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Articles 1 - 12 of 12
Full-Text Articles in Economics
Holdups, Standard Breach Remedies, And Optimal Investment, Aaron S. Edlin, Stefan J. Reichelstein
Holdups, Standard Breach Remedies, And Optimal Investment, Aaron S. Edlin, Stefan J. Reichelstein
Aaron Edlin
In bilateral trading problems, the parties may be hesitant to make relationship-specific investments without adequate contractual protection. We postulate that the parties can sign noncontingent contracts prior to investing, and can freely renegotiate them after information about the desirability of trade is revealed. We find that such contracts can induce one party to invest efficiently when courts impose either a breach remedy of specific performance or expectation damages. Moreover, specific performance can induce both parties to invest efficiently if a separability condition holds. Expectation damages, on the other hand, is poorly suited to solve bilateral investment problems.
Inflation Forecasts: How Good Are They?, Dean D. Croushore
Inflation Forecasts: How Good Are They?, Dean D. Croushore
Economics Faculty Publications
Forecasts of inflation affect decision-making in many segments of the economy. But in the early 1980s, economists found that forecasts in surveys taken over the past 20 years systematically underpredicted inflation. As a result, many economists stopped paying attention to forecasts. However, they may have abandoned them too quickly. In this article, Dean Croushore takes a closer look at survey forecasts and, after considering some relevant factors, concludes that inflation forecasts may not be as bad as you think.
Product Differentiation, Uncertainty And The Stability Of Collusion, Michael Raith
Product Differentiation, Uncertainty And The Stability Of Collusion, Michael Raith
Michael Raith
The conventional view that product heterogeneity limits the scope for collusion among oligopolists has been challenged in recent theoretical work. This paper provides an argument in support of the conventional view by emphasising the role of uncertainty. I introduce the idea that, with stochastic demand, an increase in the heterogeneity of products leads to a decrease in the correlation of the firms’ demand shocks. With imperfect monitoring, this makes collusion more difficult to sustain, as discriminating between random demand shocks and marginal deviations from the cartel strategy becomes more difficult. These effects are illustrated within a Hotelling-type duopoly model.
Spatial Retail Markets With Commuting Consumers, Michael Raith
Spatial Retail Markets With Commuting Consumers, Michael Raith
Michael Raith
In this paper we analyse a model of spatial competition with commuting consumers due to Claycombe (1991, International Journal of Industrial Organization 9, 303-313). We show that results different from Claycombe's are obtained if a rigorous game-theoretic analysis is applied to the model. Our results provide a theoretical basis for a later study carried out by Claycombe and Mahan (1993, International Journal of Industrial Organization 11,283-291) and lead to predictions which are in line with the empirical results of that later study. For small commuting distances (relative to the distance between firms), there exists a symmetric equilibrium in which the …
A General Model Of Information Sharing In Oligopoly, Michael Raith
A General Model Of Information Sharing In Oligopoly, Michael Raith
Michael Raith
Under which conditions do oligopolists have an incentive to share private information about a stochastic demand or stochastic costs? We present a general model which encompasses virtually all models of the existing literature on information sharing as special cases. Within this unifying framework we show that in contrast to the apparent inconclusiveness of previous results some simple principles determining the incentives to share information can be obtained. Existing results are generalized, some previous interpretations are questioned, and new explanations offered, leading to a single general theory for a large class of models. Journal of Economic Literature Classification Numbers C72, C73, …
Deficit Reduction Through Diversity: How Affirmative Action At The Fcc Increased Auction Competition, Peter Cramton, Ian Ayres
Deficit Reduction Through Diversity: How Affirmative Action At The Fcc Increased Auction Competition, Peter Cramton, Ian Ayres
Peter Cramton
In recent auctions for paging licenses, the Federal Communications Commission has granted businesses owned by minorities and women substantial bidding credits. In this article, Professors Ayres and Cramton analyze a particular auction and argue that the affirmative action bidding preferences, by increasing competition among auction participants, increased the government’s revenue by $45 million. Subsidizing the participation of new bidders can induce established bidders to bid more aggressively. The authors conclude that this revenue-enhancing effect does not provide a sufficient constitutional justification for affirmative action—but when such justification is independently present, affirmative actions can cost the government much less than is …
Rising Temperatures: Rising Tides, Prof. Elizabeth Burleson
Rising Temperatures: Rising Tides, Prof. Elizabeth Burleson
Prof. Elizabeth Burleson
Transboundary environmental problems do not distinguish between political boundaries. Global warming is expected to cause thermal expansion of water and melt glaciers. Both are predicted to lead to a rise in sea level. We must enlarge our paradigms to encompass a global reality and reliance upon global participation.
Slavery, Adam Smith’S Economic Vision And The Invisible Hand, Spencer J. Pack
Slavery, Adam Smith’S Economic Vision And The Invisible Hand, Spencer J. Pack
Economics Faculty Publications
Smith was against slavery on moral and economic grounds. The "invisible hand" in societies which allow slavery, operates in such a way that increases in the wealth of the rich, leads to increased misery for the poor free citizens as well as for the slaves themselves. It seems that the beneficial workings of the "invisible hand" are dependent upon commercial societies which arc not based upon the institution of slavery.
The All-Pay Auction With Complete Information, Michael R. Baye, Dan Kovenock, Casper G. De Vries
The All-Pay Auction With Complete Information, Michael R. Baye, Dan Kovenock, Casper G. De Vries
Economics Faculty Articles and Research
In a (first price) all-pay auction, bidders simultaneously submit bids for an item. All players forfeit their bids, and the high bidder receives the item. This auction is widely used in economics to model rent seeking, R&D races, political contests, and job promotion tournaments. We fully characterize equilibrium for this class of games, and show that the set of equilibria is much larger than has been recognized in the literature. When there are more than two players, for instance, we show that even when the auction is symmetric there exists a continuum of asymmetric equilibria. Moreover, for economically important configurations …
A Reliance Damages Approach To Corporate Lockups, David A. Skeel Jr.
A Reliance Damages Approach To Corporate Lockups, David A. Skeel Jr.
All Faculty Scholarship
No abstract provided.
Seventy-Five Years Of Economic Thought In Egypt, Galal A. Amin
Seventy-Five Years Of Economic Thought In Egypt, Galal A. Amin
Faculty Book Chapters
Tue fundamental determinant of how societies cope with challenges is ultimately found in their human resource base. Nothing is more important than education, in its broadest sense, to the strength of that base. Forming a vital part of any educational system, social science not only helps societies define themselves but also to identify, and indeed generate, possibilities of what they might become. Whether by transmitting or challenging conceptions of the nature of a society's relation to its members or to other societies, or by raising pertinent questions regarding these issues, what is done--or not done--in the social sciences is likely …
An Analysis Of Fee Shifting Based On The Margin Of Victory: On Frivolous Suints, Meritorious Suits, And The Role Of Rule 11, Howard F. Chang, Lucian A. Bebchuk
An Analysis Of Fee Shifting Based On The Margin Of Victory: On Frivolous Suints, Meritorious Suits, And The Role Of Rule 11, Howard F. Chang, Lucian A. Bebchuk
All Faculty Scholarship
When plaintiffs cannot predict the outcome of litigation with certainty, neither the American rule (each litigant bears its own litigation expenses) nor the British rule (the losing litigant pays the attorneys' fees of the winning litigant) would induce optimal decisions to bring suit. Plaintiffs may bring frivolous suits when litigation costs are small relative to the amount at stake; plaintiffs may not bring meritorious suits when litigation costs are large relative to this amount. More general fee-shifting rules are based not only on the identity of the winning party but also on how strong the court perceives the case to …