We consider situations in which a principal tries to induce an agent to spend e®ort on accumulating a state variable that a®ects the well-being of both parties. The only incentive mechanism that the principal can use is a state-dependent transfer of her own utility to the agent. Formally, the...

We extend the model of insecure property rights by Tornell and Velasco (1992) and Tornell and Lane (1999) by adding three features: (i) extracting the common property asset involves a private appropriation cost, (ii) agents derive utility from wealth as well as from consumption, and (iii) agents...

We investigate the effect of stock discovery on the profits of non-identical oligopolists. We show that a uniform addition to all stocks could harm firms that are originally larger than average. One conclusion that could be drawn from the results is that a new technology that leads to more...

We show that, even with flexible domestic wages, international outsourcing may worsen the welfare of the home country and reduce the profits of all firms. If wages are rigid, outsourcing is welfare-improving if and only if the sum of the "trade creation" effect and the "exploitation effect"...

Ranking development programs using integrals of discounted utilities can yield drastic consequences that offend our sense of justice. New alternative social welfare criteria should be considered. A reaction to discounted utilitarianism is to moderate its effects by adding to the social welfare...

We consider a benchmark static incentive scheme, i.e. a per unit subsidy, that induces a monopoly to produce a target output level. We show that the same output level can be achieved by a continuum of dynamic subsidy rules based on a performance indicator. The subsidy rules require only local...

We present a simple two(-country) by two(-good) differental game model of international trade in which the governments of the two countries play a tariff-setting game. We explicitly derive a unilateral optimum tarifff rate and then a Markov-perfect equilibrium pair of tariff strategies...

We present results of recent research that provides a positive theory of reciprocal trade liberalization policies by governments with political support concerns. The exchange of market access permits governments to benefit each others' exporters, thereby reciprocally facilitating...