We study a specific model of competing manufacturer-retailer pairs where adverse selection and moral hazard are coupled with non-market externalities at the downstream level. In this simple framework we show that a “laissezfaire” approach towards vertical price control might harm consumers as long as privately informed retailers impose non-market externalities on each other. Giving manufacturer...

In the presence of externalities across coalitions, Dutta et al. (2010) characterize their value by extending Hart and Mas-Colell reduced game consistency. In the present paper, we provide a characterization result for the core for games with externalities by extending one form of consistency studied by Moulin (1985), which is often refereed to as the complement-reduced game property. Moreover,...

Urban production externalities (agglomeration effects) are external effects among producers in areas with a high density of economic activity. Such external effects are the main explanation for why productivity is usually highest in those areas of a country where economic activity is densest. There is some disagreement about the strength of urban production externalities. What is clear however ...

The analysis of standardization processes is dominated by the concept of positive network externalities. This paper develops an alternative view on standardization processes which is based on transaction costs rather than positive network externalities. We call this view the institutional view and distinguish it from the physical view that is associated with the concept of positive network exte...

We hypothesize that regulatory externalities (i.e., regulations in jurisdictions beyond where a firm operates) can influence a firm’s environmental behavior. Specifically, we predict that firms will be sensitive to regulations both in neighboring jurisdictions and in jurisdictions where peer firms operate. By examining the use of renewable-generating technologies in the U.S. electrical utility ...

This paper outlines a dynamic model of firm location choice, in an environment which includes both agglomeration effects and stochastic productivity shocks. The model follows closely the methods of Hopenhayn (1992) and his treatment of firm level entry and exit decisions. However, this model adds the complexity of a second location, as well as the existence of spillover effects, or agglomeratio...

Decision-makers in coordination problems often impose negative externalities on non-decision-making third parties. This thesis investigates whether the introduction of pre-play communication in such coordination problems can work to alleviate such negative externalities, consequently increasing group welfare. Unlike previous studies, we find no significant effect following the introduction of c...

unicipal solid waste (MSW) landfills impose externalities on surrounding neighborhoods. Consequently, numerous laws have been enacted in order to promote a competitive interstate trade in MSW that takes such externalities into account. In principle, the externalities can be regulated via command-and-control of landfill technology and disposal practices; imposition of disposal taxes; or via a sy...

In continuum economies, widespread externalities are those over which each individual has negligible control. Nash–Walrasian equilibria with lump-sum transfers are defined, and their existence proved. They are then characterized by the property of “f constrained Pareto efficiency” for finite coalitions. More general “private good” Nash– Walrasian equilibria are characterized as private good con...

This paper examines how the presence of network externalities affects a monopolist’s incentive for quality degradation and its welfare consequence. The software and the Internet service industries provide our primary motivation. The network externality may lead to a Pareto-improving quality degradation that would not be realised in the absence of network externalities. However, it may also over...