This paper helps close the gap between theory and empirical evidence in the literature on asymmetric employer learning. If an employer's private learning is reflected in a worker's wage and one employer's private information is transmitted to the next when the worker makes a job-to-job transition, then asymmetric employer learning will appear in wage regressions as learning over an employment spell. Extending previous work that assumes all learning takes place publicly, this paper develops wage regressions that test for both asymmetric employer learning and public learning. The empirical results, including tests of alternative explanations, are consistent with asymmetric employer learning's having at least as much of an effect on wages during an employment spell as does public learning. The model developed in this paper illustrates how the story suggested by the empirical work might unfold. It shows that outside firms can profitably compete with a better-informed employer through bidding wars, even when the worker is equally productive in all firms. Furthermore, this competition results in different wages for workers with the same publicly observable characteristics, a result that previous models of asymmetric learning have not produced.

This paper uses an empirical dynamic oligopoly model of the commercial aircraft industry to analyse industry pricing, industry performance, and optimal industry policy. A novel feature of the model with respect to the previous literature is that entry, exit, prices, and quantities are endogenously determined in Markov perfect equilibrium (MPE). We find that many unusual aspects of the aircraft data, such as high concentration and persistent pricing below static marginal cost, are explained by this model. We also find that the unconstrained MPE is quite efficient from a social perspective, providing only 10% less welfare on average than a social planner would obtain. Finally, we provide simulation evidence that an anti-trust policy in the form of a concentration restriction would be welfare reducing. Copyright 2004, Wiley-Blackwell.

This paper develops a model of repeated innovation with knowledge spillovers. The model's novel feature is that firms compete on two dimensions: (1) product quality, where one firm's innovation ultimately spills over to other firms; and (2) distribution costs, where there are no spillovers across firms and where learning-by-doing on the part of incumbent firms gives them a competitive advantage over would-be entrants. Such firm-specific learning-by-doing has two important consequences: (1) it can in some circumstances dramatically reduce the long-run average level of innovation; (2) it leads to endogeneous bunching, or waves, in innovative activity.

In this note we show that the conditions that guarantee uniqueness and optimality of Walrasian equilibrium under uncertainty are not sufficient to guarantee these results for non-noisy rational expectations equilibrium under asymmetric information.

In the Lucas-Rapping (1969) model of the labour market, fluctuations in unemployment represent individuals optimally adjusting their labour supply behaviour in response to fluctuations in wage rates over the business cycle. In this paper I propose and implement a misspecification test of the Lucas-Rapping treatment of unemployment as labour supply behaviour using panel data. This test extends previous such work with micro data by simultaneously allowing for intertemporal substitution, uncertainty and endogenous unemployment. Using the standard specification of intertemporal labour supply behaviour, I find strong evidence against this interpretation of unemployment. There are two possible interpretations of the test results. The first is that it is necessary to turn to alternative models of the labour market in which unemployed workers are off a supply function. The second is that the test results indicate the necessity of moving to more complex models of intertemporal substitution. However, given current econometric techniques and data sets, these alternative models of intertemporal substitution will be extremely difficult to test.

This paper argues that adverse selection in the labour market, when viewed as part of a three-way interaction among workers, their current employers and a universe of alternative employers, may seriously impair a worker's freedom to change jobs. When current employers are better informed about the abilities of their workers than potential alternative employers, they will presumably concentrate their efforts to prevent turnover on their better workers. If these efforts lead to fewer quits among better workers, the stream of job changers should be composed disproportionately of less able ones. This will inhibit turnover in two ways. First, firms should be unwilling to hire from the job-changing pool except at low wages. Second, workers who change jobs are marked by being part of an inferior group, which lowers their future bargaining power and wages. Models of these phenomena can be made to account for many aspects of observed labour market behaviour.

This paper presents a dynamic, choice-theoretic general equilibrium model of capital accumulation in an open economy. Equilibria with and without capital mobility are described and compared. It is shown that neither is necessarily Pareto optimal and that an equilibrium with free trade in capital does not Pareto-dominate an equilibrium with autarky. The effects of restricting capital flows by taxing foreign investment earnings are discussed. It is seen that there will be no agreement within a country as to what constitutes an optimal tax. 1.

A social choice procedure is developed for selecting an alternative from a finite set on the basis of paired-comparison voting. Ballot data are used to construct a lottery on the alternatives that is socially as preferred as every other lottery. The constructed lottery is then used to select a winner. An axiomatization of social preferences among lotteries that justifies the procedure is included. The procedure will always select a consensus majority alternative when one exists, and it will never select an alternative that is Pareto dominated by another alternative.

This study proposes and implements a method of labour supply estimation which is appropriate when the sample contains unemployed and underemployed workers. The estimation method consists of excluding unemployed and underemployed workers from the sample and then using (to avoid selection bias) an extension of Heckman's approach to the case where two correlated selection rules generate the sample. Hausman's specification test is then used to determine whether ignoring constrained workers has led to biases in traditional labour supply estimates, and the empirical results suggest that previous estimates of several important parameters are biased. Since the biases go in the direction that would be predicted by the hypothesis that the unemployed and underemployed are constrained, the results support this hypothesis.

Journal Article Transitivity Get access Peter C. Fishburn Peter C. Fishburn Pennsylvania State University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 46, Issue 1, January 1979, Pages 163–173, https://doi.org/10.2307/2297179 Published: 01 January 1979 Article history Received: 01 February 1977 Accepted: 01 April 1978 Published: 01 January 1979