Factor price

About: Factor price is a research topic. Over the lifetime, 2764 publications have been published within this topic receiving 86176 citations.

Modeling Inefficient Institutions

Abstract: Why do inefficient %uF818 non-growth enhancing %uF818 institutions emerge and persist? This paper develops a simple framework to provide some answers to this question. Political institutions determine the allocation of political power, and economic institutions determine the framework for policy-making and place constraints on various policies. Groups with political power, the elite, choose policies to increase their income and to directly or indirectly transfer resources from the rest of society to themselves. The baseline model encompasses various distinct sources of inefficient policies, including revenue extraction, factor price manipulation and political consolidation. Namely, the elite may pursue inefficient policies to extract revenue from other groups, to reduce their demand for factors, thus indirectly benefiting from changes in factor prices, and to impoverish other groups competing for political power. The elite%u2019s preference over inefficient policies translates into inefficient economic institutions. Institutions that can restrict inefficient policies will in general not emerge, and the elite may manipulate economic institutions in order to further increase their income or facilitate rent extraction. The exception is when there are commitment (holdup) problems, so that equilibrium taxes and regulations are worse than the elite would like them to be from an ex ante point of view. In this case, economic institutions that provide additional security of property rights to other groups can be useful. The paper concludes by providing a framework for the analysis of institutional change and institutional persistence.

The Frequency and Costs of Individual Price Adjustment

Abstract: heconceptof“stickyprices”hasbeenoneofthemostcommonexpla-nations for the perceived importance of monetary policy since at leastas far back as the 1930s. Simply put, if nominal prices for individualgoods do not continuously adjust to economic conditions, then it is natural tothink that monetary policy can influence the level of real economic activitythrough its ability to determine the nominal quantity of money. In evaluatingwhether this channel for monetary policy is important, two sets of researchquestions are relevant. First, do individual prices indeed change infrequently,and if so, why? Second, within macroeconomic models, what are the ag-gregate implications of the pricing behavior found in the data, and are thoseimplications consistent with aggregate economic data? This article reviewsresearch on the first set of questions in the hope of deriving lessons useful forimproving the macroeconomic models that can address the second set.

Pricing and performance in agri-food supply chains

Abstract: This paper explores whether European food-processing and retail industries exert market power towards farmers and consumers. More in particular, this paper analyses (1) whether price changes at the farm level are fully and instantaneously transmitted into changes at the consumer level; and (2) whether there have been changes in the price risk distribution in post-war agri-food supply chains. With respect to the first research question, we do not observe a general pattern of price asymmetry to the disadvantage of farmers and consumers. In general, price symmetry and price levelling are as prevalent as price asymmetry is. With respect to the second question, I observe a shift in price risk from farmers to marketing organizations in the Dutch ware-potato supply chain.