We introduce contingent auction mechanisms, which is a superset of combinatorial auctions, and where bidders submit bids on packages that are contingent on the whole nal assignment. Without externalities, the Vickrey and the Ausubel-Milgrom Proxy Auction are both robust if items are perceived as substitutes. Such an equivalence between those formats may not hold with externalities and the analo...

Gasoline-powered vehicles produce many negative externalities including congestion, air pollution, global climate change, and accidents. A gasoline tax is perhaps the best policy to jointly address these externalities. This paper calculates the optimal gasoline tax for China. Using a model developed by Parry and Small [1] [2], we calculate the optimal adjusted Pigovian tax in China to be $1.58/...

Financial crises typically occur because firms and financial institutions are highly exposed to aggregate shocks. We propose a theory explain these exposures. study model where entrepreneurs can issue state-contingent claims consumers. Even though use instruments hedge negative shocks, they do not necessarily so insuring against shocks is expensive, as consumers also harmed by them. This effect...

This paper examines the role of spillovers and externalities in influencing the recent siting of foreign-owned R&D activities in European regions. In accordance with the literature on knowledge creation in MNCs, we find that location of foreign-owned research tends to agglomerate, depending upon the potential for the following different sources of spillovers and externalities: (i) intra-industr...

I consider peer effects of network externalities in a competitive telecommunication market. The magnitude of network externalities depends on whether the caller and the receiver are in the same peer group. Technically, interconnection between carriers can eliminate network externalities, but carriers may adopt terminationbased price discrimination to reduce compatibility. When termination-based...

We study the effects of allocative and informational externalities in (multi-object) auctions and related mechanisms. Such externalities naturally arise in models that embed auctions in larger economic contexts. In particular, they appear when there is downstream interaction among bidders after the auction has closed. The endogeneity of valuations is the main driving force behind many new, spec...