In many auctions, bidders do not have enough cash to pay their bid. If bidders have asymmetric cash positions and independent private values then auctions will be inefficient. However, what happens if bidders have access to financial markets? We characterize efficient auctions and show that in an efficient auction the information rent that a bidder earns depends generally on both his valuation ...

A 2 2 2 model with endogenous process innovation describes two regimes for international technology transfer: multinational enterprise, in which the innovating rm receives all rents from foreign and domestic use of the innovation, and piracy, in which some are all of the rents are kept in the technology-receiving country. Piracy increases the unit requirements for the factor which is scarce in ...

We study an overlapping generations version of the principal-agent problem, where incentive contracts are determined in general equilibrium. All individuals are workers when young, but have a choice between becoming entrepreneurs or remaining workers when old. Imperfections in the credit market give rise to rents in entrepreneurial activities involving capital. These rents motivate poor young a...

This paper considers why "rms often ban monetary exchange between their employees, while encouraging these trades through other means, such as through the reciprocation of favours or barter. Despite classical ine$ciencies associated with non-monetary exchange, we illustrate two themes as to why non-monetary trade may be preferred to allowing money. First, the use of non-monetary trade may a!ect...

We present a transfer-seeking model of political economy in which the size of the transfer is determined endogenously, and in which over-dissipation of rents is predicted even under conditions of risk-neutrality and perfect rationality. We implement an empirical test of this model by collecting behavioral data in a laboratory experiment. We confirm the existence of behavior that leads to over-d...

We adapt formal models of competition with differentiated products to address the evolution of market boundaries, resource rents, and competitive positions. Our model captures the central strategy insight that competitive interactions are governed by superior value creation and competitive advantage. More importantly, it shows how the interplay between improving technologies and consumers’ valu...