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SSRN Research Paper Series
The Social Science Research Network’s Research Paper Series includes working papers produced by Stanford GSB the Rock Center.
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Capacity Utilization in the Chemical Processing Industries: Theoretical Models and Empirical Tests
Alternative models of optimal capacity expansion are used to develop a series of hypotheses regarding the behavior of capacity utilization. These hypotheses are then tested at the industry level on a large data sample covering 40 chemical…
Common Knowledge with Probability 1
Two people, 1 and 2, are said to have common knowledge of an event if both know it, 1 knows that 2 knows it, 2 knows that 1 knows it, 1 knows that 2 knows that 1 knows it, and so on. We provide a Bayesian definition of common knowledge, that is,…
Excess Capacity, Entry, and Market Structure in the Chemical Processing Industries
Recent advances in oligolpoly theory suggest a number of reasons why excess capacity may be related to entry and market structure. This paper used commprehensive data on 40 chemical products to test a series of hypotheses on the determinants of…
Hierarchies of Beliefs and Common Knowledge
A type of an individual is an infinite hierarchy of beliefs—over some state space S, over other individuals’ beliefs over S, and so on. We show that a coherent type determines a belief over S and other individuals’ types, and that common…
Market Growth, Economies of Scale, and Capacity Expansion in the Chemical Processing Industries
What factors determine the size of new industrial plants? This study uses data on 23 chemical products to test alternative models of capacity expansion, including: (1) the Manne model, which yields a constant cycle time between plant construction…
Mutual Fund Performance Evaluation: A Comparison of Benchmarks and Benchmark Comparisons
Abstract not available.
Patents, Learning by Doing, and Market Structure in the Chemical Processing Industries
This paper analyzes propensity to patent and the effect of patented process innovations on output prices for a sample of 24 chemical products. Econometric count data models (Poisson and negative binomial) are used given the discrete nature of the…
Price Competition vs. Quantity Competition: The Role of Uncertainty
We analyze the Nash equilibria of a one-stage game in which the nature of the strategic variables (prices or quantities) is determined endogenously. Duopolists producing differentiated products simultaneously choose either a quantity to produce…
Reputation in Repeated Second Price Auctions
Often, the same set of bidders take part in a series of similar but independent auctions. If bidders draw inferences from the past behaviour of others, then the auctions cannot be analysed independently. In particular, this paper shows that it…
Shadow Pricing with Suboptimal Policy Rules
This paper aims to clarify different views on the validity of the Little-Mirrlees border price rule for project evaluation in a context where the Government chooses its controls suboptimally in a systematic fashion. The rule is shown to be valid…
Structural Relations in Organizations: On the Relationship Between Behavior, Belief and Formal Structure
Research concerning organizational structure has reached an impasse. Two approaches to structure research have remained isolated despite their complementary insights and methodologies. In mainstream structure research, organizational structures…
The Empirical Foundations of the Arbitrage Pricing Theory II: The Optimal Construction of Basis Portfolios
Abstract not available.
The Emprical Foundations of The Arbitrage Pricing Theory I: The Empirical Tests
The last thirty years have witnessed great changes in the field of finance associated with institutionally oriented students has been transformed into one dominated by scholars with amore scientific orientation. The Capital Asset Pricing Model (…
Why Do We Have Nominal Government Debt?
The time-consistency literature suggests that there is no reason to have anything but indexed debt. We show that nominal debt provides valuable insurance against the financial effects of economic fluctuations and variations in government…
Collusion Via Switching Costs: How "Frequent -Flyer" Programs, Trading Stamps, and Technology Choices Aid Collusion
Competing brands that are ex ante homogeneous may become, after the purchase of one of them, ex post heterogeneous. The switching costs that differentiate these functionally identical products may be learning costs, transaction costs, or “…
Dissolving a Partnership Efficiently
Several partners jointly own an asset that may be traded among them. Each partner has a valuation for the asset; the valuations are known privately and drawn independently from a common probability distribution. We characterize the set of all…
Incentives, Compensation, and Social Welfare
Alternative reward structures under conditions of moral hazard are analyzed from a social welfare standpoint. We argue that social welfare judgements under uncertainty should incorporate ex post judgements; in particular, a distribution-sensitive…