Imperfect Competition and Costly Screening in the Credit Market under Conditions of Asymmetric Information

This article provides an analysis of how banks determine levels of information production when they are in imperfect competition and there is a condition of information asymmetry between borrowers and banks. Specifically, the study concentrates on information production activities of banks in duopoly where they simultaneously determine intensity of pre-loan screening as well as interest rates. The preliminary model of this paper illustrates that due to strategic complementarities between banks, banking competition can result in inferior equilibrium out of multiple equilibria and insufficient information production. Policymakers must take into account the possible adverse effects of competition-enhancing policies on information production activities.

Pro-poor growth or poverty trap? : estimating intergenerational income mobility in rural Philippines

Using an intergenerational database covering nearly a quarter of a century, we explored the degree of intergenerational income mobility among individuals who had grown up in rural Central Luzon, the Philippines. We found that the intergenerational income elasticity is significantly lower than unity, at roughly 0.23, indicating that the average income growth rate is higher for children born to poorer families. The detailed analysis, however, revealed that its magnitude significantly varies across percentiles in a U-shape. The results provide supporting evidence of multiple equilibria or poverty trap.

Agglomeration and directional imbalance of freight rates : the role of density economies in the transport sector

This paper examines the conventional assumption that bilateral transport costs are symmetric. We develop an economic geography model with transport sector in which asymmetric freight rates can occur as a result of density economies. Comparing this to models without density economies, we show that agglomeration of economic activities is more likely to emerge and that multiple equilibria can emerge for some parameters. Then we show the change in its bifurcation and stability of equilibrium and conclude that economies of density in transport flows can act as an agglomeration force.