scholarly journals The Econometrics of Kinked Budget Constraints

1990 ◽  
Vol 4 (2) ◽  
pp. 119-139 ◽  
Author(s):  
Robert Moffitt
Keyword(s):  
Economic Theory ◽  
Piecewise Linear ◽  
Applied Econometrics ◽  
Budget Constraint ◽  
Budget Constraints ◽  
Transfer Programs ◽  
Demand Functions ◽  
Number Of Segments ◽  
Block Pricing

In the last several years, a branch of applied econometrics has developed that is devoted to the development of techniques for the estimation of demand and other functions when the budget constraint is “piecewise-linear,” or “kinky”—that is, when the constraint consists of a number of segments joined together at kink points. Such constraints most frequently arise from government tax and transfer programs. But kinked constraints sometimes arise in nongovernment contexts, a well-known example being the block pricing schedule commonly set by utilities and volume discounting in general. Kinked budget constraints create two difficulties. First, changes in tax and transfer schedules can have unexpected effects that can be exactly the opposite in sign to those expected from economic theory. Examples of this phenomenon are given below. Second, kinked budget constraints make the estimation of demand functions quite difficult.

scholarly journals The (Non) Economic Properties of the Law

Games ◽  
2021 ◽  
Vol 12 (1) ◽  
pp. 26
Author(s):  
Leo Katz ◽  
Alvaro Sandroni
Keyword(s):  
Economic Theory ◽  
Bounded Rationality ◽  
Budget Constraints ◽  
The Law

This paper shows that the logical properties of constraints imposed by law are fundamentally different from other constraints considered in economics such as budget constraints and bounded rationality constraints, such as the ones based on inattention or shortlisting. This suggests that to fully incorporate law into economics may require a revision of economic theory.

State-owned enterprises, soft budget constraints and the owner—regulator syndrome

2002 ◽  
Vol 52 (2) ◽  
pp. 221-235 ◽  
Author(s):  
J. Davis ◽  
H. Keiding
Keyword(s):  
Vertical Structure ◽  
Theory Of The Firm ◽  
Chicago School ◽  
Budget Constraint ◽  
Economic Regulation ◽  
Budget Constraints ◽  
Soft Budget Constraint ◽  
Institutional Agents ◽  
Soft Budget Constraints ◽  
Economic Agents

We look at the soft budget constraint literature in the context of the state-led restructuring of state-owned enterprises (SOE) in which institutions are both regulators charged with constraining SOE restructuring outcomes and part owners of the SOEs concerned. Such institutional agents constitute a set of what we term “owner—regulators (OR)”. These economic agents may have political problems as regulators — as suggested by the Chicago School approach to economic regulation. They can also have ownership problems — here defined by literature on the theory of the firm and on vertical structure. In this light the incentives associated with the imposition of hard budget constraints may be by themselves insufficient to radically change owner—regulator behaviour. If the implementation of such constraints does not take into account the factors highlighted by this paper, hard budget constraints are likely to be either counterproductive or irrelevant.

FINDING ALL SOLUTIONS OF PIECEWISE-LINEAR RESISTIVE CIRCUITS WITH HIGH APPROXIMATION ACCURACY

2006 ◽  
Vol 15 (03) ◽  
pp. 389-398 ◽  
Author(s):  
KIYOTAKA YAMAMURA ◽  
AKINORI MACHIDA
Keyword(s):  
Piecewise Linear ◽  
Special Technique ◽  
High Approximation ◽  
Approximation Accuracy ◽  
Dual Simplex Method ◽  
Memory Space ◽  
All Solutions ◽  
Large Memory ◽  
Dual Simplex ◽  
Number Of Segments

An efficient algorithm is proposed for finding all solutions of piecewise-linear (PWL) resistive circuits with high approximation accuracy, namely, circuits where the characteristics of PWL resistors are approximated by PWL functions with a very large number of segments. This algorithm is based on the LP test using the dual simplex method, the contraction method, and a special technique that makes the algorithm not require large memory space and not require copying tableaus. By numerical examples, it is shown that the proposed algorithm could find all solutions of a circuit where the number of PWL resistors is 4000 and the number of linear regions is 10 0004000.

Preferences and Utility

2011 ◽  
Author(s):  
Yves Balasko
Keyword(s):  
Economic Theory ◽  
Utility Maximization ◽  
Budget Constraint ◽  
Utility Functions ◽  
Consumer Theory ◽  
Definition Of ◽  
Early Phases

Classical consumer theory is essentially the theory of utility maximization under a budget constraint. This theory starts with the definition of consumers' preferences. In classical consumer theory, preferences are assumed to be transitive, complete, monotone, and convex. These preferences can then be represented by utility functions. The latter are mathematically easier to handle than preferences. Another reason for being interested in utility functions goes back to the early phases of economic theory. Then, it was thought that utility functions could be used as a measure of consumer's satisfaction or utility. This chapter is devoted to a presentation of the basic issues regarding preferences and their representability by utility functions.

Budget constraint of a firm and economic theory

1996 ◽  
Vol 8 (1) ◽  
pp. 137-153
Author(s):  
M. Kiyoshi Kuga
Keyword(s):  
Economic Theory ◽  
Budget Constraint
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