Collusion, competition and piracy

In this paper we analyze firms' ability to tacitly collude on pricesin an infinitely repeated duopoly game of vertical productdifferentiation. We show that firms collude if and only if their discountfactor is high enough, i.e. if they value future profits sufficiently. We alsoshow that a lower cost of copying facilitates collusion but that a higherquality of the copy hinders collusion. Thus, the overall effect of thesenew characteristics of copies made by consumers is ambiguous.Collusion, competition, piracy, consumers, cost of copying,

Temporary Stabilization and the Real Option of Waiting when Consumption can be Delayed: an Extreme Value Approach

This paper develops, in a small open economy framework, a stochastic model of exchange-rate-based inflation stabilization that is expected to be temporary. Agents have expectations of devaluation driven by a mixed diffusion-jump process where the expected size of a possible devaluation is supposed to have an extreme value distribution of the Fréchet type; as the stylized facts from the Mexican's 1994 and Argentinean's 2001 cases have show n. Consumption and wealth equilibrium dynamics are examined when a stabilization plan is implemented. The case of a stochastic stabilization horizon guided by an exponential distribution is studied. Moreover, this paper also deals with pricing the real option of waiting for postponing consumption when a stabilization plan is about to be abandoned; a claim on a non-traded asset. We also assess the effects of exogenous shocks on consumption and economic welfare. Finally, we use the proposed model to carry out simulation experiments that reproduces the booms of private consumption in the Mexican case of 1989-1994 and the Argentinean case of 2001-2003, which resulted in extreme devaluations.Inflation stabilization, Contingent claims, Extreme values

Tiebout, local school finance and the ineffciency of head taxes

The literature on local public (school) finance has shown that the use of local head taxes to finance schools leads to an effcient allocation of households and pupils to districts (Tiebout, 1956; Hamilton, 1975; Calabrese et al., 2009). This paper revises this well established result, using a two-community model with a housing market that adds two layers of realism to the analysis: not every household receives direct benefits from schools (e.g. some do not have children at school age) and communities are vertically differentiated, in the sense that one of them is exogenously preferred to the other by every household. In such context, head taxation leads to an ineffcient allocation of households to districts, even if local governments set local spending levels effciently given their population. The ineffciency emerges because too many intermediate income "in-school" households reside in the rich district in equilibrium. Income taxation is ineffcient as well but, in a counter-intuitive result, it may cause smaller effciency losses than a lump-sum tax.

Population ageing, inequality and the political economy of public education

Population ageing has triggered concerns about the sustainability of public systems of education. The empirical evidence is still inconclusive, whereas some theoretical results present a somewhat optimistic view (Gradstein and Kaganovich, 2004; Levy, 2005). The present note re-examines the political economy of public education in an ageing society, using the classical median voter model. The normative analysis shows that elderly households introduce distortions that render political outcomes inefficient except in rare circumstances. It is then explained that the interplay among the political and financial consequences of ageing gives rise to a non-linear, and possibly non-monotonic (inverted-U shaped) relationship between spending per pupil and the share of childless households in the population. Income inequality is shown to play a crucial role of in the process, revealing that ageing has a stronger tendency towards underprovision in economies with high inequality. The implications for the empirical literature are discussed.population ageing; income inequality; median voter model; public education

WHY DOES THE PIRATE DECIDE TO BE THE LEADER IN PRICES?

We analyze the roles of the government and the incumbent in preventing piracy, and the reasons and incentives why a pirate would want to be a leader in prices. The framework of analysis used is a duopoly model of vertical product differentiation with price competition, where both incumbent and pirate are committed to keep their prices. We find that both government and incumbent have a key role in avoiding the entry of the pirate. We show that the government will not help the incumbent to become a monopolist, even if he installs an antipiracy system, because a monopoly provides the lowest social welfare. However, he will let the pirate enters as a follower or as a leader, or encourage the incumbent to deter the entry of the pirate, which depends on the technology of the government for monitoring piracy. The pirate decides to become a leader to avoid being brought down by the incumbent and the government, although the leader's profit is lower than the follower's profit. Finally, we find that high-income countries with cheaper monitoring technology have lower piracy rates.Pirate, Incumbent, Government, Price Leadership, Copy, Monitoring Piracy, Income

Opting-out and income mixing in urban economies:the role of neighborhood effects

Residence-based public education systems promote income segregation across neighborhoods or school districts (e.g. Epple and Romano, 2002). It has been argued that allowing private schools to enter the market may reduce the levels of income segregation because private education severs the link among school quality and place of residence for those using a private school. On the other hand, the socalled neighborhood effects constitute another segregating force in urban areas. We use a two-neighborhood model of an urban economy in order to study whether such externalities inhibit the desegregating effects of private education or not. The analysis reveals that they may indeed reduce or completely eliminate private education induced income mixing. This will happen if the best public school is located where neighborhood effects are most beneficial. However, it may also be the case that neighborhood effects promote the mixing of high income households using a private school with low income ones using a public school in the neighborhood providing the most beneficial neighborhood effects.residential mobility, segregation, neighborhood effects, school choice.

On Consumption, Investment and Risk

The Mexican episode of 1992-1994 was characterized by a steep rise in consumption accompanied by a sharp fall in investment. This paper provides an explanation of the negative response of investment to political risk, as occurred in Mexico between 1992 and 1994. It is assumed that, inside an adjustable band, the expected rate of depreciation is driven by a mixed diffusion-jump process and the expected real rate of return on an international bond is governed by a diffusion process, both processes being correlated. This paper analyzes a small open stochastic economy. Two cases are considered: i) a cash-in-advance, Ramsey-type economy, and ii) a Sidrauski-type economy.

Determining the Biomechanical Behavior of the Liver Using Medical Image Analysis and Evolutionary Computation

Modeling the liver deformation forms the basis for the development of new clinical applications that improve the diagnosis, planning and guidance in liver surgery. However, the patient-specific modeling of this organ and its validation are still a challenge in Biomechanics. The reason is the difficulty to measure the mechanical response of the in vivo liver tissue. The current approach consist of performing minimally invasive or open surgery aimed at estimating the elastic constant of the proposed biomechanical models. This dissertation presents how the use of medical image analysis and evolutionary computation allows the characterization of the biomechanical behavior of the liver, avoiding the use of these minimally invasive techniques. In particular, the use of similarity coefficients commonly used in medical image analysis has permitted, on one hand, to estimate the patient-specific biomechanical model of the liver avoiding the invasive measurement of its mechanical response. On the other hand, these coefficients have also permitted to validate the proposed biomechanical models. Jaccard coefficient and Hausdorff distance have been used to validate the models proposed to simulate the behavior of ex vivo lamb livers, calculating the error between the volume of the experimentally deformed samples of the livers and the volume from biomechanical simulations of these deformations. These coefficients has provided information, such as the shape of the samples and the error distribution along their volume. For this reason, both coefficients have also been used to formulate a novel function, the Geometric Similarity Function (GSF). This function has permitted to establish a methodology to estimate the elastic constants of the models proposed for the human liver using evolutionary computation. Several optimization strategies, using GSF as cost function, have been developed aimed at estimating the patient-specific elastic constants of the biomechanical models proposed for the human liver. Finally, this methodology has been used to define and validate a biomechanical model proposed for an in vitro human liver.Martínez Martínez, F. (2014). Determining the Biomechanical Behavior of the Liver Using Medical Image Analysis and Evolutionary Computation [Tesis doctoral no publicada]. Universitat Politècnica de València. https://doi.org/10.4995/Thesis/10251/39337TESI

Lobbyin to prevent commercial piracy

In this paper we develop a common agency model to analyze the problem of pirates entering the market, in which the incumbent and the consumers form pressure groups to lobby the government on policies to prevent piracy while the pirates try to avoid being stopped. We show that a monopoly is not an equilibrium when both the incumbent and consumers lobby the government, and that the cost of monitoring commercial piracy is very important in determining (truthful) equilibria, as is the case where there is no lobby competition. However, it is now more difficult getting the pirate to enter the market.Common Agency, Lobbying, Commercial Piracy, Incumbent, Consumers and Government