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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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Journal ArticleDOI
Lewis Davis1
TL;DR: In this article, the authors considered the merits of two classes of profit maximization problems, those involving perfectly competitive firms with quadratic and cubic cost functions, and provided a simple algorithm that generates profit maximisation problems that are theoretically interesting, economically plausible and computationally simple.
Abstract: This paper considers the merits of two classes of profit maximization problems, those involving perfectly competitive firms with quadratic and cubic cost functions. While relatively easy to develop and solve, problems in which the firm has a quadratic cost functions are structurally too simple to address a number of important mathematical and economic issues, such as the use of second-order conditions and the short run shutdown condition. Problems based on cubic cost functions are sufficiently complex to address these issues, but the additional complexity introduces other problems. Solving such problems may involve messy arithmetic and, moreover, many cubic functions are not plausible representations of a firm’s costs. Finding cubic functions that do not suffer from these drawbacks can be a time consuming process. I address this issue by providing a simple algorithm that generates profit maximization problems that are theoretically interesting, economically plausible and computationally simple.

4 citations

Posted Content
TL;DR: In this article, the authors characterize the equilibrium extraction path and the development of contribution payments in time for a group of exhaustible-resource suppliers bargaining with the government over the extraction of an exhaustible resource and over contribution payments.
Abstract: Consider a lobby group of exhaustible-resource suppliers, which bargains with the government over the extraction of an exhaustible resource and over contribution payments. We characterize the equilibrium extraction path and the development of contribution payments in time. The latter relates to the development of the conflict of interest between profit-maximization and welfare-maximization. Due to stock pollution damages, the government prefers a lower level of cumulative extraction than the lobby group in the long run. In the meantime, the resource suppliers’ aim to maximize profits implies that equilibrium extraction may be too slow to maximize welfare, while flow-pollution damages imply that it may be too fast.

4 citations

Proceedings ArticleDOI
21 Oct 2008
TL;DR: In this paper, the authors examined the technical efficiency of innovation systems based upon the European Innovation Scoreboard, and the efficiency of investment in innovation is examined with the use of DEA model, and observed that the so called laggards in innovation are often efficient in their use of resources, whereas leaders of innovation fall short in the area of returns to scale and congestion.
Abstract: This paper examines the technical efficiency of innovation systems. Based upon the European Innovation Scoreboard, the efficiency of investment in innovation is examined with the use of DEA model. It is observed that the so called laggards in innovation are often efficient in their use of resources, whereas leaders of innovation fall short in the area of returns to scale and congestion.

4 citations


Cites background from "Intermediate microeconomics : A mod..."

  • ...From a micro-economic perspective, such issue epitomizes the concept of Paretto-Koopmans efficiency [28], related to...

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Journal ArticleDOI
TL;DR: In this article, focus groups with market-sellers of Mwanza (Tanzania) and Kisumu (Kenya) reveal how the two professionally similar populations differ starkly in the way they participate in public goods, and in an opposite direction to that which would be predicted by the current literature on ethnicity.
Abstract: Literature connecting ethnic diversity with public goods provision has found public goods to be poorly and unevenly supplied in ethnically heterogeneous communities. Scrutinising this hypothesis, the study contrasts an ethnically homogenous community in Kenya with an ethnically heterogeneous one in Tanzania, documenting levels of trust and cooperation in public goods provision. Interviews and focus groups with market-sellers of Mwanza (Tanzania) and Kisumu (Kenya) reveal how the two professionally similar populations differ starkly in the way they participate in public goods, and in an opposite direction to that which would be predicted by the current literature on ethnicity. On the topic of the organisation of security and cleaning within markets in Mwanza, ethnically heterogeneous market-sellers' sense of solidarity facilitates a greater degree of seller-on-seller trust. In Kisumu, in contrast, with participants reflective of the dominant Luo ethnicity, the lack of state provision of public services has...

4 citations


Cites background from "Intermediate microeconomics : A mod..."

  • ...“Public goods” is a term deployed to denote “a good that must be provided in the same amount to all the affected consumers” (Varian 1999, 618)....

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Journal ArticleDOI
TL;DR: It is argued that the findings of this paper can motivate network researchers to incorporate a finer-grained user behavior model in their investigations on pricing models of network services and other socio-economic issues.
Abstract: Socio-economic aspects of future communication networks such as pricing models for network providers, network neutrality, and Quality of Experience (QoE) are becoming more and more important as the convergence of networks is in progress. All the above areas share a common interest: the deeper understanding of user behavior. In this paper, as a first step towards a more realistic user model, we investigate customer loyalty and its impact on the pricing competition of Internet Service Providers (ISPs) who sell Internet access to end-users. The main contribution of this paper is twofold. First, we analyze the impact of user loyalty with game-theoretical means motivated by the Bertrand game. We show how loyalty introduces a new equilibrium in a repeated game setting resulting in the cooperation of ISPs. Furthermore, we investigate the case of a differentiated customer population by introducing dual reservation values, and show how it leads to new, pure strategy Nash equilibria indicating that ISPs should make the most out of their respective loyal user base. Second, we construct two novel models for customer loyalty incorporating two important aspects of the users' purchasing decisions: price sensitivity and inherent uncertainty. We evaluate the impact of user loyalty through these models by extensive simulations in a number of relevant scenarios. In particular, we show how the higher level of loyalty in the user population leads to larger profits for ISPs. We argue that our findings can motivate network researchers to incorporate a finer-grained user behavior model in their investigations on pricing models of network services and other socio-economic issues.

4 citations


Cites background from "Intermediate microeconomics : A mod..."

  • ...The proportion of income required to purchase a service also plays a key role: products requiring a larger portion of the consumer’s income tend to have greater elasticity [41]....

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  • ...A common model used for elastic demand is a linear demand function [41]....

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  • ...Setting the marginal cost to a constant is reasonable for a large range of demand, but grows in steps after reaching some critical limit [41]....

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