Factor price

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

Trade and Tradability: Exports, Imports, and Factor Markets in the Salter‐Swan Model

Abstract: We extend the Salter-Swan model to include both factor markets and semi-traded goods. In our model, changes in relative factor prices depend on changes in world commodity prices, factor endowments, and the trade balance. In contrast, only changes in world commodity prices can affect factor prices in the neoclassical trade model. The inclusion of semi-traded goods weakens the magnification effect in both the Stolper-Samuelson and Rybczynski theorems. When imports and domestic goods are poor substitutes, a characteristic of some commodities in developing countries, the sign of the Stolper-Samuelson theorem is reversed.

Estimation of the demand for electricity

Abstract: The residential consumer of electricity is often faced with a price schedule, where the price per kWh differs according to the amountof electricity consumed. 1 Instead of a single price per kWh, a price schedule exists, from which electricity is purchased in blocks at a decreasing marginal price. In a econometric demand analysis of household electricity consumption, one of the main questions is concerned with the price varible to be chosen. Should it be the marginal price, the average price, or perhaps both price varibles? In this study, residential demand functions for electricity are estimated employing different price variables. In demand functions employing both average price and marginal price the coefficients on average price are ‘right’; the negative signs reflect the expected inverse relationships between the quality of electricity demanded and the average price. On the other hand, nonsignificant but positive signs on marginal price are obtained. This result contradicts the findings of Roth (1981)...

Bargaining, Fairness, and Price Rigidity in a DSGE Environment

Abstract: A growing body of evidence suggests that an important reason why firms do not change prices nearly as much as standard theory predicts is out of concern for disrupting ongoing customer relationships because price changes may be viewed as “unfair.” Existing models that try to capture this concern regarding price-setting are all based on goods markets that are fundamentally Walrasian. In Walrasian goods markets, transactions are spot, making the idea of ongoing customer relationships somewhat dicult to understand. We develop a simple dynamic general equilibrium model of a search-based goods market to make precise the notion of a customer as a repeat buyer at a particular location. In this environment, the transactions price plays a distributive role as well as an allocative role. We exploit this distributive role of prices to explore how concerns for fairness influence price dynamics. Using pricing schemes with bargaining-theoretic foundations, we show that the particular way in which a “fair” outcome is determined matters for price dynamics. The most stark result we find is that complete price stability can arise endogenously. These are issues about which models based on standard Walrasian goods markets are silent.