The chapters in this thesis are each concerned with problems of coordination. The coordination issues examined here each arise in distinct situations and imply the need for a
different modeling approach in each case. The first case, Chapter 2, considers gender
discrimination in contemporary, competitive labour markets. It is sh9wn there that such
discrimination can arise as an outcome of maximizing activities on the part of firms facing
the problem of worker motivation in the light of imperfect monitorability. This is shown to
lead to firms’ hiring practices (in particular discrimination) depending on the practices of
other firms and consequently to labour market equilibria of discrimination and of non
discrimination. It is shown that a policy of affirmative action can be useful in moving the
labour market away from the discrimination equilibrium. The next chapter, Chapter 3,
considers an avenue by which the structure of industries in an economy can affect the
development of new technologies through its general equilibrium impact on profits relative to
wages. It shows that a monopolistic structure in one industry, by increasing the share of
profits in aggregate income, tends to increase the relative profitability of innovative activities
elsewhere thereby leading to the creation of further monopoly rents which, in turn, feeds
back into incentives for innovation thus causing a self-perpetuating cycle. This leads to the
possibility of an economy exhibiting multiple steady states including a “Poverty trap” or
situation of zero growth. The conditions under which multiple steady states exist are
analyzed and the economy’s behaviour out of the steady state is also characterized. The role
of government intervention, in the form of subsidies, direct provision of research and patent
protection is also examined. Finally it is shown that the model can also explain the existence
of clustering of innovations and consequent sporadic growth. The final substantive chapter,
Chapter 4, centres on problems of investment coordination in the context of LDCs. These
arise when the fall in the price of one good raises the demand for complementary goods,
thereby implying that investment decisions leading to such price falls may not be privately undertaken whereas, when coordinated across sectors, such investments could be profitable.
This chapter shows that the existence of multiple equilibria hinges upon the more restrictive
Definition of complementarity between goods, namely, the Hicks definition. As a result, gross
complementarity between goods (on its own), even though causing horizontal externalities,
can not lead to the existence of multiple equilibria. A later section looks at gross
complements in the presence of knowledge spillovers and shows, in contrast, that this can
lead to multiple equilibria and coordination problems. The chapter also examines the social
optimality of coordination in the Hicks complements case, showing that it is not always
implied by the multiplicity of equilbria. / Arts, Faculty of / Vancouver School of Economics / Graduate
| Identifer | oai:union.ndltd.org:UBC/oai:circle.library.ubc.ca:2429/8702 |
| Date | 11 1900 |
| Creators | François, Patrick |
| Source Sets | University of British Columbia |
| Language | English |
| Detected Language | English |
| Type | Text, Thesis/Dissertation |
| Format | 3195202 bytes, application/pdf |
| Rights | For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use. |
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