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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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TL;DR: In this paper, the authors analyzed the gross domestic product (GDP) and international trade data based on the standard international trade classification (SITC) in the period 1962 to 2000.
Abstract: Different shares of distinct commodity sectors in production, trade, and consumption illustrate how resources and capital are allocated and invested. Economic progress has been claimed to change the share distribution in a universal manner as exemplified by the Engel's law for the household expenditure and the shift from primary to manufacturing and service sector in the three sector model. Searching for large-scale quantitative evidence of such correlation, we analyze the gross-domestic product (GDP) and international trade data based on the standard international trade classification (SITC) in the period 1962 to 2000. Three categories, among ten in the SITC, are found to have their export shares significantly correlated with the GDP over countries and time; The machinery category has positive and food and crude materials have negative correlations. The export shares of commodity categories of a country are related to its GDP by a power-law with the exponents characterizing the GDP-elasticity of their export shares. The distance between two countries in terms of their export portfolios is measured to identify several clusters of countries sharing similar portfolios in 1962 and 2000. We show that the countries whose GDP is increased significantly in the period are likely to transit to the clusters displaying large share of the machinery category.
Posted Content
01 Jan 2004
TL;DR: In this paper, the authors examine Varian's treatment of rent in his textbook on Microeconomics and argue that he holds contradictory conceptions: sometimes rent is defined as surplus over cost whereas sometimes it is defining as cost, as the opportunity cost of fixed factors.
Abstract: In this paper, I examine Varian’s treatment of rent in his textbook on Microeconomics. I argue that he holds contradictory conceptions: sometimes rent is defined as surplus over cost whereas sometimes it is defined as cost, as the opportunity cost of fixed factors. I start by arguing that the distinction between fixed and variable factors is not the key for the definition of rent; ultimately, it is monopoly. Varian’s conception of rent is, essentially, Ricardo’s: rent is extraordinary profit turned rent. On the basis of a selfinconsistent notion of opportunity cost, Varian introduces the idea that rent is the opportunity cost of land, when what he actually defines is the opportunity cost of not renting the land. I also critically examine the related notion of “producer’s surplus”, and show that Varian’s treatment repeats the same contradiction as in rent.
Posted Content
TL;DR: In this article, the authors study learning dynamics in distributed production economies such as blockchain mining, peer-to-peer file sharing and crowdsourcing, and derive natural learning protocols which are stable and converge to effective outcomes rather than being chaotic.
Abstract: We study learning dynamics in distributed production economies such as blockchain mining, peer-to-peer file sharing and crowdsourcing. These economies can be modelled as multi-product Cournot competitions or all-pay auctions (Tullock contests) when individual firms have market power, or as Fisher markets with quasi-linear utilities when every firm has negligible influence on market outcomes. In the former case, we provide a formal proof that Gradient Ascent (GA) can be Li-Yorke chaotic for a step size as small as $\Theta(1/n)$, where $n$ is the number of firms. In stark contrast, for the Fisher market case, we derive a Proportional Response (PR) protocol that converges to market equilibrium. The positive results on the convergence of the PR dynamics are obtained in full generality, in the sense that they hold for Fisher markets with \emph{any} quasi-linear utility functions. Conversely, the chaos results for the GA dynamics are established even in the simplest possible setting of two firms and one good, and they hold for a wide range of price functions with different demand elasticities. Our findings suggest that by considering multi-agent interactions from a market rather than a game-theoretic perspective, we can formally derive natural learning protocols which are stable and converge to effective outcomes rather than being chaotic.
01 Jan 2017
TL;DR: In this article, a total of 204 U.S. equity mutual funds were split into one major group and one additional group for the time period 2002-2016, and the performance of each group to adequate market indices was investigated.
Abstract: I evaluate a total of 204 U.S. equity mutual funds split into one major group and one additional group for the time period 2002-2016. The major group consists of the ten largest U.S. mutual fund families based on AUM while the additional group consists of a sample of the remaining operative U.S. mutual fund families. The major group manages 58% of U.S. mutual fund supply, thus indicating a non-competitive market structure. By comparing the performances of these two particular groups, I investigate whether the current market structure within the U.S. mutual fund industry is beneficial from the point of view of U.S. investors. That is, is their aggregated private wealth efficiently invested considering that as few as ten U.S. mutual fund families are managing the majority of it? Or would they experience an increased yield if they rather reallocated it into the additional fund families? Moreover, I benchmark the performance of each group to adequate market indices in order to investigate whether the active management pays off. I find that out of my 28 regressions, eight yield alphas statistically significantly different from zero at the 1% level. Additionally, when comparing each group´s mean alpha to each other, I find a statistically significant difference for large value stocks net of fees to a significance of 99%. These findings combined suggest that the major group perform superior to the additional group and which accordingly justifies the fact that the major group manage the majority of U.S. mutual fund supply. My findings further support the fact, although with varying levels of statistical significance, that the active management by the two groups is generally not worth paying for since the fees exceed the beta-adjusted excess returns, interpreted as the actively managed mutual funds outperform the market on a gross level but once the fees are paid the net alphas inversely underperform the market. This tendency within the performance of mutual funds is in line with previous research.

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

  • ...As long as the fund family has not committed a notable mistake, e.g. flagrantly 39 For this, see e.g. Varian (2014)....

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