This paper analyzes public certification program where the government sets a quality standard and provides labels to sellers whose qualities are above the standard. Buyers are uninformed of sellers¡¯ qualities without the program. We study an optimal level of quality standard or optimal ratio...

The entry of a foreign firm has two counterbalancing effects on domestic social welfare. As the competition level in the domestic market increases by the entry, domestic incumbent firms' outputs and profits decrease. On the other hand, the price goes down and thus consumers' surplus increases....

We examine mixed bundling in a competitive environment that incorporates vertical product differentiation. We show that, compared to the equilibrium without bundling, (i) prices, profits and social welfare are lower, whereas (ii) consumer surplus is higher in the equilibrium with mixed bundling....

This paper extends Bresnahan's (1982) test of competition to the two-product case. Applying this extension, as well as Bresnahan's original one-product test to the Finnish banking industry before and after the deregulation of financial markets produces some interesting results. With the two...

This paper suggests that the optimal contract in lending under asymmetric information is a fixed rate loan contract. It is shown that deposit banks have an advantage to provide maturity transformation with fixed rate contracts. This is because the spatial nature of deposit market competition...

In this paper we study industry equilibrium and the effects of integration under the assumptions that 1) firms must use outside financing and 2) they face a moral hazard problem due to the possibility of taking excessive risks.These are typical features of banking and insurance, for instance.We...

We develop a model based on risk averse investors and limited arbitrage capital to explain the rationale for the so called carry trades: that is, trades where “the purchase of riskier, higher-yielding assets is funded by selling lower-yielding currencies” (Financial Times, January 28, 2008)....

We present evidence that some mutual funds systematically act as contrarian traders, and earn returns in the stock market by providing liquidity to investors that demand immediacy, while others systematically realize costs of immediacy. On average, the mutual funds’ costs of immediacy exceed...

In this paper we study industry equilibrium and the effects of integration under the assumptions that 1) firms must use outside financing and 2) they face a moral hazard problem due to the possibility of taking excessive risks. These are typical features of banking and insurance, for instance....