Chin Lim

Long-Run Industry Equilibrium with Uncertainty

Abstract In this paper we consider the effects of uncertainty on industry equilibrium when firms must commit themselves to production before prices are revealed. We show that (a) an increase in demand uncertainty will (i) not affect the equilibrium number and size of firms if they are risk neutral, (ii) reduce the equilibrium number of firms if they are risk averse, but will have an ambiguous effect on their size. (b) In equilibrium, firms operate at capacity if they are risk neutral, but at excess capacity if they are risk averse.

Public Good Contributions Between Communities

The four fundamental determinants of voluntary contributions to public goods are taste, community size, wealth, and wealth distribution. This paper argues that for policy purposes it is important to discriminate between the four hypotheses. To do this, it is necessary to consider the comparative static effects of the above determinants not only on total contribution, but also on per capita contribution and the participation rate. Furthermore, just as members of a smaller community would contribute more than their identical counterparts in a larger community, we show that members of a community that has more poor members would also contribute more than their identical counterparts in a community that has more rich members. Copyright 2003 Blackwell Publishing Inc..

Scrap car pricing and welfare implications

Traffic congestion is a critical and highly visible urban problem. In land scarce Singapore, the problem is even more crucial and the government has resorted to gargantuan measures not only to curb car use but also car ownership. Besides a plethora of road-use taxes, a unique tax structure on car ownership is employed that comprises hefty taxes on new car purchases plus provisions for tax discounts if new car purchases are accompanied by the scrappage of old cars. Consequently, a thriving scrap car market has evolved in which scrap car prices exceed even new car prices in some other countries. This paper constructs a theoretical model to explain the determination of the equilibrium scrap car prices. The equilibrium properties are subject to empirical tests. The paper also discusses the welfare implications of this unique policy scheme.

Moral sentiments and equilibrium moral codes

This paper shows that the consistent way of modeling sentiment‐driven moral behaviors in a setting of social interaction is to derive the equilibrium moral code that is mutually consistent with the optimal moral behavior of each player. To do this, it is necessary that moral sentiments be introduced explicitly into the utility function so that an individual could choose the optimal moral behavior that balances his/her narrow self‐interest against the avoidance of moral dissonance. It then demonstrates how the various equilibrium moral codes are derived from the key moral sentiments of love, guilt and envy.

Market uncertainty and competitive equilibrium entry

Abstract Firms facing an uncertain market environment can choose the optimal mix of early and late production by trading off informational advantages of late production against cost advantages of early production. Consequently, their choice of entry into the market, whether early and/or late, depends on the interplay of cost and stochastic demand conditions. This paper characterizes the competitive equilibrium conditions that determine the mode of market entry and derives comparative statics results to show how competitive equilibrium entry modes vary with changes in various market conditions.