On natural selection in oligopolistic markets

In this paper I analyze the kind of behavior which can be considered evolutively stable in an oligopolistic marketOligopoly; Natural Selection; Stability

The Keynesian multiplier and the Pigou effect under substitution between private and public consumption

In this paper we present a fixprice model in which private and public consumption show some degree of substitution. We offer formulae for the Keynesian multiplier which depend on this degree of substitution. We also show that there is a Pigou effect and that, sometimes, this effect is larger than the Keynesian multiplier.Disequilibrium Multiplier Pigou Effect

Welfare losses under cournot competition

We find that in a market for a homogeneous good where firms are identical, compete in quantities and produce with constant returns, the percentage of wel-fare losses (PWL) is small with as few as five competitors for a class of demand functions which includes linear and isoelastic cases. However with fixed costs and asymmetric firms PWL can be large. We provide exact formulae of PWL and robust constructions of markets were PWL is close to one in these two cases. We show that the market structure that maximizes PWL is either monopoly or dominant firm, depending on demand. Finally we prove that PWL is minimized when all firms are identical, a clear indication that the assumption of identical firms biases the estimation of PWL downwards.

TRADE AND GROWTH: A SIMPLE MODEL WITH NOT-SO-SIMPLE IMPLICATIONS

We present a simple dynamic model of international trade and growth. Our equations linking exogenous and endogenous variables do not resemble those estimated by the empirical literature: Ours are not linear, despite the fact that our model is linear, they do not include variables used in this literature and include variables that have never been used in this literature.

On the Non-Cooperative Foundations of Cooperative Bargaining

In this note we challenge the non-cooperative foundations of cooperative bargaining solutions on the grounds that the limit operation for approaching a frictionless world is not robusto We show that when discounting almost ceases to play a role, any individually rational payoff can be supported by some subgame perfect equilibrium. To select the "correct" point imposes excessive informationaL requirements on the analyst.Subgame Perfection Rubinstein Game

FORMS OF GOVERNANCE AND THE SIZE OF RENT-SEEKING

In this paper we present a model of an organization where agents can choose between productive and rent-seeking activities. We consider two governance institutions, single ownership and corporate governance or parliament rule. Applications include models of internal organization of a firm, of a kingdom ruled either by an absolute monarch or by the parliament, and location where agents can locate either in the court and become rent-seekers, or in an industrial city and become entrepreneurs. Our main goal is to study the size of rent-seeking activities under the two governance regimes. Under single ownership, rent-seeking reflects the taste of the owner for such activities and the possibilities of extracting rents from productive agents (who finance rent-seeking). The main conclusion of the paper is that, under corporate governance, the size of the rent-seeking sector may be larger than under single ownership despite the fact that in the former nobody has an intrinsic taste for rent-seeking activities.

FOUNDATIONS FOR CONTEST SUCCESS FUNCTIONS

We examine two approaches to contest success functions. In the first we analyze the implications of contestants´ incomplete information concerning the `type´ of the contest administrator. While in the case of two contestants this approach can rationalize prominent contest success functions, we show that it runs into difficulties when there are more agents. Our second approach interprets contest success functions as sharing rules and establishes a connection to bargaining and claims problems which is independent of the number of contestants. Both approaches provide foundations for popular contest success functions and guidelines for the definition of new ones.

Computing welfare losses from data under imperfect competition with heterogeneous goods

We study the percentage of welfare losses (PWL) yielded by imperfect competition under product differentiation. When demand is linear, if prices, outputs, costs and the number of firms can be observed, PWL is arbitrary in both Cournot and Bertrand equilibria. If in addition, the elasticity of demand (resp. cross elasticity of demand) is known, we can calculate PWL in Cournot (resp. Bertrand) equilibrium. When demand is isoelastic and there are many firms, PWL can be computed from prices, outputs, costs and the number of .rms. In all these cases we find that price-marginal cost margins and demand elasticities may influence PWL in a counterintuitive way. We also provide conditions under which PWL increases or decreases with concentration.Welfare losses, Product differentiation, Cournot equilibrium, Bertrand equilibrium

IMPLEMENTATION WITH STATE DEPENDENT FEASIBLE SETS AND PREFERENCES: A RENEGOTIATION APPROACH

In this paper we present a model of implementation based on the idea that agents renegotiate unfeasible allocations. We characterize the maximal set of Social Choice Correspondences that can be implemented in Nash Equilibrium with a class of renegotiation functions that do not reward agents for unfeasibilities. This result is used to study the possibility of implementing the Walrasian Correspondence in exchange economies and several axiomatic solutions to problems of bargaining and bankruptcy.