Strategic interaction between inter vivos gifts and housing acquisition

This paper models the interdependence of parental inter vivos gifts and children\u27s home purchases when informal care affects decision making. We use data from Japanese households who purchased a detached house in an urban area to test this strategic interaction. Considering both censoring and endogeneity of inter vivos gifts, which are identified by information on formal care, our preferred results demonstrate that inter vivos gifts do not significantly increase the purchase price of housing. Theory suggests that this occurs when informal care tends to be a heavy burden for children. However, subsample analysis of young home buyers indicates that the empirical results are consistent with the literature: children who receive parental gifts tend to purchase a higher-priced dwelling. One potential explanation is that relatively young adult children are less likely to take charge of care obligations, and accordingly, parental gifts are only expected to relax their liquidity constraints. Subsample analysis appears to indicate that the underlying motivation of parental gifts is influenced by the timing of children\u27s home purchase decisions

Household debt and credit : economic issues and data problems

We survey contributions to the analysis of household liabilities, highlighting relevant theoretical aspects and outlining how data sources may support empirical testing and measurement efforts. Specifically, we classify aspects of household debt, discussing the theoretical and policy relevance of heterogeneity across individual and country dimensions. Aiming to illustrate conceptual and measurement issues, we refer to the approaches and results of some recent relevant country-specific work on administrative and survey data, and we argue that research in this area would greatly benefit from availability of appropriately classified household liabilities data and of cross-country institutional information. JEL Classification: G1, E2

Entanglement between Demand and Supply in Markets with Bandwagon Goods

Whenever customers' choices (e.g. to buy or not a given good) depend on others choices (cases coined 'positive externalities' or 'bandwagon effect' in the economic literature), the demand may be multiply valued: for a same posted price, there is either a small number of buyers, or a large one -- in which case one says that the customers coordinate. This leads to a dilemma for the seller: should he sell at a high price, targeting a small number of buyers, or at low price targeting a large number of buyers? In this paper we show that the interaction between demand and supply is even more complex than expected, leading to what we call the curse of coordination: the pricing strategy for the seller which aimed at maximizing his profit corresponds to posting a price which, not only assumes that the customers will coordinate, but also lies very near the critical price value at which such high demand no more exists. This is obtained by the detailed mathematical analysis of a particular model formally related to the Random Field Ising Model and to a model introduced in social sciences by T C Schelling in the 70's.Comment: Updated version, accepted for publication, Journal of Statistical Physics, online Dec 201

The Telephone System as a Public Good: Static and Dynamic Aspects

The paper uses standard concepts of equilibrium and efficiency to analyze certain properties of the telephone system. The property of access/no access plays a central role in the analysis, and it is suggested that many so-called "systems" in modern life have similar access/no access properties.

A Note on Manufacturers' Choice of Distribution Channels

Many marketing problems are usually analysed in verbal terms only. For instance, different alternatives as regards the marketing routes, or channels, through which goods and services or their titles flow, are mostly considered in terms of "advantages" and "disadvantages". Recently, however, techniques aiming at quantification--such as linear programming and search theory--have been gaining favor. This essay purports to clarify, in quantitative terms, some of the considerations that may underlie a manufacturer's choice of distribution channels. We shall limit ourselves to a comparison of two alternatives, namely selling through wholesalers and selling directly to retailers.