Durable Goods Oligopoly with Secondary Markets: the Case of Automobiles

We study the effects of durability and secondary markets on equilibrium firm behavior in the car market. We construct a dynamic oligopoly model of a differentiated product market to incorporate the equilibrium production dynamics which arise from the durability of the goods and their active trade in secondary markets. We derive an econometric model and estimate its parameters using data from the automobile industry over a twenty-year period. Our estimates are used to provide a measure of the competitive importance of the secondary market.Publicad

Capital Tax Incidence: Fisherian Impressions from the Time Series

This paper accepts for the sake of argument the hypothesis that much of the time series correlation between tax and profit rates is spurious, and shows how nonetheless time series for profit rates, tax rates, and consumption can be organized, compared and interpreted using Fisher's (1930) theory of consumption in order to understand the incidence of capital taxes. Capital taxation is associated with a wedge between anticipated aggregate consumption growth and capital rental rates, suggesting that in one way or another capital owner behavior adjusts in the direction needed for some passing' of the capital tax. Conversely, most of the medium and low frequency deviations between anticipated aggregate consumption growth and capital rental rates are associated with capital taxation, as implied by aggregate time-separable Fisherian consumption theories in which time preference, non-tax capital market distortions, aggregation biases, and other determinants of aggregate consumption growth vary little over time.

Whittle Index Policy for Crawling Ephemeral Content

We consider a task of scheduling a crawler to retrieve content from several sites with ephemeral content. A user typically loses interest in ephemeral content, like news or posts at social network groups, after several days or hours. Thus, development of timely crawling policy for such ephemeral information sources is very important. We first formulate this problem as an optimal control problem with average reward. The reward can be measured in the number of clicks or relevant search requests. The problem in its initial formulation suffers from the curse of dimensionality and quickly becomes intractable even with moderate number of information sources. Fortunately, this problem admits a Whittle index, which leads to problem decomposition and to a very simple and efficient crawling policy. We derive the Whittle index and provide its theoretical justification

When Do Secondary Markets Harm Firms?

To investigate whether secondary markets aid or harm durable goods manufacturers, we build a dynamic model of durable goods oligopoly with transaction costs in the secondary market. Calibrating model parameters using data from the US automobile industry, we find the net effect of opening the secondary market is to decrease new car manufacturers' profits by 35 percent. Counterfactual scenarios in which the size of the used good stock decreases, such as when products become less durable, when the number of firms decreases, or when firms can commit to future production levels, increase the profitability of opening the secondary market

R&D, productivity and market value

Measuring the private returns to R&D requires knowledge of its private depreciation or obsolescence rate, which is inherently variable and responds to competitive pressure. Nevertheless, most of the previous literature has used a constant depreciation rate to construct R&D capital stocks and measure the returns to R&D, a rate usually equal to 15 per cent. In this paper I review the implications of this assumption for the measurement of returns using two different methodologies: one based on the production function and another that uses firm market value to infer returns. Under the assumption that firms choose their R&D investment optimally, that is, marginal expected benefit equals marginal cost, I show that both estimates of returns can be inverted to derive an implied depreciation rate for R&D capital. I then test these ideas on a large unbalanced panel of US manufacturing firms for the years 1974 to 2003. The two methods do not agree, in that the production function approach suggests depreciation rates near zero (or even appreciation) whereas the market value approach implies depreciation rates ranging from 20 to 50 per cent, depending on the period. The concluding section discusses the possible reasons why this is true.

Zeno machines and hypercomputation

This paper reviews the Church-Turing Thesis (or rather, theses) with reference to their origin and application and considers some models of "hypercomputation", concentrating on perhaps the most straight-forward option: Zeno machines (Turing machines with accelerating clock). The halting problem is briefly discussed in a general context and the suggestion that it is an inevitable companion of any reasonable computational model is emphasised. It is hinted that claims to have "broken the Turing barrier" could be toned down and that the important and well-founded role of Turing computability in the mathematical sciences stands unchallenged.Comment: 11 pages. First submitted in December 2004, substantially revised in July and in November 2005. To appear in Theoretical Computer Scienc