Financial crises typically occur because firms and financial institutions are highly exposed to aggregate shocks. We propose a theory explain these exposures. study model where entrepreneurs can issue state-contingent claims consumers. Even though use instruments hedge negative shocks, they do not necessarily so insuring against shocks is expensive, as consumers also harmed by them. This effect...

Mar. 22 4:55-7:45 P.M. 6:22P.M. 162.5 0.0 Mar. 23 5:05-6:45 A.M. 6:11 A.M. 162.5 0.0 Mar. 23 4:54-7:52 P.M. 6:23 P.M. 162.9 2.0 Broad minimum. Mar. 24 5:10-6:45 A.M. 6:10 A.M. 162.7 1.5 Mar. 24 4:55-7:50 P.M. 6:23 P.M. 162.5 2.0 Very broad minimum for about 1 hour. Mar. 25 5:05-6:50 A.M. 6:08 A.M. 162.6 1.5Mar. 25 4:55-7:55 P.M. 6:24 P.M. 162.5 0.0 Mar. 25 8:00-8:35 P.M. 162.5 0.5 These reading...

This paper examines the role of spillovers and externalities in influencing the recent siting of foreign-owned R&D activities in European regions. In accordance with the literature on knowledge creation in MNCs, we find that location of foreign-owned research tends to agglomerate, depending upon the potential for the following different sources of spillovers and externalities: (i) intra-industr...

I consider peer effects of network externalities in a competitive telecommunication market. The magnitude of network externalities depends on whether the caller and the receiver are in the same peer group. Technically, interconnection between carriers can eliminate network externalities, but carriers may adopt terminationbased price discrimination to reduce compatibility. When termination-based...

We study the effects of allocative and informational externalities in (multi-object) auctions and related mechanisms. Such externalities naturally arise in models that embed auctions in larger economic contexts. In particular, they appear when there is downstream interaction among bidders after the auction has closed. The endogeneity of valuations is the main driving force behind many new, spec...

Counterfeiting is a growing problem in national and international trade. We extend the work of Grossman and Shapiro (1988) on consumption externalities in prestige goods markets, and model a general aversion towards large levels of output interacting with a firm-specific aversion towards copies. We show that these externalities play the role of protecting the market share of the producer of ori...