We analyze industry equilibrium and incentive to compatibility when goods produced by different producers generate utility only when consumed as component parts of a system. We assume the presence of two systems, each composed of some basic component and a set of differentiated complementary...

The authors consider the competitive equilibrium of an economy with technological uncertainty in the production of a composite good and in the extraction of a nonrenewable natural resource. The familiar Hotelling-type rule takes the form of the intertemporal asset-pricing equation of portfolio...

The authors study optimal nonrenewable resource royalty contracts when the extracting agent has private information on costs. This is a dynamic incentive problem in which the repeated relationship between the principal and the agent is constrained by initial reserves. Commitment is limited to...

We propose a simple model of a partially integrated industry which explicitly takes into account persistent production cost differences across upstream firms, such as one might observe in natural resource industries. The model allows us to highlight the respective roles of strategic...