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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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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Queuing Discipline and Lipschitz Continuity
I was reading a paper by Platz and Østerdal (2014) titled "The curse of the first-in-first-out queue discipline". I was wondering about a particular section of it, particularly the part about last-in-...
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Pure exchange economy: Set of multiple equilibria endowments
Initial endowments which can result in multiple equilibria in a pure exchange economy are explained here. Given a pure exchange economy, that is given the utility functions (which fulfil the usual ...
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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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Topological intuition to continuous preference relation
For a Microeconomics Course, we are going through MWG, and in the lecture we discussed the notion of a continuous preference relation.
A preference relation $\succsim$ on a set $X$ is called ...
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Which is a better intermediate micro textbook: Perloff (with calculus) or baby Varian (with calculus)?
I’m currently learning intermediate microeconomics with calculus. I know to take derivatives, partial derivatives, integrals, and multiple integrals, and I know some basic linear algebra (solving ...
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Signalling Model (How to solve a differential equation?)
I'm currently reading "SAVING RATES AND POVERTY: THE ROLE OF CONSPICUOUS CONSUMPTION AND HUMAN CAPITAL" by Omer Moav and Zvika Neeman, and I encounter some problem deriving one of the equations.
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Certainty equivalence when the utility is semi-continuous instead of continuous
Let $U:\mathbb R^2\to\mathbb R$ be a utility function.
If $U$ is strictly increasing and continuous, then it is well known that for any $(x_1,x_2)$ there exists a certainty $(c,c)$ such that $$U(x_1,...
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Parsing problem 1.D.5 in MWG
I am a little confused about the statement of 1.D.5 in MWG, which I will reproduce here for convenience. I have "solved" the problem, I just don't understand something particular.
$\textbf{(...
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Afriat theorem for negative goods
GARP and Afrait theorem assume that the alternative $x\in\mathbb R_+$ is always positive. In some economic contexts, such as financial choices, the attribute can be negative.
I wonder if we can ...
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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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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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CARA risk-parameter estimation for discrete data as in Holt and Laury (2002)
I have a dataset with around 40 participants who choose between a pair of lotteries A or B while the probabilities of prizes change. This setting is similar to that in Holt and Laury (2002): Risk ...
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Looking for an universal utility function
I'm trying to build a computer simulation of an economy which separate simulation for each household and I'm trying to figure out what utility function should I use to model the households behavior. I ...
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Endogeneity in demand estimation using demand systems estimations
Assume I have quantities and prices for J products across M markets in T periods.
I want to estimate their elasticities.
I construct J regressions of this type:
$$\log \left(q_{j m t}\right)=\alpha_{t}...
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Why does short run market supply become more elastic with more firms
I have heard a justification along the lines of this: The supply curve becomes flatter (more elastic) with more firms in the market, because a given increase in price calls forth more production when ...
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Who were the first economists arguing that utility maximization is the core of rationality and economic behavior?
I am looking for the first economists arguing that maximizing utility function is the iff condition of rational behavior.
I've learned that neoclassical economics is founded on this argument. Is this ...
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Why do two-sided marketplaces often charge both sides of the transaction?
Why do marketplace apps often charge both sides of the transaction, when charging one side could raise as much (or more) revenue and be simpler?
i.e. if the marketplace knows which side of the market ...
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Where can I find research on the impact of informal/unregulated suppliers on prices and externalities?
I am looking for research and papers on the impact of informal/unregulated suppliers on market prices and negative externalities. I am particularly interested in the manufacturing sector.
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comparison of micro production functions
There are many different production function estimation methods, relevant for micro and firm data. For example Olley-Pakes, Levinsohn-Petrin, Ackerberg et al., Wooldridge etc.
But does anyone know of ...
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Question about MWG 17.D.1
I tried to solve by myself the exercises of MWG(Mas Colell). However, I think the exercise has an error at 17.D.1.
The 17.D.1 asks us that "verify that there are multiple equilibria". However, The ...
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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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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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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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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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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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Effects of ACA individual mandate vs AHCA surcharge
The US Congress is currently considering a new healthcare bill, the AHCA, which would replace the existing healthcare bill, the ACA.
One of the major changes is the way each bill encourages people to ...
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The formula for expansion path
Is there a way how to precisely compute the expansion path?
I know a consumer's utility function $U(\boldsymbol{x})$, I know the budget constraint $\sum P_i x_i \leq M$, I am able to compute the ...
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Does profit maximization imply cost minimization in both pure competition and monopoly?
How do I show that profit maximization implies cost minimization (in pure competition)?
Suppose we only consider inputs $l,k$ whose prices are $w,r$ and output price $p$. Profit is $\pi = pf(k,l) - wl ...
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Compensating wage differentials for risk
Question:
The utility from daily income $(x)$ of an individual is given by $$U(x) = 100x - 0.5x^2$$ The only source of income is his earnings. Hence, $x = wl$ where $w = \text{wage}$ and $l = \text{...
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Utility function distinguishing between complements/substitutes
Distinguish between complements/substitutes in utility function or production function
Hello everyone,
I would like to know if there exists some utility function $U(x)$ for $n$ goods that is able to ...
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Ramsey Optimal Tax
Suppose there are $n$ goods ($x_i$ with prices $p_i$) to be taxed with a sequence of ad valorem taxes whose rates are given by $t_i$. The total tax revenue is $T = \sum_{i=1}^{n} t_ip_ix_i$. For a ...
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Dynamic Information Provision model setup - It generalizes Dirk Bergemann and Stephen Morris
The following model setup is from the paper Dynamic Information Provision: Rewarding the Past and Guiding the Future by Ian Ball. It generalizes both the ideas of strategic information transmission of ...
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Unit cost function for CES
You do not need to make computations, you can just tell me how to make the following derivation:
I'm studying a paper where the unique final good of the economy is produced according to the following ...
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Extensive form game with multiple players
I am wondering on how to draw the extensive form with multiple players. Below is an example of the trust game. How would that look if there were two receivers with potentially different payoffs? Note ...
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How did econometricians justify the use of $EU$ instead of $EU^2$?
Consider the following two utility functions:
$EU(p)=\sum_i u_ip_i$
$EU^2(p)=(\sum_i u_ip_i)^2$.
In preference theory, $EU$ and $EU^2$ are equivalent because they represent the same preference. A ...
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Providing an example in cooperative - games and coalitions
Here is the paper from chich I previously posted another definition here Definition of a $k-$strong Nash Equilibrium
I am trying to construct an example to understand the idea of the following ...
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Super and sub modular games
I was trying to read up on super and sub modular games. I have started with basic survey papers like the one by Rabah Amir (2005). Research papers assume a lot of common knowledge (the papers that I ...
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Theoretical models of copyright infringement and efficiency implications
I wanted to know if there are theoretical models of copyright infringement and what are their implications for efficiency in the market and also, if possible, any empirical support they have.
When I ...
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Some basic Consumption CAPM questions
Say we are in a world described by the consumption CAPM. All investors in this world have quadratic utility. Also, assume that consumption is as follows:
$$c_{t+1} = (1+m_t)c_t + s_t c_t e_t $$
where ...
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Order-driven vs quote-driven markets
What is the difference between order driven and quote driven markets? Is there any theoretical microstructure book that gives the intuition behind the types of markets with respect to the orders that ...
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Arellano and Bond (1991) GMM estimation in R by using plm package
I am a last-year student at university, currently working on my Bachelor's (so still learning R), and I really hope that you would suggest a potential solution (even if to use Python).
So, the main ...
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Why is my elasticity of substitution wrong?
I am calculating elasticity of substitution for the following production function:
$$F(K,L) = A(aK^{-\gamma}+bL^{-\gamma})^{-\mu/\gamma}$$
where $A, a, b, \mu, \gamma$ are constants. $A, a, b, > 0$,...
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Best companion for Mas-Colell Microeconomic Theory textbook
What are the best sources to accompany MasColell Microeconomic Theory textbook in 1st year of MA in economics?
I mean any sources - textbooks, videos, websites, book companions, etc.
And I mean easy ...
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What is the observable definition of "preference" by Frisch?
To make things weird, although Frisch was fully aware of the importance of random distribution in economics relations, he never mention the randomness in binary preference relations!
How to define ...
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Continuous logit models - random utility with uncountable choice set
This question is about the mathematical foundations of the continuous logit model, as derived in McFadden (1976) (https://eml.berkeley.edu/reprints/mcfadden/math_theory.pdf) and Ben-Akiva et al (1985) ...
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MWG_3D4_C, why the solution seems in reverse?
I'm doing exercises of Chapter3 of MWG, there's a problem that I don't understand (I didn't figure out the solution manual either...).
It is about exercise 3.D.4, the full statement of the exercise is ...
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Calculating Social Welfare from an Energy Subsidy
In Allcott and Greenstone's paper, "Is there an energy efficiency gap?", one finds the following figure
I quote now from p. 13:
"When there are investment inefficiencies, the original marginal
...
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What are Frisch Demands useful for?
Frisch demands are demand equations found usually in an intermediate step of the standard utility maximization problem. By example for the basic two-good case of a consumer with quasilinear ...
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Software used for solving demands of different functions
I'm currently doing some research on demand systems and have been experimenting with different underlying utility functions which will generate different systems of demands. However I've been doing ...
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