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Questions tagged [microeconomics]

Microeconomics is a branch of economics that studies the market behavior of individual actors (usually firms and consumers) and the aggregation of their actions in different institutional frameworks (usually the market).

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How accurate is duality?

In economic theory we know that with the use of some calculus, Hotellings Lemma and Sheppards lemma we can derive a given firms supply function and in term its Profit function. With data of a given ...
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637 views

Modern theory of integrability of demand?

I am aware of Hurwickz Uzawa work in integability, neatly summarized by Border http://people.hss.caltech.edu/~kcb/Notes/Demand4-Integrability.pdf I am wondering if there is any modern treatment of the ...
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Calculus and Indifference Curves in an Urban Economics Example

I am reading the paper 'The Structure of Urban Equilibria' by Jan Brueckner. It uses a monocentric city model, where all consumers earn income $y$ at the centre of the city. They buy $q$ housing for ...
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247 views

Local and Central Wage Bargaining: What Is the Difference?

Consider the following setting: Profit maximizing firms with production functions $\Pi(w,L)$, where $w$ is the wage and $L$ is employment. Unions who want to maximize the expected utility of their ...
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Has any progress been made on the Pacman Conjecture on Finite Time Horizons?

The Pacman conjecture states that the optimal strategy for monopolistic durable goods manufacturers is to set price high and slowly drop it (i.e. eating their way down the demand curve). Empirically ...
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183 views

How do supply chains form?

I am trying to put forth a theory for endogenous supply chain formation. A set of $K$ complementary tasks need to be performed to manufacture a good $G$. If manufactured, there exists a demand ...
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Understanding the Diewertt Cost Function

The Diewert cost function (as described in Microeconomic Analysis by Hal Varian 3rd Edition) takes the form of: $$c(w,y)=y\sum_{i=1}^k\sum_{j=1}^kb_{ij}\sqrt{w_iw_j}$$ Varian goes on to say (page ...
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Optimal Fight Purse and Boxing Strategies

The following is all public information available to all the players in this scenario. The General Setup In the aftermath of the infamous race between the tortoise and the hare, the salty hare went ...
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267 views

Equilibrium Uniqueness in a General Equilibrium Framework

I was wondering if anyone had any insight into the conditions that lead to a unique equilibrium in an exchange economy under a general equilibrium framework. More specifically, I know that the two "...
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525 views

Sign of the endowment income effect

We define the change in demand due to income effect as (assume there are 2 goods and the price of only one of them, say $p_1$, changes) $dx_1^N = x_1(p_1 + dp_1, p_2, m) - x_1(p_1 + dp_1, p_2, m + dm)...
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Social Choice: from Independence axiom to Mixture symmetry axiom

Harsanyi's Utilitarian theorems' has been criticized by Diamond Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparison of Utilities and others that, it is the morally unacceptable for ...
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Are there any economic studies of License-On-Transfer agreements?

A recent entry at GitHub's blog caught my attention: https://github.com/LOT. The "network" claims to provide protection from patent trolls by entering into an agreement automatically granting all ...
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Are modern conglomerate mergers better or worse for economic competition?

Modern conglomerate mergers differ from those from decades ago as, even though they takeover smaller companies, they have a more narrow focus on related business and, in order to be successful, have ...
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44 views

Transformation of random variables and second order stochastic dominance

Suppose X and Y are two random variables where X SOSD Y. Let g(•) be a monotonic function and X'=g(X) and Y'=g(Y).Under what conditions of g, X' SOSD Y'? I know if g is linear SOSD property is ...
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How should I calculate bulk selling price for a small business?

Some friends of mine run a small business, in a small garage-like space, with a few employees, making and selling "plumbuses". The typical customer orders about 5 plumbuses at a time. When I heard ...
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Insurance question: need a brief explanation

Two risk averse people are identical in every way (including wealth, W , amount of loss, L, and utility function, U(W)) except they have different probabilities of loss. Suppose they want to buy ...
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50 views

Use of the Lagrangian in empirical work

In my own studies I have noticed that many of the constrained optimization type questions that are often covered in intermediate/advanced microeconomics courses are seldom seen in more empirical types ...
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Mathematically optimal age to begin drawing Social Security retirement benefits as a function of expected life span?

So, for most of us Americans, our official retirement age is 66 and we get 100% of our retirement benefits. If we delay retirement, that benefit increases by 8% each year (up to age 70) and if we ...
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Choice rule and path independence

Question: A choice rule $C$ satisfies path independence if for all $A, B \in 2^X \setminus \emptyset$, $C(A \cup B) = C(C(A) \cup C(B))$. Prove that if $C$ is nonempty and rationalizable, then $C$ ...
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Microeconomic Modeling of Zero-Rated content

I'm currently writing my Bachelor Thesis which discusses the Question: Does Facebook's free Basics Programm (A website which lets people in poor countries access Internet Services without paying ...
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463 views

Euler's Homogenous Function Theorem with elasticity

I'm currently reviewing my prof's slides in preparation for an exam. In one of them, he talks about Euler's Homogenous Function Theorem: Let $f(x_1, x_2, ..., x_n)$ be a function homogenous in ...
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Addressing endogenity in price elasticity and the Promotion Optimization Problem

I have data on purchases gross prices discounts (like coupons) net prices (i.e. gross price - discounts) number of leads (potential customers at any given time) conversion rates (# purchases / # ...
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81 views

Is it possible to derive the marginal product of an input using a transformation function?

I'm using a transformation function $F(\cdot)$ to describe a production set $y = (x, z, L, K)$, where $x$ and $z$ are private goods denoted by positive numbers, $L$ is labour input, $K$ is capital ...
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Transportation models in economics

How would one go about modelling the effectiveness of public transportation? More specifically how does one go about comparing two transit systems in terms of their ability to move a larger numbers of ...
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857 views

Sen's Liberal Paradox

Economist and philosopher Amartya Sen posited that no social system could guarantee: A minimal sense of freedom in social choice Pareto efficiency His original article can be found here. In his ...
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Estimating Demand for Goods with n Choices

I have a data set containing n observations (rows) of mobile applications. The dependent variable is the number of installations -- the variable is categorical (with more than 2 categories). Therefore ...
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201 views

Robinson Crusoe economy with saving and borrowing

I am working with a Robinson Crusoe economy, i.e. an economy in which there is no production and only consumption is possible: there are only two goods, $x_1$ and $x_2$. There is just one individual ...
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Does this conditional increase in income affect a budget line in the same way as an unconditional increase in income would?

It's been awhile since I've taken introductory microeconomics. I remember increases in income move budget line outward. What if the increases have some condition? The problem: Jill has $I$ to ...
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What are the best ideas for ecological accountability / justice within capitalism?

What are some best practices for including the hidden costs of ecological disruption into economic decision making? For instance, how can the cost-benefit of pollution be shifted toward conservation ...
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61 views

Queuing Discipline and Lipschitz Continuity

I was reading a paper about welfare for last in first out. I was wondering about a particular section of it. $R(t)$ is defined as the cumulative arrival distribution, and they try and show: Let $R(...
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Appropriate economic/econometric tools to analyze segmented promotion optimization problem

I'm trying to determine which micro-economic/econometrics concepts, models, and/or tools are appropriate for an analysis of promotions. Below I Describe the problem in general terms Give ...
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110 views

Proof of Proposition 1.4 from Microfoundations I by Kreps

Regardless of the size of X (set of all possible objects), if a preference relation which is complete and transitive is defined on it, then the corresponding choice function generated by it will ...
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Optimal commodity taxation - solving for the optimal tax rates?

I need to solve for optimal tax rates for two products. In my model there are N identical households that maximize their utility function subject to a budget ...
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39 views

Insurance and Hirshleifer effect

I am trying to understand the statmement that 'public information kills insurance opportunity' -- referred to as Hirshleifer effect. Does it (in general) lead to some undesirable outcomes? Could you ...
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Why is underpayment so prevalent? (23% of those who are 25 and are entitled to the UK's National Living Wage are underpaid!)?

Context: https://www.theguardian.com/uk-news/2018/nov/27/one-in-four-uk-workers-covered-national-living-wage-underpaid-low-pay-commission Why is it that employers can seemingly get away without ...
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Research community around logistics micro-economic topics?

Is there the equivalent of a Rand Journal of Economics for the topic of logistics, focusing on the micro-economics of productivity gains via automation or disruptive technologies. There is the ...
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44 views

Firm Dynamic Optimization Problem

A firm has received an order at time $0$ for $M$ units of product to be delivered by time $T$. It seeks a production schedule for filling this order at minimum cost. Let $x(t)$ denote inventory ...
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Isn't it trivial that preferences are single-peaked over two alternatives?

I'm studying Down's Median Voter Theorem which states that if voters have single-peaked preferences over two alternatives arranged along a one-dimensional political spectrum, a majority rule voting ...
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44 views

Econometrically estimating the Leontief cost function

in general the Leontief cost function is represented as: $$c(w,y)=y\sum_{i=1}^kw_ix_i$$ where: $$y=\min\left[{\frac{x_1}{\alpha_1},...,\frac{x_n}{\alpha_n}}\right]$$ How does one go about ...
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585 views

How to find the “cost function” given the production function *as well as* the cost per unit produced and the fixed costs?

I'm working on the following homework problem, transcribed verbatim: A firm has a production function defined as $y = 8L^{1/4}K^{3/4}$. The firm faces costs of \$20 wage, \$60 rental rate of ...
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65 views

A manifold of agents?

In contract theory and mechanism design, if the agents have one-dimensional characteristics, then they are usually considered as a contiuum on $\mathbb R$; if they have n-dimensional type, then they ...
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36 views

Using Stata to perform power calculations

I want to use simulation in Stata to help me determine whether or not I will have sufficient statistical power to detect meaningful effects (should they exist) in a given data set using generalized ...
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166 views

Bayes Nash Equilibrium in a game with continuous actions

I am attempting to think through a particular type of game with continuous strategies, with Bayes Nash equilibrium as the solution concept. I first describe the game below, followed by questions. ...
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91 views

The second welfare theorem without monotonicity

Are there non monotonic preferences that are strictly convex and continues but the second welfare theorem does not hold for them?
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138 views

Competitive prices, tax and lump sum cash transfer in case of externalities

An economy is made up of two people. The utility functions are $$u_1(x_{11},x_{12}) = x_{11}x_{12}$$ $$u_2(x_{21},x_{22}) = 2x_{21} + 2x_{22} −x_{11}$$ The initial endowments are $ω_1 = (1,0)$ and $...
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83 views

Empirical Evidence of Cournot Competition?

Is there empirical evidence to validate the use of Cournot competition between multiple suppliers and a buyer? Are there models which extend Cournot competition to different levels in a larger supply ...
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74 views

Economies of scale in Robinson Crusoe economy?

I encountered the following question: Which of the following will NOT exist in a one-man economy? 1. competition 2. private property rights 3. economies of scale Turns out the answer was 1 and 2. I ...
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50 views

Is America economy, Connecitcut's economy, and the global in general recovering and better than the year 2008?

Please answer all three if you can. I live in Connecticut, America, and of course global trade and economies matter as we are becoming more global from technology. December 2007 the markets ...
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113 views

What are some ways to add quality to the supply-demand model?

Please excuse me, I hardly know anything about economics yet. When the quality of a product changes, the demand curve moves. But what if there are different versions of a product, of varying ...
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81 views

Can be the duality theorem applied to not locally non-satiated utility functions?

I have the following not locally non-satiated utility function: $$U(x,y)=-(x-1)^2-(y-2)^2$$ where $U(x,y): \, \!R^n_+ \rightarrow \!R $ The 3D plot of this function is an infinite paraboloid; ...