This paper characterizes precisely the optimal capital policy for a firm facing a non-price rationing constraint in the market for investment funds. With this particular capital market imperfection firms may generally 'overinvest' relative to a perfect market case, rather than underinvest as...

This paper considers the implications of alternative managerial incentive function for reducing costs in different market structures. An incentive function relates the income received by managers to the profits attained by the firm. Managers may choose the amount of effort they devote to cost...

This paper examines the interaction between root causes, domestic policy considerations and the use of extremism as a strategic tool in an external conflict. Within a two-country three-stage game, we show that, in general, domestic policies will be used strategically to achieve the desired level...

This paper examines the role of capital structure as an instrument for shifting risk between real and financial markets. The author considers a firm whose contractual agreements involve both consumers and debtholders and shows that if consumers are risk averse, whereas equity and debtholders are...

This paper analyzes how uncertainty influences the formation and design of regional trade agreements (TAs). Two sources of uncertainty — in demand and costs — are considered. Using a multi-stage game we show that, as long as some decisions are made after uncertainty is resolved,...

This paper provides a simple dynamic model that explores the interdependence and dynamic properties of hate, violence and economic well-being. It shows that a time-dependent economic growth process that affects the evolution of hate can yield a long run steady state, but this steady state will...

We raise the possibility that at least some of the free trade areas observed in practice are customs unions in disguise. We distinguish between generalized and standard customs unions. While members of the former can choose different external tariff rates, members of the latter levy a common...