Banks as ‘fat cats’: Branching and Price Decisions in a Two-Stage Model of Competition

In this paper we develop an empirical two-stage model of competition for the banking industry that incorporates the choice of capacity in the form of new branches. It is estimated using data on Italian banks for the years 1995-2009. The results show that the conduct of banks is significantly more competitive than a Bertrand-Nash equilibrium, and support the rejection of the simple one-stage specification, which underestimates the degree of competition. In the Fudenberg and Tirole (1984)’s taxonomy, banks are found to behave as ‘fat cats’, overinvesting in the branch network so as to keep prices high and accommodate entry.bank branch network; competition; market structure; conduct

Examining social processes with agent-based models

Additional electronic copy available at http://ssrn.com/abstract=1641430It is plain that the Austrian revival that began in the 1970s has yet to succeed in convincing the mainstream of the academy to jettison their physics-based mathematical models in favor of the sort of models and forms of argumentation that contemporary Austrians advocate. Agent-based computational modeling is still in its relative infancy but is beginning to gain recognition among economists disenchanted with the neoclassical paradigm. The purpose of this paper is to assuage concerns that readers might have regarding methodological consistency between agent-based modeling and Austrian economics and to advocate its adoption as a means to convey Austrian ideas to a wider audience. I examine models developed and published by other researchers and ultimately provide an outline of how one might develop a research agenda that leverages this technique. I argue that agent-based modeling can be used to enhance Austrian theorizing and offers a viable alternative to the neoclassical paradigm

Coming and leaving. Internal mobility in late Imperial Austria.

The paper investigates the determinants of internal migration within late imperial Austria. In contrast to the modernization paradigm which studies onedirectional migration flows from rural to urban areas, our approach highlights that spatial mobility consisted of movements in both directions. Using data on all districts of the Austrian part of the Hapsburg Monarchy, we find that in- and outmigration rates are positively correlated, and that the modernization paradigm in migration research is consistent with our results for net-migration rates, but inconsistent with those for out-migration. (author's abstract)Series: Department of Economics Working Paper Serie

Programación binivel y equilibrios conjeturados: resultados teóricos y algoritmos numéricos.

This thesis presents the fruit of 3 years of research. During this time 3 works were developed, each one with its own mathematical formulations and results. These works are, of course, related to each other and will be further developed in the near future. The first work of this thesis is presented in chapter 1 and addresses the problem of defining an optimality criterion for a semi-public company in a semi-mixed duopoly model. Here, we have two agents competing, the semi-public company and a private firm, both producing a homogeneous good to satisfy the demand in the market. The private firm, as usual, seeks to maximize its net profit, while the semi-public company has a commitment to watch over the economy of the population, but at the same time, does not neglect its own profit. The compromise between these two objectives for the semipublic company is described by a parameter β ∈ (0, 1], where β → 0 represents that the semi-public company thinks only for its own net profit, and β = 1 represents that the semi-public company cares solely for the economy of the population without seeking its own benefit

Product market competition and lobbying coordination in the U.S. mobile telecommunications industry

"This paper empirically investigates market behavior and firms' lobbying in a unified structural setup. In a sequential game, where firms lobby for regulation before they compete in the product market, we derive a testable measure of lobbying coordination. Applying the setting to the early U.S. cellular services industry, we find that lobbying expenditures, as measured by campaign contributions, and market conduct were consistent with a one-shot Nash equilibrium and that price caps were binding on average. Furthermore, campaign contributions from cellular firms effectively lowered the burden of the price caps and reduced production costs." (author's abstract)"Dieses Paper untersucht Marktverhalten und Lobbying durch Unternehmen empirisch in einem vereinheitlichten strukturellen Ansatz. In einem sequentiellen Spiel, wo die Firmen für Regulierung Lobbyismus betreiben, bevor sie im Produktmarkt konkurrieren, leiten wir ein testbares Maß für Lobbying-Koordination her. In einer Anwendung auf den frühen US Mobilfunkmarkt zeigen wir, dass Marktverhalten und Lobbying-Ausgaben (gemessen als Parteispenden) mit einem einfachen Nashgleichgewicht vereinbar sind und die Preisobergrenzen im Durchschnitt binden. Außerdem waren Parteispenden offenbar ein effektives Mittel um die Preisgrenzen zu lockern und kostenbezogene Regulierung abzumildern." (Autorenreferat

Functional income distribution and aggregate demand in the Euro-area

An increase in the wage share has contradictory effects on the subaggregates of aggregate demand. Private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes. Investment expenditures ought to be negatively affected because investment will positively depend on profits. Net exports will be negatively affected because an increase in the wage share corresponds to an increase in unit labor costs and thus a loss in competitiveness. Theoretically aggregate demand can therefore be either wage led or profit led depending on how these effects add up. The results will crucially depend on how open the economy is internationally. The paper estimates a Post-Kaleckian macro model incorporating these effects for the Euro area and finds that the Euro area is presently in a wage-led demand regime. Implications for wage policies are discussed. (author's abstract)Series: Department of Economics Working Paper Serie

Possible origins of macroscopic left-right asymmetry in organisms

I consider the microscopic mechanisms by which a particular left-right (L/R) asymmetry is generated at the organism level from the microscopic handedness of cytoskeletal molecules. In light of a fundamental symmetry principle, the typical pattern-formation mechanisms of diffusion plus regulation cannot implement the "right-hand rule"; at the microscopic level, the cell's cytoskeleton of chiral filaments seems always to be involved, usually in collective states driven by polymerization forces or molecular motors. It seems particularly easy for handedness to emerge in a shear or rotation in the background of an effectively two-dimensional system, such as the cell membrane or a layer of cells, as this requires no pre-existing axis apart from the layer normal. I detail a scenario involving actin/myosin layers in snails and in C. elegans, and also one about the microtubule layer in plant cells. I also survey the other examples that I am aware of, such as the emergence of handedness such as the emergence of handedness in neurons, in eukaryote cell motility, and in non-flagellated bacteria.Comment: 42 pages, 6 figures, resubmitted to J. Stat. Phys. special issue. Major rewrite, rearranged sections/subsections, new Fig 3 + 6, new physics in Sec 2.4 and 3.4.1, added Sec 5 and subsections of Sec

RHOMOLO V3: A Spatial Modelling Framework

In this paper we provide the mathematical presentation of the RHOMOLO model. In addition, we perform some stylized and illustrative simulations with the aim to make the reader familiar with the economic adjustment mechanisms incorporated into the model. Essentially, we attempt to offer the reader and the potential users of the model an intuition of the transmission channels existing in the current version RHOMOLO. The analysis is kept simple to facilitate a better understanding of the model's findings. We simulate a permanent demand-side shock implemented separately for each of the 267 regions contained in the model. We repeat the same simulation under three alternative labour market closures and three different imperfectly competitive product market structures.JRC.B.3-Territorial Developmen