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Regular version of the site
Of all publications in the section: 12
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Working paper
De Palma A., Papageourgiou Y., Thisse J. et al. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2018. No. DP13181.
We provide a bare-bones framework that uncovers the circumstances which lead either to the emergence of equally-spaced and equally-sized central places or to a hierarchy of central places. We show how these patterns reflect the preferences of agents and the efficiency of transportation and communication technologies. Under one class of agents, the economy is characterized by a uniform distribution or by a periodic distribution of central places having the same size. Under two asymmetric classes of agents, the interaction between agents may give rise to a hierarchy of settlements with one or several primate cities.
Added: Nov 12, 2018
Working paper
Matsuyama K., Philip Ushchev. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2017. No. DP12210.
Added: Jan 19, 2018
Working paper
Guriev S., Vakulenko E. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2013. No. 9675.
In this paper, we study panel data on region-to-region gross migration flows in Russia for 1995-2010. We find that barriers to labor mobility that hindered internal migration in 1990s, have been generally eliminated by the end of 2000s. In 1990s many poor Russian regions were in a poverty trap: potential workers wanted to leave those regions but could not afford to finance the move. In 2000s (especially in late 2000s), these barriers were no longer binding. Overall economic growth and development of financial markets allowed even poorest Russian regions to grow out of the poverty traps. This resulted in convergence in Russian labor market in 2000s; the interregional gaps in incomes, wages and unemployment rates decreased substantially and are now comparable to those in Europe.
Added: Feb 15, 2013
Working paper
Ushchev P., Sloev I., Thisse J. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2013. No. DP9604.
We combine spatial and monopolistic competition to study market interactions between downtown retailers and an outlying shopping mall. Consumers shop at either marketplace or at both, and buy each variety in volume. The market solution stems from the interplay between the market expansion effect generated by consumers seeking more opportunities, and the competition effect. Firms' profits increase (decrease) with the entry of local competitors when the former (latter) dominates. Downtown retailers swiftly vanish when the mall is large. A predatory but efficient mall need not be regulated, whereas the regulator must restrict the size of a mall accommodating downtown retailers.
Added: Nov 18, 2013
Working paper
Pokrovsky D. A., Zhelobodko E. V., Behrens K. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2014. No. DP9831.
We develop a monopolistic competition model with two sectors and heterogeneous agents who self-select into entrepreneurship, depending on entrepreneurial ability. The effect of market size on the equilibrium share of entrepreneurs crucially hinges on properties of the lower-tier utility function for differentiated varieties – its elasticity of substitution and its Arrow-Pratt index of relative risk aversion. We show that the share of entrepreneurs, and the cutoff for self-selection into entrepreneurship, can increase or decrease with market size. The properties of the underlying ability distribution largely determine how income inequality changes with market size.
Added: Jun 16, 2014
Working paper
Kokovin S. G., Parenti M., Thisse J. et al. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2017. No. DP12367.
We show that a market involving a handful of large-scale firms and a myriad of small-scale firms may give rise to different types of market structure, ranging from monopoly or oligopoly to monopolistic competition through new types of market structure. In particular, we find conditions under which the free entry and exit of small firms incentivizes big firms to sell their varieties at the monopolistically competitive prices, behaving as if in monopolistic competition. We call this result the dilution of market power. The structure of preferences is the main driver for a specific market structure to emerge as an equilibrium outcome.
Added: Oct 26, 2017
Working paper
Ushchev P., Zenou Y. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2015. No. DP10862.
We develop a product-differentiated model where the product space is a network defined as a set of varieties (nodes) linked by their degrees of substitutabilities (edges). In this network, we also locate consumers so that the location of each consumer (node) corresponds to her "ideal" variety. We show that there exists a unique Nash equilibrium in the price game among firms. Equilibrium prices are determined by firms' weighted Bonacich centralities and the average willingness to pay across consumers. They both hinge on the network structure of the firm-product space. We also investigate how local product differentiation and the spatial discount factor affect the equilibrium prices. We show that these effects non-trivially depend on the network structure. In particular, we find that, in a star-shaped network, the firm located in the star node does not always enjoy higher monopoly power than the peripheral firms.
Added: Oct 8, 2015
Working paper
Ущев Ф. А., Zenou Y. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2018. № DP13250.
Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this paper, we investigate how social norms affect individual effort, aggregate effort, and welfare. While individual productivity always positively affects own effort and utility, we show that taste for conformity has an ambiguous effect on individual outcomes and depends on whether an individual is above or below her own social norm. Equilibria are usually inefficient and, to restore the first best, the planner subsidizes (taxes) agents whose neighbors make efforts above (below) the social norms in equilibrium. Thus, provision of more subsidies to more central agents is not necessarily efficient.
Added: Nov 12, 2018
Working paper
Dagaev D., Lamberova N., Sobolev A. et al. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2013. No. 9787.
There has been a wide-spread belief that elections with a wide franchise following removal of an oppressive dictator lead to establishment of a government that is not vulnerable to mass protest. At the same time, most of the post-World War II non-constitutional exits of recently-installed autocratic leaders were caused by elite coups, rather than popular protests. The recent experience of Egypt, where the democratic post-Mubarak government, a result of the Arab Spring, collapsed after having had almost uninterrupted protests since its first day in office, offers a striking counterexample to both of these patterns. We demonstrate that this is a general phenomenon: the same technological shock, arrival of social media, that makes the incumbent vulnerable, lays foundation for continuous instability of the subsequent democratic government. Our theoretical model, which incorporates protest into a Downsian framework, takes into account specific features of modern protests: the significant role of social media and the absence of the partisan or personalized leadership during popular unrest. Case studies of the Arab countries with and without large-scale protests corroborate our theoretical findings.
Added: Dec 18, 2013
Working paper
Islam A., Ushchev P., Zenou Y. et al. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2018. No. DP13419.
We develop a theoretical model in which adoption decisions are based on information received from others about the quality of a new technology and on their risk attitude. We test the predictions of this model using a field experiment in Bangladesh. We show that treated farmers who receive better training in System of Rice Intensification (SRI) technology have more accurate information about this technology, and have a higher impact on the adoption rate of untreated farmers. We also find that untreated farmers that are more risk-averse tend to adopt less and are less influenced by their treated peers. Finally, a trained farmers' impact on his untrained peers increases if he himself adopts SRI technology. Our results indicate that the crucial determinant of technology adoption for untreated farmers is their degree of risk aversion and the accuracy and reliability of information transmission about the quality of technology circulated among farmers.
Added: Jan 2, 2019
Working paper
Parenti M., Ushchev P., Thisse J. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2014. No. DP10014.
We propose a general model of monopolistic competition, which encompasses existing models while being exible enough to take into account new demand and competition features. The basic tool we use to study the market outcome is the elasticity of substitution at a symmetric consumption pattern, which depends on both the per capita consumption and the total mass of varieties. We impose intuitive conditions on this function to guarantee the existence and uniqueness of a free-entry equilibrium. Comparative statics with respect to population size, GDP per capita and productivity shock are characterized through necessary and sucient conditions. Finally, we show how our approach can be generalized to the case of a multisector economy and extended to cope with heterogeneous firms and consumers.
Added: Aug 9, 2014
Working paper
Dagaev D., Sonin K. Centre for Economic Policy Research Discussion Paper Series. ISSN 0265-8003. Centre for Economic Policy Research, 2013. No. 9373.
In sport tournaments, the rules are presumably structured in a way that any team cannot be better off (e.g., to advance to the next round of competition) by losing instead of winning a game. Starting with a real-world example, we demonstrate that the existing national rules of awarding places for the UEFA Champions Leagues and the UEFA Europa League, which are based on the results of the national championship, a round-robin tournament, and the national cup, a knock-out tournament, might produce a situation where a team will be strictly better off by losing a game. Competition rules of the European qualification tournament to the World Cup 2014 suffer from the same problem. We show formally that in qualifying systems consisting of several round-robin tournaments, monotonic aggregating rules always leave open such a possibility. Then we consider qualifying systems consisting of a round-robin tournament (championship) and a knock-out tournament (cup). We show that any redistribution rule that allows the cup's runner-up to advance in the case that the cup's winner advances based on its place in a championship, has the same drawback, and discuss possible fixes.
Added: Jul 8, 2013