[Forthcoming, American Economic Review.] We model a War of Attrition with N+K firms competing for N prizes. If firms must pay their full costs until the whole game ends, even after dropping out themselves (as in a standard-setting context), each firm's exit time is independent both of K and of...

[Forthcoming in Brookings Papers on Economic Activity] We analyse the major economic issues raised by the 1997 Tobacco Resolution and the ensuing proposed legislation that were intended to settle tobacco litigation in the United States. By settling litigation largely in return for tax increases,...

Setting a price that results in rationing may be optimal for a seller whose customers must make a specific investment to be able to use his product. Although rationing results in <MI>ex post<D> inefficiency, the resulting distribution of <MI>ex post<D> surplus compensates consumers for their...</d></mi></d></mi>

We use a classroom game, the ‘Wallet Game’, to show that in standard ascending, i.e. English, auctions of close-to-common-values objects, even slight asymmetries between bidders can have very large effects on prices. Examples of small asymmetries are a small value advantage for one bidder or...

We analyse the major economic issues raised by the 1997 Tobacco Resolution and the ensuing proposed legislation that were intended to settle tobacco litigation in the United States. By settling litigation largely in return for tax increases, the Resolution was a superb example of a "win-win"...

This paper attempts to give a meaning to the empty concept of subsidiarity. It examines various kinds of government activity with respect to the optimal layer of government in Europe at which these activities should be performed. The paper criticizes Europe's industrial policies and its...

We analyse an infinite-period model of duopolistic competition in a market with consumer switching costs, in which in every period new consumers arrive and a fraction of old consumers leaves. We show that prices (and profits) are higher than in a market without switching costs, and that this...

This is a preliminary draft of an Invited Symposium paper for the World Congress of the Econometric Society to be held in Seattle in August 2000. We discuss the strong connections between auction theory and 'standard' economic theory, and argue that auction-theoretic tools and intuitions can...

Most markets clear through a sequence of sales rather than through a Walrasian auctioneer. Because buyers can decide between buying now or later, rather than only now or never, buyers' current 'willingness to pay' is much more sensitive to price than is the demand curve. A consequence is that...