An influential literature has emerged around the premise that there exists an uneasy tension between (1) bank-firm relationships that promote incentives for firm—specific investments by banks, and (2) competition between banks that can destroy such incentives. This paper studies the industrial organization of the investment banking market in order to shed light on how this tension may be resolv...

Competition causes suppliers of goods and services to lower prices, raise quality, and innovate. It is crucial for maximizing social welfare in a market economy. Ironically, however, the market by itself does not guarantee competition, unless one makes heroic assumptions about the costlessness of market entry (North 1981; Neumann 2001: 5ff.). As Adam Smith famously warned, ‘people of the same t...

Sometimes large corporations create several firms which compete in the same market. There are, at least, three different explanations of this policy: (a) under decreasing returns production efficiency requires plant diversification, (b) competition alleviates incentive problems due to moral hazard, and (c) competing firms are a credible commitment to Stackelberg leadership of the group. In this...

In an overlapping generations model with Cournot competition on the goods market it is shown that a continuum of stationary states and perfect foresight trajectories exists with unemployment at arbitrary low wages. Decisive for this is the influence that different forecast functions have on the objective demand curve, even though they are consistent with perfect foresight. With an example it is...

In perfect competition, there is a sense in which no supplier makes any purposeful, meaningful decision regarding the price that it sets. Rather, because of perfect substitutability between all products (recall the assumption of homogenous goods in a perfectly-competitive market), firms are all price-takers. A view of firms as price-takers is incompatible with the notion that we would now like ...

In general, geometric additive models are incomplete and the perfect replication of derivatives, in the usual sense, is not possible. In this paper we complete the market by introducing the so-called power-jump assets. Using a static hedging formula, in order to relate call options and power-jump assets, we show that this market can also be completed by considering portfolios with a continuum o...

Over the last few years electricity markets are going through liberalization and modernization processes, which have resulted in introduction of smart grids. The Power Trading Agent Competition (Power TAC) is a simulation platform for evaluating trading strategies for the smart grid electricity markets: the tariff and the wholesale market. This paper gives an outline of our proposed strategies ...

We investigate the interaction between labour and credit market imperfections for the determination of equilibrium unemployment within the framework of the "right-tomanage" approach. Our analysis highlights the critical role of labour mobility for the evaluation of the employment implications of intensified credit market competition. Without labour mobility increased bargaining power of banks w...

51 WALTER BLOCK is the Harold E. Wirth eminent scholar endowed chair in economics, WILLIAM BARNETT II is associate professor of economics, and STUART WOOD is associate professor of economics and finance at Loyola University, New Orleans. Block would like to thank David Kennedy, Tony Sullivan, and the Board of Directors of the Earhart Foundation for financial support used to write this paper. An...

Many revenue management (RM) industries are characterized by (a) fixed capacities in the short term (e.g., hotel rooms, seats on an airline flight), (b) homogeneous products (e.g., two airline flights between the same cities at similar times), and (c) customer purchasing decisions largely influenced by price. Competition in these industries is also very high even with just two or three direct c...