Shuntian Yao

A Strategic Market Game with Complete Markets

Existence of equilibrium is proved for an exchange strategic market game with complete markets. An example of equilibrium with inconsistent prices is given.

The non-cooperative equilibria of a trading economy with complete markets and consistent prices

Abstract An exchange economy with complete markets is described and a general theorem for the existence of active Nash equilibria is proved. It is further shown that under replication of traders, these equilibria approach competitive equilibria of the economy. The model under discussion here was first proposed by L. Shapley and represents one of two 1 possible generalizations of the ‘single money’ model described in Dubey and Shubik (1978). It has the pleasant feature that it yields consistent prices.

Privilege and Corruption: The Problems of China's Socialist Market Economy

It is well known that Chinas corruption problem has become more and more serious during the period of economic reform. This paper examines Chinas corruption problem with the help of several simple economic models. The author proposes the concepts of implicit corruption and explicit corruption. We explain how the granting of privileges has directly created implicit corruption in Chinas socialist market economy. We argue that the long-term existence of the same privileged group in Chinese society has led to widespread collusion among its members, and as a result, these privileged group members, by utilizing their monopoly power, are able to seize almost all the wealth created by the ordinary Chinese people. This seizure is accomplished by means of a two-part tariff in pricing their administrative service, which is the essence of the explicit corruption. Finally, we point out that, because both implicit corruption and explicit corruption are generated by Chinas political system, which grants and protects privileges, unless a political reform is initiated and privileges are eliminated, Chinas problem of corruption will never be solved. Copyright 2002 The American Journal of Economics and Sociology.

Insurance market games: Scale effects and public policy

We propose a game-theoretic model to study various effects of scale in an insurance market. After reviewing a simple static model of insurer solvency (in which all customers have inelastic demand), we present a one-period game in which both the buyers and sellers of insurance make strategic bids to determine market price and quantity. For the case in which both buyers and sellers are characterized by constant absolute risk aversion, we show that a unique market equilibrium exists under certain conditions. For the special case of risk-neutral insurers, we then consider how both the price and quantity of insurance, as well as other quantities of interest to public-policy decision makers, are affected by the number of insurance firms, the number of customers, and the total amount of capital provided by investors.

Walrasian Equilibrium Computation, Network Formation, and the Wen Theorem

The paper studies the Walrasian equilibrium theory of division of labor for large economies with weakly convex production techniques and with the presence of transaction costs. Earlier results published by Wen are revised and generalized so that the new versions can be applied to a much larger category of economic models. A simple example demonstrates how the theoretical results can be used for Walrasian equilibrium computation and equilibrium network structure identification.

A Growth Model for China's Special Economic Zone

Abstract. We employ a general macroeconomic analysis to describe the economic growth and performance of the Special Economic Zone (SEZ). It is shown that not only does foreign investment make a significant contribution to the economic growth of the Zone, but also, the rapid response of foreign investment to the output level is important for maintaining steady‐state growth. The open door policy and the policy of encouraging foreign investment have thereby played an important role in the recent development of the Chinese economy.

The transactions cost of money (a strategic market game analysis)

Abstract A closed model is built and analyzed with transactions costs arising from both physical con- sumption of resources in trade and from a positive money rate of interest. The banks profits are utilized to purchase resources. Hence the outcome is influenced by the consumption demand of the financial sector.

LIQUIDITY, QUALITY, PRODUCTION COST, AND WELFARE IN A SEARCH MODEL OF MONEY

This paper examines a search model of money with divisible commodities of high and low quality, while keeping the assumptions of indivisible money and unit-inventory constraint. With no direct barter and a higher fixed cost of producing high relative to low quality, an increase in the money stock encourages the production of high-quality output by trading off the larger trading opportunities against the significance of higher fixed cost. As long as the fixed-cost differential between high and low quality is sufficiently small relative to the utility gain from high-quality consumption, the quality improvement outweighs the negative effect of higher money stocks on aggregate production, and hence implies higher welfare.

Gold, Liquidity and Secured Loans in a Multistage Economy. Part I: Gold as Money

A multiperiod exchange economy with gold used both as money and as jewelry is examined in this paper. The existence of Nash equilibria is proved for the market games with finitely many traders as well as the games with a continuum of traders. For market games with a continuum of traders at infinite horizon, the existence of stationary Nash equilibria has been proved under the assumption that gold is properly distributed at the beginning or a secured loan between traders is available.

Economic Networking and Stability

In this paper we discuss finite economies with the presence of transaction costs and with decreasing, constant or increasing returns. In general such an economy may have no general equilibrium existence and may even have an empty core. We analyse the trading networks of such an economy, introducing the concepts of locally stable network structure, un-dominated locally stable network structures and most stable network structures. We point out that the set of most stable network structures could be treated as a solution concept for the empty core economies both in theoretical analysis and in application. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Asia Pty Ltd