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Full-Text Articles in Business
The Alliance Formation Puzzle And Capacity Constraints, Kai A. Konrad, Dan Kovenock
The Alliance Formation Puzzle And Capacity Constraints, Kai A. Konrad, Dan Kovenock
Economics Faculty Articles and Research
The formation of an alliance in conflict situations is known to suffer from a collective action problem and from the potential of internal conflict. We show that budget constraints of an intermediate size can overcome this strong disadvantage and explain the formation of alliances.
Competition For Fdi With Vintage Investment And Agglomeration Advantages, Kai A. Konrad, Dan Kovenock
Competition For Fdi With Vintage Investment And Agglomeration Advantages, Kai A. Konrad, Dan Kovenock
Economics Faculty Articles and Research
Countries compete for new FDI investment, whereas stocks of FDI generate agglomeration benefits and are potentially subject to extortionary taxation. We study the interaction between these aspects in a simple vintage capital framework with discrete time and an infinite horizon, focussing on Markov perfect equilibrium. We show that the equilibrium taxation destabilizes agglomeration advantages. The agglomeration advantage is valuable, but is exploited in the short run. The tax revenue in the equilibrium is substantial, and higher on “old” FDI than on “new” FDI, even though countries are not allowed to use discriminatory taxation. If countries can provide fiscal incentives for …
Price Dispersion With Directed Search, Gabriele Camera, Cemil Selcuk
Price Dispersion With Directed Search, Gabriele Camera, Cemil Selcuk
Economics Faculty Articles and Research
We present a model that generates empirically plausible price distributions in directed search equilibrium. There are many identical buyers and many identical capacity-constrained sellers who post prices. These prices can be renegotiated to some degree and the outcome depends on the number of buyers who want to purchase the good. In equilibrium all sellers post the same price, demand is randomly distributed, and there is sale price dispersion. Prices and distributions depend on market tightness and on the properties of renegotiation outcomes. In a labor market context, the model generates a strong empirical prediction. If workers can renegotiate the posted …
Social Insurance, Commitment, And The Origin Of Law: Interest Bans In Early Christianity, Jared Rubin
Social Insurance, Commitment, And The Origin Of Law: Interest Bans In Early Christianity, Jared Rubin
Economics Faculty Articles and Research
Despite the historical importance of ideology-based, economically inhibitive laws, we know little about the economic factors underlying their origin. This paper accounts for the historical emergence of one such law: the Christian ban on taking interest--a doctrine that shaped the evolution of numerous financial contracts and related organizational forms. A game-theoretic analysis and historical evidence suggest that the Church's commitment to providing social insurance for its poorest constituents encouraged risky borrowing, which the Church attempted to limit by banning interest. The analysis highlights the applicability of the rational choice framework to seemingly irrational actions and laws, the role of nonmonetary …