A production set with indivisibilities is described by an activity analysis matrix with activity levels which can assume arbitrary integral values. A neighborhood system is an association with each integral vector of activity levels of a finite set of neighboring vectors. The neighborhood relation is assumed to be symmetric and translation invariant. Each such neighborhood system can be used to define a local maximum for the associated integer programs obtained by selecting a single commodity whose level is to be maximized subject to specified factor endowments of the remaining commodities. It is shown that each technology matrix (subject to mild regularity assumptions) has a unique, minimal neighborhood system for which a local maximum is global. The complexity of such minimal neighborhood systems is examined for several examples.
[This paper estimates the incidence of response errors in the Current Population Survey. It proposes a procedure for adjusting the Bureau of Labor Statistics' gross flows data on labor market transitions to account for these errors. Although the findings are not definitive because the procedure makes particular assumptions regarding the stochastic process generating response errors, they illustrate the potentially substantial effect of response errors on studies of labor market behavior. The adjustment procedure suggests that because measurement errors give rise to spurious transitions between labor market states, the labor market may be less dynamic than previously thought. The results imply that conventional measures may understate the duration of unemployment by as much as eighty per cent, and overstate the frequency of labor force entry and exit by even more.]
A model of aggregate economic activity is formulated which enmphasizes the effects of borrowing constraints in the presence of uninsurable risk. An important determinant of current income level is shown to be the cross-sectional distribution of wealth. As this distribution evolves endogenously, the model is capable of producing rich dynamics from a simple specification of exogenous shocks. The model shows that this phenomena can contribute to observed price volatility. IT IS COMMONLY THOUGHT that individuals have only limited opportunities to borrow against future labor income and cannot totally insure all types of risk. It has also been suggested that such departures from the presumptive norm of frictionless, complete information capital markets may have implications for aggregate economic activity. AlthLough there has been some work analyzing the implications of borrowing constraints for individual savings behavior (18, 2, 8), there has been no systematic analysis of how such borrowing constraints will affect the time series properties of output, prices, and interest rates. In this paper, we present a completely specified infinitely lived two agent equilibrium model which emphasizes the roles of borrowing constraint and uninsured risk for affecting aggregate outcomes. Specifically we assume that agents are prohibited from ever having negative nonhuman wealth. The model has the central feature that there is no aggregate uncertainty, but each agent's own productive opportunities are stochastic. If there were a full set of Arrow- Debreu contingent claim markets each agent could attain a certain consumption stream and the resulting allocation and (implicit) relative prices would be constant through time. However, we assume that such markets do not exist. Rather, we assume that at each point in time agents may trade only the single durable asset for the single perishable consumption good. This may be interpreted either as fiat mon ay with a fixed own nominal return of zero, or as claims to productive capital which emits a fixed exogenous flow of the consumption good. We assume also that output may be produced by labor. However, only one of the two agents is productive at any instant in time. The duration of time over which a single agent is productive is assumed to be random, and, for analytical simplicity, is assumed to be generated by a Poisson counting process. The resulting allocation has the property that the agent who is not productive exchanges some of his
On etudie la negociation simultanee sur plusieurs resultats par deux negociateurs en prenant les sommes des jeux de negociation et en exigeant des solutions de negociation satisfaisant certains axiomes de (super-) additivite
[This paper derives the equilibrium behavior of a monopoly producer of a durable good in a continuous time framework. We show that if purchasers are subject to rational expectations then a monopolist who cannot precommit to a particular production strategy produces more at every instant of time than does a monopolist who can precommit. Asymptotically the total production of a monopolist who cannot precommit is equal to the welfare maximizing producer's; however the monopolist produces more slowly, as long as firms are subject to increasing marginal costs. Thus we formally demonstrate that the original Coase intuition regarding the efficiency of the monopoly producer of a durable good only holds in the case of constant marginal costs.]
This paper examines the implications of adverse selection in the private annuity market for the pricing of private annuities and the consequent effects on constrption and bequest behavior. With privately known heterogeneous mortality probabilities, adverse selection causes the rate of return on private annuities to be less than the actuarially fair rate based on population average mortality. However, a fully funded social security system with compulsory participation can offer an implied rate of return equal to the actuarially fair rate based on population average mortality. Thus, since social security offers a higher rate of return than private annuities, consumers cannot completely offset the effects of social security by transacting in the private annuity market. Using an overlapping generations model with uncertain lifetimes, we demonstrate that the introduction of actuarially fair social security reduces the steady state rate of return on annuities and raises the steady state levels of average bequests and average consumption of the young. The steady state national capital stock rises or falls according to the strength of the bequest motive.
[In this paper, we study a monopolistic market for an information good possessing external effects, and investigate how far the information good is diffused from its owner to demanders through trades.]
[We consider an economy in which agents may or may not communicate with each other. Coalitions can form only between linked agents. We consider two cases: agents must communicate directly to be in the same coalition or in the second case indirectly. We consider the communication to be random. The economy may then be represented by a stochastic graph; the admissible coalitions are then stochastic and thus so is the core of an economy. We demonstrate that if the probability that agents are linked with each other does not tend to zero too fast as this number increases, then the probability that a coalition will form and block any non-Walrasian allocation tends to one, as the number of agents goes to infinity.]
[A seller and a buyer make offers and counteroffers to one another until they reach an agreement, or else one side decides to terminate the negotiations. Neither side knows the value of the other of reaching an agreement. It is shown,using the concept of sequential equilibrium, that if there are known fixed costs in bargaining, then the bargaining must terminate in a single round. The side with the lower costs of waiting makes an offer which the other side either accepts or rejects by terminating the bargaining.]
[The formulation of optimal policy in linear rational expectations models is studied using methods analogous to the classical design techniques utilized in linear systems engineering. Specifically, the policy-maker's present-value-like objective function is converted, using the convolution transform, to an equivalent frequency domain, "spectral utility" function. Then the residue calculus and Wiener-Hopf methods are used to maximize spectral utility through the choice of a complex function which represents a sequence of distributed lag coefficients to be applied to current and past values of instrument variables. The solution to this problem is a closed form expression for the decision rule of the dominant player in a particular type of linear-quadratic dynamic game.]