Consider a public utility that offers its service at two different times. We study the effects of a change from uniform pricing throughout the day to peak-load pricing. We show that for a utility constrained to operate with a fixed rate of return on capital, the introduction of peak-load pricing...

The players in most economically important games are agents, not principals. This raises the possibility of the principal's setting a strategic compensation scheme. The central question addressed here is whether unobservable agency contracts can serve as precommitments. I argue that, in terms of...

Models of the enforcement-compliance relationship have assumed that both the probability and magnitude of fines are independent choice variables of policy makers. These models indicate that it may be optimal to monitor with low frequency but to inflict uniformly maximal penalties for all...

A model of takeovers is investigated in which "noise trading" provides camouflage that makes it possible for a large corporate outsider to purchase enough shares at favorable prices so that takeovers become profitable. Although the model accommodates the possibility of dilution (Grossman and...

Should a multiproduct monopolist whose "average price" is capped by regulation be allowed to engage in (third-degree) price discrimination? If the cap applies to a price index with weights proportional to demands at uniform prices, then price discrimination benefits consumers as well as the...

New data on medical malpractice claims against a single hospital in which a direct measure of the quality of medical care is available are used to investigate the roles of the negligence rule and incomplete information in the dispute settlement process in medical malpractice. We find that the...

A "decoupled" liability system is one in which the award to the plaintiff differs from the payment by the defendant. The optimal system of decoupling makes the defendant's payment as high as possible. Such a policy allows the award to the plaintiff to be lowered, thereby reducing the plaintiff's...

This article studies provision of charity care by private, nonprofit hospitals. We demonstrate that in the absence of large positive income effects on charity care supply, convex preferences for the nonprofit hospital imply crowding out by other private or government hospitals. Extending our...

This article presents a theoretical model of research and development (R&D) competition among firms. The goal of the model is to simultaneously explain two empirical observations pertaining to the persistence of dominant firms: small firms make a disproportionate share of major innovations,...

A major policy goal of the Motor Carrier Act of 1980 was to provide the shipping public with more efficient truck freight rates. Unlike previous studies, which have focused on intrastate reforms or highly aggregated data, this article analyzes dynamically the effects of the act on the freight...