We study the percentage of welfare losses (PWL) in models of horizontal and vertical differentiation. In the Hotelling model, we show that PWL depends on the underlying parameters in a non-monotonic way. We also show that PWL can be calculated from market data-locations and market size-except when the market is covered and exhibits maximal product differentiation. PWL can be very large-up to 37...

This paper studies the impact of competition on the degree of inefficiency in lemons markets. More precisely, we characterize the second-best mechanism (i.e., the optimal mechanism with private information) in a stylized lemons market with finite numbers of buyers and sellers. We then study the relationship between the degree of efficiency of the second-best mechanism and market competitiveness...

Building the Family Nest: Pre-Marital Investments, Marriage Markets and Spousal Allocations We develop a model of the household in which spousal incomes are determined by premarital investments, the marriage market is characterized by assortative matching, and endogenously-determined sharing rules form the basis of intra-household allocations. By incorporating pre-marital investments and spousa...

The probabilistic serial mechanism (Bogomolnaia and Moulin, 2001 [9]) is ordinally efficient but not strategy-proof. We study incentives in the probabilistic serial mechanism for large assignment problems. We establish that for a fixed set of object types and an agent with a given expected utility function, if there are sufficiently many copies of each object type, then reporting ordinal prefer...

For two independent principles of intergenerational equity, the implied discount rate equals the growth rate of real percapita income, say 2%, thus falling right into the range suggested by the U.S. Office of Management and Budget. To prove this, we develop a simple tool to evaluate small policy changes affecting several generations, by reducing the dynamic problem to a static one. A necessary ...

In addition to his role as a consumer pursuing his own interests, an individual may also regard himself as an ethical observer or citizen, judging matters from society’s point of view. However, an individual’s personal preferences do not necessarily coincide with his social preferences. This paper presents a formal model in which individuals are assumed to have two distinct preference orderings...

This paper analyzes the effects of the green transformation on the German electricity sector with respect to the energy-political triangle. It focuses on how the development of renewable energies will affect security of electricity supply. In a cost-benefit analysis, the value of supply security is compared with its costs of provision. More specifically, the benefits of maintaining the present ...

The paper presents some models involving a pair of actors that aim at bartering the goods from two privately owned pools of heterogeneous goods. In the models we discuss in the paper the barter can occur only once and can involve either a single good or a basket of goods from each actor/player. In the paper we examine both the basic symmetric model (one-to-one barter) as well as some other vers...

Redistributive policies often sustain inefficient economic sectors. Economists routinely argue that governments should let the sectors collapse, and compensate the affected agents. We explain why governments may instead prefer the inefficient redistribution. If income shocks in a given sector are more correlated than in the rest of the economy, and redistribution is related to individuals’ inco...

Hedonic Estimation under Very General Conditions Using Experimental and Quasi-Experimental Designs This paper develops a generalized hedonic model in which an exogenous shock to a single product attribute can affect other attributes, the markets for the product’s complements and substitutes, and aggregate quantity produced. These factors are shown to be empirically relevant and to cause bias in...