We construct a model integrating the efficiency wage model of Shapiro-Stiglitz (1984) with the matching-bargaining models of Diamond, Mortensen and Pissarides (DMP). Firms and workers form pairwise matches, workers may shirk on the job, and the wage is set in an asymmetric Nash bargain over the...

We study the effects of mobility costs in a model of wage bargaining between workers and firms, where there is instantaneous matching, free firm entry, heterogeneous labour, and workers' individual productivities are discovered by firms only after being hired. We derive the employment level and...

This paper explores water pricing policy in Tegucigalpa, the capital of Honduras, in a political economy perspective. I argue that current water prices are too low and significantly below long-run marginal cost, and demonstrate that water prices must be raised significantly over the next ten...

I derive values of marginal changes in a public good for two-person households, measured alternatively by household member i's willingness to pay (WTP) for the good on behalf of the household, WTPi(H), or by the sum of individual WTP values across family members, WTP(C). Households are assumed...

We derive the optimal exchange rate policy for a small open economy subject to terms-oftrade shocks. Firm owners and workers are risk averse but workers more so. Wages are given or partially indexed in the short run, and capital markets are imperfect. The government sets the exchange rate to...

I study climate policy choices for a 'policy bloc' of fuel-importers, when a 'fringe' of other fuel importers have no climate policy, fuel exporters consume no fossil fuels, and importers produce no such fuels. The policy bloc and exporter blocs act strategically in fossil fuel markets. When the...

Energy-intensive infrastructure may tie up fossil energy use and carbon emissions for a long time after investments, making the structure of such investments crucial for society. Much or most of the resulting carbon emissions can often be eliminated later, through a costly retrofit. This paper...

We study optimal climate policy for a policy bloc of countries facing a market where emissions offsets can be purchased from a non-policy fringe of countries (such as for the CDM). Policy-bloc firms benefit from free quota allocations whose quantity is updated according to firms' past emissions,...

The Clean Development Mechanism (CDM) is an offset mechanism designed to reduce the overall cost of implementing a given target for greenhouse gas (GHG) emissions in industrialized Annex B countries of the Kyoto Protocol, by shifting some of the emission reductions to Non-Annex B countries. This...

We study interactions between a "policy bloc's" emissions quota market and an offset market where emissions offsets can be purchased from a non-policy "fringe" of countries (such as for the CDM under the Kyoto Protocol). Policy-bloc firms are assumed to benefit from free quota allocations that...