Louis De Mesnard

University of Burgundy | UB · CREGO EA 7317 and IAE Dijon

Universities looking to recruit or to rank researchers have to attribute credit scores to their academic publications. While they could use indexes, there remains the difficulty of coauthored papers. It is unfair to count an n-authored paper as one paper for each coauthor, i.e., as n papers added to the total: this is “feeding the multitude”. Shari...

The input-output model has been recognized as one of the most important economic models in the history of economic thought for its many practical applications. We focus here on the “price models” that allows to derive the prices of goods by considering both Leontief and Ghosh models. These models, which is part of the long tradition of the Classics...

Les données relatives à la pandémie de coronavirus COVID-19, par régions, sont généralement présentées en valeurs absolues des cas confirmés et des décès. Nous montrons que le tableau est différent lorsque les données par région sont prises par habitant, au lieu des valeurs absolues. Ainsi, si la région Grand Est avait bien été identifiée comme cel...

In input-output analysis, the Leontief and Ghosh models can be used to determine the price indexes of goods, which is convenient for analyzing inter-industry inflation. Their respective merits are debated, but both provide the same solution. We demonstrate that, contrary to common belief, it is superfluous to use the Leontief or Ghosh model to calc...

We examine the rule of Ibn Ezra – Rabad historically used to solve the “Rights Arbitration” problem when the greatest claim is equal to the endowment. For the extended Ibn Ezra problem, i.e., when the greatest claim is less than the endowment, we propose a typology of the rules used to solve the problem according to their recursive nature: (i) non-...

We introduce polluting emissions in a sequential noncooperative oligopoly model of bilateral exchange. In one sector a leader and a follower use polluting technologies which create negative externalities on the payoffs of strategic traders who belong to the other sector. By modeling emissions as a negative externality, we show that the leader pollu...

We study to what extent some functional form assumption on the Lorenz curve are amenable to calculating headcount poverty, or poverty threshold, the key concept to determine a poverty index. The difficulties in calculating it have been underestimated. We must choose some functional forms for the Lorenz concentration curve. We examine three families...

In contrast to the new theories of the firm, we return to the shareholder value model. By using optimization theory, we examine how shareholders' differentiated behavior influence corporate behavior. Strategic shareholders —characterized by thinking in terms of control ratio— maximize their residual income, which encourages firms to maximize their...

In this paper we investigate the effectiveness and the welfare implications of various fiscal policies in strategic bilateral trade. To this end, we reconsider the class of bilateral oligopoly models with taxation implemented in Gabszewicz and Grazzini (1999, 2001). Assuming the preferences of traders are represented by CES utility functions with n...

Closing" input-output models, i.e., taking into account the fact that households spend the income they receive from the productive sectors, is an important issue for the development of realistic macroeconomic models. Classical Type II multipliers fail to do that. This is why we consider here what we term the Leontief-Keynes (LK) model by introducin...

Beyond carbon tax and cap-and-trade, companies can internalize their carbon emissions by maximizing the Carbon Value Added (CVA, profit minus value of carbon emissions). However, this implies that the carbon price is determined and not too low. Thus, we propose the Carbon Profitability (CP), the ratio of profit to amount of carbon released. CP has...

RAS (or biproportion) is a method that allows finding the fitted matrix which is the closest to an initial matrix Z but with the row and column totals of a target matrix. The fitted matrix is of the form PZQ, P and Q being diagonal matrices. This generalizes proportion of scalars and vectors to matrices. Holy and Safr propose the “Multidimensional...

En « distanciel », l'enseignant parle à son ordinateur et les examens sont biaisés. L'étudiant devient un zombie (un « zoombie ») et il n'aura que peu bénéficié de l’enseignement reçu à distance.

We address a classical issue related to the use of the Karush -Kuhn - Tucker approach traditionally used to handle the discontinuity caused by the production capacity, whether exogenous or endogenous. We therefore introduce a smoothed form of marginal cost function that gradually tends to infinity as it approaches the production capacity. This is m...

The data about the COVID-19 coronavirus pandemic, per country, are generally presented in absolute values of confirmed cases and deaths. We show how the picture is different when the data per country are taken on a per-capita basis instead of absolute values. If we consider data per-capita, actually per million inhabitants, the situation of China i...

The Markov inequality is a classical nice result in statistics that serves to demonstrate other important results as the Chebyshev inequality and the weak law of large numbers, and that has useful applications in the real world, when the random variable is unspecied, to know an upper bound for the probability that an variable diers from its expecta...

Ibn Ezra (ibn Ezra 1146; Rabinovitch 1973; O'Neill 1982) proposed a method for solving the “rights arbitration problem” (one of the historical problems of “bankruptcy”) for n claimants when the estate E is equal to the largest claim. However, when the greatest claim is for less than the estate, the question of what to do with the difference between...

We reexamine the very foundations of the Leontief and Ghosh input-output price models, by producing a unied approach and correcting the way index prices are introduced, by derivation of the solution of the physical Leontief price model (de Mesnard 2009, 2016). By starting from the accounting balances, we show that deriving the Leontief price model...

Moving to a conceptual level, we compare through theory EVA and ROE as financial strategic goals. We show that corporations owned by strategic shareholders (who think in terms of control ratio) should maximize EVA; those owned by financial shareholders (who think in terms of portfolios, such as pension funds) should maximize ROE, as should those ow...

Unit margin, profit margin ratio or markup are well known marketing metrics (Farris et al. 2010). Managers often declare that they want to make their company more profitable by increasing the unit margin, the profit margin ratio or the markup. There is some confusion in their language, the three metrics seeming equivalent to maximum income and turn...

The Handbook on Supply, Use and Input-Output Tables with Extensions and Applications is an update of the Handbook of National Accounting: Handbook of Input-Output Table Compilation and Analysis (United Nations, 1999) (available here https://unstats.un.org/unsd/publication/SeriesF/SeriesF_74E.pdf) to incorporate the changes in the international stan...

We address two problems of traditional cost functions: (i) the discontinuity caused by the production capacity (the marginal cost suddenly becomes infinite when production capacity is reached) and (ii) the artificially exogenous character of the production capacity. So, we introduce a smoothed form of marginal cost function that tends progressively...

EVA® (Economic Value Added) and ROE (Return On Equity) are not only financial metrics that help companies to build their strategy but they are primarily strategic concepts that condition companies' strategy. By using microeconomics and moving to a conceptual level, we compare maximizing ROE and maximizing EVA. We prove that a ROE-maximizing company...

We examine three families of classical one-parameter functional forms for estimating a Lorenz curve: the power form (Pareto and elementary power form), the exponential form (Gupta and elementary exponential form) and one fractional form (Rohde). For the first time, we systematically study these functions, not for their ability to be estimated, but...

See the new version: "EVA/SVA/MVA vs. ROEas strategic corporate goals. A microeconomic approach"

Considering households in inter-industry models is an important issue for building realistic macroeconomic models. This is why we examine three attempts to close the Leontief input-output model, the classical approach (Type I and Type II multipliers), ten Raa model, and Klein model. Then we propose the “Leontief-Keynes model” by introducing a true...

The Leontief model actually uses two periods, base and current periods. The model is solved with current price indexes and the base technical coefficients. The corresponding physical model is monoperiodic: it is solved with the current prices and the current coefficients. The Leontief model is not coherent—both models diverge generally—unless the i...

We examine the Talmudic three wives problem, which is a generalization of the Talmudic contested garment problem solved by Aumann and Maschler (1985) using coalitional procedure. This problem has many practical applications. In an attempt to unify all Talmudic methods, Guiasu (2010, 2011) asserts that it can be explained in terms of “run-to-the-ban...

It is unfair to count a n-authored paper as one paper for each coauthor, i.e., as n papers: this is “feeding the multitude”. Sharing the credit among coauthors by percentages or by simply dividing by n is fairer but somewhat harsh. So, we propose to take into account the productivity gains of parallelization by introducing a team bonus function tha...

We discuss the mathematical difficulties encountered in Patinkin’s classical cartel model. It may be impossible to derive Patinkin's cartel by finding the reciprocal marginal cost functions: it could be impossible for cartel members to compute a solution, unless certain assumptions are made to simplify the problem, such as quasi-linear marginal cos...

In this paper, by using the game theory toolbox, we demonstrate that relative proportional compensation is better than other types of compensation, mainly maximin and equal compensation. By considering Phelps' curve, the best disagreement point (BATNA) and the gains of negotiation, we examine what a fair compensation should be. Beyond Rawls' maximi...

We discuss the mathematical difficulties encountered in Patinkin's classical cartel model. It may be impossible to derive Patinkin's cartel by finding the reciprocal marginal cost functions: it could be impossible for cartel members to compute a solution, unless certain assumptions are made to simplify the problem, such as quasi-linear marginal cos...

We study five operational objectives for the firm: three marketing objectives (maximizing profit-margin ratio, maximizing markup, and maximizing profit-margin-per-unit), and two financial objective (maximizing economic profit (i.e., EVA) and maximizing profitability), as alternatives to the scholarly objective of maximizing profit. We prove that (i...

Pressure to change the academic reviewing system is growing. We discuss two groups of proposals for introducing market mechanisms. First, Prüfer and Zetland (2009), based on Havrilesky (1975), create an auction system: manuscripts are submitted and auctioned to editors in “academic dollars”, while citations earn credits for authors. Second, Fox and...

We examine ibn Ezra's procedure (Rabinovitch 1973; O'Neill 1982) historically used to solve the Rights Arbitration problem in the general framework of bankruptcy problems. When the greatest claim is larger than or equal to the estate, the procedure is a maximal game (Aumann 2010). However, when the greatest claim is smaller than the estate, the axi...

Using France as our main example, we show there is a much scope for improving the SCImago ranking. We detect problems of nomenclature, double affiliation, aggregation and of bias toward large public-funded research organizations. The examples we cite suggest that only detailed knowledge of the situation can help in addressing the issue and take us...

MFA (Minimal Flow Analysis) is a method of qualitative input-output analysis used for identifying national of regional industrial clusters. It is based on the analysis of layers (in an input-output model, flow matrices generated at each iteration toward equilibrium). We show through theory that all normalized layers (column-coefficient matrices com...

When evaluating the impact of pollution, measurements from remote stations are often weighted by the inverse of distance raised to some nonnegative power (IDW). This is derived from Shepard's method of spatial interpolation (1968). The paper discusses the arbitrary character of the exponent of distance and the problem of monitoring stations that ar...

When evaluating poverty, the relative poverty line may be taken as a percentage of either normalized median or normalized mean income. It is proved that, for any family of non-intersecting Lorenz curves, when the poverty line is set relative to the normalized median income, reducing poverty become less costly in proportion to the total income when...

After defining biproportion (or RAS) rigorously, we recall two fundamental theorems: unicity of biproportion (any biproportional algorithm leads to the same solution than biproportion, which turns biproportion into a mathematical tool as indisputable than proportion), ineffectiveness of separability (premultiplying or post multiplying the initial m...

To foster competition the French government authorized a fourth operator, ‘Free', to enter the country's mobile phone market at the end of 2009 alongside Orange, SFR and Bouygues Telecom (BT), who held respectively one-half, one-third and one-sixth of the market. By using a stylized model of France's phone market, we have examined what we call the...

We discuss each of the recommendations made by Hochberg et al. (2009) to prevent the “tragedy of the reviewer commons”. Having journals share a common database of reviewers would be to recreate a bureaucratic organization, where extra-scientific considerations prevailed. Pre-reviewing of papers by colleagues is a widespread practice but raises prob...

France Telecom (FT), SFR and Bouygues Telecom (BT) have been fined by France's Conseil de la Concurrence (CC) for organizing a mobile phone cartel with stable market shares (one-half, one-third and one-sixth, respectively) and for directly exchanging commercial information. While not contesting the legal decision, it is argued here that the economi...

Following on from de Mesnard’s (2009) radical criticism of the Ghosh supply-driven model, this paper draws the dramatic consequences for the widespread use of forward linkages in input-output analysis applied to regional science: the practice must be abandoned. The arguments are based on three points: (i) it is impossible simultaneously to choose t...

The overall value of the Ghosh model is appraised. Its treatment of quantities and prices is scrutinized by examining the variant with data in quantities and prices, and the variant with data in value and price indexes. The methodology involves returning to the accounting equations and shows that: (i) the Ghosh model offers solutions of limited int...

In the Supply-Use (or Make-Use) input–output models, “product-technology” (PT) or “fixed-industry-sales-structure” (FISS) assumptions are more widely adopted (SNA, Eurostat) for deriving symmetric input–output tables (SIOT) than “industry-technology” or “fixed-product-sales-structure” assumptions, but generate negatives in the SIOT. A SIOT deduced...

This paper returns to de Mesnard's paper of 2000, which has exposed the so-called method of bicausative matrices. This method was created to analyze the structural change between two matrices, as an improvement of the causative method of Jackson and al. (1990). In its 2000 paper, de Mesnard has shown that chaos affects the bicausative method: two s...

The French government plans to authorize a fourth operator to enter the country’s mobile phone market alongside Orange, SFR and Bouygues Telecom. While the French government sees this as a way to foster competition, this paper predicts the move will prove a disappointment. Three points are examined. 1) If the operators are in four-way Cournot compe...

First, a typology of ownership is considered: shareholders may engage in strategic (control-oriented), financial (portfolio-oriented), or sleeping-partner behavior. Corporations owned by strategic shareholders maximize their EVA; those owned by financial shareholders maximize their ROE, as do those with sleeping-partner shareholders but such shareh...

The Talmud Division is a very old method of sharing developed by the rabbis in the Talmud and brought to the fore in the modern area some authors, among them are Aumann and Maschler. One compares the Talmud Division to other methods, mainly here the most popular, Aristotle’s Proportional Division, but also to the equal division. The Talmud Division...

The Supply-Use input-output model of the SNA and Eurostat is examined. For the product-by-product IO tables, two hypothesis are possible: “product technology”, largely adopted (Eurostat A) and examined here, and “industry technology” (Eurostat B). One examines the calculability of the model. Negatives are an issue; (i) they are systematical in the...

The input-ouput model remains the basis of most SAM or CGE models. It actually uses two periods: the prices indexes solve it with the current period coefficients; the corresponding physical model is monoperiodic: the current prices solve it with the base period coefficients. The Leontief model is not consistent --- both models diverge generally ---...

We examine the consistency of the Ghosh supply-driven input-output model (SM) by respect to the traditional Leontief demand-driven input-output model (LM); the variants considered are: primal and dual, quantity and value; input prices are not considered. SM offers solutions of limited interest, being incapable to separate quantities and prices or v...

This paper is a reply to Oosterhaven's reply of the paper A critical comment on Oosterhaven-Stelder net multipliers written by de Mesnard in this issue of The Annals of Regional Science. It is argued that, unlike Oosterhaven's statement, (1) any coefficient must be stable but Oosterhaven-Stelder final demand ratio is not; (2) the output must be exo...

Recently, Oosterhaven and Stelder (OS, 2002) have introduced the operational idea of a 'compensated net multiplier' (CNM) to take into account the double counting that occurs when output replaces final demand as an exogenous entry when the Leontief model is used to evaluate operationally the impact of large investments. Each output gross multiplier...

This paper is a reply to Oosterhaven’s reply of the paper “A critical comment on Oosterhaven–Stelder net multipliers” written by de Mesnard in this issue of The Annals of Regional Science. It is argued that, unlike Oosterhaven’s statement, (1) any coefficient must be stable but Oosterhaven–Stelder final demand ratio is not; (2) the output must be e...

When evaluating poverty, the relative poverty line may be considered as a percentage of the median income or it may be a percentage of the average income. It is proved that, with a poverty line relative to the median income, reducing poverty may become less costly in proportion to the total income as poverty increases (measured by the Sen, the Sen-...

An example in Miernyk (1977) presented a rather counterintuitive result, namely, that introducing accurate exogenous information into an RAS matrix estimating procedure could lead to an estimate that was worse than one generated by RAS using no exogenous information at all. This became an oft-cited black mark against RAS. Miller and Blair (1985) in...

This research note demonstrates the advantage of biproportional projection over the ordinary (proportional) method of technical coefficients in input-output analysis: the former is insensitive to price changes, the latter is not so. Consequently, structural change can generally be measured using the biproportional filter on tables in current prices...

Biproportional methods project a matrix A to give it the column and row sums of another matrix; the result is R A S, where R and S are diagonal matrices. As R and S are not identified, one must normalize them, even after computing, that is, ex post. This article starts from the idea developed in de Mesnard (2002) – any normalization amounts to put...

This paper introduces the rest of this issue of Economic Systems Research, which is dedicated to the contributions of Sir Richard Stone, Michael Bacharach, and Philip Israilevich. It starts out with a brief history of biproportional techniques and related matrix balancing algorithms. We then discuss the RAS algorithm developed by Sir Richard Stone...

Analysts often are interested in learning how much an exchange system has changed over time or how two different exchange systems differ. Identifying structural difference in exchange matrices can be performed using either 'directed' or 'undirected' methods. Directed methods are based on the computation and comparison of column- or row-normalizatio...

The Make-Use Model serves as a basis for most national accounting systems as the System of National Accounts (SNA) and is acknowledged as the most suitable model for interregional analysis. Two hypotheses are traditionally made featuring either industry-based technologies (IBT) or commodity-based technologies (CBT). While industry-based technologie...

The principle of matrix adjustment methods consists into finding what is the matrix which is the closest to an initial matrix but with respect of the column and row sum totals of a second matrix. In order to help deciding which matrix-adjustment method is the better, the article returns to the simpler problem of vector adjustment then back to matri...

Net multipliers, as introduced by Oosterhaven and Stelder (2002) accept outputs as entries instead of final demand. They are found by multiplying ordinary multipliers by the final demand ratio over the sector’s output. This pragmatic solution suffers from ratio instability over time. The alternative net multipliers proposed here are based on the in...

In input-output analysis there are two alternate possibilities between Leontief's mechanism (fixed technical coefficients) and Ghosh's mechanism (fixed allocation coefficients). Testing the long-term consistency of these mechanisms entails comparing input-output matrices over time. This paper challenges the value of proportional filters (separate c...

The method of forecast output coincidence used to determine if sectors are demand-sided or supply-sided in an input-output framework mixes two effects, the structural effect (choosing between demand and supply side models) and the effect of an exogenous factor (final demand or added-value). The note recalls that another method is possible, the comp...

Net multipliers, as introduced by Oosterhaven and Stelder (2002) accept outputs as entries instead of final demand. They are found by multiplying ordinary multipliers by the final demand ratio over the sector's output. This pragmatic solution suffers from ratio instability over time. The alternative net multipliers proposed here are based on the in...

Biproportional methods are used to update matrices: the projection of a matrix Z to give it the column and row sums of another matrix is R Z S, where R and S are diagonal and secure the constraints of the problem (R and S have no signification at all because they are not identified). However, normalizing R or S generates important mathematical diff...

This paper examines the consistency the Ghosh supply-driven model (SM), stressing on the question of the treatment of quantities and prices. The complete typology of all supply-driven models is examined, exploring two versions: in each one again two sub-versions are considered, one with physical data and prices, the other with value data and index...

The Ghosh model assumes that, in an input-output framework, each commodity is sold to each sector in fixed proportions. This model is strongly criticized because it seems implausible in the traditional input-output field. To answer to these critics, Dietzenbacher stresses that it can be reinterpreted as a price model: the Leontief price model is eq...

The causative-matrix method to analyze temporal change assumes that a matrix transforms one Markovian transition matrix into another by a left multiplication of the first matrix; the method is demand-driven when applied to input-output economics. An extension is presented without assuming the demand-driven or supply-driven hypothesis. Starting from...