The Consumer Price Index (CPI) attempts to answer the question of how much more (or less) income does a consumer require to be as well off in period 1 as in period given changes in prices, changes in the quality of goods, and the introduction of new goods (or the disappearance of existing goods). The CPI has not attempted to estimate the effect of the introduction of new goods, despite the reco...

We present a model of the behavior of an industry in perfect competition. A new feature in the modeling is the consumers’ role in the evolution of the industry. We show a link in between market behavior and economic growth at industry level. Growth may occur due to increases in technology or consumers’ wealth, due to a positive change in consumers’ preferences concerning this good or increasing...

New islands present the perfect opportunity for a species to get a fresh start and undergo adaptive radiation. For Galápagos land snails, both competition and resource diversity have together led to opportunity knocking twice.

Tax competition between two governments who choose nonlinear income tax schedules to maximize the average utility of its residents when skills are unobservable and labor is perfectly mobile is examined. We show that there are no Nash equilibria in which there is a skill type that pays positive taxes to one country and whose utility is larger than the average utility in the other country or in w...

We show that if limit orders are required to vary smoothly, then strategic (Nash) equilibria of the double auction mechanism yield competitive (Walras) allocations. It is not necessary to have competitors on any side of any market: smooth trading is a substitute for price wars. In particular, Nash equilibria are Walrasian even in a bilateral monopoly.

Our goal in this paper is to study the market impact in a market in which order flow is autocorrelated. We build a model which explains qualitatively and quantitatively the empirical facts observed so far concerning market impact. We define different notions of market impact, and show how they lead to the different price paths observed in the literature. For each one, under the assumption of pe...

We use a three-sector overlapping generations model to examine the efficiency characteristics and income distribution in long-run steady-state equilibrium. Assuming two sectors produce intermediate goods within an oligopolistic competition, we explore implications for production distribution, given increase competition induced by antitrust measures. Our analysis presents possibility of welfare ...

Perfect competition or Bertrand competition cause price to equal marginal cost, so that excise tax incidence can be illustrated with the most basic supply-demand diagram. Some results are: • excise taxes are shared by suppliers and demanders according to their relative price elasticities • holding revenue fixed, it doesn’t matter (for supply price, demand price, and quantity traded) whether the...

We analyze differentiated retail industries where shops engage in two-stage competition with respect to opening hours and prices. We demonstrate that retailers with longer opening hours charge higher prices and that opening hour differentiation softens price competition in a way described by a convex function of the proportion of the time that one of the stores is the sole operator. We calculat...