One of the most striking aspects of the recent recession is the collapse in international trade. This paper uses disaggregated data on U.S. imports and exports to shed light on the anatomy of this collapse. The paper finds that the recent reduction in trade relative to overall economic activity is far larger than in previous downturns. Information on quantities and prices of both domestic absorption and imports reveals a 40 percent shortfall in imports, relative to what would be predicted by a simple import demand relationship. In a sample of imports and exports disaggregated at the 6-digit NAICS level, the paper finds that sectors used as intermediate inputs experienced significantly higher percentage reductions in both imports and exports. It also finds support for compositional effects: sectors with larger reductions in domestic output had larger drops in trade. By contrast, the paper finds no support for the hypothesis that trade credit played a role in the recent trade collapse.

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The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun

"Baye's Managerial Economics and Business Strategy" remains the best-selling managerial economics textbook in which it continues to provide students with the tools from intermediate microeconomics, game theory, and industrial organization to make sound managerial decisions. Baye is known for its real-world examples, frontier research, inclusion of modern topics not found in other managerial books, as well as balanced coverage of traditional and modern microeconomic tools. The seventh edition retains all of the key signature features of previous editions and incorporates new features to enhance students' learning experiences and make it easier to teach from the book. These include updated headlines, new and updated inside business applications, and new end-of-chapter material.

/pdf/managerial-economics-and-business-strategy-3ilc28lf5s.pdf

Managerial Economics and Business Strategy

4. Summary As we indicated at the beginning of this chapter, price discrimination is a ubiquitous phenomenon. Nearly all firms with market power attempt to engage in some type of price discrimination. Thus, the analysis of the forms that price discrimination can take and the effects of price discrimination on economic welfare are a very important aspect of the study of industrial organization. In this survey we have seen some of the insights offered by the economic theory of price discrimination. However, much work remains to be done. For example, the study of marketing behavior at the retail level is still in its infancy. Retail firms use a variety of marketing devices — sales, coupons, matching offers, price promotions, and so on — that apparently enhance sales. The marketing literature has examined individual firm choices of such promotional tools. But what is the ultimate effect of such promotions on the structure and performance of market equilibrium? What kinds of marketing devices serve to enhance economic welfare and what kinds represent deadweight loss? One particularly interesting set of questions in this area that has received little attention concerns the computational costs involved in using complex forms of price discrimination. In the post-deregulation airline industry of the United States, airlines have taken to using very involved pricing schemes. Finding the most inexpensive feasible fight may involve a considerable expenditure of time and effort. What are the welfare consequences of this sort of price discrimination? Do firms appropriately take into account the computational externality imposed on their customers? Even in more prosaic case of public utilities, pricing schedules have become so complex that households often make the “wrong” choice of telephone service or electricity use. Questions of simplicity and ease-of-use have not hitherto played a role in the positive and normative analysis of price discrimination. Perhaps this will serve as a fruitful area of investigation in future studies of price discrimination.

Chapter 10 Price discrimination

This paper reviews regional economics research of recent years under the three categories of theory, methods, and policy. The theoretical topics analyzed include spatial prices, location, regional growth, and spatial diffusion. The methods section focusses on the five most popular techniques: economic base, regional input-output, regional econometric models, shift-share, and the gravity model. Policy issues discussed include the efficiency vs. equity trade-off, the case for subsidized migration, the relative merits of subsidies of capital, labor, and infrastructure, growth centers, and regional policy evaluation. It is suggested that many of the unresolved questions in regional economics spill over disciplinary boundaries and require the interdisciplinary skills of the regional scientist rather than those of the mainstream economist.

The State of Regional Economics: A Survey Article

This paper reexamines the theory of spatial price policies under more general conditions to compare mill pricing, uniform delivered pricing, and discriminatory local pricing and to interpret their implications when market regions are given. The analysis assumes that demand functions are linear and identical in all locations, that marginal production cost is constant, and that transportation cost is proportional to distance. The results go beyond previous findings, but do not seriously contradict them. [Авторский текст]

Spatial price policies revisited

In a recent article in this Review, M. L. Greenhut and H. Ohta (G-O) demonstrated that a spatial monopolist who adopts a spatially discriminating price would produce a larger output than under a mill price policy. They raise, without elaboration, the possibility that this larger output corresponds to a greater level of net benefits. The purpose of this paper is to examine a model in which the net benefits of both price policies can be measured and to extend the discussion to the case of competition for market areas-called spatial monopolistic competition in location theory (see Martin Beckmann 1968, 1970, 1971). Section I introduces a model, somewhat simpler than that of G-O, in which the basic result of G-O can be derived and the welfare effects of the two policies can be measured. Here it is found that when there is no significant competition for the firm's market area, spatial price discrimination results in firms producing larger output, serving larger market areas, and promoting greater net benefits than under a mill price policy. Section II then considers spatial monopolistic competition in which extra normal profits invite invasion of market areas. It is shown that the equilibrium firm output and market area will be smaller under spatial price discrimination than under mill pricing and that if price discrimination is allowed, firms will be forced by free entry to adopt that policy. It is also shown that customers buy more when spatial price discrimination is imposed than under mill pricing, but that they are worse off-greater net benefits are derived under mill pricing.

The Welfare Effects of Spatial Price Discrimination

Spatial monopolistic competition versus spatial monopoly

In an infinitely repeated game, sellers employ a trigger strategy of mutual forbearance from invasion of each other's markets, stabilized against invasion by the threat of Bertrand pricing. Contrary to conventional static models, this article shows stability for a wide range of transportation costs and present value parameters, and that increases in transportation costs tend to destabilize the collusive agreement.

Credible Collusion in Spatially Separated Markets

The Welfare Effects of Market Shapes in the Loschian Location Model: Squares vs. Hexagons [The Non-Uniqueness of Equilibrium in the Loschian Location Model]

William L. Holahan

Papers

The Welfare Effects of Spatial Price Discrimination

Spatial monopolistic competition versus spatial monopoly

Credible Collusion in Spatially Separated Markets

Credible Collusion in Spatially Separated Markets

The Welfare Effects of Market Shapes in the Loschian Location Model: Squares vs. Hexagons [The Non-Uniqueness of Equilibrium in the Loschian Location Model]