The presence of a vertical externality, and therefore an incentive to integrate or to impose vertical restraints, is investigated in 11 posted-offer experiments. Upstream markets are characterized by a single seller. When the downstream market consists of three firms, there is no evidence of a vertical externality, and behavior is consistent with the vertically integrated outcome. With a single...

Do Walrasian markets function orderly in the presence of adverse selection? In particular, Is their outcome efficient when exclusive contracts are enforceable? This paper addresses these questions in the context of a Rothschild and Stiglitz insurance economy. We identify an externality associated with the presence of adverse selection as a special form of consumption externality. Consequently, ...

Loyal users are vital to the future of B2B platform with rapid development and intensive competitions. This study examines how network externality, in terms of direct network externality and indirect network externality, enhances B2B platform users' perceived value, and how such perception of value, in turn, influences their satisfaction and loyalty. First, we develop a conceptual model to desc...

We propose a tractable framework to introduce externalities in screening model. Agents differ both payoff-type and influence-type (ranking how beneficial their actions are for others). Applications range from pricing network goods regulating industries that create externalities. Inefficiencies arise only if the is unobservable. When dimensions unobserved, optimal allocation satisfies lexicograp...

Abstract We evaluate the impact of a price floor for alcohol introduced in Scotland 2018, using difference-in-differences strategy with England as control group. show that policy led to largest reductions units purchased among heaviest drinkers—the group who, at margin, are likely create externalities from drinking. The is well targeted heavy drinkers because they buy much greater fraction thei...

We analyze the effects of a domestic standard that reduces an externality associated with the consumption of the good targeted by the standard, using a model in which foreign and domestic producers compete in the domestic good market. Producers can reduce expected damage associated with the externality by incurring a cost that varies by source of origin. Despite potential protectionism, the sta...

This paper extends the previous literature on optimal redistributive taxation in the presence of externalities to a multi-externality setting. While taxes on income and on 'clean' commodities are still una ected by the externalities, which con rms previous results, I nd that the existence of more than one externality-generating commodity has important implications for the optimal Pigouvian tax ...

Credit constraints that link a private agent’s debt to market-determined prices embody a credit externality that drives a wedge between competitive and constrained socially optimal equilibria, inducing private agents to “overborrow.” The externality arises because agents fail to internalize the price effects of additional borrowing when the credit constraint binds. We quantify the effects of th...