Knowledge that Transforms

This paper considers a model with monopolistic competition and multiple equilibria, rankable by output, employment, and the Pareto criterion. While papers in the literature assume a linear production technology and derive a continuum of equilibria, we assume a standard diminishing returns production function and find a finite set of equilibria. Our new feature is the assumption that firms behave in a risk-averse manner. A low-level equilibrium is sustainable because firms, at the low profits level associated with the equilibrium, become extremely cautious in their employment decisions.

Journal Article The Isolation Paradox and the Discount Rate for Benefit-Cost Analysis: A Comment Get access David M. Newbery David M. Newbery University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 1, February 1990, Pages 235–238, https://doi.org/10.2307/2937827 Published: 01 February 1990

V. V. Chari, Ravi Jagannathan, Larry Jones; Price Stability and Futures Trading in Commodities*, The Quarterly Journal of Economics, Volume 105, Issue 2, 1

This paper examines the correlation between changes in consumer spending on nondurables and services, and levels or changes in a variety of other variables that might be expected to enter directly as arguments of the household utility function or to serve as measures of household liquidity. Empirical results strongly suggest that an increase in real money balances raises the marginal utility of consumption. Once the influence of real balances is accounted for, there is little evidence that other variables have a direct impact on the timing of consumption.

This paper extends the Romer-Rosenthal [1978, 1979] model of monopoly agenda control to an environment where only the agenda setter knows with certainty the outcome associated with a failed proposal. The presence of this asymmetric information implies that any "take-it-or-leave-it" proposal may provide information crucial to the decision calculus of the voters, a fact which an optimal proposal strategy will incorporate. The equilibrium behavior of the agenda setter and voters is characterized and contrasted with that in the complete information environment, and a number of empirical predictions concerning the nature of elections with monopoly controlled agendas are derived.

Journal Article Government Target Price Intervention in Economies with Incomplete Markets Get access Robert Innes Robert Innes University of California, Davis Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 4, November 1990, Pages 1035–1052, https://doi.org/10.2307/2937884 Published: 01 November 1990

A simple real linear-quadratic inventory model is used to determine how cost and demand shocks interacted to cause fluctuations in aggregate inventories and GNP in the United States, 1947–1986. Cost shocks appear to be the predominant source of fluctuations in inventories and are largely, though not exclusively, responsible for the fact that GNP is more variable than final sales. Cost and demand shocks are of roughly equal importance for GNP. These estimates, however, are imprecise. With different, but plausible, values for a certain target inventory-sales ratio, cost shocks are less important than demand shocks for GNP fluctuations.

In a simple temporary general equilibrium model, it is shown that, if the number of firms is small, imperfect price competition in the markets for goods may be responsible for the existence of unemployment at any given positive wage. In our examples involving two firms facing their "true" demand curves, total monopolistic labor demand remains bounded as the wage rate goes to zero, and unemployment prevails for a sufficiently large inelastic labor supply. In the competitive case total labor demand would go to infinity and intersect labor supply at a positive wage.

Journal Article The Coordination Problem in Decentralized Markets: An Experiment Get access Jack Ochs Jack Ochs University of Pittsburgh Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 2, May 1990, Pages 545–559, https://doi.org/10.2307/2937800 Published: 01 May 1990

This paper empirically examines whether major domestic oil companies held down product prices relative to their less visible counterparts during the 1979 oil crisis. We compare company prices on unregulated fuel oil with a measure of political pressure—the level of television coverage of the energy crisis. We find that media coverage influenced home heating oil price ratios, but did not influence residual fuel oil price ratios for the same companies. We argue that this differential pricing pattern is rational in a politically sensitive period.