منابع مشابه
Free entry and social inefficiency
Previous articles have noted the possibility of socially ineficient levels of entry in markets in whichJirms must incurjixed set-up costs upon entry. This article identijies thefundamental and intuitive forces that lie behind these entry biases. Ifan entrant causes incumbentJirms to reduce output, entry is more desirable to the entrant than it is to society. There is therefore a tendency toward...
متن کاملQuantity leadership and social inefficiency
A game of simultaneous free entry and sequential output choices is analyzed. Firms enter simultaneously in stage 1 by paying a fixed cost, and they choose output levels sequentially in subsequent stages. At the subgame-perfect equilibrium of the game, the production level of a firm is decreasing with the order of the firm in the decision-making. The firm that is the last to choose output produc...
متن کاملDynamic inefficiency in decentralized capital markets
We study the effi ciency implications of bargaining in frictional capital markets in which firms match bilaterally with dealers in order to buy or sell capital. We show how two of the distinguishing characteristics of capital —ownership and the intertemporal nature of investment —give rise to a dynamic ineffi ciency. Firms that anticipate buying capital in the future overinvest because this inc...
متن کاملQuantifying inefficiency in incomplete asset markets∗
It is known that the incompleteness of asset markets causes inefficiency in almost every equilibrium. Yet unexplored is the ”size” of this inefficiency. The size of a Pareto improvement is the total willingness to pay for it, out of current consumption. Inefficiency is the maximum size of any Pareto improving reallocation. Inefficiency of US consumption in middle age is computed to be 10-11% of...
متن کاملInefficiency of competitive equilibrium with hidden action and financial markets ∗
In this paper, we study a pure exchange economy with idiosyncratic uncertainty, hidden action and multiple consumption goods. We consider two different market structures: contingent markets on the one hand, and financial and spot markets on the other hand. We propose a competitive equilibrium concept for each market structure. We show that the equilibrium with contingent markets is efficient in...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2003
ISSN: 1556-5068
DOI: 10.2139/ssrn.401984