Manchester School最新文献

This research investigates the relationship between real interest rate parity and the interest parity puzzle across several economies in the Asia-Pacific region. Unlike previous studies, we establish a comprehensive theoretical framework for parity and utilize macroeconomic and financial market data from 15 economies in the region to examine it. Our findings indicate that most countries exhibit mild deviations from parity, with real interest rate differentials strongly correlated with changes in the real exchange rate and interest-exchange rate interaction terms, particularly in middle-income economies. While interest parity puzzle is also observed in high-income economies, it is less prevalent in most middle-income economies. Our analysis reveals that income levels are key drivers of deviations from parity in this model, with interaction terms also playing a crucial role in most cases. The implication here is that for carry trades, investors place significant importance on risk factors, especially in economies with relatively low risk. This insight helps to clarify a puzzle in this area. Therefore, it is imperative that investors should take into account the impact of interest-exchange rate interaction terms when making carry trade decisions. Lastly, we underscore the significance of ex ante price forecast approaches in achieving parity.

We consider a government that purchases a public good or a private good for public consumption from a heterogenous group of professionals (such as scientists, doctors, or lawyers) in an environment characterized by an extremely high level of information asymmetry. Specifically, we assume that the government needs information from a self-regulatory organization (SRO) of agents (such as a research council, a medical board, or a bar association) to draft the contract. We show that the government information disadvantage is minimized when the SRO is dictatorial, that is, when it follows the preferences of the efficient agents.

This study revisits the excess entry theorem for quantity and price competition with substitutes and complements in a Kantian oligopoly. In such an oligopoly, we demonstrate that the equilibrium market outcomes are the same between the aforementioned two types of competition regimes with substitutes and complements, and in particular, each firm's equilibrium price and consumer surplus do not depend on the number of firms. Therefore, in quantity and price competition with substitutes and complements in a Kantian oligopoly, the excess entry theorem holds that the number of firms is larger under free entry than under the second-best social optimality. Finally, in the two types of competition with substitutes and complements, we characterize the ranking orders of the number of firms between free entry and the second-best social optimality in Kantian and Nashian oligopolies.

We explore the social efficiency of free entry in a pure network goods market where Cournot oligopolistic competition prevails and consumers have passive expectations. Focusing on network compatibility between firms, we consider the cases of two network systems: a firm-specific system and a single industry-wide network system. We demonstrate the following results. In the firm-specific network system, the number of firms under free entry is socially excessive compared with the second-best criteria. However, in the single industry-wide network system, if the elasticity of network effects in relation to the expected network sizes is sufficiently large, the number of firms under free entry is socially insufficient compared with the second-best criteria. Otherwise, socially excessive entry arises. We also examine the same issue in the case of a mixed network goods market.

This study investigates mixed markets in which a social welfare-maximizing public firm and a private firm engage in behavior-based price discrimination (BBPD). A total of two cases are considered: one where domestic shareholders completely own the private firm and one where foreign shareholders completely own it. In the domestic mixed duopoly, BBPD is irrelevant from the viewpoint of domestic social welfare. This is because poaching does not occur. In the international mixed duopoly, BBPD improves domestic social welfare, as BBPD reduces the outflow of the private firm's profit to foreign shareholders. In both cases, privatization is more undesirable under BBPD than uniform pricing.

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).