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This paper explores how social interactions among consumers shape markets. In a two-country model, consumers meet and exchange information about the quality of the goods. As information spreads, the demands evolve, affecting the prices and quantities manufactured by profit-maximizing firms. We show that market prices with informational frictions reach the duopoly price with full information, at the limit. However, this convergence can take two different paths depending on the size asymmetry between countries. In particular, when countries are of very different sizes, the single market does not immediately turn into a duopoly and monopoly prices may persist for several periods. Hence, the price-reducing trade effects may take longer to appear. In view of an intense globalization process, understanding how social meetings affect market outcomes is critical for understanding the performance of international economic integration.

This paper studies an optimal investment and benefit adjustment problem for a target benefit pension plan. The pension sponsor can adjust the benefit level to guarantee the stable operation of the plan. The pension is allowed to invest in a risk-free bond and a stock. The weighted product of the benefit outgo and pension wealth is considered in the objective function, which is taken in the form of Cobb-Douglas utility. Thus the plan takes both the benefit level and terminal wealth of the pension into account and then the benefit payment are dependent on the financial situation of the plan. By applying dynamic programming approach, we establish the corresponding Hamilton-Jacobi-Bellman equation and derive the optimal investment-benefit strategy and the value function explicitly. The verification theorem is presented and proved. Furthermore, the recursive utility is considered as an extension and we find that the elasticity of intertemporal substitution has a positive effect on the optimal benefit level. Finally, numerical examples are given and demonstrate that this pension scheme is sustainable and can provide stable and consecutive incremental benefit payment for future generations.

This study examines the bullwhip effect in a manufacturing/remanufacturing supply chain consisting of one retailer, one manufacturer, one supplier, and one third-party collector. Products returned from the end users are converted to ‘as-good-as-new’ products through remanufacturing. Both manufactured and remanufactured products are used to meet the stochastic demand of the retailer. We incorporate the price of the product in the demand through an autoregressive moving average (ARMA) pricing process, realizing a market demand that evolves according to a non-standard ARMA(1,1) process. For this demand model, we employ the order-up-to inventory policy with a minimum mean square error forecasting scheme and measure the bullwhip effect at each echelon of the supply chain. We investigate the behaviour of the bullwhip effect analytically, and a numerical evaluation shows that the bullwhip effect or the anti-bullwhip effect may occur at each echelon depending on the values of the autoregressive and moving average parameters of the underlying demand process. We also investigate the effects of the remanufacturing yield, the variance of the market shock on price, and the lead times on the bullwhip effect.

A delivery mix that includes delivery from stock and drop-shipping is of interest to many internet retailers. We consider a retailer serving a time- and price-sensitive market with two substitutable products that differ in the guaranteed delivery time and price, an express product (delivered from the stock) and a regular product (drop-shipped). In case of stockout, customers may switch from the express product to the regular product. We study how to differentiate the products in terms of delivery times and prices and how to determine the stock level to maximize the retailer's expected profit while satisfying service constraints. We solve different variants of the problem and derive insights into the optimal retailer's strategy. In addition, we study the impact of stockout-based substitution. This paper is the first to investigate time- and price-based differentiation along with inventory decisions for a retailer who relies on a hybrid distribution to satisfy a time- and price-sensitive demand subject to stockout-based substitution. When prices and stock are fixed, in addition to minimum and maximum time differentiations, a medium differentiation strategy may be optimal but depends on the stock level. When only prices are fixed, there exists a price differentiation limit below which a minimum time differentiation is optimal, and above which only the express product should be offered. For the general model, numerical experiments show that a higher stockout-based substitution leads to greater time differentiation (which is consistent with the results of previous models) and more stock. However, this would not impact the price differentiation.

Banking development in Indonesia is really influenced by the condition of economic macro. The dynamic fundamental change of economic macro makes banking world apply a strategy to stand and develop. Even though the Syari’ah banking practice in Indonesia that applies profit sharing system is expected independent from the fundamental of economic macro, the decision made cannot be separated from the fundamental of economic macro. The decrease of Rupiah exchange value, the decrease of BI rate, and the increase of fuel price are expected becoming positive signal for Syari’ah banking in Indonesia. This research aims at explaining the relation between the fundamental variables of economic macro and Syari’ah banking works. This research employed an explanatory research design. The population is all Syari’ah banks that expose the monetary report in 2009-2014. There are 11 Syari’ah public banks, 24 Syari’ah companies, and 31 Syari’ah office channelings. The findings reveals that (1) the decision of BI to increase BI rate will be applied if the number of money in society are too much; in the contrary, if the number of money in society are too little, BI will decrease BI rate. From analyzing the data, it shows that BI rate influences positively to Syari’ah banking works. (2) Inflation influences positively to Syari’ah banking works; it means that if inflation increases, Syari’ah banking works becomes better. If the communities ability to buy decrease, the demand of money increase more. This makes syariah banks do no have idle money. (3) the contribution of money exchange variable, BI rate, and inflation influence the Syari’ah banking works. The contribution of X1, X2, and X3 to Y can be seen from R2 (68,7 %), and 31,3 % is influeced by the exchange money variable, PDB, product variation, profit sharing, and promotion. Keywords ; Rupiah exchange value, BI rate, Syari’ah banking work

This paper studies the adoption and impact of prize-linked savings (PLS) accounts, which offer random, lottery-like payouts to individual account holders in lieu of interest. Using micro-level data from a bank offering these products in South Africa, we show that a PLS product was attractive to a broad group of individuals, across all age, race, and income levels. Financially-constrained individuals and those with no other deposit accounts were particularly likely to open a PLS account. Participants in the PLS program increased their total savings on average by 1% of annual income, a 38% increase from the mean level of savings. Deposits in PLS did not appear to cannibalize same-bank savings in standard savings products. Instead, PLS appears to serve as a substitute for lottery gambling. Exploiting the random assignment of prizes, we also present evidence that prize winners increase their investment in PLS, sometimes by more than the amount of the prize won, and that large prizes generate a local “buzz” which lead to an 11.6% increase in demand for PLS at a winning branch.

We consider a nonlinear pricing problem faced by a dominant firm which competes with a capacity-constrained minor firm for a downstream buyer who may purchase the product from the firms under complete information. Specifically, we analyze a three-stage game in which the dominant firm offers a general tariff first and then the minor firm responds with a per-unit price, followed by the buyer choosing her purchases. By establishing an equivalence between the subgame perfect equilibrium of our asymmetric competition game and the optimal mechanism in a “virtual” principal-agent model, we characterize the dominant firm's optimal nonlinear tariff, which exhibits convexity and yet can display quantity discounts. Our analysis provides a rationale for nonlinear pricing under competition in the absence of private information: The dominant firm can use unchosen offers to constrain its rival’s possible deviations and extract more surplus from the buyer. Antitrust implications are also discussed.

The field's knowledge of marketing-mix elasticities is largely restricted to developed countries in the North-Atlantic region, even though other parts of the world—especially the Indo-Pacific Rim region—have become economic powerhouses. To better allocate marketing budgets, firms need to have information about marketing-mix elasticities for countries outside the North-Atlantic region. The authors use data covering over 1,600 brands from 14 product categories collected in 7 developed and 7 emerging Indo-Pacific Rim countries across more than 10 years to estimate marketing elasticities for line length, price, and distribution and examine which brand, category, and country factors influence these elasticities. Averaged across brands, categories, and countries, line-length elasticity is .459, price elasticity is −.422, and distribution elasticity is .368, but with substantial variation across brands, categories, and countries. Contrary to what has been suggested in previous research, the authors find no systematic differences in marketing responsiveness between emerging and developed economies. Instead, the key country-level factor driving elasticities is societal stratification, with Hofstede's measure of power inequality (power distance) as its cultural manifestation and income inequality as its economic manifestation. As the effects of virtually all brand, category, and country factors differ across the three marketing-mix instruments, the field needs new theorizing that is contingent on the marketing-mix instrument studied.

Consider a market with two substitute products and a sequence of consumers. The consumers are uncertain about the quality of each product but obtain some private information about it. Additionally, each consumer observes the purchase decisions of her predecessors but not their private information. Absent prices, the standard logic of herding is that all but finitely many consumers may, with positive probability, select the lower quality product. One perspective in the literature is that informationally efficient market prices can resolve the herding inefficiency and induce asymptotic learning where the beliefs of consumers about product qualities converge to the truth. This paper shows that, while informationally efficient prices induce asymptotic learning, they also inflict a welfare cost. That is, we show that the expected welfare is decreasing in the frequency with which prices are set to be informationally efficient.

Problem definition: An on-demand service platform relies on independent workers (agents) who decide how much time, if any, to devote to the platform. Some labor advocates have argued that an expansion of the labor pool hurts agents—by reducing the wage and agent utilization (i.e., the fraction of time an agent is busy serving customers). Motivated by concern for agent welfare, regulators are considering measures that reduce the labor pool size or that impose a floor on the nominal wage or effective wage (i.e., the product of the nominal wage and agent utilization). Are agents indeed hurt by an expansion in the labor pool size? Which type of wage-floor regulation is preferable? Are consumers hurt by the imposition of a wage floor? Academic/practical relevance: Because independent agents work without the traditional protections intended to ensure the welfare of employees, the welfare of those agents is an important concern. Methodology: We employ an equilibrium model that accounts for the interaction among price, wage, labor supply, customer delay, and demand. Results: Average labor welfare increases and then decreases in the labor pool size; that is, agents are harmed by an expansion in the labor pool size if and only if the labor pool size is sufficiently large. The effective wage floor is superior to the nominal wage floor in terms of labor welfare maximization. More generally, the two types of wage floors have structurally different effects on labor welfare, with a floor on the nominal wage only beneficial to agents if it is sufficiently small. Contrary to the conventional view that consumers are hurt by an effective wage floor (because they face a higher price, due to upward pressure on the wage, and longer delay, due to upward pressure on agent utilization), consumers actually benefit. Managerial implications: Regulators, labor advocates, platform managers, and agents benefit from understanding the forces that create and destroy labor welfare.

I study how a firm manages its reputation by both investing in the quality of its product and censoring, hiding bad news from consumers. Without censorship, the threat of bad news provides strong incentives for investment. I highlight discontinuities in the firm’s maximum equilibrium payoff that censorship creates. When censorship is inexpensive, the firm never invests and a patient firm’s payoffs approach the lowest possible. In contrast, when censorship is moderately expensive, there exist equilibria where product quality is persistently high and payoffs approach the first-best, which can exceed the maximum equilibrium payoff if it was unable to censor. (JEL D21, D82, D83, G31, G32, L15)

This paper analyses the impact of economic complexity on the labour market using annual data on OECD countries for the period 1985-2008 and averaged data over the period 1990-2010 for 70 developed and developing countries with a large number of controls. We show that moving to higher levels of economic sophistication of exported goods leads to less unemployment and more employment, revealing that economic complexity does not induce job loss. Our findings remain robust across alternative econometric specifications. Furthermore, we place the spotlight on the link between products' embodied knowledge (sophistication) and labour market outcomes at the micro-level. We build a product-level index that attaches a product to the average level of unemployment (or employment) in the countries that export it. With this index, we illustrate how the development of sophisticated products is associated with changes in the labour market and show that the economic sophistication of exported goods captures information about the economy's job creation and destruction., Economics of Innovation and New Technology, 32 (1), ISSN:1043-8599, ISSN:1476-8364

The issuance of central bank digital currencies became a real policy issue after the announcement of Facebook’s Libra. Which types of product attributes should central bank digital currencies have to be widely accepted? We answer this question by analyzing consumers’ acceptance of hypothetical payment methods. We used Japanese data from the 2019 Financial Literacy Survey to estimate a model of consumers’ ranking of the frequency of the use of five payment methods via three statistical models. The estimates of three models showed that the respondents to the survey value payment methods with shorter transaction times and mobile payment methods. Based on the estimates of these models, we conducted counterfactual simulations for the introduction of the hypothetical mobile version of noncash payment methods that required a shorter transaction time. We found that these hypothetical products would be the most frequently used payment methods on average; however, respondents with experience of financial troubles and with small financial asset holdings would use them less frequently. The results suggest that if the Bank of Japan wanted to issue a central bank digital currency that would be used almost every day as a replacement for cash, policy tools should be utilized to encourage the use of it by these groups as well.

Environmental regulation can interact with agricultural markets to produce underappreciated competitiveness and leakage effects. This paper measures effective carbon tax stringency by structurally recovering the domestic supply schedule for a trade-exposed beef cattle industry such that elasticities and carbon tax rates change with product prices (i.e., due to the curvature of the supply function). Two basic propositions from the economics of taxation -- that excess burdens increase in elasticities and tax rates -- are shown to cause the stringency of uniform carbon policy to vary nonlinearly with output prices. Based on the domestic supply function, the relationship between marginal excess burden, a measure of policy stringency from the industry's perspective, and product prices is estimated. Several policy-relevant counterfactual scenarios are explored. Results show that with moderately high output prices, supply elasticities are small and the efficiency cost of a $40/tCO2e carbon tax (gross of environmental benefits) is less than $0.01 per dollar tax revenue. As prices decline, supply curves become increasingly elastic and marginal excess burdens grow rapidly.

The literature on closed loop supply chains (CLSCs) has ignored advantageous inequality aversion while modelling the fairness concern of channel partners and demonstrated that coordinating a decentralised channel requires complex price contracts. In this paper, we show that a constant wholesale price contract can coordinate a decentralised channel in a manufacturer-led CLSC if the retailer's advantageous inequality aversion is sufficiently strong. The result is valid for a range of equitable shares of the channel profit, such that the allocated share of the manufacturer is larger than that of the retailer, and the retailer's share is greater than a minimum threshold. Used product collection rate and channel profit are higher when the retailer is inequality averse compared to when she is a profit maximiser. The results are independent of whether the end-of-use products are collected by the manufacturer or the retailer. We also show that the collection rate is higher, and both channel partners are better-off, under the manufacturer collection model. To obtain these results, we solve multistage sequential move games under the two collection models. We apply Karush–Kuhn–Tucker conditions for constrained optimisation, to determine the boundaries for the existence of the subgame perfect Nash equilibrium.

Revenge consumption, the situation in which the demand for specific goods and services suddenly skyrockets and remains high for an extended period of time, is a relatively new economic phenomenon observed recently in many cities around the world after the easing of restrictions associated with the coronavirus pandemic in 2020 and 2021. We study welfare implications of revenge consumption in a model of vertical product differentiation. We show that revenge consumption induces producing firms to enhance the quality levels and raise prices on their products. As the level of revenge consumption increases, social welfare initially increases but it eventually declines. Results, which hold across monopoly, duopolistic competition, and national brand-private label competition models, provide useful information for public policy.

We study an optimisation problem of a household under a contagious financial market. The market consists of a risk-free asset, multiple risky assets and a life insurance product. The clustering effect of the market is modelled by mutual-excitation Hawkes processes where the jump intensity of one risky asset depends on both the jump path of itself and the jump paths of other risky assets in the market. The labor income is generated by a diffusion process which can cover the Ornstein-Uhlenbeck (OU) process and the Cox-Ingersoll-Ross (CIR) model. The goal of the household is to maximise the expected utilities from both the instantaneous consumption and the terminal wealth if he survives up to a fixed retirement date. Otherwise, a lump-sum heritage will be paid. The mortality rate is modelled by a linear combination of exponential distributions. We obtain the optimal strategies through the dynamic programming principle and develop an iterative scheme to solve the value function numerically. We also provide the proof of convergence of the iterative method. Finally, we present a numerical example to demonstrate the impact of key parameters on the optimal strategies.

In this article we consider the post-retirement phase optimization problem for a specific pension product in Germany that comes without guarantees. The continuous-time optimization problem is defined consisting of two specialties: first, we have a product-specific pension adjustment mechanism based on a certain capital coverage ratio which stipulates compulsory pension adjustments if the pension fund is underfunded or significantly overfunded. Second, due to the retiree’s fear of and aversion against pension reductions, we introduce a total wealth distribution to an investment portfolio and a buffer portfolio to lower the probability of future potential pension shortenings. The target functional in the optimization, that is to be maximized, is the client’s expected accumulated utility from the stochastic future pension cash flows. The optimization outcome is the optimal investment strategy in the proposed model. Due to the inherent complexity of the continuous-time framework, the discrete-time version of the optimization problem is considered and solved via the Bellman principle. In addition, for computational reasons, a policy function iteration algorithm is introduced to find a stationary solution to the problem in a computationally efficient and elegant fashion. A numerical case study on optimization and simulation completes the work with highlighting the benefits of the proposed model.

The introductory part of the article formulates its objective – to characterize development conditions in Russia and main structural changes in the Russian economy (according to 2014–2019 data) from the standpoint of their compliance with the tasks of increasing the stability and quality of the country's economic growth during the transition of the world system to a new technological order. Аccording to the authors, this period is of particular interest in assessing and studying the experience associated with structural transformation in a highly unfavorable external condition amid tight monetary policy and restrictive income policy.The article sequentially addresses certain aspects of the structural transformation of the Russian economy. The authors, relying on macroeconomic statistics, assess shifts in production and use of products, investment, import intensity, the balance of payments, and international investment position, considering external and internal conditions.The paper focuses on analyzing the proportions of the economy according to the data of the Rosstat input-output tables (IOTs). The article provides estimates of structural changes in the dependence of the economy and its segments on types of imports, signifcant changes in the direction of the use of fnal products, including considering the dynamics of changes in the total input of intermediate imports. For the frst time, the characteristics of the concentration of gross value added (GVA) and gross domestic product (GDP) by areas of fnal demand are given. A methodological approach is proposed for monitoring shifts in import consumption by compiling annual summary tables with a minimum set of data obtained during the analytical processing of IOT information. Based on the results of testing this approach on data for 2016 and 2018, the authors rated cost product balances by the share of imports in the resources of products. Conclusions were drawn about the change in the import intensity of the economy for the selected types of products, the import intensity of Russian industries, and shifts in the distribution structure of types of imported products. The article formulates proposals for the development of measures necessary to consolidate and expand positive results of this stage in the development of the Russian economy and statistical support of macroeconomic analysis.

Several recent studies show that market concentration in the US has increased over time, with firm profits increasing in the same period. The consistency of findings from the US is contrasted by more varying results from studies of the development of market concentration in Europe. In this study, we utilise the completeness of Norwegian microdata to investigate how methodological choices and data limitations impact results with respect to the market concentration and its relationship with profitability. First, we find that concentration in Norway has decreased slightly over the last two decades. Over the same period, profitability has increased slightly for two profitability measures and been stable for the other two. Despite a difference in overall trends, at the industry level, we find a positive and statistically significant relationship between concentration and profitability for three out of four profitability measures, in line with the market power hypothesis. Investigating the effect of methodological choices and data limitations, we find that concentration trends are quite robust to exclusion of smaller companies, the incorporation of ownership structures in concentration measures and the choice of industry classification. However, the positive relationship between concentration and profitability is almost non-existent when using readily available industry classification instead of more product market-oriented industry classifications and disappears completely when we do not exclude export-oriented industries. Our study is relevant for future research, as well as for policymakers, as our results indicate that one should be careful when interpreting results from studies of market concentration that fail to handle these methodological challenges.

This paper analyzes the effects of credit frictions in a trade model where heterogeneous firms select both into exporting and into two types of external finance. In our framework, small producers face stronger credit frictions, pay a higher borrowing rate and rely on bank finance, whereas large firms have access to cheaper bond finance. We show that an increase in credit frictions induces firms to select into bank finance, which attenuates the negative implications on product variety and welfare. In the open economy, the presence of effective financial intermediation increases the welfare gains from trade. In a counterfactual analysis, we exploit that our framework nests a model with credit frictions and one type of finance as a special case, and we show that endogenous selection into external finance is an important channel of adjustment.

This paper develops a model of multi-product firms with endogenous quality across products within a firm. The model can reconcile the empirical fact that product quality and market size exhibit an inverted U relationship. In our model, on the one hand a larger market has a larger scope of quality differentiation and induces firms to increase quality; on the other hand, market competition is more intense in a larger market, exerting a negative influence on quality. We show that the model without taking quality differentiation into consideration could significantly underestimate the market competition and welfare. Moreover, our numerical analysis suggests that the model without taking quality differentiation into consideration could also significantly overestimate the gains of trade liberalization.

We have considered a duopoly with perceived vertical differentiation, information disparity and optimistic consumers. When firms compete for informed and uninformed consumers, the former contribute to raise product quality, while equilibrium prices increase with optimistic misperception of the latter, in our first equilibrium. Brand premium includes a quality premium and a misperception rent. In our second equilibrium, informed consumers buy low-quality goods and minimum product differentiation without Bertrand competition occurs. The brand premium is just a misperception rent, however, an increase of the informed consumers share implies price re-balancing and rent reduction. Consumers externalities arise in both equilibria. Firms compete only for informed consumers within our third and fourth equilibrium, as uninformed ones are passive and represent a captive market. Uninformed consumers in one case are overoptimistic, they buy the high quality good and can be cheated in equilibrium. Uninformed consumers approach the real quality differential in the fourth equilibrium, and the model reduces to standard vertical differentiation with perfect information.

El objetivo principal de esta investigación es la generación de la Matriz Insumo Producto Regional y la identificación de los sectores determinantes para el Estado de Durango. Lo anterior se lleva a cabo mediante la metodología indirecta de Flegg y Weber (1997) para determinar las relaciones intersectoriales regionales, a partir de un ajuste sobre los coeficientes de ubicación cruzada de la Matriz de Insumo Producto Nacional (MIPN) 2013. Este análisis muestra como sectores clave:1) Generación, transmisión y distribución de suministro de energía eléctrica, agua y gas; 2) Servicios financieros y de seguros, 3) Información en los medios de comunicación, entre otros. En estudios regionales similares, el parámetro de ajuste es determinado a priori, por lo que una recomendación es la de estimar el valor adecuado para cada región. La principal limitación es el uso de MIPN, que son publicadas cada 5 años, lo que implica que la herramienta realiza un análisis estático, sin embargo, esto puede solventarse mediante pronósticos basados en metodologías para la actualización de los coeficientes técnicos. Hasta donde tenemos conocimiento, somos los primeros en realizar un análisis sobre los sectores productivos del estado de Durango y de implementar un proceso de optimización sobre el parámetro de ajuste. Los resultados de la clasificación concuerdan con la realizada a partir del Censo Económico y los Valores Agregados Brutos Estatales de los sectores que se encuentran en INEGI.

We study the economic impact of perceptual limitations using experimental goods for which the difficulty of perceiving the difference between them can be manipulated by altering the similarity of their visual representation. In our first experiment, we found that subjects’ willingness-to-pay for goods became more similar when it was harder to discriminate between them. Building on this result, we ran a second experiment where the same experimental goods were traded in a market with heterogeneous buyer preferences and seller market power. Buyers were less likely to choose the option which maximises consumer surplus when discriminating between products was harder, and buyer payoffs were lower. We find indications that buyers used a different method of constructing their valuations in the market than in individual choice, and there was weak evidence that using different methods were beneficial for buyers. Seller prices and profits were not dependent on how easy it was for buyers to discriminate between goods.

This paper examines the effects of the U.S. shale oil boom in a two-country DSGE model where countries produce crude oil, refined oil products, and a non-oil good. The model incorporates different types of crude oil that are imperfect substitutes for each other as inputs into the refining sector. The model is calibrated to match oil market and macroeconomic data for the U.S. and the rest of the world (ROW). We investigate the implications of a significant increase in U.S. light crude oil production similar to the shale oil boom. Consistent with the data, our model predicts that light oil prices decline, U.S. imports of light oil fall dramatically, and light oil crowds out the use of medium crude by U.S. refiners. In addition, fuel prices fall and U.S. GDP rises. We then use our model to examine the potential implications of the former U.S. crude oil export ban. The model predicts that the ban was a binding constraint in 2013 through 2015. We find that the distortions introduced by the policy are greatest in the refining sector. Light oil prices become artificially low in the U.S., and U.S. refineries produce inefficiently high amount of refined products, but the impact on refined product prices and GDP are negligible.

The goal of this study paper is to look out for “Bilateral trade and labor migration in Pakistan a gravity estimation model. Trade among two states is known as bilateral trade. This paper analyzes the trade among Pakistan and 11 partners’ countries. Pakistan and 11 partners countries export and import goods for trade. Pakistan and partner countries sign different agreements for trade and the free trade agreement is one of the best agreements. For this research paper, we take the data from 2004-2019 in form of panel annual data for different countries taken from different sources these variables are used for this study Trade, gross domestics product distance, capital endowment , population scale , land endowment and relative importance of trade . Trade is a dependent variable GDP_dis, Cap_end, Pop_scal, Land_end, and RIMT are independent variables. Panel ARDL technique used for the estimation of results.

Purpose: To understand the dynamics of the agricultural commodities market and predict a possible economic crisis, in addition to helping agricultural producers balance their product portfolio, diversifying their goods and reducing risks. Theoretical framework: Prices of agricultural commodities have changed significantly since 2002; although had been an increase in demand, where weather problems negatively affected supply, resulting in price increases. With the global financial crisis of 2008, there was a reduction in international credit and an increase in the US dollar against the Brazilian Real. Design/Methodology/Approach: Detrended Cross-Correlation Analysis and Detrended Fluctuation Analysis methods were used to understand the behavior of the cross correlations of the price of five Brazilian agribusiness commodities (cotton, sugar, coffee, corn and soybeans) for the previous periods, during and after the subprime crisis. Findings: Both methods showed a significant change in the behavior of the series in the period of crisis, when compared to their temporal neighborhoods. Research, Practical & Social Implications: It was found that the crisis changed the structure of the correlation of the returns on the commodities analyzed. This change implies alterations to a possible product portfolio in order to minimize risks. Originality/Value: The long-term nonlinear correlation behavior was calculated and analyzed on the temporal series for the return on the main agricultural commodities in the period of the subprime crisis and its temporal neighborhoods were calculated and analyzed, allowing several changes to be found in the product correlation structure, due to the crisis process. Keywords: Subprime Financial Crisis; Agricultural Commodities; Detrended Fluctuation Analysis; Detrended Cross-Correlation Analysis.

This paper is about the application of optimization methods to the analysis of three pricing schemes adopted by one manufacturer in a two-country model of production and trade. The analysis focuses on pricing schemes—one uniform pricing scheme, and two differential pricing schemes—for which there is no competition coming from the so-called parallel trade. This term denotes the practice of buying a patented product like a medicine in one market at one price, then re-selling it in a second so-called gray market at a higher price, on a parallel distribution chain where it competes with the official distribution chain. The adoption of pricing schemes under which parallel trade does not arise can prevent the occurrence of its well-documented negative effects. In the work, a comparison of the optimal solutions to the optimization problems modeling the three pricing schemes is performed. More specifically, conditions are found under which the two differential pricing schemes are more desirable from several points of view (e.g., incentive for the manufacturer to do Research and Development, product accessibility, global welfare) than the uniform pricing scheme. In particular, we prove that, compared to the uniform pricing scheme, the two differential pricing schemes increase the incentive for the manufacturer to invest in Research and Development. We also prove that they serve both countries under a larger range of values for the relative market size, making the product more accessible to consumers in the lower price country. Moreover, we provide a sufficient condition under which price discrimination is more efficient from a global welfare perspective than uniform pricing. The analysis applies in particular to the case of the European Single Market for medicines. Compared to other studies, our work takes into account also the possible presence in all the optimization problems of a positive constant marginal cost of production, showing that it can have non-negligible effects on the results of the analysis. As an important contribution, indeed, our analysis clarifies the conditions—which have been overlooked in the literature about the mechanisms adopted to prevent parallel trade occurrence—that allow/do not allow one to neglect the presence of this factor. Such conditions are related, e.g., to the comparison between the positive constant marginal cost of production, the parallel trade cost per-unit, and the maximal price that can be effectively charged to the consumers in the lower price country.

In spite of the fast spread of Additive Manufacturing (AM) in several countries and industries, its impact on employment is still unexplored and theoretically ambiguous. On the one hand, higher product customisation and shorter time-to-market entail an expansion of the market, thus fostering labour demand; on the other hand, AM profoundly changes the way goods are produced and little evidence exists regarding the complementarity or substitutability between AM technologies and labour. In this article, we contribute to fill this gap. We estimate labour demand functions augmented with a (patent-based) proxy of AM-related innovation in 31 OECD countries, across 21 manufacturing industries, over the 2009–2017 period. Our econometric findings show an overall positive relationship between AM technologies and employment at the industry level, due to both market expansion and complementarity between labour and AM technologies, while no labour-saving effect emerges. The importance of each mechanism, however, is heterogeneous across sectors.

We consider a differential game which models the competition between a genuine and a counterfeit producer. The genuine manufacturer acts as a leader, first announcing the price of the product and the investments in advertising. After observing the leader’s decisions, the counterfeiter sets the selling price of the fakes. We assume that the demand of the good is driven by the brand-name goodwill. We calculate the Stackelberg feedback equilibria and the social welfare, defined by the unweighted sum of the genuine and fakes consumers, the profit of the genuine firm, minus the enforcement costs borne by the social planner. The purpose of this paper is twofold. Firstly we study the dependence of social welfare on the amount of the fines established in the IPR law and monitoring efforts. Then, we compare prices, profits and social welfare under Nash and Stackelberg framework.

Highlights • We construct a supply chain network game theory model that captures labor constraints under different scenarios. • The equilibrium conditions are formulated as variational inequality problems. • A case study on migrant labor, and associated disruptions in the Covid-19 pandemic, is presented. • The research adds to the literature in both economics and operations research., The Covid-19 pandemic has brought attention to supply chain networks due to disruptions for many reasons, including that of labor shortages as a consequences of illnesses, death, risk mitigation, as well as travel restrictions. Many sectors of the economy from food to healthcare have been competing for workers, as a consequence. In this paper, we construct a supply chain game theory network framework that captures labor constraints under three different scenarios. The appropriate equilibrium constructs are defined, along with their variational inequality formulations. Computed solutions to numerical examples inspired by shortages of migrant labor to harvest fresh produce; specifically, blueberries, in the United States, reveal the impacts of a spectrum of disruptions to labor on the product flows and the profits of the firms in the supply chain network economy. This research adds to the literature in both economics and operations research.

Crises impact every sector of the economy; however, the magnitude of that impact varies between the different sectors. The agri-food sector-related lessons learned from the last two crises (global financial crisis in 2008, and the sanctions against Russia in 2014) are that international trade becomes lower and commodity prices rise. This article analyzes the performance of the Hungarian agri-food sector during the last three crises based on international and Hungarian datasets. The results show that impacts depend on many factors, such as the type of the agri-food products (raw material vs. processed product, perishable vs. non-perishable goods, etc.) or the depth of trade integration. It should be noted that Hungary is heavily integrated into the EU’s common market, its major trade partners are the other member states. At the commodity level, the share of raw materials is higher on the export side (e.g. cereals) compared to the import side (e.g. meat products). Based on the results, the impacts of the COVID-19 pandemic were different from the two previous crises. Despite the difficulties in transport, Hungarian exportation expanded and resulted in an increasing trade surplus, while international commodity prices remained stable. The identification of the different impacts of the coronavirus compared to the other two crises is the major finding of the article. Doi: 10.28991/HIJ-2021-02-03-02 Full Text: PDF

Recent work in macroeconomics argues that firm market power dramatically increased since the 1980s in the world. The evolution of product markups has important implications for macroeconomic dynamics. In this paper, we start to document the main patterns of markups in an emerging economy like Turkey using production function approach and dynamic panel approach. Our empirical analysis is based on large-scale firm-level reliable panel data, which enables us to provide sound results in several aspects. In this way, we trace up the facts on the cross section and time series of markups of the firms in manufacturing sector in Turkey over the period 2005–2015. Then, we use our markup estimates to discuss the connection between markup and some selective variables such as firm size, labor share, profitability, and reallocation. It is mainly seen that large firms are critical in determining these variables. This illustrates the significant amount of heterogeneity among the firms in Turkey.

The purpose of this study was to estimate the effect of Gross Domestic Product (GRDP), Human Development Index, unemployment, and the amount of electricity consumption on poverty levels in the provinces of Java and Bali. The analysis model used is panel data regression. The type of data used in this study is secondary data in the form of panel data obtained from the publication data of the Central Bureau of Statistics (BPS) Java and Bali in 2011-2019. The results of this study showed that the GRDP and the amount of electricity consumption had a negative effect on poverty levels, the unemployment rate a positive effect on the poverty levels, and the Human Development Index was proven to have no effect on poverty levels. The suggestion that can be conveyed is that the government needs to implement policies to increase the Gross Regional Domestic Product (GDRP), reduce unemployment, and increase the amount of electricity consumption. The government also needs to increase education with low education costs so that it will have a positive impact on improving community skills, and the policy for determining the minimum wage must be determined in accordance with the decent living needs.

The Melitz (2003) model with nominal exchange rates and sticky wages predicts that the extensive margin of exports can respond to both trade liberalization and nominal exchange rates, which might not, however, be supported by data according to Ruhl's (2008) argument about temporary vs. permanent shocks. Using Chinese firm-product data during 2000-2006, this paper empirically tests this theoretical prediction and has three main findings. First, overall, changes in tariffs, charged by trade partners, and nominal exchange rates both have significant effects on China's exporter numbers at the product level. Second, the effects are larger for processing trade, low income destinations, and differentiated products. Third, our calculation of autocorrelations and standard deviations indicates that China's nominal exchange rate changes should not be considered as temporary shocks during this period, and thus our results do not contradict Ruhl's argument.

Purpose The purpose of this paper is to identify trade integration and structure effects on bilateral trade between China and its partners, focusing on Chinese merchandise imports during the period 1995–2018. Design/methodology/approach The methodological approach applied here uses the augmented gravity model to investigate the factors lying behind import intensity, by use of the ordinary least squares (OLS) and Poisson pseudo maximum likelihood (PPML) estimators. Findings The findings provide evidence of complementarity between the Chinese demand and the world commodity markets. Free trade agreements between China and third countries seem to gradually lose significance, as the Chinese economy consolidates in world trade. Higher product diversification in export structures of China’s trading partners can become advantageous for facilitating market penetration. Diversification of energy resources, the steady, high demand for infrastructure equipment and more sophisticated consumer products constantly determine the structure of Chinese merchandise imports originating mainly and increasingly from countries with direct access to the Pacific Ocean. Originality/value The analytical breakdown of Chinese imports, presented in this paper, adds value to the existing literature with regard to trade structure analysis for China, paving the way for similar research for other developing countries as well.

The paper considers conceptual issues underlying empirical work on markets. It has three parts. The first reviews the analysis of demand and equilibrium in retail markets and then considers recent advances in the analysis of markets which require different assumptions; markets where adverse selection and moral hazard may be important, vertical markets with bargaining, and markets wherein a centralized allocation mechanism replaces prices. The second part considers the analysis of cost and production. It reviews the simultaneity and selection issues in production function estimation and then considers; the distinction between revenue and quantity generating functions and its implications for the analysis of markups, and the empirical analysis of fixed costs and its implications for the analysis of product repositioning. The paper concludes by considering issues that arise due to the complexity of empirical analysis of market dynamics and appropriate ways of dealing with them. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

In our country, recommendations are made on the limited land resources, improving the provision of the population with food products and the culture of using dekhkan farms and household lands in achieving food security, organizing in the republic and conducting business in this area. Resource-saving technologies can be selected in terms of its cost-effectiveness. The authors in this article assess the possibilities of developing a nut business in the republic and expanding the legal consolidation of this process. Uzbekistan is one of the leading countries with its economic potential and opportunities among Asian countries. Emphasis is placed on modernizing and diversifying the country’s economy, increasing the export potential of the agricultural sector and gaining a worthy and strong place in the world market. Walnut cultivation, development of the industry on the basis of modern technologies, the introduction of walnut varieties, economical and digital agro-technologies, which have the ability to produce products that meet the requirements of the world market, will improve product quality and increase labor productivity in the industry. They provide extensive analytical materials regarding the production and export of walnuts.

Advance selling with pre-orders has become a common practice in many industries. To encourage more consumers to purchasing in advance, retailers now try new forms of advance selling to allow consumers to complete their pre-orders after solving valuation uncertainty. Motivated by this emerging industry practice, this paper focuses on delay in payments from a retailer to consumers during the advance selling period and considers several pre-order strategies for the retailer, namely, free pre-order (FP), deposit pre-order (DP), and deposit expansion pre-order. Under the price commitment mechanism, we first derive not only the thresholds for pre-order strategies with stochastic demand and uncertain product valuation but also the retailer’s optimal price, quantity, and advance selling strategy, which are contingent on the relative size of the marginal cost and the lower bound of consumer valuation. Then, we find that the retailer should sell in advance even when the expected valuation is sufficiently low, or the marginal cost is relatively high. Besides, we reveal that the retailer is more likely to order a smaller quantity under the FP and DP strategies. Finally, we extend the model to a fixed pricing mechanism to further elucidate the retailer’s optimal decisions. By comparing these two pricing mechanisms, we find that, under certain conditions, the optimal pre-announced pricing strategy converges to the fixed pricing strategy.

In this paper, we investigate the performance of green supply chain newsvendor model under multiplicative random demand. In our model, the green supply chain consists of one manufacturer and one retailer. The manufacturer acts as a leader, which decides the variables: production quantity, wholesale price and green-level; the retailer acts as a follower, decides on the retail price. Centralized and decentralized optimal solutions are obtained to optimize the manufacturer's production, stocking and green-level decision while anticipating the retailer's price optimization decision. Through research, it is found that the stocking factor decreases with the increasing price elasticity and is not affected by the green-level elasticity; Lower price elasticity will increase the optimal selling price of the green product, while green-level elasticity has no effect on the price; Larger price elasticity or green-level elasticity will increase the optimal green-level of the green product; Lower price elasticity or higher green-level elasticity will increase the overall profitability of the supply chain; Profit sharing between manufacturer and retailer under the decentralized model only depends on price elasticity and green-level elasticity; The greater price elasticity, the more beneficial to the retailer, the greater the green-level, the more beneficial to the manufacturer.

Purpose Innovation is the way of life and we see various innovative techniques and methods being introduced in our daily life. This study aims to focus on digital innovation in the wealth management domain. This study examines the effect of usage of robo-advisory services in investment decision-making and behavioural biases, i.e. overconfidence and loss aversion. Such studies are more pronounced in developed countries and little has been studied about investor behaviour in association with advisory services in developing countries such as India. Design/methodology/approach Overconfidence and loss-aversion biases, investment decision-making and advisory services questions are measured using a five-point Likert scale. The number of respondents was 172 investors. A purposive sampling is used for gathering responses from investors. Structural equation modeling model was run using AMOS 22 version software package. Findings The authors found that behavioural biases positively and significantly influence the irrationalities of investment decision-making. The findings of this study also provide empirical evidence that the usage of robo-advisory services, by individual investors, is still incapable of mitigating behavioural biases, such as overconfidence bias and loss-aversion bias. Research limitations/implications The sample size of this study could be a limiting factor. This study is limited only to two biases, while other behavioural biases affect the investment decision-making of the investors, which can be considered for future research along with the impact of robo-advisory services in different socio-cultural backgrounds. Practical implications This study will assist fintech start-ups, banks, architecture of robo advisors, product owners and wealth management service providers improvise their products, platforms and offerings of these automated advisory services. This could help individual investors to mitigate their behavioural biases in investment decision-making. Social implications This study is useful to society as the awareness of robo-advisory services is very less, at present, and there is a need to increase the usage of these services to extend the benefit of this to the lower stratum of society. These services would be useful to all investors who find it difficult to afford financial advisors and help them mitigate their behavioural biases for investment decision-making. Originality/value This study is the first of its type that establishes the linkage between behavioural biases, digital innovation in fintech, i.e. robo-advisory services and individual investor’s investment decision-making in individual investor of the Indian stock market.

In most modern energy markets, electricity is traded in pay-as-clear auctions. Usually, multiple sequential markets with daily auctions, in which each hourly product is traded separately, coexist. In each market and for each traded hour, each power producer and consumer submits multiple price and volume combinations, called bids. After all bids are submitted by the market participants, the market-clearing price for each hour is published, and the market participants must fulfill their accepted commitments. The corresponding decision problem is particularly difficult to solve for market participants with stochastic supply or demand. We formulate the energy trading problem as a dynamic program and derive the optimal bidding functions analytically via backward recursion. We demonstrate that, for each hour and market, the optimal bidding function is completely defined by two bids. While we focus on power producers with stochastic supply (e.g., wind or solar), our model is applicable to power consumers with stochastic demand, as well. The optimal policy is applicable in most liberalized energy markets, virtually independent of the structure of the underlying electricity price process.

This article applies a panel structural VAR model using complete data of China's monthly agricultural exports to uncover both the dynamics and interproduct and intermarket differences in the responses of product quality to real exchange rate (RER) shocks. It finds that RER appreciation promotes the quality of China's agricultural exports on average compared to discouraging exports, but the effect is fully shown in the short run. The average response peaks in the month immediately after the shock and the average cumulative response converges to a constant level in three months. The quality response to RER shocks substantially differs across both products and markets. More sensitive responses of quality upgrading are found among exports that are less competitive, relatively primary, more reliant on ordinary trade, and exported with nearby and less developed partners. Therefore, greater supports on R&D activities and the adoption of advanced technologies might be needed among other exports.

This study examines the effects of product characteristics on the choice of payment methods for international trade. I develop a theoretical model that leads to two new testable hypotheses. First, as the transaction value increases, exporters tend to choose safer payment methods, such as letters of credit, rather than post‐shipment payments. Second, if the products in the transaction are easily liquidated, exporters tend to choose safer payment terms. Product‐destination‐level export data from Korean exports declaration forms support both hypotheses. Furthermore, the results using these comprehensive data on tradable goods and countries generalize the findings of previous studies on country characteristics.

This purpose of this study was to determine domestic investment, foreign investment, and total population of economic growth, namely Gross Regional Domestic Product in 34 provinces in Indonesia in 2014-2018. This research uses quantitative methods. The type of data used is secondary obtained from the Central Statistics Agency which is ready for processing.The data collection technique used is the documentation method. The analysis technique used is panel data regression. The results of this study indicate that each variable has a positive and significant effect on economic growth. Namely Foreign Investment, Domestic Investment, and Total Population which have a positive and significant effect on economic growth.

This paper examines the ethical foundations of the Islamic financial industry which is strongly criticized for its similarity with conventional finance. In this paper, we argue that this criticism is based on the consequentialist reasoning. The deontological considerations are largely ignored when the focus is on aggregate returns and associated product features. We build an economic model which allows us to examine the implementation of deontological rules in the Islamic financial products along with examining their consequences. We show that the market forces may cause the returns and the attributes of Islamic financial products to converge with conventional finance even though the industry may be adhering to the Islamic deontological rules. We build a model to show that there may exist ‘Epsilon States’ where the deontological rules are followed by the Islamic finance industry, but their impact is not significant. We argue that the source of these ‘Epsilon States’ could be either moral uncertainty or costly monitoring. The presence of these ‘Epsilon States’ enable Islamic financial institutions with weak ethical commitments to create financial products where the deontological rules are followed, but their impact remains insignificant.

We test the theory of ecologically unequal exchange that manifests in FDI ecological havens and FDI ecological halos by focusing on the two modes of entry of FDI, GFDI, and cross-border M&A sales and investigating their impact on the ecological footprints of nations. We apply a dynamic panel methodology, based on an “IPART” theoretical model. We find that first, overall, GFDI tends to be more harmful to ecosystems than cross-border M&A. Second, we find evidence of ecologically unequal exchange, since, in developed nations, the harmful effects of GFDI occur through increases in the consumption EF and imports EF, while in developing countries, the GFDI burden is born by foreign activity-related footprints, the imports EF and export EF, both of which are related to being a part of a product supply chain leading to exporting activity. Third, cross-border M&As tend to harm the ecosystems of developing countries, where they increase consumption EF and the production EF, demonstrating an FDI ecological haven effect. Based on these findings, we make distinct policy recommendations for the two types of FDI.

Introduction. The article is devoted to the problems of ecological and economic interaction in modern economic systems and the formation of ecological economy. The object of research in this work is a one-sector economy, in which, in addition to the production of the main aggregate product, the disposal of pollution products of both production and non-production nature is necessarily carried out. The purpose of the work is to develop and improve the methodological tools of economic research, in particular the tools of its modeling, which allow to simulate the processes and phenomena occurring in the economy, forming the knowledge necessary for theory and practice about the behavior and prospects of the economic system. Results. The proposed model of the dynamics of such an economy is formalized in the space of socio-economic and environmental variables, which include liquid savings of production owners (producers) and workers in the production sector, the price of the main aggregate product, the tariff for the disposal of pollution and the volume of environmental pollution by unused residues of pollution products. The model belongs to the class of differential models therefore, for its approbation and practical application one can use powerful methodology and software currently available for differential models. Like most models of economic and ecological-economic dynamics, the developed model is designed to study on its basis the basic patterns, tendencies and trends of economic development in the context of greening the economy. The results of the research obtained in this way allow formulate valuable conclusions and recommendations on the behavior of real ecological and economic systems and the development of scenarios for their development, which is fundamentally important in preparation and adoption of appropriate management decisions. Conclusion.The proposed model and its possible modifications can be used in the development and implementation of pricing mechanisms in the market of basic products, tariff setting mechanisms in the market for disposal of environmentally harmful waste, as well as environmental production standards, since it takes into account the control over environmental pollution. Taking into account the possibilities of modern information technologies, which in combination with the models of economic dynamics form an effective toolkit for studying such complex objects as the economy, the model proposed in the work has reasonable prospects for its practical application.

Monetary policy is neutral even with fixed prices if free entry determines product variety optimally, as in Dixit and Stiglitz (1977). Entry substitutes for price flexibility in the welfare-based price index when individual prices are sticky. In response to aggregate demand expansions, the intensive (quantity produced of each good) and ex tensive (number of goods being produced) margins move in offsetting ways, leaving aggregate production unchanged. Price stickiness thus generates deviations from monetary neutrality only in conjunction with entry frictions: when variety is not optimally determined (preferences are not Dixit-Stiglitz) or when entry is subject to sunk costs and lags. Wage stickiness instead implies nonneutrality even in the frictionless-entry benchmark.