Competition between highway operators: can we expect toll differentiation?

Where there are alternative roads to the same destination, competition between profit maximizing road operators is possible. Tolls on such roads could perform two welfare enhancing functions; discouraging excessive driving and allocating drivers between roads. The second of these functions will typically require some roads to be more expensive to drive on, and to be less congested, than others. Bertrand equilibrium will not always peform this second function. It may fail to allocate the most impatient drivers to less congested roads, as it does not always deliver toll differentiation. The performance of this second function is dependent on the first. That is, whether or not competing roads will be differentiated by tolls and congestion, will depend in part on the importance of discouraging marginal drivers. The equilibrium will not generally be fully efficient, but will often provide efficiency gains over other decentralized options.congestion, road pricing, networks, market structure

A Note on the Decision of a Sales Maximizer in Response to the Increase of Per Unit Cost

In this paper the author compares the behaviors of a sales revenue maximizer with that of a profit maximizer in their response to an increase of the per unit production cost or a per unit tax being imposed, A mistake in a currently used textbook is pointed out, and a new proposition is proposed for replacing a false statement there

The Welfare Effects of Monopoly Innovation

In this paper we study the welfare effect of a monopoly innovation. Unlike many partial equilibrium models carried out in previous studies, general equilibrium models are constructed and analyzed in greater details. We discover that, technical innovation carried out by a monopolist could significantly increase the social welfare. We conclude that, in general, the criticism against monopoly innovation based on its increased dead weight loss is less accurate as previously postulated by many studies.

The Transactions Cost of Money (A Strategic Game Analysis)

The payments system of a modern economy is a peculiar mix of technological and institutional factors. Trade takes time and involves some form of money or credit. Going to the bank or arranging credits is expensive. Baumol (1952) and Tobin (1956) address the costs of transactions. However both the Baumol and the Tobin analysis was carried out in a partial equilibrium context. Here we address the task of considering the costs of banking in a closed strategic market game

The Money Rate of Interest and the Influence of Assets in a Multistage Economy with Gold or Paper Money: Part I

The role of long lived assets is considered in serving as hostages to extend the domain of trustless trade in an exchange economy. Assuming that individuals have life cycle preferences, we consider the most general set of utility functions consistent with these preferences and a stationary equilibrium for an OLG economy. The influence of the type of asset, durable or storable on the need for money is considered

Transactions Loans, Intertemporal Loans, Variable Velocity, the Rates of Interest and Commodity Money: Part 1. Transactions Loans

Several models of exchange are presented here to illustrate various conceptual problems in the microeconomic model of the velocity of money and the meaning of and cost of liquidity in an exchange economy without exogenous uncertainty

The Money Rate of Interest and the Influence of Assets in a Multistage Economy with Gold or Paper Money: Part II

We consider the relationship between the length of life of individuals and the assets they own and their influence on trustless trade. In particular in some structures a role for government or an outside bank may be called for to support an equilibrium. An example of an OLG model with production illustrates the need for expanding the fiat money supply if population growth is greater than zero

Dynamic Properties of the Nash Equilibrium

In this paper the authors examine the games with well-defined reaction functions. The focus is on the stability property of the Nash equilibria, i.e. the convergency in the strategy profile space to a Nash equilibrium when, beginning with some initial strategy choices in a neighborhood, players take turn to make improvements. Some interesting propositions on the dynamic properties have been established, which offer a kind of explanation as to why in general the outcomes of games and the economic dynamic process can be rather diversified

Gold, Liquidity and Secured Loans in a Multistage Economy. Part I: Gold as Money

A multiperiod exchange economy with gold used both as money and as jewelry is examined in this paper. The existence of Nash equilibria is proved for the market games with finitely many traders as well as the games with a continuum of traders. For market games with a continuum of traders at infinite horizon, the existence of stationary Nash equilibria has been proved under the assumption that gold is properly distributed at the beginning or a secured loan between traders is available