In this note we show that the results developed in Singh and Vives (1984) are sensitive to the duopoly assumption (Rand Journal of Economics 15, 546-554). If there are more than two firms, prices may be higher under price competition than under quantity competition. This will be the case if quality differences are large and goods are complements. If goods are substitutes, high-quality firms may...

ELECTIONS AND ASSET PRICING: THE POLITICALLY SENSITIVE EQUITY OF US MILITARY CONTRACTORS by

Reference pricing (RP) theories predict different outcomes when reference prices are fixed (exogenous) versus being a function of market prices (MPs) (endogenous). Exogenous RP results in MPs at both high-price and low-price firms converging towards the reference price from above and below, respectively. Endogenous RP results in MPs at both high-price and low-price firms decreasing, with low-pr...

In the space of designs by which to auction off a single good, we have seen that there is a significant difference between a payment scheme that charges the second-highest bid, and one in which bidders pay their bids. In this lecture, we introduce a new payment and allocation scheme, called the posted-price mechanism, in which the auctioneer announces (i.e., posts) the price π at which they are...

Price discrimination is the practice of charging different consumers different prices for the same good, where the price difference cannot be accounted for by differences in cost. The ability to price discriminate enables a seller to charge buyers prices that more closely approximate their willingness-to-pay for the item. By price discriminating, sellers are able not only to maximize their own ...

In contrast with the classical models of frictionless financial markets, market models with proportional transaction costs, even satisfying usual no-arbitrage properties, may admit arbitrage opportunities of the second kind. This means that there are self-financing portfolios with initial endowments laying outside the solvency region but ending inside. Such a phenomenon was discovered by M. Rás...

Focus is here on coalitional games among economic agents plagued by aggregate pollutions of diverse sorts. Defecting players presumably pollute more than others. Then, granted convex preferences and technologies, the core is proven nonempty. In fact, under natural assumptions, a specific, computable core solution comes in terms of shadow prices on the said aggregates. Such prices may, in large ...