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Determined Endogenously (determine + endogenously)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting75%

Selected Abstracts

The Effects of a Baby Boom on Stock Prices and Capital Accumulation in the Presence of Social Security

ECONOMETRICA, Issue 2 2003
Andrew B. Abel
Is the stock market boom a result of the baby boom? This paper develops an overlapping generations model in which a baby boom is modeled as a high realization of a random birth rate, and the price of capital is determined endogenously by a convex cost of adjustment. A baby boom increases national saving and investment and thus causes an increase in the price of capital. The price of capital is mean,reverting so the initial increase in the price of capital is followed by a decrease. Social Security can potentially affect national saving and investment, though in the long run, it does not affect the price of capital. [source]

Why is Employment Protection Stricter in Europe than in the United States?

ECONOMICA, Issue 295 2007
MICHÈLE BELOT
I argue that the reason why the United States prefers a lower level of employment protection than the European countries lies in the differences in gains and costs from geographical mobility. I present a model in which labour migration and employment protection are both determined endogenously. The labour market is modelled within a matching framework, where the employment protection reduces both the job finding and job firing rates. Countries with low migration costs and high economic heterogeneity may prefer no employment protection so that workers can move quickly to better horizons rather than being maintained in low productive activities. [source]

Two-Sided Platforms: Product Variety and Pricing Structures

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 4 2009
Andrei Hagiu
This paper provides a new modeling framework to analyze two-sided platforms connecting producers and consumers. In contrast to the existing literature, indirect network effects are determined endogenously, through consumers' taste for variety and producer competition. Three new aspects of platform pricing structures are derived.,First, the optimal platform pricing structure shifts towards extracting more rents from producers relative to consumers when consumers have stronger demand for variety, since producers become less substitutable. With platform competition, consumer preferences for variety, producer market power, and producer economies of scale in multihoming also make platforms' price-cutting strategies on the consumer side less effective. This second effect on equilibrium pricing structures goes in the opposite direction relative to the first one.,Third, variable fees charged to producers can serve to trade off producer innovation incentives against the need to reduce a platform holdup problem. [source]

A Spatial Economic Analysis of Urban Land Use and Obesity,

JOURNAL OF REGIONAL SCIENCE, Issue 3 2005
Andrew J. Plantinga
Households maximize utility defined over housing, weight, and food subject to a fixed time budget allocated to commuting, calorie expenditure, and work. Our model explains the observed correspondence between high obesity rates and low development densities, but implies that these are determined endogenously in a spatial market equilibrium. We study the sorting of residents by attributes such as income, initial weight, and weight preferences, and examine the impacts on weight and density of urban design modifications that lower the costs of calorie expenditure. [source]

Optimal operating policies in a commodity trading market with the manufacturer's presence

NAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 2 2010
Hui Zhao
Abstract With the help of the Internet and express delivery at relatively low costs, trading markets have become increasingly popular as a venue to sell excess inventory and a source to obtain products at lower prices. In this article, we study the operational decisions in the presence of a trading market in a periodic-review, finite-horizon setting. Prices in the trading market change periodically and are determined endogenously by the demand and supply in the market. We characterize the retailers'optimal ordering and trading policies when the original manufacturer and the trading market co-exist and retailers face fees to participate in the trading market. Comparing with the case with no trading fees, we obtain insights into the impact of trading fees and the fee structure on the retailers and the manufacturer. Further, we find that by continually staying in the market, the manufacturer may use her pricing strategies to counter-balance the negative impact of the trading market on her profit. Finally, we extend the model to the case when retailers dynamically update their demand distribution based on demand observations in previous periods. A numerical study provides additional insights into the impact of demand updating in a trading market with the manufacturer's competition. © 2009 Wiley Periodicals, Inc. Naval Research Logistics, 2010 [source]

PRICE-LEVEL DETERMINATION UNDER DISPERSED INFORMATION AND MONETARY POLICY,

THE JAPANESE ECONOMIC REVIEW, Issue 3 2006
KOSUKE AOKI
This paper considers the determination of aggregate price level under dispersed information. A Central Bank sets policy in response to its noisy measure of the price level, and each agent makes its decisions by observing a subset of data. Information revealed to the agents and the bank is determined endogenously. It is shown that the aggregate state of the economy is not revealed perfectly to anybody but this economy behaves as if it is a representative-agent economy in which the representative agent has perfect information while the Bank has partial information. The Bank's information set affects fluctuations in the price level through its effect on policy. [source]

Endogenous Liquidity in Asset Markets

THE JOURNAL OF FINANCE, Issue 1 2004
Andrea L. Eisfeldt
ABSTRACT This paper analyzes a model in which long-term risky assets are illiquid due to adverse selection. The degree of adverse selection and hence the liquidity of these assets is determined endogenously by the amount of trade for reasons other than private information. I find that higher productivity leads to increased liquidity. Moreover, liquidity magnifies the effects of changes in productivity on investment and volume. High productivity implies that investors initiate larger scale risky projects which increases the riskiness of their incomes. Riskier incomes induce more sales of claims to high-quality projects, causing liquidity to increase. [source]

Unemployment and the Rental Rate of Capital

BULLETIN OF ECONOMIC RESEARCH, Issue 4 2000
Ricardo A. Lagos
This paper introduces a standard neoclassical production function in an equilibrium search model of the labour market, in order to analyse the effects that changes in the (exogenous) rental rate of capital have on the unemployment rate. When the number of firms is kept fixed, an increase in the rental rate affects unemployment only through its impact on selectivity, with the direction of the change depending on the size of the worker's unemployment benefits relative to the firm's search costs. Regardless of the behaviour of selectivity, when the number of firms is determined endogenously, an increase in the rental rate always increases unemployment through a process of job destruction. [source]