The design and efficiency of loyalty rewards

The goal of this paper is to reexamine the optimal design and efficiency of loyalty rewards in markets for final consumption goods. While the literature has emphasized the role of loyalty rewards as endogenous switching costs (which distort the efficient allocation of consumers), in this paper I analyze the ability of alternative designs to foster consumer participation and increase total surplus. First, the efficiency of loyalty rewards depend on their specific design. A commitment to the price of repeat purchases can involve substantial efficiency gains by reducing price-cost margins. However, discount policies imply higher future regular prices and are likely to reduce total surplus. Second, firms may prefer to set up inefficient rewards (discounts), especially in those circumstances where a commitment to the price of repeat purchases triggers Coasian dynamics.Loyalty rewards, Coasian dynamics, Price commitment, Coupons

Markets and linguistic diversity

The choice of language is a crucial decision for firms competing in cultural goods and media markets with a bilingual or multilingual consumer base. To the extent that multilingual consumers have preferences over the intrinsic characteristics (content) as well as over the language of the product, we can examine the efficiency of market outcomes regarding linguistic diversity. In this paper, I extend the spokes model and introduce language as an additional dimension of product differentiation. I show that: (i) if firms supply their product in a single language (the adoption model) then the degree of linguistic diversity is inefficiently low, and (ii) if some firms supply more than one linguistic version (the translation model) then in principle the market outcome may exhibit insufficient or excessive linguistic diversity. However, excessive diversity is associated to markets where the fraction of products in the minority language is disproportionately high with respect to the relative size of the linguistic minority.Product variety, language, translation

Simultaneous Nash Bargaining with Consistent Beliefs

We propose and analyze a new solution concept, the R solution, for three-person, transferable utility, cooperative games. In the spirit of the Nash Bargaining Solution, our concept is founded on the predicted outcomes of simultaneous, two-party negotiations that would be the alternative to the grand coalition. These possibly probabilistic predictions are based on consistent beliefs. We analyze the properties of the R solution and compare it with the Shapley value and other concepts. The R solution exists and is unique. It belongs to the bargaining set and to the core whenever the latter is not empty. In fact, when the grand coalition can simply execute one of the three possible bilateral trades, the R solution is the most egalitarian selection of the bargaining set. Finally, we discuss how the R solution changes important conclusions of several well known Industrial Organization models.cooperative games, bargaining, endogenous fall-back options, consistent beliefs, R solution.

Barcelona GSE Working Paper Series Working Paper nº 713The economic value of reciprocal bilingualism

Some bilingual societies exhibit a distribution of language skills that cannot be explained by economic theories that portray languages as pure communication devices. Such distribution of skills are typically the result of public policies that promote bilingualism among members of both speech communities (reciprocal bilingualism). In this paper I argue that these policies are likely to increase social welfare by diminishing economic and social segmentation between the two communities. However, these gains tend to be unequally distributed over the two communities. As a result, in a large range of circumstances these policies might not draw su ¢ cient support. The model is built upon the communicative value of languages, but also emphasizes the role of linguistic preferences in the behavior of bilingual individuals.

La coordinació de polítiques macroeconòmiques

La teoria dels jocs ens diu que no hi ha receptes universals per coordinar les diverses polítiques econòmique

UNA LECTURA REPUBLICANA I FEDERAL DE L'AUTODETERMINACIÓ

The prospect of offering a positive solution to the right to self-determinationand to regulate it constitutionally is an inevitable step in the convergence betweenthe liberal democratic tradition and republican patriotism. As societiesbecome increasingly democratic, and become more advanced in terms ofmaterial equality, the more national diversity is recognised and the closer wecome to a republican and federal culture, given that we are allowing real nationsto speak without internal or external discrimination or domination. Arepublican and federal interpretation of self-determination is necessary tosucceed in reversing the treatment of national conflicts within liberal democracies.The time for unilateral decisions based on sovereignty is over, insofaras democratic constitutions include and regulate the multi-nation state andthe federal principle, such as recognition and the means to agreement betweennations based on equality, respectively

Markets and linguistic diversity

The choice of language is a crucial decision for firms competing in cultural goods and media markets with a bilingual or multilingual consumer base. Insofar as multilingual consumers have preferences regarding the intrinsic characteristics (content) as well as the language of the product, we can examine the efficiency of market outcomes in terms of linguistic diversity. In this paper, I extend the spokes model and introduce language as an additional dimension of product differentiation. I show that: (i) if firms supply their product in a single language (the adoption model), then the degree of linguistic diversity is inefficiently low and (ii) if some firms supply more than one linguistic version (the translation model), then in principle the market outcome may exhibit insufficient or excessive linguistic diversity. However, excessive diversity is associated with markets where the share of products in the minority language is disproportionately high with respect to the relative size of the linguistic minority.The choice of language is a crucial decision for firms competing in cultural goods and media markets with a bilingual or multilingual consumer base. Insofar as multilingual consumers have preferences regarding the intrinsic characteristics (content) as well as the language of the product, we can examine the efficiency of market outcomes in terms of linguistic diversity. In this paper, I extend the spokes model and introduce language as an additional dimension of product differentiation. I show that: (i) if firms supply their product in a single language (the adoption model), then the degree of linguistic diversity is inefficiently low and (ii) if some firms supply more than one linguistic version (the translation model), then in principle the market outcome may exhibit insufficient or excessive linguistic diversity. However, excessive diversity is associated with markets where the share of products in the minority language is disproportionately high with respect to the relative size of the linguistic minority