Previous research shows that firms shroud high add-on prices in competitive markets with naive consumers leading to inefficiency. We analyze the effects of regulatory intervention via educating naive consumers on equilibrium prices and welfare. Our model allows firms to shroud, unshroud, or...

In many decentralised markets, the traders who benefit most from an exchange do not employ intermediaries even though they could easily afford them. At the same time, employing intermediaries is not worthwhile for traders who benefit little from trade. Together, these decisions amount to...

Price volatility, reflecting the ability to absorb exogenous supply- or demand shocks, is an important dimension of market performance. In this paper we present a model to study the factors determining the price volatility of markets of basic foodstuffs in pre industrial societies. This model is...

Studies of firm-level data have shown that there is a huge dispersion of productivity across firms even when industries are narrowly defined. So there is a significant opportunity for the least productive firms to catch up to the most productive. The formers’ convergence could therefore...

This paper examines the investment strategies of regulated companies in abatement technologies, market participants' trading behaviors, and the liquidity level in an inter-temporal cap{and{trade market using laboratory experiments. The experimental analysis is performed under varying market...

This work investigates both theoretically and empirically how the behaviour of financial analysts is affected by competition, measured as the strength of coverage of a stock from other analysts. The interaction among analysts and investors is modelled as a dynamic cheap talk game. The...

Two forces have reshaped global securities markets in the last decade: Exchanges operate at much faster speeds and the trading landscape has become more fragmented. In order to analyze the positive and normative implications of these evolutions, we study a framework that captures (i)...

A large school consolidation reform in the Netherlands changed minimum school size rules underlying public funding. The supply of schools decreased by 15 percent, but this varied considerably across municipalities. We find that reducing the number of schools by 10 percent increases pupils'...

Who does, and who should initiate costly certification by a third party under asymmetric quality information, the buyer or the seller? Our answer --- the seller --- follows from a non--trivial analysis revealing a clear intuition. Buyer--induced certification acts as an inspection device, whence...

This paper centres around the question of ownership of firms and managerial competition and how these affect managers and employees’ incentives to invest in human capital. We argue that employees’ incentives in human capital investment are affected by both ownership and competition since...