How preferences shape the welfare and employment effects of trade

We set up a trade model with two countries, two sectors, and one production factor, which features a home-market effect due to the existence of trade costs. We consider search frictions and firm-level wage bargaining in the sector producing differentiated goods and a perfectly competitive labor market in the sector producing a homogeneous good. Consumers have price-independent generalized-linear preferences over the two types of goods, covering homothetic and quasi-homothetic preferences as two limiting cases. Due to the specific functional forms of indirect utility, homothetic preferences lead to risk aversion, while quasi-homothetic preferences lead to risk neutrality in our model. We show that trade between two countries that differ in their population size leads to an expansion of the differentiated goods sector and a contraction of the homogeneous good sector in the larger economy. This induces the larger country to net-export differentiated goods at the cost of a higher economy-wide rate of unemployment in the open economy (with the effects reversed for the smaller country). The welfare effects of trade depend on the preference structure. Looking at the two limiting cases, we show that the larger country is likely to benefit from trade if preferences are homothetic, whereas losses from trade are possible if preferences are quasi-homothetic. The opposite is true in the smaller country. This reveals an important role of preferences for the welfare effects of trade in the presence of labor market imperfection, a result we further elaborate on by considering more general preferences as well as differences of countries in their per-capita income levels.

A dominant strategy double clock auction with estimation‐based tâtonnement

The price mechanism is fundamental to economics but difficult to reconcile with incentive compatibility and individual rationality. We introduce a double clock auction for a homogeneous good market with multidimensional private information and multiunit traders that is deficit‐free, ex post individually rational, constrained efficient, and makes sincere bidding a dominant strategy equilibrium. Under a weak dependence and an identifiability condition, our double clock auction is also asymptotically efficient. Asymptotic efficiency is achieved by estimating demand and supply using information from the bids of traders that have dropped out and following a tâtonnement process that adjusts the clock prices based on the estimates.

EXPRESS: The Importance of Price Beliefs in Consumer Search

A consumer’s decision to engage in search depends on the beliefs the consumer has about an unknown product characteristic such as price. Given beliefs are rarely observed, researchers typically assume that consumers have rational expectations or update beliefs consistent with Bayesian updating. These assumptions are not only restrictive, but additionally, do not afford the researcher, or the retailer, an opportunity to price discriminate among consumers based on heterogeneity in beliefs. We first show, through Monte Carlo experiments, how these assumptions impact estimates of search cost. Next, we design an incentive-aligned online study where subjects search over the price of a homogeneous good, and we elicit distributions of price beliefs before and after each search. Based on data collected from a nationally representative panel, we find substantial heterogeneity in prior price beliefs. We find that subjects update their beliefs in response to search outcomes, but they deviate from Bayesian updating in that they under-react to new information. Importantly, we show that (i) assuming Bayesian updating does not significantly bias search cost estimates at the aggregate level provided the researcher accounts for heterogeneous prior beliefs, (ii) eliciting heterogeneity in prior expected prices is much more important than eliciting heterogeneity in prior price uncertainty, and (iii) a retailer can increase profits through third-degree price discrimination by recognizing the heterogeneity in prior beliefs.

Ambiguity and price competition

There are few models of price competition in a homogeneous-good market which permit general asymmetries of information amongst the sellers. This work studies a price game with discontinuous payoffs in which both costs and market demand are ex ante uncertain. The sellers evaluate uncertain profits with maximin expected utilities exhibiting ambiguity aversion. The buyers in the market are permitted to split between sellers tieing at the minimum price in arbitrary ways which may be deterministic or random. The role of the primitives in determining equilibrium prices in the market is analyzed in detail.

FORMULASI EKSTRAK KLOROFORM DAUN BELIMBING WULUH DALAM BENTUK SEDIAAN GEL dan UJI AKTIVITAS ANTIBAKTERI TERHADAP Staphylococcus epidermidis

Herbal treatments are needed to treat various diseases, one of which is the leaves of Belimbing Wuluh (Averrhoa bilimbi L.). The aim of this study was to formulate chloroform extract of Belimbing Wuluh’s leaf (Averrhoa bilimbi L.) into gel preparations that were good, effective, and safe to use and to determine the antibacterial activity of chloroform extract of Belimbing Wuluh (Averrhoa bilimbi L.) leaf extract to Staphylococcus epidermidis by well method. The results showed that form of gel is a thick, dark green, the distinctive smell of Wuluh starfruit leaf extract, homogeneous, good skin pH, good washing and does not irritate the skin. This study uses Nutrient Agar media as a culture medium for Staphylococcus epidermidis bacteria. The results indicate that the chloroform extract gel leaves of belimbing wuluh leaves in formula 1 (10%), formula 2 (20%), and formula 3 (30%) were able to inhibit the growth of Staphylococcus epidermidis bacteria. In formula 3 (30%) gel extract of belimbing wuluh leaves has the widest zone of inhibition compared to other dosage formulas. The statistical test using the One Way ANOVA test showed a significant difference from the average diameter of the inhibition zone between all concentrations of chloroform extract gel leaves of belimbing wuluh leaves that were significant with (α ˂ 0.05).

A Duopoly with Common Renewable Resource and Incentives

In this paper, we study a duopoly model in which two symmetric firms exploit the same public renewable resource as an input for the production of a homogeneous good. We consider the case where the firms are provided with public incentives in order to prevent the resource exhaustion in a finite time horizon which coincides with the harvesting-license period. As a consequence, we consider a differential game in finite time horizon and compute the Open Loop and linear Feedback Nash Equilibria of the game. We study the social welfare and the optimal incentives polices derived from the solutions.

Properties of the Combinatorial Clock Auction

The combinatorial clock auction has become popular for large-scale spectrum awards and other uses, replacing more traditional ascending or clock auctions. We describe some surprising properties of the auction, including a wide range of ex post equilibria with demand expansion, demand reduction, and predation. Our results obtain in a standard homogeneous good setting where bidders have well-behaved linear demand curves, and suggest some practical difficulties with dynamic implementations of the Vickrey auction. (JEL D44, D47, H82, L13)