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Equilibrium Price (equilibrium + price)
Selected AbstractsTHE IMPACT OF RENT CONTROLS IN NON-WALRASIAN MARKETS: AN AGENT-BASED MODELING APPROACHJOURNAL OF REGIONAL SCIENCE, Issue 3 2006Ralph Bradburd ABSTRACT We use agent-based models to consider rent ceilings in non-Walrasian housing markets, where bargaining between landlord and tenant leads to exchange at a range of prices. In the non-Walrasian setting agents who would be extramarginal in the Walrasian setting frequently are successful in renting, and actually account for a significant share of the units rented. This has several implications. First, rent ceilings above the Walrasian equilibrium price (WEP) can affect the market outcome. Second, rent ceilings that reduce the number of units rented do not necessarily reduce total market surplus. Finally, the distributional impact of rent controls differs from the Walrasian setting. [source] IMPERFECT INFORMATION AND DIFFERENCES IN HOME OWNERSHIP INVESTMENTPACIFIC ECONOMIC REVIEW, Issue 4 2004Keiko Nosse Hirono We study the advantages accruing to buyers who have complete information and who can pay less than the equilibrium price if sellers undervalue their properties. The reduction in home ownership investment can increase consumption or investment in other assets. We develop an empirical model to capture the gain to such buyers. We estimate this to have been 12.6%,27.6% of the equilibrium price of houses at maximum in the Tokyo metropolitan area during the 1980s. [source] The Entry Cost Shock and the Re-rating of Power Prices in New South Wales, AustraliaTHE AUSTRALIAN ECONOMIC REVIEW, Issue 2 2010Paul Simshauser Australia has long been the beneficiary of low, stable power prices. A decade-long state of oversupply underpinned this result and while plant capital costs had been rising, the cost of capital had been declining. These offsetting effects locked the wholesale market into an average cost of $35,$40/MWh. However, from 2007, a simultaneous and sharp rise in new entrant plant capital costs and the cost of capital occurred. The combined effects crept up on the industry while it was in a state of oversupply. This ,entry cost shock' disrupted a 7 year long equilibrium price, with average power system cost rising to $60/MWh. [source] Price and Variety in the Spokes Model,THE ECONOMIC JOURNAL, Issue 522 2007Yongmin Chen The spokes model of nonlocalised spatial competition provides a new analytical tool for differentiated oligopoly and a representation of spatial monopolistic competition. An increase in the number of firms leads to lower equilibrium prices when consumers have relatively high product valuations, but, surprisingly, to higher equilibrium prices for intermediate consumer valuations. New entry alters consumer and social welfare through price, market expansion, and matching effects. With free entry, the market may provide too many or too few varieties from a social welfare perspective, and the equilibrium price remains above marginal cost even when the number of firms is arbitrarily large. [source] Japanese Rice Market Liberalization: A Competitive Equilibrium ApproachTHE JAPANESE ECONOMIC REVIEW, Issue 4 2000Hiroshi Fujiki This paper quantifies the effect of Japanese rice imports on the Japanese rice market with special attention to the farmland market in the year 2000, based on information available in 1997. Tariff and quota policies do not affect the equilibrium price of rice and rent significantly, given the current acreage controls. The removal of the acreage control programme would reduce the autarky price of rice by 30%. With free importation of rice into Japan, the price of rice would be halved, and the potential increase in the consumer surplus could be 0.3% of the 1995 Japanese GDP. JEL Classification Numbers: F14, Q17, Q18. [source] Futures market equilibrium under Knightian uncertaintyTHE JOURNAL OF FUTURES MARKETS, Issue 7 2003Donald Lien This paper examines the effects of Knightian uncertainty on a commodity futures market within the Newbery-Stiglitz framework. It is shown that Knightian traders act more conservatively. In a partial trade equilibrium, risk aversion and Knightian uncertainty have qualitatively similar effects on the equilibrium price and the equilibrium trading volume. Full-trade and no-trade equilibria are likely to prevail when the producer and the speculator incur different Knightian uncertainty. Herein different impacts of risk aversion and Knightian uncertainty are observed. © 2003 Wiley Periodicals, Inc. Jrl Fut Mark 23:701,718, 2003 [source] A Search Model Where Consumers Choose Quantity Based on Expected PriceTHE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 4 2003Paolo Buccirossi I describe a price game in which consumers face search costs and base their quantity decision on the expected price. Because of search costs, the choice of the firm they will buy from is described by a random process. I show that the expected equilibrium price is above the monopoly price. This result does not change if demand comes from a small share of perfectly informed consumers with zero search costs. [source] Laboratory evidence on the effectiveness of corporate leniency programsTHE RAND JOURNAL OF ECONOMICS, Issue 2 2008Jeroen Hinloopen The number of cartels detected in the United States and in Europe has increased considerably since the introduction of corporate leniency programs in antitrust legislation. It cannot, however, be ruled out that this apparent success results in part from increased cartel activity. We explore the effects of corporate leniency programs on pricing and cartel activity by use of an experiment. We find that in the lab (i) fewer cartels are established when a leniency program is in place, and (ii) cartels that do exist are less successful in charging prices above the static Nash equilibrium price and have lower survival rates. [source] Disclosures and Asset ReturnsECONOMETRICA, Issue 1 2003Hyun Song Shin Public information in financial markets often arrives through the disclosures of interested parties who have a material interest in the reactions of the market to the new information. When the strategic interaction between the sender and the receiver is formalized as a disclosure game with verifiable reports, equilibrium prices can be given a simple characterization in terms of the concatenation of binomial pricing trees. There are a number of empirical implications. The theory predicts that the return variance following a poor disclosed outcome is higher than it would have been if the disclosed outcome were good. Also, when investors are risk averse, this leads to negative serial correlation of asset returns. Other points of contact with the empirical literature are discussed. [source] Price competition under universal service obligationsINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 3 2010Axel Gautier L13; L51 In industries like telecom, postal services or energy provision, universal service obligations (uniform price and universal coverage) are often imposed on one market participant. Universal service obligations are likely to alter firms' strategic behavior in such competitive markets. In the present paper, we show that, depending on the entrant's market coverage and the degree of product differentiation, the Nash equilibrium in prices involves either pure or mixed strategies. We show that the pure strategy market sharing equilibrium, as identified by Valletti, Hoernig, and Barros (2002), defines a lower bound on the level of equilibrium prices. [source] Dynamic Competition with Experience GoodsJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 1 2006J. Miguel Villas-Boas This paper considers dynamic competition in the case in which consumers are only able to learn about their preferences for a certain product after experiencing it. After trying a product a consumer has more information about that product than about untried products. When competing in such a market firms with more sales in the past have an informational advantage because more consumers know their products. If products provide a better-than-expected fit with greater likelihood, taking advantage of that informational advantage may lead to an informational disadvantage in the future. This paper considers this competition with an infinite horizon model in a duopoly market with overlapping generations of consumers. Two effects are identified: On one hand marginal forward-looking consumers realize that by purchasing a product in the current period will be charged a higher expected price in the future. This effect results in reduced price sensitivity and higher equilibrium prices. On the other hand, forward-looking firms realize that they gain in the future from having a greater market share in the current period and compete more aggressively in prices. For similar discount factors for consumers and firms, the former effect is more important, and prices are higher the greater the informational advantages. The paper also characterizes oscillating market share dynamics, and comparative statics of the equilibrium with respect to consumer and firm patience, and the importance of the experience in the ex post valuation of the product. [source] PREFERENCE HETEROGENEITY AND ECONOMIC GEOGRAPHY,JOURNAL OF REGIONAL SCIENCE, Issue 1 2009Antonella Nocco ABSTRACT We investigate the effect of preference heterogeneity between skilled and unskilled workers on agglomeration, and we identify a new source of dependence of equilibrium prices on the demand properties shaped by the inter-regional distribution of workers. We find a new preference effect, and we show that when the intensity of skilled workers' preference for the modern good and its variety is strong enough, prices charged by firms may even increase when the mass of local firms increases, therefore acting as a new dispersion force when trade costs are low or as a new agglomeration force when trade costs are high. [source] AN EQUILIBRIUM GUIDE TO DESIGNING AFFINE PRICING MODELSMATHEMATICAL FINANCE, Issue 4 2008Bjørn Eraker The paper examines equilibrium models based on Epstein,Zin preferences in a framework in which exogenous state variables follow affine jump diffusion processes. A main insight is that the equilibrium asset prices can be computed using a standard machinery of affine asset pricing theory by imposing parametric restrictions on market prices of risk, determined inside the model by preference and model parameters. An appealing characteristic of the general equilibrium setup is that the state variables have an intuitive and testable interpretation as driving the consumption and dividend dynamics. We present a detailed example where large shocks (jumps) in consumption volatility translate into negative jumps in equilibrium prices of the assets as agents demand a higher premium to compensate for higher risks. This endogenous "leverage effect," which is purely an equilibrium outcome in the economy, leads to significant premiums for out-of-the-money put options. Our model is thus able to produce an equilibrium "volatility smirk," which realistically mimics that observed for index options. [source] Competition under time-varying demands and dynamic lot sizing costsNAVAL RESEARCH LOGISTICS: AN INTERNATIONAL JOURNAL, Issue 1 2009Awi Federgruen Abstract We develop a competitive pricing model which combines the complexity of time-varying demand and cost functions and that of scale economies arising from dynamic lot sizing costs. Each firm can replenish inventory in each of the T periods into which the planning horizon is partitioned. Fixed as well as variable procurement costs are incurred for each procurement order, along with inventory carrying costs. Each firm adopts, at the beginning of the planning horizon, a (single) price to be employed throughout the horizon. On the basis of each period's system of demand equations, these prices determine a time series of demands for each firm, which needs to service them with an optimal corresponding dynamic lot sizing plan. We establish the existence of a price equilibrium and associated optimal dynamic lotsizing plans, under mild conditions. We also design efficient procedures to compute the equilibrium prices and dynamic lotsizing plans.© 2008 Wiley Periodicals, Inc. Naval Research Logistics 2009 [source] Price and Variety in the Spokes Model,THE ECONOMIC JOURNAL, Issue 522 2007Yongmin Chen The spokes model of nonlocalised spatial competition provides a new analytical tool for differentiated oligopoly and a representation of spatial monopolistic competition. An increase in the number of firms leads to lower equilibrium prices when consumers have relatively high product valuations, but, surprisingly, to higher equilibrium prices for intermediate consumer valuations. New entry alters consumer and social welfare through price, market expansion, and matching effects. With free entry, the market may provide too many or too few varieties from a social welfare perspective, and the equilibrium price remains above marginal cost even when the number of firms is arbitrarily large. [source] Feedback Effects and Asset PricesTHE JOURNAL OF FINANCE, Issue 4 2008EMRE OZDENOREN ABSTRACT Feedback effects from asset prices to firm cash flows have been empirically documented. This finding raises a question for asset pricing: How are asset prices determined if price affects fundamental value, which in turn affects price? In this environment, by buying assets that others are buying, investors ensure high future cash flows for the firm and subsequent high returns for themselves. Hence, investors have an incentive to coordinate, which may generate self-fulfilling beliefs and multiple equilibria. Using insights from global games, we pin down investors' beliefs, analyze equilibrium prices, and show that strong feedback leads to higher excess volatility. [source] | ||||||||||||||||||||||