We investigate the factors that, in addition to preferences, aect the extent to which richer households pay more for a given durable good with respect to their expenditures on nondurables, dened as the quality slope. We show theoretically and conrm empirically that the quality slope decreases in...

Abstract: We determine the incentives for compatibility provision of firms that produce network goods with different intrinsic qualities. We consider the case in which both firms have the power to veto compatibility and the case in which none has this power. We obtain that if consumers have a...

I develop a novel view of comparative advantage that collectively explains (i) the effect of distance and GDP per capita on the price composition of trade, and (ii) the systematically higher trade-to-GDP ratio of rich countries. There are two types of goods, which offer different scopes for...

A divide-and-conquer algorithm for exploiting policy function monotonicity is proposed and analyzed. To compute a discrete problem with n states and n choices, the algorithm requires at most 5n + log2(n)n function evaluations and so is O(n log2 n). In contrast, existing methods for non-concave...

The Basel Committee on Banking Supervision (BIS) has recently sanctioned Expected Shortfall (ES) as the market risk measure to be used for banking regulatory purposes, replacing the well-known Value-at-Risk (VaR). This change is motivated by the appealing theoretical properties of ES as a...

Multiple equilibria in games pose a big challenge for identifcation and estimation. Existing literature typically abstracts from multiplicity by assuming that the data is generated by the same equilibrium. Instead of imposing such restrictions, this paper provides a nonparametric identification...