In this part of the paper, we obtain analytical resultsfor the case that transport costs are not small (complement ofPart I), and combine them with the results in Part I of the paperto provide general results for all values of transport costs. Weshow that, in general, if an SPNE exists, it would be one of thefive possible strategies each of which we explicitly characterize.<...

Despite the political sensitivity of foreign capital, existing work on the effect of foreign capital at the firm level is slim. This paper examines the effect of foreign equity ownership and management on firm performance using a panel of Korean firms for the period of 1993-2007 when foreign capital inflows increased dramatically. Empirical results show that foreign equity ownership positively ...

• The role played by the state as a land market regulator in urban areas with natural vulnerability to flooding; as a producer of urban land and housing; and as a builder of defenses against flooding. • Impacts on the land market of flooding and built defenses as well as access to urban land for different population sectors; land value increases and decreases in urban areas according to floodin...

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In a Fisher market, a market maker sells m items to n potential buyers. The buyers submit their utility functions and money endowments to the market maker, who, upon receiving submitted information, derives market equilibrium prices and allocations of its items. While agents may benefit by misreporting their private information, we show that the percentage of improvement by a unilateral strateg...

This paper explores the nature of default arrival and recovery implicit in the term structures of sovereign CDS spreads. We argue that term structures of spreads reveal not only the arrival rates of credit events (λ), but also the loss rates given credit events. Applying our framework to Mexico, Turkey, and Korea, we show that a single-factor model with λ following a lognormal process captures ...

AUTHOR Amnon Levy [email protected] Zhenya Hu This paper proposes a theoretical framework to account for systematic risk in recovery and to address the correlation between the firm’s underlying asset process and recovery. Under the proposed framework, the expected value in default under the risk neutral measure can be expressed as a linear function of the expected value under the physical mea...

No-arbitrage is the fundamental principle of economic rationality which unifies normative decision theory, game theory, and market theory. In economic environments where money is available as a medium of measurement and exchange, no-arbitrage is synonymous with subjective expected utility maximization in personal decisions, competitive equilibria in capital markets and exchange economies, and c...