Black-Scholes delta does not minimize variance of hedging risk since it fails to capture the long run negative relationship between implied volatility and underlying price. Existing works have successfully seized the aforementioned long run relationship and improved the hedging performance. We...

In this paper we examine the importance of imperfect competition in product and labour markets in determining the long-run welfare effects of tax reforms assuming agent heterogeneity in capital holdings. Each of these market failures, independently, results in welfare losses for at least a...