Search Results (40)

The Bertrand game is one of the basic game models in modern microeconomics. In some behavior experiments with game theory, it was shown that agents have different bounded rationality levels. In order to check the effect of bounded rationality levels on the stability of the equilibrium points in Bertrand games, this study establishes a new dynamic price game with a parameter to show the rationality levels. An exact geometrical characterization of the stable region of the dynamic system is firstly proposed, from which the critical points of the bifurcation of the system can be deduced. It is shown that allowing various bounded rationalities is conducive to enlarging the stable region of the equilibrium point of the price system. With increasing rationality level, the stable region expands. Numerical examples are provided to show the main results. Full article

We use the microeconomic theory that takes into account household production and human activity in the non-market sphere to analyze the phenomena of a macroeconomic nature. We check the activation of women in the labor market, a phenomenon observed in Western European countries and the United States, among others. The decision to become economically active reduces the opportunity to devote time to previously undertaken activities, including a reduction in the time spent on housework. This often involves a significant change in the structure of consumption, which, at the macroeconomic level, is associated with the creation of new jobs and a change in the structure of the economy. Structural change is understood as the transfer of economic activity between the three main sectors of the system, namely agriculture, industry and services. This study uses microeconomic data from two waves of the TUS in Poland. The so-called marketization hypothesis was tested separately for three groups of women aged 18–24, 25–44 and 45–59. When estimating the parameters of the models, characteristics such as having a partner, having children under six and educational attainment were taken into account. The calculations show that women aged 25–44 are relatively active in the labor market, but it is those aged 18–24 who fulfill all of the conditions that support the marketization hypothesis. Full article

The process of the liberalisation of services of general economic interest (SGEI) in the EU adopted the universal service (US) regulatory model. The objectives of the process were to strengthen free competition and improve social welfare. SGEIs have the characteristic of networked services and, as such, generate network externalities, as considered by the theory of market failures. This paper analyses the potential of the US in its role as a remedy for network externalities. In the SGEI context, the large number of participants reinforces network externalities, while limiting coordination mechanisms between users. Based on the relevant literature, a theoretical debate arises around the contribution of universal service obligations (USOs) to social welfare. A microeconomic analysis shows that USOs modify consumers’ utility functions by shifting from inefficient market equilibria to efficient equilibria, thereby improving social welfare. Full article

Public–Private Partnerships have been implemented globally as a key procurement strategy for addressing the issue of funding gaps amidst the immense pressure to deliver new major infrastructure projects. However, in current practice, procurement selection is applied to the entire bundle of project activities. This often leads to unduly large bundles of externalized project activities that create unduly large PPP contracts and attempt to transfer too much risk. To address this gap, this paper presents the development and testing of an implementable model that embodies a range of microeconomic theories—namely, transaction cost and resource-based theories—and property rights theory. This paper presents the first empirical testing of this model based on two road and two health projects, using competition as an independent measure of the validity of the recommended procurement strategy. The results provide compelling evidence that a rigorous application of the model will enable a substantial improvement of existing procurement approaches, such as identifying the most suitable bundle to be procured using a PPP approach. Full article

The objective of this study was to examine the potential moderating effects of the relationship between macroeconomic variables and the financial liquidity of enterprises. Given the significance of liquidity for companies and the profound impact of the macroeconomic environment, a research gap was identified in relation to the limited number of studies investigating the influence of macroeconomic factors on corporate liquidity. Additionally, the limited scope of companies surveyed in this area, in terms of sector, size, capital market presence, and the limited range of macroeconomic variables examined were notable. Most importantly, the absence of studies examining moderators of the relationship between macroeconomic factors and liquidity was a significant concern. To this end, two main research questions were formulated. First, what factors moderate the relationship between macroeconomic variables and the financial liquidity of companies? Second, what is the nature of the moderating effects on the relationship between macroeconomic variables and corporate financial liquidity? This research employed panel data analysis on an unbalanced panel comprising 5327 Polish enterprises spanning from 2003 to 2021. The primary analytical technique utilised was linear regression (pooled OLS) with robust standard errors clustered at the firm level. The main results of this study indicate that: (1) debt level, profitability, and the fixed assets to total assets ratio are significant moderators of some of the relationships between macroeconomic variables and corporate liquidity; (2) debt level moderates the relationship between the ratio of internal expenditures on research and development to GDP and financial liquidity, as well as the relationship between inflation rate and liquidity; the relationship is statistically significant and positive only for those enterprises with above-median debt levels; (3) profitability moderates the relationship between the employment coefficient and financial liquidity, as well as the relationship between the inflation rate and liquidity; in the high-profitability group, those relationships are positive, whereas in the low-profitability group, they are negative; (4) the ratio of fixed assets to total assets moderates the relationship between the money supply and corporate financial liquidity; for enterprises with low asset flexibility, there is a negative relationship between the money supply and financial liquidity; conversely, for enterprises with high asset flexibility, there is a positive relationship between the money supply and financial liquidity; (5) the rationale behind these findings can be derived from capital structure theory and financial analysis theory. The results of this study represent a step towards a more comprehensive understanding of the relationship between the macro environment and corporate liquidity, as well as the factors that moderate this relationship from both a microeconomic and a macroeconomic perspective. The findings of this study may also inform policy decisions governing the corporate sector due to a more nuanced understanding of the relationships between macroeconomic factors and corporate liquidity. Full article

We analyze various determinants of the average price level using a strictly mathematical approach. Starting with the microeconomic perspective, we review the effect of demand shifters such as consumer income and the level of advertising on the average price level in a simple partial market equilibrium model. Then, we discuss the effect of supply shifters such as the exogenous tax level, worker wage, rental rate, and technology. We use implicit differentiation and Jacobian determinants. While government spending triggers inflation, taxes have the opposite effect. This is consistent with Keynesian theory. Money supply increases national income and prices while reducing the equilibrium interest rate. Therefore, money supply has pro-inflationary effects. The effect of money demand is the opposite—it increases the equilibrium interest rate, thereby lowering national income and prices. Augmenting the model to the level of international trade, we find that exports raise national income, the interest rate, and the average price level, while the effect of imports is just the opposite. Government spending raises the exchange rate while continuous inflation lowers it. Full article

Industrial Organization, the Resource-Based View, and the Relational View are some classical, well-established, and widely accepted theories in the strategic management domain regarding the understanding, explanation, and prediction of competitive advantage of firms and above-average firm performance. Recent evidence of economic geography and regional economics added to this stream of research new perspectives like cluster theory and microeconomic competitiveness. Despite the high enthusiasm with which companies and policymakers embraced the new advancements, there is some contradictory evidence regarding the positive effect of local conditions on firm performance. Thus, in this paper, we aim to empirically test some aspects of a modern regional development theory, proposed mainly by Michael Porter and collaborators, and the impact of these aspects on firm performance. External determinants considered at three levels of analysis (local economy, local clusters, and industry) will be investigated in relation to firm performance. We will analyze empirical data through detailed correlational analyses and by building multilinear regression models. After the statistical analysis of the answers provided directly by 67 medium and large manufacturing companies operating in Romania, we will provide empirical support for some external determinants, while for other determinants, we will show that the data rejected the proposed associations. The main conclusion derived from this study is that different combinations of external determinants, considered at all three levels of analysis, have a positive and significant effect on different measures of firm performance. The findings in our paper are important for both regional economics and the strategic management literature, suggesting the importance of creating local or urban conditions depending on the type of performance that the firms in the local economy are underperforming. Full article

The digital economy and the sharing economy have changed the role citizens may acquire in society. Citizens can perform at least two roles from the open government perspective: on the one hand, they can be passive users/demanders of information and, on the other hand, they can provide or produce the information in an active manner. The objective of this paper is to offer a theoretical model to explain citizens’ incentives to participate in open government projects. Which is the opportunity cost of participation for the citizen? Which are the drivers of the preferences for the social good? This model is based on the utility function and consumption theory. We complement the theoretical framework with an exploratory–descriptive analysis based on a case study’s primary data about citizen participation. In democracy projects where citizens actively collaborate and could earn monetary gains or become entrepreneurs, the opportunity cost of participation is lower than in a passive type and the amount of the social good depends on the preferences. Preferences for social goods are related to community experiences and e-government and they also affect the decision to participate. Very few studies in the field of open government have pretended to explain citizens’ participation by using microeconomic foundations. Full article

The objective of this paper is to analyze economic alternatives for the provision of ultra-reliable low-latency communication (URLLC) and massive machine-type communication (mMTC) services over a fifth-generation (5G) network. Two business models, a monopoly and a duopoly, are studied and two 5G network scenarios are analyzed: a 5G network where the network resources are shared between the two services without service priority, and a 5G network with network slicing that allows for URLLC traffic to have a higher priority. Microeconomics is used to model the behavior of users and operators, and game theory is used to model the strategic interaction between users and operators. The results show that a monopoly over a 5G network with network slicing is the most efficient way to provide both URLLC and mMTC services. Full article

This review analyzes articles on the mathematical modeling of economic facts and processes. Mathematical modeling of the economy has rapidly developed in the past and current centuries. This is explained by the fact that, firstly, economics does not tolerate full-scale experiments, secondly, mathematical modeling significantly improves the accuracy of research results, and, finally, thirdly, economics becomes a science only when it is based on mathematics. The article presents an overview of the main methods of economic modeling used in scientific research over the past twenty years. The review does not claim to cover all areas, methods, and models used in scientific research in the field of economics. This cannot be done in one article. Mathematical modeling of only three sections of economic theory is considered: macroeconomics, microeconomics, and state regulation of the economy. The review of research methods and models in the microeconomics section, which are available in the scientific research toolkit but have already been described in the macroeconomics section, has been omitted. Only effective, practice-tested models are used in the Review. We hope that this review will be useful to scientists involved in the indirect study of economic phenomena and processes. Full article

Most gasoline currently consumed in Mexico continues to be oxygenated with Methyl Tert-Butyl Ether (MTBE) despite its proven effects on the environment and human health. Hence, the existence of a regulatory framework on biofuels and various institutional efforts have not been sufficient to develop a national market for anhydrous ethanol use as biofuel. The goal of this research is twofold: one, to review and analyze the governmental actions taken to incorporate bioethanol as a gasoline oxygenate, and, two, to design a tool to estimate the bioethanol price at the Storage and Distribution Terminals of PEMEX (Mexico’s state-owned oil company). A price estimation model for bioethanol was developed through the microeconomic theory of the producer and the indifference price of a product methodology, which calculates the daily price of ethanol in the period 2015–2022; additionally, an MS Excel-based support tool was created for this analysis (namely: the Price-CEM). The analysis showed that incorporating bioethanol into the Mexican energy matrix would require policies of fiscal support for R&D, agricultural waste management and bioethanol production, as well as a new regulatory framework to both gradually eliminate MTBE and establish bioethanol/gasoline blending targets. Furthermore, institutional efforts would also be required to integrate all links in the biofuel production chain, including primary feedstock producers. The cost estimation method and tool have also shown to be valuable instruments to calculate both the prices at which a local bioethanol market would be competitive (with respect to the international market) and the most important cost contributions for local supply chains. This is the first tool to estimate the price of anhydrous ethanol at the local level, which can contribute to identifying opportunities and economic thresholds for the successful development of feasible bioethanol markets in Mexico. Full article

The main goal of the paper is to examine whether the COVID-19 crisis has changed the “usual” pattern of consumer behavior. The analysis was conducted on the basis of samples of 6354 and 6108 Serbian households for 2019 and 2021. The results of the analysis showed that there have been changes in the behavior pattern of Serbian households when it comes to demand for digital goods and services. The obtained results have a special significance for producers, traders of digital goods and services in Serbia. This work has achieved both theoretical and empirical contribution in the field of microeconomic theory and analysis. Full article

Most recently, there has been a growing interest in understanding the correlation concerning knowledge management and competitiveness more so in the area of tourism. Hence, this paper looks to provide a synthesis on theoretical nexus of knowledge management and tourism business enterprise competitiveness by giving an integrated overview of four micro economic related theories that influence competitiveness and knowledge management. These theories were examined to exhibit the extent of their applicability to tourism businesses as a way to alleviate challenges posed by susceptibility, complexity, ambiguity, uncertainty, and volatility brought about by market liberalization and globalization. Moreover, theories are, considered a set of systematic hunches, which have multiple parts, which play a role in the overall idea of what exactly a theory is proposing. During the review of literature various theories assert to explain knowledge management and competitiveness individually, but on some occasions in relation either to organizational learning or organizational (quality) culture. Thus, the need to supply an integrated overview of the theoretical nexus between these concepts by exploring the theoretical frameworks and related facets. Of the micro-economic theories: the institutional theory, the knowledge-based theory, the resource-based theory, and the (dynamic) capabilities theory were used to guide and try to explain the relationship of aforementioned facets. The knowledge-based theory posits that an organization’s competitive gain stems from the distinctive knowledge assets along with its ability to effectively utilize and share these assets within the organization. The resource-based theory, conversely, emphasizes the role of physical and intangible resources in determining an organization’s competitiveness. The (dynamic) capabilities theory underscores the importance of an enterprise’s ability to continuously learn, adapt, as well as innovate to sustain a competitiveness. Finally, institutional theory highlights the role of external factors, such as business standards, industrial policies and procedures such as quality approaches, in shaping an organization’s competitiveness. Overall, with the comprehensive perception of the given theories the paper attempts to feature the correlation between knowledge management and competitiveness within the tourism industry. Highlighting ways in which these theories can be integrated to supply a more holistic understanding of this relationship especially in the study areas of tourism managerial micro-economics, tourism competitiveness and organizational knowledge management aimed at impending application in particular to enhance the sustainability tourism business enterprises. Full article

Bitcoin (BTC)—the first cryptocurrency—is a decentralized network used to make private, anonymous, peer-to-peer transactions worldwide, yet there are numerous issues in its pricing due to its arbitrary nature, thus limiting its use due to skepticism among businesses and households. However, there is a vast scope of machine learning approaches to predict future prices precisely. One of the major problems with previous research on BTC price predictions is that they are primarily empirical research lacking sufficient analytical support to back up the claims. Therefore, this study aims to solve the BTC price prediction problem in the context of both macroeconomic and microeconomic theories by applying new machine learning methods. Previous work, however, shows mixed evidence of the superiority of machine learning over statistical analysis and vice versa, so more research is needed. This paper applies comparative approaches, including ordinary least squares (OLS), Ensemble learning, support vector regression (SVR), and multilayer perceptron (MLP), to investigate whether the macroeconomic, microeconomic, technical, and blockchain indicators based on economic theories predict the BTC price or not. The findings point out that some technical indicators are significant short-run BTC price predictors, thus confirming the validity of technical analysis. Moreover, macroeconomic and blockchain indicators are found to be significant long-term predictors, implying that supply, demand, and cost-based pricing theories are the underlying theories of BTC price prediction. Likewise, SVR is found to be superior to other machine learning and traditional models. This research’s innovation is looking at BTC price prediction through theoretical aspects. The overall findings show that SVR is superior to other machine learning models and traditional models. This paper has several contributions. It can contribute to international finance to be used as a reference for setting asset pricing and improved investment decision-making. It also contributes to the economics of BTC price prediction by introducing its theoretical background. Moreover, as the authors still doubt whether machine learning can beat the traditional methods in BTC price prediction, this research contributes to machine learning configuration and helping developers use it as a benchmark. Full article

Simple sum monetary aggregates are based on accounting conventions and have no aggregation theoretic foundations in economic theory. In contrast, Divisia monetary aggregates are directly derived from aggregation and index number theory. Credit card services cannot be included in simple sum monetary aggregates since accounting conventions cannot aggregate over assets and liabilities. However, microeconomic aggregation theory aggregates over service flows, not stocks, regardless of whether from assets or liabilities. As a result, it has recently been shown that Divisia monetary aggregates can be augmented to include credit card services and are available from the Center for Financial Stability in New York City. Other sources of consumer credit cannot be included in Divisia monetary aggregates for the United States since other sources of consumer credit in the United States are linked to specific groups of consumer goods and hence, violate the weak separability condition for the existence of an aggregator function. However, China produces a unique opportunity to broaden the Divisia monetary aggregates since sources of consumer credit, not limited to credit cards, are applicable to all consumption purchases and hence, do not violate the existence condition for an aggregator function. We report initial results with a broader Chinese Divisia monetary aggregate, including not only credit card services but also other broadly acceptable consumer loan services. Full article