A characterization of inefficiency in stochastic overlapping generations economies

In this paper, we provide a characterization of interim inefficiency in stochastic economies ofoverlapping generations under possibly sequentially incomplete markets. With respect to the established body of results in the literature, we remove the hypothesis of two-period horizons,by considering longer, though uniformly bounded, horizons for generations. The characterization exploits a suitably Modified Cass Criterion, grounded on the long-run behavior of compounded safe interest rates and independent of the length of horizons of generations. Thus, the hypothesis of two-period horizons is purely heuristic in establishing a criterion for inefficiency. In addition, for sequentially incomplete markets, we adopt a suitable notion of unambiguous inefficiency, separating the inefficient intertemporal allocation of resources from incomplete risk-sharing. Unambiguous inefficiency reduces to inefficiency when markets are sequentially complete.stochastic overlapping generations economies, inefficiency, competitive prices, cass criterion, social security, incomplete markets

A Characterization of Inefficiency in Stochastic Overlapping Generations Economies

In this paper, we provide a characterization of interim inefficiency in stochastic economies of overlapping generations under possibly sequentially incomplete markets. With respect to the established body of results in the literature, we remove the hypothesis of two-period horizons, by considering longer, though uniformly bounded, horizons for generations. The characterization exploits a suitably Modified Cass Criterion, grounded on the long-rung behavior of compounded safe interest rates and independent of the length of horizons of generations. Thus, the hypothesis of two-period horizons is purely heuristic in establishing a criterion for inefficiency. In addition, for sequentially incomplete markets, we adopt a suitable notion of unambiguous inefficiency, separating the inefficient intertemporal allocation of resources from incomplete risk-sharing. Unambiguous inefficiency reduces to inefficiency when markets are sequentially complete.

The TV news scheduling game when the newscaster’s face matters

The present note first provides an alternative formulation of the Cancian, Bills and Bergström (1995) - problem which discards the non-existence difficulty and consequently allows to consider some extensions of the TV-newscast scheduling game. The extension we consider consists in assuming that viewers’ preferences between the competing channels do not depend only on the timing of their broadcast, but also on some other characteristics, like the content of the show or the identity of the newscaster. Then we identify a sufficient condition on the dispersion of these preferences over the viewers’ population guaranteeing the existence of a unique Nash equilibrium. It turns out that, at this equilibrium, both networks broadcast their news at the same instant.advertising; newspaper quality

Market integration in network industries

What is the effect of product market integration on the market equilibrium in the presence of international network externalities in consumption? To address this question, we set up a spatial two-country model and we find that the economic forces at work may have an ambiguous effect on prices.compatibility, horizontal differentiation, network effect

Market integration and network industries

What is the effect of product market integration on the market equilibrium in the presence of international externalities in consumption ? To address this question, we set up a spatial two-country model and we find that the economic forces at work may have an ambiguous effect on prices.compatibility; horizontal differentiation; network effect

Interaction of defined benefit pension plans and social security

This paper explores the shift from defined benefit to defined contribution pension plans when the payout rate from social security is set optimally. This paper shows that when employees are receiving more of their private pensions from defined contribution plans one should be raising the payout rate from traditional social security rather than trying to privatize part of it.social security, defined benefit, defined contribution.

To acquire or to compete ? An entry dilemna

In this paper we address the following question : is it more profitable, for an entrant in a differentiated market, to acquire an existing firm than to compete ? We illustrate the answer by considering competition in the banking sectorvertical differentiation; entry; banking competition

To acquire, or to compete? An entry dilemna

In this paper we address the following question: is it more profitable, for an entrant in a differentiated market, to acquire an existing firm than to compete? We illustrate the answer by considering competition in the banking sector.Vertical differentiation, entry, banking competition

Forced saving, redistribution and nonlinear social security schemes

This paper studies the design of a nonlinear social security scheme in a society where individuals differ in two respects: productivity and degree of myopia. Myopic individuals may not save "enough" for their retirement because their "myopic self" emerges when labor supply and savings decisions are made. The social welfare function is paternalistic: the rate of time preference of the far-sighted (which corresponds to the "true" preferences of the myopics) is used for both types. We show that the paternalistic solution does not necessarily imply forced savings for the myopics. This is because paternalistic considerations are mitigated or even outweighed by incentive effects. Our numerical results suggest that as the number of myopic individuals increases, there is less redistribution and more forced saving. Furthermore, as the number of myopic increases, the desirability of social security (measured by the difference between social welfare with and without social security) increases.social security, myopia, dual-self model

Approximating multiple class queueing models with loss models

Multiple class queueing models arise in situations where some flexibility is sought through pooling of demands for different services. Earlier research has shown that most of the benefits of flexibility can be obtained with only a small proportion of cross-trained operators. Predicting the performance of a system with different types of demands and operator pools with different skills is very difficult. We present an approximation method that is based on equivalent loss systems. We successively develop approximations for the waiting probability, The average waiting time and the service level. Our approximations are validated using a series of simulations. Along the way we present some interesting insights into some similarities between queueing systems and equivalent loss systems that have to our knowledge never been reported in the literature.