Browsing by Author "Li, Shuhe"

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    Competitive Matching Equilibrium and Multiple Principal-Agent Models
    (Center for Economic Research, Department of Economics, University of Minnesota, 1993-01) Li, Shuhe
    This paper studies one-to-one two-sided matchings with externalities and explores its application to multiple principal-agent models with principal-agent assignment being endogenously determined. Each individual has to make two strategic decisions: to choose a partner and to sign a contract with his partner. Each individual may care about not only to whom he matches and what contract he signs but also other people's matchings and contracts, that is, there may exist externalities. Equilibrium is defined inductively. A blocking pair takes all the equilibria in the residual market into account. To reflect the asymmetric distribution of power between principals and agents, the concept principal-equilibrium is introduced, which refines the equilibrium. I show that under certain conditions (i) there always exists a Pareto optimal equilibrium, (ii) there always exists a Pareto optimal principal-equilibrium and (iii) the set of equilibria coincides with the core. In general, the set of equilibria could be empty and an equilibrium could be non-Pareto optimal. This paper provides a unified framework for one-to-one two-sided matching models such as job matchings, housing markets, auctions and marriages. A generalization of this framework to a social partitioning game is provided.
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    Transition with Growth: The Chinese Experience in the World Economy
    (Center for Economic Research, Department of Economics, University of Minnesota, 1994-01) Gong, Changzhen; Li, Shuhe
    This paper analyzes the Chinese experience of gradual transition with rapid growth (1978-1993) in the world economy. The rapid growth is decomposed into four sources: population/labor-led growth, privatization-led growth, industrialization-led growth and trade/leader-led growth. The growth of China's economy in the 1990s would be at least as fast as in the 1980s, provided there were no political/military turmoil. These results are based on the combination of historical, statistical and theoretical approaches, and on our theoretical analyses of the relationships among transition, industrialization, growth and development. We present stylized facts on transition and growth, and construct conceptual frameworks to match these facts. In particular, we show that a gradualism (big bang) transition may result in growth and inflation (depression and hyperinflation), and a follower with sufficient (insufficient) social capability would catch up to (fall behind) the leader.
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    Transportation Cost and Industrial Structure: A Test with China's Cross-Regional Data
    (Center for Economic Research, Department of Economics, University of Minnesota, 1994-07) Feng, Qi; Gong, Changzhen; Li, Shuhe
    China's cross-regional data are used to test a spatial model in which some relationships among transportation costs, the number of firms, fixed capital investment, and institutional arrangements arise endogenously. We show that the number of firms is positively related to transportation costs, and inversely related to firm's average fixed capital investment. Market mechanism generates more firms than planned mechanism does.
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    A Unified Framework for Implementation, the Revelation Principle, and Optimal Approximation
    (Center for Economic Research, Department of Economics, University of Minnesota, 1993-01) Li, Shuhe
    This paper attempts to provide a unified framework for implementation to capture both private information (hidden type) and private action (hidden action) aspects. (We generalize the Mount-Reiter triangle to a "square".) In addition, it takes a different approach to study mechanism design. Given a goal, rather than dealing with full and/or weakly implementation, we search an optimal mechanism in the sense that it best approximates the given goal among all the conceivable mechanisms. We extend privacy-preserving and the revelation principle to this more general setting. Based on the discussion of the properties of the space of incentive compatible mechanisms, the existence of an optimal incentive compatible mechanism is investigated. Stochastic mechanisms are also examined.