This paper analyses whether scale economies exists in the UK telecommunications industry. The approach employed differs from other UK studies in that panel data for a range of companies is used. This increases the number of observations and thus allows potentially for more robust tests for global subadditivity of the cost function. The main findings from the study reveal that although the resul...

Market makers in over-the-counter markets often make offsetting trades and have significant market power. We develop a market making model that captures this market feature as well as other important characteristics such as information asymmetry and inventory risk. In contrast to the existing literature, a market maker in our model can optimally shift some trade with the informed to other discr...

Wages and Productivity Growth in a Dynamic Monopoly* This Paper studies the intertemporal problem of a monopolistic firm that engages in productivity-enhancing innovations to reduce its labour costs. If the level of wages is sufficiently low, the firm’s rate of productivity growth approaches the rate of wage growth and eventually the firm reaches a steady state where its unit labour cost remain...

Two bookmakers compete in Bertrand fashion while setting odds on the outcomes of a sporting contest where an influential punter (or betting syndicate) may bribe some player(s) to fix the contest. Zero profit and bribe prevention may not always hold together. When the influential punter is quite powerful, the bookies may coordinate on prices and earn positive profits for fear of letting the ‘lem...

Existing microstructure literature cannot explain the empirical evidence that bid-ask spreads can decrease with information asymmetry and ignores either information asymmetry or inventory risks. We develop a market making model that highlights the asset pricing impact of market makers’ capability of making offsetting trades in markets where both information asymmetry and inventory risk are sign...

We characterize the optimal renegotiation-proof contract in a dynamic principal–agent model in which the type of the agent may change stochastically over time. We show that, under general conditions, the optimal contract with commitment is renegotiation proof even when type realizations are serially correlated. When the renegotiation-proofness constraint is binding, it is always optimal to part...

Clinical disease associated with porcine epidemic diarrhea virus (PEDV) infection in naïve pigs is well chronicled; however, information on endemic PEDV infection is limited. To characterize chronic PEDV infection, the duration of infectious virus shedding and development of protective immunity was determined. On Day 0 (D0), a growing pig was challenged with PEDV and 13 contacts were commingled...

It has been long recognized that an exhaustible-resource monopsonist faces a commitment problem similar to that of a durable-good monopolist. Indeed, Hörner and Kamien (2004) demonstrate that the two problems are formally equivalent under full commitment. We show that there is no such equivalence in the absence of commitment. The existence of a choke price at which the monopsonist adopts the su...

We derive bounds on the ratio of a monopolist’s profit from third-degree price discrimination to that from uniform pricing. If the monopolist serves N independent markets, demand is continuous, and the cost function is superadditive, then the profit ratio is bounded by N. A linear-demand example is provided coming arbitrarily close to this bound. We provide examples showing the profit ratio can...

The exhaustible-resource monopsony problem provides a basis for understanding the dynamic relationship between resource importers and suppliers. We find that the mere presence of a substitute supply creates a time-inconsistency problem for the monopsonist. When the buyer can commit to delaying the arrival of the substitute, he obtains a substantial reduction in resource prices but not enough as...