Knowledge that Transforms

Noncooperative strategic behaviors are studied in the Malinvaud-Dreze-de la Vallee Poussin decentralized planning procedure. We depart from the assumption of myopic behavior by assuming that every agent takes into account the effect over a given period of time [0, T] of his answers to the Center. One shows that, for T large, every Nash equilibrium of the ensuing game in intertemporal strategies approaches: (i) a competitive equilibrium in an exchange economy, and (ii) a Lindahl equilibrium in an economy with public goods. Thus, the Center loses any significant influence on the income distribution.

Comments on a study by Conger and Campbell which postulated a 6 equation dynamic model including a fertility equation, estimated by 2 stage least squares on the basis of aggregate data for the U.S. The authors present a table with 3 sets of estimates for each of the 6 structural equations specified in the earlier study; 2 stage least squares estimates obtained for 1946-70 and 1946-76 and the estimates obtained by Conger and Campbell are indicated. The authors report that they were unable to obtain the results reported by the latter; their estimates were quite different and did not seem to support the conclusions offered in the earlier study. Estimates for the longer period were substantially different from those for the shorter. The authors believe that the Conger Campbell data also do not support the Conger-Campbell conclusions. Each point is discussed, with reference to the table. The equations are used to evaluate fertility, female participation, infant mortality, income, education, and medical expenditure.

T. W. Anderson, Naoto Kunitomo, Takamitsu Sawa, Evaluation of the Distribution Function of the Limited Information Maximum Likelihood Estimator, Econometrica, Vol. 50, No. 4 (Jul., 1982), pp. 1009-1027

We consider a model of capital accumulation and prove the existence of a support price path for the optimal path of capital accumulation. The considered model is a continuous time model of infinite horizon. Our problem is the so-called convex problem of optimal control without differentiability. We adopt the overtaking optimality criterion and prove the existence of a dual price path which supports the value function as well as the Hamiltonian function.

We investigate the stochastic relation between income and consumption (specifically, consumption of food) within a panel of about 2,000 households. Our major findings are: 1. Consumption responds much more strongly to permanent than to transitory movements of income. 2. The response to transitory income is nonetheless clearly positive. 3. A simple test, independent of our model of consumption, rejects a central implication of the pure life cycle-permanent income hypothesis. The observed covariation of income and consumption is compatible with pure life cycle-permanent income behavior on the part of80 percent of families and simple proportionality of consumption and income among the remaining 20 percent. As a general matter, our findings support the view that families respond differently to different sources of income variations. In particular, temporary income tax policies have smaller effects on consumption than do other, more permanent changes in income of the same magnitude.

Inflation,

Limit pricing involves charging prices below the monopoly price to make new entry appear unattractive.If the entrant is a rational decision maker with complete information, pre-entry prices will not influence its entry decision, so the established firm has no incentive to practice limit pricing.However, if the established firm has private, payoff relevant information (e.g., about costs), then prices can signal that information, so limit pricing can arise in equilibrium.The probability that entry actually occurs in such an equilibrium, however, can be lower, the same, or even higher than in a regime of complete information (where no limit pricing would occur).'Much of the work reported here first appeared in [11].This work has been presented at a large number of conferences, meetings, and seminars, and we would like to thank our audiences at each of these events for their comments.We are particularly indebted to Eric Maskin, Roger Myerson, Steve Salop, Robert Wilson, and two referees for their helpful suggestions, to David Besanko for his excellent research assistance,