This paper studies the ability of an agent and a principal to achieve the first-best outcome when the agent invests in an asset that has greater value if owned by the principal than by the agent. When contracts can be renegotiated, a well-known danger is that the principal can hold up the agent,...

This paper studies the ability of an agent and a principal to achieve the first-best outcome when the agent invests in an asset that has greater value if owned by the principal than by the agent. When contracts can be renegotiated, a well-known danger is that the principal can holdup the agent,...

The insect antennal lobe is the first brain structure to process olfactory information. Like the vertebrate olfactory bulb the antennal lobe is substructured in olfactory glomeruli. In insects, glomeruli can be morphologically identified, and have characteristic olfactory response profiles....

Regulators of natural monopolies advocate inducing monopolies to maximize the sum of consumer and producer surplus to the extent possible. Although such maximization is efficient in partial equilibrium, its general equilibrium properties have not yet been fully explored. We study the welfare...

Our companion paper introduced a new general equilibrium concept, called PDME, in which a natural monopoly maximizes its industry's surplus. While PDME's are always efficient, decentralization and existence sometimes fail under increasing returns to scale. This paper derives conditions under...

The bias of forward exchange rates as a predictor of future spot rates is typically explained or decomposed as (1) a risk premium and (2) a convexity term which accounts for the fact that, when there is stochastic inflation, nominal gains from forward currency speculation are higher than real...

Aaron Edlin points out that Microsoft continues to profit at its users' expense by creating incompatibilities, and suggests that you think twice before asking Santa for a new Windows machine with Vista and Office 2007.

Aaron Edlin recommends starting the rescue with containment --- unlimited deposit insurance and continuous access to funds --- and then moving to a well thought out plan to quash the financial flames.

The Treasury wants a blank check for $700 billion, at taxpayer expense; instead a businessman like Buffett should be given the job of making the taxpayers some money out of this mess, according to Aaron Edlin.

Although antitrust courts sometimes stress the competitive process, they have not deeply explored what that process is. Inspired by the theory of the core, we explore the idea that the competitive process is the process of sellers and buyers forming improving coalitions. Much of antitrust can be...