Economic Theory Commons^™

Using Auctions To Divest Generation Assets, Peter Cramton, Lisa J. Cameron, Robert Wilson

Peter Cramton

In most states, ratepayers will compensate utilities for their stranded costs. As a result, these costs must be measured as accurately as possible, in a manner that is easily understood by all concerned parties. We describe the options for measuring stranded costs and argue that a simultaneous ascending auction is the best approach.

Almost Everybody Disagrees Almost All The Time: The Genericity Of Weakly Merging Nowhere, Ronald I. Miller, Chris William Sanchirico

All Faculty Scholarship

Suppose we randomly pull two agents from a population and ask them to observe an unfolding, infinite sequence of zeros and ones. If each agent starts with a prior belief about the true sequence and updates this belief on revelation of successive observations, what is the chance that the two agents will come to agree on the likelihood that the next draw is a one? In this paper we show that there is no chance. More formally, we show that under a very unrestrictive definition of what it means to draw priors “randomly,” the probability that two priors have any …

Package Bidding For Spectrum Licenses, Peter Cramton, John Mcmillan, Paul Milgrom, Bradley Miller, Bridger Mitchell, Daniel Vincent, Robert Wilson

Peter Cramton

The FCC was an innovator in adopting the rules of the simultaneous ascending-price auction for its sales of spectrum licenses. While these rules have performed well in the auctions conducted so far (and would perform even better with the design improvements suggested in our first report), there are two inherent limitations in any design that seeks to assign and price the licenses individually. First, such designs create strategic incentives for bidders interested in multiple licenses that are substitutes to reduce their demands for some of the licenses in order to reduce the final prices of the others; this is the …

Public Sector Growth: An Econometric Test Of Wagner's Law, E. A. Essien

Economic and Financial Review

This study makes use of recent developments in econometric technique to test Wagner s Law of increased state activity according to which Government Expenditure must increase at a rate faster than National Output. It makes use of three different interpretations of the Law, namely, increasing relative share for the public sector in the total economy as per capita real income grows, total government expenditure as a function of real income, and relating per capita total government expenditure to per capita income. In all cases the variables were not cointegrated hence a long run equilibrium relationship could not be established between …

Auction Design Enhancements For Non-Combinatorial Auctions, Peter Cramton, John Mcmillan, Paul Milgrom, Bradley Miller, Bridger Mitchell, Daniel Vincent, Robert Wilson

Peter Cramton

We evaluate a number of possible enhancements to the FCC auctions. We consider only changes to the current auction rules that stay within the basic format of the simultaneous multiple round auction for individual licenses. This report summarizes and extends our e-mail exchanges with FCC staff on this topic. A subsequent report will cover auctions with combination bids. Overall, the FCC spectrum auctions have been an enormous success. However, there are two design goals in the auction where important improvement can be achieved within the basic rules structure. These are restricting collusion among bidders and reducing the time taken to …

How Not To Prevent Oil Crises: Challenge For An Education President, Ibpp Editor

International Bulletin of Political Psychology

This article describes several problematic approaches that are components of lay psychology.

(Reviews) Economic Thought Before Adam Smith And Classical Economics, Spencer J. Pack

Economics Faculty Publications

Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Volume I. By Murray N. Rothbard. Brookfield. Vermont: Edward Elgar Publishing Limited, 1995. Pp. 556. $99.95.

Classical Economics: An Austrian Perspective on the History of Economic Thought, Volume II. By Murray N. Rothbard. Brookfield. Vermont: Edward Elgar Publishing Limited, 1995. Pp. 528. $99.95.

Introducing Students To The Competing Schools Of Thought In Intermediate Macroeconomics, Harlan M. Smith Ii

Economics Faculty Research

The article discusses how the intermediate macroeconomics instructor can introduce students to ways of old and new Keynesians and classical theorists addressed the question on why output and employment fluctuate. Keynesian macroeconomics characterizes a school of thought developed around two central prepositions. New Keynesians develop alternative ways of explaining short-run movements in output and employment in the early 1970's. All individuals maximize utility, firm maximizes profits. Recently, new classicals developed an alternative approach in explaining short-run fluctuation in employment and output by redefining the concept of the short run.

Auction Design For Standard Offer Service, Peter Cramton, Andrew Parece, Robert Wilson

Peter Cramton

During the transition to a competitive electricity market, when a consumer does not select an electricity provider, who provides service to the customer and at what price? An auction for this "standard offer service" is a market-based way to assign the service responsibility and to determine its price. We explore the design issues in establishing rules for such an auction.

State And Industrial Capitalists In Egypt, SāMir SulaymāN

Archived Theses and Dissertations

No abstract provided.

Reply Statement On The Effect Of Nextwave’S Participation In The C-Block Auction On Antigone And Devco, Peter Cramton

Peter Cramton

For Antigone and Devco.

(Review) Ian Simpson Ross, The Life Of Adam Smith And Jerry Z. Muller, Adam Smith In His Time And Ours, Spencer J. Pack

Economics Faculty Publications

No abstract provided.

Statement On The Effect Of Nextwave’S Participation In The C-Block Auction On Antigone And Devco, Peter Cramton

Peter Cramton

For Antigone and Devco.

Adam Smith On The Virtues: A Partial Resolution Of The Adam Smith Problem, Spencer J. Pack

Economics Faculty Publications

Adam Smith's definition of justice as a moral virtue based on the "passion" of resentment in 'The Theory of Moral Sentiments' (1759), despite seeming contradictions, supports his analysis of an acquisitive, commercial society in 'The Wealth of Nations' (1774) partly by precluding the concept of a just price.

The Livingston Survey: Still Useful After All These Years, Dean D. Croushore

Economics Faculty Publications

The decisions of households, firms, and government agencies depend on forecasts of the overall economy. Large firms and the federal government often have the resources to hire their own economists to provide forecasts. But households, small firms, and local governments often depend on surveys of forecasters to get their information. In this article, Dean Croushore spotlights the Livingston Survey, which, even after 50 years, still provides useful forecasts of the economy.

Globalization And Local Economic Development: Intersections Between The Industrial Economy And Regional Industrial Planning, Center For Economic Development

Center for Economic Development Technical Reports

By now it is widely accepted that we live in a global economy. We are more likely to buy goods from Korea than Kansas, we may have pension funds invested in companies on the Tokyo stock market as well as New York's, and we may work for a corporation with headquarters in Brussels rather than Boston. But despite our sense of participating in a world economy, it is difficult to understand how that world's economy intersects with the national or local economies with which we are more familiar. This is particularly significant for the regional economic development planner. Despite the …

Industrial Clusters And Institutional Support: A Case Study The Plastics Cluster In The Montachusetts Region And It's Training Needs, Center For Economic Development

Center for Economic Development Technical Reports

The purpose of this research and the dual papers is to comprehensively explore industrial clusters by looking at a number of examples, and then examine in greater detail, the Montachusetts Region in north central Massachusetts where the plastics industry has a strong base. The current weakness of the plastics industry will be identified and tackled.

The shift in organizational structure from global mass producing giants to industrial clusters that focus on flexible specialization, influenced many studies throughout the 1980s and 1990s. This paper will feed from these studies and expand on the role of institutional support networks.

Relativism, Reflective Equilibrium, And Justice, Justin Schwartz

Justin Schwartz

THIS PAPER IS THE CO-WINNER OF THE FRED BERGER PRIZE IN PHILOSOPHY OF LAW FOR THE 1999 AMERICAN PHILOSOPHICAL ASSOCIATION FOR THE BEST PUBLISHED PAPER IN THE PREVIOUS TWO YEARS.

The conflict between liberal legal theory and critical legal studies (CLS) is often framed as a matter of whether there is a theory of justice that the law should embody which all rational people could or must accept. In a divided society, the CLS critique of this view is overwhelming: there is no such justice that can command universal assent. But the liberal critique of CLS, that it degenerates into …

The Fcc Spectrum Auctions: An Early Assessment, Peter Cramton

Peter Cramton

This paper analyzes six spectrum auctions conducted by the Federal Communications Commission (FCC) from July 1994 to May 1996. These auctions were simultaneous multiple-round auctions in which collections of licenses were auctioned simultaneously. This auction form proved remarkably successful. Similar items sold for similar prices and bidders successfully formed efficient aggregations of licenses. Bidding behavior differed substantially in the auctions. The extent of bidder competition and price uncertainty played an important role in determining behavior. Bidding credits and installment payments also played a major role in several of the auctions.

Synergies In Wireless Telephony: Evidence From The Broadband Pcs Auctions, Peter Cramton, Lawrence M. Ausubel, R. Preston Mcafee, John Mcmillan

Peter Cramton

We examine bid data from the first two broadband PCS spectrum auctions for evidence of value synergies. First, we estimate a benchmark regression for the determinants of final auction prices. Then, we include variables reflecting the extent to which bidders ultimately won or already owned the adjacent wireless properties. Consistent with geographic synergies in an ascending-bid auction, prices were higher when the highest-losing bidder had adjacent licenses. The footprints of winning bidders suggest that they were often successful in realizing these synergies.

Accounting For The Change In Income Disparities Between Us Central Cities And Their Suburbs From 1980 To 1990, Edward W. Hill, Harold L. Wolman

All Maxine Goodman Levin School of Urban Affairs Publications

Develops a method that uses cluster analysis to group central cities in the United States. Selection of the candidate cluster solutions; Median characteristics of the clusters; Stressed central cities; Healthy central cities.

Exercise The Power Of The Purse With Hussein, Porcher L. Taylor Iii

School of Professional and Continuing Studies Faculty Publications

In the same shrewd diplomatic spirit displayed by the Pentagon in its recent purchase of a squadron of MIG-29 fighter jets from Moldova in order to preempt the sale of the planes to Iran, the U.S. should offer to buy Iraq's entire biochemical weapons arsenal and then destroy it in place. Let's call this emerging instrument of U.S. foreign policy "preemptive economic diplomacy."

Tobin, James, Tony Caporale

Economics and Finance Faculty Publications

James Tobin was born in Champaign, Illinois, in 1918. He received his bachelor's degree in 1939 and his master's degree in 1940, both from Harvard. Following naval service during the years 1942-6, he returned to his graduate studies and received his PhD from Harvard in 1947. In 1950, he joined the economics department at Yale University, and he has largely remained at Yale and has been identified with this institution throughout his career. He twice directed the Cowles Foundation for Research in Economics, first from 1955 to 1961, and then from 1964 to 1965. He also served for two years, …

On Game Theory And The Law, Kenneth G. Dau-Schmidt, Jeffrey E. Stake, Robert H. Heidt, Eric Rasmusen, Michael Alexeev

Articles by Maurer Faculty

No abstract provided.

Gatt, Dispute Settlement And Cooperation: A Reply, Dan Kovenock, Marie Thursby

Economics Faculty Articles and Research

In our 1992 paper, we analyzed GATT and its dispute settlement procedure (DSP) in the context of a supergame model of international trade featuring both explicit (GATT) and implicit (non-GATT) agreements. Our paper departed from the previous economics literature on GATT enforcement (see, for instance Hungerford (1991) and Ludema (1990)) by incorporating the ``twin engines of international obligation and retaliation'' (Hudec, 1990). International obligation imposed a cost of violating an explicit international agreement, such as GATT, while retaliation could take place either within the rules stipulated by the international agreement or by punishment outside of the agreement. In Section 2 …

Dividends, Noncontractibility, And Corporate Law, William W. Bratton

All Faculty Scholarship

No abstract provided.

Class Action Reform: Lessons From Securities Litigation, Jill E. Fisch

All Faculty Scholarship

No abstract provided.

Demand Fluctuations And Capacity Utilization Under Duopoly, J. J. Gabszewicz, Sougata Poddar

Economics Faculty Articles and Research

This paper studies the impact of uncertain demand on firms' capacity decisions when they operate in an oligopolistic environment. We define a two-stage game where firms choose capacity in the first stage without knowing which state of nature is going to realize, and output levels in the second, knowing which state is realized. We prove the existence of a symmetric subgame perfect equilibrium at which firms are in excess capacity compared with the capacity they would choose in the Cournot certainty equivalent game.

The New Economics Of Jurisdictional Competition: Devolutionary Federalism In A Second-Best World, William W. Bratton, Joseph A. Mccahery

All Faculty Scholarship

No abstract provided.

An Inquiry Into The Efficiency Of The Limited Liability Company: Of Theory Of The Firm And Regulatory Competition, William W. Bratton, Joseph A. Mccahery

All Faculty Scholarship

No abstract provided.