John K.-H. Quah

 

         Department of Economics          

           Oxford University

           Manor Road, OX1 3UL

        


            Email: john.quah@economics.ox.ac.uk           Phone: 01865-281291 (Economics Department); 01865-274986 (St Hugh’s College)

            Department webpage                                        College Webpage                                 Brief Bio                                  

Office Hours                                                     Slides for Lectures

            Research interests:       monotone comparative statics, statistical decision theory, informativeness, supermodular games

                                                consumer theory, demand aggregation, general equilibrium theory

revealed preference tests

environmental economics  

           

      Published (or soon-to-be published) Papers

·         Revealed preference tests of the Cournot model (with Andres Carvajal, Rahul Deb, and James Fenske).  Forthcoming article in Econometrica. 

There is also working paper with other results.

We consider an observer who makes a finite number of observations of an industry producing a homogeneous good, where each observation consists of the market price and firm specific production quantities.  We develop a revealed preference test (in the form of a linear program) for the hypothesis that the firms are playing a Cournot game, assuming that they have convex cost functions that do not change and the observations are generated by the demand function varying across observations.

·         Emissions trading with profit-neutral permit allocations (with Cameron Hepburn and Robert Ritz), Journal of Public Economics, Vol. 98, 85--99 (2013).

We examine the impact of an emissions trading scheme (ETS) on equilibrium emissions, output, price, market concentration, and profits in a generalized Cournot model. We develop formulae for the number of emissions permits that have to be freely allocated to firms to neutralize the profit impact of the ETS. We show that its profit impact is usually limited: in a Cournot oligopoly with constant marginal costs, total industry profits are preserved so long as freely allocated permits cover a fraction of initial emissions that does not exceed the industry's Herfindahl index.

·         Revealed Preference in a Discrete Consumption Space (with Matthew Polisson), American Economic Journal: Microeconomics, Vol. 5(1), 28-34 (2013).

We show that an agent maximizing some utility function on a discrete (as opposed to continuous) consumption space will obey the generalized axiom of revealed preference (GARP) so long as the agent obeys cost efficiency. Cost efficiency will hold if there is some good, outside the set of goods being studied by the modeller that can be consumed by the agent in continuous quantities. An application of Afriat's Theorem then guarantees that there is a strictly increasing utility function on the discrete consumption space that rationalizes price and demand observations in that space.

·         Aggregating the single crossing property (with Bruno Strulovici).  Econometrica, Vol. 80 (5), 2333-2348 (2012)

The single crossing property plays a crucial role in economic theory, yet there are important instances where the property cannot be directly assumed or easily derived. Difficulties often arise because the property cannot be aggregated: the sum or convex combination of two functions with the single crossing property need not have that property. We introduce a new condition characterizing when the single crossing property is stable under aggregation and also identify sufficient conditions for the preservation of the single crossing property under multidimensional aggregation.  We use our results to establish properties of objective functions (convexity, log-supermodularity), the monotonicity of optimal decisions under uncertainty, and the existence of monotone equilibria in Bayesian-games.

Seminar slides for this paper are available. 

·         Comparative Statics, Informativeness, and the Interval Dominance Order (with Bruno Strulovici), Econometrica, Vol. 77 (6), 1949-1992 (2009).

This paper identifies a new way to order functions, called the interval dominance order, that generalizes both the single crossing property and a standard condition used in statistical decision theory. This allows us to provide a unified treatment of the major theorems on monotone comparative statics with and without uncertainty, the comparison of signal informativeness, and a non-Bayesian theorem on the completeness of increasing decision rules. We illustrate the concept and results with various applications, including an application to optimal stopping time problems where the single crossing property is typically violated. 

Seminar slides and also slides on background material are available.  Additional related material is found in Comparative Statics with the Interval Dominance Order: Some Extensions (incomplete notes dated 9 December 2007; fuller version to be posted at a later date).   

·         The existence of equilibrium when excess demand obeys the weak axiom, Journal of Mathematical Economics, Vol. 44(3-4), 337-343 (2008)

 

This paper gives an elementary and instructive proof of equilibrium existence when the excess demand correspondence obeys the weak axiom of revealed preference.

 

·         The comparative statics of constrained optimization problems, Econometrica, Vol. 75, No. 2, 401-431 (2007)    

 

This paper extends of the methods of monotone comparative statics to deal with commonly-encountered comparative statics problems involving changes to constrain sets.  

See also  Additional notes on the comparative statics of constrained optimization problems, Working Paper, Nuffield College, Oxford, No. 2006-W09.   

 

·         A contribution to duality theory, applied to the measurement of risk aversion, (with Juan Enrique Martinez-Legaz) Economic Theory, Vol. 30, No. 2, 337-362 (2007)

 

We examine the precise connection between the curvature properties of an objective function and the ray-curvature properties of its dual. When the objective function is interpreted as a Bernoulli or cardinal utility function, our results characterize the relationship between an agent’s attitude towards income risks and her attitude towards risks in the underlying consumption space.

 

·         Weak Axiomatic Demand Theory, Economic Theory, Vol. 29, No. 3, 677-699 (2006) 

 

This paper identifies a class of complete but not necessarily transitive preferences which generate demand functions that obey the weak axiom of revealed preference and within which any function obeying the weak axiom can be rationalized. 

 

·         Homothetic or Cobb-Douglas behavior through aggregation,  Contributions to Theoretical Economics, Vol. 3, No. 1, Article 8 (2003)(with Gael Giraud)

We show how consumers' (heterogeneous) preferences in a market could be distributed in such a way that aggregate market demand takes on exact homothetic or Cobb-Douglas properties.

·         Market demand and comparative statics when goods are normal, Journal of Mathematical Economics, Vol.39, 317-333 (2003)

 

This paper gives a thorough exploration of the consequences arising from normal goods on market demand and on comparative statics in exchange, production and financial economies (the last with incomplete markets).

 

·         The law of demand and risk aversion, Econometrica, Vol. 71, 713-721 (2003)

 

I show that the law of demand can be characterized by a modified version of the Milleron-Mitjuschin-Polterovich condition.  The condition could be interpreted as a measure of differences in risk aversion when an agent encounters different lotteries over commodity bundles in commodity space.

·         The monotonicity of individual and market demand, Econometrica Vol. 68, No.4 (July 2000), 911-930

Early version:  The Monotonicity of Individual and Market Demand, Working Paper, Nuffield College, Oxford, No. 127, 1997.

In this paper, I study the law of demand in a market where the income distribution is independent of price.   I show that the law of demand  for market demand (market monotonicity) can arise through a range of conditions between two extremes known to guarantee market  monotonicity:  the  Milleron-Mitjuschin-Polterovich conditions on individual preferences and the Hildenbrand conditions on the income distribution.  

·         The law of demand when income is price dependent, Econometrica, Vol. 65, (November, 1997) 1421-1442

Early version:  Homothetic Preferences, Homothetic Transformation, and the Law of Demand in Exchange Economies,  Working Paper No. 93-210, Department of Economics, UC Berkeley.

I use a weaker form of the demand heterogeneity assumption employed by Grandmont (1992)  to guarantee the uniqueness and stability of the equilibrium price in exchange and production economies. 

            Survey

·         Law of Demand (with Michael Jerison). The New Palgrave Dictionary of Economics, Second Edition (2008).  There is also a working paper of this entry. 

Recent working papers  

·         Discounting and Patience in Optimal Stopping and Control Problems (with Bruno Strulovici), Discussion Paper 1480, Northwestern University, Center for Mathematical Studies in Economics and Management Science (2009).  Revise and resubmit, Journal of Political Economy.

·         A revealed preference test for weakly separable preferences, Working Paper, Department of Economics, Oxford, No. 601 (2012). 

·         Revealed preference tests of the Cournot model (with Andres Carvajal, Rahul Deb, and James Fenske), Working Paper, Department of Economics, Oxford, No.  506 (2010).   

·         Revealed Preference in a Discrete Consumption Space (with Matthew Polisson), IFS Working Papers, W12/03, Institute for Fiscal Studies (2012).

·         Aggregating the single crossing property: theory and applications to comparative statics and Bayesian games (with Bruno Strulovici), Working Paper, Department of Economics, Oxford, No. 493 (2010).

This paper contains some material on equilibrium existence in first price auctions that is not found in Aggregating the single crossing property (published in Econometrica).   A separate paper on equilibrium existence in first price auctions is being prepared (with Bruno Strulovici). 

Selected older working papers

·         A Nonparametric Analysis of the Cournot Model   (with Andres Carvajal), Working Paper, Nuffield College, Oxford, No. 2009-W15. 

·         The aggregate weak axiom in a financial economy through dominant substitution effects, Working Paper, Nuffield College, Oxford, No.2004-W18

·         The existence of equilibrium when excess demand obeys the weak axiom, Working Paper, Nuffield College, Oxford, No.2004-W7.  

·         The existence of perfect price indices in a market with heterogeneous agent 

·         Comparative statics and welfare theorems when goods are normal, Working Paper, Nuffield College, Oxford, No. 2001-W24.
Contains welfare theorems not published in Market demand and comparative statics when goods are normal, Journal of Mathematical Economics, Vol.39, 317-333 (2003).

·         Demand is heterogeneous in Grandmont's model, Working Paper, Nuffield College, Oxford, No. 2001-W12.

·         Comparative statics of the weak axiom, Working Paper, Nuffield College, Oxford, No. 2001-W3.  

·         The weak axiom and comparative statics, Working Paper, Nuffield College, Oxford, No. 1999-W15.