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Factor price

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


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28 Jun 2007
TL;DR: In this paper, the authors estimate the effect of a rise in petroleum prices on living standards in Madagascar combining information on expenditure patterns from the Enquete Aupres des Menages 2005 with an input-output model describing how petroleum price increases propagate across economic sectors.
Abstract: In this paper the authors estimate the effect of a rise in petroleum prices on living standards in Madagascar combining information on expenditure patterns from the Enquete Aupres des Menages 2005 with an input-output model describing how petroleum price increases propagate across economic sectors They identify both a direct welfare effect (heating and lighting one's house become more expensive) and an indirect effect (the price of food and anything else which has to be transported from factory to shop rises) They find that, a 17 percent rise in oil prices produces, on average, a 175 percent increase in household expenditures (15 percent for high-income households, 21 for the households in the bottom expenditure quintile) Circa 60 percent of the increase in expenditures is due to the indirect effect, mostly via higher food prices Although energy price increases hurt the poor more in percentage terms, subsidizing would involve a substantial leakage in favor of higher income households This raises the issue of identifying more cost-effective policies to protect the poor households against energy price increases

23 citations

Journal ArticleDOI
TL;DR: In this paper, the authors suggest an interpretation of the long-term behavior of oil prices based on the insights of two models, namely signal extraction and Bayesian updating, and show that if the variability of the spot price increases and/or if the spot prices remains higher over a sustained period of time than anticipated by investors, then the probability distribution of the parameter capturing the speed of mean reversion will shift and the expected future price will move closer to the current spot price.
Abstract: One of the major features of the oil market during the 1990s was the relative stability of the long-term oil price. While the spot price exhibited sharp price volatility, that volatility was only partially transmitted to the back end of the futures curve which was anchored around the $20--22 per barrel range. However, as oil prices rose sharply during the boom years, the consensus on the oil price that would balance the long-term fundamentals of the oil market broke down and the whole futures curve became subject to a series of shifts. Our empirical evidence suggests that in the late 1990s and early 2000s there was limited evidence of adjustment between short-term and long-term oil prices. These dynamics, however, changed in early 2005 with the long-term price making most of the adjustment towards the prompt price. We suggest an interpretation of the long-term behaviour of oil prices based on the insights of two models. The first is based on a signal extraction mechanism and shows that when the private beliefs by investors about the long-run determinants of oil prices become less precise relative to the information contained in the current spot price, then the expected future oil price becomes closer to the current spot price. The second model is based on Bayesian updating and shows that if the variability of the spot price increases and/or if the spot price remains higher over a sustained period of time than anticipated by investors, then the probability distribution of the parameter capturing the speed of mean reversion will shift and the expected future price will move closer to the current spot price. Our analysis predicts that in the face of increased uncertainty the long-term and short-term prices are bound to exhibit similar movements. These changes have important consequences on the oil price formation process. Copyright 2011, Oxford University Press.

23 citations

Posted Content
TL;DR: In this article, the authors use a stock-adjustment model of the housing market to show that the price increase will be a one-time event and in the long-run overall housing prices will fall below the level that would prevail if the price regulations were maintained.
Abstract: This paper offers an explanation for the existence of price control on new houses in Korea, which is deemed both inefficient and inequitable This phenomenon cannot be explained by the conventional model of rent-seeking or the capture theory of regulation Instead, it is attributable to the popular belief that the removal of the price regulation will lead to the increase in the overall housing price by increasing the demand for existing houses that are a perfect substitute for new houses However, the paper, using a stock-adjustment model of the housing market, demonstrates that the claimed outcome cannot materialize under perfect foresight or adaptive expectation The outcome is possible in the short run under a peculiar expectation scheme of a self-fulfilling nature But even in this case, the price increase will be a one-time event and in the long-run overall housing prices will fall below the level that would prevail if the price regulations were maintained

23 citations

Posted Content
TL;DR: In this paper, the authors describe firm pricing when consumers follow simple reservation price rules, and show that this approach yields price dispersion in pure strategies even when firms have the same marginal costs.
Abstract: We describe firm pricing when consumers follow simple reservation price rules. In stark contrast to other models in the literature, this approach yields price dispersion in pure strategies even when firms have the same marginal costs. At the equilibrium, lower price firms earn higher profits. The range of price dispersion increases with the number of firms: the highest price is the monopoly one, while the lowest price tends to marginal cost. The average transaction price remains substantially above marginal cost even with many firms. The equilibrium pricing pattern is the same when prices are chosen sequentially.

22 citations

Posted Content
TL;DR: In this article, the authors present evidence from three French VAT reforms showing that tax shifting on prices operates differently upwards and downwards, and they put forward two different asymmetric effects, which are linked to asymmetries in firms' supply curves, which imply that price decreases are smaller than price increases.
Abstract: This paper presents evidence from three French VAT reforms showing that tax shifting on prices operates differently upwards and downwards. This may appear as a paradox when reading usual studies on price shifting. This paper puts forward two different asymmetric effects. The first one is linked to asymmetries in firms' supply curves, which imply that price decreases are smaller than price increases. It occurs because firms decrease their production more easily than they increase it. The second asymmetric effect is linked to asymmetries in customers' demand curves, which react with higher intensity to big price changes than to tenuous ones. Therefore, in markets with monopolistic firms or with collusion - markets that better consider the variations of the demand because of the price making power of firms - price increases are relatively weak in order to prevent the fall of the demand, and price decreases are relatively strong in order to take profit of the takeoff of the demand. This paper shows that this second effect can counteract the first effect in markets with high fixed costs.

22 citations


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Performance
Metrics
No. of papers in the topic in previous years
YearPapers
20236
20227
202115
202017
201919
201816