A large variety of markets, such as retail markets for gasoline or mortgage markets, are characterized by firms offering a fairly homogenous good produced at virtually the same cost. The present paper provides a theoretical examination of this type of market by developing a sequential search model with incomplete information where consumers are uninformed about the underlying production cost. W...

How Does Imperfect Competition in the Labor Market Affect Unemployment Policies? We consider a continuum of workers ranked according to their abilities to acquire education and two firms with different technologies that imperfectly compete in wages to attract these workers. Once employed, each worker bears an education cost proportional to his/her initial ability, this cost being higher in the ...

Should public assets such as infrastructure, education, and the environment earn the same return as private investments? We consider if time-inconsistent decisionmakers can gain from institutions that enforce cost-benefit rules on large projects that influence the economy as a whole. Long-term public investments provide commitment to current preferences, leading to investment biases in such ass...

July 2017 IZA DP No. 10905 Behavioral Responses and Welfare Reform: Evidence from a Randomized Experiment* Recent studies have used a distributional analysis of welfare reform experiments suggesting that some individuals reduce hours in order to opt into welfare, an example of behavioralinduced participation. Using data on Connecticut’s Jobs First experiment, we find no evidence of behavioral-i...

We present certain duality results on comparative statics on competitive rent vectors in the rental housing market model. In the model, apartments as indivisible goods are classified into a finite number of categories, and are traded for one composite commodity. Our concern is about certain general properties of the behavior of rents with parameter changes. In particular, the rent changes are i...

The phenomenon of rising wage inequality has been extensively documented in OECD countries. In the final quarter of the last century it appears to have been particularly marked in the US and UK. The drivers of rising inequality have been subject to econometric analysis and the relative roles of trade and skill-biased technical change evaluated. In this paper, we take an alternative approach, na...

This paper explores a theory of business cycles in which recessions and booms arise due to difficulties encountered by agents in properly forecasting the economy’s future needs in terms of capital. The idea has a long history in the macroeconomic literature, as reflected by the work of Pigou (Industrial Fluctuation, MacMillan, London, 1926). The contribution of this paper is twofold. First, we ...

One assumption in the Shapley–Shubik power index is that there is no interaction nor influence among the voting members. This paper will apply the command structure of Shapley (1994) to model members’ interaction relations by simple games. An equilibrium authority distribution is then formulated by the power-in/power-out mechanism. It turns out to have much similarity to the invariant measure o...

In order not to see their climate mitigation efforts be in vain by the unlimited growth in China and India, the developed world has started to consider imposing border tax adjustments on imports from these fast developing countries. This paper puts this problem into a game-theoretic perspective. It sets up the problem as a game between the developed world deciding on three regimes of border tax...

We show that U.S. withdrawal from the Kyoto Protocol is straightforward under political economy considerations. The reason is that U.S. compliance costs exceed low willingness to pay for dealing with global warming in the U.S. The withdrawal had a crucial impact on the concretion of the Protocol prior to its likely ratification at the end of 2002. Remaining non-EU Parties to the Kyoto Protocol ...