This paper evaluates the incentive of firms to vertically integrate in a simple 2X2 Bertrand model of two substitutes that are each comprised of two complementary components. It confirms that all prices fall as a result of a vertical merger. Further, we find that, when the composite goods are poor substitutes, producers of complementary components are better off after integration. Thus, at equi...

This paper presents the simplest possible general-equilibrium model of an open economy in which producer and consumer decisions are both intraand intertemporally consistent. Consumers maximize the present value of the utility of consumption; producers maximize the present value of profits. The model solves for the set of intertemporally consistent prices. The parsimonious structure of the model...

While homogenous goods is a convenient assumption for many models, it is frequently violated in practice. Many markets feature goods that are not identical, they vary in quality, features, reliability, reputation and/or geographic location. Indeed, markets of literally identical goods seem to be relatively rare, especially once differences in seller’s locations and reputations are taken into ac...

Bacteria frequently live in densely populated surface-bound communities, termed biofilms [1-4]. Biofilm-dwelling cells rely on secretion of extracellular substances to construct their communities and to capture nutrients from the environment [5]. Some secreted factors behave as cooperative public goods: they can be exploited by nonproducing cells [6-11]. The means by which public-good-producing...

The Austrian school is best known for its microeconomics and, in particular, for its role in the marginalist revolution. In the early 1870s, Carl Menger, along with French economist Léon Walras and English economist William Stanley Jevons, reoriented value theory by calling attention to the marginal unit of a good as key to our understanding the determination of the good’s market price. With ma...

We develop an equilibrium business cycle model where nonconvex delivery costs lead producers of final goods to follow generalized (S,s) inventory policies with respect to intermediate goods. When calibrated to match the average inventory-to-sales ratio in postwar U.S. data, our model reproduces two-thirds of the cyclical variability of inventory investment. Moreover, inventory accumulation is s...

This paper concentrates on both the positive and normative effects of punishments that enforce laws to make production and consumption of particular goods illegal, with illegal drugs as the main example. Optimal public expenditures on apprehension and conviction of illegal suppliers obviously depend on the extent of the difference between the social and private value of consumption of illegal g...

A generic model for the monetary flow in multi-level marketing schemes for virtual goods, so called incentive management systems, is introduced and analysed. It is shown that such schemes can in principle be fair, and it is argued that they can be viably realised if the value of the distributed good is positive. It is shown how the monetary incentive a buyer receives through the scheme can be p...

ness of an element is the ratio of in-degrees over in-degrees plus out-degrees of the element, and ranges from 0 to l (Pieters et al. 1995). Elements with high abstractness scores are

Oligopolies in which firms have different costs of production have been relatively understudied. In contrast to models with symmetric costs, some firms may be inactive in equilibrium. (With symmetric costs, the results trivialize to all firms active or all firms inactive.) We concentrate on the linear demand structure with constant marginal but asymmetric costs. In static one-period models, we ...