We show that in some leader-follower games, a steady-state equilibrium in quantities may exist only with non-stationary shadow prices. We call this type of equilibrium a semi-stationary steady state. Conclusions that are drawn on the assumption that a steady-state equilibrium has stationary...

We show that goal setting influences effort level, and that an appropriately set goal can enhance performance. We derive an inverted U-shaped relationship between the goal and the effort level. We then extend the model to a two-period framework, and demonstrate that the goal level set for period...

We show that the famous neutrality result in the theory of public good contributions (Warr, Kemp, Bergstrom, Blume and Varian) depends crucially on the assumption that agents do not take into account the effect of their public good contribution decisions on the relative price of the private...

We show that when polluting firms are Cournot oligopolists, they may have an incentive to use the market of pollution permits as a means of indirectly coordinating their outputs. If firms are initially identical, trade in pollution permits may result in an asymmetric oligopoly. The case where...

This paper examines the endogenous determination of the choice between an entrepreneur and a pure lender. The model relies on three key factors: risk aversion, wealth distribution, and moral hazard. We show that, under certain assumptions, only agents in the middle range of the wealth...

We characterize optimal firm-specific emission tax rates, and optimal firm-specific emission standards, and provide intuitive explanation on differential treatments. We show that there is a unified framework for deriving firm-specific policy measures. When firms are identical, the optimal policy...

This paper offers an explanation of the fact that some foreign firms are favored at the expense of others, and characterizes the distribution of favors in terms of the cost parameters of firms, and a preference parameter in the government's objective function. We present a model where favors...

We investigate economic depreciation of natural capital for cases of non-stationary output prices, technology and interest rates. For the former two cases (exogenous movements in prices and technology), constant consumption emerges under a strategy of investing to cover off economic...

We show that the cost of sorting and the network effects jointly determine the rate of participation of consumers in the process of recycling. The dominant producer of virgin material takes into account the recycling activities when it makes its pricing decision. The network effects can create...

We analyze a model of lobbying by oligopolists who allocate resources between lobbying and internal cost-reducing activities. We ask the following questions: (i) if firms differ with respect to comparative advantage in lobbying, what is the equilibrium allocation of resources between lobbying...