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European Economic Review, Volume 105 ,June 2018


Optimal task assignments with loss-averse agents by Felipe Balmaceda

Identifying voter preferences: The trade-off between honesty and competence by Fabio Galeotti, Daniel John Zizzo

If the worst comes to the worst: Dictator giving when recipient’s endowments are risky by Christoph Engel, Sebastian J. Goerg

Preference conformism: An experiment by Enrique Fatas, Shaun P. Hargreaves Heap, David Rojo Arjona

The career dynamics of high-skilled women and men: Evidence from Sweden by James Albrecht, Mary Ann Bronson, Peter Skogman Thoursie, Susan Vroman

The ISO 9000 certification: Little pain, big gain? by Beata Javorcik, Naotaka Sawada

Inflation, output and markup dynamics with purely forward-looking wage and price setters by Louis Phaneuf, Eric Sims, Jean Gardy Victor

Current account and real exchange rate changes: The impact of trade openness by Davide Romelli, Cristina Terra, Enrico Vasconcelos

Do employee spinoffs learn markets from their parents? Evidence from international trade by Marc-Andreas Muendler, James E. Rauch

Equilibrium vaccination patterns in incomplete and heterogeneous networks by William Neilson, Yancheng Xiao

Dark costs, missing data: Shedding some light on services trade by James E. Anderson, Ingo Borchert, Aaditya Mattoo, Yoto V. Yotov

URL: https://www.sciencedirect.com/journal/european-economic-review/vol/105/suppl/C

Courtesy: Sciencedirect


Trends and priority shifts in artificial intelligence technology invention: A global patent analysis

Hidemichi Fujii and Shunsuke Managi.

Economic Analysis and Policy, 58. 2018.

This study is the first to apply a decomposition framework to clarify the determinants of AI technology invention. Consisting of 13,567 AI technology patents for the 2000–2016 period, our worldwide dataset includes patent publication data from the U.S., Japan, China, Europe, and the Patent Cooperation Treaty (PCT).

We find that priority has shifted from biological and knowledge-based models to specific mathematical models and other AI technologies, particularly in the U.S. and Japan. Our technology type and country comparison shows that the characteristics of AI technology patent publication differ among companies and countries.

URL: https://www.sciencedirect.com/science/article/pii/S0313592617302539

Courtesy: Sciencedirect

The properties of inflation expectations: Evidence for India

Naresh Kumar Sharma, and Motilal Bicchal.

Economia, 19(1). 2018.

Empirical inferences about particular forms of agents’ inflation expectations are crucial for the conduct of monetary policy. This paper is an attempt to explore the properties of the Reserve Bank of India’s survey data of households’ inflation expectations. The paper shows that survey respondents do not form expectations rationally, regardless of the reference measures of inflation used.

Further, results indicate that inflation expectations are formed purely in backward-looking manner, suggesting that the Reserve Bank of India (RBI) has a low degree of credibility within the survey respondents. The study then formulates a model to identify individual elements of the backward-looking expectations in the data.

The results suggest that the respondents’ short term expectations for WPI inflation are purely naïve type of expectations, only influenced by respondents earlier period expectations. In the case of CPIIW inflation, the results however suggest that the short-term expectations are not purely naïve type, but also contain adaptive as well as a static forms of expectations.

This means that respondents consider their previous forecast errors about CPIIW inflation and draw recent price developments in the CPIIW while forming their overall short-term inflation expectations. This finding provides some formal evidence that the CPI based inflation measure is better suited, than WPI inflation, as a nominal anchor in the RBI’s recent transition to inflation targeting regime.

URL: https://www.sciencedirect.com/science/article/pii/S1517758016301291

Courtesy: Sciencedirect

Horizontal mergers and product innovation

Giulio Federico, Gregor Langus, and Tommaso Valletti.

International Journal of Industrial Organization, 59. 2018.

We set up a stylized oligopoly model of uncertain product innovation to analyze the effects of a merger on innovation incentives and on consumer surplus. The model incorporates two competitive channels for merger effects: the “price coordination” channel and the internalization of the “innovation externality”.

We solve the model numerically and find that price coordination between the two products of the merged firm tends to stimulate innovation, while internalization of the innovation externality depresses it. The latter effect is stronger in our simulations and, as a result, the merger leads to lower innovation incentives for the merged entity, absent cost efficiencies and knowledge spillovers. In our numerical analysis both overall innovation and consumer welfare fall after a merger.

URL: https://www.sciencedirect.com/science/article/pii/S0167718718300213

Courtesy: Sciencedirect

The Distribution of the Gender Wage Gap

Sonia R. Bhalotra, and Manuel Fernandez Sierra.

IZA DP No. 11640. 2018.

We analyse impacts of the rising labor force participation of women on the gender wage gap. We formulate and structurally estimate an equilibrium model of the labor market in which the elasticity of substitution between male and female labor is allowed to vary depending on the task content of occupations.

We find that the elasticity of substitution is higher in high- paying occupations that are intensive in abstract and analytical tasks than in low-paying manual and routine occupations. Consistent with this we find a narrowing of the gender wage gap towards the upper end of the wage distribution and an increase in the gender wage gap at the low end.

Demand side trends favoured women and this attenuated the supply-driven downward pressure on women’s wages in low-paying occupations, and fully counteracted it in high-paying occupations. The paper contributes new evidence on the distribution of the gender wage gaps, and contributes to a wider literature on technological change, occupational sorting, wage inequality and polarization.

URL: https://www.iza.org/publications/dp/11640/the-distribution-of-the-gender-wage-gap

Courtesy: IZA

Outsourcing under incomplete information

Tarun Kabiraj.

Indian Growth and Development Review, 10(1).


The purpose of this paper is to show that outsourcing can occur as outcome of a separating or pooling perfect Bayesian equilibrium although it is not profitable under complete information. Therefore, asymmetric information can itself be a reason for outsourcing.


The present paper constructs a model of two firms interacting in the product market under asymmetric information where one firm has private information about its technological capability, and it has the option to produce inputs in-house or buy inputs from an input market. However, using outsourced inputs involves a fixed cost at the plant level. The model solves for perfect Bayesian equilibrium.


There are situations when under complete information, outsourcing of the input will not occur, but, under incomplete information, either only the low-cost type or both high and low-cost types will go for outsourcing, and there always exist reasonable beliefs supporting these equilibria. In particular, when the fixed cost is neither too small not too large, a separating equilibrium occurs in which the low-cost type outsources inputs from the input market but the high-cost type produces in-house; hence, outsourcing signals the firm’s type. Outsourcing by only the high-cost type firm will never occur in equilibrium.


That incomplete or asymmetric information can itself be a reason for strategic outsourcing is never identified in the literature. The present paper is an attempt to fill this gap and raise the issue of outsourcing in an incomplete information environment.

URL: https://www.emeraldinsight.com/doi/abs/10.1108/IGDR-03-2017-0014

Courtesy: Emeraldinsight

How does family involvement affect a firm’s internationalization? An investigation of Indian family firms

Sougata Ray, Arindam Mondal, Kavil Ramachandran.
Global Strategy Journal, 8(1). 2018.
We investigate whether and how family ownership and management influence firms’ internationalization strategies in an emerging economy in which family firms are dominant. Anchoring on the willingness and ability framework and drawing on the socioemotional wealth perspective and agency theory, we theorize how the heterogeneity among family firms in their ownership structures, concentration, and family involvement in management shapes the firms’ internationalization strategies.
We also theorize how certain contingencies, such as the presence of foreign institutional ownership and family management, moderate the relationship between family ownership and internationalization strategy. We test our predictions by using a proprietary, longitudinal panel dataset of 303 leading family firms from India and find support for most of our theoretical predictions.
Courtesy: Wiley online library