We study the optimal combination of corporate tax rate and tax base in a model of a small open economy with heterogeneous firms. We show that it is optimal for the small country’s government to effectively subsidize capital inputs by granting a tax allowance in excess of the true costs of capital. Economic integration reduces the optimal capital subsidy and drives low-productivity firms from th...

An assumption in prior research is that debt is homogeneous and provides inappropriate governance for R&D investments. We argue that debt is heterogeneous: although transactional debt does indeed impose strict contractual constraints that provide inappropriate governance for R&D investments, relational debt has very different characteristics that provide more appropriate governance. Using a sam...

This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro-competitive effects of import penetration on the...

We derive the closed-form solution that characterizes the equilibrium in the circular city model, when competing firms have heterogeneous production costs. Tractability issues in this setting are well-known and have not been resolved in prior work. In this paper, the equilibrium solution illustrates the effects of production costs on firms’ strategic decisions and profits and on consumer surplu...

This article contains hand collected and matched data on the VC investment situation in newly listed firms in SME and ChiNext board from 2009 to 2012 and the corresponding M&A activities data undertaken by these newly listed firms as acquirers in three years following initial public offering. Mentioned data are related to the research article "Heterogeneous Venture Capital, M&A Activity, and Ma...

The presented paper offers a simple search model of the labor market to explain the empirical findings on the role of reciprocity for labor market outcomes as reported by Dohmen et al. (2009). In an agency setting where profit-maximizing firms compete for heterogeneous reciprocal workers, with full information about workers’ types, reciprocal workers who are willing to engage in gift exchange a...

This paper studies the evolution of a network of leading firms that are engaged in an active search to improve their technological capability through interaction with knowledge-heterogeneous firms. Through the simulation of a linear model of technoligical spillovers we show the emergence of paradigm setters and the impact of search routines on the system’s average performance. ∗Corresponding au...