We develop a model of strategic grade determination by universities distinguished by their distributions of student academic abilities. Universities choose grading standards to maximize total wages of graduates. Job placement and wages hinge on a firm's productivity assessment given a student's...

We analyze competitive credit markets with asymmetric information in which borrowers seek financing for either positive or negative net present value projects. The striking result is that there always exists an equilibrium where investment is efficient, while competitive lenders make strictly...

We develop a tractable spatial model of oligopolistic competition in which firms endogenously determine both franchise/product locations and prices. Remarkably, when firms only differ along the endogenous spatial dimension, they earn zero profits: while ex-post consumer heterogeneity ensures...