Book•
Intermediate microeconomics : A modern approach
01 Jan 2006-
TL;DR: The Varian approach as mentioned in this paper gives students tools they can use on exams, in the rest of their classes, and in their careers after graduation, and is still the most modern presentation of the subject.
Abstract: This best-selling text is still the most modern presentation of the subject. The Varian approach gives students tools they can use on exams, in the rest of their classes, and in their careers after graduation.
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TL;DR: In this paper, the authors analyzed the level of competition in Angola's banking industry using the Panzar-Rosse model with data from 2005 to 2014 and found that the competition is monopolist and therefore lower competition is found in Angola banks.
Abstract: This article analyses the level of competition in Angola’s banking industry using the Panzar–Rosse model with data from 2005 to 2014. Competition is a vital aspect of the banking market and therefore it is central to policy-making. The results reveal that Angola banking competition is monopolist and therefore lower competition is found in Angola banks. Policy implication is derived.
12 citations
Cites background or methods from "Intermediate microeconomics : A mod..."
...The exogenous variable follows a microeconomic cost function (Varian 1987) specification....
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...(4) This specification has been used, among others, by Molyneux, Lloyd-Williams, and Thornton (1994); Bikker and Groeneveld (2000); Bikker and Haaf (2002); Claessens and Laeven (2004); Yildirim and Philippatos (2007); and Schaeck, Cihak, and Wolfe (2009)....
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...(4) This specification has been used, among others, by Molyneux, Lloyd-Williams, and Thornton (1994); Bikker and Groeneveld (2000); Bikker and Haaf (2002); Claessens and Laeven (2004); Yildirim and Philippatos (2007); and Schaeck, Cihak, and Wolfe (2009). The third and fourth specification adopts the Revenue equation adopted by Bikker, Shaffer, and Spierdijk (2012)....
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01 Dec 2009
TL;DR: In this article, the authors analyze the causes of the weakening of copyright and suggest how a graduated response to copyright infringers can decrease the amount of money paid to copyright enforcement costs.
Abstract: The digitization of copyrighted goods and the dematerialization of their distribution over the Internet have caused a weakening of copyright, a key institution of the creative industries. One reason is that, during the broadband roll-out, copyright enforcement costs have become superior to the estimated benefits of copyright. This paper analyses the causes of this situation and suggests how a graduated response to infringers can decrease copyright
12 citations
22 Oct 2007
TL;DR: This paper studies the intermediate case with information asymmetry; that is, users’ true types are shared information among the users themselves, but are not disclosed to the service provider.
Abstract: In this paper, we study optimal nonlinear pricing policy design for a monopolistic network service provider in the face of a large population of users. We assume that users have stochastic types. In [1], games with information symmetry have been considered; that is, users' true types may be public information available to all parties, or each user's true type may be private information known only to that user. In this paper, we study the intermediate case with information asymmetry; that is, users' true types are shared information among users, but are not disclosed to the service provider. The problem can be formulated as an incentive-design problem, and an e-team optimal incentive (pricing) policy is obtained, which almost achieves Pareto optimality for the service provider. A comparative study between games with information symmetry and asymmetry are conducted as well to evaluate the service provider's game preferences.
12 citations
01 Jan 2000
12 citations
Cites background from "Intermediate microeconomics : A mod..."
...As a consequence the area under the demand curve describes society’s willingness-to-pay for a given good, and the net benefit from consuming the good, also called consumer surplus, is given by the area under the demand curve but above the price line (83)(1)....
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...The equilibrium model can then be described in a more formalised way with help from the following equations (83)...
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Journal Article•
TL;DR: In this article, the authors introduce the concept of "avoidability", which is based on the assumption that the only costs that matter to economists are opportunity costs, and use it to simplify cost analysis without sacrificing mathematical rigor or important cost relations.
Abstract: INTRODUCTION The distinction between fixed and sunk costs is a one of the most important concepts in production theory and one of the most likely to frustrate students. It is built upon the foundation of opportunity cost and is crucial to the construction of the total cost curve, the firm supply curve, the notion of economic profits, and the firm's shutdown condition. Common textbook presentations of fixed and sunk costs, however, are often unclear and theoretically inconsistent. When beginning production theory, students learn that opportunity costs are the only costs to be considered when making decisions. Opportunity costs are defined, in part, as costs that are avoidable and thus are factored into economic decision-making. Sunk costs, on the other hand, are unavoidable and, as such, should not affect decisions. After learning this opportunity cost rule, students are told that total costs are equal to the addition of fixed costs and variable costs. Somewhere in the discussion, however, an implicit assumption is made that fixed costs are costs that cannot be avoided; that is, fixed costs are synonymous with sunk costs. Assuming fixed and sunk costs are synonymous creates unnecessary complications for producer theory and presents an inconsistency in the core concept of economic costs. The assumption of equality between fixed and sunk costs appears in the majority of microeconomics texts and on some occasions is made explicit. For example, Steven E. Landsburg writes in Price Theory and Applications (2002) "In the short run, fixed costs are unavoidable. As a result, they have no bearing on any economic decision ... Because sunk costs are sunk, and because the firm's fixed costs are sunk in the short run, it follows that fixed costs are irrelevant to the firm's short-run supply decisions, including the decision about whether to shut down." Two potential problems arise from this assumption. First, some costs are fixed in both the short run and long run, an idea that contradicts the standard claim that fixed costs, by definition, do not exist in the long run. Second, many short-run fixed costs can be avoided and therefore are not sunk. These problems are resolved by categorizing all costs based on their "avoidability". This simple and intuitive remedy is founded on the core notion that the only costs that matter to economists are opportunity costs. The solution is shown to simplify cost analysis without sacrificing mathematical rigor or important cost relations such as the envelope theorem relating short-run to long-run costs. This simple revision to the principles analysis extends easily to the analysis at the intermediate and advanced levels and follows the early work on costs by writers including John Maurice Clark, Fritz Malchup, and Ronald Coase. The rest of the paper is organized as follows. Section 2 discusses the standard incorporation of sunk costs into the total cost function and the resulting problem of measuring economic profits. The avoidability criterion is then introduced to remedy the problem. Section 3 discusses how using this criterion allows for a simple and theoretically consistent derivation of the firm supply curve and shutdown condition that improves upon the standard textbook exposition. Section 4 explores the nature of fixed and sunk costs. Section 5 shows how the avoidability criterion ensures important cost relations between the short run and long run that might be unwittingly compromised using the standard pedagogy. Section 6 illustrates the gains from these simple cost revisions with numerical examples. The simplicity of deriving of long-run and short-run cost functions from standard production functions under the avoidability framework is shown. Section 7 provides evidence that indicates the confusion between fixed and sunk costs may extend beyond the classroom to the boardroom in actual firm behavior. Various consulting firms have used techniques along the lines suggested herein to resolve the problem by attributing the relevant opportunity costs to fixed costs formerly assumed to be sunk. …
12 citations