We study the behavior of firms in an imperfectly competitive environment in which firms influence the evolution of the stock of capital equipment. Our model enables us, using analytical characterizations, to show the effect of key ingredients of dynamic competition on firm strategies and industry dynamics in addition to the usual static interaction. These effects are the static market externali...

Abstract Professional service firms in the built environment are subject to externalities. Whether these forces related economic downturns, changes regulatory environment, natural disasters, trade wars, armed conflict, mass migration, hyperinflation, climate change, global pandemics, entropy, or even never foreseen, must adapt, reposition, and rebound from negative events. The ability adapt is ...

Abstract This article demonstrates that low bank capital carries a negative externality because it amplifies local shock spillovers. We exploit natural disaster is transmitted to firms in nondisaster areas via their banks. Firms connected strongly disaster-exposed with lowest-quartile capitalization significantly reduce total borrowing by 6.6% and tangible assets 6.9% compared similar well-capi...

We present a model with heterogeneous firms, in which credit constraints may give rise to self-fulfilling, sunspot-driven business cycle fluctuations. We derive optimal incentive-compatible loan contracts, under which a firm’s borrowing capacity is constrained by expected equity value. Interactions between debt and equity value made possible by credit constraints generate a credit externality, ...

This work proposes a non-stationary random field model to describe the spatial variability of housing prices that are affected by a localized externality. The model allows for the effect of the localized externality on house prices to be represented in the mean function and/or the covariance function of the random field. The correlation function of the proposed model is a mixture of an isotropi...

This paper studies optimal pay-as-you-go social security with positive bequests and endogenous fertility. With an investment externality, a competitive solution without social security suffers from under-investment in capital and over-reproduction of population. We show that social security can improve welfare by reducing fertility and increasing capital intensity. We also illustrate numericall...

We consider the case of a digital product with externality, where the product can be sold to multiple buyers who experience some disutility from other firms or consumers owning the same product. We model the problem of selling a digital product with externality as an auction and apply a Bayesian optimal mechanism design. We also design constant-approximation algorithms in the prior-free setting...

Abstract Climate ethics have been concerned with polluter pays, beneficiary pays and ability to pay principles, all of which consider climate change as a single negative externality. This paper considers it constellation externalities, positive negative, different associated demands justice. is important because explicitly considering externalities has not our knowledge done in the literature. ...

We analyze the contracting structure in a moral hazard setting with several agents where output is produced jointly and is the only contractible variable. Since the salary of each agent is a function of all agents efforts, a positive externality arises between them. This externality is not internalised by a centralised structure where the principal contracts directly with each agent. Instead, w...