In a first attempt to apply the global games methodology tonsignalling games, Ewerhart and Wichardt (2004) analyse a beer-quiche type signalling game with additional imperfect information about the preferences of the receiver. Their approach allows them to dismiss the unreasonable pool-ning on quiche equilibrium. This paper revisits their example and discusses how an extension of the set of strategies for the sender affects the analysis. Interestingly, for an extended beer-quiche game, a unique equilibrium is selected while two equilibria are consistent with the Intuitive Criterionn(Cho and Kreps, 1987). Apart from the technical analysis, potential economic applications of the results, e.g. in a context of limit pricing and entry deterrence, are indicated.
In monetary models where agents are subject to trading shocksnthere is typically an ex-post inefficiency since some agents are holding idle balances while others are cash constrained. This problem creates a role for financial intermediaries, such as banks, who accept nominal deposits and make nominal loans. In general, financial intermediation improves the allocation. The gains in welfarencome from the payment of interest on deposits and not from relaxing borrowers’ liquidity constraints. We also demonstrate that when credit rationing occurs increasing the rate of inflation can benwelfare improving.
(English text below) Il prossimo 31 marzo a Palazzo dei congressi a Lugano si terrà l evento Silicon Valley meets Switzerland. Si tratta di una piattaforma di incontro tra il mondo della ricerca scientifica in ambito informatico e quello delle imprese attive nel settore tecnologico, con l obiettivo ...
I consider the problem of evaluating the effect of a health care reform on the demand for doctor visits when the effect is potentially different in different parts of the outcome distribution. Quantile regression is a useful technique for studying such heterogeneous treatment effects. Recent progree has been made to extend such methods to applications with a count dependent variable. An analysis of a 1997 health care reform in Germany shows the benefit of the approach: lower quantiles, such as the 25 percent quantile, fell by substantially larger amounts than what would have been predicted based on Poisson or negative binomial models.
This paper uses recent data for Germany and a new outcome variable to assess the consequences of parental separation on the well-being of youths. In particular, it is considered how subjective well-being, elicited from an ordinal 11-point general life satisfaction question, differs between youths living in intact and non-intact families, holding many other potential determinants of well-being constant using ordered probit regressions. The main finding of this study is that living in a non-intact family has not the hypothesised large negative effect on child well-being.
This paper reports on a re-evaluation of the German health care reform of 1997. A previous evaluation found a limited effect of a 4.4 percent reduction of the number of doctor visits in a sample of pharmacy customers. The re-evaluation based on a representative household survey, the German Socio-Economic Panel, yields a much larger effect. The paper uses this case study to discuss the methods and benefits of modern techniques of program evaluation.
We examine cost-reducing investment in vertically-related oligopolies, where firms may be vertically integrated or separated. Analyzing a standard linear Cournot model, we show that: (i) Integrated firms invest more than separated competitors. (ii) Vertical integration increases own investment and decreases competitor investment. (iii) Firms may integrate strategically so as to preempt investments by competitors. Adopting a reduced-form approach, we identify demand/mark-up complementarities in the product market as the driving force for these results. We show that our results generalize naturally beyond the Cournot example, and we discuss policy implications.
Under certain conditions the optimal insurance policy will offer full coverage above a deductible, as Arrow and others have shown long time ago. Interestingly, the same design of insurance policies applies in case of a single loss and ex-ante moral hazard. However, many insurance policies provide coverage against a variety of losses and the possibilities for the insured to affect the probabilities of each possible loss might be substantially different. The optimal design of a insurance contract providing coverage against different losses therefore should generally differ from the standard form under moral hazard. The paper concentrates on the conditions under which the standard insurance contract holds under moral hazard and more than one loss. It gives some evidence that many insurance contracts should be split up. The main result is, that the relative changes of probabilities due to precautious activities are decisive. On the other hand, under moral hazard it is rarely ever optimal to combine two losses in one insurance contract prescribing only a single deductible for both losses if both losses can occur simultaneously.
We develop a product market theory that explains why firms invest in general training of their workers. We consider a model where firms first decide whether to invest in general human capital, then make wage offers for each others’ trained employees and finally engage in imperfect product market competition. Equilibria with and without training, and multiple equilibria can emerge. If competition is suffciently soft and trained workers are substitutes, firms may invest in non-specific training if others do the same, because they would otherwise suffer a competitive disadvantage or need to pay high wages in order to attract trained workers. Government intervention can be socially desirable to turn training into a focal equilibrium.
We examine the competitive effects of the vertical integration of gasoline refineries and retailers in the U.S. Adapting the first-order condition approach of static oligopoly games to the analysis of vertically related oligopolies, we develop a novel framework for directly evaluating the strategic foreclosure effect and the effciency benefits associated with vertical integration. Applying this framework, we find significant evidence for both vertical foreclosure and effciency benefits. The foreclosure effect dominates the effciency benefits for more than half of the refining firms in the sample. Vertical foreclosure is found to increase the wholesale price of refined gasoline by 0.2 to 0.6 cents per gallon.
