elastic labor supply, we show that under imperfect competition, the emergence of endogenous fluctuations requires a weaker substitution between production factors than under perfect competition. In this sense, imperfect competition stabilizes fluctuations. However, we find an opposite conclusion concerning the elasticity of labor supply. Indeed, endogenous fluctuations are compatible with a less elastic labor supply under imperfect competition. [source] Neo-Classical Neo-Populism 25 Years On: Déjà Vu and Déjà Passé.JOURNAL OF AGRARIAN CHANGE, Issue 1-2 2004Towards a Critique The Griffin, Khan and Ickowitz argument in favour of redistributive land reform, as a means of eradicating rural poverty, is an updated version of a case made by Griffin 30 years ago, and is here seen as a variant of neo-classical neo-populism. The essential logic presented by GKI is considered and it is argued that the approach is defective in its lack of historical perspective and its deployment of a static approach in a dynamic context: these defects manifested in its ignoring of the processes associated with capitalist transformation. It is further argued that its logical foundation is the neo-classical construct of perfect competition, which is without historical basis; its empirical justification is a postulated inverse relationship between land productivity and size of holding, supposedly true of all places and all times, but which is swept away by the development of capitalism in agriculture; and its social specification, in failing to capture the existence of differentiated peasantries, ignores the actual class structure of the countryside. [source] The Choice of Optimal Protection under Oligopoly: Import Tariff v. Production SubsidyTHE JAPANESE ECONOMIC REVIEW, Issue 3 2002Tsuyoshi Toshimitsu Economists researching the area of optimal protection have tended to analyse the ranking of alternative policy tools in the presence of perfect competition, either when the government in an importing country achieves a non-economic target, or when there is a market distortion. Assuming international oligopolistic competition, I reconsider the choice of optimal policy instruments, i.e. an import tariff and a production subsidy. I show that the choice of optimal policy instruments depends on the relative number of home firms and foreign ones and on the magnitude of international cost differences. JEL Classification Numbers: F12, F13. [source] Tradeable Emissions Permits, Emissions Taxes and GrowthTHE MANCHESTER SCHOOL, Issue 4 2004Bertrand Crettez This paper uses a dynamic general equilibrium model with overlapping generations in order to analyse and to compare emissions taxes and tradeable emissions permits. Even in the context of a perfect environment, i.e. with perfect information, perfect competition,, it is shown that privately owned emissions permits have some disadvantages. An equilibrium with emissions permits would certainly be better than a laissez-faire equilibrium since it would entail a lower pollution level. However, it is far from clear that an economy with pollution permits would be preferable over an economy with emissions taxes. While in both cases pollution would be lower, growth would be higher in an economy with emissions taxes. This is because emissions permits divert saving from ,productive' resources and have a negative impact on capital accumulation. This happens whatever the way emissions taxes are redistributed. [source] | ||||||||||||||||||||||