Revenue Sharing, Demand Uncertainty, and Vertical Control of Competing Firms

This paper argues that revenue sharing is a valuable instrument in vertically separated industries when there is intrabrand competition among the downstream firms, demand is stochastic or variable, and downstream inventory is chosen before demand is realized. In these environments, the upstream firm would like to simultaneously soften downstream competition and encourage efficient inventory holding. Traditional two-part tariffs cannot achieve both objectives in the presence of downstream competition. Raising the price of the inputs softens price competition but distorts the downstream firms' inventory decisions. We argue that revenue sharing, combined with a low input price, aligns the incentives in the vertical chain. The use of revenue sharing in video rental retailing is discussed. Blockbuster in particular has used revenue sharing in conjunction with heavy marketing of availability to grow significantly in the video rental retail industry. Many other outlets use revenue sharing as well. Some antitrust concerns have been raised by smaller firms suggesting that revenue sharing might be an anticompetitive vertical restraint. Although our model does not address retailer market power, we show that revenue sharing contracts can be used by upstream firms increase inventory holding and consumer welfare.

When does heterogeneity matter?

How do movements in the distribution of income affect the macroeconomy? Krusell and Smith (1998) analyzed this question in a neoclassical growth model, and their results show that the representative-agent assumption provides a good approximation for aggregate behaviors of heterogeneous agents. This paper extends their analysis to a cash-in-advance model with heterogeneous money demand. It is shown that movements in the distribution of monetary income can have significant impact on the macroeconomy. For example, the dynamic responses of aggregate output to monetary shocks behave very differently from those of a representative agent; the welfare costs of moderate inflation are much higher than previously thought, up to 20% of consumption when the inequality of cash distribution is sufficiently large. This is in sharp contrast to the findings of Cooley and Hansen (1989) and Lucas (2000) based on representative-agent models.Liquidity (Economics) ; Money theory

A Microfoundation of Monetary Economics

In this lecture, I explain what the microfoundations of money are about and why they are necessary for monetary economics. Then, I review recent developments of a particular microfoundation of money, commonly known as the search theory of money. Finally, I outline some unresolved issues.Money; Search; Microfoundation.

SOCIO-ECONOMIC DEVELOPMENT : A POLITICO - FINANCIAL OVERVIEW

Do Financial accounting practices as per the political setup and their administrative strategies, pose problems to the pace of Socio-economic development of any nation ? This paper addresses this question with a preview to the dawn of human civilizations on earth, and mathematically cumulating the thoughts of Socio-economic development in four facets, from Individual to National level. Different Financial Management Techniques are used under the two divergent political setups, namely the Capitalism and the Communism. A capitalist setup provides the freedom of corporate control under each individual entrepreneur or a corporate unit (I), under private or government control (G), to function as an autonomous body. using the "Return on Investment" as their motivating guideline. A communist setup represents a centralised approach through individual work contributions at micro level. Under this setup, the national demand is pre-assessed and fixed by the State. The financial management is taken care by the State Bank. Conclusion leads towards irrespective of the political setup, the Socio-economic development is a Three Dimensional Closed Cycle Economic process, namely Manpower as the Prime component, Materials and Techno-commercial infrastructure, in a preset Seven Sequential order. The inference is that the Cost and Quality of Domestic goods and services, decide the status of Socio- economic development. This directly depends upon the proper utilisation pattern of the three ingredients and the Productivity orientation of the Prime component (Manpower). The world experiences support the Closed Cycle Economic process. The inferences are supported with examples from Britain, Germany, India, Russia and USA. (The matter is supported with 4 Creative and Comprehensive Schematic Diagrams summarising the Financial Approaches of Capitalist/Communist setup, Closed Cycle Economics and the Productivity relationship of the Prime component Manpower, respectively. This Research Paper is based on a study survey by the Author to various countries functioning under different Political and Financial accounting Appraisal Techniques).Accounting System, Communist, Capitalist, Financial Methods, Infrastructure, Manpower, Materials, Information Systems, Political, Techno-commercial

New Monetarist Economics: models

The purpose of this paper is to discuss some of the models used in New Monetarist Economics, which is our label for a body of recent work on money, banking, payments systems, asset markets, and related topics. A key principle in New Monetarism is that solid microfoundations are critical for understanding monetary issues. We survey recent papers on monetary theory, showing how they build on common foundations. We then lay out a tractable benchmark version of the model that allows us to address a variety of issues. We use it to analyze some classic economic topics, like the welfare effects of inflation, the relationship between money and capital accumulation, and the Phillips curve. We also extend the benchmark model in new ways, and show how it can be used to generate new insights in the study of payments, banking, and asset markets.Money ; Monetary policy

Uncertainty, Inflation, and Welfare

This paper studies the welfare costs and the redistributive effects of inflation in the presence of idiosyncratic liquidity risk, in a micro-founded search-theoretical monetary model. We calibrate the model to match the empirical aggregate money demand and the distribution of money holdings across households, and study the effects of inflation under the implied degree of market incompleteness. We show that in the presence of imperfect insurance the estimated long-run welfare costs of inflation are on average 40% smaller compared to a complete markets, representative agent economy, and that inflation induces important redistributive effects across households. For example, the welfare gains of reducing inflation from 10% to 0% is 0.59% of income. Furthermore, we estimate that the long-run welfare gains of reducing the typical current inflation target of 2 to 1 percent to be 0.06% of income.Inflation: costs and benefits; Monetary policy framework

SOCIO-ECONOMIC DEVELOPMENT : A POLITICO - FINANCIAL OVERVIEW

Do Financial accounting practices as per the political setup and their administrative strategies, pose problems to the pace of Socio-economic development of any nation ? This paper addresses this question with a preview to the dawn of human civilizations on earth, and mathematically cumulating the thoughts of Socio-economic development in four facets, from Individual to National level. Different Financial Management Techniques are used under the two divergent political setups, namely the Capitalism and the Communism. A capitalist setup provides the freedom of corporate control under each individual entrepreneur or a corporate unit (I), under private or government control (G), to function as an autonomous body. These units could function towards their self goals, using the "Return on Investment" as their motivating guideline. A communist setup represents a centralised approach through individual work contributions at micro level. Under this setup, the national demand is pre-assessed and fixed by the State. The financial management is taken care by the State Bank. These financial overviews lead to the conclusion that irrespective of the political setup, the Socio-economic development is a Three Dimensional Closed Cycle Economic process, namely Manpower, Materials and Techno-commercial infrastructure, in a preset Seven Sequential order. Of these, the Manpower is the Prime component. It should be supported by adequate Infrastructure Systems, and Performance Feed back. The Politico-Financial overview infers that the Cost and Quality of Domestic goods and services, decide the status of Socio-economic development. This directly depends upon the proper utilisation pattern of the three ingredients and the Productivity orientation of the Prime component (Manpower). The world experiences support the Closed Cycle Economic process. The inferences are supported with examples from Britain, Germany, India, Russia and USA. The matter is supported with 4 Creative and Comprehensive Schematic Diagrams summarising the Financial Approaches of Capitalist/Communist setup, Closed Cycle Economics and the Productivity relationship of the Prime component Manpower, respectively. This Research Paper is based on a study survey by the Author to various countries functioning under different Political and Financial accounting Appraisal Techniques.Accounting System, Communist, Capitalist, Financial Methods, Infrastructure, Manpower, Materials, Information Systems, Political, Techno-commercial

Design of a network of reusable logistic containers

In this paper, we consider the management of the return flows of empty logistic containers that accumulate at the customer’s sites. These containers must be brought back to the factories in order to sustain future expeditions. We consider a network composed of several factories and several customers in which the return flows are independent of the delivery flows. The models and their solutions aim at finding to which factory the contain- ers have to be brought back and at which frequency. These frequencies directly define the volume of logistic containers to hold in the network. We consider fixed transportation costs depending on the locations of the customers and of the factories and linear holding costs for the inventory of logistic containers. The analysis also provides insight on the benefit of pooling the containers among different customers and/or factories.supply chain management, returnable items, reverse logistic, economic order quantity, network design

Decentralized Exchange and Factor Payments: A Multiple-Matching Approach

The emergence of fiat money is studied in an environment in which exchange is organized around trading posts where many producers and shoppers are matched in a dynamic monopolistically competitive framework. Each household consumes a bundle of commodities and has a preference for consumption variety. Within this multiple matching structure we determine the endogenous organization of exchange between firms and shoppers and the means of factor payment (remuneration) as well as the price at which these trades occur. Although each household contacts many sellers, the specialization of tastes implies that the variety of the consumption basket under barter mediated exchange is sparser than that obtained under monetary exchange. We verify that the endogenous linkage of factor payments with the medium of exchange can lead to a monetary equilibrium outcome where only fiat money trades for goods, an ex-ante feature of cash-in-advance models. We also examine the long-run effects of money growth on the equilibrium pattern of exchange. A primary finding, consistent with documented hyperinflationary episodes, is that a sufficiently rapid expansion of money supply and inflation leads to the gradual emergence of barter. Under these circumstances sellers will accept both goods and cash payments whereas workers receive part of their remuneration in goods.Variety Preference, Search, Trading Post, Monetary vs. Barter Equilibrium