We develop a product market theory that explains why firms invest in general training of their workers. We consider a model where firms first decide whether to invest in general human capital, then make wage offers for each others' trained employees and finally engage in imperfect product market...

The rapid rise of antibiotic resistance is a serious threat to global public health. Without further incentives, pharmaceutical companies have little interest in developing antibiotics, since the success probability is low and development costs are huge. The situation is exacerbated by the...

Many efficient policies imply a temporary deterioration of GDP while the benefits accrue to voters later. Such policies have a down-up characteristic. We show that voters cannot motivate politicians to invest in down-up policies by their reelection decision. The incumbent either undertakes...