The interaction between: (i) political constraints, in part based on notions of “nation building,” and independence; (ii) the development of a suitable legal and regulatory environment; and (iii) economic constraints such as a growing state budget deficit and a recent banking crisis, are the subject of this paper. The paper will review and discuss the main political economy and competition issu...

McAfee and Reny (1992) have given a necessary and sufficient condition for full surplus extraction in naive type spaces with a continuum of payoff types. We generalize their characterization to arbitrary abstract type spaces and to the universal type space and show that in each setting, full surplus extraction is generically possible. We interpret the McAfee-Reny condition as a much stronger ve...

We study dynamic bargaining with asymmetric information and interdependent values. We base our analysis on the equilibria characterized by Deneckere and Liang (2006) for the gap case. We show that as the gap between the cost and value of the weakest type shrinks to zero, the continuous time limit of equilibria changes dramatically from rare bursts of trade with long periods of inactivity to smo...

We characterize the dynamics of trading patterns and market composition when trade is bilateral, finding a trading partner is costly, prices are determined by bargaining, and preferences are private information. We show that equilibrium is inefficient and exhibits delay as sellers price discriminate between buyers with different values. As frictions vanish, transaction prices are asymptotically...

An economy is presented where trade is beneficial but not assumed. If trade is to occur, it must arise endogenously as either barter or mediated trade. The role decision costs play in the development of trade is explicitly recognized. The theoretical model is examined in an experimental setting by imbedding it in a computer trading game. The data obtained from the experiments are used to examin...

Statistical decision theory can help to explain and improve the market definition decision in competition cases. A Bayesian decision rule shows that market definition involves balancing (1) the weight of evidence in favour and against substitutability, (2) prior probabilities determined by previous cases and research, and (3) the loss function of the decision-maker. Market definition in differe...

This paper presents a model for the credit card industry, where oligopolistic card networks price their products in a complex marketplace with competing payment instruments, rational consumers/merchants, and competitive card issuers/acquirers. The analysis suggests that card networks demand higher interchange fees to maximize card issuers’ profits as card payments become more efficient. At equi...

We analyze how the entry of less informed participants in a market for a risky asset affects the volatility of the price of the asset. In an endogenous participation model, we show that in equilibrium the new market entrants are less informed than the rest of the participants. We study how volatility depends on market participation and on the level of information of the participants. The condit...

We propose a model of posted prices in networks. The model maps traditional concepts of market power, competition and double marginalization into networks, allowing for the study of pricing in complex structures of intermediation, such as supply chains, transportation and communication networks and financial brokerage. We provide a complete characterization of equilibrium prices. Our experiment...

Let pnðxÞ be the orthonormal polynomials associated to a measure dm of compact support in R: If EesuppðdmÞ; we show there is a d40 so that for all n; either pn or pnþ1 has no zeros in ðE d;E þ dÞ: If E is an isolated point of suppðmÞ; we show there is a d so that for all n; either pn or pnþ1 has at most one zero in ðE d;E þ dÞ:We provide an example where the zeros of pn are dense in a gap of su...