Formation of Cartels in Glove Markets and the Modiclus

Received March 23, 2001; revised version received September 21, 2001     

On Forecasting Heterogeneity, Irrational Exuberance, and the Multiplicity of Rational Expectations Equilibria

Received February 20, 2001; revised version received July 23, 2001     

Choice of Product Variety for the Durable-goods Monopolist

Received January 10, 2001; revised version received June 25, 2001     

Efficiency Wages and the Long-Run Incidence of Progressive Taxation;

Received November 3, 2000; revised version received August 2, 2001     

Tacit Collusion in a Spatial Model with Delivered Pricing

Received August 5, 1999; revised version received July 20, 2001     

Expected Future Budget Deficits,the Real Exchange Rate and Current Account Dynamics in a Finite Horizon Model

This paper uses an optimizing open economy general-equilibrium model to investigate the macroeconomic effects of current and expected future budget deficits. It is shown that current and expected future budget deficits are positively correlated with the current account deficit, the capital stock and the real exchange rate, but negatively correlated with the domestic real interest rate and consumption, along the stable path approaching the steady state. The paper also demonstrates that the world real interest rate is positively correlated with consumption, foreign assets and the domestic real interest rate, but negatively correlated with the capital stock and the real exchange rate. Received April 11, 2001; revised version received October 25, 2001     

Efficient Liability Rules: Complete Characterization

Received May, 18, 2000; revised version received March, 19, 2001     

Two Models of Intertemporal Price Discrimination

Received December 22, 2000; revised version received August 31, 2001     

Comparative Statics of Money-goods Specifications of the Utility Function

The introduction of real-cash balances into the neoclassical model of the consumer wrecks havoc, in general, on the empirically observable refutable comparative statics properties of the model. We provide the most general solution of this problem to date by deriving a symmetric and negative semidefinite generalized Slutsky matrix that is empirically observable and which contains all other such comparative statics results as a special case. In addition, we clarify and correct two aspects of Samuelson and Sato's (1984) treatment of this problem. Received March 9, 2001; revised version received September 3, 2001     

Prudence, Intertemporal Substitution, and Savings under Uncertainty

This paper derives the relations between the coefficient of absolute prudence, the equivalent precautionary premium, risk aversion to concentration, and the normality and shift of current consumption under uncertainty, without the time-separable utility assumption. Examples show that Kimball's coefficient of absolute prudence does not fully characterize precautionary saving or saving behavior under uncertainty. It is proved that, whereas a higher rate of intertemporal substitution and a larger coefficient of absolute prudence imply more savings when current consumption is normal, a larger coefficient of intertemporal substitution and a smaller coefficient of absolute prudence imply more savings when current consumption is inferior. Received July 17, 2001; revised version received November 20, 2001     

Taxation and Labor Markets

We exploit the common features of models such as union, search and efficiency wage models to develop a framework that can be used to analyze the effects of any revenue-neutral tax reform on employment. In particular, we show that taxes paid by workers are not equivalent to taxes paid by firms when taxes are non linear. Moreover, we show that the positive impact of tax progressivity on employment is attributable only to a limited set of hypotheses. Received May 2, 2001; revised version received November 27, 2001 Published online: December 5, 2002     

Timing of Entry under Externalities

Received August 23, 2000; revised version received May 14, 2001     

Vertical Integration and Market Foreclosure with Convex Downstream Costs

Received December 14, 2000; revised version received July 16, 2001     

Specific versus ad valorem Taxation and Externalities

Received December 15, 2000; revised version received September 10, 2001     

The “Adjustable-curtain” Strategy: Overbooking of Multiclass Service

The “adjustable-curtain” strategy, now commonly practiced by many airline companies, refers to a strategy where the airline adjusts the size of the business-class section of the aircraft shortly before boarding takes place. This strategy enables the carrier to deny boarding of economy-class passengers in an event of a high show-up of business-class (high-paying) passengers by simply enlarging the business-class section at the expense of the economy-class section (and of course, the other way around, in a case of a low show-up of business passengers). This paper develops a simple method of computing a profit-maximizing reservation policy which determines the number of business- and economy-class bookings taking into account that the adjustable-curtain strategy will be utilized prior to boarding. Received July 27, 2001; revised version received October 5, 2001     

The Timing of Technology Adoption by a Cost-minimizing Firm

Received December 7, 1999; revised version received July 26, 2001     

Optimal Taxation in the Presence of Black Markets

Received November 21, 2000; revised version received May 19, 2001     

Endogenous Growth and Negative Externalities

Received March 5, 2001; revised version received August 5, 2002 Published online: April 30, 2003     

Self-Reporting and Ex Post Asymmetric Information

We consider a model of optimal law enforcement where sanctions are reduced for self-reporting individuals. Violators get private signals about their individual probabilities of apprehension after they committed a crime. Since violators will self-report if and only if the signal is above a specific threshold, the possibility of self-reporting has an option value that leads to a higher crime rate if the authority's effort remains unchanged. We demonstrate that self-reporting nevertheless increases social welfare even under the restriction that the crime rate must not be higher than without self-reporting. Received June 15, 2001; revised version received December 19, 2001     

Variable Labor Supply,Terms of Trade Shocks,and Domestic Prices: A Note

This paper develops a two-good, small-country, general-equilibrium trade model with endogenous labor supply, where trade is restricted by a tariff or an import quota. Within this framework, it is shown that, contrary to Anam (1989), under an import quota domestic and world prices may vary in the same direction. This is due to the possibly positive employment effects of terms of trade shocks. In such a case, compared to fixed labor supply, variable labor supply is likely to make the domestic prices less sensitive to foreign price volatility. Received June 13, 2001; revised version received November 14, 2001