The present paper analyzes the determinants of profit persistence using a newly developed methodology that allows for the persistence parameter to vary with time. It therefore addresses a significant limitation of previous persistence models, which have assumed unrealistically that persistence...

The underground economy expanded substantially during the late 1990s, both in the industrialized and the developing world. I argue that this development is a response to the sharp increase in market competition worldwide. I develop a parsimonious oligopoly model of free entry and free sector...

This paper analyzes dynamic selection effects that arise in a regulated market where price structures are determined by a regulator or central management. Consumers come in different types where each type requires a different service or treatment. We show that for a large class of price...

We consider dynamic optimization problems on one-dimensional state spaces. Un- der standard smoothness and convexity assumptions, the optimal solutions are characterized by an optimal policy function h mapping the state space into itself. There exists an extensive literature on the relation...

The existence of short-term monetary equilibrium in a frictionless economy with suboptimal agents is proved for any (reasonable) given interest rate. Separability ideas (as defined in Decision Theory) are applied. Two financial markets are in operation: for bank contracts (deposits and credits)...

This paper analyzes the welfare consequences of bundling different risks in one insurance contract in markets where adverse selection is important. This question is addressed in the context of a competitive insurance model a la Rothschild and Stiglitz (1976) with two sources of risk....

We characterize the structure of Nash equilibria in asset market games with variable asset supply. In equilibrium, di®erent assets have dif- ferent returns, and (risk neutral) investors with di®erent wealth hold portfolios with di®erent structures. In equilibrium, an asset's return is...

In this paper we examine whether di¤erent pension systems a¤ect the set of initial human capital conditions capturing an economy in a low steady state equilibrium income. To analyze this problem, we employ a three period over- lapping generations model where fertility and investments into the...

The Dixit-Stiglitz model is extended by the possibility for rms to un- dertake process innovation. The model can provide a new explanation to describe the relationship that research activity of rms is positively corre- lated with product market competition at low levels of competition, and...

This paper studies a symmetric Bertrand duopoly with imperfect mon- itoring where rms receive noisy public signals about the state of demand. These signals have two opposite eects on the incentive to collude: avoid- ing punishment after a low-demand period increases collusive prots, mak- ing...