International Journal of Economic Theory

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• Fairness and formation rules of coalitions

  In this paper, we study the problem of a fair redistribution of resources among agents of an exchange economy and how certain limitations imposed on coalition formation may impact the set of allocations judged fair. The study is conducted in atomless economies as well as in the so‐called mixed markets.

• A new value for cooperative games based on coalition size

  We propose and characterize a new value for TU cooperative games based on egalitarian distribution of worths in smaller coalitions and players' marginal productivity in larger coalitions. This value belongs to the class of Procedural values due to Malawski. Our value is identical with the Shapley value on one extreme and the Equal Division rule on the other extreme. We show that our value is identical with the solidarity value due to Bèal et al. of the dual game. However, by duality, our characterization intuitively improves over the axiomatization of this solidarity value. We also provide a mechanism that implements our value in sub‐game perfect Nash equilibrium. Finally, a generalized version of this value is proposed followed by its characterizations.

• The wage fund theory and gains from trade in a dynamic Ricardian model

  The theory of wage fund as the basic source of financial capital or credit is incorporated into a dynamic Ricardian trade model consisting of three classes of agents: the workers, the capitalist, and the producers of goods. We derive the modified golden rule based on a significantly different mechanism from the standard optimal growth framework. We show that, although international trade in a static setting in the wage fund framework has asymmetric distributional effects on the agents' welfare, those asymmetric impacts are nullified in the dynamic setting. In fact, trade liberalization is Pareto improving along the balanced growth path.

• Axiomatic characterizations of the family of Weighted priority values

  We introduce a new family of values for TU‐games with a priority structure, which both contains the Priority value recently introduced by Béal et al. and the Weighted Shapley values (Kalai & Samet). Each value of this family is called a Weighted priority value and is constructed as follows. A strictly positive weight is associated with each agent and the agents are partially ordered according to a binary relation. An agent is a priority agent with respect to a coalition if it is maximal in this coalition with respect to the partial order. A Weighted priority value distributes the dividend of each coalition among the priority agents of this coalition in proportion to their weights. We provide an axiomatic characterization of the family of the Weighted Shapley values without the additivity axiom. To this end, we borrow the Priority agent out axiom from Béal et al., which is used to axiomatize the Priority value. We also reuse, in our domain, the principle of Superweak differential marginality introduced by Casajus to axiomatize the Positively weighted Shapley values. We add a new axiom of Independence of null agent position which indicates that the position of a null agent in the partial order does not affect the payoff of the other agents. Together with Efficiency, the above axioms characterize the Weighted Shapley values. We show that this axiomatic characterization holds on the subdomain where the partial order is structured by levels. This entails an alternative characterization of the Weighted Shapley values. Two alternative characterizations are obtained by replacing our principle of Superweak differential marginality by Additivity and invoking other axioms.

• Location choice with asymmetric data in the Hotelling model

  This paper analyzes the location choices of firms in the Hotelling model, in which one firm has consumer data and can practice price discrimination, while the other firm without data can only set uniform price. The equilibrium results show medium differentiation. The location choices of firms can alleviate the inhibition of data asymmetry on competition and increase consumer surplus. And we consider the consumers' transportation costs as an exponential function of distance. When this exponent increases, horizontal differentiation increases, but market prices fall, benefiting consumers.

• Issue Information: International Journal of Economic Theory 4/2023
• The role of standard‐setting organizations in deciding product quality and process innovation

  We analyze the effect that the presence of a standard‐setting organization (SSO) has on firms' choices of product quality and costly research and development (R&D) investment when consumers face uncertainty regarding product standardization. We construct a theoretical model with competing firms and compare frameworks where: (i) an SSO is exogenously absent and (ii) an SSO is present. Our first finding is a negative relationship between firms' product‐quality choices and R&D investment. The presence of the SSO standardizes quality which can be profitable for firms. Finally, we find conditions where the presence of an SSO could lead to welfare enhancement.

• Environmental corporate social responsibility under price competition and the second‐mover advantage: An endogenous timing approach

  We consider an environmental corporate social responsibility (ECSR) under price competition in a product differentiated duopoly and formulate an extensive endogenous timing game where firms choose ECSR and subsequently choose prices. We show that a successive sequential‐move appears in the equilibrium wherein an ECSR leader adopts a lower degree of ECSR and thereupon chooses a price leader. Therefore, the firm with a low degree of ECSR becomes a price leader while the firm with a high degree of ECSR becomes a price follower but earns higher profits, that is, a second‐mover advantage with ECSR‐induced higher costs appears.

• The effects of trade liberalization on tax avoidance

  Does trade liberalization aggravate tax avoidance? We build a three‐country model of tax competition consisting of two nonhaven countries and one tax haven in which goods are traded between the nonhavens and firms may shift profits to the tax haven. When the nonhavens cooperate, the reduction in trade costs does not change the degree of tax avoidance. In contrast, when the nonhavens do not cooperate, the equilibrium tax rates become higher, resulting in more tax avoidance. Furthermore, trade liberalization strengthens the tax competition between nonhavens, which further increases the tax‐avoidance activities.

• Optimal growth with labor market frictions

  In this paper, I build a capital accumulation model in which labor has to be alternatively employed in the production of goods or in the recruitment of workers. Within this setting, I show that (i) the intensive measure of capital may converge towards its stationary value in a non‐monotonic manner, (ii) Pareto‐optimal allocations can also be achieved in a decentralized environment in which the wage is indexed to labor market tightness, and (iii) the consistency of the wage that implements efficient allocations with the competitiveness of the market for goods relies on vanishing values of the discount rate.

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