This paper investigates the economic consequences of a financial institution’s reporting discretion in the context of bank runs. A fundamental-based run imposes market discipline on insolvent institutions, but a panic-based run shuts down institutions that could have survived with better coordination among investors. We augment a bank-run model with the financial institution’s discretion over r...

The purpose of this paper is to examine the impact of a community’s economic characteristics on its ability to generate adherence to socially efficient norms. These norms prescribe a behavior for an individual when his/her preferred behavior imposes a negative externality on others. This paper explores social norms as a mechanism of how neighborhood characteristics can affect individual behavio...

We analyze the impact of short-term alcohol bans on road traffic accidents, traffic injuries, and hospital admissions. We focus on the 2012 Municipal Elections in Brazil, during which 11 out of 27 states imposed on its 2,733 municipalities the decision to adopt alcohol bans. Using day-level data on municipalities, we find that alcohol bans caused substantial reductions in road crashes (19%), tr...

An explanation is provided for the evolution of segmented marketplaces in a pairwise exchange economy. Large traders operating in a pairwise exchange market prefer to meet other similar traders, because this enables them to trade their endowments in a smaller number of encounters. Large and small traders, however, cannot be distinguished a priori, and the existence of the small traders imposes ...

land- phone, like mobile, internet and fax is a communication device and has network externality effect. thus as the penetration coefficient increases, the network effect improves. the transmission of information via the word of mouth is the main source of enhancing the network externalities coefficient. in this article we have investigated the factors affecting the network externality coeffici...

We consider the unrelated machine scheduling game in which players control subsets of jobs. Each player’s objective is to minimize the weighted sum of completion time of her jobs, while the social cost is the sum of players’ costs. The goal is to design simple processing policies in the machines with small coordination ratio, i.e., the implied equilibria are within a small factor of the optimal...

This paper studies the effect of disclosing conflicts of interest on strategic communication when the sender has lying costs. I present a simple economic mechanism under which such disclosure often leads to more informative, but at the same time also to more biased messages. This benefits rational receivers but exerts a negative externality from them on naive or delegating receivers; disclosure...

Trade subject to predation generates externalities within and between markets. Efficient tax, infrastructure and enforcement policies internalize the net externality — more trade ⇒ fewer predators but drawn to trade at rising cost. The balance is positive (negative) as enforcement is weak (strong). Dual economies pair weak Periphery and strong Core enforcement markets. Efficient taxation and in...

This paper examines the optimal (first-best) tax policy in a stochastic representative agent model that exhibits a “keeping up with the Joneses” utility function and imperfectly competitive product markets. We show that the optimal labor tax is a constant, whose sign is determined by the relative strength of consumption externality and monopoly power. Moreover, the optimal capital tax is unambi...

This paper summarizes my previous work in Lin (2010), in which I use spatial econometrics to analyze air pollution externalities. In Lin (2010), state-by-state source-receptor transfer coefficients that can be used as a basis for a locationdifferentiated permit system are estimated. Results affirm the importance of regional transport in determining local ozone air quality, although owing to non...