Search results

The lens used by the courts and much of the antitrust literature on predatory selling and/or buying is based on partial equilibrium methodology. We demonstrate that such methodology is unreliable for assessments of predatory monopoly or monopsony conduct. In contrast to the typical two-stage dynamic analysis involving a predation period followed by a recoupment period, we advance a general equilibrium analysis that demonstrates the critical role of related industries and markets. Substitutability versus complementarity of both inputs and outputs is critical. With either monopolistic or monopsonistic market power (but not both), neither predatory overselling nor predatory overbuying is profitably sustainable. Two-stage predation/recoupment is profitable only with irreversibility in production and cost functions, unlike typical estimated forms from the production economic literature. However, when the market structure admits both monopolistic and monopsonistic behavior, predatory overbuying can be profitably sustainable while overselling cannot. Useful distinctions are drawn between contract versus non-contract markets for input markets.

This paper aims to develop a credit-risk model in which firms face rollover risk, and the markets for defaulted assets are segmented due to entry costs. The paper shows that reducing the entry costs in this economy may decrease the total surplus of the economy. This outcome can arise because when market barriers are lifted, the gap between the liquidation prices across the markets will shrink, but then the market that would experience a price drop may face more bankruptcies because the rollover risk will increase in that market. The paper describes under which condition such an intervention policy improves or hurts the total surplus.

This paper applies a volume-price probability wave differential equation to propose a conceptual theory and has innovative behavioral interpretations of intraday dynamic market equilibrium price, in which traders' momentum, reversal and interactive behaviors play roles.

The authors select intraday cumulative trading volume distribution over price as revealed preferences. An equilibrium price is a price at which the corresponding cumulative trading volume achieves the maximum value. Based on the existence of the equilibrium in social finance, the authors propose a testable interacting traders' preference hypothesis without imposing the invariance criterion of rational choices. Interactively coherent preferences signify the choices subject to interactive invariance over price.

The authors find that interactive trading choices generate a constant frequency over price and intraday dynamic market equilibrium in a tug-of-war between momentum and reversal traders. The authors explain the market equilibrium through interactive, momentum and reversal traders. The intelligent interactive trading preferences are coherent and account for local dynamic market equilibrium, holistic dynamic market disequilibrium and the nonlinear and non-monotone V-shaped probability of selling over profit (BH curves).

The authors will understand investors' behaviors and dynamic markets through more empirical execution in the future, suggesting a unified theory available in social finance.

The authors can apply the subjects' intelligent behaviors to artificial intelligence (AI), deep learning and financial technology.

Understanding the behavior of interacting individuals or units will help social risk management beyond the frontiers of the financial market, such as governance in an organization, social violence in a country and COVID-19 pandemics worldwide.

It uncovers subjects' intelligent interactively trading behaviors.

Due to the complicated nature of houses, the driving factors of the residential construction output can be investigated from different perspectives of interests. However, little research has provided an insight of the trend of the residential construction output from a cross-disciplinary perspective. The purpose of this paper is to identify the long-run equilibrium types of residential construction output, including external equilibrium, solo-market equilibrium and dual-market equilibrium.

A vector error correction model is applied into longitudinal data in the eight Australian states and territories to overview the regional variations of the residential construction output.

The empirical results show that the equilibrium of regional residential construction outputs in New South Wales and Victoria are determined by the external factors; the equilibrium in Western Australia is dominated by the construction market; and the equilibriums in the other five states and territories are influenced by both construction and house markets.

The simplified approach may overlook the detailed explanation of the external factors, such as regional population, economy, policy and so forth. Given this limitation, future studies can introduce the correspondingly variables as per research interests.

Implementing the existing research into residential construction output and house supply, this research provides a simplified approach that demonstrates the linkage between construction and real estate sectors to identify the long-run equilibriums across regions. The underlying research sheds light in delivering inter-disciplinary research into the residential construction output.

In recent years, economics has turned its serious attention to the explaining of conflicts and a peaceful resolution of conflicts. Some interesting and powerful microeconomic models have been developed, yet it seems there are gaps that motivate the current research. As our discussion shows below, the existing models are robust in explaining an equilibrium defence spending of a nation in a general equilibrium setting. Yet, there is little that we know about the regional distribution of defence spending that is likely to give rise to serious rent-seeking activities, politicking and consequent economic consequences in terms of regional disparity and inequality. In this work, we posit that defence spending is like a local public good that impacts on a regional, or local, economy. To be more specific, our model suggests that defence spending offers public infrastructure to a regional economy that, in turn, impinges on the costs of production of local firms, which thereby influence the competitive positioning of the regional economy in the national, or global, market. The goal of the work is to explore how the politics of allocation of defence spending can create an equilibrium regional inequality within a nation, which may in turn drive internal conflicts. Since an allocation of defence spending impacts on regional inequality, regional inequality becomes endogenous in our model. We establish an equilibrium inequality in our model that depends on the optimal allocation of defence spending across regions, which is driven by the electoral motive of an incumbent government.

This paper aims to investigate the problem of searching for the equilibrium in the housing market, the mortgage lending market and the insurance market in the process of selling the residential property. Three classes of markets are established in three modes, which reflect the interdependence of the firms’ interests in these markets through the parameters of their integration. The paper aims to determine the prices in these markets on the basis of the compromises among the conflicting interests of the related firms, and, in addition, to assess the rationality of integration for firms, which are participants in the process of selling the residential property.

On the basis of the revenue sharing contracts and the supply chain coordination methods, the optimization models of the housing realtor, the mortgage bank and the insurance company are developed. The models consider the interdependence of the firms’ interests, the monopolistic competition in these markets and the conditions of the firms’ individual rationality in the interaction process.

The results of the study are as follows. First, as a consequence of a decrease in the demand curves in monopolistic competition, the housing market, the mortgage market and the insurance market are interconnected, therefore, the optimization models of the firms in these markets are interdependent through the revenue sharing parameters. Second, in these markets the individual firms’ sales optimums are not identical, therefore, the interests of the firms are contradictory. Third, in the realtor-bank-insurer system, the equilibrium satisfies the condition of zero revenue sharing payments between the agents; additionally, the equilibrium prices in these markets are mutually independent. Fourth, in the disequilibrium, the prices in these markets are interrelated, i.e. the price in one market increases with the price in another market, if the payment is directed from the former to the latter, and vice versa.

The results of the study are applicable in practice, if the markets demonstrate the decreasing demand curves and if the needs of buyers in related markets are interconnected.

The interaction between the realtor and the mortgage bank enables the realtor to raise its sales and the bank to increase in the number of loans, i.e. it leads to growth of their profits. The interaction between the insurer and the mortgage bank enables the insurer to increase in the number of policies and the bank to reduce the risk of lending, i.e. it leads to an increase in their profits. The identification of the individual firms’ sales optimums enables agents to determine the terms of the contracts of these interactions, which are compromises from the positions of each transaction participants. In addition, the firms’ optimums indicate the predictions of the equilibrium market prices.

In comparison with the studies in the contract theory framework, first, the mathematical description of the complicated (three-agent) system of interactions is proposed; second, the optimal choice non-linear models are developed, which take into account the non-linear demand functions in the monopolistic competition markets; third, the equilibrium of the agents with contradictory interests is investigated. In the later item, the authors establish that the revenue sharing contracts in the complimentary demands functions systems do not require the payments between the participants. Fourth, the authors prove that, in the equilibrium of these markets, the housing prices, the mortgage interest rates and the insurance rates are mutually independent and equal to the prices in the isolated markets.

This note shows that much conventional macro‐economic literature uses two inconsistent definitions of equilibrium in the commodity market. Equilibrium is defined as income equalling expenditure when deriving the IS curve; but when overall equilibrium is treated the requirement for equilibrium is that planned supply equals planned demand. The note shows that these inconsistent definitions lead to a confusing and often erroneous exposition of disequilibrium behaviour.

This paper aims to present a model that analyses the value gap, the difference between vacant possession value and tenanted investment value, for the houses of Dutch housing associations. The paper also aims to explore why the value gap is a structural phenomenon in The Netherlands and why it is an important factor contributing to the malfunctioning of the housing market. This gives an interesting expansion of the value gap theory.

By using the well‐known concept of user costs and using market equilibrium as a reference, the model quantifies the influence of six factors that cause the value gap. This is done for The Netherlands in total and for each of the 452 housing associations separately.

The value gap between the owner‐occupied and the rental sector is immense. This is especially the case with the rented houses owned by the housing associations, constituting one‐third of the total housing stock. The vacant possession value of these houses is on average €151,000; the reported tenanted investment value is no more than €33,000. Important factors that are responsible for this gap are, on the one hand, the fiscal subsidies in the owner‐occupied sector and, on the other hand, rent control and the policy of the housing associations characterised by a low rent level and high maintenance and management costs.

This is the first paper that analyses and quantifies the factors contributing to the value lost by Dutch housing associations' operations.

This paper aims to consider the problem of determining the equilibriums on oligopoly market in case of Stackelberg leader (leaders) and reflexive behavior of market agents.

This paper includes economic and mathematical modeling, optimization methods and game theory.

This paper explains models of reflexive games on oligopoly market, taking into account the diversity of agents’ reasoning about strategies of environing and equilibrium mechanisms for coincidence or opposition of agents’ reflexive reasoning on the same rank of reflection.

This paper considers the oligopoly market with linear function of demand and costs of agents, the rational behavior of agents and the reflexive reasoning on the same rank of reflection. The set of agents’ reasoning about the environing strategies is considered as a set of market states for which the problem of agent’s optimal action choosing solves with the complete awareness.

Identification of reflexive behavior of environing allows agents to increase their market shares and profit.

Oligopoly markets play a leading role in the world oil trade and reflexive behavior affects the market equilibrium.

In the paper, the mechanisms of equilibrium in reflexive games on the linear duopoly market for arbitrary rank reflection are developed.