A method for calculating the marginal cost of industrial power cuts is developed. Firms are assumed to hedge against outages by acquiring back-up generators. The marginal cost of back-up power enables us to infer the marginal cost of a power cut.

Recently, attention has been focused on government policy toward commercialization of new energy technologies. Arguments are offered that in the early days of commercialization significant learning externalities that justify subsidy are present. Using nuclear power as a case study, this article...

This article studies the fulfilled expectations equilibrium for a Cournot duopoly model in which firms acquire information about uncertain linear demand. Several propositions are established concerning the incentives to acquire and release information in this duopoly environment.

Causal ambiguity inherent in the creation of productive processes is modeled by attaching an irreducible ex ante uncertainty to the level of firm efficiency that is achieved by sequential entrants. Without recourse to scale economies or market power, the model generates equilibria in which there...

In the use of incentive contracts to compel a supplier to produce a product of optimal quality, the supplier's payoff typically depends on observed product quality. When the observable measure of quality employed in the contract varies also with the buyer's care or maintenance of the product, it...

A government storing oil to reduce vulnerability to interruption in foreign supply should recognize the existence of private storage. In fact, public intervention is justified only if some distortion exists in the private market. A price ceiling that the government is unable to eliminate as a...

The profit-maximizing price structure of a multiproduct firm subject to fully distributed cost rules is considered. It is shown that a firm that sells in both regulated and unregulated markets would choose a dominated price vector. Similar incentives for inefficient pricing are provided to a...

The major innovation in the steel industry in the post-World War II period has been the replacement of the open hearth furnace by the basic oxygen furnace. This article examines the diffusion of this important innovation at a more micro level than previous studies by focusing on plant behavior....

In some competitive situations under uncertainty, less risk averse competitors have an advantage over more risk averse opponents. Private information acquisition by the advantaged players diminishes this advantage by reducing the risk faced by their opponents in a Nash equilibrium. This tradeoff...

It has been suggested by Hallagan (1978) and Newbery and Stiglitz (1979) that the coexistence of rent, wage, and share contracts generates information on the abilities of tenants which allows landlords to allocate resources more efficiently. It is argued here that despite the asymmetric...