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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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Journal ArticleDOI
TL;DR: In this article, the authors developed a neoclassical model to analyse the impact of a proportionate capital subsidy on the level of employment in a perfectly competitive and monopolistic industry and found that the predicted change in employment will be positive.
Abstract: Swales J. K. (1981) The employment effects of a regional capital subsidy, Reg. Studies 15, 263–273. In this paper, neoclassical models are developed to analyse the impact of a proportionate capital subsidy on the level of employment in a perfectly competitive and monopolistic industry. In these models the level of output, factor inputs, product price and factor prices are determined simultaneously. In both models, the sign on the change in employment depends solely on the elasticity of demand for the product. When the models are used to analyse the introduction of a regional subsidy, there is a strong presumption that the predicted change in employment will be positive.

15 citations

Journal ArticleDOI
TL;DR: It is shown that price rigidities help restore trade and could even enhance effectiveness of prices as signals of quality and develop this intuition by analyzing the strategic advantages ofprice rigidities.
Abstract: We analyze trade between a price setting party (seller) who has private information about the quality of a good and a price taker (buyer) who may also have private information. Differently from most of the literature, we focus on the case in which, under full information, it would be inefficient to trade goods of poor quality. We show that there is a unique equilibrium outcome passing Cho and Kreps (1987) Never a Weak Best Response. The refined outcome is always characterized by absence of trade, although trade would be mutually beneficial in some state of nature. This occurs: 1. Even if the price taker has more precise information than the price setting party, and 2. Even when the information received by both parties is almost perfect. The model thus implies that signaling through prices may exacerbate the effect of adverse selection rather than mitigate it. The price setting party would always benefit from committing to prices that do not reveal her information. We develop this intuition by analyzing the strategic advantages generated by price rigidities. Possible applications to professional bodies and compensation policies are discussed.

15 citations

Journal ArticleDOI
TL;DR: In this article, the authors consider the case where the home country is capital-abundant and has levied on optimal tax on earnings of its own capital operating abroad, and allow, for the first time, some inflow of foreign labour.
Abstract: In a succinct but classic article appearing in Economica in 1968, Ramaswami put forth an argument supporting the superiority of a policy that attracts foreign factors over a policy that allows a relatively abundant factor to emigrate. In each case the active home country is assumed to levy taxes on factor flows so as to capture for itself the discrepancy in return to the same factor at home and abroad. The asymmetry reflected by this policy ranking rests on a basic propeity of production functions-the convexity of technology-plus the ability of the active home country to hire (or rent out) factors at wages or rentals prevailing in the foreign country.' Briefly put, the Ramaswami argument proceeds as follows. Suppose the active home country is capital-abundant and has levied on optimal tax on earnings of its own capital operating abroad. Now consider repatriating this capital, and allowing, for the first time, some inflow of foreign labour. In particular, suppose the home country allows a level of immigration identical to the labour force previously employed with the home capital that is being repatriated. Such a transfer of (home) capital and (foreign) labour out of the foreign country leaves factor proportions abroad undisturbed, and thus does not alter the wage that must be paid to attract the requisite bundle of foreign workers. Although the home country thus avoids any increase in factor costs in foreign markets, it can increase output since the capital/labour ratiooriginally employed at home at high home wage rates is greater than the ratio in the freshly acquired bundle from abroad. By adopting a uniform capital/labour ratio over all factors now employed at home, output, and thus real income, rises. There may be even further gains to be had by allowing yet a different (optimal) level of immigration in the home country, which has now banned capital exports.2 Essential to the Ramaswami argument is the ability of the home country to extract a bundle of factors previously employed abroad without disturbing factor prices in that country. Indeed, Jones, Coelho and Easton (1983) have suggested that, in the context of the Ramaswami discussion, the original argument could be pursued to suggest that the home country gains not only from repatriating its own capital but from actually encouraging foreign capital to be employed at home. Such a capital flow is admittedly "uphill"-the home country would have to pay out more in rentals than such capital can earn at home. Despite this fact, such an import of capital and labour, in the same proportions found abroad, does not alter foreign factor prices but does, via the same Ramaswami-type argument on the convexity of the technology, result in gains at home. Although Ramaswami's own discussion starts with a repatriation of home capital previously invested abroad, his argument can be applied directly to the foreign autarky factor endowment bundle. If technology exhibits constant returns to scale, and if all (both) factors are indeed internationally

15 citations

Posted Content
TL;DR: In this article, the authors studied the tendency of price level convergence in Russian regions using price dynamics data (overall consumer price indices, food price indices and manufactured goods price indices) across 7 regions of West Siberia over 1992-1998.
Abstract: Theoretical considerations suggest that as market institutions are developing in Russian regions, the divergence of regional consumer price levels, which has been caused by the price liberalization of 1992, should give way to price level convergence. Using price dynamics data (overall consumer price indices, food price indices, manufactured goods price indices, service price indices) across 7 regions of West Siberia over 1992–1998, the tendency of such convergence is studied. The speed in which regional price levels converge to the national price level and to the price levels of other regions is estimated. Besides that, the price differential thresholds, below which interregional arbitrage becomes unprofitable, are also estimated.

15 citations

Journal ArticleDOI
TL;DR: In this article, the authors examine settings where input prices are negotiated by industry suppliers, rather than dictated by regulators, and find that the input buyer may agree to pay a high price for an input because the high price serves to reduce the intensity of retail price competition with the input seller.
Abstract: We examine settings where input prices are negotiated by industry suppliers, rather than dictated by regulators. We find that the input buyer may agree to pay a high price for an input because the high price serves to reduce the intensity of retail price competition with the input seller. Full exploitation of retail customers can result. However, retail price regulation, competition among buyers, and product heterogeneity all can limit the extraction of consumer surplus. We also identify conditions under which input price negotiations will fail to produce a mutually agreeable input price.

15 citations


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