This paper presents a model of the optimal bidding behaviour of a single bank in the context of fixed rate liquidity tenders. Banks’ bidding is shown to depend crucially on the central bank’s liquidity policy as regards tender allotments. The paper also analyses ECB liquidity policy in terms...

In this paper we extend Kreps and Scheinkam's (1983) results to mixed-duopolies with linear demands and constant unit costs. We show that quantity precommitment and Bertrand competition yield to Cournot outcomes not only in the case of private firms but also when a public firm is involved.

The theory of geographical markets is based on the notion that economic activity is not evenly spread and regional inequalities have an impact on the decisions of economic agents. Retail gasoline markets are almost perfect examples of geographical markets. The gasoline sold by the stations is a...

Market makers on financial markets often act as competitiors and step into cooperations with each other at the same time. Primarily, they quote prices for investors, thus providing liquidity on the customer market. But they also trade with each other in order to reduce their inventory risk. The...

We show that for any market-clearing price, average profits in a symmetric industry cannot exceed the individual profits from the Walrasian output. This immediately implies that a firm itself can guarantee to beat the market by producing the Walrasian output. This property clarifies and...

The theory of geographical markets is based on the notion that economic activity is not evenly spread and regional inequalities have an impact on the decisions of economic agents. Retail gasoline markets are almost perfect examples of geographical markets. The gasoline sold by the stations is a...

Market makers on financial markets often act as competitiors and step into cooperations with each other at the same time. Primarily, they quote prices for investors, thus providing liquidity on the customer market. But they also trade with each other in order to reduce their inventory risk. The...

We investigate, theoretically and empirically, the relationship between monetary policy and the term structure of interest rates. In particular, we show in a dynamic macroeconomic model that if monetary policy reveals information about economic developments, interest rates of all maturities move...

In a simple dynamic macroeconomic model, it is shown that uncertainty about structural parameters does not necessarily lead to more cautious monetary policy, refining the accepted wisdom concerning the effects of parameter uncertainty on optimal policy. In particular, when there is uncertainty...

Based upon Granger causality and Pesaran-Shin’s generalized impulse-response functions, this paper studies the link between the term structure and economic growth, and the link between the term structure and actual and expected percent changes of the Cons