Chin W. Yang

The Cournot competition in the spatial equilibrium model

Abstract In this paper, we develop conditions for the Takayama–Judge spatial equilibrium model to collapse into the classical Cournot model. In the case of heterogeneous demand and cost functions, the linear complementarity programming formulation is proposed to model the spatial Cournot model. Lastly, we implement the spatial equilibrium Cournot model to the US coal market and compare its performance to that of the original Takayama–Judge model. To the best of our knowledge, this is the only spatial equilibrium Cournot model estimated and implemented.

The fractal structure in multinational stock returns

The essence of fractal analysis is seeking for a pattern that is independent of scale. This paper examines the existence of long-term memory in nine Asian stock markets together with US and UK indices using the modified rescaled-ranged (R/S) statistic. The modified R/S statistic is robust not only with respect to the normality assumption,but also to short-term autocorrelation. The data in the sample range from 1 January 1988 to 30 June 1992 and are arranged in daily, weekly and monthly returns. In most cases, the phenomenon of long-term memory is not found; hence the random walk hypothesis cannot be rejected.The UK market, however, exhibits some long-term memory for various data frequencies and lags. The result of this paper provides directions for future research.

Iteration and Sensitivity for a Spatial Equilibrium Problem with Linear Supply and Demand Functions

We investigate a set of spatial equilibrium conditions which apply, for example, to a multiregional, multicommodity market or to a physical system of interconnected sources and sinks. Under additional hypotheses, the equilibrium conditions are the Kuhn-Tucker conditions for a concave, quadratic programming problem. For the case in which the equilibrium conditions do not correspond to a programming problem, an iterative process for obtaining a solution is discussed. This iteration is motivated by the Project Independence Evaluation System (PIES) energy model algorithm. An algorithmic method to determine the sensitivity of an equilibrium solution vector to data perturbations is described. Both the sensitivity analysis and the convergence of the iterative solution method are based upon a solvability lemma, which guarantees that a solution of the equilibrium conditions may be expressed in terms of the problem data. Nondegeneracy assumptions for the inter-regional flows are unnecessary for this discussion. An example of the equilibrium problem which arose in modeling the supply and demand of eastern coal is briefly described.

Long-run purchasing power parity revisited: a Monte Carlo simulation

The existence of long-run purchasing power parity (PPP) implies that a cointegration vector of nominal exchange rate, domestic price, and foreign price is expected regardless of using the Engle-Granger two-step method or Johansen maximum likelihood approach. However, this paper has found conflicting results: the Engle-Granger technique tends to reject the long-run PPP hypothesis whereas the Johansen method is generally supportive of long-run PPP. Via Monte Carlo simulations, the present paper finds that the Johansen approach has a bias toward supporting long-run PPP especially under the circumstances in which the assumption of normally or/and independently and identically distributed disturbance terms is violated.

A quadratic programming model of the Appalachian steam coal market

Abstract The authors report on an extension of recent modelling efforts to analyse the Appalachian steam coal market using a programming approach. The background to these modelling efforts is examined first. The particular aspects of the steam coal market to be modelled are then presented and the corresponding coal model described. Empirical results are analysed for the 1973 base solution and then compared to alternative solutions embodying variations in the parametric structure. Conclusions are drawn regarding potential policy applications.

Sensitivity Analysis of Tax Incidence in a Spatial Equilibrium Model

In this paper, we show that the impact of an ad valorem tax on demand prices is the same for all interrelated spatial regions regardless of sizes of their price elasticities. In the case of a degenerate spatial equilibrium model in which several independent submarkets develop, the tax incidence is identical within a submarket; but varies between different submarkets. In the case of non-linear and/or non-separable demand and supply functions, the same results hold as long as (i) the tax does not affect unit transportation costs and (ii) a unique equilibrium commodity flow solution exists.

The optimum uniform and discriminatory taxes or tariffs of third-degree price discrimination

Abstract This paper compares for the first time the effect of a uniform tax (tariff) and a discriminatory tax (tariff) in the framework of third-degree price discrimination. We find that (1) the optimum uniform tax, if it exists, is a convex combination of the discriminatory taxes, (2) the output under the discriminatory taxes with linear demand functions, much like that in the original third-degree price discrimination models equals that under the uniform tax, and (3) the welfare under the uniform tax exceeds that of the discriminatory taxes.

An improved approach to solution of the faculty assignment problem

Abstract We analyze the problem of assigning faculty members to teach various courses in an accounting department. Often difficulties arise due to conflicting choices of course preference, scheduling preference in terms of time, etc. Based on selected evaluation information, we employ a rather different zero-one integer programming model to solve the assignment problem. This approach has the advantage of utilizing readily available evaluation or outcome assessment data to take into consideration the learning curve phenomenon, various competing needs and institutional constraints at very little cost. It can be easily implemented for the public institutions to which outcome assessment measures are administered on a regular basis.

A comparison of Ad valorem and per unit taxes in regulated monopolies

This paper compares the output and revenue effects in the rate-of-return regulated monopoly model. Both the ad valorem and the unit tax generally decrease the use of capital, and as such, reduce the output and raise the price. In addition, it is shown that Suits and Musgraves conclusion of higher revenue of an ad valorem tax at a given output can apply to a regulated monopolist if the marginal product of labor under the ad valorem tax is greater than or equal to that under the unit tax. Similarly, their second conclusion, that for a given tax revenue an ad valorem tax has a larger output than a unit tax rate before the revenue-maximizing tax rate, can also apply to the regulated monopolist.

A Welfare Anomaly in the Rate-of-Return Regulated Monopoly Model Which Creates Opportunities for Offsetting Taxation and Regulatory Policies

The impact of the property tax on a fair rate of return regulated firm is examined. We find that a change in the tax rate has exactly the same effect on factor employment, output and hence the price as an equivalent change in the allowed rate of return. However, an increase in the allowed rate of return will lead to higher profits, whereas the same increase in the property tax rate will decrease profits. We find that an increase in the tax rate or allowed rate of return may result in a net increase in social welfare. This result contradicts the long-established belief that a lower (or no) tax is preferred to a higher tax rate in maximizing welfare. Finally, a linear iso-welfare locus is derived which creates the possibility of the regulatory agency or the tax authority offsetting the negative effects of the others policy.