This paper studies the evolution of two clusters of firms competing on a common market. Firms exit and enter a cluster based on the perceived chances for profits inside and outside the cluster. Information about profits are diffused by direct communication between firms. Internal and external...

We study the evolution of imitation behaviour in a differentiated market where firms are located equidistantly on a (Salop) circle. Firms choose price and quantity simultaneously, leaving open the possibility for non-market-clearing outcomes. The strategy of the most successful firm is imitated....

I develop a theory to explain why workers want restrictive work rules, those that induce wages to be paid for non-productive labor hours, and why competition reduces them. Work rules allow workers to maintain both high levels of employment and wages. They generate a fixed payment that transfers...

Empirical evidence has shown that exporters are more capital intensive than non-exporters. Based on this evidence, I construct a two-factor general equilibrium model with firm heterogeneity in factor intensities, monopolistic competition, scale economies and international trade. This setting can...

This paper provides new theory and evidence on the relationship between ability and entrepreneurship. I show that there is a U-shaped relationship between the probability of entrepreneurship and both a person's schooling and wage when employed. This pattern can be explained in a model of...

We present a dynamical model of web site growth in order to explore the effects of competition among web sites and to determine how they affect the nature of markets. We show that under general conditions, as the competition between sites increases, the model exhibits a sudden transition from a...

The aim of this paper is to quantify the role of formal-sector institutions in shaping the demand for human capital and the level of informality. We propose a firm dynamics model where firms face capital market imperfections and costs of operating in the formal sector. Formal firms have a larger...

Although there are many models that yield a simple interpretation of the basic features of firm and industry evolution, they are too stylized to confront the micro-level data in a formal quantitative analysis. By introducing heterogeneity to a stylized industry evolution model, I explain several...

This paper extends the forestry maximum principle of Heaps (1984) to allow the benefits of harvesting to be the utility of the volume of the wood harvested as in Mitra and Wan (1985, 1986). Unlike those authors, however, time is treated as a continuous rather than as a discrete variable....

We develop in this paper a novel portfolio selection framework with a feature of double robustness in both return distribution modeling and portfolio optimization. While predicting the future return distributions always represents the most compelling challenge in investment, any underlying...