Manchester School最新文献

This paper establishes a general equilibrium model to investigate how property rights enforcement impacts wage inequality when unproductive and productive activities coexist. We consider enforcement funded by a gross income tax, a labor tax, or a capital tax, and find that in all of the three schemes, when property rights enforcement is relatively efficient and the skilled sector is more capital intensive than the unskilled sector, an increase in enforcement will decrease wage inequality. However, the critical values of property rights enforcement efficiency under the three funding sources are different. In particular, the critical value in the scheme of a capital tax is always smaller than that in the scheme of a gross income tax, which suggests that if the skilled sector is more capital intensive than the unskilled sector, switching the funding sources of enforcement from a gross income tax to a capital tax can help mitigate wage inequality.

This research explores the equilibria of a spatial model with consumers having finite reservation prices and two firms under Cournot-Bertrand competition. We find three types of equilibria. For high effective reservation prices, a unique equilibrium exists with spatially agglomerating firms serving all consumers. For medium effective reservation prices, the intermediate-location-differentiation firms serve all consumers at equilibria. For low effective reservation prices, the firms act as two monopolists and do not serve all consumers at equilibria. The results herein and from previous studies together demonstrate that changing one of two Bertrand (Cournot) firms to Cournot-type (Bertrand-type) can make the minimum-location-differentiation equilibrium appear (disappear). Moreover, both firms' location distances at our intermediate-location-differentiation equilibria are always larger than those at the equilibria of firms' price competition.

Alcohol has long been known as the demon drink; an epithet owed to the numerous social ills it is associated with. Our lab-in-the-field experiment assesses the extent to which changes in intoxication and an individual's environment lead to changes in overconfidence or cognitive ability that are, in turn, often linked to problematic behaviours. Results indicate that it is the joint effect of being intoxicated in a bar, rather than simply being intoxicated, that matters. Subjects systematically underestimated the magnitude of their behavioural changes, suggesting that they cannot be held fully accountable for their actions.

This study examines the superiority of the discriminatory and uniform tariff regimes under both simultaneous and sequential arrangements in terms of social and global welfare by considering asymmetrically increasing marginal costs among exporters. Under Cournot competition, the importing country has an incentive to manipulate the tariff structure using a sequential tariff arrangement, which implies that it prefers to impose tariff on a low-cost exporter first and a high-cost exporter later. Sequential discriminatory (uniform) tariffs can achieve Pareto superiority from the perspective of consumer surplus, and social and global welfare if product differentiation is low (high). It is mainly because high-cost (low-cost) exporters are handicapped (subsidized) under alternative tariff regimes. In contrast to previous research, our analysis suggests the possibility that preferences for tariff regimes will change in the same direction for consumer surplus, social welfare, and global welfare.

What effect, if any, do changes in the terms of trade have on the level of output (GDP) or welfare? I examine this issue through two versions of a textbook, Heckscher-Ohlin-Samuelson (HOS), two-good model of a small, open economy. In the first version both goods are for final consumption. In the second, one good is an imported intermediate input into the other. In both versions, economic theory suggests that an improvement in the terms of trade raises welfare (consumption) but leaves aggregate output (GDP) unchanged. I then show that a national income accountant applying the principles of the 2008 System of National Accounts (SNA) would reach the same conclusions. This follows from a continuous-time analysis using Divisia index numbers. However in the case where imports are intermediate inputs and competition is imperfect, an improvement in the terms of trade does raise GDP: the size of the effect depends on the size of the markup of price over marginal revenue. I argue that the continuous time Divisia approach is the right framework for national income accounting, even though it can only be implemented approximately in practice. If the aim is to find the best approximation to the Divisia index, then the chained Fisher index (as used in the US and Canadian national accounts) or the chained Törnqvist are better approximations than is the chained Laspeyres (as used in Europe).

We investigate the relationship between education funding and educational inequality across Chinese prefectures. The decentralisation of education in China has created substantial variations in government educational expenditures, both over time and across regions. We propose that these variations relate to the budget preferences of local governors. These are age dependent with younger officials more inclined to invest in large and quantifiable infrastructure projects rather than public service provision. This provides a source of exogenous variation in local fiscal efforts to provide public education and thus permits quasi-experimental evaluation through instrumental variable identification. Our results suggest that increased education spending is linked with lower educational inequality. Moreover, we find strong evidence of heterogeneity - the magnitude of the effect is diminishing with the degree of local fiscal autonomy.

This paper studies how product design and pricing strategies are affected by the existing relationship between the characteristics that integrate the product. The analysis shows that complementarity and low substitutability encourage the provision of quality incorporated to the products and increase the quality distortion and cannibalization problems that are common in segmented markets. A two-product strategy with a common attribute is shown to be a feasible strategy for reasons other than cost savings, namely attribute dependence. In addition, menu pricing is found to be the most profitable strategy, and a commonality strategy is more profitable than a common-product strategy.

Price competition is more intense than quantity competition in private oligopolies, wherein all firms are profit maximizers. However, in mixed oligopolies where one state-owned public firm competes with profit-maximizing private firms, price competition may not result in tougher competition than quantity competition. In this study, we introduce common ownership, a distinct feature of recent financial markets, into a mixed oligopoly model and investigate how common ownership affects this ranking. We show that under common ownership, quantity competition is likely to be tougher than price competition. Moreover, we find that common ownership harms welfare regardless of the competition mode. Common ownership enhances private firms' profits under Bertrand competition while these may decline under Cournot competition.

We consider a model of corruption in the form of surround-bidding in a first-price procurement auction in which bidders' private cost follows uniform distribution. We find that the briber's high-price bidding function is less aggressive than honest suppliers' while his low-price one is more aggressive. As the bribery cost increases, both the briber's low-price and high-price bidding functions become less aggressive. The winning probability and expected profit of the briber increase, while the winning probability and expected profit of honest suppliers decrease. Surprisingly, although the briber's high-price bid may be the winning bid, which is harmful to the procurer, the procurer's expected payment decreases, that is, the procurer benefits from surround-bidding corruption, because the benefit due to more intense competition outweighs the harm caused by the briber's high-price bid.

This paper investigates the predictive power of the shadow rate for the inflation rate in countries with a zero lower bound (the US, the UK and Canada) and in those with negative rates (Japan, the Euro Area and Switzerland). Using shadow rates obtained from two different models (the WX(3) and the KANSM(2) ones) and for different LB parameters we compare the out-of-sample forecasting performance of an inflation model including a shadow rate with a benchmark one excluding it. Both specifications are estimated by OLS (Ordinary Least Squares) and includes a range of macroeconomic factors computed by means of principal component analysis. Both point and density forecasts of the inflation rate are evaluated. The models including the shadow rate are found to outperform the benchmark ones according to both sets of criteria except in countries operating an official inflation targeting regime. Both types of shadow rates appear to produce equally accurate out-of-sample inflation forecasts.