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1. Optimization of national grain imports to balance risk and return: a portfolio theory approach

   https://doi.org/10.1088/2976-601X/ad22d1  

   Karakoc, Deniz Berfin; Konar, Megan (February 2024, Environmental Research: Food Systems)

   Abstract Global grain trade plays a key role in food security. Many nations rely on imported grain to meet their dietary requirements. Grain imports may be at risk due to weather shocks, economic crises, or international conflicts. Countries aim to balance import risk with the expected return of their grain supplies. This research brings these dual objectives together in an innovative modern portfolio theory framework. Modern portfolio theory provides a set of concepts to formulate the trade-off between risk and expected return in national grain imports. Using Markowitz’s mean-variance optimization model, we identify opportunities to reduce risk in existing national grain import accounts, without increasing costs under realistic supply mass constraints of trade partners. Several major grain importers may be able to reduce risk in their grain imports without increasing cost, such as wheat imports in Egypt, maize imports in Vietnam, and rice imports in Saudi Arabia. However, some countries would indeed have to pay more to achieve more stable grain supplies, such as wheat imports in Turkey. This study provides a framework to quantify the different costs, benefits, and levels of risk in grain trade that can inform future research and decision-making. 

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2. Inventories, Integration, Productivity, and Welfare

   https://doi.org/10.1257/pandp.20251088  

   Alessandria, George; Khan, Shafaat Yar; Khederlarian, Armen (May 2025, AEA Papers and Proceedings)

   We augment a heterogeneous firm trade model with rich logistic frictions--order costs and delivery times--that differ by source and tariffs to evaluate how trade influences the aggregate economy. These frictions lead importers to order larger amounts less frequently, resulting in an importer inventory premium. As trade barriers fall, firms import more frequently, leading to lower inventories and more efficient distribution, releasing resources for consumption. With inventories, the gains from trade are larger. However, these long-run differences are small compared to the transition around a possible tariff increase, as firms stockpile in advance of a possible tariff increase. 

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3. On Multi-Dimensional Gains from Trade Maximization

   https://doi.org/10.1137/1.9781611976465.67  

   Cai, Y.; Goldner, K.; Ma, S.; Zhao, M. (January 2021, Proceedings of the 2021 ACM-SIAM Symposium on Discrete Algorithms (SODA))

   We study gains from trade in multi-dimensional two-sided markets. Specifically, we focus on a setting with n heterogeneous items, where each item is owned by a different seller i, and there is a constrained-additive buyer with feasibility constraint ℱ. Multi-dimensional settings in one-sided markets, e.g. where a seller owns multiple heterogeneous items but also is the mechanism designer, are well-understood. In addition, single-dimensional settings in two-sided markets, e.g. where a buyer and seller each seek or own a single item, are also well-understood. Multi-dimensional two-sided markets, however, encapsulate the major challenges of both lines of work: optimizing the sale of heterogeneous items, ensuring incentive-compatibility among both sides of the market, and enforcing budget balance. We present, to the best of our knowledge, the first worst-case approximation guarantee for gains from trade in a multi-dimensional two-sided market. Our first result provides an O(log(1/r))-approximation to the first-best gains from trade for a broad class of downward-closed feasibility constraints (such as matroid, matching, knapsack, or the intersection of these). Here r is the minimum probability over all items that a buyer's value for the item exceeds the seller's cost. Our second result removes the dependence on r and provides an unconditional O(log n)-approximation to the second-best gains from trade. We extend both results for a general constrained-additive buyer, losing another O(log n)-factor en-route. The first result is achieved using a fixed posted price mechanism, and the analysis involves a novel application of the prophet inequality or a new concentration inequality. Our second result follows from a stitching lemma that allows us to upper bound the second-best gains from trade by the first-best gains from trade from the “likely to trade” items (items with trade probability at least 1/n) and the optimal profit from selling the “unlikely to trade” items. We can obtain an O(log n)-approximation to the first term by invoking our O(log(1/r))-approximation on the “likely to trade” items. We introduce a generalization of the fixed posted price mechanism—seller adjusted posted price—to obtain an O(log n)-approximation to the optimal profit for the “unlikely to trade” items. Unlike fixed posted price mechanisms, not all seller adjusted posted price mechanisms are incentive compatible and budget balanced. We develop a new argument based on “allocation coupling” to show the seller adjusted posted price mechanism used in our approximation is indeed budget balanced and incentive-compatible. 

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4. Oligopolistic Price Leadership and Mergers: The United States Beer Industry

   https://doi.org/10.1257/aer.20190913  

   Miller, Nathan H.; Sheu, Gloria; Weinberg, Matthew C. (October 2021, American Economic Review)

   We study a repeated game of price leadership in which a firm proposes supermarkups over Bertrand prices to a coalition of rivals. Supermarkups and marginal costs are recoverable from data on prices and quantities using the model’s structure. In an application to the beer industry, we find that price leadership increases profit relative to Bertrand competition by 17 percent in fiscal years 2006 and 2007, and by 22 percent in 2010 and 2011, with the change mostly due to consolidation. We simulate two mergers, which relax binding incentive compatibility constraints and increase supermarkups. These coordinated effects arise even with efficiencies that offset price increases under Bertrand competition. (JEL G34, K21, L13, L14, L41, L66) 

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5. Monitoring Sustainability and Targeting Interventions: Indicators, Planetary Boundaries, Benefits and Costs

   https://doi.org/10.3390/su13063181  

   Randall, Alan (March 2021, Sustainability)

   null (Ed.)

   This article shows how sustainability indicators (SIs) which have proliferated, and downscaled planetary boundaries (DPBs) which have recently emerged, can be used to target remedial interventions. I offer an integrative analysis drawing upon the existing literature, challenging, clarifying, and amending it in some ways, and extending it with new insights. The exposition is couched in the example of pollution control, but the analysis also applies to resource management with only modest amendments. Key conclusions are summarized. (i) In a default case where damage is indifferent to location within the problem shed and transactions costs are trivial, minimizing abatement costs requires that all units face the same marginal price of emissions and can be implemented by price setting at the jurisdictional level or cap and trade in pollution reduction credits. Larger geographic scale tends to reduce the average cost of abatement, an argument for coordination at the problem-shed level. Deviations from the default policy may be appropriate for addressing large point sources and local hot spots where damage is concentrated. (ii) A framework winnowing the proliferation of SIs includes the following principles: for quantitative target setting, SIs should address sustainability in its long-term context; SIs should be measured in ratio scale, whereas ordinal-scale SIs are common; and SIs should be selected for their usefulness in mapping the relationships among emissions, ambient concentrations, and damage. (iii) Target setting requires science-based empirical relationships and social values to assess trade-offs between abatement and its opportunity costs and suggest upper limits on tolerable damage. (iv) PBs that address global public goods can usefully be downscaled to set abatement targets. The PBs are science based and, in their original form, propose replacing social values with imperatives: violating the PB will doom the planet, which is unacceptable given any plausible value system. Given that PB = ∑DPB over all jurisdictions, global trading of credits would minimize costs of honoring the PB. Trade among a willing subset of jurisdictions could minimize the costs of meeting its aggregate DPB. (v) In contrast to most SI approaches, a cost–benefit (CB) approach can deal with substitutability and complementarity among sustainability objectives and evaluate multi-component policies. Net benefits are maximized when the marginal cost of abatement equals the marginal benefit for all units in the problem shed. This can be attained by price setting at the jurisdictional level or trade in credits. (vi) A major advantage of the CB approach is its well-defined relationship to weak sustainability. However, its value measures over-weight the preferences of the well-off. Equity considerations suggest relief from strict CB criteria in the case of essentials such as human health and nutrition, and subsidization by rich countries of sustainability projects in low-income countries. 

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